Banking Newsletter Analysis of China's Major Listed Banks’ Results for the First Quarter of 2015

May 2015

www.pwccn.com

Net income growth of 13 Major Listed Banks slowed by 8.81 ppts YoY to 3%.

Most listed banks saw their profit growth dropped to single-digit in 1Q 2015.

The analysis covers 13 large listed banks that are classified as Large Commercial Banks and Joint-Stock Commercial Banks by the China Banking Regulatory Commission (CBRC). The total assets of these banks by the end of 1Q 2015 accounted for 76.44% of that for China banking sector.

NPL ratio of 13 Major Listed Banks rose by 0.11 ppts to 1.33% by the end of 1Q 2015.

3.00% 1.33%

Editorial Team

Editor-in-Chief：Michael Hu

Deputy Editor-in-Chief：Patrick Zhou

Macro Overview：Jeff Deng

Operating performance: Amanda Li

Financial position: Arthur Zhang

Capital Management: Arthur Zhang

Editorial Team：

Advisory Board：

Raymond Yung, Jimmy Leung, Margarita Ho, Richard Zhu

PwC

Introduction

We are pleased to present our Banking Newsletter (the Newsletter), PwC’s analysis of China’s Listed Banks and the wider industry, which is now in its 23rd edition.

The analysis covers 13 large listed banks (we refer to them as the “Major Listed Banks” hereafter) that are defined by the China Banking Regulatory Commission (CBRC) as following two categories:

Large Commercial Banks (LCBs)

Industrial and Commercial Bank of China Limited (ICBC)

China Construction Bank Corporation (CCB)

Agricultural Bank of China Limited (ABC)

Bank of China Limited (BOC)

Bank of Communications Co. Ltd (BOCOM)

Joint-Stock Commercial Banks (JSCBs)

China Merchants Bank Co., Ltd (CMB)

China Industrial Bank Co., Ltd. (CIB)

Shanghai Pudong Development Bank Co., Limited (SPDB)

China CITIC Bank Corporation Limited (CITIC)

China Minsheng Banking Corporation Limited (CMBC)

China Everbright Bank Company Limited (CEB)

Ping An Bank Co., Ltd (PAB)

Hua Xia Bank Co., Limited (HXB)

The total assets of the Major Listed Banks by the end of 1Q 2015 accounted for 76.44% of the assets of China banking sector. Unless otherwise stated, the information in the newsletter comes from publicly available sources, e.g. listed banks’ annual reports and statistics by regulatory bodies. All figures are prepared under China Accounting Standards (CAS) and expressed in RMB (except for ratios).

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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May 2015

PwC

Table of Contents

Banking Newsletter

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May 2015

1. Macro Overview 5

2. Analysis of Operating Performance 9

3. Analysis of Financial Position 17

4. Analysis of Capital Management 27

5. Appendix 29

PwC

1. Macro overview

• Sluggish growth around the world, with China searching for a bottom

• Investment & consumption slowed while inflation remained mild

• A basket of measures being implemented by the PBoC as money supply growth slowed

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May 2015

PwC

Sluggish growth around the world, with China searching for a bottom

Global economy remained fragile in 1Q 2015. Growth for the US was unexpectedly low on extreme cold weather. On the other hand, both Europe and Japan recorded mild growth as a result of a new wave of quantitative easing (QE). The growth for emerging economies was slower than previous year.

The US dollar continued to appreciate against other major currencies, causing currency depreciation and financial markets volatility in emerging economies.

China recorded a Gross Domestic Product (GDP) growth of 7.00% in 1Q 2015, compared to the same period in 2014. The growth was the lowest since 1Q 2009 (see Graph 1), suggesting the economy is still searching for a bottom in growth.

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Graph 1 China GDP quarterly growth, YoY

1998 Q2, 7.20%

2009 Q1, 6.60%

2015 Q1, 7.00%

0%

2%

4%

6%

8%

10%

12%

14%

16%

Note: The growth covers the period from the beginning of the year to till the end of that

quarter. Eg. the growth of 2013 Q2 covers the peroid of first two quarters in 2013.

Source: National Bureau of Statistics & PwC

PwC

Investment & consumption slowed while inflation remained mild

In terms of industry breakdown, wholesale and retail, as well as transportation, logistics and postal services suffered most significant slowdown in 1Q 2015 as their value added growth was lower than in same period of 2014.

Investments, consumption and net exports slowed in 1 Q 2015, with monthly reading of fixed asset investment, retail sales and industrial production value added growth continued to slip (see Graph 2). Overall trade volume in 1Q 2015 was 6.00% lower than in 1Q 2014, with export remained flat and import decreased by 17.30% YoY.

Price level remained stable in 1Q 2015 as the economic growth was on downward trend. Consumers Price Index (CPI) rose by 1.40% YoY in March 2015, and Producers Price Index (PPI) felt by 4.60% YoY in the same period (see Graph 3). This leaves room for further fiscal and monetary policy manoeuvre.

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Graph 2 FAI, retail sales & IP growth Graph 3 Change of CPI & PPI

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

22%

Industrial production

Fixed asset investment

Source: National Bureau of Statistics & PwC

Retail sales

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

2013.0

1

2013.0

3

2013.0

5

2013.0

7

2013.0

9

2013.1

1

2014.0

1

2014.0

3

2014.0

5

2014.0

7

2014.0

9

2014.1

1

2015.0

1

2015.0

3

CPI PPI

Source: National Bureau of Statistics & PwC Note: January and February data are usually combined to avoid

the seasonal distortion of Chinese New Year.

PwC

A basket of measures being implemented by the PBoC as money supply growth slowed

Banking Newsletter

Money supply growth remained slow in 1Q 2015, with the ratio of M2 to GDP growth slipping further to 1.41 (see Graph 4).

According to the People’s Bank of China (“PBoC” or the “central bank”) in its Monetary policy Report for 2015 Q1, the slower growth of monetary supply was mainly due to the cooling down of banks’ interbank business, as regulatory tightening that targeted at interbank activities and local government financing vehicles (LGFVs) debt reduced the money creation. It is also a reflection of economic restructuring.

The central bank argued that the money creation process in China has been experiencing a structural change, that money creation is mainly reliant on bank loans with an increasing portion of securities investments.

The PBoC has cut benchmark interest rates twice (February and March) in 2015. Since November 2014, the interest rates have been cut three times in the space of six month in an attempt to reduce borrowing costs.

The current one year (and below) benchmark lending rate are as low as historical record (see Graph 5), with one year deposit rate close to record low.

The central bank has also lowered deposit reserve requirement ratio (RRR) twice in February and April 2015, as well as providing liquidity to banks through Standard Lending Facilities (SLF) and Medium-term Lending Facility (MLF).

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May 2015

Graph 4 M2 growth to GDP growth

1.41

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

Source: National Bureau of Statistics, PBoC & PwC

1 year deposit

rate, 2.25%

1 year (or below) lending

rate, 5.10%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

Source: PBoC & PwC

Graph 5 RMB benchmark interest rates

PwC

2. Analysis of Operating Performance • Net profit enters a “single-digit” growth era

• Profitability indicators (ROA & ROE) presented a downward trend

• Income mix presented divergent patterns

• Growth slows for both interest income and fee & commission income

• Net Interest Margin (NIM) narrowed slightly

• Cost controls were generally enhanced

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May 2015

PwC

Net profit enters a “single-digit” growth era

Most banks significantly increased their provisions in 1Q 2015 due to concerns over credit risk in light of the economic downturn. These provisions, coupled with the impact of rate cuts, interest rate liberlisation and disruptions from internet-based financial products and services providers, slowed banks profit growth.

Since 2014, the net profit growth of Major Listed Banks has entered a “single-digit” growth era. This trend was more obvious in 1Q 2015, with an net profit of RMB 349.1 bn, only grew 3.00% YoY. The growth rate was 8.81 ppts lower than that in 1Q 2014.

This trend is more evident for Large Commercial Banks (LCBs), as none of their net profit growth in 1Q 2015 was higher than 2.00%. And four Joint-stock Commercial Banks (JSCBs) in the sample earned less than 5.00% growth.

The further slowdown of net profit growth in 2015 was caused by :

1) Slower growth in banks’ assets as a result of the economic downturn;

2) Net interest margin drop slightly due to PBoC’s asymmetric interest rate cuts; together with the impact of interest rate liberalization and financial disintermediation;

3) Loan impairment charges increased significantly in 1Q2015 as credit asset quality deteriorated and credit risk expanded.

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Table 1 Net profit and growth for the Major Listed Banks

Listed banks Net profit

(in billions)

2015 Q1

growth

2014 Q1

growth

ICBC 74.46 1.36% 6.75%

CCB 67.13 1.83% 10.40%

ABC 54.32 1.49% 13.75%

BOC 47.77 1.21% 13.36%

BCM 19.05 1.57% 5.68%

CMB 17.30 15.61% 14.97%

CIB 14.90 10.81% 21.64%

SPDB 11.31 4.64% 20.75%

CITIC 11.10 1.52% 17.13%

CMBC 13.57 4.93% 14.57%

CEB 8.37 2.35% 2.57%

PAB 5.63 11.38% 40.82%

HXB 4.16 11.42% 26.40%

Total 349.06 3.00% 11.81%

PwC

Profitability indicators (ROA & ROE) presented a downward trend

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Graph 6 Change in profitability indicators for the Major Listed Banks

The key profitability indicators of the Major Listed Banks continued to fall in Q1 2015 as net profit growth slowed.

Having been managing their assets and liabilities proactively, the Major Listed Banks still saw their net interest margin (NIM) narrowed in 1Q 2015 compared with the same period in 2014 (see Graph 10 on page 14), due to the impact of rate cuts, interest rate liberalization and implementation of deposit insurance. Their return on average assets (ROA) was lower than is was in 1Q 2014 (see Graph 6) as net profit growth slower than assets growth.

Return on Equity (ROE) for most banks were also on a downward trend too. Apart from the slower growth in net profit in, this is also due to the fact that the owners’ equity of most banks were strengthened in 1Q 2015via either the adoption of Advanced Approach of capital adequacy ratio, and issuance of preference shares.

ICBC

CCB

ABC

BOC

BOCOM

CMB

CIB

SPDB

CITIC

CMBC

CEB

PAB

HXB

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）

2015 Q1 2014 Q1

ICBC

CCB ABC

BOC

BOCOM

CMB

CIB

SPDB

CITIC

CMBC

CEB

PAB

HXB

15%

17%

19%

21%

23%

25%

27%

Return On Equity（ROE）

2015 Q1 2014 Q1

May 2015

PwC

Income mix presented divergent patterns

The Major Listed Banks recorded an aggregate operating income of RMB 896.6 bn in 1Q 2015, 9.98% more than that in 1Q 2014.

The income mix for the 5 LCBs and the 8 JSCBs presented divergent patterns (see Graph 7).

The proportion of net interest income for the 5 LCBs saw a slight rise, while the proportion of fee and commission income fell due to the impact of stronger regulation in intermediary businesses such as consulting and investment banking businesses. The proportion of other non-interest income showed a slight rise as return on derivative financial instruments, available-for-sale financial instruments, insurance and other non-interest businesses enjoyed a rapid growth.

As for the 8 JSCBs, the proportion of net interest income fell slightly, as the fee and commission income saw a rapid growth due to the increase in the sales of wealth management products, the scale of asset custody and debt instrument underwriting.

The total fee and commission income of the 8 JSCBs amounted to RMB 67.2 bn in 1Q 2015, 36.72% more than that in 1Q 2014. The proportion of non-interest income fell as some banks experienced fair value loss in held for trading assets, foreign exchange swap and foreign exchange forwards due to the market volatility.

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May 2015

Note: other non interest income includes income, investment income, foreign exchange

gains and other income from changes in fair value; the other is insurance, leasing

and business of precious metals 。

Graph 7 Change in income mix, 5 LCB Vs. 8 JSCBs

70.67% 70.54% 71.81% 72.08%

20.24% 21.82% 26.03% 22.92%

9.09% 7.63% 2.16% 4.99%

2015Q1 2014Q1 2015Q1 2014Q1

5 LCBs 8 JSCBs

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

PwC

Growth slows for both interest income and fee & commission income

In 1Q 2015, the growth of interest income and fee and commission income of the Major Listed Banks was lower than that in 1Q 2014. This slowdown was more evident for the 8 JSCBs.

In light of the continued pressure in economic downturn in 1Q 2015, PBoC further reduced the deposit reserve requirement ratio and the benchmark interest rates. At the same time, under the background of interest rate liberalisation and financial disintermediation, most banks’ interest income growth in 1Q 2015 was lower than that in 1Q 2014 (see Graph 8).

In terms of fee and commission income, most banks’ growth in 1Q 2015 was lower than that in 1Q 2014, with BOCOM, CMBC and CEB being the exceptions (see Graph 9).

The higher growth of fee and commission income of BOCOM, CMBC and CEB were mainly owed to the growth in their custodian, asset management, bank card, agent, credit card and consultancy business.

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May 2015

Graph 8 Change in interest income growth Graph 9 Change in intermediary business growth

ICBC

CCB

ABC

BOC

BOCOM

CMB

CIB

SPDB

CITIC

CMBC

CEB

PAB

HXB 0%

5%

10%

15%

20%

25%

30%

35%

40%

2015 Q1 2014 Q1

ICBC

CCB

ABC BOC

BOCOM

CMB

CIB

SPDB

CITIC

CMBC

CEB PAB

HXB

-20%

0%

20%

40%

60%

80%

100%

2015 Q1 2014 Q1

PwC

Net Interest Margin (NIM) narrowed slightly

In 1Q 2015, of the seven listed banks that disclosed their NIM, CMB and PAB saw a expansion. But the NIM of CCB, BOC, BOCOM, CITIC and CMBC all narrowed compared with that in 1Q 2014 (see Graph 10).

In 1Q 2015, in the light of PBoC’s asymmetric interest rate cuts, continued implement of interest rate liberalization, the expansion of the floating range of deposit rates, and the challenge from internet-based products and services providers and financial disintermediation, the NIM of Major Listed Banks generally narrowed.

In response, the Major Listed Banks actively adjusted the structure of their interest-bearing assets to enhance asset profitability. However, since PBoC provided the liquidity to interbank market by continuously lowered the reserve requirement ratio and repurchase rate, costs of interbank borrowings were dropped. Most Major Listed Banks only show a slight decline in their NIM, with CMB and PAB saw a rise.

Banking Newsletter May 2015

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Graph 10 Change in net interest margin

Note: NIMs of 2015 Q1 were not released by ICBC, ABC, SPDB, CIB, CEB and HXB.

CCB

BOC BOCOM

CMB

CITIC

CMBC

PAB

2.0%

2.1%

2.2%

2.3%

2.4%

2.5%

2.6%

2.7%

2.8%

2.9%

3.0%

2015 Q1 2014 Q1

PwC 15

May 2015

Cost controls were generally enhanced

In 1Q 2015, Major Listed Banks continued to strengthen their cost control, with 11 banks’ cost to income ratio going down (see Graph 11), representing an average cost-income ratio of 26%, down by 2 ppts on a YoY basis.

Facing the pressure of assets quality and the fall in NIM, most banks tried to enhance their cost control through standardising expenses and payroll controls, to keep expenses growth in line with income growth.

Graph 11 Changes of cost to income ratios

ICBC CCB

ABC

BOC

BOCOM

CMB

CIB

SPDB

CITIC

CMBC CEB

PAB

HXB

18%

20%

22%

24%

26%

28%

30%

32%

34%

36%

38%

40%

2015 Q1 2014 Q1

Banking Newsletter

银行业快讯

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2013年9月

PwC

3. Analysis of Financial Position • Asset growth continued to slow

• Loan growth slowed while investments rose in proportion

• NPL figures increase further as credit risk exposure accelerated

• Provision levels continue to drop as credit risks rise

• High growth in investments

• Investments classified as receivables rose in proportion

• Slight change in liability structure as overall growth slowed

• Loan growth slowed as a result of weak deposit growth

Banking Newsletter

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May 2015

PwC

Assets growth continued to slow

Banking Newsletter

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May 2015

Graph 12 Total asset growth, 5 LCBs vs 8 JSCBs

Total assets of the Major Listed Bank expanded to RMB 107.48 tn at the end of 1Q 2015, increased by 4.23% compared to the end of 2014. The growth was 1.17 ppts lower than it was in 1Q 2014.

Total assets of the 5 LCBs amounted to RMB 78.36 tn at the end of 1Q 2015, increased by 4.69% in compared to the end of 2014. The growth was slower than that in 1Q 2014 and 1Q 2013 (see Graph 12).

Total assets of the 8 JSCBs amounted to RMB 29.12 tn at the end of 1Q 2015, increased by 3.04% compared to the end of 2014. The growth was 2.76 ppts slower than that in 1Q 2014.

Over the past several years, total asset growth of Major Listed Banks showed a downward trend with volatility. This was due to those banks have been transforming themselves to a lighter asset structure, from deposit taking and loan making to a diversified business model that focus on credit management by offering more extensive services, such as wealth management, private banking, and investment banking, etc.

5.53% 5.24%

4.69%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

-10

0

10

20

30

40

50

60

70

80

Total assets QoQ growth

In trillions QoQ growth 5 LCBs

5.58% 5.80%

3.04%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

-10

-5

0

5

10

15

20

25

30

35

40

Total Assets QoQ growth

QoQ growth In trillions 8 JSCBs

PwC

Loan growth slowed while investments rose in proportion

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May 2015

At the end of 1Q 2015, 5 LCBs’ asset structure remained relatively stable (see Graph 13), with the proportion of loans falling and interbank assets rising slightly.

As for the 8 JSCBs, interbank assets dropped by 1.66 ppts in proportion in 1Q 2015, due to tightening regulations. To make up for the cost rise in liabilities caused by interest rate liberalisation, those banks increased investments, making its proportion rise by 2.03 ppts.

At the end of 1Q 2015, the Major Listed Banks’ loan balance reached RMB 56.01 tn, up 3.89% from the end of 2014. The growth slowed compared to 1Q 2014 (see Graph 14).

The decline in loan growth for ICBC, BOC, CMB and CITIC was evident. Yet for BOCOM, CIB and PAB, loan growth was apparently higher than that in 1Q 2014 (see Graph 15).

Graph 13 Change in asset mix, 5 LCBs vs 8 JSCBs

52.13% 52.61% 46.83% 46.26%

20.67% 20.86% 25.90% 23.87%

16.23% 16.31% 11.58% 12.79%

7.47% 6.93% 12.25% 13.91%

3.50% 3.29% 3.44% 3.17%

2015.3.31 2014.12.31 2015.3.31 2014.12.31

5 LCBs 8 JSCBs

Others Interbank assets

Cash&deposits with central banks Investments

Loans

5.43% 4.64%

3.89%

0%

1%

2%

3%

4%

5%

6%

0

10

20

30

40

50

60

Loan balance QoQ growth

In trillions QoQ growth

ICBC

CCB ABC

BOC

BOCOM

CMB

CIB

SPDB

CITIC

CMBC

CEB

PAB

HXB

0%

2%

4%

6%

8%

10%

12%

2015.3.31 2014.12.31

Graph 14 Loan growth for Major Listed Banks Graph 15 Change in loan growth

PwC

NPL figures increase further as credit risk exposure accelerated

The Major Listed Banks’ credit asset quality continued to deteriorate in 1Q 2015, with non-performing loan (NPL) balance increasing and NPL ratios on the rise. The NPL balance for the 5 LCBs amounted to RMB 747.79 bn, increased by 13.49% compared to the year end of 2014.

NPL ratios for the Major Listed Banks rose to 1.33% in 1Q 2015, up by 0.11 ppts compared to the end of 2014. The NPL ratios for the 5 LCBs and the 8 LJSCBs were 1.39% and 1.23%, respectively.

NPL ratios on the rise was due to: the slowdown of macro economy, falling price in property markets, the poor operation conditions of small and medium-sized enterprises (SMEs), and the overcapacity in some industries. To help disposing NPL assets regulatory bodies have been exploring the possibility of securitization.

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Graph 17 Change in NPL balance, 5 LCBs vs 8 JSCBs

Graph 16 Changes in NPL ratio

ICBC

CCB

ABC

BOC

BOCOM

CMB

CIB

SPDB

CITIC

CMBC

CEB

PAB

HXB

0.8%

1.0%

1.2%

1.4%

1.6%

1.8%

2015.3.31 2014.12.31

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

0

20

40

60

80

100

120

140

160

5 LCBs

2015.3.31 2014.12.31 QoQ growth

In billion QoQ growth

0%

5%

10%

15%

20%

25%

30%

0

5

10

15

20

25

30

35

8 JSCBs

2015.3.31 2014.12.31 QoQ growth

In billion QoQ growth

PwC

Provision levels continue to drop as credit risks rise

As the asset quality of Major Listed Banks deteriorates, more pressure fall upon their provision level. At of the end of 1Q 2015, the average provision coverage ratio of the Major Listed Banks was 204.86%, down by 16.47 ppts compared to the end of 2014. The ratio for 5 LCBs dropped by 19.50 ppts, while 8 JSCBs’ dropped by 6.40 ppts. With the increase of NPL it is expected that the ratio will continue to fall in future.

Loan loss reserve (LLR) to total loans, a ratio that measures bank’s readiness to deal with NPLs was 2.73% for the Major Listed Banks in 1Q 2015, a 0.02 ppts rise compared to the end of 2014. The ratio for the 5 LCBs was 2.80%, broadly remained unchanged; and for the 8 JSCBs was 2.53%, up 0.10 ppts compared to the end of 2014.

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May 2015

Graph 20 LLR/total loan ratio Graph 19 Provision coverage ratio

Graph 18 Changes in provision coverage ratio

180%

207%

268%

167%

173%

224%

227% 245%

184%

181% 181%

173%

227%

0%

50%

100%

150%

200%

250%

300%

2015.3.31 2014.12.31

2.3%

2.7%

4.4%

2.2%

2.3%

2.8% 2.8%

2.9%

2.5% 2.2%

2.1% 2.0%

2.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

2015.3.31 2014.12.31

0%

50%

100%

150%

200%

250%

300%

350%

5 LCBs 8 JSCBs

PwC

High growth in investments

At the end of 1Q 2015, the balance of investments for the Major Listed Banks amounted to RMB 23.73 tn, an increase of RMB 1.38 tn or 6.18% compared to the end of 2014. The growth in 1Q 2015 was 3 ppts higher than it was in 1Q 2014. Receivables increased by RMB 691.98 bn or 12.98%.

The investments for the 5 LCBs at the end of 1Q 2015 amounted to RMB 16.19 tn, an increase of 3.76% compared to the end of 2014.

The investments for the 8 JSCBs in 1Q 2015 increased by RMB 79 mn to RMB 7.54 tn, a growth of 11.79%.

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May 2015

Note：Investment includes the financial assets at fair value

through profit or loss, available-for-sale assets, held-to-maturity

assets and debt instruments classified as receivables.

Graph 22 Comparison of the investment assets of Major Listed Banks

ICBC

CCB

ABC

BOC

BOCOM

CMB

CIB

SPDB

CITIC

CMBC

CEB

PAB

HXB

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

2015.3.31 2014.12.31

0%

1%

2%

3%

4%

5%

6%

7%

8%

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

2015.3.31 2014.12.31 QoQ growth

In trillions 5 LCBs QoQ growth

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

40%

(0.4)

(0.2)

-

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

2015.3.31 2014.12.31 QoQ growth

In trillions 8 JSCBs QoQ growth

Graph 21 Comparison of investment growth

PwC

Investments classified as receivables rose in proportion

Banking Newsletter

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7.82%

9.35%

8.91%

7.33%

11.60%

10.57%

9.09%

10.58%

26.80%

27.38%

24.84%

23.96%

25.95%

26.43%

27.70%

28.85%

18.06%

17.14%

57.90%

55.29%

61.67%

64.25%

47.85%

48.70%

52.55%

50.98%

54.65%

51.75%

7.48%

7.98%

4.58%

4.46%

14.60%

14.30%

15.89%

16.30%

18.20%

20.53%

2014.12.31

2015.03.31

2014.12.31

2015.03.31

2014.12.31

2015.03.31

2014.12.31

2015.03.31

2014.12.31

2015.03.31

Held for trading Available for sale Held to maturity Receivables

ICBC

CCB

ABC

BOC

BOCOM

5 LCBs

28.22%

26.38%

30.03%

28.09%

17.72%

17.96%

19.60%

17.55%

26.70%

24.28%

23.54%

24.26%

15.48%

18.19%

26.29%

23.59%

14.56%

12.83%

9.71%

10.74%

16.66%

12.96%

29.56%

29.25%

18.98%

16.99%

43.18%

44.26%

33.24%

36.90%

41.42%

46.49%

52.14%

56.55%

69.95%

67.19%

61.16%

66.14%

39.19%

41.33%

56.74%

57.86%

51.15%

47.56%

49.07%

42.86%

2014.12.31

2015.03.31

2014.12.31

2015.03.31

2014.12.31

2015.03.31

2014.12.31

2015.03.31

2014.12.31

2015.03.31

2014.12.31

2015.03.31

2014.12.31

2015.03.31

2014.12.31

2015.03.31

CMB

CIB

SPDB

CITIC

CMBC

CEB

PAB

HXB

8 JSCBs

May 2015

Graph 23 Change in composition of investment securities The proportion of investments for the 5 LCBs at the end of 1Q 2015 remained stable compared to that at the end of 2014. Held to maturity investments were still the main type for all 5 LCBs, most of which taking up over 50% of the portfolio.

The balance of receivables investments of the 5 LCBs at the end of 1Q 2015 was RMB 1.79 trn, an increase of 7.48% compared to the end of 2014.

Receivables investments took up the largest percentage of all investments for the 8 JSCBs and enjoyed a fast growth by proportion. The proportion of receivables investments rose from 54.31% at the end of 2014 to 56.10% at the end of 1Q 2015.

The total increase in amounts of receivables investments of the 8 LJSCBs was RMB 567.35 bn, an increase of 15.49% compared to that at the end of 2014.

PwC

Slight change in liability structure as overall growth slowed

At the end of 1Q 2015, the total liabilities of Major Listed Banks were RMB 99.78 tn, an increase of 4.08% compared to the end of 2014. The 5 LCBs saw an increase of 4.55% compared to the end of 2014, and the 8 LJSCBs an increase of 2.85%, showing a continued decline in growth compared to 1Q 2014 (see Graph 25).

The liability structure for the 5 LCBs were relatively stable (see Graph 24). On the other hand, the 8 LJSCBs saw evident changes in liability structures, with deposits dropping proportion and interbank liabilities and bonds payables rising.

Banking Newsletter

24

May 2015

Graph 25 Liabilities growth, LCB vs JSCBs

Graph 24 Change in liabilities mix

Note: Others include financial liabilities at fair value through profit

or loss, derivative financial liabilities.

80.79% 80.59% 68.13% 68.96%

12.09% 12.15% 25.05% 24.66%

1.99% 2.08% 4.13% 3.23%

5.13% 5.18% 2.69% 3.15%

2015.3.31 2014.12.31 2015.3.31 2014.12.31

5 LCBs 8 JSCBsOthersBonds payableInter-bank liabilities & borrowings from central bankDeposits

5.50% 5.17%

4.55%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

-10

0

10

20

30

40

50

60

70

80

Total Liabilities QoQ growth

In trillion QoQ growth 5 LCBs

5.59% 5.70%

2.85%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

-10

-5

0

5

10

15

20

25

30

Total Liabilities QoQ growth

QoQ growth 8 JSCBs In trillion

PwC

Loan growth slowed as a result of weak deposit growth

Banking Newsletter

25

Due to the impact of interest rate liberalisation, emergence of internet-based financial products and services providers and a strong stock market, the growth rate of deposits of Major Listed Banks continued to slow, which caused the loan growth slowed accordingly.

Based on the official reply of the State Council to The Opinion on the Key Tasks of Deepening the Reform of Economic System in 2015 issued by The National Development and Reform Commission (NDRC), regulators will promote the reform of interest rate liberalisation, allowing the issuance of certificates of deposit to institutions and individuals when the time is appropriate. Regulators will also promote credit asset securitisation and develop the bond market, increasing the proportion of direct finance.

Graph 27 Change in deposit growth Graph 28 Change in loan-to-deposit ratios

Graph26 Comparison of Loan and Deposits

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

-30

-20

-10

0

10

20

30

40

50

60

70

80

Deposits balance Loan growth

Deposits growth

In trillions QoQ growth

ICBC

CCB

ABC

BOC

BOCOM

CMB

CIB

SPDB

CITIC

CMBC

CEB

PAB

HXB -5%

-3%

-1%

1%

3%

5%

7%

9%

11%

13%

15%

2015.3.31 2014.12.31

ICBC

CCB

ABC

BOC

BOCOM

CMB

CIB

SPDB

CITIC

CMBC

CEB

PAB

HXB

60%

63%

66%

69%

72%

75%

2015.3.31 2014.12.31

Note: CMB, CIB,CITIC, CMBC and CEB didn’t disclose 2015 1Q

L/D ratios.

May 2015

银行业快讯

26

2014年4月

PwC

4. Analysis of Capital Management

• Capital adequacy ratio (CAR) further improved for most banks

Banking Newsletter

27

May 2015

PwC

In April 2014, the CBRC gave the green light for the implementation of the Advanced Approach of Capital Management (the “advanced approach”) to ICBC, CCB, ABC, BOC,BOCOM and CMB.

During the parallel period, those banks are supposed to comply with both the advanced approach and the regulatory requirements of other approaches (those adopted for the period ended 31 December 2013), and meet the minimum capital requirements.

Most of Major Listed Banks at 1Q 2015 saw a steady rise in CAR compared to the end of 2014 (see Graph 29), with five of which saw a slight decline.

Along with the promotion of credit asset securitisation by the regulators, banks’ risk weighted assets will further decrease. The issuance of other new capital instruments such as preference share will effectively increase their capital base.

Note: ICBC, CCB, ABC, BOC, BOCOM and CMB’s were

calculated under the advanced approach.

Graph 29 Capital adequacy ratios

Capital adequacy ratio (CAR) further improved for most banks

Graph 30 CET 1 capital adequacy ratio

Banking Newsletter

28

ICBC

CCB

ABC

BOC

BOCOM

CMB

CIB

SPDB

CITIC

CMBC

CEB

PAB

HXB

9%

10%

11%

12%

13%

14%

15%

16%

2014.12.31 2015.3.31

ICBC

CCB

ABC

BOC

BOCOM

CMB

CIB

SPDB

CITIC

CMBC

CEB

PAB

HXB

8%

9%

10%

11%

12%

13%

2015.3.31 2014.12.31

May 2015

PwC

4. Appendix

• Financial highlights

• Banking and Capital Markets Contacts

• PwC Offices in China

Banking Newsletter

29

May 2015

PwC 银行业快讯

30

2014年4月

PwC

Financial highlights (I)

Banking Newsletter

31

May 2015

Large Commercial Banks (In RMB millions)

Operating Performance in 1Q 2015 ICBC CCB ABC BOC BOCOM 5 LCBs Total

Operating income 181,164 162,367 139,443 121,440 49,405 653,819

Net interest income 125,283 111,300 109,442 81,000 35,002 462,027

Non-interest income 55,881 51,067 30,001 40,440 14,403 191,792

Net fee & commission income 37,210 33,928 26,978 24,355 9,875 132,346

Other non-interest income 18,671 17,139 3,023 16,085 4,528 59,446

Operating expenses (84,775) (75,860) (70,408) (59,213) (24,933) (315,189)

Business tax and surcharges (10,780) (9,289) (7,655) (6,804) (3,526) (38,054)

Business & administration expenses (37,973) (32,714) (40,227) (29,106) (11,892) (151,912)

Allowance for impairment losses (20,748) (20,005) (20,088) (13,784) (5,923) (80,548)

Other business expenses (15,274) (13,852) (2,438) (9,519) (3,592) (44,675)

Operating profit 96,389 86,507 69,035 62,227 24,472 338,630

Profit before tax 97,019 87,152 70,200 62,459 24,611 341,441

Income tax expense (22,562) (20,023) (15,881) (14,690) (5,558) (78,714)

Net profit 74,457 67,129 54,319 47,769 19,053 262,727

Non-controlling interests 133 124 203 1,931 83 2,474

Profit attributable to shareholders 74,324 67,005 54,116 45,838 18,970 260,253

Financial Position,

as of 31 March 2015 ICBC CCB ABC BOC BOCOM 5 LCBs Total

Total assets 21,396,633 17,475,900 16,836,530 16,019,205 6,627,239 78,355,507

Loans and advances, net 11,057,257 9,548,449 8,121,509 8,607,317 3,511,678 40,846,210

Loans and advances 11,319,842 9,812,211 8,496,671 8,802,394 3,592,651 42,023,769

Less: Allowance for impairment losses 262,585 263,762 375,162 195,077 80,973 1,177,559

Investments 4,602,939 3,752,623 3,714,988 2,875,396 1,251,035 16,196,981

Interbank assets 1,443,628 987,791 1,564,646 1,251,130 603,035 5,850,230

Cash & deposits with central bank 3,537,667 2,735,295 2,972,174 2,530,394 942,249 12,717,779

Others assets 755,142 451,742 463,213 754,968 319,242 2,744,307

Total liabilities 19,775,373 16,159,637 15,711,010 14,747,163 6,134,400 72,527,583

Deposits from customers 15,848,171 13,666,492 13,234,003 11,555,978 4,295,213 58,599,857

Interbank liabilities 2,214,315 1,228,496 1,274,371 1,872,377 1,339,819 7,929,378

Debt securities issued 280,771 436,259 329,670 263,016 133,403 1,443,119

Due to central bank 333 150,144 100,110 462,697 123,891 837,175

Other liabilities 1,431,783 678,246 772,856 593,095 242,074 3,718,054

Total owners’ equity 1,621,260 1,316,263 1,125,520 1,272,042 492,839 5,827,924

Non-controlling interests 9,932 10,404 1,848 44,533 2,921 69,638

Total equity attributable to equity

shareholders 1,611,328 1,305,859 1,123,672 1,227,509 489,918 5,758,286

PwC

Financial highlights (II)

Banking Newsletter

32

Operating Performance in 1Q 2015 CMB CIB SPDB CITIC CMBC CEB PAB HXB 8 JSCBs

Operating income 50,747 34,207 32,991 32,992 36,030 22,263 20,671 12,876 242,777

Net interest income 33,389 26,976 24,679 24,053 23,152 15,574 15,144 11,368 174,335

Non-interest income 17,358 7,231 8,312 8,939 12,878 6,689 5,527 1,508 68,442

Net fee & commission income 15,633 6,583 6,932 8,184 12,026 6,653 5,387 1,801 63,199

Other non-interest income 1,725 648 1,380 755 852 36 140 (293) 5,243

Operating expenses (28,146) (15,077) (18,305) (18,347) (18,190) (11,248) (13,224) (7,349) (129,886)

Business tax and surcharges (3,075) (2,748) (2,274) (2,478) (2,446) (1,759) (1,572) (998) (17,350)

Business & administration expenses (12,252) (6,539) (6,484) (9,350) (9,126) (5,472) (6,901) (4,918) (61,042)

Allowance for impairment losses (12,744) (5,569) (9,313) (6,519) (6,376) (3,991) (4,751) (1,429) (50,692)

Other business expenses (75) (221) (234) - (242) (26) - (4) (802)

Operating profit 22,601 19,130 14,686 14,645 17,840 11,015 7,447 5,527 112,891

Profit before tax 22,696 19,208 14,794 14,637 17,882 11,019 7,437 5,540 113,213

Income tax expense (5,393) (4,308) (3,485) (3,540) (4,315) (2,647) (1,808) (1,384) (26,880)

Net profit 17,303 14,900 11,309 11,097 13,567 8,372 5,629 4,156 86,333

Non-controlling interests 83 110 115 169 190 14 - 20 701

Profit attributable to shareholders 17,220 14,790 11,194 10,928 13,377 8,358 5,629 4,136 85,632

Financial Position,

as of 31 March 2015 CMB CIB SPDB CITIC CMBC CEB PAB HXB JSCBs

Total assets 4,908,944 4,513,036 4,255,333 4,430,215 4,016,757 2,868,543 2,304,775 1,821,084 29,118,687

Loans and advances, net 2,549,815 1,631,456 2,024,135 2,188,398 1,845,094 1,342,469 1,101,313 954,101 13,636,781

Loans and advances 2,622,736 1,678,810 2,084,305 2,244,011 1,886,693 1,371,835 1,124,168 978,564 13,991,122

Less: Allowance for impairment

losses 72,921 47,354 60,170 55,613 41,599 29,366 22,855 24,463 354,341

Investments 1,130,175 1,542,175 1,276,371 1,379,740 636,892 664,969 522,129 388,610 7,541,061

Interbank assets 496,207 729,243 335,702 249,612 854,246 440,182 296,976 164,100 3,566,268

Cash & deposits with central

bank 603,391 439,272 491,813 504,931 434,614 347,905 266,705 284,119 3,372,750

Others assets 129,356 170,890 127,312 107,534 245,911 73,018 117,652 30,154 1,001,827

Total liabilities 4,576,829 4,236,675 3,966,609 4,151,466 3,754,979 2,680,474 2,168,071 1,715,075 27,250,178

Deposits from customers 3,332,170 2,406,187 2,787,412 2,904,331 2,449,141 1,840,453 1,578,437 1,265,842 18,563,973

Interbank liabilities 905,328 1,425,220 858,497 950,092 870,344 612,148 449,738 364,267 6,435,634

Debt securities issued 161,569 244,736 180,900 161,237 147,984 130,918 77,921 20,785 1,126,050

Due to central bank 32,500 70,000 60,736 55,050 106,679 35,040 4,086 27,530 391,621

Other liabilities 145,262 90,532 79,064 80,756 180,831 61,915 57,889 36,651 732,900

Total owners’ equity 332,115 276,361 288,724 278,749 261,778 188,069 136,704 106,009 1,868,509

Non-controlling interests 800 3,345 3,230 7,937 7,699 522 - 661 24,194

Total equity attributable to

equity shareholders 331,315 273,016 285,494 270,812 254,079 187,547 136,704 105,348 1,707,611

May 2015

Joint-stock Commercial Banks (In RMB millions)

PwC

Financial highlights (III)

Banking Newsletter

33

Financial Ratios for the first quarter of 2015 ICBC CCB ABC BOC BOCOM

Profitability

Return on average total assets (ROA) 1.42% 1.57% 1.32% 1.22% 1.18%

Return on weighted average equity (ROE) 19.35% 21.03% 21.28% 16.93% 15.79%

Net Interest Spread (NIS) No Data No Data No Data No Data 2.11%

Net Interest Margin (NIM) No Data 2.72% No Data 2.22% 2.29%

Cost to income ratio 20.96% 22.03% 28.85% 23.97% 24.48%

Income Mix

Net interest income 69.15% 68.55% 78.49% 66.70% 70.85%%

Non-interest income 30.85% 31.45% 21.51% 33.30% 29.15%

Fee and commission income 20.54% 20.90% 19.35% 20.06% 19.99%

Asset Quality

Non performing loan (NPL) balance, in millions 145,548 127,277 139,962 116,777 46,843

NPL ratio 1.29% 1.30% 1.65% 1.33% 1.30%

Allowance to total loans ratio 2.32% 2.69% 4.42% 2.22% 2.25%

Provision coverage ratio 180.41% 207.23% 268.05% 167.05% 172.86%

Capital Adequacy

Common Equity Tier 1 capital adequacy ratio 12.24% 12.51% 9.38% 10.87% 11.21%

Tier 1 capital adequacy ratio 12.51% 12.51% 10.10% 11.85% 11.21%

Capital adequacy ratio 14.41% 14.97% 13.25% 14.13% 13.56%

Total equity to total assets ratio 7.58% 7.53% 6.68% 7.94% 7.44%

Risk-weighted assets to total assets ratio No Data No Data 65.70% No Data 65.74%

Financial Ratios for the first quarter of 2015 CMB CIB SPDB CITIC CMBC CEB PAB HXB

Profitability

Return on average assets (ROA) 1.44% 1.34% 1.08% 1.05% 1.35% 1.19% 1.00% 0.91%

Return on weighted average equity (ROE) 21.33% 23.44% 17.88% 16.71% 21.64% 18.24% 15.83% 16.00%

Net Interest Spread (NIS) 2.72% No Data No Data No Data No Data No Data 2.57% No Data

Net Interest Margin (NIM) 2.90% No Data No Data 2.32% 2.37% No Data 2.73% No Data

Cost to income ratio 24.14% 19.76% 19.65% 28.34% 25.33% 24.58% 33.38% 38.20%

Income Mix

Net interest income 65.80% 78.86% 74.81% 72.91% 64.26% 69.95% 73.26% 88.29%

Non-interest income 34.20% 21.14% 25.19% 27.09% 35.74% 30.05% 26.74% 11.71%

Fee and commission income 30.81% 19.24% 21.01% 24.81% 33.38% 29.88% 26.06% 13.99%

Asset Quality

Non performing loan (NPL) balance, in millions 32,587 20,833 24,513 30,228 23,036 16,193 13,198 10,796

NPL ratio 1.24% 1.24% 1.18% 1.35% 1.22% 1.18% 1.17% 1.10%

Allowance to total loans ratio 2.78% 2.82% 2.89% 2.48% 2.20% 2.14% 2.03% 2.50%

Provision coverage ratio 223.77% 227.30% 245.46% 183.98% 180.58% 181.35% 173.17% 226.59%

Capital Adequacy

Common Equity Tier 1 capital adequacy ratio 10.59% 8.65% 8.56% 8.95% 8.80% 9.43% 8.53% 8.57%

Tier 1 capital adequacy ratio 10.59% 9.08% 9.58% 9.01% 8.82% 9.43% 8.53% 8.57%

Capital adequacy ratio 12.45% 11.31% 11.62% 12.16% 10.81% 11.26% 10.56% 10.82%

Total equity to total assets ratio 6.77% 6.12% 6.78% 6.29% 6.52% 6.56% 5.93% 5.82%

Risk-weighted assets to total assets ratio 61.43% 66.82% 69.15% 69.06% No Data 68.71% 63.61% 67.86%

May 2015

Large Commercial Banks

Joint-stock Commercial Banks

PwC

Banking and Capital Markets Contacts

34

Banking Newsletter

Assurance Advisory Tax

Raymond Yung – Beijing Matthew Phillips – Hong Kong Florence Yip – Hong Kong

Tel: +86 (10) 6533 2121 Tel: +852 2289 2303 Tel：+852 2289 1833

raymond.yung@cn.pwc.com matthew.phillips@hk.pwc.com florence.kf.yip@hk.pwc.com

Margarita Ho – Beijing James Chang – Beijing Matthew Wong – Shanghai

Tel: +86 (10) 6533 2368 Tel: +86 (10) 6533 2755 Tel: +86 (21) 2323 3052

margarita.ho@cn.pwc.com james.chang@cn.pwc.com matthew.mf.wong@cn.pwc.com

Jimmy Leung – Shanghai Chris Chan – Hong Kong Danny Yiu – Beijing

Tel: +86 (21) 2323 3355 Tel：+852 2289 2824 Tel：+86 (10) 6533 2787

jimmy.leung@cn.pwc.com chris.st.chan@hk.pwc.com danny.yiu@cn.pwc.com

Richard Zhu – Beijing Addison Everett – Beijing Oliver Kang – Beijing

Tel: +86 (10) 6533 2236 Tel: +86 (10) 6533 2345 Tel：+86 (10) 6533 3012

richard.y.zhu@cn.pwc.com addison.l.everett@cn.pwc.com oliver.j.kang@cn.pwc.com

Michael Hu －Shanghai William Yung – Shanghai Assurance – Risk & Quality

Tel: +86 (21) 2323 2718 Tel：+86 (21) 2323 1984

michael.l.hu@cn.pwc.com william.sw.yung@cn.pwc.com Tracy Chen – Shanghai

Tel: +86 (21) 2323 3070

Charles Chow – Shenzhen William Gee – Beijing tracy.yh.chen@cn.pwc.com

Tel: +86 (755) 8261 8988 Tel：+86 (10) 6533 2269

charles.s.chow@cn.pwc.com william.gee@cn.pwc.com Nigel Dealy – Hong Kong

Tel: +852 2289 1221

Shirley Yeung – Guangzhou nigel.dd.dealy@hk.pwc.com

Tel：+86 (20) 3819 2218

shirley.yeung@cn.pwc.com

May 2015

PwC

PwC Offices in China

35

Banking Newsletter

Beijing Shanghai Hong Kong 26/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 Tianjin 34/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 Hangzhou 8F 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 Xiamen Room 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 Centre 7/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 Shenyang 29/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 2015

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

consultation with professional advisors.

© 2015 PricewaterhouseCoopers Zhong Tian LLP. All rights reserved. PwC refers to the China member

firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please

see www.pwc.com/structure for further details.

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