Introduction to Annual Results March 29 th, 2018
Disclaimer This information was prepared by the China Everbright Bank ("CEB" or the Bank"), without being independently verified. This document has not expressed or implied any representation or warranty, and you shall not rely on any forward-looking or outlook type of language contained within. The Bank and any of its affiliates, advisors or representatives will not bear any responsibility for any loss caused in any manner as a result of any information expressed or contained within this document. 1
Table of Contents 1. Financial Results Review 2. Business Development Overview 3. 2018 Outlook 2
Financial Results Summary Balance Sheet Summary (RMB,million) Income Statement Summary (RMB,million) End of 2015 End of 2016 End of 2015 2016 Total Assets 3,167,710 4,020,042 4,088,243 Operating income 93,159 94,037 91,850 Total loans and advances 1,513,543 1,795,278 2,032,056 Net interest income 66,459 65,288 60,950 Total liabilities 2,943,663 3,768,974 3,782,807 Net fee and commission income 26,301 28,112 30,774 Deposits from customers Equity attributable to equity shareholders of the Bank Non-performing loan ratio 1,993,843 2,120,887 2,272,665 223,493 250,455 304,760 1.61% 1.60% 1.59% Operating profit 39,358 40,180 40,646 Net profit 29,577 30,388 31,611 Net profit attributable to equity shareholders of the Bank 29,528 30,329 31,545 Provision coverage ratio 156.39% 152.02% 158.18% ROAA 1.00% 0.85% 0.78% Core tier-1 CAR 9.24% 8.21% 9.56% ROAE 15.50% 13.80% 12.75% Tier-1 CAR 10.15% 9.34% 10.61% Dividend Ratio 30.04% 15.08% 30.12% CAR 11.87% 10.80% 13.49% 3
Table of contents 1. Financial Results Review Balanced and steady asset liability developments Continuously optimized business structure Steadily improved earnings power Well managed asset quality Strengthened capital position 4
Balanced and steady asset liability developments Total Assets(RMB,billion) +13.60% Total Liabilities(RMB,billion) +13.36% 3,167.71 4,020.04 4,088.24 +1.70% 2,943.66 3,768.97 3,782.81 +0.37% 2015 2016 2015 2016 Total Loans(RMB,billion) Total Deposits(RMB,billion) 1,513.54 +15.87% 1,795.28 2,032.06 +13.19% 1,993.84 +6.76% 2,120.89 2,272.67 +7.16% 2015 2016 2015 2016 5
Continuously optimized business structure Asset Structure Liability Structure 55.34% 44.66% 50.30% 49.70% +5.04 ppts 43.73% 56.27% 39.92% 60.08% +3.81 ppts 2016 2016 General Loan Accounts Receivables, Investments and others Deposits From customers Deposits from other Banks and others Loan Structure Deposit Structure 3.13% 1.10% 5.09% 4.02% 36.94% 40.85% +3.91 ppts 39.64% 40.45% +0.81 ppts 59.93% 58.05% 55.27% 55.53% 2016 2016 Corporate Loan Retail Loan Advances Fixed term Deposits Demand Deposits Others 6
Steadily improved earnings power Earnings Structure(RMB,billion) 93.16 94.04 91.85 28.23% 29.89% 33.50% +3.61% ppts 71.77% 70.11% 66.50% 2015 2016 Net interest income and others Net fee and commission income Net Profit(RMB,billion) Net Profit Structure(%) +3.37% 29.58 30.39 31.61 +4.02% 45.43 46.71 27.08 2015 2016 34.54 20.32 25.82 34.25 27.47 38.38 2015 2016 Corporate Bank Retail Bank Capital Markets and others 7
Well managed asset quality 4.39% Non-performing Loan ratio and special mention loan ratio 1.61% 3.78% 1.60% 2.97% 1.59% 2015 2016 Special Mention 1.70% Non-performing 1.68% 1.66% 1.64% 1.62% 1.60% 1.58% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% Provision coverage ratio and loan ratio Provision coverage ratio Loan ratio 156.39% 152.02% 158.18% 2.52% 2.43% 2.52% 2015 2016 150.00% 140.00% 130.00% 120.00% 110.00% 100.00% 90.00% 80.00% 86.57% 30.33% 4.27% 2015 Rate of loan migration 62.17% 26.78% 3.31% 2016 57.69% 22.49% 1.68% Substandard Special mention Normal 15.3 10.3 5.3 0.3 144.30% Loan overdue 90 days over non-performing loan ratio 124.43% 103.40% 2015 2016 8
Strengthened capital position Capital Adequacy Ratio(%) 13.49 11.87 10.15 10.8 10.61 9.24 9.34 9.56 8.21 Multi-channel capital replenishment The Bank seized favorable market conditions 2015 2016 Core Tier-1 CAR Tier-1 CAR CAR Leverage Ratio(%) 6.45% 5.95% +1.01 ppts 5.44% and completed 40 billion RMB Tier 2 capital bond offering, 30 billion RMB A share convertible bond offering and 31 billion H share private placement Multiple Channel capital replenishment effectively gives the bank more flexibility over financing sources, strengthened its capital position and optimize capital structure Develop sound capital management system, implement rigid capital constraints; develop capital light business and elevate leverage ratio 2015 2016 Note:1. The leverage ratio refers to the ratio of the net amount of Tier 1 capital held by a commercial bank that meets the relevant regulations and the adjusted balance of assets on and off the balance sheet held by commercial banks. The CBRC requires commercial banks to have a leverage ratio of no less than 4%. 9
Table of contents 2. Business Development Overview Corporate Banking Business Retail Banking Business Financial Market Business Strengthened brand recognition and increased market influence 10
Corporate Banking Business(1/2) Corporate Deposit Balance 1 (RMB,billion) Corporate Loan Balance(RMB,billion) 1547.81 +7.87% 1658.85 1800.95 +8.57% 917.33 +13.40% 1,075.97 1,179.66 +9.64% 2015 2016 2015 2016 Small and Micro Loan Balance 2 (RMB, billion) +17.80% 400.28 340.97 +17.39% 288.44 2015 2016 Continued Corporate Banking Business Transformation Serve real economy and follow national strategies Support supply side structural reform and control lending to overcapacity sector Optimize corporate deposit structure, lower cost of debt, core corporate deposits increased by 6.37% Strive to develop inclusive finance, small and micro lending client grow to 261.1 thousand Note: 1 Corporate deposits in other deposit included 2 Consistent with classification from Ministry of Industry and Information Technology and regulatory classification from CBRC 11
Corporate Banking Business(2/2) Investment Banking Trade Finance Bond Issuance Bond issuance amounted to 212.4 billion in Market share increased by 1.57 ppts Product Innovation Develop online supply chain finance business platform and cross border e-commerce payment system M&A Financing Completed first MBO project and Free trade zone offshore bank consortium project Platform expansion September 8th,, China Everbright Bank European branch and Luxenberg branch opened for business Officially entered European market ABS Successfully issued GuangYing I and Guangying II loan ABS products, amounted to 19.19 billion RMB Business Development Trade finance intermediate income: realized operating income of 1.70 billion RMB, increased by 17.87% International settlements: realized operating income of 89.65 billion dollars, increased by 28.40% Exchange settlement: realized operating income of 41.92 billion dollars, increased by 33.11% On and off balance sheet trade finance balance as of year end is 293.94 billion, increased by 26.59% 12
Retail Banking Business(1/3) Retail Deposit Balance 1 (RMB,Billion) Retail Loan Balance 2 (RMB,Billion) 446.04 +2.84% 462.04 471.72 +2.09% 352.21 +22.60% 450.81 529.39 +17.43% 2015 2016 2015 2016 Retail Client(0,000s) Private Banking Client(0,000s) 5,926 +14.90% 6,767 7,823 +15.60% 2.43 +12.13% 2.82 3.05 +8.07% 2015 2016 Note: 1 Retail Deposit in other deposit included 2 Credit card loan not included 13 2015 2016
Retail Banking Business (2/3) Accumulated credit card issuance(million) Accumulated credit card transaction(rmb,billion) 28.33 +26.39% 35.96 45.26 +25.86% 1003.45 +29.17% 1,277.39 1,674.23 +31.07% 2015 2016 2015 2016 Credit card outstanding balance(rmb,billion) Credit card operating income(rmb,billion) +31.58% 302.95 +24.39% 28.00 175.00 214.21 +41.42% 18.10 20.64 +35.66% 2015 2016 2015 2016 14
Retail Banking Business (3/3) Cloud Payment Cloud Fee Payment Operating Income(RMB,00s million) Cloud Fee Payment Transaction (00s million) 11.37 5.39 72.54% 7.37 +54.25% 102.84% +134.35% 3.82 1.31 2.30 2015 2016 Y2015 Y2016 Y 3.58 Mobile Banking Transaction (00s million) +35.68% 4.26 Mobile Banking Transaction 6.59 +54.69% Mobile Banking to private E-Bank Transaction (x) 1.21 1.75 3.12 +0.78x Direct bank and mobile bank client (0s thousands) +81.63% Direct Bank +31.35% Mobile Bank 848.79 3535.12 2016 467.32 2691.35 2015 2016 2015 2016 15
Financial Market Business Loans and receivables to total asset Government Debt proportion 16.52% 15.61% 12.59% -3.02 ppts 50.63% 54.18% 64.70% +10.52 ppts 2015 2016 2015 2016 Wealth Management Product balance (RMB,trillion) Asset under custody balance(rmb,trillion) 1.22 1.36 1.11-18.38% 3.37 +24.27% 4.43 5.21 +17.49% 2015 2016 2015 2016 16
Brand recognition and market influence 49th in "Top 1000 World Banks", 44th in "Top 500 Banking Brand The Banker Best Retail Banking Franchise Innovation Award The Asian Banker Asset Management Excellence Award, Best Institutional Wealth Management Brand Shanghai Securities News Best E-Banking Award and Best Direct Banking Award China Financial Certification Center Annual Excellence Innovation Bank, Annual Excellent Cash Management Bank Annual Excellent Financial Brand Innovation Award, Best Financial Innovation Bank of the Year, Best Small and Micro Financial Services Bank of the Year Outstanding Contribution Award Best Family Wealth Management Bank, Best Integrated Financial Management Capability Award, Best Earnings Award, Best Innovation Award, Best Transformation Award, Best Social Contribution Award, Best Wind Control Award Economic Observer Financial News JCB China Banking Association Best E-banking 21st Century Business Review Innovative Wealth Management Bank The most competitive share bank of the year, the best service credit card center of the year Sina.com Ifeng.com Best Bank Wealth Management Brand, Most Development Potential Private Bank 21st Century Business Herald Best Chinese Brand Interbrand China Regional Bank (Industry) Investment Banking Jun Ding Award China Bond Underwriting Bank Jun Ding Award Most Trusted Bank Brand of the Year, Commercial Bank Innovative Product Award (Cloud Payment Platform), Excellent Financial Institution of the Year (Credit Card Center) Best Private Bank of the Year, Excellent Corporate Annuity Management Bank Securities Times Hexun.com Daily Economic News 17
Table of Contents 3. 2018 Outlook Major Management Objectives in 2018 Strategic priorities in 2018 18
2018 Major Management Objectives Sound risk management practices Reinforce capital constraints 2018 Major Management Objectives Improve earnings power Optimize credit structure Lower credit cost 19
Strategic priorities in 2018 (1/3) 1 Deepen comprehensive risk management and firmly guard the bottom line of risk 2 Strengthen asset liability management Adhere to quality first, profit first Optimize the reshaping of the balance sheet to promote the quality and efficiency of on and off balance sheet business Vigorously develop Customer Deposit and strengthen the Asset Quality Adhere to Three Bottom Lines Operation Safety Compliance competitive liability cost Promote the balanced development of deposits and loans, efficiently use credit resources Further optimize capital allocation Improve the net interest margin through refined pricing management Strengthen duration and structure management to prevent liquidity and interest rate risk 20
Strategic priorities in 2018 (2/3) 3 Accelerate the application of fin-tech Accelerate digital transformation 4 Focus on wealth management Realize characteristic and light transition Create a "One Phone, One Bank" lightweight, intelligent service system, and improve service channels Accelerate the incubation of technological innovation businesses, and introduce marketbased operating mechanisms for specialty services such as cloud payment Deepen cooperation with financial technology companies, restructure service models, and comprehensively improve customer acquisition capability Deeply integrate the technological innovation with our unique business model and strengthen the technology application as foundation of business Asset Management Trade Finance Credit Cards Business Wealth Management Bank Construction Investment Banking Agent Business Asset Custody 21
Strategic priorities in 2018 (3/3) 5 Build a firm customer base Improve service quality 6 Improve human resources management Optimize institutional mechanisms Corporate Client With support from Everbright Group, strive to provide "one stop" comprehensive financial services for our customers Accelerate the traditional corporate banking business's transformation into investment banking and transaction banking Improve customer serving ability and efficiency by using financial technology Foster a dynamic environment:promotion and demotion of officials,employee recruitment and dismissal,differentiated compensation Retail Client Build a "finance + living" service system, embed financial services into extensive scenarios, and increase customer acquisition ability Deepen the essence of Sunshine Wealth brand and expand the total amount retail customers' AUM Build talent pools for managerial, businessfocused and operational positions Establish a segmented customer service system, optimize sales process, comprehensively promote transparent service and enhance total customer experience Inter-Bank Client Build inter-bank client relationship management system Draft comprehensive, customized marketing plan Talents attraction, retention, usage and cultivation 22