Ping An Bank

2013 Annual Report Release

I. Financial Highlights

Content

II. Business Operations

III. Looking Ahead

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I. Financial Highlights

1. Profit and Scale

2. Asset Quality and Efficiency

3. Income Statement

4. Regulatory Indicators

1. Profit and Scale

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(In RMB’100 million) 2013 2012 YoY

Change Change %

1. Net Profit 152.31 135.12 17.19 12.7%

31 Dec 2013 31 Dec 2012 YTD

Change Change %

2. Total Assets 18,917 16,065 2,852 17.8%

Including: Total Loans 8,473 7,208 1,265 17.5%

Including: Retail Loans (including CC) 3,257 2,258 999 44.2%

3. Total Liabilities 17,797 15,217 2,580 17.0%

Including: Total Deposits 12,170 10,211 1,959 19.2%

Including: Corporate Deposits 10,053 8,399 1,654 19.7%

4. Shareholders’ Equity 1,121 848 273 32.2%

2. Asset Quality and Efficiency

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(In RMB’100 million) 31 Dec 2013 31 Dec 2012 YTD

1. Asset Quality

NPL Balance 75.41 68.66 9.83 %

NPL Ratio 0.89% 0.95% -0.06 pc point

Provision to Loan Ratio 1.79% 1.74% +0.05 pc point

Provision Coverage Ratio 201.06% 182.32% +18.74 pc points

2013 2012 YoY

2. Return on Assets

Average Return on Total Assets 0.87% 0.94% -0.07 pc point

Weighted Average Return on Equity 16.57% 16.78% -0.21 pc point

3. Net Interest Spread (NIS) 2.14% 2.19% -0.05 pc point

4. Net Interest Margin (NIM) 2.31% 2.37% -0.06 pc point

5. Cost / Income Ratio 40.77% 39.41% +1.36 pc points

Notes:

1. The decrease in ROA was mainly due to the impact of additional provision, and it would have been increased YoY if the additional provision

remains the same as the same period of 2012.

2. The increase in CIR was primarily due to the increase in strategic investment for supporting operation transformation and outlet expansion.

3. Income Statement

(In RMB’100 million)

2013 YoY

Amount Proportion Amount

Change

Amount

Change %

Proportion

Change

Operating Income 521.89 100% 124.40 31.3%

Net Interest Income 406.88 77.96% 76.52 23.2% -5.15%

Net Non-interest Income 115.01 22.04% 47.88 71.3% 5.15%

Including: Net Fee Income 104.56 20.03% 47.34 82.7% 5.63%

Expenses 253.44 62.68 32.9%

Operating Fees 212.79 40.77% 56.15 35.9% 1.36%

Operating Profit Before Provisions 268.45 61.72 29.9%

Less: Asset Impairment Loss 68.90 37.60 120.1%

Net Profit 152.31 17.19 12.7%

Net Profit Attributable to Parent Company 152.31 18.28 13.6%

Basic / Diluted EPS (in RMB)

1.86 0.22 13.4%

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4. Regulatory Indicators

Standard Level 31 Dec 2013 31 Dec 2012

Liquidity Ratio (RMB and Foreign Currency) ≥25% 49.56% 51.99%

Loan / Deposit Ratio (including bills, RMB

and Foreign Currency) ≤75% 69.67% 70.64%

NPL Ratio ≤5% 0.89% 0.95%

According to

Administrative

Measures for the

Capital of

Commercial Banks

(Trial)

Capital Adequacy Ratio ≥8.5% 9.90% N/A (note)

Tier 1 Capital Adequacy

Ratio ≥6.5% 8.56% N/A (note)

Core Tier 1 Capital

Adequacy Ratio ≥5.5% 8.56% N/A (note)

At the end of the reporting period, the key regulatory indicators of the Bank were in compliance with the regulatory

requirements.

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Note: The Administrative Measures for the Capital of Commercial Banks (Trial) has been implemented by the Bank since 1 Jan 2013.

II. Business Operations 1. Rapid Growth in Deposits

2. Remarkable Optimization of Business Structure

3. Continuous Improvement of Interest Spread

4. Business Innovation Highlights

5. Smooth Progress in Institutional Reform

6. Solidifying Development Foundation

1. Rapid Growth in Deposits

(In RMB’100 million)

31 Dec 2013 YTD

Balance Proportion Balance

Change

Balance

Change %

Proportion

Change

Corporate Deposits 10,053 82.60% 1,654 19.7% +0.35%

Retail Deposits 2,117 17.40% 305 16.8% -0.35%

Total Deposits 12,170 100% 1,959 19.2% -

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The deposits of the Bank grew steadily in 2013. The deposits at the end of the reporting period increased by 19.18%

YTD, ranking the Bank one of the top players among peers.

The annual average deposits balance was RMB 1,141.8 bn, an increase of RMB 229.8 bn or 25.20% as compared with

the annual average deposits balance of 2012.

2. Remarkable Optimization of Business Structure (1)

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• Ineffective inter-bank assets had been cut to ensure an orderly development of the inter-bank business. A coordinative asset and liability structure of the Bank effectively mitigated the liquidity risk and helped it ride out of the liquidity crisis in June and December, setting it free from obtaining expensive short term funding;

• The loan structure had been optimized to focus on micro loans and consuming finance. High yield operations, such as micro loans, New One Loan, and auto loans grew rapidly and the percentage to ending balance increased significantly.

Structure of Assets

• The Bank has been devoted to developing the deposits business, leading to a YTD increase of 1.28 pc points in the year end deposit to total liabilities;

• The year end loan-to-deposit ratio and daily average loan-to-deposit ratio recorded a substantial decrease, remaining below 70% throughout the year.

Structure of Liabilities

Changes of the Loan Structure in 2013

(In RMB’100 million) 31 Dec 2013 Proportion YTD

Balance Change Proportion Change

Total Loans 8,473 1,265

Corporate

Loans

General Corporate Loans 5,093 60.11% 248 -7.11%

Discounted Bills 123 1.45% 19 0.01%

Subtotal 5,216 61.56% 267 -7.10%

Retail Loans

General Retail Loans 789 9.31% -122 -3.33%

Micro Loans & New One Loan 1,113 13.14% 473 4.26%

Auto Loans 487 5.75% 276 2.82%

Credit Card Receivable 868 10.24% 371 3.35%

Subtotal 3,257 38.44% 998 7.10%

2. Remarkable Optimization of Business Structure (2)

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67

115

0

50

100

150

2012 2013

54.2%

71.3%

0%

25%

50%

75%

100%

2012 2013

Fee-based Business Income

(In RMB’100 million)

Percentage of Fee-based

Business Income

Growth Rate of Fee-based

Business Income

16.89%

22.04%

0%

9%

18%

27%

2012 2013

• The Bank leveraged on its integrated financial advantages and put great efforts on developing investment banking business. The fee-based income from investment banking for the year increased by RMB 1.3 bn from the previous year to RMB 1.6 bn, contributed significantly to the fee-based income growth of the Bank.

Fostering Investment

Banking Business

• With enhancement in the organization and incentives, it resulted in an annual fee-based business income of RMB 11.5 bn, representing an increase of 71.3% YoY. The percentage of fee-based business income to operating income increased by 5.15 pc points, with the income structure of the Bank improving remarkably.

Remarkable Optimization

of Income Structure

+71.3%

+5.15 pc

points

+17.1 pc

points

3. Continuous Improvement of Interest Spread

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Quarterly NIS

4.11%

4.31%

4.57%

4.82%

4.00%

4.40%

4.80%

5.20%

1Q2013 2Q2013 3Q2013 4Q2013

2.41%

2.38% 2.37%

2.39%

2.35%

2.40%

2.45%

2.50%

1Q2013 2Q2013 3Q2013 4Q2013

2.01%

2.04%

2.14%

2.34%

1.80%

2.00%

2.20%

2.40%

1Q2013 2Q2013 3Q2013 4Q2013

2.18% 2.21%

2.31%

2.52%

2.00%

2.20%

2.40%

2.60%

1Q2013 2Q2013 3Q2013 4Q2013

Quarterly Deposit-Loan Spread

Quarterly NIM

Quarterly Average Cost of Deposit Rate

Against the backdrop of market interest rates acceleration, the Bank’s deposit cost remained stable while achieving swift growth

in deposits. The utilization efficiency of loan resources and average loan interest rate have been increased by enhancing loan

pricing management. The deposit-loan spread, NIS and NIM for the year maintained a steady QoQ growth.

The Bank’s return on assets also improved gradually, representing a significant increase as compared with the previous year,

netting out the effect from provision.

4. Business Innovation Highlights

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• Fast product promotion: As at the end of the year, the accumulated number of card users reached 352,000 with an approved credit limit of RMB10.9 bn, and 35,042 customers were granted with a credit line;

• Remarkable product advantages: As at the end of the year, the deposit balance and loan balance amounted to RMB 5.4 bn and 6 bn, respectively, and the average loan interest rate was significantly higher than the loan interest rate. It has become an important tool for the Bank’s business, customer and return restructuring.

Ping An Dual Debit-credit

Card

• The Golden Orange series investment banking businesses, including the Golden Orange Club, Golden Orange Housekeeper and Golden Orange Wealth Management, demonstrated initial market influence by providing one-stop and comprehensive integrated financial services for the customers;

• The Bank accelerated its innovation efforts to actively explore for new investment banking businesses, such as Golden Orange Capital, Golden Orange Small and Micro Enterprises and industrial funds.

Investment Banking

• Hang-E-Tong channel: More than 100 cooperation institutions covering the banking, securities, trusts and funds sectors, and the content of cooperation has been enriched continuously;

• Featured gold businesses: Introduced the “Ping An Gold” brand, covering precious metal investment and financing, trading, wealth management and physical gold, etc..

Treasury and Inter-bank Business

• The Bank made an innovation by introducing the corporate-targeted WeChat Bank and the brand new “Orange-E-Net” (online Supply Chain Finance). Several online financing projects on the e-business platform had been rolled out; And the new version of Pocket Bank for retail business was launched.

Internet Finance

5. Smooth Progress in Institutional Reform

• The number of cost centers had been cut from 79 to 38, thereby considerably enhancing the operational management effectiveness.

Reduction of Cost Centers

• 15 business units had been set up and commenced operation to launch professional operations targeting different customers in different product segments. Featuring “integrated financial services” and “internet financial services”, the new business units achieved rapid growth and have become the key drivers of the business and income of the Bank.

Increase of Profit Centers

• In the half year since the establishment of the real estate and energy business units, the total deposits have already reached RMB 29.4 bn. The loan scale was RMB 39.3 bn, with new loans yielding a relatively high level of return. The accumulated fee-based business income was RMB 629 mn.

• The results grew rapidly leveraging on accelerated transformation of products and platform business units such as investment banking, custody, trade finance, financial market and bills.

Initial Operational

Success

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CC & Consuming

Finance BU

Financial Market BU

Inter-bank BU

Bills BU

SME Finance BU

Institutional Finance BU

Investment Banking

BU

Asset Custody BU

Trade Finance BU

Offshore Finance BU

Private Banking BU

Industrial Business Unit: Strong Start

Real Estate Finance BU

Energy and Mining Finance BU

Transportation Finance BU

Product Business Unit: Transformational

Development

Platform Business Unit: Service Upgrade

Corporate Internet Finance BU

6. Solidifying Development Foundation

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• The Bank enhanced the strategic investment and incentive efforts in outlet establishment to accelerate outlet expansion.

• During the reporting period, 5 branches, including the Xi’an branch, Suzhou branch, Linyi branch, Leshan branch and Xiangyang branch and 73 sub-branches had been approved to commence operation. As at the end of the reporting period, the Bank had a total of 38 branches and 528 outlets.

Accelerated Outlet

Expansion

• The Bank successfully completed the non-public offering of shares. Upon completion of the capital injection from the Group at the end of 2013, the capital adequacy ratio increased from 8.91% at the end of the third quarter to 9.90%, up by 0.99 pc point.

• The Bank actively implemented the issuance of tier two capital bonds.

Effective Capital

Injection

III. Looking Ahead

Looking Ahead of Year 2014

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Restructure by Coordination and Planning

Strengthen Control to Enhance Efficiency

Expedite Innovation to Create Uniqueness

Strict Risk Control for Sound Operations

Capital Replenishment for Institutional Expansion

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