Bank of Communications Co., Ltd.

Transcription

1 Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. Bank of Communications Co., Ltd. (A joint stock company incorporated in the People s Republic of China with limited liability) (Stock Code: 03328, 4605 (Preference Share)) RESULTS ANNOUNCEMENT FOR FIRST QUARTER 2018 The Board of Directors of Bank of Communications Co., Ltd. (the Bank ) is pleased to announce the unaudited consolidated financial information (the First Quarter Results ) of the Bank and its subsidiaries (the Group ) for the three months ended 31 March 2018 (the Reporting Period ), which has been prepared in accordance with the International Accounting Standard ( IAS ) 34 Interim Financial Reporting issued by the International Accounting Standards Board. The Board of Directors of the Bank and the Audit Committee of the Board of Directors have reviewed and confirmed the First Quarter Results. This announcement is made pursuant to Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and Rule of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. I. CORPORATE INFORMATION Stock name Stock code Stock exchange A Share Bank of Communications Shanghai Stock Exchange H Share BANKCOMM The Stock Exchange of Hong Kong Limited Domestic Preference Shares BOCOM PREF Shanghai Stock Exchange Overseas Preference Share BOCOM 15USDPREF 4605 The Stock Exchange of Hong Kong Limited - 1 -

2 Secretary of the Board of Directors/Company Secretary Name Contact address Tel 86 (21) Gu Sheng No.188, Yin Cheng Zhong Road, China (Shanghai) Pilot Free Trade Zone, Shanghai, P.R. China II. FINANCIAL HIGHLIGHTS As at the end of the Reporting Period, the key financial data and financial indicators of the first quarter prepared by the Group in accordance with International Financial Reporting Standards ( IFRSs ) are as follows: Key financial data (In millions of RMB unless otherwise stated) 31 March December 2017 Increase/ decrease (%) Total assets 9,266,797 9,038, Loans and advances to customers 1 4,704,065 4,579, Total liabilities 8,598,296 8,361, Due to customers 1 5,718,712 5,545, Shareholders equity (attributable to shareholders of the Bank) 663, ,143 (1.16) Net assets per share (attributable to shareholders of the Bank, in RMB yuan) (1.22) Net Capital 3 783, ,381 (0.83) Including: Net Core Tier 1 capital 3 601, ,454 (1.33) Additional Tier 1 capital 3 59,976 59, Tier 2 capital 3 122, , Risk-weighted assets 3 5,599,170 5,646,313 (0.83) Key financial data January to March 2018 January to March 2017 Increase/ decrease (%) Net interest income 30,469 31,217 (2.40) Net fee and commission income 10,844 11,279 (3.86) Profit before tax 23,385 24,012 (2.61) Net profit (attributable to shareholders of the Bank) 20,091 19, Basic and diluted earnings per share (attributable to shareholders of the Bank in RMB yuan)

3 Key financial indicators (%) 31 March December 2017 Difference (percentage) Identified impaired loans to total loans Allowance for loan impairment losses to non-performing loans Capital adequacy ratio Tier 1 Capital adequacy ratio (0.05) Core Tier 1 Capital adequacy ratio (0.05) Key financial indicators (%) January to March 2018 January to March 2017 Difference (percentage) Return on average assets (annualized) (0.03) Return on average shareholders equity (annualized) (0.12) Cost-to-income ratio Notes: 1. Comparative data are restated because of a change in presentation. 2. Refers to shareholder s equity attributable to shareholders of the Bank after the deduction of other equity instruments divided by the total issued ordinary shares as at the end of the Reporting Period. 3. Calculated pursuant to the Administrative Measures for the Capital Management of Commercial Banks (Trial Implementation) issued by the China Banking and Insurance Regulatory Commission ( CBIRC ). 4. Excluding the impact from s. 5. Calculated pursuant to the operating expenses divided by operating income net of other operating costs under China Accounting Standard for Business Enterprises that were consistent with the reporting data under China Accounting Standard for Business Enterprises, and the comparative data at the same period were restated in accordance with the requirements of China Accounting Standard for Business Enterprises

4 III. SHAREHOLDERS INFORMATION (1) Numbers of Ordinary Shareholders and Shareholdings of Top 10 Ordinary Shareholders as at the end of the Reporting Period Total Number of Ordinary Shareholders The Bank has a total of 364,976 shareholders, including 329,461 holders holding A shares and 35,515 holders holding H shares. Shareholdings of Top 10 Ordinary Shareholders Number of shares held as at the end Shares pledged or frozen Name of shareholders (full name) of the Reporting Period (share) Percentage (%) Status of shares Number of shares Class of shares Nature of shareholders Ministry of Finance of the People s 15,148,693, Nil A Share The State Republic of China 4,553,999, Nil H Share HKSCC Nominees Limited 14,961,060, Unknown H Share Foreign legal person The Hong Kong and Shanghai Banking Corporation Limited 13,886,417, Nil H Share Foreign legal person The National Council for Social Security 1,877,513, Nil A Share The State Fund 1,405,555, Nil H Share China Securities Finance Corporation Limited 2,429,788, Nil A Share State-owned legal person Capital Airport Holding Company 1,246,591, Nil A Share State-owned legal person Shanghai Haiyan Investment Management Co., Ltd. 808,145, Nil A Share State-owned legal person Wutongshu Investment Platform Co., Ltd. 794,557, Nil A Share State-owned legal person Yunnan Hehe (Group) Co., Ltd. 745,305, Nil A Share State-owned legal person China FAW Group Corporation 663,941, Nil A Share State-owned legal person Details of holders with restored voting right and During the Reporting Period, there was no restoration of voting rights for preference shareholdings shares

5 Notes: 1. All ordinary shares issued by the Bank are not subject to any sales restrictions. 2. Shanghai Haiyan Investment Management Co., Ltd. and Yunnan Hehe (Group) Co., Ltd. are parties acting in concert under Provisional Measures on Equity Management of Commercial Banks. The Bank is not aware of any existence of associated relationship among other Top 10 shareholders or those acting in concert under Provisional Measures on Equity Management of Commercial Banks. 3. The aggregate number of shares held by the nominee, HKSCC Nominees Limited, represents the total number of H shares of the Bank held by all institutional and individual investors who maintained the accounts with it as at the end of the Reporting Period. 4. According to the Bank s register of members, as at the end of the Reporting Period, the Hong Kong and Shanghai Banking Corporation Limited ( HSBC ) held 13,886,417,698 H shares of the Bank. In addition, according to the disclosure of interests forms filed with the Stock Exchange of Hong Kong Limited (the Hong Kong Stock Exchange ) by HSBC Holdings plc, HSBC beneficially held 14,135,636,613 H shares of the Bank as at the end of the Reporting Period, representing 19.03% of the Bank s total ordinary shares issued. 5. According to the Bank s register of members, as at the end of the Reporting Period, the National Council for Social Security Fund (the SSF ) held 1,877,513,451 A Shares and 1,405,555,555 H Shares. According to the information provided by the SFF to the Bank, as at the end of the Reporting Period, other than the shareholdings recorded in the register of members of the Bank, SSF held additional 7,637,056,777 H shares of the Bank, of which 7,027,777,777 H shares were registered under HKSCC Nominees Limited and 609,279,000 H shares were indirectly held by certain asset managers. As at the end of the Reporting Period, SSF held a total of 10,920,125,783 A shares and H shares of the Bank, representing 14.70% of the Bank s total ordinary shares issued. (2) Number of Preference Shareholders and Shareholdings of Top 10 Preference Shareholders as at the end of the Reporting Period Total number of overseas holders 1 Name of shareholder (full name) Top 10 Overseas Preference Shareholdings Number of shares Shares pledged held as at the end or frozen of the Reporting Number of Period (share) Percentage (%) Class of shares Status of shares shares Nature of shareholder DB Nominees (Hong Kong) Limited 122,500, Overseas preference share Unknown Foreign legal person - 5 -

6 Notes: 1. All overseas s issued by the Bank are not subject to any sales restrictions. 2. Shareholdings of overseas holders are summarized according to the Bank s register of members of overseas holders. 3. DB Nominees (Hong Kong) Limited, as a trustee, held 122,500,000 overseas s, accounting for 100% of the Bank s total overseas s, on behalf of all assignees in clearing systems of Euroclear and Clearstream as at the end of the Reporting Period. 4. Percentage refers to the percentage of the number of overseas s held by overseas holders to the total number of overseas s. 5. The Bank is not aware of any existence of related relationship among the overseas preference shareholders and Top 10 ordinary shareholders, or those acting in concert. Total number of domestic holders 43 Name of shareholder (full name) Top 10 Domestic Preference Shareholdings Number of shares Shares pledged held as at the end or frozen of the Reporting Percentage Status of Number Period (share) (%) Class of shares shares of shares Nature of shareholders China Mobile Communications Corporation 100,000, Domestic AXA SPDB Investment Managers SPDB 20,000, Domestic Shanghai Pudong Development Bank Shanghai Branch CCB Trust Co., Ltd. Qian Yuan Ri Xin Yue Yi open-ended wealth management unit fund trust Truvalue Asset Management CMB China Merchants Bank Co., Ltd. Bosera Funds ICBC Bosera ICBC Flexible allocation No. 5 designated customers asset management plan Wisdom Asset Management Ping An Bank Ping An Bank Co., Ltd. China Ping An Life Insurance Co., Ltd. Owned capital China National Tobacco Corporation Henan Company China Life Property & Casualty Insurance Company Limited Traditional General Insurance Product China CITIC Bank Corporation Limited CITIC Le Ying wealth management series 20,000, Domestic Nil State-owned legal person Nil Others Nil Others 20,000, Domestic Nil Others 20,000, Domestic Nil Others 20,000, Domestic Nil Others 18,000, Domestic Nil Others 15,000, Domestic Nil State-owned legal person 15,000, Domestic Nil Others 14,000, Domestic Nil Others - 6 -

7 Notes: 1. All domestic s issued by the Bank are not subject to any sales restrictions. 2. Shareholdings of domestic holders are summarized according to the Bank s register of members of domestic holders. 3. Percentage refers to the percentage of the number of domestic s held by domestic holders to the total number of domestic s. 4. The Bank is not aware of any existence of related relationship among Top 10 domestic holders, and Top 10 ordinary shareholders, or those acting in concert. IV. MANAGEMENT DISCUSSION AND ANALYSIS (1) Business Review During the first quarter of 2018, the Group actively dealt with the changing market and policy environment, firmly implemented strategies, effectively adapted to the changes, based on the service of the real economy, accelerated the reform and innovation, effectively strengthened our risk management and controls to achieve stable performance and continuously improve quality and efficiency of operation. As at the end of the Reporting Period, the total assets of the Group increased by 2.53% from the end of last year to RMB9, billion; the total liabilities increased by 2.83% from the end of last year to RMB8, billion; shareholders equity (attributable to shareholders of the Bank) decreased by 1.16% from the end of last year to RMB billion. During the Reporting Period, the net operating income decreased by 10.49% on a year-on-year basis to RMB billion; the net profit (attributable to the Bank) increased by 3.97% on a year-on-year basis to RMB billion; the annualized return on average assets (ROAA) and the annualized return on average shareholders equity (ROAE) increased by 0.07 percentage points and 1.79 percentage points from last year to 0.88% and 13.23%, respectively, (2) Financial Statement Analysis 1. Analysis on Key Income Statement Items 1.1 Net interest income During the Reporting Period, the net interest income of the Group reached RMB billion, representing a decrease of RMB0.748 billion or 2.40% on a year-on-year basis, which accounted for 61.90% of the net operating income. During the Reporting Period, the net interest margin of the Group decreased by 11 basis points on a year-on-year basis to 1.40%

8 1.2 Net fee and commission income During the Reporting Period, the net fee and commission income of the Group reached RMB billion, representing a decrease of RMB0.435 billion or 3.86% on a year-on-year basis. The net fee and commission income accounted for 22.03% of the net operating income, representing a year-on-year increase of 1.52 percentage points. 1.3 Operating costs During the Reporting Period, the Group s operating costs increased by RMB0.654 billion or 5.13% on a year-on-year basis to RMB billion, while the Group s cost-to-income ratio was 28.40%, representing a year-on-year increase of 4.27 percentage points. 1.4 Credit impairment losses on loans and advances to customers During the Reporting Period, the Group s credit impairment losses on loans and advances to customers decreased by RMB649 million or 8.68% on a year-onyear basis to RMB6.828 billion. 2. Analysis on Key Balance Sheet Items 2.1 Loans and advances to customers As at the end of the Reporting Period, the Group s total loans and advances to customers were RMB4, billion, representing an increase of RMB billion or 2.73% from the end of last year, of which the balance of corporate loans increased by RMB billion or 1.61% from the end of last year to RMB3, billion; the balance of individual loans increased by RMB billion or 5.24% from the end of last year to RMB1, billion. 2.2 Due to customers As at the end of the Reporting Period, the Group s balance of due to customers increased by RMB billion or 3.13% from the end of last year to RMB5, billion, of which the proportion of due to corporate customers accounted for 68.72%, representing a decrease of 0.82 percentage points from the end of last year. The proportion of due to individual customers was 31.23%, representing an increase of 0.83 percentage points from the end of last year. The proportion of demand deposits decreased by 3.21 percentage points from the end of last year to 42.02%, while the proportion of fixed deposits increased by 3.22 percentage points from the end of last year to 57.93%

9 2.3 Investment securities As at the end of the Reporting Period, the Group s net balance of securities investments increased by RMB billion or 3.96% from the end of last year to RMB2, billion. 2.4 Asset quality (3) Capital Adequacy Ratio As at the end of the Reporting Period, the Group s impaired loan balance increased by RMB2.092 billion from the end of last year to RMB billion; the identified impaired loans to total loans was 1.50%, remaining at the same level as the end of last year; the allowance for loan impairment losses to nonperforming loans was %, representing an increase of percentage points from the end of last year; the provision rate was 2.49%, representing an increase of 0.18 percentage points from the end of last year. The Group calculated the capital adequacy ratios pursuant to the Administrative Measures for the Capital of Commercial Banks (Trial Implementation) issued by China Banking and Insurance Regulatory Commission ( CBIRC ) and the relevant requirements. Since the adoption of the Advanced Approach of Capital Management upon the first approval from CBIRC in April 2014, the Bank steadily implemented and applied it in accordance with the regulatory requirements. Pursuant to the Administrative Measures for the Capital of Commercial Bank (Trial Implementation), the Bank met the conditions of completing the parallel period. Upon the approval of CBIRC, the Bank expands the application scope of the Advanced Approach and ends the parallel run period. By the end of March 2018, the Group s capital adequacy ratio, Tier 1 Capital adequacy ratio and core Tire 1 Capital ratio were 14.00%, 11.81% and 10.74% respectively, which all met the regulatory requirements

10 (In millions of RMB unless otherwise stated) Calculated pursuant to the Administrative Measures for the Capital Management of Commercial Banks (Trial Implementation) issued by CBIRC Notes Item The Group The Bank Net Core Tier 1 Capital 601, ,609 Net Tier 1 Capital 661, ,485 Net Capital 783, ,163 Core Tier 1 Capital adequacy ratio (%) Tier 1 Capital adequacy ratio (%) Capital adequacy ratio (%) Notes: (1) Pursuant to the Administrative Measures for the Capital Management of Commercial Banks (Trial Implementation), the above calculation excluded BoCom Insurance and BoCommLife Insurance. (2) According to capital adequacy ratio calculated by adopting the Advanced Approach of Capital Management, the credit risk was assessed by the internal rating based approach, the market risk by the internal models approach and the operational risk by the standardized approach. Calculated pursuant to the Administrative Measures for the Capital Adequacy Ratio of Commercial Banks issued by CBIRC and relevant requirements Item The Group The Bank Core Capital Adequacy Ratio (%) Capital adequacy ratio (%) (4) Leverage Ratio The Group calculated the leverage ratio pursuant to the Measures for the Administration of the Leverage Ratio of Commercial Banks (Revised) issued by China Banking and Insurance Regulatory Commission in January As at 31 March 2018, the Group s leverage ratio was 6.61%, which met the regulatory requirements

11 The Group (In millions of RMB unless otherwise stated) Calculated pursuant to the Measures for the Administration of the Leverage Ratio of Commercial Banks (Revised) (2015, No. 1) issued by CBIRC Item 31 March December September June 2017 Net Tier 1 Capital 661, , , ,671 Adjusted on-and-offbalance sheet assets 10,010,549 9,731,368 9,654,624 9,653,233 Leverage ratio (%) (5) Liquidity Coverage Ratio According to the Measures for Disclosure of Liquidity Coverage Ratio of Commercial Banks, commercial banks should disclose the daily average liquidity coverage ratio within the quarter since The daily average liquidity coverage ratio of the Group in the first quarter of 2018 was % (the daily average within the quarter is the arithmetic average of daily data of the quarter, the number of average of daily data is 90). The ratio increased by 8.22 percentage points from the last quarter mainly due to the increase of qualified high-quality liquid assets. The details of average monthly liquidity coverage ratio in the first quarter are listed as follows:

12 Serial Number (In millions of RMB unless otherwise stated) Amount before conversion Amount after conversion Qualified high-quality liquid assets 1 Qualified high-quality liquid assets 1,422,902 Cash Outflows 2 Retail deposits and deposits from small 1,397, ,709 business customers, of which: 3 Stable deposit 158,898 7,843 4 Less stable deposit 1,238, ,866 5 Unsecured wholesale funding, of which: 3,970,446 1,704,277 6 Operational deposits (excluding those 2,478, ,591 generated from correspondent banking activities) 7 Non-operational deposits (all counterparties) 1,481,362 1,075,602 8 Unsecured debt 11,084 11,084 9 Secured funding 10, Other items, of which: 1,245, , Cash outflows related to derivative exposures 463, ,888 and other collateral requirements 12 Cash outflows relates to loss of funding on debt products 13 Credit and liquidity facilities 782,422 43, Other contractual funding obligations 59,190 59, Other contingent funding obligations 974,805 31, Total expected cash outflows 2,442,624 Cash Inflows 17 Secured lending (including reverse repos and 116, ,645 securities borrowing) 18 Cash inflows from fully performing exposures 856, , Other cash inflows 492, , Total expected cash inflows 1,465,946 1,241,085 Amount after adjustment 21 Qualified high-quality liquid assets 1,422, Net cash outflow 1,201, Liquidity Coverage Ratio (%)

13 V. FINANCIAL STATEMENTS Unaudited Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income (All amounts expressed in millions of RMB unless otherwise stated) Three months ended 31 March Interest income 85,428 75,988 Interest expense (54,959) (44,771) Net interest income 30,469 31,217 Fee and commission income 11,685 12,202 Fee and commission expense (841) (923) Net fee and commission income 10,844 11,279 Net gains arising from trading activities Net gains arising from financial investments (41) 366 Share of profits of associates and joint venture Insurance business income 3,114 8,182 Other operating income 4,210 3,481 Credit impairment losses on loans and advances to customers (6,828) (7,477) Insurance business expense (2,788) (7,614) Other operating expenses (16,220) (15,885) Profit before tax 23,385 24,012 Income tax (3,153) (4,562) Net profit for the period 20,232 19,

14 Three months ended 31 March Other comprehensive income Items that may be reclassified subsequently to profit or loss: Debt instruments at fair value through other comprehensive income Net gain recorded in equity 51 N.A. Net gain reclassified from equity to profit or loss 36 N.A. Available-for-sale financial assets Changes in fair value recorded in equity N.A. 165 Changes in fair value reclassified from equity to profit or loss N.A. (155) Net gains/(losses) arising from cash flow hedge Changes in fair value recorded in equity Changes in fair value reclassified from equity to profit or loss (7) 49 Translation difference on foreign operations (1,630) 137 (1,527) 287 Items that will not be reclassified subsequently to profit or loss: Net gains on equity investments designated at fair value through other comprehensive income (9) N.A. Actuarial gains/(losses) on pension benefits (13) 14 Change in fair value attributable to change in the credit risk of financial liabilities at fair value through profit or loss (27) N.A. Other comprehensive income for the period (1,576) 301 Comprehensive income for the period 18,656 19,751 Net profit attributable to: Shareholders of the Bank 20,091 19,323 Non-controlling interests ,232 19,450 Total comprehensive income attributable to: Shareholders of the Bank 18,565 19,647 Non-controlling interests ,656 19,751 Basic and diluted earnings per share for profit attributable to the shareholders of the Bank (in RMB yuan)

15 Unaudited Condensed Consolidated Interim Statement of Financial Position (All amounts expressed in millions of RMB unless otherwise stated) As at As at 31 March 31 December ASSETS Cash and balances with central banks 908, ,571 Due from banks and other financial institutions 807, ,468 Financial assets at fair value through profit or loss 345, ,037 Loans and advances to customers 4,583,350 4,473,255 Financial investments fair value through other comprehensive income 398,056 N.A. Financial investments available-for-sale N.A. 402,138 Financial investments amortised cost 1,924,787 N.A. Financial investments loans and receivables N.A. 387,733 Financial investments held-to-maturity N.A. 1,511,375 Investment in associates and joint venture 3,419 3,357 Property and equipment 134, ,492 Deferred income tax assets 27,086 16,456 Other assets 133, ,372 Total assets 9,266,797 9,038,254 LIABILITIES Due to banks and other financial institutions 1,978,348 2,106,192 Financial liabilities at fair value through profit or loss 65,272 60,308 Due to customers 5,718,712 5,545,366 Certificates of deposits issued 328, ,482 Current tax liabilities 9,524 7,943 Deferred income tax liabilities Debt securities issued 289, ,662 Other liabilities 208, ,510 Total liabilities 8,598,296 8,361,983 EQUITY Share capital 74,263 74,263 Preference shares 59,876 59,876 Capital surplus 113, ,663 Other reserves 299, ,827 Retained earnings 116, ,514 Equity attributable to shareholders of the bank 663, ,143 Non-controlling interests 5,165 5,128 Total equity 668, ,271 Total equity and liabilities 9,266,797 9,038,

16 Unaudited Condensed Consolidated Interim Statement of Cash Flows (All amounts expressed in millions of RMB unless otherwise stated) Three months ended 31 March Cash flows from operating activities: Net Profit before tax: 23,385 24,012 Adjustments for: Provision for/(reversal of) credit impairment of loans and advances to customers 6,828 7,477 Provision for/(reversal of) credit impairment of financial investments (266) 361 Provision for/(reversal of) credit impairment of other receivables Provision for/(reversal of) credit impairment of interest receivables 338 Provision for/(reversal of) insurance contracts reserve (2,136) 4,903 Depreciation and amortisation 2,478 2,186 Provision for/(reversal of) outstanding litigation and unsettled obligation (6) 18 Net gains on disposal of property and equipment (12) (25) Net gains on disposal of foreclosed assets (1) Interest income from financial investments (19,971) (19,098) Unwind of discount on allowances during the period (463) (451) Fair value loss/(gains) 1, Share of profits of associates and joint venture (65) (30) Net gains arising from financial investments (109) (366) Interest expense on debt securities issued 2,868 2,198 Operating cash flows before movements in operating assets and liabilities 14,075 21,436 Net decrease/(increase) in mandatory reserve deposits (18,001) (19,988) Net (increase)/decrease in due from banks and other financial institutions (13,673) 19,885 Net increase in financial assets at fair value through profit or loss (28,834) (35,532) Net increase in loans and advances to customers (149,483) (245,677) Net increase in other assets (1,060) (5,051) Net increase in due to banks and other financial institutions 49,758 67,871 Net increase/(decrease) in financial liabilities at fair value through profit or loss (3,924) 5,920 Net increase in due to customers 173, ,095 Net increase/(decrease) in other liabilities (5,695) 5,017 Net increase/(decrease) in value added tax and other taxes payable Income tax paid (3,082) (975) Net cash generated from operating activities 13,920 47,254

17 Three months ended 31 March Cash flows from investing activities: Purchase of financial investments (157,603) (151,007) Disposal or redemption of financial investments 94,845 87,118 Dividends received Interest received from financial investments 17,405 17,022 Acquisition of intangible assets and other assets (157) (181) Disposal of intangible assets and other assets 5 5 Purchase and construction of property and equipment (4,313) (4,251) Disposal of property and equipment Net cash used in investing activities (49,579) (51,071) Cash flows from financing activities: Cash received on debt securities issued 9,432 19,567 Cash payments for distribution of dividends, profits or interest expenses (666) (1,154) Repayment of the principals of debts securities issued (4,895) (21,030) Net cash flows from financing activities 3,871 (2,617) Effect of exchange rate changes on cash and cash equivalents (3,041) (972) Net increase/(decrease) in cash and cash equivalents (34,829) (7,406) Cash and cash equivalents at the beginning of the period 228, ,396 Cash and cash equivalents at the end of the period 194, ,990 Net cash flows from operating activities include: Interest received 62,466 57,669 Interest paid (47,334) (37,176) The Group has adopted International Financial Reporting Standard 9 Financial Instruments (IFRS 9) since 1 January According to the transition requirement under IFRS 9, the entity should re-classify and re-measure (including impairment measurement) its financial instruments on the date of adoption. The difference between the new carrying amount and original carrying amount should be recognized in retained earnings and other reserves on the first adoption day and the comparative period financial information is not required to be restated. Due to the adoption of IFRS 9, the Group s opening retained earnings reduced from RMB124,514 million to RMB96,257 million, and the opening other reserves increased from RMB298,827 million to RMB300,712 million

18 VI. PUBLICATION OF THE FIRST QUARTER REPORT The result announcement will be simultaneously published on the website of the Hong Kong Stock Exchange at as well as the website of the Bank at for the reference of shareholders. The first quarter 2018 report prepared in accordance with China Accounting Standard for Business Enterprises will be available on the website of the Shanghai Stock Exchange at and the website of the Bank. Shanghai, the PRC 27 April 2018 By order of the Board Bank of Communications Co., Ltd. Peng Chun Chairman of the Board of Directors The Directors of the Bank as at the date of this announcement are Mr. Peng Chun, Mr. Wong Tung Shun, Peter*, Ms. Yu Yali, Mr. Hou Weidong, Mr. Wang Taiyin*, Mr. Song Guobin*, Mr. He Zhaobin*, Ms. Wong Pik Kuen, Helen*, Mr. Liu Hanxing*, Mr. Luo Mingde*, Mr. Liu Haoyang*, Mr. Chen Zhiwu #, Mr. Yu Yongshun #, Ms. Li Jian #, Mr. Liu Li #, Mr. Yeung Chi Wai, Jason # and Mr. Woo Chin Wan, Raymond #. * Non-executive Directors # Independent Non-executive Directors