Stock Code: 1398

2021 Annual Report

2021
Annual Report

中國北京市西城區復興門內大街55號 郵編：100140
55 Fuxingmennei Avenue, Xicheng District, Beijing, China Post Code: 100140
www.icbc.com.cn, www.icbc-ltd.com
 Company Profile

Industrial and Commercial Bank of China was The Bank always keeps in mind its underlying mission
established on 1 January 1984. On 28 October 2005, of serving the real economy with its principal business,
the Bank was wholly restructured to a joint-stock and along with the real economy it prospers, suffers
limited company. On 27 October 2006, the Bank was and grows. Taking a risk-based approach and never
successfully listed on both Shanghai Stock Exchange overstepping the bottom line, it constantly enhances its
and The Stock Exchange of Hong Kong Limited. capability of controlling and mitigating risks. Besides,
the Bank remains steadfast in understanding and
Through its continuous endeavor and stable
following the business rules of commercial banks to
development, the Bank has developed into the
strive to be a century-old bank. It also stays committed
leading bank in the world, possessing an excellent
to seeking progress with innovation while maintaining
customer base, a diversified business structure, strong
stability, continuously enhances the key development
innovation capabilities and market competitiveness.
strategies, actively develops the FinTech and accelerates
The Bank regards service as the very foundation to
the digital transformation. The Bank unswervingly
seek further development and adheres to creating
delivers specialized services, and pioneers a specialized
value through services while providing a comprehensive
business model, thus making it “a craftsman in large
range of financial products and services to over 9.691
banking”.
million corporate customers and 704 million personal
customers. The Bank has been consciously integrating The Bank was ranked the 1st place among the Top
the social responsibilities with its development strategy 1000 World Banks by The Banker, the 1st place in the
and operation and management activities, and gaining Global 2000 by Forbes, and the 1st place in the list of
wide recognition in the aspects of supporting pandemic commercial banks of the Global 500 in Fortune for the
containment, promoting inclusive finance, backing ninth consecutive year, and took the 1st place among
rural revitalization, developing green finance and the Top 500 Banking Brands of Brand Finance for the
participating in public welfare undertakings. sixth consecutive year.
 Strategic Objective:
Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, ICBC will adhere to the general
principle of pursuing progress while ensuring stability, apply the new development philosophy, modernize its governance
system and capacity, and turn ICBC into a world-class and modern financial enterprise with global competitiveness.

Strategic Significance:

Adhere to the guidance of ICBC upholds the Party’s leadership over the financial work,
the Party building theory and and strives to improve the scientific decision-making as
exercising rigorous corporate well as the effectiveness of corporate governance through
governance: enhanced governance system and capacity building.

ICBC remains steadfast in serving the real economy and

Adhere to putting the customer commits to satisfying people’s new expectations and
first and serving the real demands for financial services, making every effort to build
economy: the No.1 Personal Finance Bank.

ICBC empowers its business operations and management

Adhere to technology-driven with FinTech, and creates superior value for the real
development and value economy, shareholders, customers, employees and the
creation: society as a whole.

ICBC proactively taps resources from both domestic and

Adhere to a broad international overseas markets, and undertakes to constantly promote
vision and globalized international development, which well-integrates with
operations: China’s high-level opening-up.

Adhere to pushing for Keeping pace with changing times, ICBC endeavors to
pragmatic business advance reforms in key areas and critical steps, seeking
transformation and progressing room for development through transformation and vitality
through reform: for growth through reform.

ICBC safeguards the lifeline of asset quality by reinforcing

Adhere to laying a solid
bottom-line thinking with a combination of prevention and
foundation for risk control
control measures. Meanwhile, corporate culture formation
and achieving development
and caring for staff are strengthened to increase group
through talent cultivation:
cohesion.
 Mission
Excellence for You
Excellent services for clients
Maximum returns to shareholders
Real success for employees
Great contribution to society

Vision
To build a world-class, globally
competitive modern financial
institution in all aspects, and
become a long-lasting and
ever-prosperous bank

Values
Integrity Leads to Prosperity
Integrity
Humanity
Prudence
Innovation
Excellence
 CONTENTS

Definitions 4    — D  iversified Operation and

Major Ranking and Rewards in 2021 5   Subsidiary Management 58
Important Notice 6    — Major Controlled Subsidiaries
Corporate Information 7   and Equity Participating Company 61
Financial Highlights 8   — Risk Management 63
Chairman’s Statement 12   — Capital Management 79
President’s Statement 15   — Outlook 84
Discussion and Analysis 19   — Hot Topics in the Capital Market 85
  — E conomic, Financial and Details of Changes in Share Capital
  Regulatory Environments 19   and Shareholding of Substantial
  — Financial Statements Analysis 21  Shareholders 91
  — Business Overview 34 Directors, Supervisors and
   — Corporate Banking 34   Senior Management 102
   — Personal Banking 39 Corporate Governance Report 112
   — Asset Management Services 41 Report of the Board of Directors 129
   — Financial Market Business 42 Report of the Board of Supervisors 133
  — FinTech 44 Environmental and Social Responsibilities 135
   — Internet Finance 48 Significant Events 139
   — Outlet Development 51 Organizational Chart 141
   — Service Improvement 51 Auditor’s Report and Financial
   — Human Resources Management,  Statements 142
    Employees and Institutions 52 List of Domestic and
   — Internationalized Operation 54   Overseas Branches and Offices 307
Definitions

In this report, unless the context otherwise requires, the following terms shall have the meanings set out below:
Articles of Association The Articles of Association of Industrial and Commercial Bank of China Limited
Bank ICBC (JSC) Bank ICBC (Joint stock company)
Capital Regulation Regulation Governing Capital of Commercial Banks (Provisional) promulgated in June
2012
CBIRC China Banking and Insurance Regulatory Commission
Company Law Company Law of the People’s Republic of China
CSRC China Securities Regulatory Commission
HKEX Hong Kong Exchanges and Clearing Limited
Hong Kong Listing Rules Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
Huijin Central Huijin Investment Ltd.
ICBC (Almaty) Industrial and Commercial Bank of China (Almaty) Joint Stock Company
ICBC (Argentina) Industrial and Commercial Bank of China (Argentina) S.A.
ICBC (Asia) Industrial and Commercial Bank of China (Asia) Limited
ICBC (Austria) ICBC Austria Bank GmbH
ICBC (Brasil) Industrial and Commercial Bank of China (Brasil) S.A.
ICBC (Canada) Industrial and Commercial Bank of China (Canada)
ICBC (Europe) Industrial and Commercial Bank of China (Europe) S.A.
ICBC (Indonesia) PT. Bank ICBC Indonesia
ICBC (London) ICBC (London) PLC
ICBC (Macau) Industrial and Commercial Bank of China (Macau) Limited
ICBC (Malaysia) Industrial and Commercial Bank of China (Malaysia) Berhad
ICBC (Mexico) Industrial and Commercial Bank of China Mexico S.A.
ICBC (New Zealand) Industrial and Commercial Bank of China (New Zealand) Limited
ICBC (Peru) ICBC PERU BANK
ICBC (Thai) Industrial and Commercial Bank of China (Thai) Public Company Limited
ICBC (Turkey) ICBC Turkey Bank Anonim Şirketi
ICBC (USA) Industrial and Commercial Bank of China (USA) NA
ICBC Credit Suisse Asset Management ICBC Credit Suisse Asset Management Co., Ltd.
ICBC International ICBC International Holdings Limited
ICBC Investment ICBC Financial Asset Investment Co., Ltd.
ICBC Investments Argentina ICBC Investments Argentina S.A. Sociedad Gerente de Fondos Comunes de Inversión
ICBC Leasing ICBC Financial Leasing Co., Ltd.
ICBC Standard Bank ICBC Standard Bank PLC
ICBC Technology ICBC Information and Technology Co., Ltd.
ICBC Wealth Management ICBC Wealth Management Co., Ltd.
ICBC-AXA ICBC-AXA Assurance Co., Ltd.
ICBCFS Industrial and Commercial Bank of China Financial Services LLC
IFRSs The International Financial Reporting Standards promulgated by the International
Accounting Standards Board, which comprise the International Accounting Standards
Inversora Diagonal Inversora Diagonal S.A.
MOF Ministry of Finance of the People’s Republic of China
New Rules on Asset Management The Guiding Opinions on Regulating the Asset Management Business of Financial
Institutions jointly promulgated by PBC, CBIRC, CSRC and State Administration of
Foreign Exchange in 2018 and relevant rules
PBC The People’s Bank of China
PRC GAAP Accounting Standards for Business Enterprises promulgated by MOF
Securities and Futures Ordinance of Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
Hong Kong
SEHK The Stock Exchange of Hong Kong Limited
SSE Shanghai Stock Exchange
SSF National Council for Social Security Fund
Standard Bank Standard Bank Group Limited
State Council The State Council of the People’s Republic of China
The Bank/The Group Industrial and Commercial Bank of China Limited; or Industrial and Commercial Bank
of China Limited and its subsidiaries

4
Major Ranking and Rewards in 2021

Ranking the Ranking the Ranking the

st st st
place place place
Among the Top 1000 World In the Global 2000 Among commercial banks in
Banks for the ninth for the ninth the Global 500 for the ninth
consecutive year consecutive year consecutive year

Fortune
The Banker Forbes

Ranking the Ranking the Ranking the

st st st
place place place
Among the Top 500 In the In the 2021 GYROSCOPE
Banking Brands for the sixth “Corporate Brand Value List” assessment system among
consecutive year for the sixth time national commercial banks

Brand Finance China Council for Brand China Banking Association

Development

World’s Best Bank in

Special Award of Data Management Capability Maturity Emerging Markets
FinTech Development (DCMM) — The highest Level 5 Best Bank in Asia-Pacific
Award — ECOS Project certification Best Bank in China
Best Corporate Bank in China

People’s Bank of China

China Federation of Electronics and Global Finance
Information Industry

Best Bank, China Best Asian International Cash

Best Bond Advisor, China Management Bank in Asia Pacific
Best Insurance Custodian Bank Best RMB Clearing Bank in Asia Pacific
Best Bank in China in China Best Custodian Bank in China (Mega Bank)

Finance Asia
The Asset The Asian Banker

Annual Report 2021

5
Important Notice

The Board of Directors, the Board of Supervisors, Directors, Supervisors and Senior Management members of Industrial
and Commercial Bank of China Limited undertake that the information in this report contains no false record, misleading
statement or material omission, and assume individual and joint and several liability for the authenticity, accuracy and
completeness of the information in this report.

The 2021 Annual Report of the Bank and its abstract have been considered and approved at the meeting of the Board of
Directors of the Bank held on 30 March 2022. There were 14 directors eligible for attending the meeting, of whom 13
directors attended the meeting in person and 1 director by proxy, namely, Mr. Nout Wellink appointed Mr. Anthony Francis
Neoh to attend the meeting and exercise the voting right on his behalf.

The 2021 financial statements prepared by the Bank in accordance with PRC GAAP and IFRSs have been audited by
Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche Tohmatsu in accordance with Chinese and
International Standards on Auditing respectively, with standard unqualified auditors’ reports being issued.

The Board of Directors of the Bank proposed distributing cash dividends for ordinary shares of RMB2.933 (pre-tax) for each
ten shares for 2021. The distribution plan will be submitted for approval to the Annual General Meeting for the Year 2021.
The Bank did not convert capital reserve to share capital.

The Board of Directors of Industrial and Commercial Bank of China Limited

30 March 2022

Mr. Chen Siqing, Legal Representative of the Bank, Mr. Liao Lin, President in charge of finance of the Bank, and Mr.
Liu Yagan, General Manager of the Finance and Accounting Department of the Bank, hereby warrant that the financial
statements contained in the Annual Report are authentic, accurate and complete.

The report contains forward-looking statements on the Bank’s financial position, business performance and development.
The statements are based on existing plans, estimates and forecasts, and bear upon future external events or the
Group’s future finance, business or performance in other aspects, and may involve future plans which do not constitute
substantive commitment to investors. Hence, investors and persons concerned shall be fully aware of the risks and
understand the difference between plans, estimates and commitments.

The Bank is primarily exposed to credit risk, market risk, interest rate risk in the banking book, liquidity risk, operational
risk, reputational risk and country risk. The Bank has actively adopted measures to effectively manage various types of
risks. Please refer to the section headed “Discussion and Analysis — Risk Management” for detailed information.

(This report is prepared in both Chinese and English. In the case of discrepancy between the two versions, the Chinese
version shall prevail.)

6
Corporate Information

Legal name in Chinese Share Registrars

中國工商銀行股份有限公司 (「中國工商銀行」) A Share
China Securities Depository and Clearing Corporation Limited,
Legal name in English   Shanghai Branch
INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED (“ICBC”) 188 Yanggao South Road, Pudong New Area, Shanghai, China
Telephone: 86-4008058058
Legal Representative
Chen Siqing H Share
Computershare Hong Kong Investor Services Limited
Registered address and office address 17M Floor, Hopewell Center, 183 Queen’s Road East, Wanchai,
55 Fuxingmennei Avenue, Xicheng District, Beijing, China   Hong Kong SAR, China
Postal code: 100140 Telephone: 852-28628555
Telephone: 86-10-66106114 Facsimile: 852-28650990
Business enquiry and complaint hotline: 86-95588
Website: www.icbc.com.cn, www.icbc-ltd.com Location where copies of this annual report are kept
Board of Directors’ Office of the Bank
Principal place of business in Hong Kong
33/F, ICBC Tower, 3 Garden Road, Central, Hong Kong SAR, China Place where shares are listed, and their names and codes
A Share
Authorized representatives Shanghai Stock Exchange
Liao Lin and Guan Xueqing Stock name: 工商銀行
Stock code: 601398
Board Secretary and Company Secretary
Guan Xueqing H Share
Address: 55 Fuxingmennei Avenue, Xicheng District, Beijing, China The Stock Exchange of Hong Kong Limited
Telephone: 86-10-66108608 Stock name: ICBC
Facsimile: 86-10-66107571 Stock code: 1398
E-mail: [email protected]
Domestic Preference Share
Selected newspaper for information disclosure Shanghai Stock Exchange
China Securities Journal, Shanghai Securities News, Securities Times, Stock name: 工行優1
  Securities Daily Stock code: 360011

Website of SSE for disclosure of Stock name: 工行優2

  the annual report in respect of A shares Stock code: 360036
www.sse.com.cn
Offshore Preference Share
The “HKEXnews” website of HKEX for disclosure of The Stock Exchange of Hong Kong Limited
  the annual report in respect of H shares Stock name: ICBC 20USDPREF
www.hkexnews.hk Stock code: 4620

Legal Advisors Name and office address of Auditors

Chinese mainland Domestic Auditor
King & Wood Mallesons Deloitte Touche Tohmatsu Certified Public Accountants LLP
17–18/F, East Tower, World Financial Center, 1 East 3rd Ring 30/F, 222 East Yan’an Road, Huangpu District, Shanghai, China
  Middle Road, Chaoyang District, Beijing, China CPAs (Practicing): Wu Weijun and Zeng Hao

Haiwen & Partners International Auditor

20/F, Fortune Financial Center, 5 East 3rd Ring Middle Road, Deloitte Touche Tohmatsu
  Chaoyang District, Beijing, China 35/F, One Pacific Place, 88 Queensway, Hong Kong SAR, China

Hong Kong SAR, China

Allen & Overy
9/F, Three Exchange Square, Central, Hong Kong SAR, China

Freshfields Bruckhaus Deringer

55th Floor, One Island East, 18 Westlands Road, Quarry Bay,
  Hong Kong SAR, China

Annual Report 2021

7
Financial Highlights

Net profit Total assets

Unit: RMB100 millions Unit: RMB100 millions

3,502 351,714
2021 3,502 2021 351,714

2020 3,177 2020 333,451

2019 3,134 2019 301,094

Total loans and advances to customers Due to customers

Unit: RMB100 millions Unit: RMB100 millions

206,672 264,418
2021 206,672 2021 264,418

2020 186,243 2020 251,347

2019 167,613 2019 229,777

Corporate customers Personal customers Business outlets Self-service banks

9,691 thousand 704 million

Up 1,048 thousand Up 23.41 million 15,767 24,145

Non-performing
Net tier 1 capital Capital adequacy ratio loans ratio Cost-to-income ratio
Unit: RMB100 millions

1.42%
32,413.64 18.02% Down 0.16 percentage 26.36%
points

8
 Financial Highlights

Dividend per 10 shares

FinTech input FinTech personnel Market value (pre-tax)
Unit: RMB100 millions Unit: RMB yuan

RMB 2.933

2021 2.933

2020 2.660

259.87
Up 21.68 35 thousand USD 245.4 billion
2019 2.628

(Financial data and indicators in this annual report are prepared in accordance with IFRSs and, unless otherwise specified, are
consolidated amounts of the Bank and its subsidiaries and denominated in Renminbi.)

Financial Data

2021 2020 2019 2018 2017

Annual operating results (in RMB millions)
Net interest income 690,680 646,765 632,217 593,677 522,078
Net fee and commission income 133,024 131,215 130,573 124,394 139,625
Operating income 860,880 800,075 776,002 725,121 675,654
Operating expenses 236,227 206,585 207,776 194,203 186,194
Impairment losses on assets 202,623 202,668 178,957 161,594 127,769
Operating profit 422,030 390,822 389,269 369,324 361,691
Profit before taxation 424,899 392,126 391,789 372,413 364,641
Net profit 350,216 317,685 313,361 298,723 287,451
Net profit attributable to equity holders 348,338 315,906 312,224 297,676 286,049
  of the parent company
Net cash flows from operating activities 360,882 1,557,616 481,240 529,911 770,864

Annual Report 2021

9
Financial Highlights

Financial Data (continued)

2021 2020 2019 2018 2017
As at the end of reporting period
  (in RMB millions)
Total assets 35,171,383 33,345,058 30,109,436 27,699,540 26,087,043
Total loans and advances to customers 20,667,245 18,624,308 16,761,319 15,419,905 14,233,448
  Corporate loans 12,194,706 11,102,733 9,955,821 9,418,894 8,936,864
  Personal loans 7,944,781 7,115,279 6,383,624 5,636,574 4,945,458
  Discounted bills 527,758 406,296 421,874 364,437 351,126
Allowance for impairment losses 603,983 531,161 478,730 413,177 340,482
  on loans(1)
Investment 9,257,760 8,591,139 7,647,117 6,754,692 5,756,704
Total liabilities 31,896,125 30,435,543 27,417,433 25,354,657 23,945,987
Due to customers 26,441,774 25,134,726 22,977,655 21,408,934 19,562,936
  Corporate deposits 13,331,463 12,944,860 12,028,262 11,481,141 10,705,465
  Personal deposits 12,497,968 11,660,536 10,477,744 9,436,418 8,568,917
  Other deposits 250,349 261,389 234,852 268,914 288,554
  Accrued interest 361,994 267,941 236,797 222,461 —
Due to banks and other financial 2,921,029 2,784,259 2,266,573 1,814,495 1,706,549
 institutions
Equity attributable to equity holders 3,257,755 2,893,502 2,676,186 2,330,001 2,127,491
  of the parent company
Share capital 356,407 356,407 356,407 356,407 356,407
Net core tier 1 capital(2) 2,886,378 2,653,002 2,457,274 2,232,033 2,030,108
Net tier 1 capital(2) 3,241,364 2,872,792 2,657,523 2,312,143 2,110,060
Net capital base (2)
3,909,669 3,396,186 3,121,479 2,644,885 2,406,920
Risk-weighted assets (2)
21,690,349 20,124,139 18,616,886 17,190,992 15,902,801
Per share data (in RMB yuan)
Net asset value per share(3) 8.15 7.48 6.93 6.30 5.73
Basic earnings per share 0.95 0.86 0.86 0.82 0.79
Diluted earnings per share 0.95 0.86 0.86 0.82 0.79
Credit rating
S&P(4) A A A A A
Moody’s (4)
A1 A1 A1 A1 A1

Notes: (1) Calculated by adding allowance for impairment losses on loans and advances to customers measured at amortised cost with
allowance for impairment losses on loans and advances to customers measured at fair value through other comprehensive income.
(2) Calculated in accordance with the Capital Regulation.
(3) Calculated by dividing equity attributable to equity holders of the parent company after deduction of other equity instruments at
the end of the reporting period by the total number of ordinary shares at the end of the reporting period.
(4) The rating results are in the form of “long-term foreign currency deposits rating”.

10
 Financial Highlights

Financial Indicators

2021 2020 2019 2018 2017

Profitability (%)
Return on average total assets(1) 1.02 1.00 1.08 1.11 1.14
Return on weighted average equity (2)
12.15 11.95 13.05 13.79 14.35
Net interest spread (3)
1.92 1.97 2.12 2.20 2.10
Net interest margin (4)
2.11 2.15 2.30 2.36 2.22
Return on risk-weighted assets(5) 1.68 1.64 1.75 1.81 1.89
Ratio of net fee and commission income 15.45 16.40 16.83 17.15 20.67
  to operating income
Cost-to-income ratio(6) 26.36 24.76 25.79 25.71 26.45
Asset quality (%)
Non-performing loans (“NPLs”) ratio(7) 1.42 1.58 1.43 1.52 1.55
Allowance to NPLs (8)
205.84 180.68 199.32 175.76 154.07
Allowance to total loans ratio (9)
2.92 2.85 2.86 2.68 2.39
Capital adequacy (%)
Core tier 1 capital adequacy ratio(10) 13.31 13.18 13.20 12.98 12.77
Tier 1 capital adequacy ratio(10) 14.94 14.28 14.27 13.45 13.27
Capital adequacy ratio (10)
18.02 16.88 16.77 15.39 15.14
Total equity to total assets ratio 9.31 8.73 8.94 8.47 8.21
Risk-weighted assets to total assets 61.67 60.35 61.83 62.06 60.96
 ratio

Notes: (1) Calculated by dividing net profit by the average balance of total assets at the beginning and at the end of the reporting period.
(2) Calculated in accordance with the Rules for the Compilation and Submission of Information Disclosure by Companies that Offer
Securities to the Public No. 9 — Calculation and Disclosure of Return on Net Assets and Earnings per Share (Revision 2010)
issued by CSRC.
(3) Calculated by the spread between yield on average balance of interest-generating assets and cost on average balance of
interest-bearing liabilities.
(4) Calculated by dividing net interest income by the average balance of interest-generating assets.
(5) Calculated by dividing net profit by the average balance of risk-weighted assets at the beginning and at the end of the
reporting period.
(6) Calculated by dividing operating expenses (less taxes and surcharges) by operating income.
(7) Calculated by dividing the balance of NPLs by total balance of loans and advances to customers.
(8) Calculated by dividing allowance for impairment losses on loans by total balance of NPLs.
(9) Calculated by dividing allowance for impairment losses on loans by total balance of loans and advances to customers.
(10) Calculated in accordance with the Capital Regulation.

Quarterly Financial Data

2021 2020
(In RMB millions) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Operating income 214,120 212,286 217,489 216,985 206,187 196,159 197,901 199,828
Net profit attributable to equity 85,730 77,743 88,348 96,517 84,494 64,296 79,885 87,231
  holders of the parent
 company
Net cash flows from operating 612,669 (235,123) 588,904 (605,568) 1,907,890 (34,157) 146,709 (462,826)
 activities

Annual Report 2021

11
Chairman’s Statement

Chairman  Chen Siqing

12
 Chairman’s Statement

The year 2021 was a milestone in the history of the off the balance sheet, domestic and overseas, online and
Communist Party of China (“CPC” or the “Party”) and offline. We tightened control over all kinds of credit risks,
the country as we celebrated the 100th anniversary of the and increased efforts to improve the asset quality, with
founding of the Party. ICBC adhered to Xi Jinping Thought continuous improvement in the operating capacity of
on Socialism with Chinese Characteristics for a New Era, risk assets, and simultaneous decline in the NPL ratio and
earnestly implemented the decisions and arrangements overdue loan ratio. We stayed alert to the volatility of the
of the CPC Central Committee and the State Council, financial market, adhered to prudent trading strategies,
stayed committed to the general principle of pursuing strictly controlled the risk exposure, and kept the market
progress while ensuring stability, and continued to uphold risk at an overall stable level.
the “48-character” guideline. Based on the reality of the
We advanced reform more vigorously and strived
new development stage, we applied the new development
to achieve high-quality development. We focused
philosophy, actively served and integrated into the new
on improving the governance system and capacity, and
development paradigm, responded to COVID-19 and
deepened the organic integration of Party leadership
pursued financial security and business development in
and corporate governance. We pushed forward the
a well-coordinated way, and contributed to high-quality
arrangements of “bringing out our strengths to make
economic development while striving to pursue our own
up for our weaknesses and laying a solid foundation
high-quality development. As a result, we delivered a solid
and base.” Headways were made in our implementation
performance to celebrate the Party’s centenary.
of key strategies such as the No.1 Personal Bank, the
We kept in mind national priorities and did our best Preferred Bank for Foreign Exchange Business, Sharpening
to serve high-quality development. In line with the Competitive Edge in Key Regions and Urban-Rural
new development paradigm and the requirements for the Collaborative Development. We accelerated the bank-
implementation of the 14th Five-Year Plan, we implemented wide digital transformation. Our intelligent banking
the guidance of macro policies, and promoted high- ecosystem ECOS project was awarded PBC’s special
level coordination of investment and financing in terms award of the “FinTech Development Awards”, and our
of quality, scale, pace and price. We continued to refine data management capability was given the highest rating
financial services in key areas and weak links, and led by the Ministry of Industry and Information Technology.
the market in terms of credit scale in manufacturing, Last year, we delivered financial services for the China
technological innovation and green sectors, with the International Import Expo, the China Import and Export
growth of inclusive finance loans topping the rankings. To Fair, the China International Fair for Trade in Services and
promote common prosperity, we set up special agencies the China International Consumer Products Expo. We
to serve rural revitalization, launched the brand “ICBC initiated the China-Europe Business Council, and promoted
Xingnongtong”, and delivered helpful assistance to micro, the development of Belt and Road Bankers Roundtable
small and medium-sized enterprises and industries in (“BRBR”). We played an active part in international
need. We strengthened global service synergy, and actively governance of green finance and launched the Beijing
promoted opening-up at a higher level and the high-quality Initiative on Climate-Friendly Banks.
development of the Belt and Road Initiative. We ensured
We made every effort to promote the head start of the
financial support for epidemic prevention and control,
new development plan. We acted swiftly and efficiently
energy supply, flood control and relief, and vigorously built
to implement key strategies and tasks, with notable
up our image as a responsible large bank.
achievements made. We performed well in major operating
We adhered to the bottom-line thinking and spared indicators and we became “stronger, better and bigger.”
no effort to promote high-quality risk control. We
The foundation for strong development was
continued to plan ahead, see the big from the small,
further consolidated. Our capital strength was further
remedy in time and draw inferences. By doing so we
strengthened. The capital adequacy ratio exceeded 18%,
improved the enterprise risk management system, and
one of the highest among the large banks in the world.
helped maintain economic and financial stability. We
The balance of provisions surpassed RMB600.0 billion, and
planned in a well-coordinated way, and managed with
the allowance to NPLs rebounded to over 200% for the
clear accounting. We improved the risk identification,
first time in the past seven years. For the ninth consecutive
early-warning and risk mitigation mechanism across the
year, the Bank ranked first among Global 2000 by Forbes
entire chain, and coordinated efforts to guard against
and the Top 1000 World Banks by The Banker.
and control traditional and emerging risks, risks on and

Annual Report 2021

13
Chairman’s Statement

The quality of business performance was further At present, as the world is experiencing a pandemic and
improved. Our operating efficiency continued to improve, changes unseen in the past century, a fast-changing global
with the return on assets (“ROA”) and return on equity political and economic landscape, and chain reactions
(“ROE”) reaching 1.02% and 12.15% respectively. arising from geopolitical conflicts, the global finance,
Through meticulous management and internal potential energy, transportation and supply chain stability are faced
tapping, the change in our net interest margin (“NIM”) with great shocks, and the global banks are facing an ever-
was better than most peers, and the cost-to-income ratio complex external environment and new challenges in their
was 26.36%, lower than most large banks in the world. operations. However, the fundamentals of the Chinese
economy remain unchanged, and they will maintain long-
Our scale merits were further augmented. Our assets
term growth and demonstrate strong resilience and vitality.
exceeded RMB35 trillion, operating income topped
As China moves faster to construct a new development
RMB860.0 billion, and net profit surpassed RMB350.0
pattern and implements macro policies in full, the Chinese
billion, consolidating our lead in the banking sector. We
economy is being stimulated on all fronts for steady, sound
maintained the first place in assets, capital, deposits and
and high-quality growth. The domestic banking sector is
loans among banks in the world, and the first place in
facing a favorable environment for development.
market value and total dividends among Chinese banks.
In 2022, we will continue to follow the guidance of Xi
On behalf of the Board of Directors, I would like to express
Jinping Thought on Socialism with Chinese Characteristics
my sincere gratitude to people from all walks of society for
for a New Era, make economic stability our top priority and
their care and support to ICBC, to the Board of Supervisors
pursue progress while ensuring stability, thus contributing
for its effective supervision, and to the Management and
to the goal of achieving a stable performance of the
all employees for their dedication and contribution. Based
macro economy. We will further improve the quality and
on our good business performance, the Board of Directors
efficiency of services for the real economy, and make
proposed a dividend of RMB2.933 per ten ordinary shares
more progress in achieving high-quality development. We
for 2021, which will be submitted to the Shareholders’
will remedy problems identified by the central inspection
General Meeting for deliberation.
team, and in the course push forward the implementation
From our practices in the past year, we have deepened of various reforms to produce real effects. We will work
our understanding on improving our financial work. We hard to build the Bank into a world-class modern financial
will always follow the guidance of Party building, firmly enterprise with Chinese characteristics and set the stage
carry out financial work in the right direction, adhere to for the Party’s 20th National Congress with concrete actions
the people-centered principle, and fulfill our responsibility and remarkable achievements.
of serving the real economy. We will foster and uphold
the correct view on business performance, unswervingly
follow the qualitative development path of quality-first,
efficiency-prioritized and innovation-driven development,
and strive to become stronger, better and bigger. We will
stick to the bottom-line thinking, take the initiative to
guard against and defuse risks, and promote the realization
of the dynamic balance between high-quality development
and high-level security. We shall actively shoulder our
due responsibilities, address difficulties on development
through reform, and stick to the path of financial
development with Chinese characteristics.

Chairman: Chen Siqing

30 March 2022

14
President’s Statement

President  Liao Lin

Annual Report 2021

15
President’s Statement

In 2021, in the face of the complicated and severe external than the increment last year, hitting the new high for the
environment, the Bank conscientiously implemented the same period. Bond investments grew by RMB763.2 billion,
decisions and arrangements of the CPC Central Committee with the balance remaining at the first position among
and the State Council, acted upon the “48-character” peers. We took precise and targeted actions to support
guideline, stepped foot in the new development stage, the key fields and weak areas of the real economy. Loans
applied the new development philosophy in full, in to manufacturing increased by RMB319.7 billion, with the
the right way and in all fields, and actively served and medium to long-term loans to manufacturing growing
integrated into the new development paradigm. We by RMB242.7 billion. We improved financial service
coordinated COVID-19 containment efforts and financial modes for sci-tech enterprises, and the balance of loans
work, went to all lengths to accomplish the “Three to key state-supported high-tech fields surpassed RMB1
Tasks” of financial work, and achieved stable and even trillion. We actively pushed forward green and low-carbon
more remarkable business performance. We made great transformation and witnessed the total amount of green
headway in our new development plan and took solid loans exceeding RMB2.4 trillion, indicating a growth rate
steps toward high-quality development. of 34.4%. We made vigorous efforts in the development
of digital inclusive finance and supply chain finance,
In 2021, the Group recorded RMB860.9 billion in
and scaled up small and micro loans. We launched the
operating income, representing an increase of 7.6%
“ICBC Xingnongtong” brand, to expand the breadth and
from the previous year. Profit before provision was
depth of our financial support for the endeavor of rural
RMB627.5 billion, representing an increase of 5.5% from
revitalization. Our inclusive loans grew by over 50% in the
the previous year. Net profit reached RMB350.2 billion,
year.
representing an increase of 10.2% from the previous year.
Return on total average assets and return on weighted Such resilience is built upon our solid measures for
average equity were both higher than the previous year. safeguarding the bottom line of risk management
Capital adequacy ratio stood at 18.02%. NPL ratio was and continuously enhancing our ability to defuse
1.42%, down 0.16 percentage points from the end of risks. The Bank placed equal emphasis on development
the previous year. Allowance to NPLs reached 205.84%. and security, adopted a holistic risk management
These indicators fully reflect the balance and coordination approach to people, money and policy system, and
between value creation, market standing, risk management upgraded the enterprise risk management system through
and capital constraints and demonstrate the Bank’s strong “active prevention, smart control and comprehensive
momentum for high-quality development and extraordinary management”. We strengthened the implementation
development resilience. of policies and fully implemented new credit review
regulations across domestic institutions. We carried out
Such resilience is firmly rooted in our commitments
special actions to improve asset quality, systematically
to fulfilling our original aspirations and serving
inspected and managed risks in key areas and related to
the real economy. According to the cross-cyclical and
key customers, and redoubled efforts in the collection and
counter-cyclical policy adjustments, the Bank earnestly
disposal of NPLs. The overdue rate, overdue amount and
implemented the requirements for “ensuring stability on
price scissors between overdue loans and NPLs continued
six key fronts” and “maintaining security in six key areas”.
to decline. We overdid the task of reducing existing wealth
We arranged the aggregate volume, pace and structure of
management products. We stayed vigilant against market
investment and financing in a well-coordinated way, and
risk and took effective measures to forestall emerging risks
continuously improved the adaptability, competitiveness
such as climate risk and model risk. We comprehensively
and inclusiveness of financial services, so as to better meet
improved the effectiveness of internal control and case
the diversified financial needs of the real economy and
prevention, and achieved notable results in customer
the general public. The Bank registered new domestic
complaint management.
RMB loans of RMB2.12 trillion, RMB243.3 billion more

16
 President’s Statement

Such resilience stems from our thorough efforts 2022 is of great significance in the development progress
to advance transformation and innovation and of the Party and the country, as the Communist Party
continuously inspire business vitality and growth of China will hold its 20th National Congress. The Bank
momentum. In alignment with the 14th Five-Year Plan, will continue to fully implement the decisions and
the Bank launched its new development plan, followed arrangements of the CPC Central Committee and the
through on the pattern of “bringing out our strengths to State Council, and stick to the general principle of
make up for our weaknesses and laying a solid foundation pursuing progress while ensuring stability. In light of the
and base” and pushed forward the implementation of “48-character” guideline, we, with the trust and support
the No.1 Personal Bank Strategy, the Preferred Bank of all shareholders and people from all walks of society,
Strategy for Foreign Exchange Business, the Strategy for will concentrate on our core responsibilities and businesses,
Sharpening Competitive Edge in Key Regions and the place a greater emphasis on integrity and innovation, focus
Urban-Rural Collaborative Development Strategy. We on “action, implementation and promotion”, and adhere
worked hard to cultivate and shape new advantages for to the pattern of “bringing out our strengths to make
high-quality development, advanced the transformation of up for our weaknesses and laying a solid foundation and
asset management, private banking, bank card and other base”. We will strive for mid-term breakthroughs in the
businesses in an orderly manner, and comprehensively implementation of our new plan, step up efforts to build
improved our service quality. We accelerated digital a world-class modern financial institution, and stick to the
transformation and deepened the fusion of technology path of financial development with Chinese characteristics.
and business. We vigorously developed service scenarios in We will welcome the convening of the Party’s 20th National
smart government, smart social security, smart education Congress with concrete actions aimed at serving the
and other fields with a focus to help improve people’s new development paradigm and promoting high-quality
livelihoods, further strengthened the interactions among development.
government, business and consumption (“GBC”), and
achieved substantial results in fundamental work such as
fund taking and “net making and patching” program.
With more than 700 million personal customers and
9.69 million corporate customers, the Bank has a well-
coordinated customer ecosystem encompassing large,
medium, small and micro customers, laying a solid
foundation for high-quality development.

President: Liao Lin

30 March 2022

Annual Report 2021

17
 Chairman of the Board of Supervisors  Huang Liangbo

18
Discussion and Analysis

ECONOMIC, FINANCIAL AND REGULATORY ENVIRONMENTS

In 2021, the global economy recovered on the whole, but supply chain. Moreover, China promoted coordinated
in the second half of the year, affected by the impact of development between urban and rural areas, and
the epidemic, energy shortage, supply chain bottleneck supported the effective link between the achievements of
and other factors, the economic recovery momentum poverty alleviation and rural revitalization.
witnessed marginal slowdown and rising inflation. The
The prudent monetary policy was flexible, targeted and
monetary policy shift of major developed economies
appropriate. PBC maintained reasonable and adequate
accelerated, with increasing fluctuation in the international
liquidity by comprehensive use of various tools such as
financial market.
reserve requirement ratio (RRR) cut and structural policies.
China’s economy continued to recover steadily. In 2021, It created tools supporting carbon emission reduction,
China’s gross domestic product (GDP), retail sales of launched special relending for clean and efficient utilization
consumer goods, fixed asset investment (excluding rural of coal, and made good use of relending for supporting
households), industrial added value of enterprises above agriculture and small enterprises and two directly targeting
designated size, and total (RMB-denominated) imports instruments, to strengthen support for key areas such as
and exports of trade in goods rose by 8.1%, 12.5%, scientific and technological innovation, manufacturing,
4.9%, 9.6% and 21.4% year on year respectively, while small and micro enterprises and green development.
consumer price index (CPI) increased mildly by 0.9% year By playing a role of the Loan Prime Rate (LPR), PBC
on year. pushed forward to reduce comprehensive financing cost
of enterprises while maintaining it at an overall stable
Proactive fiscal policy was implemented to improve quality
level, and optimized the method of determining the self-
and efficiency. China deepened the reform of the fiscal
disciplined capping of deposit interest rate, to improve the
and tax systems, carried out the tax and fee reduction
freedom and accuracy of independent pricing of deposit
policy, optimized the management of special bonds of
interest rate of commercial banks and promote orderly
local governments, and improved the regular mechanism
competition in the industry. Besides, PBC deepened the
for targeted allocation of fiscal funds. It continuously
market-oriented reform of exchange rates and kept the
increased investment in science and technology and
flexibility of RMB exchange rates.
people’s livelihood, and stabilized the industrial chain and

Annual Report 2021

19
Discussion and Analysis

Regulatory policies have supported high-quality The asset scale of commercial banks grew steadily,
development. The real estate loan concentration with continuously improving asset quality, stronger
management, green finance evaluation plan, education risk offsetting capacity, robust profitability and steadily
opinion of “easing the burden of excessive homework and enhanced global competitiveness. At the end of 2021,
off-campus tutoring for students undergoing compulsory the RMB and foreign-currency assets of commercial banks
education” and measures for regulating the economic totaled RMB288.6 trillion, up 8.6% year on year. The
development of internet platforms were promulgated and balance of NPLs reached RMB2.8 trillion, with a NPL ratio
implemented to prevent risks and monopolies in promoting of 1.73% and allowance to NPLs of 196.9%. The capital
development. The Guidelines on Macro Prudential Policies adequacy ratio was 15.13%. Specifically, the RMB and
(Trial), the Measures for Regulatory Rating of Commercial foreign-currency assets of large commercial banks totaled
Banks and the Additional Regulation on Systemically RMB138.4 trillion, accounting for 48.0%. The balance of
Important Banks (Trial) were successively issued to enhance NPLs of large commercial banks reached RMB1.1 trillion,
risk management capability and prudential operation with a NPL ratio of 1.37% and allowance to NPLs of
of banks. The Guidelines on Corporate Governance of 239.2%. The capital adequacy ratio was 17.29%. Among
Banking and Insurance Institutions and other regulations the Top 1000 World Banks 2021 by The Banker, six major
were issued to strengthen shareholder equity supervision state-owned commercial banks ranked in the top 15.
and regulate the performance of directors and supervisors.
In 2021, ICBC steadily pushed forward the strategic
The pilot program of pension wealth management
pattern of “bringing out our strengths to make up for
products was launched, and relevant policies on equity-
our weaknesses and laying a solid foundation and base”,
convertible capital bonds were improved to support capital
reinforced the working method of “Three Comparisons,
replenishment of small and medium-sized banks.
Three Reviews and Three Improvements” and achieved
The financial system ran smoothly. At the end of 2021, operating results of making progress while maintaining
the balance of broad money supply (M2) was RMB238.3 stability and improving quality. The Bank continued
trillion, up 9.0% year on year. The existing social financing to consolidate its scale advantage, and ranked first in
scale size stood at RMB314.1 trillion, up 10.3% year on the industry in terms of asset scale, green loans, loans
year. The outstanding RMB loans reached RMB192.7 to strategic emerging industries, balance of loans to
trillion, increasing by 11.6% year on year. The balance manufacturing and balance of deposits. The Bank
of RMB deposits amounted to RMB232.3 trillion, up continued to enhance its profitability, and maintained a
9.3% year on year. The total issuance amount of various leading position among peers in terms of income scale and
bonds in the bond market reached RMB61.4 trillion, up total profit. Asset quality continued to be consolidated and
7.8% year on year. The stock market index fluctuated the risk offsetting capacity continued to be enhanced. The
upward, with the Shanghai Composite Index and the Bank maintained its advantage in international influence,
Shenzhen Component Index increasing by 4.8% and ranking the 1st place among the Top 1000 World Banks by
2.7% respectively over the end of last year. The central The Banker, the 1st place in the Global 2000 by Forbes, and
parity of RMB against the US dollar was RMB6.3757, an the 1st place in the list of commercial banks of the Global
appreciation of 2.3% from the end of last year. 500 in Fortune for the ninth consecutive year.

20
 Discussion and Analysis

FINANCIAL STATEMENTS ANALYSIS

21 Income Statement Analysis Income Statement Analysis

• Net Interest Income In 2021, facing the complicated and tough business environment, the
Bank maintained sound business quality, constantly elevated the quality
• Interest Income and efficiency of financial services, and further improved its capability in
balancing and coordinating sustainable development. In the year, the Bank
• Interest Expense
realized a net profit of RMB350,216 million, representing an increase of
• Non-interest Income RMB32,531 million or 10.2% as compared to the previous year. Return
on average total assets stood at 1.02%, and return on weighted average
• Operating Expenses equity was 12.15%. Operating income amounted to RMB860,880 million,
representing an increase of 7.6%, of which, net interest income grew
• Impairment Losses on
by 6.8% to RMB690,680 million; non-interest income was RMB170,200
 Assets million, up by 11.0%. Operating expenses amounted to RMB236,227
million, representing an increase of 14.3%, and the cost-to-income ratio
• Share of Results of
was 26.36%. Impairment losses on assets were RMB202,623 million.
  Associates and Joint Income tax expense rose by 0.3% to RMB74,683 million.
 Ventures
• Income Tax Expense CHANGES OF KEY INCOME STATEMENT ITEMS
In RMB millions, except for percentages
• Summary Geographical
Increase/ Growth rate
 Segment Information Item 2021 2020 (decrease) (%)
Net interest income 690,680 646,765 43,915 6.8
Non-interest income 170,200 153,310 16,890 11.0
27 Balance Sheet Analysis
Operating income 860,880 800,075 60,805 7.6
• Assets Deployment Less: O
 perating expenses 236,227 206,585 29,642 14.3

• Liabilities Less: Impairment losses on assets 202,623 202,668 (45) (0.0)

Operating profit 422,030 390,822 31,208 8.0
• Shareholders’ Equity
Share of results of associates and 2,869 1,304 1,565 120.0
• Off-balance Sheet Items   joint ventures
Profit before taxation 424,899 392,126 32,773 8.4
Less: Income tax expense 74,683 74,441 242 0.3
33 Analysis on Statement of Net profit 350,216 317,685 32,531 10.2
  Cash Flows Attributable to: E quity holders 348,338 315,906 32,432 10.3
  of the parent
 company
33 Reconciliation of Differences Non-controlling 1,878 1,779 99 5.6
  between the Financial  interests

  Statements Prepared
  under PRC GAAP and Those
  under IFRSs

Annual Report 2021

21
Discussion and Analysis

Net Interest Income

In 2021, net interest income was RMB690,680 million, RMB43,915 million or 6.8% higher than that of last year, accounting
for 80.2% of the Bank’s operating income. Interest income grew by RMB69,697 million or 6.4% to RMB1,162,218 million
and interest expenses increased by RMB25,782 million or 5.8% to RMB471,538 million. Net interest spread and net interest
margin (“NIM”) came at 1.92% and 2.11% respectively, down 5 basis points and 4 basis points respectively from the
previous year, mainly because the Bank continued to provide favorable fee policy for the real economy and further reduced
the financing cost of enterprises.

AVERAGE YIELD OF INTEREST-GENERATING ASSETS AND AVERAGE COST OF INTEREST-BEARING LIABILITIES

In RMB millions, except for percentages

2021 2020
Interest Interest
Average income/ Average yield/ Average income/ Average yield/
Item balance expense cost (%) balance expense cost (%)
Assets
Loans and advances to customers 19,996,414 832,136 4.16 17,979,409 766,407 4.26
Investment 7,999,530 262,827 3.29 7,223,638 243,545 3.37
Due from central banks(2) 2,888,381 42,027 1.46 2,848,543 42,022 1.48
Due from banks and other 1,772,522 25,228 1.42 2,003,882 40,547 2.02
  financial institutions(3)
Total interest-generating assets 32,656,847 1,162,218 3.56 30,055,472 1,092,521 3.64
Non-interest-generating assets 2,659,895 2,865,115
Allowance for impairment losses on (574,932) (506,316)
 assets
Total assets 34,741,810 32,414,271
Liabilities
Deposits 24,477,111 397,625 1.62 22,670,373 364,173 1.61
Due to banks and other 3,287,917 44,387 1.35 2,938,129 51,477 1.75
  financial institutions(3)
Debt securities issued 1,072,667 29,526 2.75 1,028,929 30,106 2.93
Total interest-bearing liabilities 28,837,695 471,538 1.64 26,637,431 445,756 1.67
Non-interest-bearing liabilities 1,991,928 2,114,998
Total liabilities 30,829,623 28,752,429
Net interest income 690,680 646,765
Net interest spread 1.92 1.97
Net interest margin 2.11 2.15

Notes: (1) The average balances of interest-generating assets and interest-bearing liabilities represent their daily average balances. The
average balances of non-interest-generating assets, non-interest-bearing liabilities and the allowance for impairment losses on
assets represent the average of the balances at the beginning of the year and at the end of the year.

(2) Due from central banks mainly includes mandatory reserves and surplus reserves with central banks.

(3) Due from banks and other financial institutions includes the amount of reverse repurchase agreements, and due to banks and
other financial institutions includes the amount of repurchase agreements etc.

22
 Discussion and Analysis

ANALYSIS OF CHANGES IN INTEREST INCOME AND EXPENSE

In RMB millions

Comparison between 2021 and 2020

Increase/(decrease) due to Net increase/
Item Volume Interest rate (decrease)
Assets
Loans and advances to customers 83,708 (17,979) 65,729
Investment 25,061 (5,779) 19,282
Due from central banks 575 (570) 5
Due from banks and other financial institutions (3,296) (12,023) (15,319)
Changes in interest income 106,048 (36,351) 69,697
Liabilities
Deposits 31,185 2,267 33,452
Due to banks and other financial institutions 4,663 (11,753) (7,090)
Debt securities issued 1,272 (1,852) (580)
Changes in interest expenses 37,120 (11,338) 25,782
Changes in net interest income 68,928 (25,013) 43,915

Note: Changes in volume are measured by the changes in average balances, while the changes in interest rate are measured by the changes
in average interest rates. Changes resulted from the combination of volume and interest rate have been allocated to the changes
resulted from business volume.

Interest Income
Interest Income on Loans and Advances to Customers

Interest income on loans and advances to customers was RMB832,136 million, RMB65,729 million or 8.6% higher as
compared to that of last year, mainly due to the increase in the size of loans and advances to customers.

ANALYSIS OF THE AVERAGE YIELD OF LOANS AND ADVANCES TO CUSTOMERS BY MATURITY STRUCTURE
In RMB millions, except for percentages

2021 2020
Average Interest Average yield Average Interest Average yield
Item balance income (%) balance income (%)
Short-term loans 4,045,145 142,549 3.52 3,934,831 143,043 3.64
Medium to long-term loans 15,951,269 689,587 4.32 14,044,578 623,364 4.44
Total loans and 19,996,414 832,136 4.16 17,979,409 766,407 4.26
  advances to customers

Annual Report 2021

23
Discussion and Analysis

ANALYSIS OF THE AVERAGE YIELD OF LOANS AND ADVANCES TO CUSTOMERS BY BUSINESS LINE
In RMB millions, except for percentages

2021 2020
Average Interest Average yield Average Interest Average yield
Item balance income (%) balance income (%)
Corporate loans 10,787,207 439,575 4.08 9,461,995 400,605 4.23
Discounted bills 380,678 10,266 2.70 443,764 11,883 2.68
Personal loans 7,415,770 349,572 4.71 6,606,897 314,940 4.77
Overseas business 1,412,759 32,723 2.32 1,466,753 38,979 2.66
Total loans and 19,996,414 832,136 4.16 17,979,409 766,407 4.26
  advances to customers

Interest Income on Investment

Interest income on investment amounted to RMB262,827 million, representing an increase of RMB19,282 million or 7.9% as
compared to that of last year, mainly due to the increased scale in investment.

Interest Income on Due from Banks and Other Financial Institutions

Interest income on due from banks and other financial institutions was RMB25,228 million, representing a decrease of
RMB15,319 million or 37.8% as compared to that of last year, principally due to the factors such as reduced lending size
and low interest rate environment.

Interest Expense
Interest Expense on Deposits

Interest expense on deposits amounted to RMB397,625 million, representing an increase of RMB33,452 million or 9.2%
over the previous year, principally due to the expansion in the size of due to customers.

ANALYSIS OF AVERAGE DEPOSIT COST BY PRODUCTS

In RMB millions, except for percentages

2021 2020
Average Interest Average cost Average Interest Average cost
Item balance expense (%) balance expense (%)
Corporate deposits
Time deposits 4,929,388 121,230 2.46 4,757,009 111,977 2.35
Demand deposits 7,133,857 58,618 0.82 6,787,204 53,752 0.79
Subtotal 12,063,245 179,848 1.49 11,544,213 165,729 1.44
Personal deposits
Time deposits 6,337,635 189,118 2.98 5,723,692 167,153 2.92
Demand deposits 5,091,927 18,678 0.37 4,509,984 17,243 0.38
Subtotal 11,429,562 207,796 1.82 10,233,676 184,396 1.80
Overseas business 984,304 9,981 1.01 892,484 14,048 1.57
Total deposits 24,477,111 397,625 1.62 22,670,373 364,173 1.61

24
 Discussion and Analysis

Interest Expense on Due to Banks and Other Financial Institutions

Interest expense on due to banks and other financial institutions was RMB44,387 million, RMB7,090 million or 13.8% lower
than that of last year, principally attributable to the decline in cost as affected by the factors such as market interest rates
and product maturities.

Interest Expense on Debt Securities Issued

Interest expense on debt securities issued was RMB29,526 million, indicating a decrease of RMB580 million or 1.9% over
last year. Please refer to “Note 35. to the Consolidated Financial Statements: Debt Securities Issued” for the debt securities
issued by the Bank.

Non-interest Income
In 2021, non-interest income was RMB170,200 million, RMB16,890 million or 11.0% higher than that of last year,
accounting for 19.8% of the operating income. Specifically, net fee and commission income increased by 1.4% to
RMB133,024 million, and other non-interest related gains rose by 68.3% to RMB37,176 million.

Net Fee and Commission Income

In RMB millions, except for percentages

Increase/ Growth rate

Item 2021 2020 (decrease) (%)
Settlement, clearing business and 41,270 39,101 2,169 5.5
  cash management
Personal wealth management and 30,001 29,630 371 1.3
  private banking services
Investment banking business 22,416 21,460 956 4.5
Bank card business 16,679 18,623 (1,944) (10.4)
Corporate wealth management services 15,165 15,554 (389) (2.5)
Guarantee and commitment business 9,756 10,101 (345) (3.4)
Asset custody business 8,738 7,545 1,193 15.8
Trust and agency services 1,808 1,617 191 11.8
Other 2,894 3,037 (143) (4.7)
Fee and commission income 148,727 146,668 2,059 1.4
Less: Fee and commission expense 15,703 15,453 250 1.6
Net fee and commission income 133,024 131,215 1,809 1.4

In 2021, the Bank’s net fee and commission income was RMB133,024 million, an increase of RMB1,809 million over last
year. Specifically, income from settlement, clearing business and cash management increased by RMB2,169 million, mainly
driven by the growth of third party payment business income; income from investment banking business registered an
increase of RMB956 million, mainly due to the income increase from securitization service etc.; asset custody business
income increased by RMB1,193 million, principally attributable to the increasing income from mutual fund custody business.
The Bank adhered to the business transformation and implemented the policy of fee reduction and profit concessions,
resulting in the income decrease on bank card, corporate wealth management, guarantee and commitment businesses.

Annual Report 2021

25
Discussion and Analysis

Other Non-Interest Related Gains

In RMB millions, except for percentages

Increase/ Growth rate

Item 2021 2020 (decrease) (%)
Net trading income 8,955 2,222 6,733 303.0
Net gains on financial investments 16,440 11,829 4,611 39.0
Other operating income, net 11,781 8,044 3,737 46.5
Total 37,176 22,095 15,081 68.3

Other non-interest related gains amounted to RMB37,176 million, RMB15,081 million or 68.3% higher than that of the
previous year. Specifically, the increase in net trading income was mainly attributable to the increase in gains on derivative
financial instruments; the increase in net gains on financial investments was primarily due to the increase in gains on equity
instruments and bond investments; and the increase in other net operating income was mainly because of the increase in net
gains on exchange and exchange rate products.

Operating Expenses
In RMB millions, except for percentages

Increase/ Growth rate

Item 2021 2020 (decrease) (%)
Staff costs 139,363 126,572 12,791 10.1
Property and equipment expenses 28,822 27,960 862 3.1
Taxes and surcharges 9,318 8,524 794 9.3
Amortisation 3,125 2,607 518 19.9
Other 55,599 40,922 14,677 35.9
Total 236,227 206,585 29,642 14.3

In 2021, operating expenses amounted to RMB236,227 million, an increase of RMB29,642 million or 14.3% over last year.

Impairment Losses on Assets

In 2021, the Bank set aside the impairment losses on assets of RMB202,623 million, a decrease of RMB45 million as
compared to that of last year. Specifically, the impairment losses on loans was RMB168,267 million, indicating a decrease
of RMB3,563 million or 2.1%. Please refer to “Note 23. to the Consolidated Financial Statements: Loans and Advances to
Customers; Note 14. to the Consolidated Financial Statements: Impairment Losses on Assets” for details.

Share of Results of Associates and Joint Ventures

Share of results of associates and joint ventures stood at RMB2,869 million, representing an increase of RMB1,565 million
or 120.0% over last year, mainly due to the increase in the Bank’s share of results from Standard Bank, an associate of the
Bank.

Income Tax Expense

Income tax expense increased by RMB242 million or 0.3% to RMB74,683 million as compared to the previous year. The
effective tax rate stood at 17.58%. Please see “Note 15. to the Consolidated Financial Statements: Income Tax Expense” for
the reconciliation of income tax expense applicable to profit before tax at the PRC statutory income tax rate and the effective
income tax expense.

26
 Discussion and Analysis

Summary Geographical Segment Information

In RMB millions, except for percentages

2021 2020
Percentage Percentage
Item Amount (%) Amount (%)
Operating income 860,880 100.0 800,075 100.0
  Head Office 135,419 15.8 107,705 13.5
  Yangtze River Delta 136,544 15.9 130,424 16.3
  Pearl River Delta 107,474 12.5 102,902 12.9
  Bohai Rim 145,660 16.9 145,927 18.1
  Central China 105,357 12.2 98,851 12.4
  Western China 126,799 14.7 121,336 15.2
  Northeastern China 29,582 3.4 32,342 4.0
  Overseas and other 74,045 8.6 60,588 7.6
Profit before taxation 424,899 100.0 392,126 100.0
  Head Office 58,031 13.6 34,092 8.7
  Yangtze River Delta 83,920 19.8 75,295 19.2
  Pearl River Delta 59,699 14.1 67,383 17.2
  Bohai Rim 64,383 15.2 76,322 19.4
  Central China 47,115 11.1 42,655 10.9
  Western China 65,477 15.4 66,598 17.0
  Northeastern China 1,259 0.3 2,593 0.7
  Overseas and other 45,015 10.5 27,188 6.9

Note: Please see “Note 48. to the Consolidated Financial Statements: Segment Information” for details.

Balance Sheet Analysis Assets Deployment

In 2021, in response to the changes in external As at the end of 2021, total assets of the Bank amounted
development trends, the Bank earnestly implemented to RMB35,171,383 million, RMB1,826,325 million or
macro-economic and financial policies and regulatory 5.5% higher than that at the end of the previous year.
requirements, and continued to enhance the foresight, Specifically, total loans and advances to customers
scientificity and initiative of asset and liability management, (collectively referred to as “total loans”) increased by
and appropriately arranged the aggregate amount, RMB2,042,937 million or 11.0% to RMB20,667,245
structure and pace of assets and liabilities. While million, investment increased by RMB666,621 million or
maintaining a moderate growth of the total assets and 7.8% to RMB9,257,760 million, and cash and balances
liabilities, the Bank earnestly followed the regulatory with central banks decreased by RMB439,357 million or
orientation, continued to promote liability quality 12.4% to RMB3,098,438 million.
management, and gradually established a liability quality
management system that is commensurate with the
development of liability business. Besides, it strived to
cement the foundation for deposit development, and
maintained steady development of liability business. The
Bank deeply promoted the continuous optimization of the
asset and liability structure and coordinated development
of quantity and price, and enhanced the adaptability,
competitiveness and inclusiveness of serving the real
economy.

Annual Report 2021

27
Discussion and Analysis

In RMB millions, except for percentages

At 31 December 2021 At 31 December 2020

Percentage Percentage
Item Amount (%) Amount (%)
Total loans and advances to customers 20,667,245 — 18,624,308 —
Add: Accrued interest 45,719 — 42,320 —
Less: A
 llowance for impairment losses on 603,764 — 530,300 —
  loans and advances to customers
  measured at amortised cost
Net loans and advances to customers(1) 20,109,200 57.2 18,136,328 54.4
Investment 9,257,760 26.3 8,591,139 25.8
Cash and balances with central banks 3,098,438 8.8 3,537,795 10.6
Due from banks and other 827,150 2.4 1,081,897 3.2
  financial institutions
Reverse repurchase agreements 663,496 1.9 739,288 2.2
Other 1,215,339 3.4 1,258,611 3.8
Total assets 35,171,383 100.0 33,345,058 100.0

Note: (1) Please see “Note 23. to the Consolidated Financial Statements: Loans and Advances to Customers”.

Loan and grasped the development opportunities of green

finance comprehensively. It mainly supported the state’s
The Bank continued to improve the quality and efficiency food security, stable production and supply of important
of serving the real economy, actively supported the agricultural products, transformation and upgrading
construction of ongoing infrastructure projects and major of agricultural industries and integrated development
projects for making up shortcomings, and implemented of industrial chains. As at the end of 2021, total loans
strategic arrangements such as new urbanization initiatives amounted to RMB20,667,245 million, RMB2,042,937
and building a country with strong transportation million or 11.0% higher compared with the end of the
network. It fully supported the high-quality development previous year, of which RMB denominated loans of
of the manufacturing industry, served the state’s energy domestic branches were RMB18,929,925 million, up by
supply security and low-carbon transformation strategy, RMB2,124,707 million or 12.6%.

DISTRIBUTION OF LOANS BY BUSINESS LINE

In RMB millions, except for percentages

At 31 December 2021 At 31 December 2020

Percentage Percentage
Item Amount (%) Amount (%)
Corporate loans 12,194,706 59.0 11,102,733 59.6
  Short-term corporate loans 2,737,742 13.2 2,643,212 14.2
  Medium to long-term corporate loans 9,456,964 45.8 8,459,521 45.4
Discounted bills 527,758 2.6 406,296 2.2
Personal loans 7,944,781 38.4 7,115,279 38.2
  Residential mortgages 6,362,685 30.8 5,728,315 30.8
  Personal consumption loans 187,316 0.9 183,716 0.9
  Personal business loans 702,441 3.4 521,638 2.8
  Credit card overdrafts 692,339 3.3 681,610 3.7
Total 20,667,245 100.0 18,624,308 100.0

28
 Discussion and Analysis

Corporate loans rose by RMB1,091,973 million or good reputation and increasing market shares of online
9.8% from the end of last year. Specifically, short-term inclusive finance product “e-Mortgage Quick Loan”.
corporate loans and medium to long-term corporate
Please see the section headed “Discussion and Analysis —
loans increased by RMB94,530 million and RMB997,443
Risk Management” for detailed analysis of the Bank’s loans
million respectively. The Bank continued to increase credit
and their quality.
allocation to manufacturing, strategic emerging industries,
inclusive finance, green finance, rural revitalization and
other key fields, and the Bank’s corporate loans in key
Investment
strategic areas such as the Beijing-Tianjin-Hebei region,
Yangtze River Delta, Guangdong-Hong Kong-Macao In 2021, the Bank continued to reinforce its financial
Greater Bay Area, Central China and Chengdu-Chongqing service capability for the real economy and scaled up its
economic circle continued to grow. investments in local government bonds, green bonds and
Personal loans increased by RMB829,502 million or other bonds. As at the end of 2021, investment amounted
11.7% from the end of last year. Specifically, residential to RMB9,257,760 million, representing an increase of
mortgages grew by RMB634,370 million or 11.1%; RMB666,621 million or 7.8% from the end of the previous
personal business loans increased by RMB180,803 million year. Among these, bonds rose by RMB763,152 million or
or 34.7%, and the rapid growth is mainly because of the 9.5% to RMB8,817,345 million.

In RMB millions, except for percentages

At 31 December 2021 At 31 December 2020

Percentage Percentage
Item Amount (%) Amount (%)
Bonds 8,817,345 95.2 8,054,193 93.8
Equity instruments 190,186 2.1 175,698 2.0
Funds and other 148,166 1.6 262,800 3.1
Accrued interest 102,063 1.1 98,448 1.1
Total 9,257,760 100.0 8,591,139 100.0

DISTRIBUTION OF INVESTMENT IN BONDS BY ISSUERS

In RMB millions, except for percentages

At 31 December 2021 At 31 December 2020

Percentage Percentage
Item Amount (%) Amount (%)
Government bonds 6,371,607 72.3 5,737,368 71.2
Central bank bonds 38,207 0.4 32,072 0.4
Policy bank bonds 754,719 8.6 725,625 9.0
Other bonds 1,652,812 18.7 1,559,128 19.4
Total 8,817,345 100.0 8,054,193 100.0

In terms of distribution by issuers, government bonds increased by RMB634,239 million or 11.1% over the end of last year,
mainly due to the increase in local government bonds and national bonds; central bank bonds increased by RMB6,135
million or 19.1%; policy bank bonds went up by RMB29,094 million or 4.0%; and other bonds increased by RMB93,684
million or 6.0%.

Annual Report 2021

29
Discussion and Analysis

DISTRIBUTION OF INVESTMENT IN BONDS BY REMAINING MATURITY

In RMB millions, except for percentages

At 31 December 2021 At 31 December 2020

Percentage Percentage
Remaining maturity Amount (%) Amount (%)
Undated(1) 167 0.0 35 0.0
Less than 3 months 514,685 5.8 495,137 6.1
3 to 12 months 1,228,144 13.9 978,923 12.2
1 to 5 years 3,517,415 39.9 3,493,342 43.4
Over 5 years 3,556,934 40.4 3,086,756 38.3
Total 8,817,345 100.0 8,054,193 100.0

Note: (1) Refers to overdue bonds.

DISTRIBUTION OF INVESTMENT IN BONDS BY CURRENCY

In RMB millions, except for percentages

At 31 December 2021 At 31 December 2020

Percentage Percentage
Item Amount (%) Amount (%)
RMB-denominated bonds 8,110,061 92.0 7,388,349 91.8
USD-denominated bonds 450,447 5.1 436,381 5.4
Other foreign currency bonds 256,837 2.9 229,463 2.8
Total 8,817,345 100.0 8,054,193 100.0

In terms of currency structure, RMB-denominated bonds rose by RMB721,712 million or 9.8% over the end of last year;
USD-denominated bonds increased by an equivalent of RMB14,066 million or 3.2%; other foreign currency bonds increased
by an equivalent of RMB27,374 million or 11.9%. During the reporting period, the Bank improved the investment portfolio
structure of foreign currency bonds and moderately increased the investment in bonds denominated in other currencies.

DISTRIBUTION OF INVESTMENT BY MEASURING METHOD

In RMB millions, except for percentages

At 31 December 2021 At 31 December 2020

Percentage Percentage
Item Amount (%) Amount (%)
Financial investments measured at fair value 623,223 6.7 784,483 9.1
  through profit or loss
Financial investments measured at fair value 1,803,604 19.5 1,540,988 17.9
  through other comprehensive income
Financial investments measured at amortised 6,830,933 73.8 6,265,668 73.0
 cost
Total 9,257,760 100.0 8,591,139 100.0

As at the end of 2021, the Group held RMB1,607,183 million of financial bonds1, including RMB754,719 million of policy
bank bonds and RMB852,464 million of bonds issued by banks and non-bank financial institutions, accounting for 47.0%
and 53.0% of financial bonds, respectively.

1 Financial bonds refer to the debt securities issued by financial institutions on the bond market, including bonds issued by policy banks,
banks and non-bank financial institutions but excluding debt securities related to restructuring and central bank bonds.

30
 Discussion and Analysis

TOP 10 FINANCIAL BONDS HELD BY THE BANK

In RMB millions, except for percentages

Allowance
for
Nominal Annual impairment
Bond name value interest rate (%) Maturity date losses(1)
Policy bank bonds 2015 20,700 4.21 13 April 2025 –
Policy bank bonds 2020 19,461 3.23 23 March 2030 –
Policy bank bonds 2020 18,440 2.96 17 April 2030 –
Policy bank bonds 2019 17,663 3.45 20 September 2029 –
Policy bank bonds 2019 17,071 3.48 8 January 2029 –
Policy bank bonds 2015 16,250 4.29 7 April 2025 –
Policy bank bonds 2020 15,135 3.79 26 October 2030 –
Policy bank bonds 2020 14,256 3.70 20 October 2030 –
Policy bank bonds 2020 13,500 3.74 16 November 2030 –
Policy bank bonds 2015 13,435 3.81 5 February 2025 –

Note: (1) Excludes stage 1 allowance for impairment losses set aside in accordance with the expected credit loss model.

Liabilities
As at the end of 2021, total liabilities reached RMB31,896,125 million, an increase of RMB1,460,582 million or 4.8%
compared with the end of last year.

In RMB millions, except for percentages

At 31 December 2021 At 31 December 2020

Percentage Percentage
Item Amount (%) Amount (%)
Due to customers 26,441,774 82.9 25,134,726 82.6
Due to banks and other financial institutions 2,921,029 9.2 2,784,259 9.1
Repurchase agreements 365,943 1.1 293,434 1.0
Debt securities issued 791,375 2.5 798,127 2.6
Other 1,376,004 4.3 1,424,997 4.7
Total liabilities 31,896,125 100.0 30,435,543 100.0

Annual Report 2021

31
Discussion and Analysis

Due to Customers RMB837,432 million or 7.2%. In terms of maturity

structure, time deposits increased by RMB952,110 million
Due to customers is the Bank’s main source of funds. As at or 8.0%, while demand deposits increased by RMB271,925
the end of 2021, due to customers was RMB26,441,774 million or 2.1%. In terms of currency structure, RMB
million, RMB1,307,048 million or 5.2% higher than that deposits stood at RMB24,914,524 million, an increase of
at the end of the previous year. In terms of customer RMB1,342,532 million or 5.7%. Foreign currency deposits
structure, corporate deposits increased by RMB386,603 were equivalent to RMB1,527,250 million, a decrease of
million or 3.0%; and personal deposits increased by RMB35,484 million or 2.3%.

DISTRIBUTION OF DUE TO CUSTOMERS BY BUSINESS LINE

In RMB millions, except for percentages

At 31 December 2021 At 31 December 2020

Percentage Percentage
Item Amount (%) Amount (%)
Corporate deposits
  Time deposits 5,798,353 21.9 5,489,700 21.8
  Demand deposits 7,533,110 28.5 7,455,160 29.7
Subtotal 13,331,463 50.4 12,944,860 51.5
Personal deposits
  Time deposits 7,107,386 26.9 6,463,929 25.7
  Demand deposits 5,390,582 20.4 5,196,607 20.7
Subtotal 12,497,968 47.3 11,660,536 46.4
Other deposits (1)
250,349 0.9 261,389 1.0
Accrued interest 361,994 1.4 267,941 1.1
Total 26,441,774 100.0 25,134,726 100.0

Note: (1) Includes outward remittance and remittance payables.

DISTRIBUTION OF DUE TO CUSTOMERS BY GEOGRAPHIC AREA

In RMB millions, except for percentages

At 31 December 2021 At 31 December 2020

Percentage Percentage
Item Amount (%) Amount (%)
Head Office 38,290 0.1 42,611 0.2
Yangtze River Delta 5,436,282 20.6 5,057,963 20.0
Pearl River Delta 3,495,325 13.2 3,335,179 13.3
Bohai Rim 6,885,411 26.0 6,733,969 26.8
Central China 3,900,441 14.8 3,608,490 14.4
Western China 4,320,355 16.3 4,072,459 16.2
Northeastern China 1,410,376 5.3 1,308,155 5.2
Overseas and other 955,294 3.7 975,900 3.9
Total 26,441,774 100.0 25,134,726 100.0

32
 Discussion and Analysis

Shareholders’ Equity Net cash outflows from investing activities amounted

to RMB674,556 million. Specifically, cash inflows were
As at the end of 2021, shareholders’ equity totaled RMB2,718,919 million, representing an increase of
RMB3,275,258 million, RMB365,743 million or 12.6% RMB613,048 million over last year, mainly due to the
higher than that at the end of the previous year. Equity increased cash proceeds from the sale and redemption
attributable to equity holders of the parent company of financial investments; and cash outflows were
recorded an increase of RMB364,253 million or 12.6% to RMB3,393,475 million, representing an increase of
RMB3,257,755 million. Please refer to the “Consolidated RMB152,507 million, mainly due to the increase in cash
Financial Statements: Consolidated Statement of Changes payment for financial investments.
in Equity” for details.
Net cash outflows from financing activities amounted
to RMB11,553 million. Specifically, cash inflows were
Off-balance Sheet Items RMB975,234 million, representing an increase of
RMB27,759 million over last year, mainly due to the
The off-balance sheet items of the Bank mainly include increased cash proceeds from the issuance of other equity
derivative financial instruments, contingencies and instruments; and cash outflows were RMB986,787 million,
commitments. For details on the nominal amount and representing a decrease of RMB7,637 million mainly due
fair value of derivatives financial instruments, please refer to the decreased cash payment for repayment of debt
to “Note 21. to the Consolidated Financial Statements: securities.
Derivative Financial Instruments”. For details on
contingencies and commitments, please refer to “Note 46.
to the Consolidated Financial Statements: Commitments Reconciliation of Differences between
and Contingent Liabilities”. the Financial Statements Prepared
under PRC GAAP and Those under IFRSs

Analysis on Statement of Cash Flows In respect of the financial statements of the Bank prepared
under PRC GAAP and those under IFRSs, net profit
Net cash inflows from operating activities amounted attributable to equity holders of the parent company for
to RMB360,882 million, representing a decrease of the year ended 31 December 2021 and equity attributable
RMB1,196,734 million as compared to last year, principally to equity holders of the parent company as at the end of
due to the decrease of cash inflows resulted from the the reporting period have no differences.
decrease of net increase of due to customers and due to
banks and other financial institutions. Specifically, cash
outflows of operating assets increased by RMB8,130
million; and cash inflows of operating liabilities decreased
by RMB1,185,927 million.

Annual Report 2021

33
Discussion and Analysis

BUSINESS OVERVIEW

34 Corporate Banking SUMMARY OPERATING SEGMENT INFORMATION

In RMB millions, except for percentages

2021 2020
39 Personal Banking Percentage Percentage
Item Amount (%) Amount (%)
Operating income 860,880 100.0 800,075 100.0
41 Asset Management Services   Corporate banking 398,373 46.3 393,661 49.2
  Personal banking 346,172 40.2 318,058 39.7
  Treasury operations 111,278 12.9 83,931 10.5
42 Financial Market Business  Other 5,057 0.6 4,425 0.6
Profit before 424,899 100.0 392,126 100.0
 taxation
44 FinTech
  Corporate banking 140,569 33.1 146,903 37.5
  Personal banking 195,658 46.0 174,469 44.5
  Treasury operations 85,326 20.1 68,199 17.4
48 Internet Finance
 Other 3,346 0.8 2,555 0.6

Note: Please see “Note 48. to the Consolidated Financial Statements: Segment
51 Outlet Development Information” for details.

51 Service Improvement
Corporate Banking
Adhering to using corporate banking services as an important means
to boost the high-quality development of the real economy, the Bank
52 Human Resources innovated the corporate credit layout of new manufacturing, new services,
new basic industries and high-tech customer groups, improved the supply
  Management, Employees
of financial resources for the key areas and weak links in the real economy,
  and Institutions and actively shouldered the responsibilities as a large bank. At the end
of 2021, corporate loans reached RMB12,194,706 million, representing
an increase of RMB1,091,973 million or 9.8% over the end of last year.
54 Internationalized Operation Corporate deposits stood at RMB13,331,463 million, representing an
increase of RMB386,603 million or 3.0%.

New breakthroughs have been achieved in customer base. The

58 Diversified Operation and Bank deeply conducted the “net making and patching” program,
expanded the customer base, improved customer quality, activated
  Subsidiary Management
customer transactions, and enhanced customer expansion and
maintenance capability. While focusing on high-quality customer
marketing, the Bank vigorously expanded medium-sized enterprise
61 Major Controlled Subsidiaries customer groups to establish a coordinated, active and loyal
  and Equity Participating customer base comprising large, medium and small enterprises. At
the end of 2021, the number of corporate customers increased by
 Company 12.1% over the end of the previous year to 9,691 thousand.

34
 Discussion and Analysis

Corporate loans of domestic branches

by industry of loan customers Corporate Deposits
Unit: RMB100 millions

Transportation, storage and 25.8%

postal services
Leasing and commercial services 15.2%

Manufacturing 15.1%
Water, environment and public 12.5% 75,331.10
utility management 74,551.60
Production and supply of 9.7% 67,325.58
electricity, heat, gas and water
Real estate 6.5%
57,983.53
Wholesale and retail 4.2% 54,897.00
52,957.04
Construction 2.9%

Science, education, culture 2.6%

and sanitation
Mining 1.9% 2019 2020 2021

Lodging and catering 0.7%

Time deposits Demand deposits
Others 2.9%

The Bank served the high-quality development of the green industries such as clean energy and green
manufacturing. It has carried out the campaign of transportation. At the end of 2021, the balance of
“Year of Financial Services for Manufacturing” for green loans amounted to RMB2.48 trillion. The Bank,
three consecutive years, and has signed a strategic as the lead underwriter, underwrote RMB63,637
cooperation agreement with the Ministry of Industry million worth of green bonds (including carbon
and Information Technology to strengthen product neutrality bonds) in the year.
innovation and resource guarantee. At the end of
The Bank actively integrated into the regional
2021, the balance of manufacturing loans exceeded
coordinated development strategy. It stepped
RMB2 trillion, ranking first among peers in terms of
up financial support focusing on coordinated
both the balance and increment.
development of the Beijing-Tianjin-Hebei region,
The Bank supported the high-level self-reliance integrated development of the Yangtze River
and self-improvement in science and technology. Delta, Guangdong-Hong Kong-Macao Greater Bay
It upgraded the financial service system for Area, the rise of central China, and the Chengdu-
technological innovation, signed a strategic Chongqing economic circle. At the end of 2021,
cooperation agreement with the Ministry of Science RMB corporate loans in key regions reached
and Technology, carried out the campaign of RMB7.54 trillion, accounting for 71% of the balance
“Financial Service for National High-tech Industrial of RMB corporate loans of domestic branches,
Development Zones and High-tech Enterprises” representing an increase of RMB884.0 billion over
and initially formed a service pattern driven by the end of the previous year.
“technological innovation and strategic emerging
industries”. At the end of 2021, the balance of loans
to enterprises in key high-tech fields and strategic Inclusive Finance
emerging industries supported by the state both
exceeded RMB1 trillion. In light of China’s 14th Five-Year Plan and vision for the
year 2035, the Bank implemented the new development
The Bank provided comprehensive financial concept, served the new development paradigm,
services for private enterprises. It implemented the and promoted high-quality development in the new
“Eight Comprehensive Measures” to serve private development stage. With the high-quality development
enterprises, and carried out the “Project of Improving of inclusive finance as an important measure to better
Services for Private Enterprise Partners”. At the end serve the real economy and enhance its competitiveness,
of 2021, the balance of loans to private enterprises the Bank continued to push forward product innovation,
reached RMB3.39 trillion. strengthen service channels, improve comprehensive
The Bank drove green development with green services and promote the high-quality and sustainable
finance. It actively supported green and low-carbon development of inclusive financial services.
transformation, especially the financial needs of

Annual Report 2021

35
Discussion and Analysis

The Bank continuously provided stable and efficient upgraded and built version 2.0 of the “ICBC Business
inclusive credits. It adhered to digital inclusive Matchmaker”, a cross-border matchmaking platform
development, accelerated the improvement of that provides intelligent, full-process and closed-
the centralized operation system and online and loop cross-border matchmaking services consisting
offline integrated service channels in line with of five features, i.e. events, marketplace, feature
the characteristics of “digital inclusive finance”, zone, financial service and information message, and
and supported the sustained and rapid growth of allows 7×24-hour, one-point access to the global
inclusive loans and customers. industrial chain for small and medium enterprises.

The Bank provided targeted support for the key At the end of 2021, inclusive small and micro
links of inclusive finance. Catering for the needs enterprise loans amounted to RMB1,099,012 million,
of the real economy, it increased first loans, loan representing an increase of RMB378,448 million or
renewal, credit loans and manufacturing loans for 52.5% over the beginning of the year; inclusive small
small and micro enterprises. It optimized the regional and micro enterprise loan customers numbered 795
layout, and promoted the rapid business growth thousand, representing an increase of 204 thousand;
in the regions with active operation of small and the average interest rate of newly granted inclusive
micro enterprises, to attain the key regions-driven loans was 4.10%. The balance of agriculture-related
development. It stepped up support for regions with loans was RMB2,661,317 million, representing an
weak business foundation to achieve sustainable increase of RMB404,101 million or 17.9% over the
regional development. beginning of the year; the Bank had 1,182 thousand
agriculture-related loan customers, representing
Innovation of inclusive finance products was
an increase of 240 thousand; the average interest
advanced constantly. The Bank upgraded the “Quick
rate of newly granted agriculture-related loans was
Lending for Operation”, accelerated the integration
4.13%, down 19 basis points from the previous year.
and application of multidimensional data, and
The Bank had 342 small and micro financial business
improved the non-contact service mode. The Bank
centers, up 18 over the end of the previous year.
launched innovative scenarios such as “Technical
Innovation Loan”, “Prosperous Agriculture Loan”
and “Solar Power Loan” to better meet the needs
Institutional Banking
of market segments. The Bank continued to
promote the online transformation of the whole The Bank consolidated its dominant position in
process of “e-Mortgage Quick Loan” product, to traditional fields such as finance and social security,
improve business processing efficiency and customer and served the national reform. In the financial field,
experience; “e-Enterprise Quick Loan”, an innovative the Bank strengthened basic financial services for
financing product, was launched to further enrich financial funds and provided high-quality financial
online collateral products. The Bank optimized the services to financial departments and budget units
financial service platform for supply chain, created at all levels; in the field of social security, “ICBC
a unified service portal for digital supply chain e Social Security” services were made available in
financing, and further enhanced its service capability. all provinces and autonomous regions in China; in
The Bank continuously enhanced the capability the field of agriculture, rural areas and farmers, it
of inclusive finance services. It deeply identified took the lead in the industry to launch the “Digital
customer needs, strengthened strategic coordination, Villages” comprehensive service platform to assist
and leveraged the Group’s comprehensive business agricultural and rural authorities at all levels in
advantages to render the inclusive finance services strengthening the standardized management of rural
that combined financing, consulting and commercial collective economy and improving the smart public
services; it continued to carry out a series of services and social governance in rural areas, which
activities such as “ICBC Inclusive Finance Travel”, have covered 31 provinces, 260 prefectures and
“One Thousand Experts Serving Small and Micro cities across the country. The Bank has established
Enterprises”, “Ten Thousand Small and Micro information technology-based cooperation with
Enterprises Growth Plan” and “Specialization, 770 district and county-level agricultural and rural
Refinement, Differentiation and Innovation  • departments. Its project was rated as “2021 Excellent
Chunfeng Action”, and gradually formed a set Project of New Technology, New Product and New
of inclusive finance service models with strategic Model of Digital Agriculture in Rural Areas” by the
value; it gave full play to the advantages of the Ministry of Agriculture and Rural Affairs.
Group’s domestic and foreign service outlets,

36
 Discussion and Analysis

The Bank gave full play to the advantages of FinTech of multi-level capital market, strove to be the capital
and tapped the growth potential in education, hub and leading bank in the capital market, and
healthcare, public resources, social organizations and signed a tripartite strategic cooperation agreement
other fields. In the field of education, it took the lead with the National Equities Exchange and Quotations
in the industry to launch the “Education and Training Co., Ltd. and Beijing Stock Exchange. It helped
Cloud” supervision platform, carried out IT-based with interbank risk prevention and control through
fund supervision cooperation with 938 education FinTech, and provided nearly 30 small and medium
authorities at all levels in China, and assisted to banks, securities companies, insurance and other
strengthen the management of education and interbank customers with five categories of scientific
training institutions and the supervision of training and technological products, including “ICBC
funds. In the medical field, the Bank launched BRAINS” intelligent anti-money laundering system
the “ICBC Cloud Healthcare”, an open platform and credit management system.
of intelligent healthcare, and formed a matrix of
intelligent healthcare products and services in 45
sub-categories out of five categories, covering all Settlement and Cash Management
services and products in line with the major policies
on the national “healthcare, medical insurance and The Bank provided high-quality account services in a
medicine” interconnection reform. It was awarded customer-centric manner. It actively implemented the
the “excellent case of digital healthcare innovation requirements for “delegating power, streamlining
services” at the 16th China Health Information administration and optimizing government
Technology Application and Exchange Conference services” and strengthened the digital convenient
of the Information Center of the National Health service coverage of settlement accounts in various
Commission. In the field of public resource trading, typical scenarios. It enhanced cooperation with
the Bank independently developed the “e-Enterprise government departments, and provided enterprises
Guarantee”, a blockchain e-guarantee platform that with source account opening services through the
provides a new online service mode of e-guarantee “Enterprise Link” business. It broadened customer
with automatic processing, real-time receiving and base by platform, and made the account opening
whole-process management in the field, and helps appointment interface available to help improve the
improve the business environment. In the field of business environment.
social organizations, the Bank launched a “Civil The Bank deeply served the broadest customer
Affairs Capital Verification Link” and cooperated base, and made a breakthrough in “net making
with local civil affairs departments to provide and patching” program. It gave full play to the
online capital verification services for new social advantages of settlement finance to serve large
organizations. customers, and provided comprehensive financial
The Bank built a new model of cooperation in services for group enterprises and large and
financial institutions to serve the real economy. medium enterprises relying on the advantages of
It improved the mechanism for customer service, cash management business. It served medium-sized
established a “systematic, digital, ecological and customers with high-quality settlement products,
professional” service system, and served thousands upgraded the “ICBC Pooling” platform, embedded
of customers of different types identified by level, the “ICBC E Enterprise Payment” into the trading
class, group or category. It launched the “Gong platform, and provided efficient online payment
Tong Ying”, an innovative comprehensive service and settlement services for traders. It offered
platform for financial customers, which provides digital batch service for small and micro customers,
customers with all-round and one-stop services. The embedded “non-financial + financial” services in
Bank deepened financial infrastructure cooperation, enterprise operation and management through
optimized innovation support for exchanges, small and micro financial service platform, realized
registration and settlement, guarantee funds, targeted marketing, big data operation and digital
payment systems and other financial infrastructure risk control, and effectively improved the coverage
customers, and facilitated the development of and capability of services for small and micro
financial institutions through platform services. It was enterprises.
among those first successfully participating in the At the end of 2021, the Bank maintained
commodity clearing business in Shanghai Clearing 11,216 thousand corporate settlement accounts,
House, and ranked first in the market in terms of representing an increase of 1,110 thousand over the
contractual customers and clearing amount. It was end of the previous year. It had 1,609 thousand cash
also among those first obtaining the online financing management customers, including 9,615 global cash
qualification of standard warehouse receipts on management customers. The volume of corporate
Dalian Commodity Exchange and carried out the first settlements reached RMB2,598.13 trillion.
interbank transaction. The Bank served the building

Annual Report 2021

37
Discussion and Analysis

Strengthening Settlement Finance Support and

Coordination to Serve the Bank’s Strategy
Facilitating to build the “No.1 Personal Bank”. The Bank promoted the interactions among government, business
and consumption (“GBC”) through ICBC e BillPay. In 2021, it handled payment services of RMB713 billion for
customers, served 144 million individual customers in total, and saw an increase in the flows of both corporate and
individual customer. In 2021, ICBC e BillPay was awarded the “Best Aggregate Payment Product in China” by The
Asian Banker.

Facilitating to build the “Preferred Bank for Foreign Exchange Business”. It took a global response approach
to extend global cash management services to more than 80 countries and regions. It deepened bank-enterprise
cooperation, and effectively served 64 “going global” state-owned enterprises directly under the central government,
accounting for 77% of total, and 149 customers out of the Fortune Global 500. In 2021, the Bank was awarded the
“Best Asian International Cash Management Bank in Asia Pacific” by The Asian Banker.

Facilitating to implement the Strategy for Sharpening Competitive Edge in Key Regions. Focusing on the
building of two zones in Beijing, it launched the pilot project of domestic and foreign currency integrated cash pool.
Focusing on the building of Guangdong-Hong Kong-Macao Greater Bay Area, the Bank took the lead in the industry
to launch the universal free trade (FT) cash pool business in Guangzhou and Hengqin. Focusing on the Yangtze River
Delta Integration, the Bank provided strategic customers with innovative services for cross-border cash pool under the
Shanghai Free Trade Zone policy.

Facilitating to implement the Urban-Rural Collaborative Development Strategy. It was the first to launch
the “rural collective intelligent account opening service”, provided door-to-door services with portable intelligent
terminals, and comprehensively improved the service experience of agro-related non-enterprise accounts. It carried
out chain marketing with a focus on leading enterprises in agricultural industrialization, and assisted high-quality
enterprises with reserve grain purchase projects.

Investment Banking environmental protection and other industries.

The Bank innovated equity financing products to
The Bank served the high-quality development help enterprises optimize their capital structure
of the real economy, focusing on key areas such and provide fund support for major infrastructure
as the reform of state-owned enterprises, capital projects. The Bank expanded actively managed
market, industrial integration, and the Belt and Road asset securitization business to meet the needs of
Initiative. As the first bank to issue more than RMB1 enterprises for comprehensive financial services.
trillion of M&A financing accumulatively, the Bank The Bank accelerated the financing rearrangement
increased credit supply in manufacturing industry and enterprise debt restructuring, and mitigated the
and maintained a leading position in domestic and liquidity pressure and potential risks of customers.
overseas M&A markets. By number of M&A deals The Bank enriched the mobile scenarios of customer
led by the Bank, the Bank ranked first in China services, upgraded the functions of “ICBC e
in Refinitiv’s ranking of Any Chinese Involvement Confirmation Service”, “ICBC e Intelligence”, “ICBC
Completed and first in the ranking of China e Security”, “ICBC e RM” and “ICBC ISP” and
Outbound Announced M&A. enhanced the new driving force of digital services.
The Bank assisted with the supply-side structural In 2021, the Bank acted as the lead underwriter for
reform through the new model of investment- 2,673 Chinese bond projects with a total value of
loan interconnection and interaction between RMB1,807,765 million, ranking first in the market for
commercial banking and investment banking. 15 consecutive years. It acted as the lead underwriter
The Bank actively participated in publicly offered for a total of RMB81,357 million worth of ESG bonds
REITs to support infrastructure construction, and such as green bonds (including carbon neutrality
strengthened services for scientific and technological bonds), sustainability-linked bonds and rural
innovation, advanced manufacturing, green revitalization bonds, ranking first in the market.

38
 Discussion and Analysis

Discounted Bills The broadest customer base service system was

upgraded comprehensively. Being customer-centric,
The Bank grasped the development trend of financial the Bank launched “ICBC Star Privileges”, a brand-
services, successfully made a debut of banker’s new high-star personal customer value-added
acceptance rediscounting service of supply chain bill equity brand, and deeply carried out the activities,
in China, and launched featured products such as including “March Forward with Wealth and Gift”, a
“Monthly Discount”, “Weekend Discount”, “ICBC medium and high-end customer marketing activity,
i Green Discount”, “Supply Chain Bill Pay Plus”, “Treasure Hunt”, a credit reward activity, and “Star
“ICBC e Discount + Agreed Interest”. The “bill Promotion”, a targeted marketing activity. The
business platform scenario” project was connected number of customers with the average monthly/daily
with the high-quality industrial platform to further financial assets of RMB50,000 and above increased
improve the user function experience of bill business by 6.5% over the end of the previous year.
in corporate internet banking channels.
The Bank promoted the transformation and
In 2021, discounted bills amounted to development of wealth management business. It
RMB1,708,223 million, representing an increase of organized and carried out activities such as “828
15.8% year on year, ranking first in the market. ICBC Wealth Season” and “AXA Theme Day”,
Discounted bills for small and micro enterprises launched a series of wealth management products
reached RMB473,966 million. At the end of 2021, that are open, selected, best-selling and exclusive
the balance of discounted bills for small and micro under new financial regulations, and promoted
enterprises was RMB213,796 million. intelligent asset allocation services.

The Bank fully met customers’ consumer financing

Personal Banking needs. Adhering to the guideline that “housing is
for living in, not for speculation”, the Bank satisfied
In 2021, the Bank continued to deepen the No.1 Personal the reasonable needs of customers, including first
Bank Strategy, to make it a bank satisfactory to the time home buyers, and continued to carry out
people. Focusing on the building of an individual customer special marketing activities, such as “Home-backed
ecosystem, the Bank promoted the high-quality business Finance”, “Merchants Mate”, “Online Merchants
development relying on the “intelligent brain” decision Loan” and “Entrepreneurship Dream”.
pivot and full-spectrum operation system.
At the end of 2021, the number of personal
It upgraded the “intelligent brain” decision pivot. customers increased by 23.41 million over the end of
Relying on the “intelligent brain”, the Bank drew the previous year to 704 million. Personal financial
up a plan for differentiated and targeted services, assets totaled RMB16.96 trillion. Specifically,
and developed the overall plan and strategy for personal deposits reached RMB12,497,968 million,
personal customer marketing services through online representing an increase of RMB837,432 million
and offline multi-channel service outlets. A total of or 7.2%. Personal loans stood at RMB7,944,781
34 intelligent models have been developed and put million, representing an increase of RMB829,502
into operation to realize automatic triggering and million or 11.7%. Funds under agency sales
real-time response, strengthen the empowerment amounted to RMB645.4 billion, government bonds
support for marketing and management under agency distribution were valued at RMB57
personnel, and promote the digital and intelligent billion, and personal insurance products under
transformation of personal banking. agency sales reported at RMB108.2 billion.

Annual Report 2021

39
Discussion and Analysis

Personal Deposits Personal Loans

Unit: RMB100 millions Unit: RMB100 millions

53,905.82
51,966.07 79,447.81
43,280.90 71,152.79
63,836.24

71,073.86
64,639.29
61,496.54

2019 2020 2021 2019 2020 2021

Time deposits Demand deposits

ICBC Deepened the No.1 Personal Bank Strategy

In 2021, the Bank quickened the pace of deepening the No.1 Personal Bank Strategy, made new progress and new
breakthroughs, and took on a new look.

Focusing on the financial business “serving, benefiting and reassuring the people”, the Bank improved the
adaptability, competitiveness and inclusiveness of financial services, with the total number of personal customers
topping 700 million. Among them, the number of mobile banking customers reached 469 million. Credit card
consumption tended to recover gradually, giving an impetus to services for the strategy of expanding domestic
demand. Focusing on the goal of common prosperity, the Bank vigorously developed wealth management business,
managed personal financial assets of nearly RMB17 trillion, remaining in the leading position in the industry. The
balance of personal wealth management products under the new rules stood at RMB1.71 trillion, representing an
increase of 102.71% over the end of the previous year. Relying on “Rural Revitalization • Funong Card”, the Bank
quickened the pace of expanding county markets, and promoted financial services at the grass-roots level. It launched
the “ICBC with You” service brand, created products, services, channels and theme activities suitable for the elderly,
and accelerated the building of all-in-one social security card as a move to fulfill the responsibility of a large bank. It
held nearly half of the newly increased market share of social security cards.

In light of the core objective of strategic breakthrough, the Bank strengthened the upgrading of financial supply side
services, and promoted high-quality business development. Personal deposits exceeded RMB12 trillion, hitting a new
high. The cost was effectively controlled and the capacity of volume-price coordination was significantly enhanced. The
balance of personal loans approached to RMB8 trillion. The quality of assets improved steadily, and the balance and
ratio of non-performing loans both declined. Income from fee-based personal banking increased steadily.

In light of the “customer-centric” business philosophy, the Bank comprehensively promoted the transformation from
“business-oriented” to “customer-oriented”, strengthened the overall planning to meet the needs of customers, and
significantly improved the cohesion and competitiveness of personal banking. Focusing on the building of personal
customer ecosystem and customers’ needs to spend money, make money, borrow money and manage money, the
Bank promoted the comprehensive building of wealth management, consumer finance, payment and settlement
and smart account business system, with the operation of key customer groups as the foothold. The Bank further
strengthened capacity-building, assessment orientation and digital transformation, and established a digital operation,
investment research and consulting, and innovation empowerment team of the Head Office, providing stronger
support and guarantee for building the No.1 Personal Bank to the satisfaction of the people.

40
 Discussion and Analysis

Private Banking The Bank accelerated the building of ICBC e Life

platform by creatively promoting “credit card plus
In line with the buyer’s market trend of wealth e-CNY” closed loop where both e-CNY payment and
management, the Bank grasped the diversified needs QR code payment could be completed with the e
of private banking customers, shifted from single Life APP. The Bank supported the acceptance of Visa
product marketing to comprehensive service, and overseas cards in its e-CNY wallet to back up the
built a comprehensive service ecosystem for private Winter Olympic Games.
banking customers jointly built in multiple scenarios
By the end of 2021, the Bank had issued 1,169
of “individuals, families, enterprises and social
million bank cards, an increment of 41.70 million
responsibility”.
compared with the end of last year. Specifically,
The Bank adhered to product and service innovation. 1,006 million debit cards and 163 million credit
It made efforts to build a service ecosystem cards had been issued. The overdraft balance of
for entrepreneurs, and listed 100 branches as credit cards reached RMB692,339 million. In 2021,
“Entrepreneurs Service Center”. It jointly issued ICBC bank cards registered a spending volume of
the Report on ICBC Entrepreneur Wealth Health RMB22.99 trillion, including RMB20.43 trillion from
Index with renowned universities. The Bank strove debit cards and RMB2.56 trillion from credit cards.
to build a comprehensive service platform for
family customers, vigorously developed family trust
consulting business, and successfully launched Asset Management Services
insurance trust, fund trust, equity trust and other
full-spectrum family wealth management services. The Bank firmly implemented the regulatory requirements,
seized development opportunities, pushed forward
The Bank spared no effort to promote innovation the transformation of asset management business
in the field of green finance, worked with ICBC and products in a steady and compliant manner and
Wealth Management to create “Hengrui” series of comprehensively enhanced investment management and
green finance themed products, helped serve major research capabilities. It established an asset management
strategies such as national rural revitalization and business system allowing allocation of capital in all markets
common prosperity, and carried forward China’s and value creation across the whole value chain by relying
contemporary entrepreneurship. on the strength of the Group’s asset management, custody
The Bank was awarded the “Overall Best State- and pension businesses as well as its comprehensive
Owned Private Bank in China” by the Asiamoney, the subsidiaries specialized in fund, insurance, leasing,
“Excellent Private Bank of the Year” by the National investment banking and wealth management, to serve
Business Daily, and the “The Competitive Private direct financing, and provide diversified, integrated and
Bank in 2021” by the China Business Journal. specialized services for customers.

At the end of 2021, the Bank had 199.5 thousand

private banking customers, representing an increase Wealth Management Services
of 17.6 thousand or 9.7% over the end of the
previous year. The assets under management In compliance with regulatory requirements and
totaled RMB2.32 trillion, representing an increase of New Rules on Asset Management, the Bank made
RMB144.2 billion or 6.6%. comprehensive use of wealth management product
undertaking, asset return to the balance sheet and
market-based transfer and other measures that
Bank Card Business comply with the new regulations, and overdid the
task of rectifying and reducing existing wealth
Based on the crossover scenario of “finance plus
management products during the transition
tourism”, the Bank issued the co-branded credit
period. At the end of 2021, the balance of wealth
card of ICBC Universal Beijing Resort with exclusive
management products reached RMB2,586.9 billion.
authorization. It also issued various innovative
Please refer to the section headed “Business
debit cards and carried out continuous promotional
Overview — Diversified Operation and Subsidiary
campaigns such as “Palace Museum Card Applicant
Management” for details on the business
Gifts” and “CNPC UnionPay Cloud Flash Pay
development of ICBC Wealth Management.
Discount”.

Annual Report 2021

41
Discussion and Analysis

Asset Custody Services At the end of 2021, the annuity funds under custody
amounted to RMB407.0 billion. The Bank managed
New breakthroughs were made in key products, 11.98 million individual enterprise annuity accounts,
and the Bank’s leading position in the industry and the annuity funds under custody reached
was further consolidated. The mutual funds under RMB1,152.3 billion. The Bank obtained the trustee,
custody amounted to RMB3.7 trillion, representing custodian and investment manager qualifications
an increase of RMB663.7 billion over the end of for occupational annuities in 33 regions under
the previous year. The pension funds under custody overall planning, with the total size of occupational
totaled RMB2.3 trillion, an increase of RMB359.1 annuities of the three qualifications ranking first in
billion. The enterprise annuity funds, occupational the market. The Bank ranked first among peers in
annuity funds and pension fund products under terms of the scale of enterprise annuity funds under
custody ranked first in the industry. The insurance custody, number of individual enterprise annuity
asset under custody was RMB5.9 trillion, an increase accounts and annuity funds under custody.
of RMB479.8 billion. The Bank achieved an important
breakthrough in global custody business, and was
approved eligible for the first batch of pilot custody Financial Market Business
and clearing bank under “Southbound Bond
Connect” scheme. The outsourcing business of asset Money Market Activities
management products developed rapidly, with a size
In terms of RMB, the Bank actively fulfilled its
over RMB2.5 trillion.
responsibilities as a large bank and assisted in
The building of intelligent custodian bank was maintaining the smooth operation of the money
advanced steadily. The Bank officially released the market. It rationally devised financing maturities,
“ICBC Intelligent Custody System”, launched the varieties and counterparty structure, and constantly
ICBC custody mobile banking and the intelligent improved the profitability of fund operation. As
investment service platform, and comprehensively it steadily promoted business innovation and
improved its custody service. development, it completed the first batch of offshore
RMB negotiable certificate of deposit (“NCD”)
The Bank was awarded the “Best Custodian Bank in
investments via “Southbound Connect”.
China” and the “Best Insurance Custodian Bank in
China” by The Asset and the “Best Custodian Bank In terms of foreign currencies, the Bank continued
in China (Mega Bank)” by The Asian Banker. to strengthen research of global central banks’
monetary policies and closely tracked changes in the
At the end of 2021, the size of custody business
fund liquidity and interest rates of foreign currency
reached RMB22.1 trillion.
markets. While ensuring liquidity safety, it flexibly
employed foreign currency market operation tools to
support the foreign currency financing needs of the
Pension Services
real economy. The Bank was among the first on the
In light of China’s strategy of actively responding to market to make foreign currency repurchase with
the aging population, the Bank made every effort domestic foreign currency NCD and bonds under
to promote the transformation and development of custody of ChinaBond as collaterals. In 2021, the
pension business to pension finance business, build Bank won many honors, including the “Best Foreign
a business ecosystem centering on pension fund Currency Lending Panel Bank”, the “Best Foreign
finance, senior care service finance and senior care Currency Lending Member” and the “Best Foreign
industry finance, help improve people’s well-being Currency Repo Member” conferred by China Foreign
and fulfill the responsibilities of a large bank. Exchange Trade System.

The Bank won the “Tianji Award for Pension

Financial Services Bank of the Year” by the
Securities Times, the “2021 Top 10 Supply Wealth
Management Innovation” by The Chinese Banker,
and the “2020–2021 Investible Pension Financial
Institution” by the Economic Observer.

42
 Discussion and Analysis

Investment Treasury Trading Business on Behalf of

Customers
In terms of RMB bonds, the Bank continued to
strengthen its capability to serve the real economy. In terms of foreign exchange settlement and sales on
It actively invested in local government bonds in behalf of customers and foreign exchange trading,
strategic regions and key fields, and the scale of the Bank continuously enriched foreign exchange
new investment in local government bonds ranked settlement and sales and foreign exchange trading
No.1 in the market for the seventh consecutive year. currencies, improved the trading functions of online
The Bank actively practiced green and low-carbon channels, and provided convenient service for
development and the rural revitalization strategy. enterprises in exchange rate risk management. In
It was among the first banks to invest in carbon terms of corporate commodity derivative trading,
neutrality bonds and sustainability linked bonds, under the routine pandemic control mechanism, the
and increased investment in rural revitalization Bank actively carried out online business promotion
bonds. Meanwhile, the Bank actively invested and marketing to attract customers, delivered good
in energy supply guarantee related bonds, and service to existing customers, promptly responded
bonds of advanced manufacturing industry and to customer queries and trading needs, and helped
private enterprises, to give full play to the financial corporate customers properly respond to commodity
guarantee for energy security effect. price fluctuation risks during the pandemic. In terms
of RMB interest rate derivative business, the Bank
In terms of foreign-currency bonds, the Bank
continued to provide interest rate risk management
steadily increased investments, moderately expanded
service to corporate customers like small and micro
portfolio investments, optimized the portfolio
enterprises and manufacturing enterprises. In terms
structure, and intensified support to the real
of the over-the-counter (“OTC”) bond business,
economy and green finance. It completed the first
the Bank distributed China Development Bank’s
batch of foreign-currency bond transactions via
financial bonds with the themes of “Coordinated
“Southbound Connect”.
Development of the Beijing-Tianjin-Hebei Region”
In 2021, the Bank was honored as the “Top “Carbon Neutrality” and “Ecological Protection and
Investment Houses in Asian G3 Bonds” by The Asset. High-quality Development of the Yellow River Basin”,
Agricultural Development Bank of China’s “Carbon
Neutrality” financial bonds and the OTC local
Financing government bonds in 36 provinces (autonomous
regions, municipalities directly under the Central
The Bank reasonably adjusted the financing structure
Government, and cities specifically designated in
based on liquidity management requirements, and
the state plan) to investors in the OTC market,
operating benefit improved steadily. It actively
contributing to the coordinated development of
advanced the development of the business system,
key regions and assisting in green finance, rural
improved the level of refined business management,
revitalization and regional development. The Bank
and promoted the steady development of the
was awarded the “Excellent Underwriter Award
financing business. For details on the Bank’s CDs and
for Over-the-counter Circulating Bonds” and
debt securities issued, please refer to “Note to the
an “Excellent Underwriter Award for Over-the-
Consolidated Financial Statements: 33. Certificates of
Counter Local Government Bonds” by China Central
Deposit; 35. Debt Securities Issued”.
Depository & Clearing Co., Ltd. In terms of foreign
institutional investors trading business in China’s
inter-bank market, the Bank took an active part in
serving foreign institutional investors from more
than 60 countries and regions. It won the “Opening-
Up Contribution Award” granted by the National
Interbank Funding Center and the “Excellent
Settlement Agent under Global Connect Business”
granted by China Central Depository & Clearing Co.,
Ltd.

Annual Report 2021

43
Discussion and Analysis

Asset Securitization Business In 2021, the Bank was ranked at first place in the
banking industry for the eighth consecutive year in
The asset securitization business effectively CBIRC’s IT supervision ratings. The intelligent banking
supported the Bank in disposing of non-performing ecosystem ECOS won PBC’s special award of the “FinTech
assets and optimizing credit structure, and further Development Awards”. The Bank became the first
improved the Bank’s capability to serve the real enterprise in the Chinese financial industry to obtain the
economy. In 2021, the Bank issued 19 asset-backed highest Data Management Capability Maturity (DCMM)
securities totaling RMB112,592 million, including the rating (Level 5), and it won the “Best Financial Innovation
first green vehicle installment asset-backed securities Award” from The Chinese Banker for the sixth consecutive
issued by a commercial bank in China. By introducing year.
cross-border funds via “Bond Connect”, it further
promoted financial cooperation between domestic
and foreign institutions and the two-way opening up Fortifying Digital Infrastructure
of the Chinese green bond market.
The Bank adhered to technology self-reliance, promoted
technology breakthrough in key fields of infrastructure
Precious Metal Business system, and strengthened research and application of
cutting-edge technologies. A series of new enterprise-
The Bank promoted the transformation and level technology platforms with strong service capability
development of the physical precious metal and industry-leading advantages were built up based on
business, to meet customers’ demands for quality 5G+ABCDI1. As at the end of 2021, the Bank had the most
improvement in investment and consumption. It newly added and accumulated patents among Chinese
launched physical precious metal products with the banks.
theme of China International Import Expo, and on
The Bank built the world-leading “cloud computing
the basis of the “Magnificent China” theme, it rolled
+ distributed” technology architecture, leading the
out “Most Beautiful Hometown” and “Beautiful
industry to transform from a traditional centralized
Countryside” physical precious metal product
one to a fully distributed one. The Bank completed
series to fully demonstrate the appearance of rural
the world’s largest financial cloud platform with the
revitalization. It also promoted the green and low-
strongest technological capacity and full coverage
carbon development of the precious metal leasing
of business scenarios. With the platform, it realized
business and opened up new space for business
automated and intensive management and full
development. In 2021, the Bank ranked first among
stack independent innovation cloud service supply.
all dealers in Shanghai Gold Exchange in terms of
The Bank was the first among its peers to meet the
gold and silver trading volume, clearing amount and
Level 4 security capacity requirement for private
gold leasing scale, was reelected “First Prize Winner
clouds and the Level 3 security capacity requirement
of the Excellent Financial Member” by Shanghai Gold
for ecosystem clouds, and it declared more than
Exchange, and was named “Best Provider of Precious
200 patents for invention. It also established the
Metals Services” by Global Finance.
distributed technology system with the most systems
and the most extensive application among its peers,
FinTech with an average daily service invocation of over 12.0
billion times.
Centering on the FinTech development plan (2021–2023),
The Bank spared no effort to promote technology
the Bank practiced technology self-reliance, strengthened
breakthroughs in key fields. The Bank was the first
the “dual wheel drive” of technological innovation
among its peers to realize the deployment of the
and system reform, built new advantages in FinTech
“one cloud with multiple cores” architecture and to
development, and empowered the development of
complete the compatible adaption of cloud platforms
“D-ICBC” with technology, which assisted in the Bank’s
with general open platforms and the independent
high-quality development and better fostered a new
innovation technology system, which provided the
development pattern.
Bank with the large-scale supply capacity of full

1 Refers to AI, BLOCK-CHAIN, Cloud Computing, Big Data and IoT.

44
 Discussion and Analysis

stack basic resources for independent innovation. Reinforcing Production Safety

The Bank sought technology breakthroughs in key
fields such as cloud platforms, operating system The Bank took the initiative to deal with the new
and database in a centralized way, connected challenges brought by the complex and volatile external
key breakpoints in the independent innovation situation and technological reforms, adhered to the
and transformation of the financial industry, and bottom line of safe production, further promoted the
developed a complete package of technical solutions transformation of production, operation and maintenance,
that can be copied and promoted for various fields and upgraded and built in an information security defense
including office management, data analysis, risk system for the whole group and the whole process. The
control, business management, regulatory reporting, Group’s production safety was maintained at a high level.
etc., providing a model template for independent The transformation of production and operation
innovation, transformation, upgrading, application maintenance was carried out in an orderly manner.
and promotion for the financial industry. The Bank strengthened technical support capacity.
A series of leading enterprise-level independent Based on the distributed system framework,
innovation technology platforms were built. The it realized the betterment of high-availability
Bank built the first, reliable, efficient and scalable architecture deployment of key business lines such
big data platform among peers, and established a as mobile banking, internet banking, fast payment,
big data service ecosystem integrating technology, financial markets, etc. The Bank improved emergency
data and services. It upgraded AI technology systems. response capability. It was the first among its peers
It was the first among its peers to complete the to complete the total switching drill of the cloud
enterprise-level Robot Process Automation (“RPA”) platform, and successfully simulated cross-park quick
platform, and also the first to pass the application emergency switch at the ten-thousand node level
maturity assessment of RPA systems and tools by under large-scale, complex fault scenarios. The drill
the Ministry of Industry and Information Technology verified the high availability level of key technology
and the China Academy of Information and infrastructure. The Bank optimized the business
Communications Technology. A blockchain platform operation monitoring system and realized full-link
with proprietary intellectual property rights was built, integrated monitoring of application and equipment
which has integrated more than 150 technology in key applications, and formed correlation analysis
breakthroughs. It was among the first batch to pass and full-link tracking capabilities of cross-application
the five certifications under special evaluation for transactions.
“Trusted Blockchain” by the Ministry of Industry and The Group’s information security protection
Information Technology and the China Academy of capability was further improved. The Bank promoted
Information and Communications Technology, and the implementation of version 2.0 of network
was selected as part of the 2021 Blockchain 50 by security rating and protection regulations and
Forbes. completed external evaluations for all its protection
The Bank explored new “highlands” in cutting- systems, all of were granted the highest grade
edge technologies. By integrating satellite remote of “Excellent”. The Bank established the group-
sensing technology with AI technology and using wide integrated intelligent information security
high-definition satellite remote sensing data and management sub-center, allowing tier-one (directly
intelligent monitoring models, the Bank conducted managed) branches to conduct automated and
post-lending monitoring of crop growth and visual management of tier-two branches within their
construction of large engineering projects. The jurisdiction. The Bank preliminarily established a
Bank was the first in the industry to complete the financial attack-defense range and a safe operation
homemade intelligent POS monitoring system with model that uses attack to improve defense which
the Beidou Navigation Satellite System as its only won the first place in many security competitions
signal source. It made breakthroughs in the feasibility held by the relevant departments. As the first
testing and pilot application of quantum technology financial institution member of the technology team
in important financial encryption scenarios. It of the China National Vulnerability Database (CNVD),
employed the privacy computation technology to the Bank fulfilled its responsibilities as a large bank
develop innovative post-lending risk monitoring and actively looked for 0 day vulnerabilities.
measures regarding small and micro enterprises.

Annual Report 2021

45
Discussion and Analysis

Promoting Innovation as a Drive of High- Strengthening product innovation. The Bank

quality Development of the Bank upgraded the intelligent custody platform,
launched the featured deposit product “Intelligent
Centering on the needs of national strategies such as Corporate Deposit Express”, added e-CNY support
serving the real economy, preventing financial risks and into ICBC e BillPay and bank-enterprise interlink,
deepening the financial reform, based on the intelligent and completed the industry’s first public e-CNY
banking ecosystem development project ECOS, the Bank payment with the State Grid e-commerce platform,
deepened technological empowerment from the three the first of its kind in the industry. The Bank
dimensions of model innovation, production innovation, empowered cross-border finance. It established
and ecosystem opening up and innovation and developed a the “Southbound Bond Connect” business system
series of quality services that the people are satisfied with. to support the development of cross-border
Promoting model innovation. The Bank encouraged RMB business. It promoted the innovation and
innovation in non-contact services. It was the first application of the Intelligent Trade Finance Platform.
among its peers to launch the “Cloud ICBC” brand It was the first among its peers to join the cross-
system. By integrating and optimizing diverse service border financial blockchain service platform of
scenarios such as cloud business handling, screen- the State Administration of Foreign Exchange
to-screen handling of urgent matters, around-the- as an authentication node, it was among the
clock communication, service integration, open- first institutions in the industry to complete the
type intelligent ecosystem, etc., the system allows connection to the electronic L/C forfaiting system
customers to handle their banking business anytime of PBC, and it was also the first in the industry
anywhere. The Bank promoted innovation in to embed L/C products into the customs’ Single
integration of data and intelligent technology. The Window platform. The Bank innovated in inclusive
Bank was the first in the industry to establish the finance and launched “ICBC Inclusive”, the three-
enterprise-level data middle-office and was also in-one online channel brand that combines “an
the first to load the whole group’s data into the exclusive version of personal mobile banking, a
data lake. It deposited 14 categories of customer WeChat applet, and a dedicated zone in enterprise
features and provided more than 1,000 enterprise- mobile banking”. It upgraded the cross-border
level data services to business systems in the fields of business matchmaking platform, “ICBC Business
customer marketing, product innovation, risk control, Matchmaker”, and launched its 2.0, which provides
operation management, etc., which fully improved intelligent, whole-process closed-loop cross-border
the capability to convert enterprise data into value. business matchmaking services to small and medium
The Bank upgraded “intelligent brain” marketing enterprises. The Bank empowered rural revitalization.
and offered intelligent service solutions that are It creatively launched the ICBC Xingnongtong APP,
unique to 700 million personal customers. By an online financial service channel for rural areas
using interactive techniques such as digital human, featured by services and functions concerning
intelligent Q&As and voice interaction, the Bank people’s livelihood, agency services, inclusive finance
intensified application of “Machine substitution” at services, village affairs, etc. It also established
the front office of customer service, the back office three service platforms, namely, the Xingnong
of business operation, etc. and launched more than matchmaking platform, the rural revitalization
600 intelligent application scenarios with digital statistical monitoring platform, and the “Digital
employee attributes. Villages” comprehensive service platform, to assist in
the digital transformation of rural finance.

46
 Discussion and Analysis

Innovating in ecosystem cooperation. The Bank built targeted incentives to unleash talents’ innovation
the “1+N” intelligent government services product vitality. Meanwhile, the Bank established the open
system and established the “all-in-one network” competition mechanism to encourage innovation,
government service platform to fully empower implemented the agile R&D model across the board,
government services. It promoted integration and organized more than one hundred flexible teams
of government service data across the board for agile R&D, who efficiently responded market
and launched more than 300 bank-government demand. ICBC Information and Technology (Beijing)
cooperation scenarios in 29 branches. The Bank Co., Ltd. was established to reinforce the value
was one of the first contracted data traders of output capability and market influence.
the Shanghai Data Exchange, concluded the first
Deepening industry-university-research-application.
transaction and the first financing based on the data
The Bank gave play to the R&D capabilities of the
asset voucher at the Shanghai Data Exchange, and
FinTech Institute and laboratories and strengthened
strengthened innovation in cooperation with local
joint innovation and R&D. Centering on prospective
data markets. The Bank built an intelligent industry
technology fields such as secure multi-party
ecosystem, by establishing a series of platforms
computation, federal learning, quantum technology,
such as Julian and Jurong, connecting to supply
blockchain, 5G application, etc., joint laboratories
chain scenarios in the upstream and downstream
such as financial information infrastructure, financial
sections of large enterprises such as procurement
application of 5G, AI, etc. were built, assisting in
and sales management, providing a package of
China’s independent technological innovation. The
personalized financial services, and empowering the
Bank cooperated with scientific research institutes
transformation and upgrading into digital supply
and leading enterprises and focused on cutting-edge
chains.
technologies. The Bank was the first in the industry
to release the White Paper on Privacy Computing in
Promoting the Development of the Data Ecosystem
Accelerating Reforms of Technology
of the Financial Industry, and a total of 12 projects
Governance Mechanisms
were designated as the pilot projects for innovation
The Bank deepened the layout of FinTech consisting of and supervision of FinTech, among which “IoT-
“one department, three centers, one subsidiary, and one based Item Traceability Certification Management
research institute”. It stepped up efforts in mechanism and Supply Chain Finance” was among the first pilot
innovation, promoted penetration of the technology projects completed for whole-process innovation and
gene, continued to improve financial innovation response supervision of FinTech in China.
efficiency and supply capability, and unleashed the Building an innovation culture. The Bank has held
vitality of the Bank’s FinTech innovation. The Bank the ICBC Cup FinTech Innovation Competition for
invested RMB25,987 million in FinTech in 2021, and it National College Students outside the Bank for
had 35 thousand FinTech personnel at the end of 2021, 12 consecutive years. In 2021, more than 40,000
accounting for 8.1% of all employees across the Bank. students from some 700 universities across the
Building an active pattern and increasing innovation country signed up and submitted over 8,000 works.
supply. The Bank implemented the FinTech talent The Competition focused on hot issues and key
development project, carried out the “Tech Elite” fields, stimulated students’ innovation vitality, and
training program, and actively introduced high- created a good technological innovation atmosphere.
end social technical personnel. It fully promoted Within the Bank, by holding “Creative ICBC” series
the “trained by technology – used by business” activities and establishing the incubation system,
talent pool mechanism and used layered and the Bank has formed the long-acting mechanism
of “gathering – tutoring – testing – incubation –
launch”, which has supported and assisted in the
spreading of creativity across the Bank.

Annual Report 2021

47
Discussion and Analysis

Internet Finance Improving the functions and user experience of

enterprise mobile banking and internet banking.
The Bank actively adapted to new needs of the digital The Bank launched Enterprise Mobile Banking 4.0,
development of the national economy. Based on key improved the basic platform service capability of
strategies, it accelerated reform and innovation, made enterprise internet finance, and carried out the
overall plans for all channels, services via all channels and “Excellence Project” of frequently used functions
online customer operation, promoted the development of corporate internet banking. In 2021, average of
of e-ICBC 4.0, and built the “One Body, Two Wings” the monthly active customers of corporate internet
development pattern featuring “own platforms + open banking hit 4.41 million, and that of Enterprise
banking”. In 2021, transaction volume via electronic Mobile Banking 1.60 million. The Bank maintained a
channels hit RMB732.85 trillion, an increase of 14.4% leading position by customer activity in the industry.
from the previous year, and business handled via electronic
Deepening government-business-consumption
channels accounted for 98.8%. The Bank won a number of
coordination and assisting in “net making and
important awards in the field of internet finance, including
patching” program. Seizing the opportunities of
“Best Digital Consumer Bank in China” and “Best
reforms to streamline administration and delegate
Corporate/Institutional Digital Bank in China” from Global
power, improve regulation, and upgrade services
Finance.
and the development of digital economy, the Bank
promoted bank-government-enterprise cooperation
in depth. Through “Ju Fu Tong”, it connected to
Accelerating Platform Innovation and
nearly 200 platforms and served 73 government
Deepening Synergy among Channels
and public service platforms. The Bank assisted
Building No.1 Personal Mobile Bank and empowering customers in traditional manufacturing circulation
the No.1 Personal Bank Strategy. The Bank launched fields in going online and served 26 thousand
Version 7.0 of personal mobile banking that features corporate customers. In the field of consumer
“five intelligent companionships”, namely, wealth internet, the Bank actively explored cross-border
companionship, cloud companionship, exclusive e-commerce business, intensified marketing of cross-
companionship, account companionship, and border e-commerce platforms, and strengthened
privilege companionship and provides interaction cooperation with rural revitalization related
in all respects and companionship throughout the platforms. In this field, it served 19.60 million
whole customer journey. The Bank established a personal customers.
personalized service system. It released exclusive
Deepening online and offline integrated
versions including Happy Life Version 2.0, Beautiful
development. A total of 16 thousand “cloud”
Home Version 2.0, Inclusive Finance for Small and
outlets, 28 thousand wealth managers, over 100
Micro Enterprises Version 1.0, the English version
remote customer service representatives provided
and the payroll payment agency service zone, “ICBC
online and offline integrated services in the
Salary Manager”, improved exclusive services for
“intelligent + manual” and “text + voice + video”
key customer groups such as elderly customers,
forms via “cloud outlets, cloud studios and cloud
customers in counties, small and micro enterprises,
customer service”, making the Bank, employees
cross-border service customers and payroll payment
and services available online. The services and
agency service customers, and met customers’
functions of “cloud” outlets were upgraded, and
diversified financial needs. The Bank improved
capabilities in online and offline marketing and
user experience of mobile banking by upgrading a
publicity, characteristic operation and collaborative
number of frequently used transaction functions.
output were improved. Twelve cloud outlets with
It also intensified precision marketing of financial
ancient building characteristics and benchmarking
products. Wealth management, fund and insurance
“cloud” outlets on Universal City Walk were created,
transaction volume via online channels accounted
and marketing of characteristic outlet brands was
for over 95%. At the end of 2021, personal mobile
strengthened. Enterprise-level WeChat accounts
banking customers recorded 469 million, and ICBC
were integrated and upgraded, resulting in resource
Mobile Banking became the first application in
concentration and efficient operation of the WeChat
banking industry that topped 100 million monthly
ecosystem. Moreover, connection between mobile
active users (“MAU”), with over 150 million MAUs
banking and remote banking and outlets was
at mobile terminals, leading the industry in terms of
deepened, with the launch of the real-time same-
customer size and activity.
screen tutoring service, an upgrade from “face

48
 Discussion and Analysis

to face” service at outlets to “screen to screen” payment, village affairs and business matchmaking,
interaction online. The scope of remote online the Bank launched four types of agriculture-
video review business was expanded to include related services, namely, people’s livelihood related
more frequently used services including debit card finance, inclusive finance, government services
password changing, cancellation of loss reporting of related finance, and agricultural assistance finance,
debit cards, etc. Card-free and certificate-free service and developed new farm tools, new supermarkets
scenarios at outlets and medialess service scenarios and new platforms that are easy to operate for
of intelligent devices were enriched by launching “Sannong” (agriculture, farmers and rural areas)
the “Scan and take a queue number” function and customers and which they are willing to use. The
the counter service evaluation function on mobile Bank also upgraded the county edition of mobile
banking. The “ordering online and mailing offline” banking to version 2.0. At the end of 2021,
service of mobile banking covered ten scenarios customers of the county version 2.0 of mobile
including issuance of credit certification, printing of banking reached 16.03 million. Moreover, the Bank
details of history, query of loan details, etc., and its continued to use ICBC Mall to assist Sannong. Rural
replacement rate of outlet services exceeded 90%. revitalization related transaction volume of ICBC Mall
recorded RMB2.76 billion.
Accelerating interconnection between domestic
and overseas business and serving domestic and In serving small and micro enterprises, the Bank
international circulations. Centering on mobile actively implemented bailout policy and inclusive
finance, corporate service and cross-border scenarios, finance. The Bank rolled out the exclusive personal
the Bank worked faster to improve the quality and mobile banking version of Inclusive Finance for Small
standard of overseas online financial services. Version and Micro Enterprises and the inclusive finance zone
6.0 of overseas personal mobile banking was fully on Enterprise Mobile Banking. By putting together
upgraded at pilot institutions including ICBC (Asia), urgent financial services such as online credit limit
ICBC (Macau), Singapore Branch, and ICBC (Thai). testing and speedy loan granting and adopting
Overseas corporate internet financial services were video interview, face recognition and other technical
further improved, and the global version of corporate means, it improved the efficiency and risk control
internet banking was continuously promoted at level of application, approval, contract signing, draw-
overseas institutions. New highlights such as overseas down, payment and repayment procedures.
study remittance and payment were developed
In serving consumption relating to people’s
in cross-border business scenarios, the overseas
livelihood, the Bank assisted in ensuring basic
study remittance product was launched in personal
living standards and improving the quality of and
mobile banking, and the overseas services of ICBC
expanding consumption. Centering on the fields
e-Payment were promoted, making overseas mobile
of education, healthcare, etc., the Bank provided
payment more convenient.
convenient online financial services such as “Campus
Affairs Management Cloud” “Commercial Medical
Cloud”, electronic certificates of medical insurance
Serving the Real Economy and Building an
and electronic social insurance cards to more than
Ecological Bank
25 thousand schools, some 100 medical institutions
In serving the rural revitalization strategy, the and over ten million personal customers. Using the
Bank promoted common prosperity and interactive strategy of expanding domestic consumption as an
development of urban and rural areas. Adhering to opportunity, with a focus on the fields of travel,
going online, going digital and going ecological, shopping, catering, entertainment, e-commerce,
the Bank established the new-type rural financial etc., the Bank continued to carry out series payment
service system in which online and offline services activities aimed to benefit the people, and expanded
are integrated and complement each other, and e-CNY application scenarios, contributing to quality
developed the “ICBC Xingnongtong” APP. Based on improvement and expansion of consumption.
its core financial capabilities such as account, loan,

Annual Report 2021

49
Discussion and Analysis

ICBC Launched Mobile Banking 7.0

On 18 November 2021, the Bank officially launched Mobile Banking 7.0. After a decade, ICBC Mobile Banking has
become the most trustworthy banking APP with the most users. Themed by “companionship”, with comprehensive
upgrades in wealth management, services, personality, interaction and privileges, Mobile Banking 7.0 aims to provide
all-round interaction and whole-journey companionship to nearly 470 million customers.

Building the “intelligent operation engine”. The new version of mobile banking has adopted the leading “intelligent
brain + operation engine” technology. Supported by strong GPU server computing power and data storage
and management capabilities and hundreds of intelligent algorithms, it can push suitable contents like product
information, news and privileges in a targeted manner to customers when they use relevant services of mobile
banking, thus providing personalized, guided journey services.

Upgrading the wealth management service. The new version has upgraded from wealth management product sales
to wealth companionship and established a set of wealth companionship service system running through the whole
investment process (before, during and after investment). Before investment, it can detect the health condition of
the customer’s asset allocation via one button and generate personalized investment advice; during investment, it
can provide friendly interactive experience of product transaction; and after investment, it can provide customers
with bank statements and fund taking services. In addition, the new version has added the intelligent payroll
planning service, which, with a focus on salary payment, check and use journeys, can meet customers’ remuneration
management needs.

Innovating in “cloud” service modes. The new version has launched the same-screen tutoring service. When having
difficulties transferring or remitting money via mobile banking, customers can contact a remote customer service
representative via one button, and the remote customer service representative will assist customers completing the
whole business procedures by “checking the page via video and explaining services and instructing customers via
voice”, thus solving customers’ difficulties in a “screen-to-screen” way. In addition, “cloud” outlets, “cloud” studios
and “cloud” customer service have introduced “online malls” of 16 thousand ICBC outlets and 28 thousand wealth
managers to provide “one-to-one” exclusive service to customers online.

Establishing a diversified service system. A personalized service system has been established to meet customers’
diversified financial service needs. For elderly customers, the Bank has launched Happy Life 2.0, which helps elderly
customers cross the “digital divide” with larger characters and simpler interaction. For people with visual impairment,
barrier-free services have been upgraded. By adding the screen reading function on the function interface, it has made
it easier for people with visual impairment to use the mobile application. For key markets in counties, the Bank has
launched Beautiful Home 2.0. It has developed exclusive products designed to bring tangible benefits to the people,
business and customers in rural areas and made quality financial services available in counties, towns and villages,
making financial contributions to the implementation of the national strategy of rural revitalization. For small and
micro enterprise customers, the Bank has launched the Inclusive Finance version. With “one-stop” inclusive financial
services with financing at the core and a series of “Small and Micro Enterprise e Loan” products including credit loans,
pledged loans and digital supply chain, it has improved the inclusiveness and availability of financial services.

The new version of mobile banking has strengthened value creation with “human + digital” resources, and it has
focused more on leveraging platform advantages, paid more attention to users’ mindset and experience and attached
more importance to common growth with users’ wealth. It has delivered a value to users, that is, “companionship
itself is the best wealth”. It has completed the transformation from “face to face” interaction at traditional physical
outlets to online “screen to screen” interaction, from traditional wealth management product recommendation and
sales to professional wealth investment advice giving that focuses on long-term growth, and from simple recording
of account payments to deep connection of finance with scenarios. It has made financial life more convenient and
friendlier to users, and has injected new vitality and connotation into the Bank’s brand of “By Your Side and As Your
Trust”.

50
 Discussion and Analysis

Outlet Development Service Improvement

Steadily promoting outlet optimization and Outlet services were improved continuously. The
adjustment. Throughout 2021, the Bank optimized Bank carried out the campaign of “Financial
the layout of 714 outlets, and renovated 1,528 Standards for the Benefit of People and Enterprises”,
outlets. The Bank effectively increased service took a combination of measures to improve the
supply in counties by setting up 151 new outlets in service quality of outlets and endeavored to become
counties, including 15 counties that had never had a service benchmark of outlets. The Bank enriched
an ICBC outlet before. The Bank practiced the green barrier-free facilities, upgraded 4,691 outlets for the
financial development philosophy. It piloted “zero elderly, promoted the service functions of self-service
carbon outlets” in Guangdong, Tianjin, Guangxi, devices for the elderly, and put in place ATMs with
etc. and actively fulfilled its responsibilities as a large passbook function to meet the needs of the elderly
bank. to provide them with more convenient and intimate
and faster services. In 2021, 110 outlets of the Bank
Continuing to enrich outlets’ pan-finance services
were named 1,000 Best Role Model Units in China’s
and functions. With a focus on reforms to streamline
banking industry.
administration and delegate power, improve
regulation, and upgrade services, the Bank promoted More services were supplied for the people’s
one-stop government services and added 3,020 livelihood. Relying on 15.5 thousand “ICBC Sharing
outlets that offer “outlet +” one-stop government Stations”, the Bank carried out more than 40
services. The Bank led the industry in launching such thousand diverse public welfare activities with the
functions as issuance of electronic social insurance theme of warm care in winter, volunteer service
cards, printing of credit reports and issuance of publicity, support for national college entrance
electronic medical insurance vouchers in intelligent exam and anti-fraud on the Double Ninth Festival
devices. As a result, outlets’ “finance + pan-finance” etc., cumulatively serving more than 40 million
comprehensive service capability further improved. person-times customers. It constantly enriched the
connotation of public welfare service of “ICBC
Accelerating digital transformation of outlets. The
Sharing Stations” and cooperated with All-China
Bank extensively applied new technological means
Federation of Trade Unions to build “Trade Union’s
such as big data, AI, intelligent voice and RPA in the
Service Stations for Outdoor Workers · ICBC Sharing
layout, location selection, systems & platforms, self-
Stations”.
service devices, business operation, etc. of outlets,
which further improved the resource utilization An experience monitoring and evaluation
efficiency of outlets. It continued to promote the system was established. The Bank launched a
mode of operations services featuring convenient special campaign to solve the hotspot problems
online acceptance, intensive and efficient handling complained by customers. The Bank established a
and speedy delivery of services at outlets, and system for “feedback of customers” and “voice
completed its promotion and application in the of employees”, set up a customer satisfaction
scenarios of the five major fields of products in kind, monitoring system combining instant feedback and
information, cash, account, and foreign exchange. special survey, conducted experience monitoring
In addition, the Bank continuously optimized in multiple dimensions and strove to enhance
the combined service process of intelligent teller customer satisfaction. In 2021, the Bank’s customer
machines and expanded “medialess” services at satisfaction stood at 86.8%, and 92.9% of problems
outlets to cover more than 150 high-frequency reported via phone by customers were solved at first
transactions including debit card deposit and draw- instance, ranking at the forefront among its peers.
down, transfer & remittance, account information
The intelligent transformation of customer services
query, etc.
was accelerated. The Bank expanded the intelligent
At the end of 2021, the Bank had 15,767 outlets, service entrances of ICBC intelligent robot “Gino
24,145 self-service banks, 79,793 intelligent (Gong Xiao Zhi)” to 96, including incoming and
devices, and 66,563 ATMs with trading volume of outgoing calls, audio + text, online + offline and
RMB5,312.6 billion. inside + outside of the Bank. The accuracy of audio
and text recognition was above 97%. 630 million

Annual Report 2021

51
Discussion and Analysis

intelligent services were provided, up 11% from last management and executive English training for
year. In the First Intelligent Service Robot Contest managers to enhance their management capabilities.
held by China Banking Association, the Bank was The Bank continued to carry out thematic training
ranked No. 1 in intelligent audio robot and No. 2 in on FinTech, inclusive finance, AML and ESG to
intelligent text robot. improve the professional competency and business
capabilities of professionals. The Bank started cross-
provincial rotating training for the heads of front-
Human Resources Management, line outlets, coordinated and strengthened training
Employees and Institutions for personnel on other positions, extensively
carried out the bank-wide reading campaign and
Human Resources Management helped employees perform duties and grow up on
appropriate positions.
With the focus on high-quality development of
operation and areas vital to market competition,
the Bank assigned more human resources to
strategic areas. The Bank deepened technological
Remuneration Policy
empowerment, moved ahead with the construction The Bank adopted a remuneration policy that was
of retail and FinTech teams and improved operation in line with corporate governance requirements,
through the transformation and upgrading of in combination with high-quality development
human resources. The Bank expanded frontline targets, in adaptation to risk management system
marketing service personnel to strongly support and talent development strategy, and well-matched
the competitiveness enhancement of outlets. In with employees’ value contribution, so as to advance
line with the trend of digital transformation, the the sound operation and high-quality development
Bank optimized institutional function setting and of the whole bank. The Bank’s remuneration
deepened online and offline integrated development. management policy was formulated and adjusted
The Bank increased support for personnel in key in strict accordance with applicable national
counties and rural areas and promoted financial regulations, regulatory requirements and corporate
service resources to lower tiers. governance procedures.
The Bank endeavored to promote the acceptance of Employee remuneration consisted of basic
corporate culture. The Bank, focusing on its strategy, remuneration, performance-based remuneration and
expanded the connotation of corporate culture, welfare income. In particular, the basic remuneration
strengthened cultural transmission, and reinforced depended on an employee’s value contribution and
employees’ strategic consensus and cultural identity ability to perform duties, and the performance-based
by preparing and publishing white papers on cultural remuneration was based on the overall situation of
building and producing micro-videos to interpret the the Bank, the employee’s institution or department,
strategy. The Bank carried forward the “Innovative and the employee’s personal performance
ICBC” project, put into production the incubation measurement results. Meanwhile, the performance-
system, and created an atmosphere of innovation based remuneration to the Senior Management and
for all employees. ICBC continued to implement employees on key positions was subject to a deferred
the cultural event “That’s China, That’s ICBC” to payment and recourse deduction mechanism, so
promote cultural integration and dissemination. The as to balance risks and incentives. For employees
Bank launched “Red Financial Footprint” campaign who violated regulations and disciplines or had
to guide employees to inherit the tradition and spirit abnormal exposure of risk losses within their duties,
of revolution. The Bank produced special educational the performance-based remuneration for the
films such as “Comprehensive and Strict Governance corresponding period shall be deducted, stopped in
over Party and ICBC”, carried out special warning payment and recovered according to the severity.
education on “Financial Criminal Cases”, to foster a During the reporting period, according to relevant
clean and honest financial culture. measures, the Bank deducted or stopped payment of
The Bank continued to develop tiered and corresponding performance-based remuneration to
classified training programs to meet the needs of employees who were subject to disciplinary action or
business development and talent team building. other treatment due to violation of regulations and
The Bank concentrated efforts on implementing disciplines or abnormal exposure of risk losses within
leadership training camp, Mini MBA Program, credit their duties.

52
 Discussion and Analysis

The Bank continuously optimized the remuneration The Bank’s 2021 remuneration plan was prepared
resource allocation mechanism with value creation and implemented as per the internal decision-making
as the core, resolutely maintained a fair allocation process. The execution of total annual salaries was
concept with incentive commensurate with restraint, reported to the authority for filing according to
transmitted the Group’s strategic objectives national regulations. During the reporting period, the
for business management, and allocated more Bank’s Senior Management fulfilled the indicators
remuneration resources to the grassroots employees, concerning economic, risk and social responsibilities
for the purpose of mobilizing and inspiring the well, and final results will be determined after
business vitality of institutions at all tiers. deliberation by the Board of Directors.

Basic Information on Employees and Institutions

As at the end of 2021, the Bank had a total of 434,089 employees, including 410,766 employees in the Head Office
and domestic branches, 7,467 employees in domestic subsidiaries, and 15,856 employees in overseas institutions.

Educational Background of Employees Structure

Structureof
ofEmployee
EmployeeAge
Age

Doctorate 0.2%
Below
Below3030
years old
years old 20.6%
20.6%
Master 9.8%
31–40
31–40years old
years old 26.9%
26.9%
Bachelor 60.5%
41–50
41–50years old
years old 23.0%
23.0%
Associate 22.3%
Above
Above5151
years old
years old 29.5%
29.5%
Below associate 7.2%

Structure of Employee Gender Employee Specialization

Personal banking 41.9%

Operation and comprehensive 16.5%
support
Corporate banking 12.7%
Male 50.7% Operation management 8.9%
49.3% FinTech 8.1%
Female
Risk and compliance 6.5%
management
Emerging business 2.1%
Non-banking business 1.0%
Others 2.3%

Annual Report 2021

53
Discussion and Analysis

As at the end of 2021, the Bank had a total of by the Head Office, 459 branches in capital cities
16,590 institutions. Among them, there were and tier-two branches, 15,508 outlets, 32 Head
16,169 domestic institutions and 421 overseas ones. Office-level profitability units along with their
Domestic institutions included the Head Office, 36 directly managed institutions and branches, and 133
tier-one branches and branches directly managed subsidiaries and their branches.

GEOGRAPHIC DISTRIBUTION OF ASSETS, INSTITUTIONS AND EMPLOYEES

Assets Percentage Percentage of Percentage of

(in RMB of assets Number of institutions Number of employees
Item millions) (%) institutions (%) employees (%)
Head Office 8,145,032 23.2 33 0.2 19,812 4.6
Yangtze River Delta 8,248,981 23.5 2,537 15.3 61,639 14.2
Pearl River Delta 5,870,705 16.7 1,983 11.9 48,234 11.1
Bohai Rim 5,186,815 14.7 2,713 16.4 68,065 15.7
Central China 3,786,925 10.8 3,453 20.8 83,257 19.2
Western China 4,553,489 12.9 3,678 22.2 87,859 20.2
Northeastern China 1,333,077 3.8 1,639 9.9 41,900 9.6
Overseas and other 4,100,318 11.7 554 3.3 23,323 5.4
Eliminated and (6,053,959) (17.3)
  unallocated assets
Total 35,171,383 100.0 16,590 100.0 434,089 100.0

Note: Overseas and other assets include investments in associates and joint ventures.

Internationalized Operation by Refinitiv. The Bank was among market leaders in

Hong Kong IPO underwriting and sponsorship, and
The Bank served and integrated into the high-level the underwriting of overseas bonds and offshore
opening-up of the state, actively grasped changes in China bonds.
foreign investment and trade patterns, deeply implemented
Personal banking: The Bank was the first to launch
the strategy to become the preferred bank for foreign
“Cross-boundary Wealth Management Connect”
exchange business, officially unveiled the financial product
business in Guangdong-Hong Kong-Macao Greater
brand of “YES ICBC” for foreign exchange, and proactively
Bay Area, providing “Southbound Connect” and
drove domestic business development and the Group’s
“Northbound Connect” investment services for the
market competitiveness enhancement through high-quality
customers in nine cities in the Pearl River Delta, Hong
internationalized development.
Kong SAR and Macau SAR. The Bank built a cross-
Corporate banking: The Bank provided “one-stop” border service platform for entrepreneurs through
financial services in local and foreign currencies for “Entrepreneurs Service Center” in the Greater
Chinese enterprises “Going Global” and foreign Bay Area. The Bank gathered pace in overseas
enterprises “Bringing In” by making comprehensive bank card product innovation and digital service
use of financial products such as overseas bond improvement, rolled out new products (digital bank
issuance, cross-border merger and acquisition, card, private banking credit card and debit card of
project financing, international trade financing, wealth management) abroad and diversified online
derivative trading and global cash management. financial services (such as card opening, installment
The Bank has remained the first place in terms and acquiring). The Bank continued to optimize the
of the number of deals completed for the cross- functions of overseas mobile payment and acquiring
border acquisition transactions of Chinese-invested products of bank cards, promoted ICBC e Payment,
enterprises according to the ranking promulgated and further promoted the interconnection of cross-
border payment in the Greater Bay Area.

54
 Discussion and Analysis

Internet financial services: Through internet banking, Global custody business: The global custody
mobile banking and other online channels, the Bank business hit another record high. Specifically,
offered services across 46 countries and regions the custody of domestic investment by overseas
in 15 languages. A full range of financial services, customers surpassed RMB200.0 billion. The Bank
including account query, transfer and remittance, was approved eligible for pilot custody clearing bank
investment and wealth management, payroll, fund of the first batch of “Southbound Bond Connect”
payment and cross-border payment were available and completed the first batch of trading. The
to customers. Focusing on key products, scenarios Bank was among the first batch to support QFIs
and regions, the Bank promoted online business to complete securities investment and refinancing
innovation and characteristic development of securities lending in Beijing Stock Exchange, and
overseas institutions. the first exercise of employees’ CDR right. It further
reinforced innovation advantages of cross-border
Financial market business: The Bank completed
custody.
“Southbound Connect” investment trading with
its own funds in the first batch, assisted overseas Cross-border RMB business: The Bank pressed head
institutions in financing in the interbank market with the construction of cross-border RMB product
through panda bond underwriting service, and system and multi-scenario services, fostered offshore
established the interbank bond and foreign RMB market, innovated offshore RMB investment
exchange market business partnership with and financing products, and continued to promote
overseas institutional investors from more than 60 RMB-denominated settlement in the whole process
countries and regions. The Bank provided prime of bulk commodity transactions. The Bank promoted
trading services for “Going Global” and “Bringing the construction of the account system of the
In” customers, and increased foreign exchange separate accounting units in free trade zones, and
settlement and sale business for spot (10 currencies supported the innovative development of cross-
such as CZK) and forward (6 currencies such as HKD) border RMB business in key areas such as Shanghai
difference delivery. The Bank entered the first prime Lingang Special Area, Greater Bay Area and Hainan
brokerage trading for foreign exchange swap in Free Trade Port. The Bank strengthened cooperation
RMB in the interbank foreign exchange market and with payment institutions, cross-border e-commerce
the first USD rate swap of USD-linked SOFR, and platforms and other entities, continuously optimized
constantly enhanced market making capabilities and the cross-border payment business platform of
market competitiveness of foreign exchange trading. “Cross-border e-Business Connect”, and supported
the development of new cross-border e-commerce
Global asset management business: The Bank
firms. In 2021, cross-border RMB business exceeded
further advanced the steady development of foreign
RMB8.5 trillion.
exchange and cross-border wealth management
business. At the end of 2021, China CGB Index Fund The Bank continued to improve its global network
“ICBC CSOP WGBI CGB Index ETF” for which ICBC layout. Panama Branch was officially opened. At
Wealth Management and ICBC Asset Management the end of 2021, the Bank established 421 overseas
(Global) provided investment advisory service, as institutions in 49 countries and regions and indirectly
the world’s largest offshore pure CGB ETF product, covered 20 African countries as a shareholder of
become an important channel for overseas funds to Standard Bank Group. It had 125 institutions in 21
invest in CGB assets. “ICBC CSOP Bloomberg CGB+ countries along the Belt and Road. The Bank also
Policy Bank Bond Index ETF” became the largest established correspondent banking relationships with
Chinese rate bond ETF product in Hong Kong’s 1,404 overseas banking institutions in 142 countries
market. and regions, making its service network covering
six continents and important international financial
centers around the world.

Annual Report 2021

55
Discussion and Analysis

MAJOR INDICATORS FOR OVERSEAS INSTITUTIONS

Assets Profit before taxation

(in USD millions) (in USD millions) Number of institutions
At the end At the end At the end At the end
Item of 2021 of 2020 2021 2020 of 2021 of 2020
Hong Kong SAR and 214,414 204,181 1,373 1,565 102 108
  Macau SAR
Asia-Pacific Region 145,860 118,253 1,057 950 91 90
  (except Hong Kong SAR
  and Macau SAR)
Europe 83,726 89,030 401 302 75 75
America 59,548 51,106 253 42 152 152
African Representative Office – – – – 1 1
Eliminations (51,999) (44,378)
Subtotal 451,549 418,192 3,084 2,859 421 426
Investment in Standard Bank (1)
3,870 3,887 330 158
Total 455,419 422,079 3,414 3,017 421 426

Note: (1) The assets represent the balance of the Bank’s investment in Standard Bank and the profit before taxation represents the Bank’s
gain on investment recognized by the Bank during the reporting period.

As at the end of 2021, total assets of overseas reporting period was USD3,414 million, representing
institutions (including overseas branches, subsidiaries an increase of USD397 million or 13.2% and
and investment in Standard Bank) of the Bank were accounting for 5.1% of the Group’s profit before
USD455,419 million, representing an increase of taxation. Total loans amounted to USD197,279
USD33,340 million or 7.9% from the end of the million, representing a decrease of USD5,565 million
previous year, and they accounted for 8.2% of the or 2.7% from the end of the previous year; and total
Group’s total assets. Profit before taxation during the deposits were USD149,273 million, representing an
increase of USD1,052 million or 0.7%.

56
 Discussion and Analysis

DISTRIBUTION OF OVERSEAS INSTITUTIONS

Asia-Pacific Region (except Hong Kong SAR and Macau SAR)

Institutions (country/region)

Tokyo Branch (Japan) Yangon Branch (Myanmar)

Seoul Branch (South Korea) ICBC (Almaty) (Kazakhstan)
Busan Branch (South Korea) Karachi Branch (Pakistan)
Mongolia Representative Mumbai Branch (India)
Office (Mongolia) Dubai (DIFC) Branch (UAE)
Singapore Branch (Singapore) Abu Dhabi Branch (UAE)
ICBC (Indonesia) (Indonesia) Doha Branch (Qatar)
ICBC (Malaysia) (Malaysia) Riyadh Branch (Saudi Arabia)
Manila Branch (Philippines) Kuwait Branch (Kuwait)
ICBC (Thai) (Thailand) Sydney Branch (Australia)
Hanoi Branch (Vietnam) ICBC (New Zealand) (New
Ho Chi Minh City Representative Zealand)
Office (Vietnam) Auckland Branch (New Zealand)
Vientiane Branch (Lao PDR)
Phnom Penh Branch (Cambodia) Europe
Institutions (country/region)

Frankfurt Branch (Germany) ICBC (London) (UK)

Luxembourg Branch (Luxembourg) London Branch (UK)
ICBC (Europe) (Luxembourg) ICBC Standard Bank (UK)
Paris Branch (France) Bank ICBC (JSC) (Russia)
Amsterdam Branch ICBC Turkey (Turkey)
(the Netherlands) Prague Branch (Czech Republic)
Brussels Branch (Belgium) Zurich Branch (Switzerland)
Milan Branch (Italy) ICBC (Austria) (Austria)
Madrid Branch (Spain)
Warsaw Branch (Poland)
Greece Representative Office
(Greece)

Hong Kong SAR and Macau SAR

Institutions (country/region)
Hong Kong Branch ICBC (Macau) (Macau, China)
(Hong Kong, China) Macau Branch (Macau, China)
ICBC (Asia) (Hong Kong, China)
ICBC International
(Hong Kong, China)

America
Institutions (country/region)

New York Branch (USA) ICBC (Peru) (Peru)

ICBC (USA) (USA) ICBC (Argentina) (Argentina)
ICBCFS (USA) ICBC Investments
ICBC (Canada) (Canada) Argentina (Argentina)
ICBC (Mexico) (Mexico) Inversora Diagonal (Argentina)
ICBC (Brasil) (Brazil) Panama Branch (Panama)

Africa
Institutions (country/region)

Investments in Standard Bank

(South Africa)
African Representative Office
(South Africa)

Annual Report 2021

57
Discussion and Analysis

Diversified Operation and Subsidiary ICBC CREDIT SUISSE ASSET MANAGEMENT

Management
ICBC Credit Suisse Asset Management is mainly engaged
The Bank remained committed to serving the real in fund raising, fund sales, asset management and other
economy and supply-side structural reform, focused on businesses approved by CSRC. It had many business
main business, refined specialized business, and gradually qualifications such as mutual fund, QDII, enterprise
created a diversified operation pattern covering fund, annuity, specific asset management, domestic (foreign)
leasing, overseas investment banking, insurance, wealth investment manager of social security fund, RQFII,
management, debt-for-equity swap and technology. insurance fund management, special asset management,
Strategic coordination efficiency was continuously raised. occupational annuity and basic endowment insurance
investment manager, and was one of the “fully qualified”
The Bank made unremitting efforts in perfecting the fund companies in the industry.
management system of “Four Beams and Eight Columns”,
issued the Rules for Management of Overseas Institutions, ICBC Credit Suisse Asset Management quickened
Rules for Management of Domestic Integrated Subsidiaries steps in high-quality development, and continuously
and other important policies, and established a subsidiary improved the value contribution. The investment
management mechanism featuring “leading coordination performance remained in a leading position and
and focusing on lines” to promote the perfection of the the average yields of equity funds and bond funds
subsidiary management system. actively managed remained in the forefront of
large fund companies. ICBC Credit Suisse Asset
The Bank optimized the governance structure of Management practiced the concept of socially
subsidiaries, strengthened the support for duty responsible investing, and won the “Gold Fund SRI
performance by directors and supervisors assigned (ESG) Return Fund Management Company Award”
to subsidiaries, promoted the organic integration of of Shanghai Securities News.
Party building and corporate governance of domestic
subsidiaries, and continuously improved the effectiveness ICBC Credit Suisse Asset Management served the
of corporate governance of subsidiaries. The Bank wealth management needs of residents. It upgraded
promoted the deep and accurate transmission of the the customer service mode and provided the
Group’s strategy to subsidiaries, and improved the Group’s whole process companion service of “investment +
full-product, full-market, full-process and full-lifecycle advisory”. It set up an investor protection committee,
service system and value chain. The Bank improved the strengthened the protection of investors’ legitimate
efficiency of capital use, and optimized the assessment rights and interests, and further promoted investor
mechanism and resource allocation. The industry influence, education, which was evaluated as excellent in the
core competitiveness and customer service capability of assessment of the national securities and futures
subsidiaries were constantly enhanced. investor education base.

The Bank strictly abided by local regulatory requirements, At the end of 2021, ICBC Credit Suisse Asset
developed the Group’s unified risk management strategy Management managed 207 mutual funds, and more
and risk appetite based on the work idea of “plan than 690 annuities, special accounts and special
ahead, see the big from the small, remedy in time and portfolios, with assets totaling RMB1.72 trillion.
draw inferences”, promoted inclusion of investment and
financing data of domestic subsidiaries into the data lake
to effectively identify, measure, monitor, control and report ICBC LEASING
various risks, and enhanced enterprise risk management.
ICBC Leasing was mainly engaged in financial leasing
The Bank adopted strict consolidated and penetration
of large-scale equipment in key areas such as aviation,
management, improved risk prevention & control and
shipping, energy and power, rail transit and equipment
internal control & compliance capabilities, and pursued
manufacturing, and provided a number of financial and
high-quality development.
industrial services such as rent transfer, investment fund,
investment asset securitization, asset trading and asset
management.

58
 Discussion and Analysis

It effectively consolidated its market position in terms ICBC INTERNATIONAL

of aviation business, deeply developed high-quality
customers, and explored innovative business areas ICBC International is a Hong Kong licensed financial service
such as cargo aircraft leasing. It actively implemented integrated platform wholly owned by the Bank, mainly
the Belt and Road Initiative in terms of maritime providing various financial services such as corporate
business. It deepened strategic cooperation with financing, investment management, sales transaction and
key customers, boosted the transformation and asset management.
upgrading of China’s shipbuilding industry, and Focusing on key industries and fields, it provided
supported domestic shipyards to build high-tech and all-round investment and financing services for the
high value-added ships. real economy, and made every effort to build the
Regarding domestic comprehensive leasing characteristic brand of investment banking. The four
business, it continuously stepped up marketing business segments, i.e. investment banking, sales
and business development efforts in the fields of and trading, investment management and asset
“New infrastructure”, “New infrastructure, New management, achieved smooth development. ICBC
urbanization initiatives and Major projects”, “New International was among the top-tier market players
manufacturing, New services, New basic industries of Hong Kong market by IPO underwriting volume,
and High-tech industries”, concretely promoted and stayed ahead in the bond market for Chinese
innovation and transformation, actively optimized offshore investment-grade enterprises by overseas
asset structure, extensively carried out marketing bond underwriting. It was still among the Class-B
interconnection between banks and companies, securities firms on the Hong Kong Stock Exchange. It
deeply tapped needs of key customers, strengthened made a breakthrough in double GP actively managed
business reserves and investment, and drove key fund business. It was awarded “Best Bond Advisor in
strategic regional markets through key projects. Hong Kong” by The Asset.

ICBC-AXA ICBC INVESTMENT

ICBC-AXA operated various insurance businesses such as ICBC Investment is one of the first pilot banks in China to
life insurance, health insurance and accident insurance, conduct debt-for-equity swap. It holds the franchise license
as well as reinsurance of the aforesaid businesses, of non-bank financial institution and is mainly engaged in
business permitted by national laws and regulations to use debt-for-equity swap and the supporting business.
insurance funds and other businesses approved by CBIRC. ICBC Investment actively and steadily expanded and
It took a customer-centric approach to improve improved market-oriented debt-for-equity swap
services. It greatly expanded the customer coverage business, focused on supply-side structural reform,
of the service, continued to adequately settle strengthened coordination with the Group, exerted
customer claims, and optimized the claim settlement strict customer access and diversified fund-raising
process, with the odds of small claims reaching channels. The “headquarters-to-headquarters”
99.34%. Operations were digitally transformed in a cooperation based on fund of funds was innovatively
push for online underwriting, policy owner service carried out to boost the clean energy development
and claim settlement for personal insurance. and continuously improve the quality and efficiency
in serving the real economy. ICBC Investment actively
It gave full play to the role of insurance as a played its part as a shareholder, and sent directors
social stabilizer, activated the contingency plan and supervisors to the shareholding subsidiaries in
against natural disasters such as rainstorm in a which it conducted debt-for-equity swap. It provided
timely manner, and opened a green channel for comprehensive financial services for debt-for-equity
claim settlement, so as to ensure full and fast swap enterprises, and energetically supported the
compensation. It adhered to the principle of reform and development of these enterprises.
“insurance for the benefit of people”, boosted
inclusive insurance projects, and actively participated
in the “Huimin Insurance” business.

Annual Report 2021

59
Discussion and Analysis

ICBC WEALTH MANAGEMENT first in the industry to issue “carbon neutrality”

asset allocation index and green finance themed
ICBC Wealth Management engages mainly in the issuance wealth management products. It innovated inclusive
of wealth management products, wealth management finance services, developed fixed-income products
advisory and consulting service and other activities suitable for the risk-return appetite of county and
approved by CBIRC. rural residents, and expanded the coverage of
It fully accommodated the requirements of the new rural wealth by financial services. It innovated and
regulations on wealth management business, pushed opened up financial services, steadily promoted the
forward the net-worth transformation of products, establishment of joint ventures, actively participated
and continued to develop products and services. It in the pilot business of “Cross-boundary Wealth
was the first among peers to exceed RMB2 trillion in Management Connect” in the Greater Bay Area,
wealth management products, significantly increased innovated and developed new wealth management
the proportion of non-cash management and open products with the theme of “Southbound Connect”
net worth products, and provided customers with under new regulations, and contributed to the
richer asset allocation choices. In 2021, it won more internationalization of RMB and the interconnection
than 30 important awards in the industry such between Hong Kong and Chinese mainland.
as the “Golden Bull Award for Banking Wealth As at the end of 2021, the balance of ICBC Wealth
Management Company” from China Securities Management’s wealth management products was
Journal. It was ranked first among domestic wealth RMB2,021,804 million, an increase of RMB951,731
management companies on the list of IPE Top 500 million over the end of the previous year, all of which
Global Asset Management Companies. were net-worth products. By fundraising methods,
It accelerated business transformation and the balance of public offering wealth management
innovation, continuously enhanced the adaptability products was RMB1,975,907 million, an increase
and competitiveness of serving the high-quality of RMB940,656 million, accounting for 97.73%;
development of the real economy, and shouldered the balance of private offering wealth management
its social responsibility. It innovated financial services products was RMB45,897 million, an increase of
for senior care, became the first batch of pilot RMB11,075 million, accounting for 2.27%. By
institutions for wealth management business for customer types, the balance of personal wealth
senior care in China, and released ICBC Wealth management products was RMB1,714,603 million,
Management Yi Xiang An Tai wealth management an increase of RMB889,838 million, accounting
products for senior care and helped the construction for 84.81%. The balance of corporate wealth
of the national multi-level senior care system. It management products was RMB307,201 million,
innovated green finance services, and was the an increase of RMB61,893 million, accounting for
15.19%.

DIRECT AND INDIRECT INVESTMENTS IN WEALTH MANAGEMENT PRODUCTS AS AT THE END OF 2021
In RMB millions, except for percentages

Percentage
Asset type Amount (%)
Cash, deposits and negotiable certificate of deposit 718,591 34.2
Placement with banks and other financial institutions and 36,546 1.7
  bonds under reverse repurchase agreements
Bonds 1,016,593 48.3
Non-standard debt assets 98,541 4.7
Other assets 233,083 11.1
Total 2,103,354 100.0

60
 Discussion and Analysis

Major Controlled Subsidiaries and Equity Participating Company

Major Overseas Subsidiaries
At 31 December 2021 2021
Issued share Total assets Net assets Net profit
capital/ (in USD (in USD (in USD
Institution Principal business paid-in capital millions) millions) millions)
Industrial and Commercial Bank of China Commercial banking HKD44,188 million 118,979.38 18,416.05 726.58
  (Asia) Limited
ICBC International Holdings Limited Investment banking HKD5,963 million 7,954.56 1,680.45 2.74
Industrial and Commercial Bank of China Commercial banking MOP589 million 54,595.95 3,720.41 282.98
  (Macau) Limited
PT. Bank ICBC Indonesia Commercial banking IDR3.71 trillion 4,421.83 435.04 13.87
Industrial and Commercial Bank of China Commercial banking MYR833 million 987.88 299.77 11.01
  (Malaysia) Berhad
Industrial and Commercial Bank of China Commercial banking THB20,132 million 9,120.79 1,114.66 81.88
  (Thai) Public Company Limited
Industrial and Commercial Bank of China Commercial banking KZT8,933 million 599.72 83.51 18.80
  (Almaty) Joint Stock Company
Industrial and Commercial Bank of China Commercial banking NZD234 million 1,530.75 192.38 7.89
  (New Zealand) Limited
Industrial and Commercial Bank of China Commercial banking EUR437 million 7,148.71 687.53 (7.58)
  (Europe) S.A.
ICBC (London) PLC Commercial banking USD200 million 1,432.36 466.86 15.35
ICBC Standard Bank PLC Banking USD1,083 million 26,268.36 1,369.84 98.50
Bank ICBC (Joint stock company) Commercial banking RUB10,810 million 1,252.37 167.08 13.49
ICBC Turkey Bank Anonim Şirketi Commercial banking TRY860 million 2,978.87 125.03 14.10
ICBC Austria Bank GmbH Commercial banking EUR200 million 975.56 218.02 (0.56)
Industrial and Commercial Bank of China Commercial banking USD369 million 2,991.49 404.80 14.92
  (USA) NA
Industrial and Commercial Bank of China Broker dealer, USD50 million 24,631.67 80.76 (20.61)
  Financial Services LLC   securities margin
 trading
Industrial and Commercial Bank of China Commercial banking CAD208 million 1,801.00 291.67 13.97
 (Canada)
Industrial and Commercial Bank of China Commercial banking MXN1,597 million 269.41 34.16 2.39
  Mexico S.A.
Industrial and Commercial Bank of China Commercial banking BRL202 million 260.49 35.20 (2.17)
  (Brasil) S.A.
ICBC PERU BANK Commercial banking USD120 million 1,477.99 99.11 7.95
Industrial and Commercial Bank of China Commercial banking ARS28,415 million 4,767.40 877.76 82.17
  (Argentina) S.A.

Annual Report 2021

61
Discussion and Analysis

Major Domestic Subsidiaries

In RMB100 millions

At 31 December 2021 2021

Issued share
capital/
Institution Principal business paid-in capital Total assets Net assets Net profit
ICBC Credit Suisse Asset Management Co., Ltd. Fund management 2 176.27 140.92 27.94
ICBC Financial Leasing Co., Ltd. Leasing 180 2,948.03 399.90 22.36
ICBC-AXA Assurance Co., Ltd. Insurance 125.05 2,581.34 183.01 16.07
ICBC Financial Asset Investment Co., Ltd. Financial asset 270 1,725.91 401.23 101.97
 investment
ICBC Wealth Management Co., Ltd. Wealth management 160 187.91 177.00 8.92

Major Equity Participation Company customer expansion, project financing, product innovation,
risk management, FinTech and staff exchange. At the
STANDARD BANK GROUP LIMITED end of 2021, Standard Bank recorded total assets of
ZAR2,725,817 million and net assets of ZAR242,849
Standard Bank is the largest commercial bank in Africa. Its
million. It generated a net profit of ZAR28,059 million
scope of business covers commercial banking, investment
during the year.
banking, life insurance business and other areas. The Bank
holds 20.06% ordinary shares of Standard Bank. Based
on mutual benefit and win-win cooperation, the two
sides furthered their cooperation in equity cooperation,

62
 Discussion and Analysis

RISK MANAGEMENT

63 Enterprise Risk Management Enterprise Risk Management System

 System Enterprise risk management is a process to effectively identify, assess,
measure, monitor, control or mitigate and report risks in order to ensure
the realization of the Group’s operating and strategic objectives by setting
64 Credit Risk up effective and balanced risk governance structure, fostering robust and
prudent risk culture, formulating unified risk management strategies and
risk appetite, and implementing the risk limit and risk management policies.
The principles of enterprise risk management of the Bank include full
71 Market Risk coverage, matching, independence, perspectiveness and effectiveness, etc.

In 2021, the Bank adhered to the risk management path of “active

prevention, smart control and comprehensive management”, promoted
72 Interest Rate Risk in the the implementation of key measures for “management of personnel,
assets, defense lines and bottom lines” and improved enterprise risk
  Banking Book
management results. The Bank developed and implemented a three-
year plan for risk management, perfected the risk management system,
reinforced three lines of defense for risk management, and carried out risk
74 Liquidity Risk management responsibilities. The Bank strengthened risk appetite and limit
management, intensified risk monitoring and early warning, and made
risk prevention and control more proactive and foresighted. Relying on
intelligent platforms such as ICBC e Shield, the Bank accelerated the digital
76 Operational Risk and intelligent transformation of risk management. The Bank strengthened
risk management in emerging fields, incorporated climate risk into the
enterprise risk management system, established a climate risk governance
framework, stepped up climate risk identification and management, and
78 Reputational Risk
carried out climate risk stress testing.

78 Country Risk

Annual Report 2021

63
Discussion and Analysis

The Bank’s organizational structure of risk management comprises the Board of Directors and its special committees, the
Board of Supervisors, the Senior Management and its special committees, the risk management departments, the internal
audit departments, etc. The risk management organizational structure is illustrated below:

At the level of the Board of Directors

Board of Directors Board of Supervisors

and the Board of Supervisors

Risk Management Committee US Risk Committee Audit Committee of
of the Board of Directors the Board of Directors

Asset & Liability

Management Committee
President
Senior Executive Risk Management Credit Risk
Vice Presidents Committee Management Committee
Chief Risk Officer
Enterprise risk, market risk, Risk Management Market Risk
country risk Department Management Committee

At the level of Head Office

Credit and Investment
Credit risk Management Department Operational Risk
Business departments Management Committee
Liquidity risk, interest rate risk Asset & Liability Internal Audit Bureau
in the banking book Management Department
Internal Control &
Operational risk, compliance risk Compliance Department
Institutional Banking
Corporate Banking

Personal Banking

Reputational risk Executive Office

Global Market
Department

Department

Department

Department

Department
Bank Card

Strategic risk Office of Steering Group

⋯ for Deepening Reform

Financial Technology
IT risk Department

Legal risk Legal Affairs Department

Board of directors of subsidiaries

At the level of branches

and subsidiaries
Management of Branches
Senior management of subsidiaries

Business departments of Risk management departments and internal control & Internal Audit Sub-bureau
branches and subsidiaries compliance departments of branches and subsidiaries

First line of defense Second line of defense Third line of defense

Primary reporting line Risks not mentioned above have been incorporated
Secondary reporting line into the enterprise risk management system.

Credit Risk The Bank strictly adheres to regulatory requirements

regarding credit risk management, diligently fulfills
Credit Risk Management established strategies and objectives under the leadership
of the Board of Directors and the Senior Management,
Credit risk is the risk where loss is caused to the banking
and implements an independent, centralized and vertical
business when the borrower or counterparty fails to
credit risk management mode. The Board of Directors
meet its contractual obligations. The Bank’s credit risks
assumes the ultimate responsibility for the effectiveness
mainly originate from loans, treasury operations (including
of credit risk management. The Senior Management is
deposits with banks and other financial institutions,
responsible for executing the strategies, overall policy
placements with banks and other financial institutions,
and system regarding credit risk management approved
reverse repurchase agreements, corporate bonds and
by the Board of Directors. The Credit Risk Management
financial bonds investment), receivables and off-balance
Committee of the Senior Management is the reviewing
sheet credit business (including guarantees, commitments
and decision-making organ of the Bank in respect of credit
and financial derivatives trading).
risk management, is responsible for reviewing material and

64
 Discussion and Analysis

important affairs of credit risk management, and performs specialized” credit risk management of personal loans,
its duty in accordance with the Charters of the Credit continued to strengthen the application of “smart brain”
Risk Management Committee. The credit and investment to empower personal loan credit risk management,
management departments at different levels undertake improved the comprehensive risk monitoring system of
the responsibility of coordinating credit risk management personal loans, enhanced the credit risk management
at respective levels, and the business departments capability of key business links, and stepped up efforts in
implement credit risk management policies and standards the risk prevention and control of important risk points
for their respective business areas in accordance with their such as customer access and mortgage projects.
functions.
The Bank imposed stringent control over risks in fields
According to the regulatory requirement on loan risk of local government debt, real estate, high polluting,
classification, the Bank implemented five-category high energy-consuming industries, etc. The Bank
classification management in relation to loan quality strictly implemented the national laws and regulations
and regulatory policies on local debt management
and classified loans into five categories: pass, special
and financing platforms, continued with credit access
mention, substandard, doubtful and loss, based on the
management and monitoring, firmly held the bottom
possibility of collecting the principal and interest of loans.
line for regional systemic risks, and actively studied and
In order to implement sophisticated management of credit prevented operation risks in commercial construction.
asset quality and improve risk management, the Bank The Bank steadily cooperated with local governments
implemented the twelve-category internal classification and financing platform companies to resolve the risks in
system for corporate loans. The Bank applied five-category existing financing due, and devoted great efforts in debt
classification management to personal credit assets and risk mitigation and financing monitoring & analysis. The
ascertained the category of the loans based on the number Bank strictly implemented the national policy guidance for
of months in default, expected loss ratio, credit rating, real estate, steadily carried out the prudential management
collateral and other quantitative and qualitative factors. requirements for real estate, continued to implement limit
management for commercial real estate investment and
The Bank accurately grasped the layout and direction financing, paid close attention to the changes of real estate
of investment and financing business and strengthened market risks in various regions, strictly guarded against
credit risk management. The Bank continued to strengthen the risks of real estate group customers engaging high-
the construction of credit policy system, optimized leverage expansion, and improved refined management.
credit product rules, and continuously consolidated the The Bank implemented the concept of green development,
foundation of non-standard agency investment policies. further strengthened the investment and financing
The Bank highlighted support for key industries, key control over the high polluting, high energy-consuming
regions, key customers, key projects and other “four industries, and strengthened the adjustment of investment
and financing structure and risk prevention & control in
key and one major” quality credit markets. The Bank
a forward-looking manner, to promote the “low-carbon
actively supported the consumption upgrading service
transformation” of high-carbon industries.
sectors such as “New infrastructure, New urbanization
initiatives and Major projects”, high-quality development
of manufacturing industry, medical care, education and Credit Risk Analysis
senior care. The Bank provided key support for strategic
emerging industries, inclusive finance, green finance, rural At the end of 2021, the Bank’s maximum exposure to
revitalization, etc. The Bank actively implemented the credit risk, without taking into account of any collateral
development strategies of five key regions (namely, Beijing- and other credit enhancements, was RMB36,737,042
million, an increase of RMB1,720,224 million compared
Tianjin-Hebei region, Yangtze River Delta, Guangdong-
with the end of the previous year. Please refer to “Note
Hong Kong-Macao Greater Bay Area, central China and
49.(a)(i) to the Consolidated Financial Statements:
Chengdu-Chongqing economic circle), kept improving
Maximum Exposure to Credit Risk Without Taking
differentiated region credit policies, and actively supported Into Account of Any Collateral and Other Credit
the financing needs of relevant industries boosting Enhancements”. For mitigated risk exposures of credit
domestic and international circulations and improving risk asset portfolio of the Bank, please refer to the section
the global supply chain in the Chinese market. The Bank headed “Credit Risk” of the 2021 Capital Adequacy
constantly promoted “mobile, digital, intelligent and Ratio Report of Industrial and Commercial Bank of China
Limited.

Annual Report 2021

65
Discussion and Analysis

DISTRIBUTION OF LOANS BY FIVE-CATEGORY CLASSIFICATION

In RMB millions, except for percentages

At 31 December 2021 At 31 December 2020

Percentage Percentage
Item Amount (%) Amount (%)
Pass 19,961,778 96.59 17,918,430 96.21
Special mention 412,038 1.99 411,900 2.21
NPLs 293,429 1.42 293,978 1.58
 Substandard 134,895 0.66 114,438 0.61
 Doubtful 128,983 0.62 149,926 0.81
 Loss 29,551 0.14 29,614 0.16
Total 20,667,245 100.00 18,624,308 100.00

According to the five-category classification, pass loans amounted to RMB19,961,778 million at the end of 2021,
representing an increase of RMB2,043,348 million when compared with the end of the previous year and accounting for
96.59% of total loans. Special mention loans stood at RMB412,038 million, representing an increase of RMB138 million, and
accounting for 1.99% of the total, with a drop of 0.22 percentage points. NPLs amounted to RMB293,429 million, showing
a decrease of RMB549 million, and NPL ratio was 1.42%, with a decrease of 0.16 percentage points.

DISTRIBUTION OF LOANS AND NPLS

In RMB millions, except for percentages

At 31 December 2021 At 31 December 2020

Percentage NPL ratio Percentage NPL ratio
Item Loan (%) NPLs (%) Loan (%) NPLs (%)
Corporate loans 12,194,706 59.0 254,887 2.09 11,102,733 59.6 253,815 2.29
  Short-term corporate 2,737,742 13.2 107,390 3.92 2,643,212 14.2 130,893 4.95
  loans
  Medium to long-term 9,456,964 45.8 147,497 1.56 8,459,521 45.4 122,922 1.45
  corporate loans
Discounted bills 527,758 2.6 – – 406,296 2.2 622 0.15
Personal loans 7,944,781 38.4 38,542 0.49 7,115,279 38.2 39,541 0.56
  Residential mortgages 6,362,685 30.8 15,460 0.24 5,728,315 30.8 16,207 0.28
 Personal 187,316 0.9 3,092 1.65 183,716 0.9 3,668 2.00
  consumption loans
  Personal business 702,441 3.4 6,811 0.97 521,638 2.8 6,760 1.30
  loans
  Credit card overdrafts 692,339 3.3 13,179 1.90 681,610 3.7 12,906 1.89
Total 20,667,245 100.0 293,429 1.42 18,624,308 100.0 293,978 1.58

Corporate NPLs were RMB254,887 million, showing an increase of RMB1,072 million when compared with the end of the
previous year, and representing a NPL ratio of 2.09%, with a decrease of 0.20 percentage points. Personal NPLs amounted
to RMB38,542 million, showing a decrease of RMB999 million, and represented a NPL ratio of 0.49%, with a decrease of
0.07 percentage points.

66
 Discussion and Analysis

DISTRIBUTION OF CORPORATE LOANS AND NON-PERFORMING CORPORATE LOANS OF DOMESTIC BRANCHES BY

INDUSTRY OF LOAN CUSTOMERS
In RMB millions, except for percentages

At 31 December 2021 At 31 December 2020

Percentage NPL ratio Percentage NPL ratio
Item Loan (%) NPLs (%) Loan (%) NPLs (%)
Transportation, storage 2,816,789 25.8 24,762 0.88 2,467,959 25.2 20,683 0.84
  and postal services
Leasing and 1,667,376 15.2 33,824 2.03 1,441,688 14.8 31,242 2.17
  commercial services
Manufacturing 1,654,610 15.1 61,602 3.72 1,555,382 15.9 65,361 4.20
Water, environment 1,370,252 12.5 11,379 0.83 1,154,201 11.8 8,425 0.73
  and public utility
 management
Production and supply 1,065,459 9.7 8,653 0.81 995,232 10.2 3,977 0.40
  of electricity, heat,
  gas and water
Real estate 705,714 6.5 33,820 4.79 701,094 7.2 16,238 2.32
Wholesale and retail 464,169 4.2 38,558 8.31 437,283 4.5 60,272 13.78
Construction 312,849 2.9 5,538 1.77 260,667 2.7 8,636 3.31
Science, education, 287,601 2.6 6,947 2.42 245,378 2.5 5,462 2.23
  culture and sanitation
Mining 203,130 1.9 3,470 1.71 177,408 1.8 7,593 4.28
Lodging and catering 73,063 0.7 8,095 11.08 83,886 0.9 11,743 14.00
Other 317,641 2.9 5,732 1.80 247,866 2.5 5,495 2.22
Total 10,938,653 100.0 242,380 2.22 9,768,044 100.0 245,127 2.51

The Bank continued to propel the optimization and mainly for steadily satisfying the investment and financing
adjustment of the industry’s credit structure and stepped needs arising from significant projects and projects for
up efforts to shore up the development of the real people’s livelihood in the areas of urban infrastructure
economy. Loans to transportation, storage and postal construction, ecological environment protection and
services increased by RMB348,830 million as compared public services. Manufacturing loans rose by RMB99,228
with the end of the previous year, representing a growth million, an increase of 6.4%, mainly due to continuously
rate of 14.1%, mainly due to active support for the increased support for manufacturing, faster credit granting
liquidity needs of highway, railway, airport and berth structure adjustment and fast growth of loans to leading
projects and large transportation group companies. and backbone enterprises in manufacturing of electrical
Loans to leasing and commercial services increased by equipment, general equipment, food and medicine.
RMB225,688 million, representing a growth rate of 15.7%,
The Bank continued to strengthen risk management of
mainly for supporting the financing needs of developing
financing in various industries, intensified the disposal
projects for “New infrastructure, New urbanization
of non-performing assets with RMB190.1 billion NPLs
initiatives and Major projects”, people’s wellbeing, projects
recovered or disposed accumulatively, and actively
for strengthening areas of weaknesses in infrastructure,
promoted the transformation of risk asset management.
and of enterprise headquarters, parks and commercial
Except for the deterioration of loans to customers in
complex management service customers. Loans to water,
some industries due to external factors such as COVID-19
environment and public utility management grew by
pandemic, the loan quality was generally stable.
RMB216,051 million, representing a growth rate of 18.7%,

Annual Report 2021

67
Discussion and Analysis

DISTRIBUTION OF LOANS AND NPLS BY GEOGRAPHIC AREA

In RMB millions, except for percentages

At 31 December 2021 At 31 December 2020

Percentage NPL ratio Percentage NPL ratio
Item Loan (%) NPLs (%) Loan (%) NPLs (%)
Head Office 791,994 3.8 21,668 2.74 772,372 4.1 21,603 2.80
Yangtze River Delta 4,163,732 20.2 35,149 0.84 3,582,682 19.2 45,304 1.26
Pearl River Delta 3,134,781 15.2 33,860 1.08 2,746,019 14.8 31,540 1.15
Bohai Rim 3,371,325 16.3 72,241 2.14 3,030,552 16.3 71,763 2.37
Central China 3,133,539 15.2 40,046 1.28 2,789,085 15.0 38,584 1.38
Western China 3,746,867 18.1 47,031 1.26 3,369,916 18.1 47,788 1.42
Northeastern China 895,238 4.3 30,600 3.42 841,595 4.5 28,411 3.38
Overseas and other 1,429,769 6.9 12,834 0.90 1,492,087 8.0 8,985 0.60
Total 20,667,245 100.0 293,429 1.42 18,624,308 100.0 293,978 1.58

MOVEMENTS OF ALLOWANCE FOR IMPAIRMENT LOSSES ON LOANS

In RMB millions

Movements of allowance for Movements of allowance for

impairment losses on loans and advances to impairment losses on loans and advances to
customers measured at amortised cost customers measured at FVTOCI
Item Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
Balance at 223,703 89,151 217,446 530,300 211 – 650 861
  1 January 2021
Transfer:
  to stage 1 17,860 (15,581) (2,279) – – – – –
  to stage 2 (9,856) 14,056 (4,200) – – – – –
  to stage 3 (3,534) (35,319) 38,853 – – – – –
Charge/(reverse) 41,831 58,906 67,614 168,351 (13) – (71) (84)
Write-offs and – – (100,447) (100,447) – – (551) (551)
  transfer out
Recoveries of loans – – 9,020 9,020 – – – –
  and advances
  previously written off
Other movements (628) (564) (2,268) (3,460) (7) – – (7)
Balance at 269,376 110,649 223,739 603,764 191 – 28 219
  31 December 2021

Note: Please see “Note 23. to the Consolidated Financial Statements: Loans and Advances to Customers” for details.

As at the end of 2021, the allowance for impairment losses on loans stood at RMB603,983 million, of which RMB603,764
million at amortised cost, and RMB219 million at fair value through other comprehensive income. Allowance to NPLs was
205.84%, showing an increase of 25.16 percentage points over the end of last year; allowance to total loans ratio was
2.92%, showing an increase of 0.07 percentage points.

68
 Discussion and Analysis

DISTRIBUTION OF LOANS BY COLLATERAL

In RMB millions, except for percentages

At 31 December 2021 At 31 December 2020

Percentage Percentage
Item Amount (%) Amount (%)
Loans secured by mortgages 9,497,898 46.0 8,703,068 46.8
Pledged loans 1,720,583 8.3 1,401,565 7.5
Guaranteed loans 2,459,887 11.9 2,260,445 12.1
Unsecured loans 6,988,877 33.8 6,259,230 33.6
Total 20,667,245 100.0 18,624,308 100.0

OVERDUE LOANS
In RMB millions, except for percentages

At 31 December 2021 At 31 December 2020

% of total % of total
Overdue periods Amount loans Amount loans
Less than 3 months 72,444 0.35 98,963 0.54
3 months to 1 year 70,057 0.34 74,820 0.40
1 to 3 years 93,247 0.45 72,467 0.39
Over 3 years 19,153 0.09 21,257 0.11
Total 254,901 1.23 267,507 1.44

Note: Loans and advances to customers are deemed overdue when either the principal or interest is overdue. For loans and advances to
customers repayable by installments, the total amount of loans is deemed overdue if part of the installments is overdue.

Overdue loans stood at RMB254,901 million, representing a decrease of RMB12,606 million from the end of the previous
year. Among which, loans overdue for over 3 months amounted to RMB182,457 million, representing an increase of
RMB13,913 million.

RESCHEDULED LOANS

Rescheduled loans and advances amounted to RMB19,134 million, representing an increase of RMB7,174 million as
compared to the end of the previous year. Rescheduled loans and advances overdue for over 3 months amounted to
RMB2,301 million, representing an increase of RMB246 million.

LOAN MIGRATION RATIO

In percentages

At At At
31 December 31 December 31 December
Item 2021 2020 2019
Pass 1.6 1.7 1.5
Special mention 20.1 36.4 26.1
Substandard 41.2 60.9 36.0
Doubtful 14.3 19.2 15.6

Annual Report 2021

69
Discussion and Analysis

Large Exposures Management

The Bank carried out large exposures management in strict accordance with regulatory requirements, improved the large
exposures management system, optimized large exposures limit management, promoted the construction of large exposures
management related systems, and continuously improved the Group’s large exposures management.

BORROWER CONCENTRATION

As at the end of 2021, the total amount of loans granted by the Bank to the single largest borrower and top ten single
borrowers accounted for 3.6% and 14.2% of the Bank’s net capital base respectively. The total amount of loans granted to
the top ten single borrowers was RMB554,249 million, accounting for 2.7% of the total loans.

At At At
31 December 31 December 31 December
Item 2021 2020 2019
Loan concentration to the single largest borrower (%) 3.6 3.5 3.1
Loan concentration to the top ten borrowers (%) 14.2 14.8 12.6

The table below shows the details of the loans granted to the top ten single borrowers of the Bank as at the end of 2021.

In RMB millions, except for percentages

% of total
Borrower Industry Amount loans
Borrower A Transportation, storage and postal services 141,457 0.8
Borrower B Transportation, storage and postal services 67,107 0.3
Borrower C Finance 50,828 0.2
Borrower D Finance 49,479 0.2
Borrower E Transportation, storage and postal services 48,999 0.2
Borrower F Transportation, storage and postal services 42,660 0.2
Borrower G Transportation, storage and postal services 42,375 0.2
Borrower H Finance 40,095 0.2
Borrower I Finance 36,781 0.2
Borrower J Finance 34,468 0.2
Total 554,249 2.7

For credit risk capital measurement, please refer to the section headed “Credit Risk” of the 2021 Capital Adequacy Ratio
Report of Industrial and Commercial Bank of China Limited.

70
 Discussion and Analysis

Market Risk Management (“GMRM”) system to overseas institutions

and steadily pushed forward the implementation of the
Market risk is defined as the risk of loss to the Bank’s standardized market risk approach of Basel III Final Reform
on- and off-balance sheet activities caused by adverse Package issued by Basel Committee.
movements in market rates (including interest rates,
exchange rates, stock prices and commodity prices). The
Bank is primarily exposed to interest rate risk and currency Management of Market Risk in the Trading
risk (including gold). Market risk management is the Book
process of identifying, measuring, monitoring, controlling
and reporting market risk. The objective of market risk The Bank kept strengthening trading book market risk
management is to control market risk exposures within a management and product control, and adopted the value-
tolerable level and maximize risk-adjusted return according at-risk (VaR), stress testing, sensitivity analysis, exposure
to the Bank’s risk appetite. analysis, profit/loss analysis, price monitoring and other
means to measure and manage trading book products.
The Bank strictly complies with regulatory requirements It continued to improve the portfolio-based market
on market risk management, has implemented an risk limit management system, refined limit indicators,
independent, centralized and coordinated market ameliorated the dynamic management mechanism to meet
risk management model, and formed a management the requirements of new products and businesses for
organizational structure featuring the segregation of the timeliness, and realized quick and flexible limit monitoring
front, the middle and the back offices in the financial and dynamic adjustments based on the GMRM system.
market business. The Board of Directors assumes the
ultimate responsibility for monitoring market risk For VaR of the trading book, please refer to “Note 49. (c)(i)
management. The Senior Management is responsible to the Consolidated Financial Statements: VaR”.
for executing the strategies, overall policy and system
concerning market risk management approved by
the Board of Directors. The Market Risk Management Currency Risk Management
Committee of the Senior Management is the reviewing and
Currency risk is the risk of adverse movements of exchange
decision-making organ of the Bank in respect of market
rate resulting in losses on the foreign currency exposure,
risk management, is responsible for reviewing material
which is due to the currency structure’s mismatch between
affairs of market risk management, and performs its duty
foreign currency assets and liabilities. The Bank’s objective
in accordance with the Working Regulations for the Market
of currency risk management is to control the impact of
Risk Management Committee. The risk management
exchange rate fluctuations on the Bank’s financial position
departments at different levels undertake the responsibility
and shareholders’ equity within a tolerable extent. The
of coordinating market risk management at respective
Bank mitigates such risk principally by limit management
levels, and the business departments implement market
and hedging of risks. The Bank carries out sensitivity
risk management policies and standards for their respective
analysis and stress testing of currency risk on a quarterly
business areas in accordance with their functions.
basis, and the Senior Management and the Market Risk
In 2021, the Bank continued to deepen the Group’s market Management Committee review the currency risk reports
risk management, tightened the Group’s market risk limit on a quarterly basis.
control, and verified and issued the Group’s market risk
In 2021, the Bank closely watched the changes in external
limit plan for 2021. A forward-looking analysis of interest
environment and market conditions, actively took a
rate, exchange rate and commodity risks was conducted in
combination of measures such as limit management
a timely manner. It continuously conducted global financial
and hedging of risks to improve the matching degree of
market monitoring and perfected the fast risk reporting
the Group’s foreign exchange assets and liabilities, and
mechanism. Empowered by technologies, the market risk
strengthened capital fund preservation management of
management system was more intelligent. It continuously
overseas institutions. The currency risk was controllable in
promoted the extended application of Global Market Risk
general.

Annual Report 2021

71
Discussion and Analysis

FOREIGN EXCHANGE EXPOSURE

In RMB (USD) millions

At 31 December 2021 At 31 December 2020

USD USD
Item RMB equivalent RMB equivalent
Exposure of on-balance sheet foreign 444,773 69,919 402,774 61,593
  exchange items, net
Exposure of off-balance sheet foreign (276,298) (43,435) (198,474) (30,351)
  exchange items, net
Total foreign exchange exposure, net 168,475 26,484 204,300 31,242

Please refer to “Note 49.(c)(ii) to the Consolidated the ultimate and executive responsibilities, respectively,
Financial Statements: Currency Risk” for the exchange rate for managing interest rate risk in the banking book. The
sensitivity analysis. Asset & Liability Management Department of the Head
Office takes the leading role in managing interest rate
risk in the banking book, and other departments and
Please refer to the section headed “Market Risk” of the institutions play their roles in implementing policies and
2021 Capital Adequacy Ratio Report of Industrial and standards concerning interest rate risk in the banking
Commercial Bank of China Limited issued by the Bank for book. The Internal Audit Bureau and the Internal Control &
further information on market risk capital measurement. Compliance Department of the Head Office are responsible
for reviewing and evaluating duties in respective of interest
rate risk in the banking book.
Interest Rate Risk in the Banking Book
The objective of management of interest rate risk in the
Interest rate risk in the banking book is defined as the banking book: The Bank aims at maximizing the risk-
risk of loss in the economic value and overall profit of the adjusted net interest income within the tolerable level
banking book arising from adverse movements in interest of interest rate risk under its risk management and risk
rate and maturity structure, etc. appetite. The Bank formulated strategies and clarified
objectives and modes for managing interest rate risk
in the banking book based on risk appetite, risk status,
Management of Interest Rate Risk in the macroeconomic and market changes. Based on the pre-
Banking Book judging of the interest rate trend and measurement
results of the changes in overall profit and economic
The Bank’s management system for interest rate risk in value, the Bank formulated and put into practice relevant
the banking book conforms to the system importance, risk management policies, and adopted a coordinated
status and business complexity, and fits the Bank’s overall approach to using interest rate risk control tools to
development strategy and the enterprise risk management mitigate and manage risks, so as to ensure the Bank’s
system. The system mainly consists of the following actual interest rate risks conform to its bearing capability
elements: an effective risk governance structure; sound and willingness. On the basis of management strategies
risk management strategies, policies and procedures; and objectives, the Bank developed policies and made clear
effective risk identification, measurement, monitoring, the modes and instruments for managing interest rate risk
control and mitigation that cover all areas; a complete in the banking book. By developing and modifying such
internal control and review mechanism; a fully-built risk methods as on-balance sheet adjustment and off-balance
management system; and adequate information disclosure sheet hedging to manage interest rate risk, adeptly using
and reporting. The Bank strictly complied with regulatory quantity, pricing and derivative instruments regarding
requirements for interest rate risk in the banking book, assets and liabilities, and applying limit management
effectively managed interest rate risk in the banking book system, business plan, performance assessment and capital
at the Bank and consolidated level, and developed a sound evaluation in all areas for interest rate risk management
governance structure for interest rate risk management in and assessment, the Bank achieved effective control of
the banking book that is fully built and well-structured, interest rate risk at the business lines, the branches, the
with clearly defined rights and responsibilities. The Board affiliates and the products and portfolios easily affected by
of Directors and the Senior Management are vested with interest rate risk.

72
 Discussion and Analysis

In line with the principles of comprehensiveness, prudence and continuously deepened the new pattern of cross-
and foresight, the Bank’s stress testing on interest rate cyclical stable interest rate risk management. The Bank
risk in the banking book adopted the interest rate risk strengthened the research and anticipation of interest
exposure measurement approach and standardized rate risk strategy in a forward-looking and active manner,
duration approach to measure the effect of interest rate made combined use of asset and liability amount, price
changes under different stress scenarios on the overall and derivative tools to accurately adjust the allocation
profit and economic value. Based on the domestic and structure of the Group’s asset and liability interest rate
overseas regulatory requirements, the bank-wide asset and portfolio, effectively resisted the impact of global economic
liability business structure, operation and management as and financial operation and internal and external risk
well as risk appetite, the Bank set stress testing scenarios challenges, and realized the balanced growth of current
for interest rate risk in the banking book by taking into income and long-term value.
account the current interest rate level, historical changes
and trends, total assets and liabilities and their term
characteristics, business development strategies, customer Analysis on Interest Rate Risk in the
behaviors and other factors, and conducted stress testing Banking Book
quarterly.
Interest Rate Sensitivity Analysis
In 2021, the Bank implemented the new development
concept, improved the combined regulation mechanism Supposing that there is parallel shift of overall market
for whole process management, all-factor regulation interest rates, and taking no account of possible risk
and full-lifecycle coverage of interest rate risk, built an management actions taken by the management to mitigate
intelligent interest rate risk monitoring, early warning and the interest rate risk, the analysis on interest rate sensitivity
business control platform, improved the ability to respond of the Bank categorized by major currencies at the end of
quickly and actively to complex market environment, 2021 is shown in the following table:

In RMB millions

+100 basis points -100 basis points

Effect on Effect on
net interest Effect on net interest Effect on
Currency income equity income equity
RMB (27,350) (39,969) 27,350 43,662
USD 1,551 (5,873) (1,551) 6,126
HKD (958) (140) 958 142
Other 1,029 (1,661) (1,029) 1,694
Total (25,728) (47,643) 25,728 51,624

Note: Please refer to “Note 49.(d) to the Consolidated Financial Statements: Interest Rate Risk in the Banking Book”.

Interest Rate Exposure Analysis mainly caused by the increase in repriced or matured
loans and advances to customers within one year. It had a
As at the end of 2021, the Bank had a positive cumulative positive cumulative interest rate sensitivity exposure above
interest rate sensitivity exposure within one year of one year of RMB1,018,814 million, representing a decrease
RMB1,943,618 million, representing an increase of of RMB305,399 million, mainly resulted from the increase
RMB836,372 million from the end of the previous year, in repriced or matured due to customers above one year.

Annual Report 2021

73
Discussion and Analysis

INTEREST RATE RISK EXPOSURE

In RMB millions

Less than 3 months to

3 months 1 year 1 to 5 years Over 5 years
At 31 December 2021 (6,440,087) 8,383,705 (2,301,496) 3,320,310
At 31 December 2020 (6,378,856) 7,486,102 (1,560,515) 2,884,728

Note: Please refer to “Note 49.(d) to the Consolidated Financial Statements: Interest Rate Risk in the Banking Book”.

Liquidity Risk Objective of liquidity risk management: By establishing

and improving the liquidity risk management system,
Liquidity risk is the risk that the Bank is unable to raise the Bank aims at realizing effective identification,
funds on a timely basis at a reasonable cost to settle measurement, monitoring and control of the liquidity
liabilities as they fall due, or perform other payment risk at the Group level, the Bank, the affiliates, the
obligations and satisfy other funding demands arising from branches and the business lines, and ensuring the liquidity
the normal course of business. Liquidity risk may arise from demand is satisfied at a reasonable cost in time under
the following events or factors: material adverse changes the normal business scenario and the stress scenario. The
in market liquidity, withdrawal of customers’ deposits, Bank’s liquidity risk management strategy and policy are
drawing of loans by customers, overdue payment of formulated in accordance with the liquidity risk appetite,
debtors, mismatch between assets and liabilities, difficulties and they cover all businesses on- and off-balance sheet,
in assets realization, operating losses and risk associated all domestic and overseas business departments, branches
with its affiliates. and affiliates that are likely to have a material impact on
the liquidity risk, and contain the liquidity risk management
under normal and stressed scenarios. The liquidity risk
Liquidity Risk Management management strategy specifies the overall objective and
mode of liquidity risk management and lists major policies
The Bank’s liquidity risk management system conforms
and procedures. The policies for liquidity risk management
to the overall development strategy and the overall risk
are formulated in accordance with external and macro
management system, and is commensurate with the
operating environments and business development of the
business scale, business nature, complexity and other
Bank, with a view to striking an effective balance among
aspects of the Bank. The system includes the following
security, liquidity and profitability. The Bank conducts stress
fundamental elements: effective governance structure
testing quarterly or by subject by fully considering various
for liquidity risk management; sound strategy, policy
macro and micro factors that may affect the liquidity of
and procedures for liquidity risk management; effective
the Bank, changes in the external operating environment,
identification, measurement, monitoring and control for
regulatory requirements, and business characteristics and
liquidity risk and a complete management information
complexity of the Bank.
system. In respect of liquidity risk management, the Bank’s
governance structure embodies the decision-making In 2021, the Bank adhered to a steady and prudent
system comprising the Board of Directors and its special liquidity management strategy, and the Group’s liquidity
committees as well as the Asset and Liability Management was stable. The Bank intensified the monitoring of funds
Committee and the Risk Management Committee of and maintained a proper and sufficient liquidity reserve.
the Head Office; the supervision system comprising the The Bank optimized and upgraded the liquidity risk
Board of Supervisors, the Internal Audit Bureau and the management mechanism and system, and continuously
Internal Control and Compliance Department of the enhanced the automation and intelligence level of liquidity
Head Office; and the execution system comprising the risk monitoring, measurement and control. The Bank
Asset and Liability Management Department, leading strengthened on- and off-balance sheet liquidity risk
management departments of on- and off-balance sheet management in local and foreign currencies in domestic
businesses, the information technology departments, and overseas institutions, optimized the multi-level and
operation management departments of the Head Office multi-dimensional liquidity monitoring and early warning
and relevant departments of branches. Each of these system, and further enhanced the Group’s liquidity risk
systems performs the corresponding functions of decision prevention and emergency response capabilities.
making, supervision and execution according to division of
responsibilities.

74
 Discussion and Analysis

Liquidity Risk Analysis

The Bank assesses liquidity risk status by comprehensive use of a variety of methods and tools such as liquidity indicator
analysis and liquidity exposure analysis.

At the end of 2021, RMB liquidity ratio and foreign currency liquidity ratio of the Bank were 41.5% and 88.9% respectively,
both meeting the regulatory requirements. Loan-to-deposit ratio was 77.3%.

At At At
Regulatory 31 December 31 December 31 December
Item criteria 2021 2020 2019
RMB >=25.0 41.5 43.2 43.0
Liquidity ratio (%)
Foreign currency >=25.0 88.9 91.4 85.9
Loan-to-deposit ratio (%) RMB and foreign 77.3 72.8 71.6
 currency

Note: The regulatory indicators in the table are calculated in accordance with related regulatory requirements, definitions and accounting
standards applicable to the current period. The comparative figures are not adjusted or restated.

Net stable funding ratio aims to ensure commercial banks of Liquidity Coverage Ratio of Commercial Banks, please
have sufficient stable sources of funding to meet the needs refer to the section headed “Unaudited Supplementary
for stable funding of assets and off-balance sheet risk Information to the Consolidated Financial Statements”.
exposures. The net stable funding ratio is the ratio of the
As at the end of 2021, the liquidity exposure for less
available stable funding to the required stable funding. As
than 1 month turned negative from positive from the end
at the end of the fourth quarter of 2021, the net stable
of last year, mainly due to the increase of matured due
funding ratio was 126.20%, 1.98 percentage points lower
to customers within corresponding term. The negative
than that at the end of the previous quarter, mainly due
liquidity exposure for 1 to 3 months expanded, mainly
to the rapid growth of stable funds required. For the
due to the increase of matured due to customers within
quantitative information for net stable funding ratio in
corresponding term. The negative liquidity exposure for
accordance with Disclosure Rules on Net Stable Funding
3 months to 1 year decreased slightly, mainly due to the
Ratio of Commercial Banks, please refer to the section
increase of matured loans and advances to customers with
headed “Unaudited Supplementary Information to the
corresponding term. The positive liquidity exposure for 1
Consolidated Financial Statements”.
to 5 years decreased slightly mainly due to the increase
The daily average liquidity coverage ratio for the fourth of matured due to customers within corresponding
quarter of 2021 was 112.20%, 0.96 percentage points term. The positive liquidity exposure for the category
higher than the previous quarter, mainly because of the of over 5 years expanded, which was mainly due to the
continuous growth of qualified high-quality liquid assets. increase in matured loans and advances to customers and
High-quality liquid assets cover cash, available central bank bond investments within corresponding term. Deposits
reserve under stress and primary and secondary bond maintained steady growth with a high deposition rate,
assets that can be included in the liquidity coverage ratio and at the same time the Bank made major investment in
under the regulatory requirements. For the quantitative highly liquid bond assets, and possessed sufficient liquidity
information for liquidity coverage ratio based on the reserves. Therefore, the overall liquidity of the Bank was
Administrative Measures for the Information Disclosure maintained at a safe level.

Annual Report 2021

75
Discussion and Analysis

LIQUIDITY EXPOSURE ANALYSIS

In RMB millions

Overdue/
repayable
on Less than 1 to 3 3 months to 1 to 5 Over 5
demand 1 month months 1 year years years Undated Total
At 31 December 2021 (14,262,606) (89,448) (415,735) (377,347) 538,067 14,692,050 3,190,277 3,275,258
At 31 December 2020 (14,309,956) 335,580 (209,780) (563,541) 981,145 13,324,640 3,351,427 2,909,515

Note: Please refer to “Note 49.(b) to the Consolidated Financial Statements: Liquidity Risk”.

Operational Risk risk across credit and market risks. The Internal Audit
Department performs the functions as the third line of
Operational Risk Management defense and assumes the responsibility for supervision,
which is responsible for supervising the effectiveness of
Operational risk is defined as the risk of loss resulting from
operational risk management.
insufficient or problematic internal processes, employees
and IT systems or from external events, including legal In 2021, the Bank continued to reinforce operational
risk, but excluding strategic and reputational risk. There risk management in line with regulatory focuses and
are seven major types of operational risks faced by the operational risk trends. It optimized the risk limit
Bank, including internal fraud, external fraud, employment management mechanism, and effectively transmitted
system and workplace safety, customers, products and the Group’s operational risk management appetite. The
business activities, damage to physical assets, IT system, Bank formulated and issued 2021–2023 Development
execution and delivery and process management. Among Plan for the Internal Control System, and kept perfecting
these, external fraud, execution, delivery and process internal control mechanism with all-round coverage,
management constitute major sources of operational risk whole-process control and all-employee participation. The
losses of the Bank. operational risk and control self-assessment of special lines
under “regulatory red line” was carried out. In view of
The Bank strictly complies with regulatory requirements
serious risks, the Bank promoted optimization of policies,
on operational risk management. The Board of Directors,
processes, systems and mechanisms. The Bank carried out
the Board of Supervisors, the Senior Management and its
risk governance in key business areas, strengthened case
Operational Risk Management Committee are respectively
warning education, and continuously tightened employee
responsible for decision-making, supervision and
behavior control. Moreover, the operational risk application
execution with respect to operational risk management,
and management system was optimized, to continuously
and relevant departments act as the “three lines of
enhance effective risk data aggregation and risk reporting
defense” for operational risk management pursuant to
capabilities. During the reporting period, the operational
their management functions, thus forming an operational
risk management system of the Bank operated smoothly,
risk management system with close connection and
and the operational risk was controllable on the whole.
mutual checks and balances. Institutions and departments
function as the first line of defense, which assume
the direct responsibility for respective operational risk Legal Risk
management. Classified management departments such
as Internal Control & Compliance, Legal Affairs, Security, Legal risk is the risk of incurring legal sanctions, regulatory
Financial Technology, Finance & Accounting, Operation penalties, financial losses, reputational losses or other
Management and Human Resources as well as cross- negative consequences that arises out of or in connection
risk management departments including Credit and with the failure of the Bank to comply with relevant laws,
Investment Management and Risk Management jointly regulations, administrative rules, regulatory provisions or
perform the functions as the second line of defense, which requirements of other relevant rules during the Bank’s
are respectively responsible for the lead management of operation; the unfavorable legal defects that exist in
operational risk, the classified management of certain type products, services or information provided to clients,
of operational risk and the management of operational transactions engaged in, and contracts, agreements or

76
 Discussion and Analysis

other documents executed by the Bank; legal disputes Bank ameliorated the function design and management
(litigation or arbitration proceedings) between the Bank mechanic for the electronic signing system, to strengthen
and its clients, counterparties and stakeholders; important its strict control of seal use in business contracts during
changes in relevant laws and regulations, administrative the whole process, and effectively prevent and control
rules, regulatory provisions and other relevant rules; operational risk, legal risk and reputational risk caused
and other relevant legal events that occur internally and by misuse of contract seal. It reinforced authorization
externally. management, related party management, trademark
management and intellectual property protection, and
Based on the objective to ensure legal and compliant
made efforts to effectively institutionalize risk management
operation, the Bank always attaches great importance
and control, and refine the structure of the system.
to establishing a sound legal risk management system,
The Bank devoted great energy to strongly deal with
forming a full-process legal risk prevention and control
lawsuit cases to protect the Bank’s rights and interests
mechanism to support and secure business innovation and
in accordance with law and avoid and reduce risk losses.
market competition, and to prevent and eliminate various
In addition to the active assistance in online judicial
potential or practical legal risks. The Board of Directors
inquiry and enforcement, the Bank played a positive role
is responsible for reviewing and determining the strategy
in improving the efficiency of law enforcement and case
and policy relating to legal risk management, and assumes
handling by competent authorities and building a social
the ultimate responsibility of legal risk management.
credibility system.
The Senior Management is responsible for executing the
strategy and policy relating to legal risk management,
examining and approving relevant important affairs.
Anti-Money Laundering
The Legal Affairs Department of the Head Office is in
charge of legal risk management across the Group, with In strict compliance with anti-money laundering (“AML”)
relevant business departments providing related support laws and regulations of China and host countries (regions)
and assistance on legal risk prevention and control. The of overseas institutions, the Bank sincerely fulfilled the
affiliates, domestic and overseas branches undertake the legal obligations and social responsibilities concerning
responsibility of legal risk management of their respective AML. The Bank actively adapted to AML changes in the
institutions. new era, established the global, comprehensive and brand-
In 2021, the Bank continued to strengthen legal risk new money laundering risk management concept involving
management, by improving the risk prevention and control all personnel, spanning all processes and covering all
capacity in legal risk management, ensuring the legal and risk exposures, accommodated to “cross-border, cross-
compliant operation, healthy business development and industrial and cross-sector” development requirements,
overall business stability of the Group. In accordance with practiced the management principle of “active prevention,
new laws and regulations such as the Personal Information smart control and comprehensive management”, and
Protection Law, its business rules and relevant agreements coordinated it efforts to strengthen Group-wide money
were continuously improved, and legal risk prevention and laundering risk management. The Bank continuously
control in key areas and links was further pushed forward improved the Group’s AML governance system, constantly
in line with new requirements of financial regulators. promoted the comprehensive management regarding
The Bank also conducted ongoing monitoring of legal customer identification, implemented new regulations
risks and improved both the vertical interconnection and on money laundering risk assessment, created a digital
horizontal coordination mechanism between the Head AML ecosystem, ramped up efforts in overseas AML
Office and branches. By systematically embedding legal risk infrastructure, etc. The quality and efficiency of money
prevention and control into business negotiations, product laundering risk management has been further improved.
design, contract signing and other links, the Bank made
risk prevention and control more prospective, proactive
and targeted. It improved the cross-border coordination Please refer to the section headed “Operational Risk”
and management for legal work and strengthened the of the 2021 Capital Adequacy Ratio Report of Industrial
legal risk management of overseas institutions, properly and Commercial Bank of China Limited issued by the
responding to cross-border legal issues emerging in the Bank for further information on operational risk capital
development of international operations. Moreover, the measurement.

Annual Report 2021

77
Discussion and Analysis

Reputational Risk actively responded to social concerns, and organized and

promoted influential brand communication activities, to
Reputational risk is defined as the risk of negative enhance the Bank’s brand image. During the reporting
comments on the Bank from stakeholders, the public period, the reputational risk of the Bank was stable and
or the media as a result of the behaviors of the Bank or within a controllable range.
practitioners or external events, thereby damaging brand
value, detrimental to normal operation, and even affecting
market and social stability. Reputational risk may arise Country Risk
in any part of the Bank’s operation and management,
and usually co-exists and correlates with credit risk, Country risk is the risk incurred to a bank arising from
market risk, operational risk and liquidity risk. Good the inability or refusal by the borrower or debtor to repay
reputation is central to the operation and management of bank debt, losses suffered by the Bank or its commercial
a commercial bank. The Bank highly values its reputation presence in such country or region and other losses due
and has incorporated reputational risk management in the to economic, political and social changes and events
corporate governance and enterprise risk management in a country or a region. Country risk may be triggered
system to prevent reputational risk. by deterioration of economic conditions, political and
social turmoil, asset nationalization or expropriation,
The Board of Directors is responsible for reviewing and government’s refusal to pay external debt, foreign
finalizing bank-wide policies concerning reputational risk exchange control or currency depreciation in a country or a
management that are in line with the strategic objective of region.
the Bank, establishing a bank-wide system of reputational
risk management, monitoring the overall status and The Bank strictly observes regulatory requirements on
effectiveness of reputational risk management across country risk management. The Board of Directors assumes
the Bank and assuming the ultimate responsibility for the ultimate responsibility for the effectiveness of country
reputational risk management. The Senior Management risk management. The Senior Management is responsible
is responsible for leading reputational risk management for executing the country risk management policies
of the Bank, implementing the strategies and policies approved by the Board of Directors. The Risk Management
established by the Board of Directors, reviewing and Committee of the Head Office is responsible for reviewing
finalizing the rules, measures and operating procedures matters regarding country risk management. The Bank
for reputational risk management, preparing plans for manages and controls country risk with a series of tools,
responding to and coping with extraordinarily major including country risk assessment and rating, country risk
reputational risk events and ensuring the proper and limit, country risk exposure calculation and monitoring and
effective operation of the reputational risk management stress testing. The Bank reviews the country risk rating and
system. The Bank has established a special reputational limits at least once every year.
risk management team to take charge of the daily In 2021, facing the increasingly complicated, severe and
management of reputational risk. uncertain external environment, the Bank strictly abode
In 2021, the Bank kept improving the structure of by regulatory requirements and, with consideration of its
reputational risk management system, to optimize relevant business development needs, continued to strengthen
working mechanism and enhance reputational risk country risk management. The Bank closely observed
management. The Bank revised and issued the Measures changes in country risk exposures, constantly tracked,
for Reputational Risk Management of ICBC (Version 2021) monitored and reported country risk, and timely updated
and further improved the construction of the whole- and adjusted the country risk rating and limits. It continued
process reputational risk management system across to strengthen early warning mechanism for country risk,
the Group. The Bank raised the efficiency of “dual-line proactively conducted stress testing on country risk and
management” (speciality and local) and prevented hidden reasonably and effectively controlled country risk while
reputational risks at the source. In addition, the Bank steadily promoting internationalization.

78
 Discussion and Analysis

CAPITAL MANAGEMENT

The Bank implements a group-based capital management capital management on risk-weighted assets and continued
mechanism, and takes capital as the object and an to elevate the capital use efficiency. It holistically balanced
instrument for its management activities, including the endogenous and exogenous capital replenishment, and
planning, measurement, allocation, application and further consolidated the capital base to further reinforce
operation. The Bank’s capital management aims at its capacity in supporting the real economy. In 2021,
maintaining appropriate capital adequacy ratio and all capital indicators performed well, of which capital
continuously meeting capital supervisory regulations adequacy ratio was kept at a sound and appropriate level.
and policies; ceaselessly strengthening and enhancing
the capital base and supporting business growth and
implementation of strategic planning; establishing a Capital Adequacy Ratio and Leverage
value management system focusing on economic capital, Ratio
reinforcing capital constraint and incentive mechanism
and improving capital allocation efficiency; innovating The Bank calculated its capital adequacy ratios at
and expanding capital replenishment channels, raising all levels in accordance with the Capital Regulation.
capital quality and optimizing capital structure. The Bank’s According to the scope of implementing the advanced
capital management covers various operating entities in capital management approaches as approved by the
the Group, and its contents include capital adequacy ratio regulatory authorities, the Bank adopted the foundation
management, economic capital management, capital internal ratings-based (“IRB”) approach for corporate
investment and financing management. credit risk, the IRB approach for retail credit risk, the
internal model approach (“IMA”) for market risk, and
In 2021, the Bank further deepened the capital the standardized approach for operational risk meeting
management reform, strengthened capital saving and regulatory requirements. The weighted approach was
optimization, carried forward the disposal of low-efficiency adopted for credit risk uncovered by the IRB approach and
capital occupation, intensified the constraint of economic the standardized approach was adopted for market risk
uncovered by the IMA.

RESULTS OF CAPITAL ADEQUACY RATIO CALCULATION OF THE GROUP AND PARENT COMPANY
In RMB millions, except for percentages

At 31 December 2021 At 31 December 2020

Parent Parent
Item Group Company Group Company
Net core tier 1 capital 2,886,378 2,614,392 2,653,002 2,404,030
Net tier 1 capital 3,241,364 2,944,636 2,872,792 2,605,594
Net capital base 3,909,669 3,600,883 3,396,186 3,114,878
Core tier 1 capital adequacy ratio (%) 13.31 13.29 13.18 13.14
Tier 1 capital adequacy ratio (%) 14.94 14.97 14.28 14.24
Capital adequacy ratio (%) 18.02 18.30 16.88 17.02

As at the end of 2021, the core tier 1 capital adequacy ratio, tier 1 capital adequacy ratio and capital adequacy ratio
calculated by the Bank in accordance with the Capital Regulation stood at 13.31%, 14.94% and 18.02%, respectively,
complying with regulatory requirements.

Annual Report 2021

79
Discussion and Analysis

CAPITAL ADEQUACY RATIO

In RMB millions, except for percentages

At 31 December At 31 December
Item 2021 2020
Core tier 1 capital 2,903,516 2,669,055
  Paid-in capital 356,407 356,407
  Valid portion of capital reserve 148,597 148,534
  Surplus reserve 356,849 322,692
  General reserve 438,640 339,486
  Retained profits 1,618,142 1,508,562
  Valid portion of minority interests 3,539 3,552
 Other (18,658) (10,178)
Core tier 1 capital deductions 17,138 16,053
 Goodwill 7,691 8,107
  Other intangible assets other than land use rights 5,669 4,582
  Cash flow hedge reserve that relates to the hedging of items (4,202) (4,616)
   that are not fair-valued on the balance sheet
  Investments in core tier 1 capital instruments issued by financial 7,980 7,980
   institutions that are under control but not subject to consolidation
Net core tier 1 capital 2,886,378 2,653,002
Additional tier 1 capital 354,986 219,790
  Additional tier 1 capital instruments and related premiums 354,331 219,143
  Valid portion of minority interests 655 647
Net tier 1 capital 3,241,364 2,872,792
Tier 2 capital 668,305 523,394
  Valid portion of tier 2 capital instruments and related premiums 418,415 351,568
  Surplus provision for loan impairment 248,774 170,712
  Valid portion of minority interests 1,116 1,114
Net capital base 3,909,669 3,396,186
Risk-weighted assets(1) 21,690,349 20,124,139
Core tier 1 capital adequacy ratio (%) 13.31 13.18
Tier 1 capital adequacy ratio (%) 14.94 14.28
Capital adequacy ratio (%) 18.02 16.88

Note: (1) Refers to risk-weighted assets after capital floor and adjustments.

80
 Discussion and Analysis

RISK-WEIGHTED ASSETS
In RMB millions

At 31 December At 31 December
Item 2021 2020
Credit risk-weighted assets 20,042,955 18,535,324
  Parts covered by internal ratings-based approach 13,472,715 12,279,663
  Parts uncovered by internal ratings-based approach 6,570,240 6,255,661
Market risk-weighted assets 153,686 174,784
  Parts covered by internal model approach 51,014 94,238
  Parts uncovered by internal model approach 102,672 80,546
Operational risk-weighted assets 1,493,708 1,414,031
Total 21,690,349 20,124,139

Please refer to the 2021 Capital Adequacy Ratio Report of Industrial and Commercial Bank of China Limited issued by the
Bank for further information on capital measurement.

LEVERAGE RATIO
In RMB millions, except for percentages

At At At At At
31 December 30 September 30 June 31 March 31 December
Item 2021 2021 2021 2021 2020
Net tier 1 capital 3,241,364 3,132,095 3,009,641 2,956,971 2,872,792
Balance of adjusted on- and 37,292,522 37,682,357 37,370,525 36,423,221 35,300,338
  off-balance sheet assets
Leverage ratio (%) 8.69 8.31 8.05 8.12 8.14

Note: Please refer to “Unaudited Supplementary Information to the Consolidated Financial Statements” for details on disclosed leverage
ratio information.

Capital Financing Management The Bank issued undated additional tier 1 capital bonds of
USD6.16 billion in the offshore market in September 2021.
On the basis of capital replenishment by retained profits, All proceeds from this issuance, after deduction of issuance
the Bank proactively expanded the channels for external expenses, were used to replenish the Bank’s additional tier
capital replenishment and continuously promoted the 1 capital in accordance with applicable laws and approvals
innovation of capital instruments, to reinforce the capital by the regulatory authorities.
strength, optimize capital structure and control the cost of
capital rationally.
Issuance Progress of Tier 2 Capital Bonds

Issuance of Undated Additional Tier 1 The Bank issued a tier 2 capital bond of RMB30.0 billion
Capital Bonds in China’s national inter-bank bond market in January
2021. All proceeds were used to replenish the Bank’s tier 2
The Bank publicly issued two tranches of undated capital in accordance with the applicable laws as approved
additional tier 1 capital bonds of RMB70.0 billion and by relevant regulatory authorities.
RMB30.0 billion in China’s national inter-bank bond
In 2021, the Bank received the approvals from CBIRC
market in June and November 2021 respectively. All
and PBC respectively, for the Bank to publicly issue tier 2
proceeds from these issuances, after deduction of issuance
capital bonds of no more than RMB190.0 billion in China’s
expenses, were used to replenish the Bank’s additional tier
national inter-bank bond market. In December 2021
1 capital in accordance with applicable laws and approvals
and January 2022, the Bank issued two tranches of tier
by the regulatory authorities.

Annual Report 2021

81
Discussion and Analysis

2 capital bonds of RMB60.0 billion and RMB40.0 billion The Bank further improved the Group’s economic capital
in the national inter-bank bond market, respectively. All management system in terms of measurement, allocation
proceeds were used to replenish the Bank’s tier 2 capital and assessment, strengthened the Group’s economic
in accordance with the applicable laws as approved by capital constraint and incentive mechanism, and promoted
relevant regulatory authorities. the Group’s intensive capital development. It further
improved its economic capital measurement policy and
The Second Extraordinary General Meeting of 2021 of the
optimized its economic capital measurement standards
Bank reviewed and approved the Proposal on the Issuance
and system. The Bank strictly implemented the quota
of Eligible Tier 2 Capital Instruments, which approved the
management of economic capital, continuously boosted
Bank’s issuance of eligible tier 2 capital instruments in
the refined management of economic capital, and
domestic and offshore markets to replenish the Bank’s tier
reinforced the capital constraint on domestic branches,
2 capital. The issuance plan of the eligible tier 2 capital
profitability units, overseas institutions and subsidiaries.
instruments is still subject to the approval of relevant
Moreover, the Bank upgraded the economic capital
regulatory authorities.
measurement and appraisal policy of credit business and
proactively facilitated the adjustment of its credit structure.
It strengthened trainings on economic capital management
For details on the issuance of capital instruments of the
for institutions at all levels, and vigorously pushed
Bank, please refer to the announcements published by the
forward the application of economic capital in operational
Bank on the website of SSE, the “HKEXnews” website of
management and business front-line.
HKEX and the website of the Bank.

Allocation and Management of Assessment Indicators of Systemically

Economic Capital Important Banks

Economic capital management of the Bank includes three

Global Systemically Importance Assessment
major aspects: measurement, allocation and application.
Indicators of Commercial Banks
Economic capital indicators include Economic Capital (EC), In accordance with the Guidelines on the Disclosure of
Risk-Adjusted Return on Capital (RAROC) and Economic Global Systemically Importance Assessment Indicators for
Value-added (EVA). All of the above are applied in credit Commercial Banks issued by CBIRC and the Instructions for
resource allocation, quota management, performance G-SIB Assessment Exercise issued by the Basel Committee
assessment, expenditure allocation, product pricing and on Banking Supervision, the Bank calculated and disclosed
customer management, etc. the global systemically importance assessment indicators.

In RMB millions

Indicator 2021
Balance of adjusted on- and off-balance sheet assets 37,560,752
Intra-financial system assets 2,088,082
Intra-financial system liabilities 2,947,997
Securities and other financing instruments issued 5,080,700
Payments settled via payment systems or correspondent banks 493,730,289
Assets under custody 19,980,932
Underwritten transactions in debt and equity markets 2,272,838
Trading volume of fixed-income securities 6,582,443
Trading volume of listed equities and other securities 1,259,003
Notional amount of over-the-counter (“OTC”) derivatives 7,966,381
Trading and available-for-sale securities 784,582
Level 3 assets 153,164
Cross-jurisdictional claims 2,092,121
Cross-jurisdictional liabilities 2,069,735

82
 Discussion and Analysis

Assessment Indicators of Domestic Systemically Important Banks

In accordance with the Measures for Assessment of Systemically Important Banks issued by PBC and CBIRC and the Notice
on Launching the Assessment Data Completion of Systemically Important Banks issued by CBIRC, the Bank calculated and
disclosed the 2020 assessment indicators of domestic systemically important banks.

In RMB millions, unless otherwise specified

Indicator 2020
Balance of adjusted on- and off-balance sheet assets 35,300,338
Intra-financial system assets 2,988,192
Intra-financial system liabilities 3,121,151
Securities and other financing instruments issued 2,591,743
Payments settled via payment systems or correspondent banks 480,825,563
Assets under custody 18,157,690
Agency and commission-based business 7,448,878
Number of corporate customers (in 10,000) 864
Number of personal customers (in 10,000) 68,030
Number of domestic operating institutions 16,065
Derivatives 8,085,879
Securities measured at fair value 790,093
Assets of non-banking affiliates 872,495
Wealth management business 1,637,344
Balance of wealth management products issued by the wealth management subsidiary 1,070,072
Cross-jurisdictional claims and liabilities 4,222,848

Annual Report 2021

83
Discussion and Analysis

OUTLOOK

In 2022, the global economy is expected to continue counter-cyclical policy arrangements, and provide targeted
its rebound, but tensions in the global supply chain and support for the implementation of major projects during
energy supplies may persist, and the prices of major asset the 14th Five-Year Plan period to keep the macro-economy
categories show a divergent trend. The accelerated shift in on an even keel. The Bank will integrate financial services
monetary policy of major economies and the upward shift into the processes of production, distribution, circulation
in interest rate centers will pose challenges to the banking and consumption to help build a complete demand system
sector in terms of liquidity management, asset allocation and smoothen the circulation of the national economy and
and optimization of the debt structure. At present, the the global economy. Third, it will implement the new
Chinese economy faces pressures from three fronts, development plan at a high-quality standard. The
namely shrinking demand, supply shock and weakening Bank will give greater prominence to quality, efficiency and
expectations, but the momentum of sustained recovery innovation, make itself stronger and better based on actual
and development has not changed, and its economic conditions, and improve qualitative development. It will
fundamentals remain strong in the long term. China is push forward the implementation of key strategies such
stepping up efforts to foster a new development paradigm as the No.1 Personal Bank, the Preferred Bank for Foreign
featuring dual circulation, in which domestic and overseas Exchange Business, Sharpening Competitive Edge in Key
markets reinforce each other, with the domestic market as Regions, and Urban-Rural Collaborative Development. The
the mainstay. This will bring new opportunities to the high- Bank will strive to achieve new results while “bringing
quality development in the banking sector. out our strengths to make up for our weaknesses and
laying a solid foundation and base” and make mid-term
Adhering to Xi Jinping Thought on Socialism with Chinese
breakthroughs in the implementation of new development
Characteristics for a New Era, ICBC will continue to
plan. Fourth, it will carry out the high-quality
earnestly implement the decisions and arrangements
enterprise risk management. Adhering to the systematic
of the Central Committee of the Communist Party of
thinking pattern, the Bank will strengthen risk awareness
China and the State Council, advance full and accurate
and bottom-line thinking, comprehensively sort out and
implementation of the new development philosophy in the
identify potential risks, and develop targeted response
new development stage, and actively serve and integrate
plans and countermeasures. The Bank will improve credit
into the new development paradigm. The Bank will stay
risk management, and further stabilize the asset quality.
committed to the general principle of pursuing progress
It will refine the risk management mechanism for online
while ensuring stability, keep hold of the requirement
and emerging businesses, and strictly forestall market risks.
of “stability”, fight for achievements in “progress”,
The Bank will comprehensively enhance the effectiveness
redouble efforts in “reform”, stick to the path of financial
of internal control and case prevention measures to ensure
development with Chinese characteristics, follow the
that no major risk events and cases occur. Fifth, it will
“48-character” guideline, and pursue its own high-
press ahead with high-quality financial reform. The
quality development while contributing to the country’s
Bank will further promote the organic integration of the
high-quality economic and social development. First, it
Party’s leadership and corporate governance, put in place
will reinforce the Party’s establishment in a high-
the sound system of modern financial enterprise, and
quality manner. The Bank will uphold and strengthen
modernize the governance system and capacity. It will fully
the Party’s leadership, further integrate it with corporate
exploit its advantages in technology and data to boost
governance, better align the procedural rules of the
the development of the digital economy and ramp up its
Party Committee and the decision-making mechanism in
efforts in building “D-ICBC”. The Bank will roll out new
corporate governance, and improve the modern financial
cutting-edge and controllable financial technology and
enterprise system. The Bank will give full play to its
take solid measures to ensure the security in the process
role in full and strict Party self-governance in providing
of digital transformation. Sixth, it will reinforce the
political guidance and guarantees and strengthen strict
building of talent teams in a high-quality manner. The
management and atmosphere. Second, it will serve
Bank will strengthen the top-level design for talent-related
the new development paradigm in a high-quality
work, devise and implement a new round of bank-wide
manner. The Bank will continue to focus on its main
talent development plans. It will improve the evaluation,
responsibilities and businesses, scale up support for
appraisal and monitoring systems, refine the incentive and
manufacturing enterprises and small and micro enterprises,
restraint mechanisms, strengthen employee management
and improve the service quality and efficiency for scientific
and supervision, and improve employee care. By doing
and technological innovation and green development.
so, the Bank aims to build a strong bank with top-notch
The Bank will bring into full play to its dual functions as
talent teams and forge synergy for ICBC’s high-quality
monetary policy tools in the total amount and structure of
development.
investment and financing, implement the cross-cyclical and

84
 Discussion and Analysis

HOT TOPICS IN THE CAPITAL MARKET

Hot Topic 1: An Impressive “Answer and large” and delivered to investors an impressive
Sheet” from ICBC “answer sheet”.

In 2021, ICBC adhered to the “48-character” guideline and

coordinated COVID-19 prevention and control efforts with I. The input and output efficiency of assets
business development. Through high-quality investment and capital constantly enhanced
and financing, the Bank provided comprehensive services
against a new development paradigm, implemented the First, operational efficiency was further boosted.
new development plan by steadily pushing forward the ROE reached 12.15% and ROA was 1.02%, up 20 basis
mantra of “bringing out our strengths to make up for points and 2 basis points from last year, respectively, an
our weaknesses and laying a solid foundation and base”, outstanding level among world’s largest banks. Second,
strengthened risk control on every front by improving the the capital base was increasingly strengthened.
risk management system and comprehensively deepened Capital adequacy ratio stood at 18.02%, an increase
reform and innovation through well-focused efforts to of 1.14 percentage points from the end of last year,
enhance governance capacity. While contributing to high- maintaining a leading position in the global banking sector.
quality economic growth, the Bank further improved its Core tier 1 capital adequacy ratio was 13.31%, up 0.13
sustainability, further cemented the foundation for its percentage points, and tier 1 capital adequacy ratio was
own high-quality development and delivered remarkable 14.94%, up 0.66 percentage points. Net capital base was
performance in main business indicators. In summary, ICBC RMB3,909.7 billion, an increase of 15.1% from the end of
continued to highlight the qualities of “strong, excellent last year, remaining at a leading position worldwide.

Stronger capital base Higher operating efficiency

Unit: RMB100 millions, % Unit: %

20.0% 40,000 12.15% 1.04%

16.0% 38,000
12.07% 1.02%

12.0% 36,000

12.00% 1.01%
8.0% 34,000

4.0% 32,000 11.92% 0.99%

0.0% 30,000
11.85% 0.98%
2020 2021
2020 2021
Core tier 1 capital adequacy ratio
Tier 1 capital adequacy ratio ROE ROA
Capital adequacy ratio
Net capital base

Annual Report 2021

85
Discussion and Analysis

II. Capital profitability and risk control comparable domestic banks. The Bank demonstrated
capability continuously improved a strong ability to manage assets and liabilities, and
implemented the policy of fee reduction and profit
First, net interest margin (“NIM”) remained good. concessions and serving the real economy. Second, the
NIM stood at 2.11%, still an outstanding level in the profit structure was optimized with an increasing
banking sector. Against the backdrop of persistently low proportion of non-interest income. Non-interest income
interest rates worldwide and narrowing banking spreads, accounted for 19.77% of operating income, up 0.61
the contraction (-4 basis points) in NIM outperformed percentage points compared with the previous year.

NIM remained good Higher proportion of non-interest income

Unit: % Unit: %

2.20% 0.55%

2.16% 0.35%
2.15
19.16 19.77
2.13% 0.15%
2.11

2.09% -0.05%

-0.15 -0.04
2.06% -0.25%
2020 2021 2020 2021

Decline rate NIM

Third, asset quality further improved. NPL ratio was percentage points over the end of last year. Allowance to
1.42%, down 16 basis points from the end of last year, total loans ratio was 2.92%, representing an increase of
and basically returned to the pre-pandemic level. The 7 basis points. Credit cost ratio was 0.86%, down 0.11
overdue loan rate was 1.23%, down 21 basis points. percentage points. Fifth, capital discipline worked
The price scissors between overdue loans and NPLs effectively. RWA grew by 7.8%, 3.2 percentage points
was RMB-38.5 billion, maintaining negative for seven slower than growth of credit assets. Sixth, the input/
consecutive quarters, representing a record low. Fourth, output efficiency was high. Cost-to-income ratio was
risk resilience was further boosted and the base 26.36%, still relatively low among global peers despite a
of risk allowances further fortified. Allowance to rise of 1.60 percentage points over last year.
NPLs was 205.84%, representing an increase of 25.16

86
 Discussion and Analysis

Asset quality continued to improve Risk resilience was further boosted

Unit: RMB100 millions, % Unit: %

450 1.60% 250.00% 2.92%

1.40%
300
1.20%
150
1.00%

0 0.80% 200.00% 2.84%

0.60%
-150
0.40%
-300
0.20%

-450 0.00% 150.00% 2.75%

2020 2021 2020 2021

Price scissors NPL ratio Allowance to NPLs Allowance to total loans ratio
Overdue rate

III. Scale merits and brand value leading the

world
First, the Bank ranked No. 1 by total income among
global banks. The Bank recorded RMB860.9 billion in
operating income, up 7.6% from the previous year, with
net fee and commission income maintaining its leading Income and profit ranked first worldwide
position among domestic banks. Second, the Bank Unit: RMB100 millions, %

ranked No. 1 by total profits among global banks.

10,000 16.0%
Net profit reached RMB350.2 billion, representing an
increase of 10.2% over the previous year. Profit before 8,000
12.0%
provision was RMB627.5 billion, up 5.5% from last year.
6,000
Third, the Bank ranked No. 1 by total assets among 8.0%
global banks. Total assets reached RMB35,171.4 billion, 4,000

representing an increase of 5.5% over the end of the 4.0%

2,000
previous year. Loans and advances to customers totaled
RMB20,667.2 billion, up 11.0% from the end of the 0 0.0%
2020 2021
previous year. Investment in bonds was RMB8,817.3
billion, up 9.5% from the end of the previous year. Net profit
Profit before provision
Growth rate of net profit
Growth rate of profit before provision
Fourth, the Bank ranked No. 1 by total deposits Operating income Growth rate of operating income

among global banks. Due to customers amounted to

RMB26,441.8 billion, an increase of 5.2% from the end of
the previous year.

Annual Report 2021

87
Discussion and Analysis

Total assets Total deposits

Unit: RMB100 millions Unit: RMB100 millions

390,000 350,000

325,000
280,000

260,000
210,000
195,000
140,000
130,000

70,000
65,000

0 0
2020 2021 2020 2021

Investment in bonds
Customer deposits Total liabilities
Loans and advances to customers
Total assets

Fifth, the Bank remained in the first place in In terms of transaction banking, the financial market
international rankings. The Bank was ranked the 1st business generated more than RMB100 billion of net
place among the Top 1000 World Banks by The Banker, profit, investment banking continued to rank first among
the 1st place in the Global 2000 by Forbes, and the 1st domestic peers by income from advisory and consulting
place in the list of commercial banks of the Global 500 services, and mega asset management totaled RMB27
in Fortune for the ninth consecutive year, demonstrating trillion, representing a growth of 11.24%.
strong overall capacity and market influence. Sixth, brand
ii. Making up for our weaknesses: focusing on
value kept increasing. According to the “2022 Top 500
personal banking, foreign exchange business, key
Banking Brand” by Brand Finance, a research institute of
areas and urban-rural collaborative development. In
global brand value, the Bank took the 1st place among the
terms of No.1 Personal Bank Strategy, personal assets
world’s top banking brands with a brand value of USD75.1
under management (“AUM”, close to RMB17 trillion)
billion for the sixth consecutive year.
still led the market. The number of individual customers
exceeded 700 million and the number of mobile banking
customers reached 469 million. The Bank was the first
IV. Major breakthroughs made in “bringing
bank to have more than 100 million monthly active users
out our strengths to make up for our
(“MAU”) of mobile banking. The balance of personal
weaknesses and laying a solid foundation
loans reached nearly RMB8 trillion, and payroll service
and base”
reached over RMB5 trillion of distributions to more than
i. Bringing out our strengths: focusing on cementing 100 million customers. In terms of the Strategy of the
strengths in institutional banking, corporate banking, Preferred Bank for Foreign Exchange Business, the
settlement and transaction banking. In terms of Bank launched the “YES ICBC” financial service brand.
settlement service, RMB corporate settlement generated The average daily balance of domestic foreign exchange
RMB11.3 billion of fee income, ranking first among peers. deposits increased by 35% over the previous year. The
In terms of institutional banking, the customer base Group’s cross-border RMB business volume exceeded
hit a five-year high in growth, and deposits from banks RMB8.5 trillion. The Bank became one of the first eligible
and other financial institutions remained in the first pilot banks for the “Southbound Bond Connect” scheme
place among comparable peers, manifesting a notable and the “Cross-boundary Wealth Management Connect”
competitive edge. In terms of corporate banking, scheme in the Guangdong-Hong Kong-Macao Greater
the Bank still took the first spot in both the number of Bay Area. It played a leading role as a big bank to serve
corporate customers and the amount of corporate loans two-way opening-up of the financial market. In terms
and deposits among comparable peers. The Bank was the of Strategy for Sharpening Competitive Edge in Key
first commercial bank to break the RMB10 trillion mark of Regions, the Bank enjoyed a dominance in total balance
RMB corporate loans. The asset quality improved steadily. of deposits and loans in five key areas, namely the Beijing-

88
 Discussion and Analysis

Tianjin-Hebei region, Yangtze River Delta, Guangdong- In 2022, ICBC will adhere to the general principle of
Hong Kong-Macao Greater Bay Area, Central China and pursuing progress while ensuring stability, apply the new
Chengdu-Chongqing region. In terms of the Urban- development philosophy in every respect and remain stable
Rural Collaborative Development Strategy, the Bank with sound momentum. The Bank will push for medium-
innovated the rural vitalization service system, introduced term breakthroughs under new plans, deepen digital
the “Xingnongtong” brand and provided stronger credit transformation and work hard to break new ground in
resource support. The balance of agriculture-related loans ICBC’s high-quality development.
reached RMB2.66 trillion.

iii. Laying a solid foundation: focusing on FinTech

Hot Topic 2: D-ICBC
and financial innovation. In terms of FinTech, the
Bank practiced technology self-reliance, strengthened the The Bank remained steadfast on the road of digital
“dual wheel drive” of technological innovation and system development. In shifting from “bank informatization”
reform, and empowered the development of “D-ICBC” to “informatized bank”, ICBC led the Digital 1.0 stage
with technology. The intelligent banking ecosystem ECOS of digital technology-driven business development. The
was awarded PBC’s only special award of the “FinTech Bank keenly grasped the trends in the fresh technological
Development Awards” in 2021. The Bank had the most revolution and industry transformation and made a push
newly added and accumulated patents among Chinese for IT architecture transition and the “smart banking
banks. In terms of financial innovation, the Bank ecosystem ECOS” project, kick-starting the Digital 2.0
ranked first in both the balance and growth of credits to stage of digitalization-led transformation in every respect.
manufacturing, strategic emerging industries, green and During the reporting period, the Bank took the lead in
other key fields among peers. Specifically, the Bank topped developing a five-dimensional plan for “digital ecosystem,
the RMB2 trillion mark in balance of manufacturing loans, digital assets, digital technology, digital infrastructure
a net increase of RMB319.7 billion. The balance of loans and digital genes” and planned to launch a farsighted
to strategic emerging industries exceeded RMB1 trillion. digital brand “D-ICBC”. In addition, leveraging on the
Outstanding green loans amounted to RMB2.48 trillion, up Group’s FinTech and data strengths, the Bank deepened
RMB634.9 billion from the beginning of the year, with the the D-ICBC development driven by “data and technology”
new green loans issued in the year hitting an all-time high. on a customer-oriented basis. Keeping in mind the bigger
iv. Laying a solid base: focusing on enhancing the picture of building a digital China, ICBC contributed to
capacity of enterprise risk management, efficiency the healthy development of digital economy by promoting
of GBC interactions and competitiveness of outlets profound changes in business and service models,
and teams. In terms of enterprise risk management and improvement of quality and efficiency of product
system, the Bank adhered to the four-pronged risk innovation. Significant improvements have been made in
management approach to people, money, defense customer experience, service efficiency and business value.
line and bottom line, followed the guiding principle of I. Digital transformation boosted circulation.
“active prevention, smart control and comprehensive According to the business model and transaction
management”, incorporated investment and financing characteristics of small and micro customers, the Bank
cooperation, secondary risks of intermediate business, continuously upgraded its digital inclusive products and
climate risk and model risk in the enterprise risk their operation system. Inclusive loans issued online
management system. The “9+X” risks were generally accounted for 94% of the new balance. More scenarios
under control. In terms of GBC interactions and were introduced for “e-Enterprise Quick Loan” to improve
coordination of channels, the Bank made solid progress the service quality and efficiency for small and micro
in GBC work, fund taking, “net making and patching” customers who hold non-residential real properties. A
program, payroll service, management of investment and combination of tax, electricity, settlement and other
financing cooperation institutions and competitiveness data were used to provide credit loan support for the
enhancement of outlets. Remarkable achievements were activity of small and micro businesses. The digital supply
made in the development of key GBC scenarios. G-end chain and industrial chain scenarios-based financial
added 12 thousand customers and RMB120.0 billion services were developed and perfected for national
of deposits. B-end added 290 thousand customers and strategic sectors such as modern agriculture, “specialized,
RMB290.0 billion of deposits. C-end acquired or activated sophisticated, distinctive and innovative” enterprises
52.00 million customers with a payroll service volume of and advanced manufacturing. In cooperation with the
RMB1.7 trillion. National Financing Guarantee Fund, the Bank introduced

Annual Report 2021

89
Discussion and Analysis

the “bulk guarantee” credit enhancement mechanism Bank developed special sections for key customer groups,
to make financing more accessible to small and micro becoming the first bank to establish interconnection with
businesses. The Bank strengthened the capacity of fully the system of the Ministry of Human Resources and Social
digital operations by building a customer marketing Security (MOHRSS) and enabling the issuance of “physical
system covering “targeting, attraction, engagement + electronic” social security cards. The Bank supported
and retention”. During the reporting period, the Bank cross-provincial processing of social security cards and
kept deepening trade finance and cross-border finance built a “smart risk control” platform to safeguard
in support of cooperation projects under the Belt and customers’ funds. Efforts were intensified to monitor
Road Initiative. The Bank developed the “ICBC Global unusual transactions in high-risk areas, such as sensitive
Pay” product series to provide one-stop global cash transactions, anti-theft and the elderly’s fund transfer.
management services, serving nearly 10,000 multinational
III. Pushing for technology self-reliance. First, the IT
corporations and helping Chinese enterprises going
core architecture was transformed and upgraded. The
global. The “ICBC Business Matchmaker” cross-border
Bank has advanced the smart banking ecosystem project
matchmaking platform was developed. ICBC became
(ECOS) since 2015. Two core IT infrastructure platforms
the first bank to provide closed-loop cross-border
(cloud computing and distributed computing) were
matchmaking services. Nearly 80% of matched pairs
developed in-house to deal with all the core operations of
intended to cooperate with each other.
ICBC. The two platforms provided safe and stable financial
II. Building a GBC digital community. First, on the services to over 700 million individual customers and
G-end, new models of digital government services nearly 9.70 million corporate customers, with the system
were introduced. The Bank carried out government data availability always above 99.99%. Second, digital new
partnership with 29 provincial or equivalent governments infrastructures were developed in a faster pace. In
and launched more than 300 government partnership 2021, the Bank became the first bank to receive a five-star
scenarios, proactively supporting government affairs to rating for its maturity of data management capabilities. The
be “processed in one network”. “My Ningxia” APP built Bank thoroughly implemented the development philosophy
and shaped a new brand and image for Ningxia’s digital that “lucid waters and lush mountains are invaluable
government. Second, B-end saw in-depth participation assets” in a bid to build a world-class green data center.
in industry digitalization. Keeping pace with digital The Bank’s “National Green Data Center” recorded a daily
transformation of leading players in modern agriculture, peak of 868 million transactions, equivalent to a carbon
advanced manufacturing and modern service industries, dioxide emissions reduction of nearly 6,000 tons a year.
the Bank provided services along the value chain ranging Third, the Bank made a push for new technologies on
from upstream to downstream customers, and improved its all fronts. With a focus on cutting-edge technologies such
financial service capabilities covering the entire industrial as artificial intelligence, blockchain, cloud computing and
chain. The Bank launched over 20 “financial + industrial” big data, the Bank has built a series of new IT platforms,
cloud service ecosystem to provide over 2,600 types of including ICBC Turing, ICBC Premier Chain and ICBC
financial services and products to the public around the Nebula, to boost its core capabilities in new infrastructures.
hot areas of people’s livelihood, including healthcare, Among them, ICBC Premier Chain integrates basic
education and mobility, ranking first among peers by technical services of blockchain, intelligent operations,
service types and number of scenarios covered. Third, and financial-level security capabilities. With more than
C-end endeavored to build a new service model 150 breakthroughs achieved in security, performance and
of “ICBC on cloud”. The Bank continued to upgrade capacity, the Bank was included in Forbes’ Blockchain
mobile banking and offered abundant online services 50 2021. Fourth, data asset management and data
for 469 million users. It developed new models of smart security control were enhanced. The Bank developed
marketing, under which Smart Brain was connected to a data architecture focused on “one data lake, two
channels such as ICBC e-Service, Gino (Gong Xiao Zhi) databases”. It built a big data-based smart cloud platform
and cloud studios, providing more than 10 million smart that is first of its type, self-contained, controllable and with
service solutions for individual customers. The Bank actively a distributed architecture. All the Group’s data have been
promoted scenario- and ecosphere-based use of digital moved into the “lake”.
RMB, getting fully involved in digital public services. The

90
Details of Changes in Share Capital and Shareholding of
Substantial Shareholders

Changes in Ordinary Shares

DETAILS OF CHANGES IN SHARE CAPITAL
Unit: Share

At 31 December 2020 Increase/decrease At 31 December 2021

Percentage during the Percentage
Number of shares (%) reporting period Number of shares (%)
I. Shares subject to – – – – –
  restrictions on sales
II. Shares not subject to 356,406,257,089 100.00 – 356,406,257,089 100.00
  restrictions on sales
1. RMB-denominated 269,612,212,539 75.65 – 269,612,212,539 75.65
  ordinary shares
2. Foreign shares listed 86,794,044,550 24.35 – 86,794,044,550 24.35
 overseas
III. Total number of shares 356,406,257,089 100.00 – 356,406,257,089 100.00

Notes: (1) The above data are based on the Equity Structure Chart issued by China Securities Depository and Clearing Corporation Limited.

(2) “Foreign shares listed overseas”, namely H shares, are within the same meaning as defined in the “No. 5 Standards on the
Content and Format of Information Disclosure of Companies with Public Offerings — Content and Format of the Report of
Change in Corporate Shareholding” (Revision 2022) of CSRC.

(3) Due to rounding, percentages presented herein are for reference only.

Details of Securities Issuance and Listing

During the reporting period, the Bank did not issue any shares, did not have any employee shares, employee stock
ownership plan, did not issue any convertible bonds, or corporate bonds to be disclosed in accordance with Chapter II,
Section 9 of the “No. 2 Standards on the Content and Format of Information Disclosure of Companies with Public Offerings
— Content and Format of the Annual Report (Revision 2021)” issued by CSRC.

For details on the issuance of preference shares of the Bank, please refer to the section headed “Details of Changes in Share
Capital and Shareholding of Substantial Shareholders — Preference Shares”.

For details on the issuance progress of tier 2 capital bonds and undated additional tier 1 capital bonds of the Bank during
the reporting period, please refer to the section headed “Discussion and Analysis — Capital Management”.

For information on other securities issued by the Bank and its subsidiaries, please refer to “Note 35. to the Consolidated
Financial Statements: Debt Securities Issued; Note 38. to the Consolidated Financial Statements: Other Equity Instruments”
for details.

Number of Shareholders and Particulars of Shareholding

As at the end of the reporting period, the Bank had a total number of 750,894 ordinary shareholders and no holders of
preference shares with voting rights restored or holders of shares with special voting rights, including 113,054 holders of H
shares and 637,840 holders of A shares. As at the end of the month immediately before the annual results announcement
date (28 February 2022), the Bank had a total number of 721,975 ordinary shareholders and no holders of preference shares
with voting rights restored or holders of shares with special voting rights.

Annual Report 2021

91
Details of Changes in Share Capital and Shareholding of Substantial Shareholders

PARTICULARS OF SHAREHOLDING OF THE TOP 10 ORDINARY SHAREHOLDERS OF THE BANK

Unit: Share

Increase/
decrease of
shares during Number of shares Shareholding Number of
Nature of Class of the reporting held at the end of percentage pledged or
Name of shareholder shareholder shares period reporting period (%) locked-up shares
Huijin State-owned A Share – 123,717,852,951 34.71 None
MOF State-owned A Share – 110,984,806,678 31.14 None
HKSCC Nominees Limited(5) Foreign legal H Share -13,477,082 86,154,124,549 24.17 Unknown
person
SSF(6) State-owned A Share – 12,331,645,186 3.46 None
Ping An Life Insurance Company Other entities A Share – 3,687,330,676 1.03 None
  of China, Ltd. — Traditional —
  Ordinary insurance products
China Securities Finance Co., Ltd. State-owned A Share -24 2,416,131,540 0.68 None
legal person
Hong Kong Securities Clearing Foreign legal A Share 200,331,413 1,386,451,666 0.39 None
  Company Limited(7) person
Central Huijin Asset Management State-owned A Share – 1,013,921,700 0.28 None
  Co., Ltd. legal person
China Life Insurance Company Other entities A Share -34,438,403 435,910,885 0.12 None
  Limited — Traditional
  — Ordinary insurance products
  — 005L — CT001 Hu
Taiping Life Insurance Co., Ltd. — Other entities A Share 39,168,600 426,975,751 0.12 None
  Traditional — Ordinary insurance
  products — 022L — CT001 Hu

Notes: (1) The above data are based on the Bank’s register of shareholders as at 31 December 2021.

(2) The Bank had no shares subject to restrictions on sales.

(3) HKSCC Nominees Limited is a wholly-owned subsidiary of Hong Kong Securities Clearing Company Limited. Central Huijin Asset
Management Co., Ltd. is a wholly-owned subsidiary of Huijin. Save as disclosed above, the Bank is not aware of any connected
relations or concert party action among the afore-mentioned shareholders.

(4) Except to the extent unknown to HKSCC Nominees Limited, the top 10 shareholders of the Bank did not participate in any
margin trading, short selling or refinancing business.

(5) The number of shares held by HKSCC Nominees Limited at the end of the period refers to the total H shares held by it as a
nominee on behalf of all institutional and individual investors registered with accounts opened with HKSCC Nominees Limited
as at 31 December 2021, which included H shares of the Bank held by SSF, Ping An Asset Management Co., Ltd. and Temasek
Holdings (Private) Limited.

(6) According to the Notice on Comprehensively Transferring Part of State-Owned Capital to Fortify Social Security Funds (Cai Zi
[2019] No. 49), MOF transferred 12,331,645,186 A shares to the state-owned capital transfer account of SSF in a lump sum in
December 2019. According to the relevant requirements under the Notice of the State Council on Issuing the Implementation
Plan for Transferring Part of State-Owned Capital to Fortify Social Security Funds (Guo Fa [2017] No. 49), SSF shall perform the
obligation of more than 3-year lock-up period as of the date of the receipt of transferred shares. At the end of the reporting
period, according to the information provided by SSF to the Bank, SSF also held 7,946,049,758 H shares of the Bank and
20,277,694,944 A and H shares in aggregate, accounting for 5.69% of the Bank’s total ordinary shares.

(7) The number of shares held by Hong Kong Securities Clearing Company Limited at the end of the period refers to the total A
shares (Northbound shares of the Shanghai-Hong Kong Stock Connect) held by it as a nominal holder designated by and on
behalf of Hong Kong and foreign investors as at 31 December 2021.

92
Details of Changes in Share Capital and Shareholding of Substantial Shareholders

Particulars of Substantial Shareholders

During the reporting period, the Bank’s controlling shareholders and de facto controller remained unchanged.

Controlling Shareholders
The largest single shareholder of the Bank is Huijin, whose full name is Central Huijin Investment Ltd. Huijin is a state-owned
company founded by the State according to the Company Law on 16 December 2003. Its registered capital is equal to its
paid-in capital at RMB828,209 million. Its registered address is New Poly Plaza, 1 Chaoyangmen North Street, Dongcheng
District, Beijing. Its unified social credit code is 911000007109329615, and its legal representative is Peng Chun. Huijin is a
wholly-owned subsidiary of China Investment Corporation. It, in accordance with authorization by the State Council, makes
equity investments in major state-owned financial enterprises, and shall, to the extent of its capital contribution, exercise the
rights and perform the obligations as an investor on behalf of the State in accordance with applicable laws, to achieve the
goal of preserving and enhancing the value of state-owned financial assets. Huijin does not engage in any other business
activities, and does not intervene in the day-to-day business operations of the key state-owned financial institutions it
controls.

As at 31 December 2021, Huijin held approximately 34.71% shares of the Bank. It held shares directly in the institutions
listed below:

Huijin’s shareholding
No. Company name percentage
1 China Development Bank Corporation 34.68%

2 Industrial and Commercial Bank of China (A; H) 34.71%

3 Agricultural Bank of China Limited (A; H) 40.03%
4 Bank of China Limited (A; H) 64.02%
5 China Construction Bank Corporation (A; H) 57.11%
6 China Everbright Group Ltd. 63.16%
7 Hengfeng Bank Co., Ltd. 53.95%
8 China Export & Credit Insurance Corporation 73.63%
9 China Reinsurance (Group) Corporation (H) 71.56%
10 New China Life Insurance Company Limited (A; H) 31.34%
11 China Jianyin Investment Limited 100.00%
12 China Galaxy Financial Holdings Company Limited 69.07%
13 Shenwan Hongyuan Group Co., Ltd. (A; H) 20.05%
14 China International Capital Corporation Limited (A; H) 40.11%
15 Jiantou CITIC Asset Management Co., Ltd. (A; H) 30.76%
16 China Galaxy Asset Management Co., Ltd. 13.30%
17 Guotai Junan Investment Management Co., Ltd. 14.54%

Notes: (1) A represents A share listed company, while H represents H share listed company.

(2) Except the above-mentioned controlling or equity participating enterprises, Huijin also has a wholly-owned subsidiary — Central
Huijin Asset Management Co., Ltd. Central Huijin Asset Management Co., Ltd. was incorporated in November 2015 in Beijing.
With a registered capital of RMB5 billion, the company runs an asset management business.

Annual Report 2021

93
Details of Changes in Share Capital and Shareholding of Substantial Shareholders

The second single largest shareholder of the Bank is MOF, which held approximately 31.14% shares of the Bank as at 31
December 2021. MOF is a department under the State Council, and is responsible for overseeing the State’s fiscal revenue
and expenditure, formulating the fiscal and taxation policies, and supervising State finance at a macro level.

Particulars of Other Substantial Shareholders

SSF. SSF owned 5.69% of the shares of the Bank as at 31 December 2021. Founded in August 2000, SSF is a public service
institution administered by MOF, having its address at South Tower, Building 11, Fenghuiyuan Fenghui Times Building,
Xicheng District, Beijing, China, and its legal representative being Liu Wei. With the approval of the State Council and
pursuant to regulations of MOF and the Ministry of Human Resources and Social Security, SSF has been entrusted to manage
the following funds: the National Social Security Fund, the subsidy from central government to individual accounts, part of
the surplus of the enterprise employee’s basic pension insurance, basic pension insurance fund and the partial state-owned
capital transferred.

Particulars of the De Facto Controller

None.

94
Details of Changes in Share Capital and Shareholding of Substantial Shareholders

Interests and Short Positions Held by Substantial Shareholders and Other Persons
Substantial Shareholders and Persons Having Notifiable Interests or Short Positions
Pursuant to Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance of Hong
Kong
As at 31 December 2021, the Bank received notices from the following persons about their interests or short positions held
in the Bank’s ordinary shares and underlying shares, which were recorded in the register pursuant to Section 336 of the
Securities and Futures Ordinance of Hong Kong as follows:

HOLDERS OF A SHARES

Number of Percentage of
Name of substantial A shares held Nature of Percentage of total ordinary
shareholder Capacity (share) interests A shares(2) (%) shares(2) (%)
Huijin (1)
Beneficial owner 123,717,852,951 Long 45.89 34.71
position
Interest of 1,013,921,700 Long 0.38 0.28
controlled position
corporations
Total 124,731,774,651 46.26 35.00
MOF Beneficial owner 110,984,806,678 Long 41.16 31.14
position

Notes: (1) According to the register of shareholders of the Bank as at 31 December 2021, Huijin held 123,717,852,951 shares in the Bank,
while Central Huijin Asset Management Co., Ltd., a subsidiary of Huijin, held 1,013,921,700 shares in the Bank.
(2) Due to rounding, percentages presented herein are for reference only.

HOLDERS OF H SHARES

Number of Percentage of
Name of substantial H shares held Nature of Percentage of total ordinary
shareholder Capacity (share) interests H shares(3) (%) shares(3) (%)
Ping An Asset Investment 12,168,809,000 Long 14.02 3.41
 Management manager position
  Co., Ltd.(1)
SSF(2) Beneficial owner 8,663,703,234 Long 9.98 2.43
position
Temasek Holdings Interest of 7,317,475,731 Long 8.43 2.05
  (Private) Limited controlled position
corporations

Notes: (1) As confirmed by Ping An Asset Management Co., Ltd., such shares were held by Ping An Asset Management Co., Ltd. on behalf
of certain customers (including but not limited to Ping An Life Insurance Company of China, Ltd.) in its capacity as investment
manager and the interests in such shares were disclosed based on the latest disclosure of interests form filed by Ping An Asset
Management Co., Ltd. for the period ended 31 December 2021 (the date of relevant event being 12 June 2019). Both Ping
An Life Insurance Company of China, Ltd. and Ping An Asset Management Co., Ltd. are subsidiaries of Ping An Insurance
(Group) Company of China, Ltd. As Ping An Asset Management Co., Ltd. is in a position to fully exercise the voting rights in
respect of such shares on behalf of customers and independently exercise the rights of investment and business management
in its capacity as investment manager, and is completely independent from Ping An Insurance (Group) Company of China, Ltd.,
Ping An Insurance (Group) Company of China, Ltd. is exempted from aggregating the interests in such shares as a holding
company under the aggregation exemption and disclosing the holding of the same in accordance with the Securities and Futures
Ordinance of Hong Kong.
(2) According to the information provided by SSF to the Bank, SSF held 7,946,049,758 H shares of the Bank as at the end of the
reporting period, accounting for 9.16% of the Bank’s H shares and 2.23% of the Bank’s total ordinary shares.
(3) Due to rounding, percentages presented herein are for reference only.

Annual Report 2021

95
Details of Changes in Share Capital and Shareholding of Substantial Shareholders

Preference Shares
Issuance and Listing of Preference Shares in Latest Three Years
Issuance of “工行優 2”

With the approval of CBIRC by its Document Yin Bao Jian Fu [2019] No. 444 and the approval of CSRC by its Document
Zheng Jian Xu Ke [2019] No. 1048, the Bank made a non-public issuance of 700 million domestic preference shares on 19
September 2019 at a par value of RMB100 per share. The dividend rate is the benchmark interest rate plus a fixed spread,
remaining unchanged in the first five years. Subsequently the benchmark interest rate will be reset every five years, with
the dividend rate kept unchanged in each reset period and the fixed spread remaining constant through the duration of
the domestic preference shares. The initial dividend rate of the afore-mentioned domestic preference shares is set at 4.2%
through market inquiry for the first five years. With the consent of SSE by its letter Shang Zheng Han [2019] No. 1752, the
afore-mentioned domestic preference shares issued were listed for transfer on the Comprehensive Business Platform of SSE
on 16 October 2019 with the stock name “工行優2” and stock code 360036. Proceeds of the afore-mentioned domestic
preference shares totaled RMB70.0 billion, all of which was replenished to the additional tier 1 capital of the Bank after
deduction of issuance expenses.

For issuance of domestic preference shares of the Bank, please refer to the announcements published by the Bank on the
website of SSE, the “HKEXnews” website of HKEX and the website of the Bank.

Issuance of offshore preference shares

With the approval of CBIRC by its Document Yin Bao Jian Fu [2020] No. 138 and the approval of CSRC by its Document
Zheng Jian Xu Ke [2020] No. 1391, the Bank made a non-public issuance of 145 million USD-denominated non-cumulative
perpetual offshore preference shares (the “Offshore USD Preference Shares”) on 23 September 2020 at an issuance price
of USD20 per share (see the table below for details). The Offshore USD Preference Shares were listed on the SEHK on 24
September 2020. All proceeds from the issuance, after deduction of commission and issuance expenses, will be used to
replenish additional tier 1 capital and increase capital adequacy ratio.

Total Full amount Net amount

Type of offshore issuance of proceeds of proceeds Number of
preference shares Stock code Dividend rate amount per share per share shares issued
USD Preference Shares 4620 3.58% USD2.9 billion USD20 RMB135.77 145 million shares

The number of qualified placees for the Offshore USD Preference Shares shall not be less than six, and they shall be offered
only to professional investors instead of retail investors, and shall be non-publicly transferred in the OTC market only.

For details on the issuance of offshore preference shares of the Bank, please refer to the announcements published by the
Bank on the website of SSE, the “HKEXnews” website of HKEX and the website of the Bank.

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Details of Changes in Share Capital and Shareholding of Substantial Shareholders

Reset dividend rate of “工行優 1”

Pursuant to relevant provisions of the Prospectus on Non-public Offering of Preference Shares of Industrial and Commercial
Bank of China Limited, domestic preference shares non-publicly offered by the Bank in November 2015 (abbreviation “工行
優1” and code “360011”) were priced at a coupon dividend rate adjusted in stages, with the coupon dividend rate being
the benchmark interest rate plus a fixed spread. The coupon dividend rate for the first five years remained unchanged from
the date of issuance, and subsequently the benchmark interest rate will be reset every five years, and the nominal dividend
rate during each reset period will remain unchanged. In November 2020, the Bank reset the nominal dividend rate of “工
行優1” as it lasted five years from the issuance date, and the coupon dividend rate after reset became 4.58% from 23
November 2020.

For details on the reset dividend rate of domestic preference shares of the Bank, please refer to the announcements
published by the Bank on the website of SSE, the “HKEXnews” website of HKEX and the website of the Bank.

Number of Preference Shareholders and Particulars of Shareholding

As at the end of the reporting period, the Bank had one offshore preference shareholder (or proxy), 25 domestic preference
shareholders of “工行優1” and 33 domestic preference shareholders of “工行優2”. As at the end of the month immediately
before the annual results announcement date (28 February 2022), the Bank had one offshore preference shareholder (or
proxy), 26 domestic preference shareholders of “工行優1” and 33 domestic preference shareholders of “工行優2”.

PARTICULARS OF SHAREHOLDING OF THE TOP 10 OFFSHORE PREFERENCE SHAREHOLDERS (OR PROXIES) OF THE
BANK
Unit: Share

Increase/ Number Number of

decrease Shares held of shares pledged/
during the at the end Shareholding subject to locked-up/
Nature of reporting of the percentage restrictions marked
Name of shareholder shareholder Class of shares period period (%) on sales shares
The Bank of New York Foreign legal USD offshore – 145,000,000 100 – Unknown
  Depository (Nominees) Limited person preference shares

Notes: (1) The above data are based on the Bank’s register of offshore preference shareholders as at 31 December 2021.

(2) As the issuance of the offshore preference shares above was non-public offering, the register of preference shareholders
presented the information on the registered holder of the offshore preference shares.

(3) The Bank is not aware of any connected relations or concert party action between the afore-mentioned preference shareholder
and top 10 ordinary shareholders.

(4) “Shareholding percentage” refers to the percentage of offshore preference shares held by preference shareholders in total
number of offshore preference shares.

Annual Report 2021

97
Details of Changes in Share Capital and Shareholding of Substantial Shareholders

PARTICULARS OF SHAREHOLDING OF THE TOP 10 DOMESTIC PREFERENCE SHAREHOLDERS OF “工行優1”

Unit: Share

Increase/ Number Number of

decrease of shares pledged/
during the Shares held subject to locked-up/
Nature of reporting at the end of Shareholding restrictions marked
Name of shareholder shareholder Class of shares period the period percentage (%) on sales shares
China Mobile Communications State-owned Domestic – 200,000,000 44.4 – None
  Group Co., Ltd. legal person preference shares
China National Tobacco Other entities Domestic – 50,000,000 11.1 – None
 Corporation preference shares
China Life Insurance Company State-owned Domestic – 35,000,000 7.8 – None
 Limited legal person preference shares
Ping An Life Insurance Company Domestic non-state- Domestic – 30,000,000 6.7 – None
  of China, Ltd. owned legal person preference shares
BOCOM Schroders Asset Domestic non-state- Domestic – 18,000,000 4.0 – None
  Management Co., Ltd. owned legal person preference shares
CCB Trust Co., Ltd. State-owned Domestic – 15,000,000 3.3 – None
legal person preference shares
BOC International (China) Co., State-owned Domestic – 15,000,000 3.3 – None
 Ltd. legal person preference shares
CITIC Securities Co., Ltd. State-owned Domestic 9,240,000 12,290,000 2.7 – None
legal person preference shares
Hwabao Trust Co., Ltd. State-owned Domestic 11,400,000 11,400,000 2.5 – None
legal person preference shares
China National Tobacco Other entities Domestic – 10,000,000 2.2 – None
  Corporation Shandong Branch preference shares
China National Tobacco Other entities Domestic – 10,000,000 2.2 – None
  Corporation Heilongjiang preference shares
 Branch
Ping An Property & Casualty Domestic non-state- Domestic – 10,000,000 2.2 – None
  Insurance Company of owned legal person preference shares
  China, Ltd.

Notes: (1) The above data are based on the Bank’s register of domestic preference shareholders of “工行優1” as at 31 December 2021.

(2) China National Tobacco Corporation Shandong Branch and China National Tobacco Corporation Heilongjiang Branch are both
wholly-owned subsidiaries of China National Tobacco Corporation. “China Life Insurance Company Limited — Traditional
— Ordinary insurance products — 005L — CT001 Hu” is managed by China Life Insurance Company Limited. “Ping An Life
Insurance Company of China, Ltd. — Traditional — Ordinary insurance products” is managed by Ping An Life Insurance Company
of China, Ltd. Ping An Life Insurance Company of China, Ltd. and Ping An Property & Casualty Insurance Company of China,
Ltd. have connected relations. Save as disclosed above, the Bank is not aware of any connected relations or concert party action
among the afore-mentioned preference shareholders and among the afore-mentioned preference shareholders and top 10
ordinary shareholders.

(3) “Shareholding percentage” refers to the percentage of domestic preference shares of “工行優1” held by preference shareholders
in total number (450 million shares) of domestic preference shares of “工行優1”.

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Details of Changes in Share Capital and Shareholding of Substantial Shareholders

PARTICULARS OF SHAREHOLDING OF THE TOP 10 DOMESTIC PREFERENCE SHAREHOLDERS OF “工行優2”

Unit: Share

Increase/ Number Number of

decrease of shares pledged/
during the Shares held subject to locked-up/
Nature of reporting at the end of Shareholding restrictions marked
Name of shareholder shareholder Class of shares period the period percentage (%) on sales shares
China Life Insurance Company State-owned Domestic – 120,000,000 17.1 – None
 Limited legal person preference shares
Hwabao Trust Co., Ltd. State-owned Domestic 112,750,000 112,750,000 16.1 – None
legal person preference shares
China Mobile Communications State-owned Domestic – 100,000,000 14.3 – None
  Group Co., Ltd. legal person preference shares
BOC International (China) State-owned Domestic – 70,000,000 10.0 – None
  Co., Ltd. legal person preference shares
CCB Trust Co., Ltd. State-owned Domestic – 70,000,000 10.0 – None
legal person preference shares
China National Tobacco Other entities Domestic – 50,000,000 7.1 – None
 Corporation preference shares
Jiangsu International Trust State-owned Domestic 37,250,000 37,250,000 5.3 – None
  Co., Ltd. legal person preference shares
Shanghai Tobacco Group Other entities Domestic – 30,000,000 4.3 – None
  Co., Ltd. preference shares
Bank of Beijing Co., Ltd. Domestic non-state- Domestic – 20,000,000 2.9 – None
owned legal person preference shares
BOCOM Schroders Asset Domestic non-state- Domestic – 15,000,000 2.1 – None
  Management Co., Ltd. owned legal person preference shares
Ping An Property & Casualty Domestic non-state- Domestic – 15,000,000 2.1 – None
  Insurance Company of owned legal person preference shares
  China, Ltd.

Notes: (1) The above data are based on the Bank’s register of domestic preference shareholders of “工行優2” as at 31 December 2021.

(2) Shanghai Tobacco Group Co., Ltd., China National Tobacco Corporation Shandong Branch and China National Tobacco
Corporation Heilongjiang Branch are all wholly-owned subsidiaries of China National Tobacco Corporation. “China Life Insurance
Company Limited — Traditional — Ordinary insurance products — 005L — CT001 Hu” is managed by China Life Insurance
Company Limited. “Ping An Life Insurance Company of China, Ltd. — Traditional — Ordinary insurance products” is managed by
Ping An Life Insurance Company of China, Ltd. Ping An Life Insurance Company of China, Ltd. and Ping An Property & Casualty
Insurance Company of China, Ltd. have connected relations. Save as disclosed above, the Bank is not aware of any connected
relations or concert party action among the afore-mentioned preference shareholders and among the afore-mentioned
preference shareholders and top 10 ordinary shareholders.

(3) “Shareholding percentage” refers to the percentage of domestic preference shares of “工行優2” held by preference shareholders
in total number (700 million shares) of domestic preference shares of “工行優2”.

Dividend Distribution of Preference Shares shares on 23 September 2021; the Bank reviewed and
approved the Proposal on Distribution of Dividends for
As per the resolution and authorization of the General Offshore EUR Preference Shares and “工行優1” at the
Meeting, the Bank reviewed and approved the Proposal on meeting of its Board of Directors on 29 October 2021,
Distribution of Dividends for “工行優2” and Offshore USD permitting the Bank to distribute the dividends on domestic
Preference Shares at the meeting of its Board of Directors preference shares “工行優1” on 23 November 2021 and
on 27 August 2021, permitting the Bank to distribute the on the offshore EUR preference shares on 10 December
dividends on domestic preference shares “工行優2” on 2021.
24 September 2021 and on the offshore USD preference

Annual Report 2021

99
Details of Changes in Share Capital and Shareholding of Substantial Shareholders

Dividends on the Bank’s domestic preference shares “工 laws, when the Bank distributes dividends for offshore
行優1” and “工行優2” are paid annually in cash, and EUR preference shares, the enterprise income tax shall be
calculated based on the aggregate par value of the issued withheld by the Bank at a rate of 10%. According to the
domestic preference shares. Dividends on the Bank’s requirements of the terms and conditions of the offshore
domestic preference shares are non-cumulative. Holders of EUR preference shares, the Bank paid the relevant taxes,
domestic preference shares are only entitled to dividends included in the dividends for offshore EUR preference
at the prescribed dividend rate, but are not entitled to any shares.
distribution of residual profits of the Bank together with
Dividends on the Bank’s offshore USD preference shares
the holders of ordinary shares. According to the dividend
are paid annually in cash, and calculated based on the
distribution plan in the domestic preference share issuance
liquidation preference of the offshore preference shares.
proposal, the Bank distributed dividends of RMB2,061
Dividends on the Bank’s offshore USD preference shares
million (pre-tax) on the domestic preference share “工行優
are non-cumulative. Holders of offshore USD preference
1” at a dividend rate of 4.58% (pre-tax); and distributed
shares are only entitled to dividends at the prescribed
dividends of RMB2,940 million (pre-tax) on the domestic
dividend rate, but are not entitled to any distribution of
preference share “工行優2” at a dividend rate of 4.2%
residual profits of the Bank together with the holders of
(pre-tax).
ordinary shares. According to the dividend distribution plan
Dividends on the Bank’s offshore EUR preference shares in the offshore USD preference share issuance proposal,
are paid annually in cash, and calculated based on the total dividends of about USD115.3 million (pre-tax) on the
liquidation preference of the offshore preference shares. offshore USD preference shares were distributed in USD at
Dividends on the Bank’s offshore EUR preference shares a dividend rate of 3.58% (after-tax). According to relevant
are non-cumulative. Holders of offshore EUR preference laws, when the Bank distributes dividends for offshore
shares are only entitled to dividends at the prescribed USD preference shares, the enterprise income tax shall be
dividend rate, but are not entitled to any distribution of withheld by the Bank at a rate of 10%. According to the
residual profits of the Bank together with the holders of requirements of the terms and conditions of the offshore
ordinary shares. According to the dividend distribution USD preference shares, the Bank paid the relevant taxes,
plan in the offshore EUR preference share issuance included in the dividends for offshore USD preference
proposal, total dividends of EUR0.04 billion (pre-tax) on shares.
the offshore EUR preference shares were distributed in EUR
at a dividend rate of 6% (after-tax). According to relevant

The table below shows the distribution of dividends on preference shares by the Bank in latest three years:

2021 2020 2019

Type of preference Dividend Dividend Dividend Dividend Dividend Dividend
shares rate distributed(1) rate distributed(1) rate distributed(1)
Domestic preference share 4.58% RMB2,061 million 4.50% RMB2,025 million 4.50% RMB2,025 million
 “工行優1”
Domestic preference share
 “工行優2” 4.20% RMB2,940 million 4.20% RMB2,940 million N/A N/A
Offshore EUR, USD and 6.00% EUR40 million 6.00% EUR40 million 6.00% EUR40 million
  RMB preference shares(2) USD196 million
RMB800 million
Offshore USD preference About USD115.3
 share(3) 3.58% million N/A N/A N/A N/A

Notes: (1) Dividend distributed is tax included.

(2) Offshore EUR, USD and RMB preference shares refer to EUR0.6 billion preference shares, USD2.94 billion preference shares and
RMB12.0 billion preference shares issued offshore by the Bank at a dividend rate of 6.00% in 2014. The Bank redeemed the
above offshore USD preference shares and offshore RMB preference shares on 10 December 2019 and the above offshore EUR
preference shares on 10 December 2021.
(3) Offshore USD preference share refers to USD2.9 billion preference shares issued offshore by the Bank at a dividend rate of
3.58% in 2020.

The above-mentioned preference share dividend distribution plans have been fulfilled. For particulars of the Bank’s
distribution of dividends on preference shares, please refer to the announcements of the Bank on the website of SSE, the
“HKEXnews” website of HKEX and the website of the Bank.

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Details of Changes in Share Capital and Shareholding of Substantial Shareholders

Redemption or Conversion of Preference Restoration of Voting Rights of Preference

Shares Shares
In 2014, the Bank issued EUR0.6 billion offshore During the reporting period, the Bank did not restore any
preference shares. The Board of Directors of the Bank voting right of preference share.
reviewed and approved the Proposal on the Exercise of
Redemption of Offshore EUR Preference Shares on 27
August 2021. On the premise of obtaining the approval of Accounting Policy Adopted for Preference
CBIRC, the Bank planned to exercise the right to redeem Shares and Rationale
all the abovementioned offshore EUR preference shares on
10 December 2021. In October 2021, the Bank received According to the Accounting Standard for Business
a reply letter from CBIRC, which had no objection to the Enterprises No. 22 — Recognition and Measurement
Bank’s redemption of EUR0.6 billion offshore preference of Financial Instruments, the Accounting Standard for
shares. Pursuant to the terms and conditions of the Business Enterprises No. 37 — Presentation of Financial
offshore EUR preference shares and the reply letter from Instruments promulgated by MOF as well as the
CBIRC, the Bank redeemed the aforementioned offshore International Financial Reporting Standard 9 — Financial
EUR preference shares in whole on 10 December 2021 Instruments and the International Accounting Standard
at the redemption price of each offshore EUR preference 32 — Financial Instruments: Presentation promulgated
share (being the aggregate of an amount equal to the by International Accounting Standards Board and other
liquidation preference of each offshore EUR preference accounting standards and the key terms of issuance of
share plus any dividends accrued but unpaid in respect of the Bank’s preference shares, the issued and existing
the period from (and including) the immediately preceding preference shares do not contain contractual obligations
dividend payment date to (but excluding) the redemption to deliver cash or other financial assets or contractual
date). Subsequent to the redemption and cancellation obligations to deliver variable equity instruments for
of the aforementioned offshore EUR preference shares settlement, and shall be accounted for as other equity
on the redemption date, there are no EUR preference instruments.
shares issued in the offshore market. Please refer to the
announcements published by the Bank on the website of
SSE, the “HKEXnews” website of HKEX and the website of
the Bank.

During the reporting period, the Bank did not convert any
preference share.

Annual Report 2021

101
Directors, Supervisors and Senior Management

Basic Information on Directors, Supervisors and Senior Management

Birth
Name Position Gender year Tenure
Chen Siqing Chairman, Executive Director Male 1960 May 2019–May 2022
Liao Lin Vice Chairman, Executive Director, President Male 1966 July 2020–July 2023
Huang Liangbo Chairman of the Board of Supervisors Male 1964 July 2021–July 2024
Zheng Guoyu Executive Director, Senior Executive Vice President Male 1967 December 2021–December 2024
Wang Jingwu Executive Director, Senior Executive Vice President, Male 1966 September 2021–
Chief Risk Officer September 2024
Lu Yongzhen Non-executive Director Male 1967 August 2019–August 2022
Feng Weidong Non-executive Director Male 1964 January 2020–January 2023
Cao Liqun Non-executive Director Female 1971 January 2020–January 2023
Chen Yifang Non-executive Director Female 1964 August 2021–August 2024
Dong Yang Non-executive Director Male 1966 January 2022–January 2025
Anthony Francis Neoh Independent Non-executive Director Male 1946 April 2015–April 2021
Yang Siu Shun Independent Non-executive Director Male 1955 April 2016–June 2022
Shen Si Independent Non-executive Director Male 1953 March 2017–June 2023
Nout Wellink Independent Non-executive Director Male 1943 December 2018–December 2021
Fred Zuliu Hu Independent Non-executive Director Male 1963 April 2019–April 2022
Zhang Wei Shareholder Supervisor Male 1962 June 2016–June 2022
Huang Li Employee Supervisor Male 1964 June 2016–June 2022
Wu Xiangjiang Employee Supervisor Male 1962 September 2020–September 2023
Shen Bingxi External Supervisor Male 1952 June 2016–June 2022
Zhang Jie External Supervisor Male 1965 November 2021–November 2024
Zhang Wenwu Senior Executive Vice President Male 1973 July 2020–
Xu Shouben Senior Executive Vice President Male 1969 October 2020–
Zhang Weiwu Senior Executive Vice President Male 1975 June 2021–
Wang Bairong Chief Business Officer Male 1962 April 2020–
Guan Xueqing Board Secretary Male 1963 July 2016–
Xiong Yan Chief Business Officer Female 1964 April 2020–
Song Jianhua Chief Business Officer Male 1965 April 2020–
Directors, Supervisors and Senior Management Leaving Office
Yang Guozhong Chairman of the Board of Supervisors Male 1963 January 2020–March 2021
Zheng Fuqing Non-executive Director Male 1963 February 2015–January 2022
Mei Yingchun Non-executive Director Female 1971 August 2017–February 2021
Qu Qiang External Supervisor Male 1966 December 2015–November 2021

102
 Directors, Supervisors and Senior Management

Notes: (1) Please refer to the section headed “Appointment and Removal”.

(2) The terms of Mr. Liao Lin, Mr. Zheng Guoyu and Mr. Wang Jingwu as Executive Directors of the Bank are set out in the above
table. Please refer to the section headed “Biographies of Directors, Supervisors and Senior Management” for the starting time of
their terms as Senior Management members of the Bank.

(3) According to laws, regulations and the Articles of Association of the Bank, before the newly elected directors take office, the
current directors shall continue to act as directors.

(4) According to the regulations of CSRC, the commencement date of a re-elected director or supervisor’s tenure as indicated in the
above table shall be the day of his/her first appointment.

(5) During the reporting period, the Bank did not implement any share incentives. None of the existing directors, supervisors and
senior management members of the Bank or those who left office during the reporting period held shares or share options or
were granted restricted shares of the Bank, and there was no change during the reporting period.

(6) The full name of Mr. Nout Wellink is Arnout Henricus Elisabeth Maria Wellink.

Biographies of Directors, Supervisors and Senior Management

Chen Siqing, Chairman, Executive Director
Mr. Chen has served as Chairman and Executive Director of the Bank since May 2019. He joined Bank of China in 1990. Mr.
Chen Siqing previously worked in the Hunan Branch of Bank of China before he was dispatched to the Hong Kong Branch
of China and South Sea Bank Ltd. as Assistant General Manager. Mr. Chen held various positions in Bank of China, including
Assistant General Manager and Vice General Manager of the Fujian Branch, General Manager of the Risk Management
Department of the Head Office, General Manager of the Guangdong Branch, Executive Vice President, President, Vice
Chairman and Chairman of Bank of China. Mr. Chen served concurrently as Chairman of the Board of Directors of BOC
Aviation Limited, Non-executive Director, Vice Chairman and Chairman of the Board of Directors of BOC Hong Kong
(Holdings) Limited. Mr. Chen graduated from Hubei Institute of Finance and Economics, and obtained a Master’s degree
in Business Administration (MBA) from Murdoch University, Australia. He is a Certified Public Accountant and a senior
economist.

Liao Lin, Vice Chairman, Executive Director, President

Mr. Liao has served as Vice Chairman, Executive Director and President of the Bank since March 2021, Executive Director
of the Bank since July 2020, and Senior Executive Vice President, Senior Executive Vice President and concurrently Chief
Risk Officer since November 2019. Mr. Liao joined China Construction Bank in 1989, and was appointed as Deputy General
Manager of Guangxi Branch of China Construction Bank, General Manager of Ningxia Branch, Hubei Branch and Beijing
Branch of China Construction Bank, Chief Risk Officer, Executive Vice President and concurrently Chief Risk Officer of
China Construction Bank. Mr. Liao graduated from Guangxi Agricultural University. He obtained a Doctorate degree in
management science from Southwest Jiaotong University. Mr. Liao is a senior economist.

Huang Liangbo, Chairman of the Board of Supervisors

Mr. Huang has served as Chairman of the Board of Supervisors of the Bank since July 2021. He served as the Deputy
Chief of the Human Resources Department of PBC, President of Nanning Central Sub-branch of PBC and Chief of Guangxi
Zhuang Autonomous Region Branch of State Administration of Foreign Exchange, General Manager of the Human Resources
Department, member of the Business Committee, Assistant to President and Vice President of Export-Import Bank of
China, and Chairman of the Board of Supervisors of the People’s Insurance Company (Group) of China Limited. Mr. Huang
graduated from Renmin University of China and obtained a Master’s degree in Law, and is a senior economist.

Zheng Guoyu, Executive Director, Senior Executive Vice President

Mr. Zheng has served as Executive Director and Senior Executive Vice President of the Bank since December 2021 and
as Senior Executive Vice President of the Bank since September 2021. He joined Bank of China since November 1988.
He was appointed as Assistant to General Manager and Deputy General Manager of Hubei Branch, General Manager of
Shanxi Branch, General Manager of Sichuan Branch, Member of Executive Committee of Bank of China, and Executive Vice
President of Bank of China. Mr. Zheng graduated from Wuhan Institute of Water Transportation Engineering and obtained a
Master’s degree in Business Administration from Huazhong University of Science and Technology. He is a senior economist.

Annual Report 2021

103
Directors, Supervisors and Senior Management

Wang Jingwu, Executive Director, Senior Executive Vice President, Chief Risk Officer
Mr. Wang has served as Executive Director, Senior Executive Vice President and concurrently Chief Risk Officer since
September 2021, and as Senior Executive Vice President of the Bank since April 2020. He joined PBC in August 1985, and
has successively served as Supervision Commissioner (Deputy Director level) of PBC Shijiazhuang Central Sub-branch, Head of
PBC Shijiazhuang Central Sub-branch and concurrently Director of State Administration of Foreign Exchange (“SAFE”) Hebei
Branch, Head of PBC Hohhot Central Sub-branch and concurrently Director of SAFE Inner Mongolia Branch, Head of PBC
Guangzhou Branch and concurrently Director of SAFE Guangdong Branch, and Director-General of PBC Financial Stability
Bureau since January 2002. Mr. Wang graduated from the Hebei Banking School, and he received a doctorate degree in
economics from Xi’an Jiaotong University. He is a research fellow.

Lu Yongzhen, Non-executive Director

Mr. Lu has served as Non-executive Director of the Bank since August 2019. He joined Huijin in 2019. Mr. Lu previously
served as Deputy Director of the Administrative Office of the Economic Research Consultation Centre of the State Economic
and Trade Commission, Director of the Specific Research Department of the Economic Research Centre of the State
Economic and Trade Commission, Director of the Capital Markets Research Department of the Research Centre of the State-
owned Assets Supervision and Administration Commission of the State Council, and Director Assistant of the Research
Centre of the State-owned Assets Supervision and Administration Commission of the State Council with the concurrent post
as the Director of the Capital Markets Research Department, and Deputy Director of the Research Centre of the State-owned
Assets Supervision and Administration Commission of the State Council. Mr. Lu obtained a Bachelor’s degree and a Master’s
degree in History from Peking University, and a Doctorate degree in Economics from Southwestern University of Finance and
Economics. He is a researcher.

Feng Weidong, Non-executive Director

Mr. Feng has served as Non-executive Director of the Bank since January 2020. He joined MOF in 1986. He previously
served as Deputy Director of Academic Affairs Division of Chinese Accounting Correspondence School of Accounting
Department of MOF (deputy division chief level), Person in charge of Teaching Material Department of National Accountant
Certification Examination Leading Group Office, Director of Accounting Personnel Management Division and Director of
Institutional System Division I of Accounting Department of MOF, Deputy Director (deputy director-general level), Deputy
Director (person in charge), Director (director-general level), Secretary of the Party Committee and Director of National
Accountant Assessment & Certification Centre of MOF. He concurrently serves as a Managing Director of the 8th Council
of the Accounting Society of China, a part-time professor and off-campus practice tutor for postgraduate students of the
School of Economics and Management of Beijing Jiaotong University, and a visiting tutor for postgraduate students in the
Accounting School of the Central University of Finance and Economics. Mr. Feng obtained a Bachelor’s degree in Economics
from Dongbei University of Finance & Economics and Doctorate degree from Beijing Jiaotong University. Mr. Feng Weidong
is a senior accountant, researcher, non-practicing certified public accountant and is a recipient of the Special Government
Allowance by the State Council of China.

Cao Liqun, Non-executive Director

Ms. Cao has served as Non-executive Director of the Bank since January 2020. She joined Huijin in 2020. Ms. Cao previously
served as Deputy Director of Regulations Division, General Affairs Department, Director of Regulations Division, General
Affairs Department, Director of Non-Financial Institutions Inspection Division, Supervision and Inspection Department,
Director of General Affairs Division, Supervision and Inspection Department, Deputy Director-General of Supervision and
Inspection Department, Inspector of General Affairs Department (Policy and Regulation Department), Level-Two Inspector of
General Affairs Department (Policy and Regulation Department) of State Administration of Foreign Exchange, and acted as
Deputy Director of Administrative Committee of Beijing’s Zhongguancun Science Park. Ms. Cao obtained a Bachelor’s degree
in Law from China University of Political Science and Law, a Master’s degree in Finance from Renmin University of China, and
a Master’s degree in Public Administration from Peking University. Ms. Cao is an economist.

104
 Directors, Supervisors and Senior Management

Chen Yifang, Non-executive Director

Ms. Chen has served as Non-executive Director of the Bank since August 2021. She joined MOF in August 1985. She
previously served as Deputy Division Chief of Payment Management Division and Deputy Director of Charge Bill Regulatory
Center of General Affairs and Reform Department of MOF, Deputy Division Chief of the Charging Fund Policy Management
Division of the Comprehensive Department of MOF, Division Chief of Charging Fund Division of Policy Planning Department
of MOF, Division Chief of Housing and Land Division of the Comprehensive Department of MOF, Deputy Director-General of
the Comprehensive Department of MOF, Member of the Party Group, Inspector and Deputy Secretary of the Party Group of
Shenzhen Finance Supervision Commissioner Office of MOF, Deputy Secretary of the Party Group, Inspector and Level-one
Inspector of Shenzhen Regulatory Bureau of MOF, and Level-one Inspector of Fiscal Notes Supervision Center of MOF. Ms.
Chen obtained a Bachelor’s degree in Economics from Jiangxi University of Finance and Economics.

Dong Yang, Non-executive Director

Mr. Dong has served as Non-executive Director of the Bank since January 2022. He joined MOF in August 1989. He
previously served as assistant researcher, researcher and secretary (director level) of the Department of National Defense of
MOF, a member of the CPC Committee, Deputy Inspector, and Discipline Inspection Team Leader of the Commissioner’s
Office of MOF in Heilongjiang, a member of the CPC Committee, Deputy Inspector and Discipline Inspection Leader of the
Commissioner’s Office of MOF in Beijing, a member of the CPC Committee, Deputy Director, and Discipline Inspection Team
Leader of the Beijing Regulatory Bureau of MOF. Mr. Dong graduated from the Beijing Normal University and obtained a
Master’s degree in Management from Harbin Engineering University.

Anthony Francis Neoh, Independent Non-executive Director

Mr. Neoh has served as Independent Non-executive Director of the Bank since April 2015. He previously served as Chief
Advisor to CSRC, a member of the International Consultation Committee of CSRC, a member of the Basic Law Committee
of the Hong Kong Special Administrative Region under the Standing Committee of the National People’s Congress of
People’s Republic of China, and Chairman of the Hong Kong Securities and Futures Commission. He was Chairman of the
Technical Committee of the International Organization of Securities Commissions, Chairman of Hong Kong Independent
Police Complaints Council, a Non-executive Director of Global Digital Creations Holdings Limited. He was an Independent
Non-executive Director of Link Management Limited, which is the Manager of Link Real Estate Investment Trust. He was
also an Independent Non-executive Director of China Shenhua Energy Company Limited, Bank of China Limited, China Life
Insurance Company Limited and New China Life Insurance Company Ltd. Mr. Neoh currently serves as an Independent Non-
executive Director of CITIC Limited, Treasurer and Member of Council of The Chinese University of Hong Kong and Chairman
of the Asian Academy of International Law. He graduated from the University of London with a Bachelor’s degree in Law.
He is Honorary Doctorate of Law of Chinese University of Hong Kong and Open University of Hong Kong and Honorary
Doctorate of Social Sciences of Lingnan University. He was elected Honorary Fellow of the Hong Kong Securities Institute,
Fellow of the Hong Kong Academy of Finance and Academician of the International Euro-Asian Academy of Sciences. Mr.
Neoh was appointed as Senior Counsel in Hong Kong. He is a barrister of England and Wales. He was admitted to the State
Bar of California.

Yang Siu Shun, Independent Non-executive Director

Mr. Yang has served as Independent Non-executive Director of the Bank since April 2016. He previously served as
Chairman and Principal Partner of PricewaterhouseCoopers Hong Kong, Executive Chairman and Principal Partner of
PricewaterhouseCoopers Chinese Mainland and Hong Kong, member of five-people leading group of global leadership
committee of PricewaterhouseCoopers, Chairman of PricewaterhouseCoopers Asia-Pacific region, Director and Chairman of
Audit Committee of Hang Seng Management College, Vice Chairman of the Council of the Open University of Hong Kong
and a member of the Exchange Fund Advisory Committee of Hong Kong Monetary Authority. Mr. Yang currently serves
as a member of the 13th National Committee of the Chinese People’s Political Consultative Conference, a member of the
board of directors of the Hong Kong Jockey Club and an Independent Non-executive Director of Tencent Holdings Limited.
Mr. Yang graduated from the London School of Economics and Political Science. He was awarded the degree of Honorary
Doctor of Social Sciences by The Open University of Hong Kong. He is a Justice of the Peace in Hong Kong. Mr. Yang holds
the qualification of Chartered Accountants, and is a senior member of the Institute of Chartered Accountants in England and
Wales, the Hong Kong Institute of Certified Public Accountants and the Chartered Institute of Management Accountants.

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Directors, Supervisors and Senior Management

Shen Si, Independent Non-executive Director

Mr. Shen has served as Independent Non-executive Director of the Bank since March 2017. Previously, he served as Deputy
Division Chief and Division Chief of Zhejiang Branch of PBC, Deputy General Director of the Investigation and Statistics
Department of the Head Office of PBC, and Deputy President of the Hangzhou Branch of Shanghai Pudong Development
Bank, Board Secretary of Shanghai Pudong Development Bank and Executive Director and concurrently Board Secretary of
Shanghai Pudong Development Bank. He obtained a Master’s degree in Economics from Zhejiang University and an EMBA
degree. He is a senior economist.

Nout Wellink, Independent Non-executive Director

Mr. Wellink has served as Independent Non-executive Director of the Bank since December 2018. Previously, he served
as the Treasurer General in the Dutch Ministry of Finance, member of the Executive Board and the President of the Dutch
Central Bank, member of the Governing Council of the European Central Bank, member of the Group of Ten Central Bank
Governors and Governor of the International Monetary Fund, member and Chairman of the Board of Directors of the Bank
for International Settlements, Chairman of the Basel Committee on Banking Supervision, Independent Director of Bank of
China Limited, Vice Chairman of Supervisory Board of PricewaterhouseCoopers Accountants N.V. and an Emeritus Professor
at the Free University in Amsterdam. Mr. Wellink also served as member of the supervisory board of a bank, a reinsurance
company and other enterprises on behalf of the Dutch authorities, Chairman of the Board of Supervisors of the Netherlands
Open Air Museum, member and treasurer of the Royal Picture Gallery Mauritshuis and the Westeinde Hospital in The Hague.
He was awarded a Knighthood in the Order of the Netherlands Lion in 1980 and is Commander of the Order of Orange-
Nassau since 2011. He received a Master’s degree in Law from Leiden University, a Doctorate degree in Economics from
Erasmus University Rotterdam and an Honorary Doctorate from Tilburg University.

Fred Zuliu Hu, Independent Non-executive Director

Mr. Hu has served as Independent Non-executive Director of the Bank since April 2019. He previously served as a senior
economist at the International Monetary Fund, Head of Research at the World Economic Forum, the chairman for Greater
China and a partner at Goldman Sachs Group, Inc., an independent non-executive director of Great Wall Pan Asia Holdings
Limited (formerly known as SCMP Group Limited), an independent non-executive director of Hang Seng Bank Limited,
the non-executive director of China Asset Management Co., Ltd., an independent director of Dalian Wanda Commercial
Management Group Co., Ltd., an independent director of Shanghai Pudong Development Bank and the independent non-
executive director of Hong Kong Exchanges and Clearing Limited, etc. Mr. Hu currently serves in various positions such as
the chairman of Primavera Capital Group, the non-executive chairman of Yum China Holdings, Inc, the independent non-
executive director of Ant Group Co., Ltd., the director of UBS Group AG, the co-chair of The Nature Conservancy’s Asia
Pacific Council and the director of the China Medical Board. Mr. Hu is also a member of the Global Board of Advisors for
the Council on Foreign Relations, the 21st Century Council of the Berggruen Institute, the Harvard Global Advisory Council,
the Harvard Kennedy School Mossavar-Rahmani Center for Business and Government, the Stanford Center for International
Development, and the Jerome A. Chazen Institute of International Business at Columbia University etc. He concurrently
serves as the co-director of the National Center for Economic Research and a professor at Tsinghua University, and he is also
an adjunct professor at the Chinese University of Hong Kong and Peking University. Mr. Hu obtained a master’s degree in
engineering science from Tsinghua University, and a master’s degree and a PhD in economics from Harvard University.

Zhang Wei, Shareholder Supervisor

Mr. Zhang has concurrently served as Shareholder Supervisor and Director of the Board of Supervisors’ Office of the Bank
since June 2016. He joined ICBC in 1994, and has served as Employee Supervisor of the Board of Supervisors, General
Manager of the Legal Affairs Department and Chief of Consumer Protection Office of the Bank. He graduated from Peking
University with a Doctorate degree in Law and is a research fellow.

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 Directors, Supervisors and Senior Management

Huang Li, Employee Supervisor

Mr. Huang has served as Employee Supervisor of the Bank since June 2016. He joined ICBC in 1994 and is currently
the Head of Beijing Branch of the Bank. He served as Deputy General Manager and General Manager of the Banking
Department as well as Deputy Head and Head of Guizhou Branch of ICBC. Mr. Huang graduated from The University of
Hong Kong with an MBA degree. He is a senior economist.

Wu Xiangjiang, Employee Supervisor

Mr. Wu has served as Employee Supervisor of the Bank since September 2020. He joined ICBC in 1988 and is currently the
General Manager of Internal Control & Compliance Department of the Bank. He served such positions at the Bank as Deputy
Head of Zhejiang Branch, General Manager of E-banking Department and General Manager of Internet Finance Department.
Mr. Wu graduated from Zhejiang University with a Doctorate degree in Management. He is a senior economist.

Shen Bingxi, External Supervisor

Mr. Shen has served as External Supervisor of the Bank since June 2016. He previously served as the Deputy Chief of the
Financial Market Division of the Financial System Reform Department, Chief of the System Reform Division and Monetary
Policy Research Division of the Policy Study Office, and Chief of the Monetary Policy Research Division of the Research
Bureau of the PBC, Chief Representative of the PBC Representative Office in Tokyo, Deputy Director-general and Director-
level Inspector of Financial Market Department of the PBC, and Non-executive Director of Agricultural Bank of China. Mr.
Shen is currently guest professor of Tsinghua University, Zhejiang University and Nankai University. Mr. Shen graduated from
Renmin University of China, and received a Doctorate degree in Economics. He is a research fellow.

Zhang Jie, External Supervisor

Mr. Zhang has served as External Supervisor of the Bank since November 2021. He is currently a professor and doctoral
supervisor of the Renmin University of China, director of the International Monetary Institute, a distinguished professor
of the Ministry of Education’s “Changjiang Scholars Program”, a famous teacher of the national “Ten Thousand Talents
Program”, and a national candidate of the “New Century Talents Project”. Mr. Zhang is a recipient of the special
government allowance provided by the State Council to experts, and is engaged in research on the topics of institutional
finance, China’s financial system and financial development. He was the Dean of the School of Finance of Shaanxi Institute
of Finance and Economics, the Associate Dean of the School of Economics and Finance of Xi’an Jiaotong University, the
Associate Dean of the School of Finance of Renmin University of China, and the first Secretary General of the College
Finance Teaching Steering Committee of the Ministry of Education. At present, he is concurrently a researcher of the
Finance Research Institute of the Counsellor’s Office of the State Council, and an executive director of the China Society for
Finance and Banking. Mr. Zhang graduated from Shaanxi University of Finance and Economics with a Doctorate degree in
Economics.

Zhang Wenwu, Senior Executive Vice President

Mr. Zhang has served as Senior Executive Vice President of the Bank since July 2020. He joined ICBC in 1995. He was
appointed as Deputy General Manager of the Finance & Accounting Department of the Head Office, Deputy Head of
Liaoning Branch, Executive Director and Chief Financial Officer of ICBC-AXA Assurance Co., Ltd., Director of the Board of
Supervisors’ Office of the Head Office, and General Manager of the Finance & Accounting Department of the Head Office.
Mr. Zhang graduated from the University of International Business and Economics, and he obtained a Doctorate degree in
Management from Renmin University of China. He is a senior accountant.

Xu Shouben, Senior Executive Vice President

Mr. Xu has served as Senior Executive Vice President of the Bank since October 2020. He joined ICBC in 1995. He was
appointed as Deputy Head of Guangdong Branch and Head of Shenzhen Branch. Mr. Xu graduated from the Harbin Institute
of Technology, and he obtained a Doctorate degree in Economics from Sun Yat-sen University. He is a senior economist.

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Directors, Supervisors and Senior Management

Zhang Weiwu, Senior Executive Vice President

Mr. Zhang has served as Senior Executive Vice President of the Bank since June 2021. He joined ICBC in July 1999, and was
appointed as General Manager of ICBC (Europe) Amsterdam Branch in January 2011, General Manager of Singapore Branch
in February 2013 and General Manager of the International Banking Department of the Head Office of ICBC in January
2017. Mr. Zhang graduated from the Northwest University in China and obtained Master’s degree in Political Economy and
MBA from Hitotsubashi University in Japan. He is a senior economist.

Wang Bairong, Chief Business Officer

Mr. Wang has served as Chief Business Officer of the Bank since April 2020. He began his career in 1986. He joined ICBC in
1991 and previously served as Assistant to Head of Zhejiang Branch and Head of Shaoxing Branch, Deputy Head of Zhejiang
Branch and General Manager of the Banking Department of Zhejiang Branch, Deputy Head (person in charge) and Head of
Chongqing Branch and Chief Risk Officer. Mr. Wang graduated from the Party School of the Central Committee of CPC and
obtained a Master’s degree in Economics. He is a senior economist.

Guan Xueqing, Board Secretary

Mr. Guan has served as Board Secretary of the Bank since July 2016. He joined ICBC in 1984 and served as Head of Suining
Branch in Sichuan, Representative of Frankfurt Representative Office and Deputy General Manager of Frankfurt Branch,
Deputy Head of Sichuan Branch, Deputy Head of Sichuan Branch and General Manager of Banking Department of Sichuan
Branch, and Head of Hubei Branch and Sichuan Branch. Previously Mr. Guan was also General Manager of Corporate
Strategy and Investor Relations Department of the Bank. He graduated from the Southwestern University of Finance and
Economics and obtained a Doctorate degree in Economics. He is a senior economist.

Xiong Yan, Chief Business Officer

Ms. Xiong has served as Chief Business Officer of the Bank since April 2020. She joined ICBC in 1984, and served as
Deputy Director-General of Kunming Sub-bureau of the Internal Audit Bureau, Deputy General Manager of Yunnan Branch,
Deputy Director-General of the Sub-bureau directly managed by the Internal Audit Bureau, Deputy General Manager of
the Corporate Banking Department I (Corporate Banking Department) and General Manager of the Institutional Banking
Department of the Head Office. Ms. Xiong graduated from Hunan University, and obtained a degree of International Master
of Business Administration (IMBA) from Fudan University and The University of Hong Kong. She is a senior economist.

Song Jianhua, Chief Business Officer

Mr. Song has served as Chief Business Officer of the Bank since April 2020. He joined ICBC in 1987. He was appointed as
Deputy General Manager of Jiangsu Branch and General Manager of the Personal Banking Department of the Head Office.
Mr. Song graduated from Peking University and obtained a Doctorate degree in management science and engineering from
Nanjing University. He is a senior economist.

Mr. Lu Yongzhen, Mr. Feng Weidong, Ms. Cao Liqun, Ms. Chen Yifang and Mr. Dong Yang were recommended by Huijin to
serve as Non-executive Directors of the Bank. Huijin holds interests in shares of the Bank. Please refer to the section headed
“Details of Changes in Share Capital and Shareholding of Substantial Shareholders — Interests and Short Positions Held by
Substantial Shareholders and Other Persons” for further details.

None of the Directors, Supervisors and Senior Management members of the Bank, whether they are incumbent or have left
office during the reporting period, have been punished by the securities regulator in the past three years.

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 Directors, Supervisors and Senior Management

Appointment and Removal Supervisors

Directors At the First Extraordinary General Meeting of 2021 held
on 29 July 2021, Mr. Huang Liangbo was elected as
On 25 February 2021, the Board of Directors of the Bank Shareholder Supervisor of the Bank, and his term of office
elected Mr. Liao Lin as Vice Chairman of the Bank, and as Shareholder Supervisor of the Bank started from the
his qualification was approved by CBIRC in March 2021. day of approval by the Shareholders’ General Meeting,
At the Annual General Meeting for the Year 2020 held and his term of office as Chairman of the Board of
on 21 June 2021, Ms. Chen Yifang was elected as Non-
Supervisors of the Bank took effect simultaneously. At the
executive Director of the Bank, and her qualification
Second Extraordinary General Meeting of 2021 held on
was approved by CBIRC in August 2021. At the First
25 November 2021, Mr. Zhang Jie was elected as External
Extraordinary General Meeting of 2021 held on 29 July
Supervisor of the Bank, and his term of office as External
2021, Mr. Wang Jingwu was elected as Executive Director
of the Bank, and his qualification was approved by Supervisor of the Bank started from the day of approval by
CBIRC in September 2021. At the Second Extraordinary the Shareholders’ General Meeting.
General Meeting of 2021 held on 25 November 2021, In March 2021, Mr. Yang Guozhong ceased to act as
Mr. Zheng Guoyu was elected as Executive Director of
Shareholder Supervisor and Chairman of the Board of
the Bank, and his qualification was approved by CBIRC
in December 2021; Mr. Dong Yang was elected as Non- Supervisors of the Bank due to change of job assignments.
executive Director of the Bank, and his qualification was In November 2021, Mr. Qu Qiang ceased to act as External
approved by CBIRC in January 2022. On 30 March 2022, Supervisor of the Bank due to change of job assignments.
the Board of Directors of the Bank nominated Mr. Chen
Siqing as the candidate for Executive Director of the Bank
and to be re-elected as Executive Director of the Bank, Senior Management Members
and agreed him to consecutively serve as Chairman of the
Bank after his re-election as Executive Director is approved On 25 February 2021, the Board of Directors appointed
by the Shareholders’ General Meeting of the Bank. The Mr. Liao Lin as President of the Bank, and his qualification
appointment of Mr. Chen Siqing as Executive Director of
was approved by CBIRC in March 2021. Mr. Liao Lin
the Bank shall be submitted to the Shareholders’ General
Meeting of the Bank for deliberation and voting, and his ceased to act as Chief Risk Officer of the Bank after he
new term of office shall start from the date of review and took office as President. On 29 April 2021, the Board of
approval by the Shareholders’ General Meeting. Directors appointed Mr. Zhang Weiwu as Senior Executive
Vice President of the Bank, and his qualification was
In February 2021, Ms. Mei Yingchun ceased to act as
Non-executive Director of the Bank due to expiration of approved by CBIRC in June 2021. On 24 September 2021,
her term of office. In January 2022, Mr. Zheng Fuqing the Board of Directors appointed Mr. Zheng Guoyu as
ceased to act as Non-executive Director of the Bank due to Senior Executive Vice President of the Bank and Mr. Wang
expiration of his term of office. Jingwu as Chief Risk Officer of the Bank.

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109
Directors, Supervisors and Senior Management

Annual Remuneration
Unit: RMB10,000

Remuneration from the Bank

Contribution
by the employer Obtain
to social insurance, remuneration
housing allowance, from shareholder
Remuneration annuities, and Other Total entities or
paid additional medical monetary remuneration other related
Name (before tax) insurances Fees income before tax parties or not
(1) (2) (3) (4) (5)=(1)+(2)+(3)+(4)

Chen Siqing 61.94 20.05 – – 81.99 No

Liao Lin 61.42 19.70 – – 81.12 No
Huang Liangbo 30.97 10.06 – – 41.03 No
Zheng Guoyu 18.58 6.48 – – 25.06 No
Wang Jingwu 55.74 19.36 – – 75.10 No
Lu Yongzhen – – – – – Yes
Feng Weidong – – – – – Yes
Cao Liqun – – – – – Yes
Chen Yifang – – – – – Yes
Dong Yang – – – – – Yes
Anthony Francis Neoh – – 52.00 – 52.00 Yes
Yang Siu Shun – – 47.00 – 47.00 Yes
Shen Si – – 47.00 – 47.00 Yes
Nout Wellink – – 47.00 – 47.00 No
Fred Zuliu Hu – – 41.00 – 41.00 Yes
Zhang Wei 93.95 27.79 – – 121.74 No
Huang Li – – 5.00 – 5.00 No
Wu Xiangjiang – – 5.00 – 5.00 No
Shen Bingxi – – – – – No
Zhang Jie – – 2.43 – 2.43 No
Zhang Wenwu 55.74 19.36 – – 75.10 No
Xu Shouben 55.74 19.36 – – 75.10 No
Zhang Weiwu 41.81 15.80 – – 57.61 No
Wang Bairong 97.70 28.42 – – 126.12 No
Guan Xueqing 101.02 29.43 – – 130.45 No
Xiong Yan 96.04 28.90 – – 124.94 No
Song Jianhua 96.04 27.97 – – 124.01 No
Directors, Supervisors and Senior Management Leaving Office
Yang Guozhong 10.32 3.33 – – 13.65 No
Zheng Fuqing – – – – – Yes
Mei Yingchun – – – – – Yes
Qu Qiang – – 16.32 – 16.32 No

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 Directors, Supervisors and Senior Management

Notes: (1) Since January 2015, the remuneration to the Chairman of the Board of Directors, the President, the Chairman of the Board of
Supervisors and other executives of the Bank has followed the State’s policies relating to the remuneration reform on executives
of central enterprises.

(2) During the reporting period, the total remuneration amount paid to Directors, Supervisors and Senior Management members
was RMB14,157.7 thousand. According to the requirements of relevant government authorities, the total final remuneration
payable to the Chairman of the Board of Directors, the President, the Chairman of the Board of Supervisors, Executive Directors,
Shareholder Supervisors and other Senior Management members is still subject to final confirmation by relevant government
authorities. Additional details of remuneration will be disclosed when they have been determined.

(3) In accordance with applicable national regulations, the incentive income for 2018-2020 was paid to the Chairman, the President
and Senior Executive Vice President of the Bank in 2021 based on their specific tenure and performance appraisal results.
Accordingly, the Bank accrued RMB16 thousand, RMB9.4 thousand, RMB6.5 thousand, RMB5 thousand and RMB3.6 thousand
for Mr. Chen Siqing, Mr. Liao Lin, Mr. Wang Jingwu, Mr. Zhang Wenwu and Mr. Xu Shouben respectively, as additional
contribution to the Annuity Plan in 2021.

(4) During the reporting period, Mr. Lu Yongzhen, Mr. Feng Weidong, Ms. Cao Liqun, Ms. Chen Yifang, Mr. Zheng Fuqing and Ms.
Mei Yingchun did not obtain remuneration from the Bank during their tenure as directors of the Bank.

(5) Fees of Mr. Huang Li and Mr. Wu Xiangjiang are their allowances obtained as Employee Supervisors of the Bank, excluding their
remuneration with the Bank in accordance with the employee remuneration system.

(6) As the Bank’s Independent Non-executive Directors served as directors or senior management of other legal persons or
organizations other than the Bank or the controlled subsidiaries of the Bank, such legal persons or organizations became
related parties of the Bank. During the reporting period, Independent Non-executive Directors obtained remuneration from such
related parties. Except to the extent of the afore-mentioned circumstances, none of the Bank’s Directors, Supervisors and Senior
Management was paid by the Bank’s related parties during the reporting period.

(7) For the change of the Bank’s Directors, Supervisors and Senior Management, please refer to the section headed “Appointment
and Removal”.

Annual Report 2021

111
Corporate Governance Report

Overview of Corporate Governance coordinated the implementation of the “Three Tasks” of

financial work. Focusing on key missions such as service
During the reporting period, the Bank refined the modern for the high-quality development in manufacturing, self-
corporate governance framework, mechanism and culture. reliance and self-improvement in science and technology,
The Bank further developed the corporate governance rural revitalization, inclusive finance, and “carbon peak
structure which was led by the Bank’s Party Committee and carbon neutrality”, the Board of Directors formulated
with the Board of Directors acting as the decision- overall strategic development plans to provide more
making organ, the Board of Supervisors responsible for adaptive, competitive, and inclusive financial services.
compliance supervision, and the Management in charge The Board of Supervisors gave full play to its supervisory
of operation. Under the working guideline of “adhere to function. It focused on how the Board of Directors and the
the guidance of the Party building theory and exercising Senior Management implemented the important decisions
rigorous corporate governance”, the Bank strengthened and arrangements of the Party Central Committee and
the organic connection between the rules of procedure of the State Council, national economic and financial policies
the Party Committee and the decision-making mechanism and regulatory requirements, etc. The Board of Supervisors
for corporate governance, deeply applied its institutional conducted sound supervision on duty performance,
advantages to the construction of modern governance financial management, risk management, internal control
system, and constantly improved the governance efficiency and compliance and other aspects, putting its important
and high-quality development capability. The Board of role in corporate governance into good use. There is
Directors continued to improve corporate frameworks no material divergence between the actual corporate
and strengthen strategic guidance. In alignment with governance of the Bank, relevant laws and administrative
the national “14th Five-Year Plan” and the long-range regulations, and the corporate governance-related rules
objectives through the year 2035, the Board of Directors issued by CSRC.

Corporate Governance Framework

Shareholders’ Primary reporting line
General Meeting Secondary reporting line

Board of Board of
Directors Supervisors

Corporate Social Related Party

Strategy Responsibility and Risk Management Nomination Compensation US Risk
Transactions Control Audit Committee
Committee Consumer Protection Committee Committee Committee Committee
Committee Committee

Senior
Management

Asset & Liability Risk

Management Management
Committee Committee Internal Audit
Bureau
Financial Technology
Personal Banking and Digital
Promotion Development
Committee Committee
Financial Assets
Consumer Protection Service
Committee Management
Committee

Corporate & Inclusive Finance

Investment Banking and Rural Internal Audit
Promotion Committee Revitalization Sub-bureau
Promotion Committee

Institutional Banking
Promotion
Committee

Marketing Risk Comprehensive Directly

Profitability Supporting Domestic Overseas
Management Management Administration Controlled
Units Departments Institutions Institutions
Departments Department Departments Institutions

Note: The above is the corporate governance framework chart as of the disclosure date of this report.

112
 Corporate Governance Report

The Bank has made constant efforts to improve the Convening of the Shareholders’ General
corporate governance and checks and balances mechanism Meeting
comprising the Shareholders’ General Meeting, the Board
of Directors, the Board of Supervisors and the Senior During the reporting period, the Bank convened the
Management featuring clearly-defined responsibilities Annual General Meeting for the Year 2020 on 21 June
and accountability, coordination and effective checks and 2021, the First Extraordinary General Meeting of 2021
balances, and to optimize responsibilities of the authority on 29 July 2021, and the Second Extraordinary General
organ, decision-making organ, supervisory organ and Meeting of 2021 on 25 November 2021. The afore-
executive organ. As a result, the corporate governance mentioned Shareholders’ General Meetings were convened
operation mechanism with scientific decision-making and held in strict compliance with relevant laws and
process, effective supervision and steady operation has regulations and the Articles of Association of the Bank.
been in place. The Bank made announcements on the resolutions and
disclosed legal opinions in a timely manner in accordance
with regulatory requirements. For details of the above
Corporate Governance Code meetings, please refer to the announcements of the Bank
During the reporting period, save as disclosed below, the dated 21 June 2021, 29 July 2021 and 25 November
Bank fully complied with the principles, code provisions 2021 respectively on the website of SSE, the “HKEXnews”
and recommended best practices stipulated in the website of HKEX and the website of the Bank.
Corporate Governance Code (Appendix 14 to the Hong
Kong Listing Rules).
Board of Directors and Special Committees
With regard to the compliance with Article C.2.1 of the
Corporate Governance Code (Appendix 14 to the Hong Responsibilities of the Board of Directors
Kong Listing Rules), Mr. Gu Shu resigned from his position
as President of the Bank on 31 December 2020. The Board As the decision-making organ of the Bank, the Board of
of Directors of the Bank deliberated and decided that Mr. Directors of the Bank is accountable to, and shall report
Chen Siqing, Chairman of the Board of Directors, should its work to, the Shareholders’ General Meeting. The Board
perform the duties of acting President from the date when of Directors is responsible for, among others, convening
Mr. Gu Shu does not perform the management duties in the Shareholders’ General Meeting; implementing
the Bank due to job change to the date when the new the resolutions of the Shareholders’ General Meeting;
President appointed by the Board of Directors of the Bank deciding on the business plans, investment proposals
formally takes office. On 16 March 2021, Mr. Liao Lin took and development strategies of the Bank; formulating
office as President of the Bank, and since that date, Mr. annual financial budget and final accounts of the
Chen Siqing had ceased to serve as acting President. Bank; formulating plans for profit distribution and loss
recovery of the Bank; formulating plans for the increase
or decrease of the Bank’s registered capital, capital
Shareholders’ General Meeting replenishment and financial restructuring of the Bank;
Responsibilities of the Shareholders’ General formulating basic management systems of the Bank such
Meeting as risk management system and internal control system,
and supervising the implementation of such systems;
As the organ of power of the Bank, the Shareholders’ appointing or removing President and the Board Secretary,
General Meeting involves all shareholders. The and appointing or removing Senior Executive Vice
Shareholders’ General Meeting is responsible for, among Presidents and other senior management members (except
others, deciding on business policies and significant the Board Secretary) who shall be appointed or removed
investment plans of the Bank; examining and approving by the Board of Directors under relevant laws according
the Bank’s annual financial budget, final account
to the nomination of the President and deciding on their
proposals, plans for profit distribution and loss make-up;
compensation, bonus and penalty matters; deciding on or
electing and replacing directors, supervisors appointed
authorizing the President to decide on the establishment
from the shareholder representatives and external
of relevant offices of the Bank; regularly evaluating and
supervisors; examining and approving work report of
improving corporate governance of the Bank; managing
the Board of Directors and work report of the Board of
information disclosure of the Bank; and supervising and
Supervisors; adopting resolutions on merger, division,
dissolution, liquidation, change of corporate form, increase ensuring the President and other Senior Management
or decrease of the Bank’s registered capital, issuance of members to perform their management duties effectively.
corporate bonds or other securities and public listing,
repurchase of the shares and issuance of preference shares;
and amending the Articles of Association of the Bank.

Annual Report 2021

113
Corporate Governance Report

Implementation of Resolutions of the Chairman Mr. Chen Siqing is the legal representative of the
Shareholders’ General Meeting by the Bank, and is responsible for leading the Board of Directors
Board of Directors in considering and formulating business development
strategies, risk management, internal control and other
The Board of Directors of the Bank earnestly and fully significant matters of the Bank.
implemented the resolutions adopted by the Shareholders’
General Meeting during the reporting period. President Mr. Liao Lin is responsible for the daily
management of the business operations of the Bank. The
President is appointed by and accountable to the Board of
Composition of the Board of Directors Directors, and performs his responsibilities as stipulated in
the Articles of Association of the Bank and as authorized
The Bank formulated relatively complete procedures by the Board of Directors.
for nominating and electing Directors. With diversified
backgrounds, the Directors of the Bank complemented Mr. Liao Lin took office as President of the Bank on 16
each other on one hand with regard to their expertise, March 2021. Please refer to the section headed “Corporate
professional competence and experience, which ensured Governance Report — Corporate Governance Code” for
scientific decision-making of the Board of Directors. As at details.
the disclosure date of the results, the Board of Directors of
the Bank consisted of 14 directors, including four Executive
Directors: Mr. Chen Siqing, Mr. Liao Lin, Mr. Zheng Guoyu Meetings of the Board of Directors
and Mr. Wang Jingwu; five Non-executive Directors: Mr. Lu
Yongzhen, Mr. Feng Weidong, Ms. Cao Liqun, Ms. Chen During the reporting period, the Board of Directors of
Yifang and Mr. Dong Yang; and five Independent Non- the Bank held 13 meetings on 29 January, 25 February,
executive Directors: Mr. Anthony Francis Neoh, Mr. Yang 26 March, 29 April, 21 June, 8 July, 19 July, 24 July, 27
Siu Shun, Mr. Shen Si, Mr. Nout Wellink and Mr. Fred Zuliu August, 24 September, 29 October, 25 November and
Hu. 17 December 2021, respectively. At these meetings, the
Board of Directors considered 78 proposals, and heard 30
Mr. Chen Siqing was Chairman of the Board of Directors.
reports.
Mr. Liao Lin was Vice Chairman of the Board of Directors.
The Executive Directors have worked in the areas of The Board of Directors made scientific decisions on, and
banking and management for a long time, possesses reviewed and approved such proposals as development
extensive professional expertise and experience in those strategy plans for 2021–2023 and establishment of the
areas and are familiar with operation and management Rural Revitalization Office in accordance with economic
of the Bank. Non-executive Directors have worked in the and financial policies and major objectives, including
fiscal, economic, financial and governing sectors for many development strategies, preventing and controlling
years, and they have rich practical experience and relatively financial risks, serving the real economy, deepening
high level of understanding of policies and theories. inclusive finance, and supporting rural revitalization.
All of the Independent Non-executive Directors are
prestigious Chinese or foreign experts in their respective The Board of Directors attached great importance to the
areas, e.g. economy, financial supervision, finance, audit enterprise risk management, continuously improved risk
and law, and they are familiar with Chinese and foreign management systems, and prevented the systemic risk
regulatory rules and have a good knowledge of corporate with all strength. It revised the Rules on Enterprise Risk
governance, finance and bank management. The number Management and the Measures for the Reputational Risk
of Independent Non-executive Directors of the Bank Management, reviewed and approved proposals including
accounted for more than one third of the total members of the 2020 and 2021 Interim Risk Management Reports,
the Board of Directors, complying with relevant regulatory the Liquidity Risk Management Strategy for 2021, the
requirements. Management Strategy of Interest Rate Risk in the Banking
Book for 2021, and heard reports such as Report on
Technology Risk Management in 2020.
Chairman and President
The Board of Directors improved asset management and
Pursuant to Code Provision C.2.1 of the Corporate continued to meet the capital needs of supporting the
Governance Code (Appendix 14 to the Hong Kong Listing real economy and the regulatory requirements on capital
Rules) and the Articles of Association of the Bank, the roles management. It reviewed and approved proposals on the
of Chairman and President should be held by two persons, 2020 Risk and Capital Adequacy Assessment Report, the
and the Chairman shall not concurrently hold the position 2020 Capital Adequacy Ratio Report, issuing eligible tier 2
of legal representative or chief responsible officer of the capital instruments, etc.
controlling shareholder.

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The Board of Directors highly valued the fulfillment of For major proposals reviewed by the Board of Directors,
social responsibility and endeavored to maximize the please refer to the announcements of the Bank on the
comprehensive value of economy, environment and website of SSE, the “HKEXnews” website of HKEX or the
society. It reviewed and approved proposals on the website of the Bank.
Donations for extreme heavy rainfall in Henan Province, the
The attendance of each of the Directors in Shareholders’
Application for Temporary Authorization Limit for External
General Meetings and meetings of the Board of Directors
Donations, the Corporate Social Responsibility Report 2020
and the special committees of the Board of Directors
(ESG Report), the 2021 Business Plan for Inclusive Finance,
during the reporting period is set out below:
the Report on the Implementation of Green Finance, the
2020 Work Report on and 2021 Work Plan for Consumer
Protection, etc.
Attendances in person/Number of meetings that should be attended

Special Committees of the Board of Directors:

Corporate
Social
Responsibility Related Party
Shareholders’ and Consumer Risk Transactions
General Board Strategy Protection Audit Management Nomination Compensation Control US Risk
Directors Meeting of Directors Committee Committee Committee Committee Committee Committee Committee Committee
Executive Directors
  Chen Siqing 3/3 11/13 6/8 — — — — — — —
  Liao Lin 3/3 13/13 7/7 3/3 — — 5/5 — — —
  Zheng Guoyu — — — — — — — — — —
  Wang Jingwu 1/1 4/4 — — — 1/1 — — 1/1 1/2
Non-executive Directors
  Lu Yongzhen 3/3 13/13 8/8 — — 4/4 — 2/2 — 5/5
  Feng Weidong 3/3 13/13 — — 5/5 4/4 7/7 — — 5/5
  Cao Liqun 3/3 13/13 — 3/3 5/5 4/4 — — — 5/5
  Chen Yifang 1/1 5/5 3/3 — — — — — — —
  Dong Yang — — — — — — — — — —
Independent Non-executive Directors
  Anthony Francis Neoh 3/3 12/13 8/8 — 5/5 4/4 6/7 2/2 — 5/5
  Yang Siu Shun 3/3 13/13 — — 5/5 4/4 7/7 — 4/4 4/5
  Shen Si 3/3 13/13 — — 5/5 4/4 — 2/2 4/4 5/5
  Nout Wellink 3/3 13/13 8/8 3/3 5/5 — — 2/2 4/4 —
  Fred Zuliu Hu 3/3 11/13 6/8 — 3/5 — 6/7 — — —
Directors Leaving Office
  Zheng Fuqing 3/3 13/13 8/8 — — 4/4 — — — 5/5
  Mei Yingchun — 1/1 1/1 — — — — — — —

Notes: (1) “Attendances in person” refers to attending meetings in person or on telephone or by video conference.

(2) Directors who did not attend the meetings of the Board of Directors and its special committees in person appointed other
directors to attend the meetings and exercise the voting right on their behalf.

(3) For the change of directors, please refer to the section headed “Directors, Supervisors and Senior Management — Appointment
and Removal”.

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Special Committees of the Board of Directors

Special Committees of the Board of Directors

The Board of Directors of the Bank has established eight special committees, namely, the Strategy Committee, the Corporate
Social Responsibility and Consumer Protection Committee, the Audit Committee, the Risk Management Committee, the
Nomination Committee, the Compensation Committee, the Related Party Transactions Control Committee and the US Risk
Committee. Except the Strategy Committee and the Corporate Social Responsibility and Consumer Protection Committee,
chairmen of all the other committees are assumed by Independent Non-executive Directors. More than half of the members
of the Audit Committee, the Nomination Committee, the Compensation Committee and the Related Party Transactions
Control Committee are Independent Non-executive Directors.

As at the disclosure date of the results, the composition of special committees of the Board of Directors of the Bank is as
follows:

Special Committees under the Board of Directors

Corporate
Social
Responsibility Related Party
and Consumer Risk Transactions
Strategy Protection Audit Management Nomination Compensation Control US Risk
Directors Committee Committee Committee Committee Committee Committee Committee Committee
Chen Siqing Chairman
Liao Lin Committee Member Chairman Committee Member
Zheng Guoyu Committee Member Committee Member Committee Member
Wang Jingwu Committee Member Committee Member Committee Member
Lu Yongzhen Committee Member Committee Member Committee Member Committee Member
Feng Weidong Committee Member Committee Member Committee Member Committee Member
Cao Liqun Committee Member Committee Member Committee Member Committee Member
Chen Yifang Committee Member Committee Member Committee Member
Dong Yang Committee Member Committee Member Committee Member
Anthony Francis Neoh Committee Member Committee Member Chairman Committee Member Committee Member Chairman
Yang Siu Shun Committee Member Committee Member Committee Member Chairman Committee Member
Shen Si Chairman Committee Member Committee Member Committee Member Committee Member
Nout Wellink Committee Member Committee Member Committee Member Chairman Committee Member
Fred Zuliu Hu Committee Member Committee Member Chairman

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During the reporting period, the performance of duties by the special committees of the Board of Directors is set out below:

Strategy Primary Responsibilities of the Strategy Committee The Strategy Committee is mainly responsible for
Committee considering the Bank’s strategic development plan, risk events that bear material influence on the overall
situation, business and institutional development plan, major investment and financing plan, annual social
responsibility report and other major matters critical to the Bank’s development, making recommendations to
the Board of Directors, and examining and assessing the soundness of the corporate governance framework
to ensure financial reporting, risk management and internal control are compliant with corporate governance
criteria of the Bank.

Performance of the Strategy Committee During the reporting period, the Strategy Committee of
the Board of Directors held eight meetings on 29 January, 26 March, 29 April, 21 June, 27 August, 24
September, 29 October and 25 November 2021, respectively. At these meetings, the Strategy Committee
considered and approved 22 proposals, and heard four reports. To promote the coordination between
bank-wide strategic planning and national strategies, the Strategy Committee considered and approved the
Bank’s 2021–2023 Development Strategy Plan as well as four sub-plans on risk management, international
development, internal audit development, and group data governance and intelligent application. The
Strategy Committee also paid close attention to strategic capital allocation, and reviewed and approved
several proposals including the proposals on issuing tier 2 capital instruments and the 2020 capital adequacy
ratio management report, providing a driving force for the Bank to promote sustainable development,
enhance capital strength, and strengthen risk resistance capacity on all fronts.
Corporate Primary Responsibilities of the Corporate Social Responsibility and Consumer Protection Committee
Social The Corporate Social Responsibility and Consumer Protection Committee is mainly responsible for
Responsibility considering the Bank’s fulfillment of social responsibilities with respect to environment, society, corporate
and Consumer governance, precision poverty alleviation, and corporate culture, the strategy, policy and target of consumer
Protection protection, green finance strategy, the development plan, basic policy, annual operating plan and assessment
Committee method of inclusive finance, and making recommendations to the Board of Directors.

Performance of the Corporate Social Responsibility and Consumer Protection Committee During
the reporting period, the Corporate Social Responsibility and Consumer Protection Committee held three
meetings on 25 March, 28 April and 26 August 2021, respectively. At these meetings, the Corporate
Social Responsibility and Consumer Protection Committee considered and approved five proposals. It
fully performed the political missions and social responsibilities as a major state-owned bank, considered
and approved the proposals on the donation of anti-epidemic materials in 2020 and the application for
temporary authorization limit for external donations, etc., providing continuous support for the epidemic
prevention and control, charity, culture, education and other public-interested activities. The committee
focused on the development of green finance and inclusive finance, considered and approved the proposals
on the implementation of green finance and the 2021 annual business plan for inclusive finance, and actively
practiced China’s green development concept and sustainable development strategy.
Audit Primary Responsibilities of the Audit Committee The Audit Committee is mainly responsible for
Committee constantly overseeing the Bank’s internal control system, and supervising, inspecting and evaluating financial
information and internal audit of the Bank, proposing the engagement or replacement of external auditors,
reviewing the reports of external auditors, and coordinating the communication between the internal audit
departments and external auditors, and assessing mechanisms for the Bank’s staff to report misconducts
in financial statements, internal control, etc., and assessing the mechanism for the Bank to conduct
independent and fair investigations and take appropriate actions in relation to the reported matters.

Performance of the Audit Committee During the reporting period, the Audit Committee held five
meetings on 29 January, 25 March, 28 April, 26 August and 28 October 2021, respectively. At these
meetings, the Audit Committee considered and approved 10 proposals, and heard 22 reports. The Audit
Committee continued to oversee the Bank’s internal control system, reviewed and approved the Bank’s
annual internal control assessment report, and heard reports on internal control audit results to improve the
Group’s compliant operation. It inspected and supervised the implementation of internal and external audits,
considered and approved proposals on the internal audit plan and the amendment to the evaluation plan
of annual performance of external auditors, heard reports on the implementation of internal audits and the
summary of external audit to promote the formation of an effective communication mechanism between
internal and external audits.

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• Reviewing periodic reports

The Audit Committee periodically reviewed the financial reports of the Bank. It had reviewed and submitted
to the Board of Directors to approve the annual report, interim report and quarterly reports of the Bank.
It also organized and conducted an internal control assessment of the Group for 2020 and engaged
external auditors to audit the assessment report of the Bank on internal control in accordance with the
relevant regulatory requirements. Additionally, it enhanced communication with external auditors, attached
importance to the supervision of external auditors and heard several reports of external auditors concerning
audit results, and management proposals. The Audit Committee was also concerned with the compliant
development of overseas institutions and heard related branches’ reports on internal audit work.

During the preparation and audit of the 2021 financial statements, the Audit Committee discussed and
agreed with the external auditors on matters such as audit schedule and progress arrangement, followed
the status of external audit and conducted supervision over relevant work at appropriate time by means
of hearing reports and holding informal discussions, and reviewed the unaudited and preliminarily audited
annual financial statements respectively. The Audit Committee held a meeting on 29 March 2022, and
considered that the 2021 financial statements truly, accurately and completely reflected the financial position
of the Bank.

• Examining internal control system

The Audit Committee is responsible for constantly monitoring and examining the internal control system of
the Bank, and examining the effectiveness of the system at least on an annual basis. The Audit Committee
performed its function of examining the Bank’s internal control system through reviewing the administrative
rules and regulations and their implementation, and examined and assessed the compliance and effectiveness
of major operating activities of the Bank.

The Board of Directors of the Bank is responsible for establishing, improving and effectively implementing
internal control, assessing its effectiveness and truthfully disclosing internal control assessment reports
according to the standard system for enterprise internal control. The objective of the internal control of the
Bank is to reasonably assure the compliance of its operation and management with relevant laws, safety of
its assets, as well as the authenticity and completeness of its financial reports and relevant information, in
order to enhance operation efficiency and results, and to facilitate the realization of its development strategy.
Due to inherent limitation of internal control, only reasonable assurance can be provided for the afore-
mentioned objectives. The Board of Directors and the Audit Committee have reviewed and approved the
2021 Internal Control Assessment Report of the Bank. For details of the Bank’s internal control, please refer
to the section headed “Corporate Governance Report — Internal Control”.

• Effectiveness of the internal audit function

The Bank has established a vertical and independent internal audit management system responsible and
reporting to the Board of Directors. The Board of Directors regularly reviews the internal audit plan and
hears internal audit reports on internal audit activities, audit supporting measures, internal audit team
building, etc., thus effectively performing the function of risk management. The Audit Committee examines,
monitors and assesses the internal audit work of the Bank, supervises the internal audit rules and their
implementation, and makes assessment of audit procedures and results of the internal audit department.
It is also responsible for urging the Bank to ensure adequate resources for the internal audit department
and coordinating the communication between the internal audit department and external auditors. The
internal audit department is accountable to and reports to the Board of Directors, is guided by the Board of
Supervisors and is under the examination, supervision and assessment of the Audit Committee. For details of
the internal audit, please refer to the section headed “Corporate Governance Report — Internal Audit”.

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Risk Primary Responsibilities of the Risk Management Committee The Risk Management Committee
Management is primarily responsible for constantly overseeing the Bank’s risk management system, reviewing and
Committee revising the strategy, policy and procedures of risk management and internal control process of the Bank,
and supervising and evaluating the performance of Senior Management members and risk management
departments in respect of risk management.

Performance of the Risk Management Committee During the reporting period, the Risk Management
Committee held four meetings on 25 March, 28 April, 26 August and 28 October 2021, respectively.
At these meetings, the Risk Management Committee considered and approved 16 proposals, and heard
five reports. The Risk Management Committee continuously supervised enterprise risk management. It
considered and approved proposals on the 2020 and 2021 Interim Risk Management Report, the 2020
Report on Management of Interest Rate Risk in the Banking Book, the 2020 Report on the Risk Appetite
Implementation and Assessment, the 2020 Compliance Risk Management Report of the Group and the 2020
Case Prevention Report and heard reports on technology risk management and the Group’s anti-money
laundering in 2020. It has become more foresighted in preventing and controlling financial risks and refining
the risk management mechanism, in a bid to assist the Board of Directors in improving its risk management,
prevention and control capabilities.

• Examining the risk management system

The Risk Management Committee is responsible for constantly monitoring and examining the risk
management system of the Bank, and examining the effectiveness of the system at least on an annual basis.
Under the enterprise risk management system structure of the Bank, the Risk Management Committee
performed its function of examining the Bank’s risk management system through reviewing and revising the
risk strategy, risk management policy, risk appetite and the enterprise risk management structure, monitoring
and evaluating the setup, mode of organization, work procedures and results of risk management
departments, regularly assessing the risk policy, risk appetite and enterprise risk management status,
supervising and assessing risk control activities conducted by the Senior Management members in terms of
credit risk, market risk, operational risk, liquidity risk, compliance risk, reputational risk and interest rate risk
in the banking book. For details of the risk management, please refer to the section headed “Discussion and
Analysis — Risk Management”.
Nomination Primary Responsibilities of the Nomination Committee The Nomination Committee is mainly responsible
Committee for making recommendations to the Board of Directors on candidates for Directors and Senior Management
members, nominating candidates for chairmen and members of special committees of the Board of
Directors, formulating the standards and procedures for selection and appointment of Directors and Senior
Management members, and formulating the training and development plans for Senior Management
members and key reserved talents. The Nomination Committee is also responsible for assessing the structure,
size and composition of the Board of Directors on a yearly basis and making recommendations to the Board
of Directors based on the Bank’s development strategy.

The Articles of Association of the Bank specifies methods and procedures to nominate Directors. Please refer
to Article 118 of the Articles of Association. During the reporting period, the Bank appointed and renewed
the appointments of Directors of the Bank in strict accordance with the Articles of Association of the Bank.
The Nomination Committee reviews the qualifications of candidates for Directors based on whether the
candidate complies with applicable laws, administrative rules, regulations and the Articles of Association of
the Bank. The Bank attached importance to diversified sources and backgrounds of Directors and continued
the efforts to enhance the professionalism of the Board of Directors, thus laying the foundation for the
effective operation and scientific decision-making of the Board of Directors. According to the requirement
on diversified composition of the Board of Directors in the Rules for Recommendation and Nomination of
Board Candidates of the Bank, the Nomination Committee shall pay attention to the complementarity of
the candidates in terms of expertise, professional competence and experience, cultural and educational
background, gender, etc., to ensure the members of the Board of Directors are well equipped, experienced
and have diversified perspectives and views. In order to implement the diversity policy, the Nomination
Committee discusses and designs measurable goals according to actual conditions and assesses the
improvement of diversified composition of the Board of Directors during the course of its yearly assessment
on the framework, number of Directors and composition of the Board of Directors. As at the disclosure date
of the results, there were five Independent Non-executive Directors, accounting for more than one third of
the total members of the Board of Directors.

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Performance of the Nomination Committee During the reporting period, the Nomination Committee held
seven meetings on 29 January, 25 February, 28 April, 8 July, 26 August, 24 September and 25 November
2021, respectively. Through the seven meetings, the Nomination Committee considered and approved
13 proposals including the proposals on the election of Mr. Liao Lin as Vice Chairman of the Bank, the
nomination of Mr. Zheng Guoyu and Mr. Wang Jingwu as candidates for Executive Directors of the Bank,
the nomination of Ms. Chen Yifang and Mr. Dong Yang as candidates for Directors of the Bank, and the
appointment of Mr. Liao Lin as President of the Bank, Mr. Zheng Guoyu and Mr. Zhang Weiwu as Senior
Executive Vice Presidents of the Bank, and Mr. Wang Jingwu concurrently as Chief Risk Officer of the Bank,
and heard the report on the framework of the Board of Directors in 2020. The Nomination Committee
prudently assessed the organizational structure of the Bank’s Board of Directors and its special committees,
promoted the change of directors in an orderly manner and continuously improved the composition of
special committees of the Board of Directors.
Compensation Primary Responsibilities of the Compensation Committee The Compensation Committee is mainly
Committee responsible for formulating assessment measures on the performance of duties and compensation plans
for Directors, organizing the assessment on the performance of duties of Directors, putting forth proposal
on remuneration distribution for Directors, formulating and reviewing the assessment measures and
compensation plans for Senior Management members of the Bank and evaluating the performance and
behaviors of Senior Management members.

Performance of the Compensation Committee During the reporting period, the Compensation
Committee held two meetings on 25 March and 26 August 2021, respectively. At these meetings, the
Compensation Committee considered and approved five proposals including the proposals on the payment
of remuneration to Directors and Senior Management members for 2020, the Senior Management
performance evaluation plan for 2021, the coverage of directors, supervisors and officers liability insurance
for 2021–2022 and the Employment Plan of the Group for 2022, and heard the 2020 assessment report
on the performance of duties of Directors by the Board of Directors. The Compensation Committee,
in accordance with regulatory requirements, drafted the remuneration of directors, and improved the
performance evaluation indicators and the incentive and constraint mechanism.
Related Party Primary Responsibilities of the Related Party Transactions Control Committee The Related Party
Transactions Transactions Control Committee is mainly responsible for developing the basic policies governing the
Control management of related party transactions, identifying the Bank’s related parties, approving related party
Committee transactions and other related matters within the authority granted by the Board, receiving related party
transaction statistics for filing purpose, reviewing the related party transactions that are subject to the
approval of the Board of Directors or the Shareholders’ General Meeting, and reporting to the Board
of Directors on the implementation of the related party transaction management policies as well as the
conditions on these transactions.

Performance of the Related Party Transactions Control Committee During the reporting period, the
Related Party Transactions Control Committee held four meetings on 25 March, 21 June, 26 August and
17 December 2021, respectively. At these meetings, the Related Party Transactions Control Committee
considered and approved four proposals including the proposal on identification of related parties of the
Bank, and heard two reports including the report on related party transactions in 2020 and the identification
of related parties of the Bank in 2020. The Related Party Transactions Control Committee focused on
reviewing the fairness and objectivity of related party transactions, urged the Bank to strengthen the
management of related party transactions and inside transactions, and assisted the Board of Directors in
ensuring the Bank’s related party transactions are carried out in compliance with laws and regulations.
US Risk Primary Responsibilities of the US Risk Committee In accordance with the relevant requirements
Committee in the Enhanced Prudential Standards for Bank Holding Companies and Foreign Banking Organizations
established by the Federal Reserve Board, the US Risk Committee supervised the implementation of the
US business-related risk management framework and relevant policies.
Performance of the US Risk Committee During the reporting period, the US Risk Committee held
five meetings on 25 March, 21 June, 26 August, 28 October and 17 December 2021, respectively.
At these meetings, the US Risk Committee considered and approved four proposals, and heard
12 reports. It attached importance to and strengthened the compliance management of overseas
institutions, reviewed and approved the proposals including the risk management framework and the
annual audit of risk appetite in the US, and the liquidity stress testing, funding contingency plans,
key business lines and product liquidity risks in the US, heard the reports on the risk management
and liquidity risk management in the US in 2020, and assisted the Board of Directors in urging the
Management to well perform in compliance and risk prevention and control in international operation.

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Term of Directors Investigation and Training of Directors

In accordance with the Articles of Association of the During the reporting period, Directors of the Bank
Bank, Directors are elected by the Shareholders’ General proactively conducted surveys on departments of the
Meeting with a term of three years, and the appointment Bank, branches and subsidiaries concerning such topics as
shall take effect from the date of approval by CBIRC or serving the new development paradigm, supporting rural
upon completion of relevant procedures according to the revitalization, FinTech, green finance, wealth management,
requirements of CBIRC. Directors may be re-appointed and pension finance. In the form of survey reports
through re-election at the Shareholders’ General Meeting and briefs, such investigations provide the Bank with
after expiry of their term. constructive suggestions and opinions.

During the reporting period, the Bank developed an overall

training plan, increased training resources, and encouraged
Responsibilities of Directors in Respect of
and actively organized the Directors to attend trainings
Financial Statements
in many ways, with the aim of assisting the Directors in
The Directors of the Bank acknowledged that they are continuing to improve their ability to perform their duties.
responsible for the preparation of the financial statements Directors of the Bank attended relevant trainings according
of the Bank. During the reporting period, in strict to work needs.
compliance with relevant provisions, the Bank published
the 2020 Annual Report, the First Quarterly Report of
2021, the 2021 Interim Report and the Third Quarterly
Report of 2021 as scheduled.

Subject matters of the trainings attended by the Directors of the Bank during the reporting period were mainly as follows:

External trainings SSE:

Follow-up training for independent directors of listed companies

China Banking Association:

Interpretation of Guidelines on Corporate Governance of Banking and Insurance Institutions and
Measures for Evaluating the Performance of Directors and Supervisors of Banks and Insurance
Institutions (Pilot)

The Listed Companies Association of Beijing:

“Compliance Operation”, “Investor Protection”
“Innovative Development”, “Capital Operation”
Internal trainings Anti-money Laundering
Climate risk management and green finance
Trainings on business of the Bank
Introduction trainings for newly-appointed directors

Training of Board Secretary Independence and Performance of Duties

of Independent Non-executive Directors
During the reporting period, the Board Secretary of the
Bank attended the relevant specialized trainings, with The qualifications, number and proportion of the Bank’s
the training hours over 15 hours, which meets relevant Independent Non-executive Directors comply with
regulatory requirements. regulatory requirements. The Bank’s Independent Non-
executive Directors do not have any business or financial
interests in the Bank or its subsidiaries, and they have not
assumed any managerial position in the Bank. The Bank
has received the annual confirmation on independence
from all Independent Non-executive Directors and
considered that they were independent.

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During the reporting period, Chairman Chen Siqing held comments and suggestions. The Bank paid close attention
discussions with the Bank’s Independent Non-executive to the relevant comments and suggestions, and organized
Directors, who provided suggestions with respect to the the implementation thereof according to the actual
Bank’s development strategies, business transformation conditions.
and risk control, etc. The Bank’s Independent Non-
During the reporting period, the Bank’s Independent Non-
executive Directors earnestly attended the meetings of the
executive Directors did not raise any objection on proposals
Board of Directors and special committees, and during
of the Board of Directors and special committees of the
consideration of issues, gave independent opinions on
Board of Directors.
improving the abilities of serving national strategies,
focusing on risk control and compliance development, and For the details on performance of duties of Independent
speeding up FinTech innovation, etc. They also carried out Non-executive Directors of the Bank during the reporting
active discussions or surveys on financial support for the period, please refer to the Work Report of Independent
real economy, climate risk management, green finance Directors for 2021 issued by the Bank on 30 March 2022.
development, etc., exchanged ideas, and put forward

Independent Non-executive Directors’ Special Explanation and Independent

Opinions on External Guarantees of the Bank
In accordance with relevant provisions and requirements of CSRC, we, in the capacity of Independent Non-executive
Directors of the Bank, reviewed external guarantees of the Bank on the principles of fairness, impartiality and
objectivity, and hereby give our specific explanation and opinions as follows: upon review, external guarantees
provided by the Bank mainly focus on issuance of letters of guarantee and standby letters of credit, which is part of
the ordinary banking services within the business scope of the Bank as approved by relevant regulatory authorities.
As at 31 December 2021, the balance of letters of guarantee and standby letters of credit issued by the Bank totaled
RMB494,532 million.

The Bank has attached great importance to the management of risks arising from such business, formulated strict rules
on the credit ratings of the entities to which the guarantee was provided and on the operation process and duration
management of provision of guarantee services, and carried out relevant business on such basis.

Independent Non-executive Directors of Industrial and Commercial Bank of China Limited

Anthony Francis Neoh, Yang Siu Shun, Shen Si, Nout Wellink and Fred Zuliu Hu

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Board of Supervisors general meeting, and convening and presiding over

the extraordinary general meeting in case the Board
Responsibilities of the Board of Supervisors of Directors fails to perform its duty of convening
Shareholders’ General Meeting; proposing to convene an
As the supervisory organ of the Bank, the Board of
interim meeting of the Board of Directors.
Supervisors is accountable to, and shall report its work
to, the Shareholders’ General Meeting. The Board of
Supervisors is responsible for, among others, supervising Composition of the Board of Supervisors
the performance and due diligence of Directors and Senior
Management members; supervising the performance As at the disclosure date of the results, the Board of
of duties by the Board of Directors and the Senior Supervisors of the Bank consisted of six members, including
Management; conducting exit audits on Directors and two Shareholder Supervisors, namely Mr. Huang Liangbo
Senior Management members when necessary; inspecting and Mr. Zhang Wei; two Employee Supervisors, namely
and supervising financial activities of the Bank; examining Mr. Huang Li and Mr. Wu Xiangjiang; and two External
financial information such as financial report, business Supervisors, namely Mr. Shen Bingxi and Mr. Zhang Jie.
report and profit distribution plan to be submitted to
the Shareholders’ General Meeting by the Board of
Directors; inspecting and supervising the business decision- Meetings of the Board of Supervisors
making, risk management and internal control of the
Bank and guiding the internal audit department of the During the reporting period, the Board of Supervisors held
Bank; formulating performance evaluation measures nine meetings, reviewed 20 proposals including the Report
of the Board of Directors and the Senior Management on the Work of the Board of Supervisors for 2020 and the
and their members as well as supervisors; evaluating the Report on Performance Evaluation, heard nine reports on
performance of the Board of Directors and the Senior the business operation, development strategy planning, the
Management and their members as well as supervisors, Group’s anti-money laundering and other contents, and
and reporting to the Shareholders’ General Meeting reviewed 43 documents including the documents on the
for approval; presenting proposals to the Shareholders’ supervision in each quarter of 2021 and relevant survey
General Meeting; proposing to convene an extraordinary reports of the Board of Supervisors.

Attendance of supervisors of the Bank in meetings during the reporting period is as follows:

Attendances in person/Number of meetings that should be attended

Shareholders’
General Board of
Supervisor Meeting Supervisors
Huang Liangbo 1/1 4/4
Zhang Wei 3/3 9/9
Huang Li 3/3 9/9
Wu Xiangjiang 3/3 9/9
Shen Bingxi 3/3 9/9
Zhang Jie — 1/1
Supervisor Leaving Office
Yang Guozhong — 1/1
Qu Qiang 3/3 8/8

Note: For the change of supervisors, please refer to the section headed “Directors, Supervisors and Senior Management — Appointment and
Removal”.

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Securities Transactions of Directors and Shareholders’ Rights

Supervisors
Proposing the Convening of an Extraordinary
The Bank has adopted a set of codes of conduct General Meeting
concerning the securities transactions by directors and
supervisors which are no less stringent than the standards An extraordinary general meeting should be convened
set out in the Model Code for Securities Transactions by within two (2) months from the date when shareholders
Directors of Listed Issuers, Appendix 10 to the Hong Kong holding more than ten percent (10%) of the voting
Listing Rules. After making enquiries to all Directors and shares of the Bank, either individually or jointly, request
Supervisors of the Bank, each Director and Supervisor to convene in writing. Proposing shareholders shall have
confirmed that he/she has complied with the provisions the right to request the Board of Directors in writing to
of the afore-said codes of conduct during the reporting convene an extraordinary general meeting. The Board of
period. Directors shall make a written response as to whether
or not it agrees to convene such a meeting within ten
(10) days upon receipt of the request in accordance with
Senior Management laws, administrative regulations, rules and the Articles of
Association of the Bank. Reasonable expenses incurred
Responsibilities of the Senior Management from the case where shareholders convene the meeting
by themselves due to the failure of the Board of Directors
As the executive organ of the Bank, the Senior to convene the meeting shall be borne by the Bank, and
Management is accountable to the Board of Directors. deducted from the payment to those negligent directors.
The Senior Management is responsible for, among others,
the operation and management of the Bank; organizing
the implementation of operation and investment plans Submitting Interim Proposals for the
approved by the Board of Directors; formulating specific Shareholders’ General Meeting
rules and regulations of the Bank; determining plans for
compensation distribution and performances evaluation of Shareholders who hold more than three percent (3%)
persons in charge of internal departments and branches of shares of the Bank, either individually or jointly, may
of the Bank (except the internal audit department); prepare an interim proposal and submit it in writing to the
truthfully reporting to the Board of Directors or the Board Board of Directors ten (10) days before the Shareholders’
of Supervisors on the business performance; drafting General Meetings convened. The Board of Directors shall
the annual financial budget plan, final account plan, issue a supplementary notice for the Shareholders’ General
profit distribution plan and loss make-up plan, plans for Meeting within two (2) days upon receipt of the proposal
increase or reduction of the registered capital, the issuance and submit such proposal to the Shareholders’ General
of bonds or other securities and listing, and making Meeting for approval.
suggestions in that respect to the Board of Directors.

Putting Forward Suggestions and

Powers and Functions of the Senior Reviewing Documents
Management
Shareholders are entitled to supervise business operation
The powers of the Board of Directors and the Senior of the Bank and put forward suggestions or inquiries
Management are separated in strict compliance with the accordingly. Shareholders are entitled to review the
Articles of Association and other corporate governance information of the Bank such as the Articles of Association,
documents of the Bank. During the reporting period, the the register of shareholders, documents on status of share
Bank made an inspection on the implementation of the capital and minutes of Shareholders’ General Meetings,
plan on authorization of the Board of Directors to the etc.
President, and no matter was found to be beyond the
approval authority of the President.

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 Corporate Governance Report

Special Provisions on Rights of Preference of insider lists and regularly conducted insider transaction
Shareholders self-inspections. After self-inspections, none of the insiders
of the Bank were found to be involved in dealings in
In the following circumstances, preference shareholders shares of the Bank who have taken advantage of inside
of the Bank have the right to attend the Shareholders’ information during the reporting period.
General Meeting and exercise voting rights: (1)
amendments to the Articles of Association which relate
to preference shares; (2) the reduction of the registered Investor Relations
capital of the Bank by more than 10% (either separately
or in aggregate); (3) merger, division and dissolution or Effective Communication with Shareholders
change of corporate form of the Bank; (4) issuance of and Review of Investor Relations Activities
preference shares; and (5) other events specified in the
In 2021, with the consistent adherence to the investor-
Articles of Association that will change or abrogate the
centered approach, the Bank strove to improve the quality
rights of preference shareholders. If any of the above
of investor relations services and generate stable return to
circumstances occurs, the notice of a Shareholders’ General
shareholders following the principle of serving investors
Meeting shall be given to preference shareholders in
in a comprehensive, proactive, precise, coordinated and
accordance with the notification procedures applicable
efficient manner.
to ordinary shareholders as specified in the Articles of
Association. During the reporting period, the Bank proactively carried
out frequent “online + offline” and “face-to-face +
In the event that the Bank failed to pay the agreed
screen-to-screen” investor exchanges, and held annual
dividend to preference shareholders for three years in
and interim results releases through “on-site meetings
aggregate or for two consecutive years, from the next
+ global teleconferencing + public opinion collection +
day following the date of approval of the proposal not
livestreaming”. The Bank made constant and extensive
paying the agreed dividend for the current year by the
communication with institutional investors and minority
Shareholders’ General Meeting, preference shareholders
investors through online and offline channels like press
shall be entitled to attend and vote (together with ordinary
conferences in relation to periodic results announcements,
shareholders) at the Shareholders’ General Meeting. For
reverse roadshows, domestic and overseas non-deal
preference shares the dividend of which is non-cumulative,
roadshows, investor hotline, investor relations mailbox,
the voting rights shall be temporarily restored until the full
investor relations website and the online platform of sns.
payment of the agreed dividend for the current year by the
sseinfo.com. In this way, the Bank presented its operational
Bank.
quality, efficiency and strategic achievements to the
capital market, actively responded to the concerns from
investors and analysts, and strove to deliver the values
Other Rights
of ICBC. Besides, it enhanced investors’ comprehensive
Ordinary shareholders of the Bank have the right to and objective understanding and cognition in economic
collect dividends and other forms of benefits distributed development of China and high-quality development of the
on the basis of the number of shares held by them; Bank and helped bring the market value in line with the
preference shareholders shall be entitled to rights to long-term intrinsic value of the Bank. The Bank improved
dividends in priority to payment of dividends to ordinary investor relations information collection and market
shareholders. Shareholders have other rights conferred by information feedback mechanism, followed and analyzed
laws, administrative regulations, rules and the Articles of spotlight issues of the capital market, and effectively
Association of the Bank. enhanced the quality of communication with the investors.
The Bank actively understood and solicited the comments
and suggestions of the capital market on the Bank, and
Inside Information Management assisted the Management in making timely reaction with
the help of many operation and communication strategies,
The Bank manages inside information and insiders in so as to continuously strengthen the level of corporate
accordance with regulatory requirements of the exchanges governance and core values of the Bank.
on which the Bank is listed and the Bank’s rules, and
conducts the collection, delivery, sorting, preparation In 2022, the Bank will further and proactively deepen the
and disclosure of relevant information in compliance communication and exchange with investors to enhance
with applicable laws and regulations. During the investors’ understanding and recognition of the Bank and
reporting period, the Bank continued to strengthen inside continue to protect legitimate interests of the investors,
information management, timely organized the completion and at the same time hope to receive more support from,
and attention of the investors.

Annual Report 2021

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Corporate Governance Report

Investor Enquiries development of data assets, and boosted the collection,

processing and analysis of information, ensuring smooth
If an investor wishes to enquire any questions related to and effective internal and external communication. The
operation performance of the Bank, please contact: Bank deeply coordinated supervision and inspection,
Telephone: 86-10-66108608 optimized the internal control evaluation system, and
strengthened the dual closed-loop remediation of
Facsimile: 86-10-66107571 problems, making all-round efforts to implement the new
E-mail: [email protected] accountability mechanism for violations, and enhancing the
synergistic supervision of the “three lines of defense”, in
Address: Corporate Strategy and Investor Relations an endeavor to ensure stable operations.
Department, Industrial and Commercial Bank of China
Limited, 55 Fuxingmennei Avenue, Xicheng District,
Beijing, China Internal Control Assessment Report and
Postal code: 100140 Internal Control Audit
While disclosing the annual report, the Bank also disclosed
the 2021 Internal Control Assessment Report of Industrial
Internal Control
and Commercial Bank of China Limited in accordance
The Board of Directors is responsible for formulating with the requirements of MOF, CSRC and SSE. The report
the basic regulations for internal control and supervising stated that the Bank had maintained effective internal
the implementation of such regulations. The Audit control over financial reporting in all material aspects
Committee of the Board of Directors supervises the in accordance with the standard system for enterprise
development of the internal control system and evaluates internal control and relevant rules as at 31 December 2021
the compliance and effectiveness of the major operation (benchmark date). Deloitte Touche Tohmatsu Certified
and management activities of the Bank. The Bank has set Public Accountants LLP has audited the effectiveness of
up the Internal Audit Bureau and the Internal Audit Sub- the Bank’s internal control over financial reporting as at
bureau, which adopt a hierarchical management system 31 December 2021 and issued the standardized audit
and are responsible to and report to the Board of Directors. report on internal control. For details, please refer to the
The Senior Management of the Bank is responsible for announcements published by the Bank on the website of
formulating systematic policies, procedures and methods, SSE, the “HKEXnews” website of HKEX and the website of
as well as taking risk control measures. Under the Senior the Bank.
Management, the Operational Risk and Internal Control
Management Committee subordinated to the Risk
Management Committee, performs the responsibilities Internal Control Evaluation and Defects
related to internal control and evaluates the sufficiency
The Board of Directors of the Bank conducted an
and effectiveness of internal control. The Head Office
assessment on the effectiveness of the Group’s internal
and branches have internal control and compliance
control during the reporting period in accordance with
departments which are responsible for the organization,
the Basic Standard for Enterprise Internal Control and
promotion and coordination of internal control.
its supporting guidelines issued by five ministries and
During the reporting period, the Bank continued to commissions including MOF, and relevant regulatory
optimize its internal control mechanism for higher requirements of SSE and CBIRC. No significant or material
quality and efficiency of the Group. The Bank formulated deficiencies were detected in the Bank’s internal control
and implemented the 2021–2023 Development Plan system during the assessment. Risks that may arise from
for Internal Control System and continuously refined ordinary deficiencies are controllable and corrective actions
the internal control environment. The Bank improved have been or are being taken, which have no material
the “9+X” risk assessment technologies and methods, impact on the fulfillment of internal control objectives
focused on case and compliance risk control, and of the Bank. The Bank had maintained effective internal
enhanced prospective risk identification and response control in all material aspects in accordance with the
capabilities. The Bank optimized the system governance standard system for enterprise internal control and relevant
mechanism and authorization management, strengthened rules.
the management on key positions and personnel, and
There was no factor that affected the assessment
improved the process and system management for key
conclusion of internal control effectiveness from the
areas and business links, thus developing better capacities
benchmark date to the issuance date of the internal control
in the process control of risk. The Bank advanced the
assessment report.

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 Corporate Governance Report

Internal Audit
The Bank established a vertical and independent internal audit management system responsible and reporting to the Board
of Directors. The chart below illustrates the internal audit management and reporting framework of the Bank:

Board of Directors Board of Supervisors

Audit Committee

Senior Management

Internal Audit Bureau

Beijing Tianjin Shenyang Shanghai Nanjing Wuhan Guangzhou Chengdu Kunming Xi’an
Office Office Office Office Office Office Office Office Office Office

Primary reporting line

Secondary reporting line

During the reporting period, the Bank acted on the conditions, properly responded to the COVID-19 pandemic,
regulatory requirements on the industry, implemented refined the audit management mechanism, optimized the
risk-oriented audit activities and fully accomplished the audit mode, accelerated digital transformation, promoted
annual audit plan according to the development strategies the deep integration between technologies and businesses,
and central tasks of the Bank. The audit activities covered improved audit efficiency and value, strengthened the
domestic and overseas key institutions of the Group, major audit team’s ability to perform duties, and constantly
areas, key processes and the main responsible persons enhanced the audit service capacity and professionalism.
of domestic and overseas institutions. The audit activities
focused on the Bank’s performance in supporting national
policies, meeting regulatory requirements, strengthening Engagement of Auditors
risk prevention and control, promoting strategy
implementation and other aspects, covering such key areas Deloitte Touche Tohmatsu Certified Public Accountants
as financial benefit, credit business, emerging business, LLP1 was the domestic auditors of the Bank for the financial
FinTech, operation management, capital management statements audit in 2021, and Deloitte Touche Tohmatsu1
and internal control. The Bank also paid close heed to and was the international auditors of the Bank for the financial
made full use of audit findings and recommendations, statements audit in 2021. Deloitte Touche Tohmatsu
with the aim of continuously improving risk management, Certified Public Accountants LLP was also the auditors of
internal control and corporate governance. internal control of the Bank in 2021. KPMG Huazhen LLP1
and KPMG1 resigned from the positions of providers of
During the reporting period, internal audit of the Bank audit services for the Bank after serving a maximum term
actively adapted to the changes in the risk management of eight consecutive years from 2013 to 2020.

1 Deloitte Touche Tohmatsu Certified Public Accountants LLP and KPMG Huazhen LLP are Recognized Public Interest Entity Auditor under
Hong Kong’s Financial Reporting Council Ordinance. Deloitte Touche Tohmatsu and KPMG are Registered Public Interest Entity Auditor
under Hong Kong’s Financial Reporting Council Ordinance.

Annual Report 2021

127
Corporate Governance Report

During the reporting period, the Group paid Deloitte Business Overview — Diversified Operation and Subsidiary
Touche Tohmatsu and its member institutions a total fee Management, Major Controlled Subsidiaries and Equity
of RMB176 million for the audit of financial statements Participating Company”.
(including the audit of financial statements of subsidiaries
and overseas branches). Of which, RMB104 million
(including fee for internal control audit of RMB8.80 million) Remediation of Problems in the Self-
was paid by the Bank. inspection amid the Governance
Improvement Campaign of Listed
During the reporting period, Deloitte Touche Tohmatsu
Companies
and its member institutions provided the Group with non-
audit services including professional services for asset During the reporting period, in accordance with the
securitization and bonds issuance etc., and received RMB7 relevant notices of CSRC, the Bank conducted a self-
million for such professional non-audit services. inspection amid the governance improvement campaign
of listed companies. The self-inspection results showed
that, from 2018 to 2020, the Bank had complete
Management on Subsidiaries internal rules and regulations for corporate governance,
sound organizational structure, standardized operation
For the information of management and control on
procedures, smooth mechanism for the communication
subsidiaries, please refer to “Discussion and Analysis —
with investors, and stable cash dividend ratio.

128
Report of the Board of Directors

Principal Business  The principal business of the about RMB104,534 million. The distribution plan will be
Bank and its subsidiaries is the provision of banking and submitted for approval to the Annual General Meeting
related financial services. Please refer to the section headed for the Year 2021. Once approved, the above-mentioned
“Discussion and Analysis” for the business review of the dividends will be paid to the holders of A shares and H
Bank. shares whose names appeared on the share register of
the Bank after the close of market on 11 July 2022. The
Bank will suspend the registration procedures of H share
ownership transfer on 6 July 2022 (inclusive) through 11
Profits and Dividends Distribution
July 2022 (inclusive). The holders of H shares of the Bank
The profit and financial status of the Bank during the that desire to receive the proposed cash dividends but
reporting period are presented in the Auditor’s Report and have not registered the ownership transfer documents
Financial Statements of the Annual Report. are requested to hand over their ownership transfer
documents together with the H shares to the Bank’s H
As approved at the Annual General Meeting for the Year
share registrar — Computershare Hong Kong Investor
2020 held on 21 June 2021, the Bank has distributed cash
Services Limited that is located at Room 1712–1716,
dividends of about RMB94,804 million, or RMB2.660 per
17 Floor, Hopewell Center, 183 Queen’s Road East,
ten shares (pre-tax) for the period from 1 January 2020
Wanchai, Hong Kong no later than 4:30 p.m. of 5 July
to 31 December 2020 to the ordinary shareholders whose
2022. Pursuant to relevant regulatory requirements and
names appeared on the share register after the close of
operational rules, dividends on A shares and H shares will
market on 5 July 2021.
be paid on 12 July 2022 and 27 July 2022, respectively.
The Board of Directors of the Bank proposed distributing
For dividend-related tax and tax reduction, please refer to
cash dividends of RMB2.933 (pre-tax) for each ten shares
the announcements on dividend distribution of the Bank.
of 356,406,257,089 ordinary shares for 2021, totaling

The Bank did not convert any capital reserve to share capital in the last three years. The table below sets out the dividend
distribution of ordinary shares of the Bank for the last three years:

Item 2021 2020 2019

Dividend per ten shares (pre-tax, in RMB yuan) 2.933 2.660 2.628
Cash dividends (pre-tax, in RMB millions) 104,534 94,804 93,664
Percentage of cash dividends (%) (1)
30.9 30.9 30.4

Note: (1) Calculated by dividing cash dividends on ordinary shares (pre-tax) by net profit attributable to ordinary shareholders of the parent
company for the period.

For details on the distribution of dividends on preference the long-term interest of the Bank, the overall interests of
shares of the Bank, please refer to the section headed all shareholders and the sustainable development of the
“Details of Changes in Share Capital and Shareholding of Bank. It emphasizes the priority to adopt cash dividend
Substantial Shareholders — Preference Shares”. as the profit distribution method and provides that the
Bank’s adjustment to the profit distribution policy shall be
discussed by the Board of Directors as a special proposal
Formulation and Implementation of and the grounds for adjustment shall be substantiated and
Cash Dividend Policy proved in detail and presented in a written substantiating
report for Independent Non-executive Directors to issue
The Articles of Association of the Bank explicitly stipulates their opinions, and then the report will be submitted to the
that the Bank’s profit distribution policy shall maintain Shareholders’ General Meeting for approval as a special
its continuity and stability and meanwhile have regard to resolution.

Annual Report 2021

129
Report of the Board of Directors

The formulation and implementation of the Bank’s cash Purchase, Sale and Redemption of
dividend policy accords with the provisions stipulated in Shares  During the reporting period, except the
the Articles of Association and the requirements provided redemption of offshore EUR preference shares, neither
in the resolutions of the Shareholders’ General Meeting, the Bank nor any of its subsidiaries purchased, sold or
the dividend distribution standards and proportion are redeemed any listed shares of the Bank. For details on
clear and explicit, and the decision-making procedure and the redemption of offshore EUR preference shares, please
mechanism are complete. Moreover, Independent Non- refer to the section headed “Details of Changes in Share
executive Directors had issued their opinions for it. Minority Capital and Shareholding of Substantial Shareholders —
shareholders can fully express their opinions and appeals, Preference Shares”.
to completely safeguard their legitimate rights.

Pre-emptive Rights  The Articles of Association

Distributable Reserves Details of the
of the Bank does not have any mandatory provision
distributable reserves of the Bank as at 31 December 2021
regarding pre-emptive rights. Pursuant to the Articles of
are set out in “Note 39. to the Consolidated Financial
Association, the Bank may increase its registered capital
Statements: Reserves” of this annual report.
after obtaining approval of the Shareholders’ General
Meeting and of relevant authorities, by issuing shares
through public or non-public offering, issuing bonus shares
Financial Summary  The summary of results,
to the existing shareholders, converting capital reserve
assets and liabilities for the five years ended 31 December to share capital or using other methods as allowed by
2021 is set out in the section headed “Financial applicable laws and administrative regulations or approved
Highlights” of this annual report. by relevant authorities.

Donations  During the reporting period, the Group

Major Customers In 2021, the aggregate
made external donations of RMB114.81 million equivalent. interest income and other operating income from top five
customers of the Bank did not exceed 30% of the interest
income and other operating income of the Bank for the
Subsidiaries  Particulars of the Bank’s major year.
subsidiaries as at 31 December 2021 are set out in the
sections headed “Discussion and Analysis — Business
Overview” and “Note 25. to the Consolidated Financial Use of Proceeds from Fundraising
Statements: Investments in Subsidiaries” in this annual Activities
report.
The funds raised from the Bank’s fundraising activities were
used for the purposes as disclosed in the prospectuses,
Share Capital and Public Float namely, strengthening the capital base to support the
ongoing business growth of the Bank.
Changes in the share capital of the Bank for the year
For future planning disclosed in the public disclosure
ended 31 December 2021 are set out in “Note 37. to the
documents such as previous offering prospectuses and
Consolidated Financial Statements: Share Capital”.
fund raising prospectuses issued by the Bank which has
As at the latest practicable date before the disclosure date continued during the reporting period, its implementation
of the results, the Bank has maintained the minimum progress conformed to the planning as described after
public float of 23.45%, based on the publicly available verification and analysis.
information and to the best knowledge of the Board of
Directors of the Bank.

130
 Report of the Board of Directors

Equity-linked Agreement  The Bank had no Part XV of the Securities and Futures Ordinance of Hong
equity-linked agreements required to be disclosed by the Kong (including interests or short positions therein that
Hong Kong Listing Rules. they shall be deemed to have pursuant to such provisions
of the Securities and Futures Ordinance of Hong Kong), or
any interests or short positions which have to be recorded
in the register under Section 352 of the Securities and
Management Contracts  During the reporting
Futures Ordinance of Hong Kong, or any interests or short
period, the Bank did not enter into or have any contract
positions which have to be notified to the Bank and SEHK
regarding the management and administration of the
pursuant to the Model Code for Securities Transactions by
whole or any important business.
Directors of Listed Issuers as set out in Appendix 10 to the
Hong Kong Listing Rules.

Directors’ and Supervisors’ Interests in

Transactions, Agreements or Contracts
of Significance  During the reporting period, Connected Transactions
none of the Directors or Supervisors of the Bank had In 2021, the Bank carried out standardized management
any material interests, whether directly or indirectly, in of the Group’s connected transactions in strict accordance
any transaction, arrangement or contract of significance with the regulations of CBIRC and CSRC as well as
regarding the Bank’s business to which the Bank, its listing rules in Shanghai and Hong Kong, and had no
subsidiaries, its controlling shareholders or subsidiaries connected transaction to be submitted to the Board
of its controlling shareholders was a party. None of the of Directors or the Shareholders’ General Meeting for
Directors or Supervisors of the Bank have entered into any review. All connected transactions occurred complied
service contract with the Bank, which is not determinable with the disclosure exemptions under the Listing Rules of
by the Bank within one year without payment of the Shanghai Stock Exchange and the Hong Kong Listing
compensation (other than statutory compensation). Rules. The disclosure exemptions abided by the provisions
of SSE for disclosure of connected transactions as well as
the provisions of SEHK for reporting and announcement of
Directors’ Interests in Competing connected transactions.
Business  None of the Bank’s Directors held any
During the reporting period, the Bank’s connected
interests in any business competes or competed or is or
transactions under the rules of CBIRC mainly included
was likely to compete, either directly or indirectly, with the
inter-bank lending, bond repurchase, bond investment,
Bank.
loans, deposits and financial market derivative transactions
etc., with a total amount of RMB1,430,056 million
accumulatively.
Directors’ and Supervisors’ Rights to
Acquire Shares or Debentures  None of Please refer to “Note 47. to the Consolidated Financial
the Bank, its subsidiaries, its controlling shareholders or Statements: Related Party Disclosures” for details of
subsidiaries of its controlling shareholders entered into the related party transactions defined under the laws,
any agreement or arrangement enabling the Directors and regulations and accounting standards of China.
Supervisors to acquire benefits by means of the acquisition
of shares in or debentures of the Bank or any other body
corporate. Participation in Investing in National
Financing Guarantee Fund Co., Ltd.  In
July 2018, the Bank signed the Promoter’s Agreement
Interests in Shares, Underlying Shares, of the National Financing Guarantee Fund Co., Ltd.
and Debentures Held by Directors In October 2018, upon the approval of CBIRC, the
and Supervisors  As at 31 December 2021, Bank planned to contribute RMB3.0 billion to National
none of the Directors or Supervisors of the Bank had Financing Guarantee Fund Co., Ltd., which shall be paid by
any interests or short positions in the shares, underlying instalments. In May 2021, the Bank completed the entire
shares or debentures of the Bank or any of its associated contribution. For details on the investment, please refer to
corporations (as defined in Part XV of the Securities and the announcements published by the Bank on the website
Futures Ordinance of Hong Kong) which have to be of SSE, the “HKEXnews” website of HKEX and the website
notified to the Bank and SEHK under Divisions 7 and 8 of of the Bank.

Annual Report 2021

131
Report of the Board of Directors

Participation in Investing in National Remuneration Policy for Directors,

Green Development Fund Co, Ltd.  In Supervisors and Senior
July 2020, the Bank signed the Promoter’s Agreement of Management  The Bank has clearly documented
the National Green Development Fund Co, Ltd. In April the remuneration policy for Directors, Supervisors and
2021, upon the approval of CBIRC, the Bank planned to Senior Management members, and has continuously
contribute RMB8.0 billion to National Green Development improved its performance assessment system and incentive
Fund Co, Ltd., which shall be paid by instalments. In May restriction mechanism. From the perspectives of economic
2021, the Bank completed the first contribution of RMB0.8 benefit, prevention and control of financial risks and
billion. For details on the investment, please refer to the support for the real economy and social responsibilities,
announcements published by the Bank on the website of the Bank adopted a system composed of the Bank’s
SSE, the “HKEXnews” website of HKEX and the website of overall operation and management based indicators for
the Bank. the Management and duties allocation based indicators
for individuals. The remuneration to the Chairman of
the Board of Directors, the President, the Chairman
Liability Insurance of Directors, of the Board of Supervisors and other executives of
Supervisors and Senior Management the Bank has followed the State’s policies relating
Members  Pursuant to the Articles of Association to the remuneration reform on executives of central
of the Bank, where conditions permit, the Bank may enterprises, which consists of basic annual remuneration,
establish the professional liability insurance system of performance-based remuneration and incentive income
Directors, Supervisors and Senior Management members linked to term appraisal. The remuneration to other Senior
upon approval of the Shareholders’ General Meeting. Management members and Shareholder Supervisors
The Bank will use its own assets to compensate each consists of basic annual remuneration and performance-
Director, Supervisor and Senior Management member for based remuneration, and part of performance-based
any liability arising during their performance period to the remuneration is paid in a deferred manner. The Bank has
maximum extent permitted by laws and administrative contributed to statutory retirement programs organized by
regulations or within the scope not prohibited by laws and Chinese governmental organizations at different levels for
administrative regulations, unless the Directors, Supervisors Directors, Supervisors and Senior Management members
and Senior Management members are otherwise proved concurrently as the employees of the Bank. Upon obtaining
to have failed to act honestly or in good faith during their all applicable approvals, the Bank will implement a long-
duty performance. During the reporting period, the Bank term incentive program. As at 31 December 2021, the
purchased liability insurance for Directors, Supervisors and Bank had not granted any share appreciation rights to
Senior Management members. any Director, Supervisor, Senior Management member, or
other core business personnel designated by the Board of
Directors.
Relations among Directors, Supervisors
and Senior Management  Directors, Supervisors
and Senior Management members of the Bank are not
related to one another with respect to finance, business,
Members of the Board of Directors
family, or other material relationships which are required to As at the disclosure date of the results, the composition of
be disclosed. the Board of Directors of the Bank is as follows:

Executive Directors: Mr. Chen Siqing, Mr. Liao Lin,

Mr. Zheng Guoyu and Mr. Wang Jingwu;

Non-executive Directors: Mr. Lu Yongzhen,

Mr. Feng Weidong, Ms. Cao Liqun, Ms. Chen Yifang and
Mr. Dong Yang;

Independent Non-executive Directors:

Mr. Anthony Francis Neoh, Mr. Yang Siu Shun,
Mr. Shen Si, Mr. Nout Wellink and Mr. Fred Zuliu Hu.

Industrial and Commercial Bank of China Limited

Board of Directors

132
Report of the Board of Supervisors

Work of the Board of Supervisors six key areas”, facilitated the inclusive finance and green
finance development, prevented and defused financial
During the reporting period, the Board of Supervisors, risks, and handled information disclosure. It ensured the
pursuant to relevant laws and regulations, regulatory Bank could well-perform the political, social and economic
requirements and the Articles of Association, performed responsibilities as a large state-owned bank.
supervision duties earnestly. Relying on a variety of
Financial supervision. The Board of Supervisors
methods such as onsite surveying and offsite monitoring,
supervised the Bank’s financial activities as well as
it carried out supervision of duty performance and due
decisions on and implementation of material financial
diligence, financial activities, risk management and internal
issues. It paid close attention to the major accounting
control, etc. in a down-to-earth way. With its important
issues, expected credit loss, financial approval issues, and
role in corporate governance exploited adequately, it
relevant accounting items of the Bank, kept alert to the
promoted the legal, compliant operation and development
impact of domestic and overseas pandemic situations
across the Bank.
on the Bank’s business operation, and conducted in-
Performance of the Board of Supervisors. In 2021, the depth analysis on the major factors affecting the Group’s
Board of Supervisors held nine meetings, considered 20 profitability. It carefully reviewed periodic reports, final
proposals including proposals on the 2020 work report accounts and profit distribution plan, learned about and
of the Board of Supervisors and assessment report on kept watchful eye on the external audit work, and oversaw
the duty performance, heard nine reports on the topics and evaluated the quality of external audit. It focused on
including the operation, development strategy planning the allocation of financial resources and the operation of
and the Group’s AML work, and reviewed 43 reports financial management mechanism to intensify supervision
including reports on the quarterly supervision and relevant constantly.
surveys of the Board of Supervisors in 2021. It issued
Risk supervision. The Board of Supervisors supervised
opinions in an objective and fair manner and appropriately
the effectiveness and soundness of the risk management
exercised voting rights. The members of the Board of
system and mechanism. It paid close attention to the risk
Supervisors diligently and faithfully fulfilled their duties,
management strategies, the formulation and transmission
attended three Shareholders’ General Meetings, and
of risk appetite, and improvement and implementation of
attended nine meetings of the Board of Directors and 36
risk management policies and procedures. It supervised
meetings of special committees as non-voting attendees.
capital management, consolidated management, stress
They input adequate time and effort in supervisory
testing management and regulatory indicators, and
inspections, attached equal importance to theoretical
tracked changes in major risks such as credit risk, market
learning and experience summary from practice, with an
risk and liquidity risk. It concerned about the impact
aim to further build up their duty performance ability.
of continued spreading of pandemic on the domestic
External supervisors of the Bank worked for more than
economy and finance as well as relevant risk prevention
15 working days in the Bank, complying with the relevant
and control measures taken by the Bank, and strengthened
requirements.
the supervision of key regions, key institutions and key
Supervision on the performance of duties. The Board businesses, to analyze and expose the potential risks and
of Supervisors supervised the Board of Directors, Senior hazards as early as possible.
Management and their members on their compliance
Supervision on internal control. The Board of
with the laws and regulations, the Articles of Association
Supervisors supervised the effectiveness of the internal
of the Bank, and the implementation of the resolutions
control system, the performance of internal control duties
of the Shareholders’ General Meeting and the Board
and the business compliance with laws and regulations.
of Directors and the regulatory opinions. It paid close
It paid close attention to the operation of internal control
attention to how the Board of Directors and the Senior
mechanism, policy system building, implementation of
Management implemented the economic and financial
regulatory opinions, remediation of inspection findings,
policies of the state and regulatory requirements,
management of material risk events and accountability
served the implementation of major national strategies,
for operating losses, among other aspects. The Board
responded to the COVID-19 pandemic, supported the
of Supervisors effectively supervised key institutions and
real economy, promoted the key tasks of “ensuring
business areas, paid continuous attention to internal
stability on six key fronts” and “maintaining security in
control in case prevention management, AML, information

Annual Report 2021

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Report of the Board of Supervisors

technology and other aspects, and gave full play to the Connected Transactions  During the reporting period,
supervision efficiency to effectively improve the Group’s the connected transactions of the Bank were conducted
internal control compliance management. on normal commercial terms. The Board of Supervisors
did not find any circumstance that infringed upon the
interests of the Bank. The approval, voting, disclosure
Independent Opinions of the Board of and implementation of connected transactions complied
Supervisors on Relevant Issues with applicable laws and regulations and the Articles of
Association of the Bank.
Compliant Operation During the reporting period,
the Board of Directors and the Senior Management Implementation of Resolutions Passed at the
of the Bank continued to operate in compliance with Shareholders’ General Meeting  During the reporting
applicable laws and regulations, and the decision-making period, the Board of Supervisors had no objection to the
procedures complied with applicable laws and regulations reports or proposals presented by the Board of Directors to
and the Articles of Association of the Bank. Members the Shareholders’ General Meeting for consideration. The
of the Board of Directors and the Senior Management Board of Directors earnestly implemented the resolutions
diligently and faithfully performed their duties, and the approved at the Shareholders’ General Meetings.
Board of Supervisors did not find any violation of laws Review of the Internal Control Assessment
and regulations, or any circumstance that contravened the Report  The Board of Supervisors reviewed the 2021
interests of the Bank in their performance of duties during Internal Control Assessment Report of the Bank and had
the reporting period. no objection to the report.
Preparation of Annual Report Preparation and Implementation of Information Disclosure
review procedures of the Bank’s Annual Report were in Rules  During the reporting period, the Bank performed
compliance with laws, regulations and regulatory rules. its duty of information disclosure in compliance with the
Contents of this report reflected the actual conditions of regulatory requirements, implemented the information
the Bank truly, accurately and completely. disclosure management rules in earnest, and disclosed
Use of Proceeds from Fundraising Activities During information in a timely and fair manner. Information
the reporting period, the use of proceeds from the Bank’s disclosed was authentic, accurate and complete.
fundraising activities was consistent with the purpose Save as disclosed above, the Board of Supervisors had no
stated in the prospectuses. objection to any other matters during the reporting period.
Purchase and Sale of Assets  During the reporting
period, the Board of Supervisors did not find any insider
trading or any circumstance that contravened the
shareholders’ interests or caused the loss of the Bank’s
assets in the process of the Bank’s purchase or sale of
assets.

134
Environmental and Social Responsibilities

Fulfillment of Environmental and of domestic loans granted to such green fields as energy
Corporate Social Responsibilities saving and environmental protection, clean production,
clean energy, ecological environment, green upgrade of
During the reporting period, being fully committed to infrastructures and green services, representing an increase
the strategic plan of carbon peak and carbon neutrality, of RMB634,902 million over the end of the previous year.
the Bank established and improved the green financial In 2021, green projects supported by the Bank’s green
development system, issued the Work Plan of Industrial loans converted into savings of 47,381.3 thousand tons of
and Commercial Bank of China Limited for Carbon Peak standard coal, a reduction of 98,846.9 thousand tons in
and Carbon Neutrality (Trial), and set up the Steering carbon dioxide emissions.
Group for Carbon Peak and Carbon Neutrality to carry
The Bank was actively engaged in the issuance,
out the systematic planning and overall deployment of
underwriting and investment of green bonds, and provided
the Bank’s carbon neutrality efforts. Leveraging on the
green financial support for the key areas of ecological
investment and financing toolkit of “loan, bond, stock,
civilization development, such as ecological protection
agency, lease and consultant”, the Bank promoted
and clean energy. In 2021, it completed the issuance of
investment and financing restructuring across all regions,
67 green bonds of various categories as lead underwriter,
increased financial support for green technology, and
and assisted other issuers in raising funds of RMB140,130
made every effort to drive innovation in financial products
million with a lead underwriting scale of RMB63,637
and services. Progress was made in approaching the
million, including 24 carbon-neutral bonds with a lead
national carbon emissions trading market by offering it
underwriting scale of RMB24,909 million which ranked
comprehensive financial services. ICBC Credit Suisse, one
No.1 in the market. In 2021, the total amount of offshore
of the Bank’s subsidiaries, launched an ESG-themed ETF
green bonds issued by the Bank reached USD13.06 billion,
that was the first one of the kind approved in the industry,
with 11 international awards received by the Bank.
and ICBC Wealth Management released the first ESG-
themed net worth-based wealth management product in The Bank made sustained efforts to scale up lending to
the industry. The Bank actively supported the innovation- new energy, resource recycling, advanced manufacturing
driven development of the national pilot zone for green and other areas of transformation and upgrading, with
finance reform and innovation, and further strengthened a focus on providing financing support to small and
the environmental and social risk prevention and control. micro enterprises in green and low-carbon industries.
It also launched the “ICBC ESG” column on its official Taking into account the new types of financing needs
website, through which the 2021 interim ESG special arising from the low-carbon transformation of small and
report was released for the first time globally. Moreover, micro enterprise customers, the Bank actively developed
further progress was made in exchange, cooperation and supporting products to promote innovation of small and
prospective studies on green finance. micro financing products. It remained committed to the
development approach of “digital inclusive finance”,
accelerated the digital transformation of traditional
Green Finance credit products for small and micro enterprises, and
progressively guided and promoted the digital and low-
The Bank continuously refined the green finance policy
carbon transformation of production and operation of
system, intensified the implementation of green finance
micro and small enterprises. By actively taking advantage of
planning, and strengthened the policy guidance of
innovative financial instruments such as digital credit note,
differentiated investment and financing to positively
it worked to increase the supply of funds and support for
advance the green adjustment of investment and
small and micro enterprises in green industry chains such as
financing structure. As part of its efforts to intensify the
clean energy, pollution control and resource recycling.
management of environment (climate) and social risks, the
Bank fully implemented the green-classified management
of investment and financing business, actively advanced Green Office
systematic control over environment (climate) and social
risks of investment and financing, and took the initiative to The Bank made steady progress in promoting carbon
conduct the climate risks studies. As at the end of 2021, footprint management. It established an information
the Bank recorded a balance of RMB2,480,621 million statistics and analysis system for carbon footprint

Annual Report 2021

135
Environmental and Social Responsibilities

management in its operation, made use of information For details of the Bank’s fulfillment of corporate social
technology to collect, analyze and summarize historical responsibilities, please refer to the 2021 Corporate Social
carbon emission data, and provided strong support for Responsibility (ESG) Report of Industrial and Commercial
continuous digital carbon emission management. On the Bank of China Limited published by the Bank on the
basis of the pilot carbon emission inventory conducted website of SSE, the “HKEXnews” website of HKEX and the
by the Head Office, Beijing Branch and Hunan Branch, website of the Bank.
the Bank launched the relevant work to find out the real
Scan for access to the 2021 Corporate Social Responsibility
carbon emissions data in the past five years. According to
(ESG) Report of Industrial and Commercial Bank of China
the total amount and structure of carbon emissions in the
Limited
past, the Bank studied and developed the implementation
roadmap for carbon neutrality in its operation as well as
the energy saving and emission reduction pathway, and
gradually advanced the carbon neutrality in its operation.

Remarkable results were achieved in green office. The Bank

implemented independent and controllable localization of
office platform, optimized the system functions of official
document processing and business trip reimbursement,
integrated and upgraded mobile office functions, with the
daily active users of mobile office increasing by more than
50% year-on-year. Consolidation of Achievements in
Poverty Alleviation and Services for
Rural Revitalization
International Exchange and Cooperation
The Bank fully implemented the national strategic plans for
The Bank conducted in-depth researches on topics such as rural revitalization, and resolutely followed the regulatory
low-carbon transformation of commercial banks, financial requirements of financial services for rural revitalization. To
support for carbon market development, and business “address the country’s needs, give full play to finance and
promotion of pilot zones for green finance reform and tap into ICBC strengths”, the Bank put in place the urban-
innovation, explored quantitative assessment methods rural collaborative development strategy and made all-
for corporate green development, and established an round efforts to consolidate and expand the achievements
assessment mechanism of green finance development made in poverty alleviation in coordination with the
under the framework of Paris Agreement. It also updated extensive drive for rural vitalization.
and published the 2021 edition of the Belt and Road Green The urban-rural collaborative development strategy was
Finance (Investment) Indexes Report, launched China’s put in place. The Bank established the “Steering Group
first industry standard for environmental information for Financial Services for Rural Revitalization” headed
disclosure by financial institutions, and developed the by the chairman of the Bank and the “Committee for
CERAT online instrument for environmental risk analysis Promoting Financial Services for Rural Revitalization”
to help enterprises and financial institutions quantify with the president of the Bank serving as the director.
the environmental risks of overseas projects. It actively Leveraging the advantages in urban finance, technological
participated in the global financial governance of the development and integrated services, the Bank
Task Force on Climate-Related Financial Disclosures, formulated and implemented the urban-rural collaborative
and spared no efforts to push forward climate change development strategy, released the Action Plan for
response and “dual carbon” work through international Financial Support to Rural Revitalization, and introduced
platforms such as United Nations Environment Programme 15 action measures. It also launched a uniform brand
Finance Initiative (UNEP FI), Global Investors for Sustainable of financial services for rural revitalization — “ICBC
Development Alliance (GISD), Green Investment Principles Xingnongtong” to strengthen the urban-rural collaborative
(GIP) for the Belt and Road, and the Belt and Road Inter- financial services to rural areas featuring urban areas
bank Regular Cooperation Mechanism (BRBR). helping rural areas and urban-rural complementarity and
boost the comprehensive extension of industrial chain,
supply chain and capital chain from urban to rural areas.

136
 Environmental and Social Responsibilities

A rural financial service system was built and relevant Innovation was made in rural revitalization product.
systems and mechanisms were further refined. The Bank Nearly 100 credit and non-credit products and services
established a specialized institution of Rural Vitalization were launched to form a product and service system
Office which was designed to coordinate financial services with ICBC characteristics, covering rural industry, rural
for rural revitalization, and set up the specialized line of development, inclusive finance, farmer services, GBC
financial services for rural revitalization. With all these interaction and technology empowerment. It made
efforts, the Bank was committed to building an all- breakthrough in launching an online agriculture-related
round rural financial service system covering agriculture, inclusive loan product, i.e., “ICBC Prosperous Agriculture
rural areas and farmers, offering rural customer groups Loan”, and cooperated with the Ministry of Agriculture
with meticulous, warm and convenient customer and Rural Affairs to carry out various activities such as
experience, and delivering readily available, intelligent and the “agricultural matchmaking” activity and the “serving
wholehearted financial services to boost prosperity in rural thousands of villages and accompanying ten thousands
areas, rural industries and livelihood of rural residents. of households” campaign. It also launched a series of
training for rural customers on “practical skills for poverty
Achievements made in poverty alleviation were
alleviation of Jinyang”, and promoted the brand of
consolidated and expanded. The Bank continued to provide
“ICBC Training for Rural Revitalization”, with the aim to
all kinds of support for poverty alleviation with financial
create an integrated rural revitalization service with ICBC
services, optimized micro loan products for poverty
characteristics that combined financing, consulting and
alleviation, and strongly supported the financing needs
commercial services.
of key counties for national rural revitalization assistance.
Furthermore, the Bank launched the specialized rural As at the end of 2021, the Bank’s balance of agriculture-
revitalization recruitment of “ICBC Stars · Supporting Rural related loans exceeded RMB2.6 trillion, an increase of over
Residents and Enabling Dreams”, targeting at college RMB400.0 billion from the beginning of the year. The
students from families that have shaken off poverty, people balance of loans placed at areas that have been lifted out
involved in “three supports and one assistance” and of poverty was RMB782.0 billion, up over RMB100 billion
other key targeted groups and areas of national poverty from the beginning of the year. The balance of loans in
alleviation efforts as well as groups providing support for granted for key poverty assistance counties exceeded
agriculture, rural areas and farmers. RMB100.0 billion, an increase higher than the average of
the Bank’s loans.
Targeted assistance for poverty alleviation was continuously
improved to help the targeted regions realize rural
revitalization. The Bank formulated and released the Work
Consumer Protection
Plan on Targeted Poverty Alleviation for 2021, established
a “Three-to-One” paired assistance mechanism, and The Bank conscientiously implemented the laws,
organized 12 branches to pair up with targeted assistance regulations and regulatory requirements regarding
counties to help attract investment and high-caliber consumer protection, took various measures to
professionals. It insisted on promoting poverty assistance improve the consumer protection governance system,
through healthcare and education, business development, and comprehensively enhance its ability to protect
and consumption growth, in a way to help the invigoration the legitimate rights and interests of consumers. It
of high-caliber talents. strengthened the guidance and coordination of the
Service was further delivered in lower-tier market. The consumer protection work of the Board of Directors,
Bank developed an online-offline integrated rural services the Board of Supervisors and the Senior Management,
delivery system highlighting online, streamlined and and continuously consolidated the management
efficient operation. In terms of offline channels, relying groundwork of corporate governance. It incorporated
on rural service sites for inclusive finance, it built a light- the risks of consumer protection into a comprehensive
asset and flexible ICBC messenger operation and service risk management system, refined the key rules and
model to effectively fill the gap of rural financial services. In regulations for consumer protection, and continuously
terms of online channels, the Bank built a comprehensive improved the systematization and standardization of
service platform — ICBC “Xingnongtong” APP, effectively consumer protection. Moreover, it optimized the system
realizing the service downward penetration of “one-point functions of financial information protection and sales of
access, borderless rural revitalization”. financial products, and enhanced the level of intelligent
management and control of consumer protection risks

Annual Report 2021

137
Environmental and Social Responsibilities

in a targeted manner. The Bank also strengthened the The Bank widely rolled out the series of “Chunxun Action”
management of third-party cooperation agencies and training (“Spring Training Action”) for consumer protection
continuously improved the level of compliance operations. to promote more effective implementation of the laws,
By creating the “ICBC with You” elderly customer regulations and regulatory requirements of consumer
service brand, it worked to make the elderly customers protection in key areas such as personal banking, credit
more satisfied and happier with financial service and cards and Internet finance. Ongoing efforts were made
to contribute to the effective implementation of the to strengthen special training, where corresponding
national strategy of responding to population aging. It training content and focus of consumer protection were
also continued to conduct reviews and risk warning on set in accordance with the management level, profession
policies, procedures, financial products and services related and job responsibilities of the targeted groups, in a bid
to consumer protection, actively protected consumer rights to constantly improve the accuracy and effectiveness of
and enhanced consumer experience. training.

The Bank highly valued the integration of online and Adhering to putting the customer first, the Bank took
offline efforts, launching consumer protection promotion special measures to tackle the pain points of customer
activities such as “March 15th Consumer Protection experience, carried out “I do practical things for the
Publicity Week”, “Financial Knowledge Publicity Month, public” service improvement campaign, and implemented
Household Financial Knowledge, Be a Rational Investor root-cause rectification in terms of rules and regulations
and a Good Financial Internet User “, “Spreading Financial formulation, products improvement, processes
Knowledge, Protecting Your Pocket” and “Publicizing optimization and systems refinement to continuously
Financial Knowledge to Walk Ten Thousand Miles”, improve the quality of financial services. The Bank also
where the efforts were especially directed at key contents established a customer complaint management system
and special groups with an aim to continuously enhance that is more compatible with customer demands and
consumers’ financial literacy and risk prevention capability. regulatory requirements, and strengthened the full-
The Bank designed itself a uniform consumer protection chain management covering monitoring and early
logo, established a library of consumer protection materials warning, standardized processing, and supervision and
and gave full play to its advantages in channels, brands implementation. In 2021, the Bank further broadened its
and talented staff. It also made sustained efforts to complaint acceptance channels and optimized the relevant
enhance the standardization, quality and efficiency of process, as part of its effort to listen more to customers’
consumer protection promotion endeavors, in an effort to voices and respond to and resolve customer appeals in
build a publicity brand with the Bank’s own characteristics. a more comprehensive way, with customer satisfaction
reaching 86.8%.

138
Significant Events

Material Lawsuits or Arbitration Please refer to “Note 47. to the Consolidated Financial
Cases  During the reporting period, the Bank incurred Statements: Related Party Disclosures” for details of
no material lawsuits or arbitration cases. It was involved the related party transactions defined under the laws
in several legal disputes in its ordinary course of business. and regulations of China and the relevant accounting
Most of these cases were initiated by the Bank to recover standards.
non-performing loans, while some were related to disputes
with clients. As at 31 December 2021, the amount of
Material Contracts and Performance of
cases pending judgements or arbitrations awards in which
Obligations thereunder
the Bank and/or its subsidiaries are defendants totaled
RMB6,165 million, and the Bank does not expect any Material Trust, Sub-contract and
material adverse effect from the above-mentioned cases on Lease  During the reporting period, the Bank had not
the Bank’s business, financial position or operating results. held on trust to a material extent or entered into any
material sub-contract or lease arrangement in respect
of assets of other corporations, which were subject to
Material Assets Acquisition, Sale and disclosure, and no other corporation had held on trust to
a material extent or entered into any material sub-contract
Merger  During the reporting period, the Bank had no
or lease arrangement in respect of the Bank’s assets, which
material assets acquisition, sale and merger.
were subject to disclosure.

Credit Standing  During the reporting period,

Material Guarantees  The provision of guarantees
neither the Bank nor its controlling shareholders had is in the ordinary course of business of the Bank. During
ever failed to fulfil obligations provided in effective legal the reporting period, the Bank did not have any material
documents issued by court for material lawsuits, nor had guarantee that needs to be disclosed except for the
there been any outstanding debt of significant amount. financial guarantee services within the business scope as
approved by PBC and the CBIRC.

Implementation of Share Incentive Plan

and Employee Stock Ownership Plan Other Material Contracts  During the reporting
during the Reporting Period  During the period, the Bank did not have any other material contracts
reporting period, the Bank did not implement any share which were subject to disclosure.
incentive plan or any employee stock ownership plan.

External Guarantees During the reporting

Key Audit Matters The Audit Committee period, the Bank did not enter any guarantee contract
has reviewed the key audit matters in the audit report against the resolution procedures for external guarantees
and concluded that it is unnecessary to provide a that are prescribed by laws, administrative regulations or
supplementary explanation. CSRC.

Material Related Party Transactions Occupation of Fund by Controlling

Shareholders and Other Related
During the reporting period, the Bank did not enter into Parties  During the reporting period, none of the
any material related party transactions. controlling shareholders and other related parties of the
Bank occupied any fund of the Bank. The auditors have
issued the Special Explanation on the Occupation of Fund
by Controlling Shareholders and Other Related Parties of
Industrial and Commercial Bank of China Limited in 2021.

Annual Report 2021

139
Significant Events

Commitments
As at 31 December 2021, all of the continuing commitments made by the shareholders were properly fulfilled, and were
listed as follows:

Legal document
under which the
Type of Time and term of commitment is Fulfillment of
Shareholder commitment commitment made Commitment commitment
Huijin Commitment of October 2006/ Prospectus of Provided that Huijin continues to hold As at 31
non-competition No specific term Industrial and any share of the Bank or is deemed as December 2021,
Commercial Bank the controlling shareholder of the Bank Huijin strictly
of China Limited or the related party of the controlling fulfilled the above
on Initial Public shareholder of the Bank according to commitment
Offering (A Share) the laws or listing rules of China or and did not
November 2010/ Prospectus on A the listing place of the Bank, Huijin do anything in
No specific term Share Rights Issue will not engage in or participate in any violation of the
of Industrial and competitive commercial banking business commitment.
Commercial Bank including but not limited to granting
of China Limited loans, attracting deposits and providing
settlement, fund custody, bank card
and money exchange services. However,
Huijin can engage in or participate in
some competitive businesses by investing
in other commercial banks. In this regard,
Huijin has committed that it will: (1)
fairly treat the investments in commercial
banks and will not make any decision or
judgment that will have adverse impact
on the Bank or be beneficial to other
commercial banks by taking advantage
of the status of being a shareholder of
the Bank or information obtained by
taking advantage of the status of being a
shareholder of the Bank; and (2) perform
the shareholders’ rights for the maximum
interests of the Bank.
SSF Commitment of Taking effect from Simplified Report of According to the Notice of the State As at 31
performing the December 2019/ Changes in Equity of Council on Issuing the Implementation December 2021,
obligation of Above three years National Council for Plan for Transferring Part of State-Owned SSF strictly
lock-up period Social Security Fund Capital to Fortify Social Security Funds fulfilled the above
for A shares (Guo Fa [2017] No. 49), SSF shall perform commitment
the obligation of more than 3-year lock- and did not
up period as of the date of the receipt of do anything in
transferred shares. violation of the
commitment.

Disciplinary Actions  During the reporting period, the Bank was not subject to any case filing investigation for
suspected crime, nor was any of its controlling shareholders, Directors, Supervisors and Senior Management members
subject to coercive measures for suspected crime; neither the Bank nor its controlling shareholders, Directors, Supervisors
and Senior Management members were subject to any criminal penalty or any case filing investigation by CSRC for
suspected illegality or irregularity or administrative penalty by CSRC or material administrative penalty by other competent
authority; none of its controlling shareholders, Directors, Supervisors and Senior Management members was held in
retention by the disciplinary inspection and supervision organ because of suspected serious illegality or irregularity or
work-related crime, which affected their duty performance; none of its Directors, Supervisors and Senior Management
members was subject to coercive measures taken by other competent authority for suspected illegality or irregularity, which
affected their duty performance; neither the Bank nor any of its controlling shareholders, Directors, Supervisors and Senior
Management members was subject to any administrative or regulatory measures taken by CSRC or disciplinary sanction
imposed by stock exchanges.

140
 Shareholders’
General Meeting
Board of Supervisors Supervisory Board Office
Board of Directors

Board of Directors’
Office Corporate Social
Strategy Responsibility and Consumer
Committee
Protection Committee
Risk Nomination
Management Financial Technology and
Committee Committee Asset & Liability Risk Management Personal Banking Consumer Protection
Management Committee Committee
Digital Development
Promotion Committee Committee Committee
Compensation Related Party
Transactions Control
Committee Committee Senior Management

Audit Committee US Risk Committee Corporate & Inclusive Finance and

Financial Assets Service Institutional Banking
Investment Banking Rural Revitalization
Management Committee Promotion Committee Promotion Committee Promotion Committee
Organizational Chart

Internal Audit
Internal Audit Bureau
Sub-bureau

Internal departments and directly managed

institutions of the Head Office Domestic Institutions Overseas Institutions

Operation
Risk Management Global Market Private Banking
Executive Office Management
Department Department Department Tier-one Branches Overseas Branches
Department
(including Directly Managed Branches) and their Institutions
Corporate Internal Control & Information (36) (54)
Asset Management Changchun Institute
Banking Compliance Management Overseas Subsidiaries
Department of Financial Managers Banking Departments of Tier-one
Department Department Department Domestic Branches and their Institutions
Branches and Tier-two Branches (459)
Legal Affairs Corporate (367)
Personal Banking Asset Custody Hangzhou Institute
Department (Consumer Culture Grassroots Branches
Department Department of Financial Managers
Protection Office) Department (15,508)
Party-related
Institutional Banking Finance & Accounting Investment Banking Business Research &
Affairs
Department Department Department Development Center
Department
Inclusive Finance Special Financing
Human Resources Modern Finance Software
Department (Rural Department
Department Research Institute Development Center ICBC Leasing
Revitalization Office) (Banking Department)
Domestic Subsidiaries
Settlement & Cash Asset & Liability and their Branches
Inspection Office of Pension Business ICBC Credit Suisse
Management Management Data Center Asset Management
Department the Party Committee Department
Department
Corporate Strategy and ICBC-AXA
Internet Finance Bank Card Department
Investor Relations Security Department
Department (ICBC Peony Card Center)
Department
Credit and Investment International ICBC Investment
Retired Staff Precious Metal
Management Banking Service and Management
Department Business Department
Department Department
ICBC Wealth Management
Credit Approval Financial Technology Staff Union Working ICBC Bills Discounting
Department Department Committee Department
Rural Banks

Annual Report 2021

Primary reporting line Secondary reporting line

141
Auditor’s Report and
Financial Statements
CONTENTS

Pages Pages
INDEPENDENT AUDITOR’S REPORT 144   27. Property and Equipment 208
AUDITED FINANCIAL STATEMENTS   28. Deferred Tax Assets and Liabilities 209
 Consolidated:   29. Other Assets 211
   Statement of Profit or Loss 153   30. Financial Liabilities Designated as at
   Statement of Profit or Loss and   Fair Value Through Profit or Loss 213
   Other Comprehensive Income 154   31. Due to Banks and Other Financial
   Statement of Financial Position 155  Institutions 213
   Statement of Changes in Equity 157   32. Repurchase Agreements 214
   Statement of Cash Flows 159   33. Certificates of Deposit 214
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS   34. Due to Customers 214
  1. Corporate Information 161   35. Debt Securities Issued 214
  2. Basis of Preparation 161   36. Other Liabilities 217
  3. Application of the New and   37. Share Capital 217
  Amendments to IFRSs 162   38. Other Equity Instruments 218
  4. Summary of Significant Accounting Policies 164   39. Reserves 223
  5. Significant Accounting Judgements and   40. Other Comprehensive Income 224
 Estimates 183   41. Cash and Cash Equivalents 225
  6. Net Interest Income 184   42. Interests in Structured Entities 226
  7. Net Fee and Commission Income 185   43. Transferred Financial Assets 227
  8. Net Trading Income 185   44. Assets Pledged as Security 228
  9. Net Gains on Financial Investments 185   45. Share Appreciation Rights Plan 228
  10. Other Operating Income, Net 186   46. Commitments and Contingent Liabilities 229
  11. Operating Expenses 186   47. Related Party Disclosures 231
  12. Directors’ and Supervisors’ Remuneration 187   48. Segment Information 237
  13. Five Highest Paid Individuals 191   49. Financial Risk Management 242
  14. Impairment Losses on Assets 191   50. Fair Value of Financial Instruments 266
  15. Income Tax Expense 192   51. Statement of Financial Position and
  16. Profit Attributable to Equity Holders   Statement of Changes in Equity
  of the Parent Company 192   of the Bank 273
  17. Dividends 193   52. Events After the Reporting Period 274
  18. Earnings Per Share 193   53. Comparative Amounts 274
  19. Cash and Balances with Central Banks 194   54. Approval of the Consolidated Financial
  20. Due From Banks and Other  Statements 274
  Financial Institutions 194 UNAUDITED SUPPLEMENTARY INFORMATION
  21. Derivative Financial Instruments 195   TO THE CONSOLIDATED FINANCIAL STATEMENTS 275
  22. Reverse Repurchase Agreements 198
  23. Loans and Advances to Customers 199
  24. Financial Investments 201
  25. Investments in Subsidiaries 205
  26. Investments in Associates and
  Joint Ventures 207

Annual Report 2021

143
Independent Auditor’s Report

To the Shareholders of Industrial and Commercial Bank of China Limited

(Incorporated in the People’s Republic of China with limited liability)

Opinion
We have audited the consolidated financial statements of Industrial and Commercial Bank of China Limited (the “Bank”)
and its subsidiaries (collectively referred to as the “Group”) set out on pages 153 to 274, which comprise the consolidated
statement of financial position as at 31 December 2021, the consolidated statement of profit or loss, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other
explanatory information.

In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at
31 December 2021, and of its consolidated financial performance and its consolidated cash flows for the year then ended
in accordance with International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards
Board (“IASB”) and have been properly prepared in compliance with the disclosure requirements of the Hong Kong
Companies Ordinance.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section
of our report. We are independent of the Group in accordance with the Code of Ethics for Professional Accountants issued
by International Ethics Standards Board for Accountants (“the Code”), and we have fulfilled our other ethical responsibilities
in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.

144
 Independent Auditor’s Report

Key audit matters (continued)

Key audit matter How our audit addressed the key audit matter
Expected credit loss allowance of loans and advances
to customers measured at amortised cost
The Group uses an expected credit loss (“ECL”) model Our audit procedures in respect of expected credit loss
to calculate the loss allowance for loans and advances to allowance of loans and advances to customers measured at
customers measured at amortised cost in accordance with amortised cost included the following:
IFRS 9.
(1) Design and operating effectiveness of key internal
As at 31 December 2021, the Group’s loans and controls
advances to customers measured at amortised cost was
• understood, assessed and tested the design
RMB20,174,699 million, and the related impairment
and operating effectiveness of key internal
provision was RMB603,764 million.
controls relating to approval, recording,
The management exercised significant judgements and monitoring and regular evaluation of internal
estimation in its assessment of ECL allowance of loans and credit risk ratings which are relevant inputs to
advances to customers measured at amortised cost. They the ECL model;
include the determination of staging of loans and advances
• understood, assessed and tested the design
to customers including determining whether the credit risk
and operating effectiveness of key internal
has increased significantly and credit impairment events
controls of ECL model, including the selection,
have occurred; the determination of key parameters used
approval, and application of ECL model
in the ECL model including probability of default (PD), loss
methodology, on-going model monitoring,
given default (LGD), exposure at default (EAD), discount
input of underlying data and parameters, and
rate, and forward-looking information for stage 1 and
loan staging based on customer asset quality,
2 corporate loans and advances, discounted bills and all
cash flow projection used in the discounted
personal loans and advances; the determination of key
cash flow method, and the review and
parameters used in discounted cash flow assessment in
approval of forward-looking information;
respect of stage 3 corporate loans and advances including
recoverable cash flows and discount rates. • understood, assessed and tested the
information technology system and design and
operating effectiveness of the related controls,
including general information technology
controls, data transmission between systems,
mapping of parameters of ECL model, and
system calculation of loss allowance.

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Independent Auditor’s Report

Key audit matters (continued)

Key audit matter How our audit addressed the key audit matter
Expected credit loss allowance of loans and advances
to customers measured at amortised cost (continued)
Due to the significance of allowance for impairment losses (2) ECL model
of loans and advances to customers measured at amortised
• assessed the reliability and appropriateness
cost and the associated ECL allowance and the significant
of the ECL model and the reasonableness of
judgements and estimation exercised by management in
key parameters used in the model, including:
estimating ECL, we identified this as a key audit matter.
PD, LGD, EAD, discount rate, forward-looking
Refer to Note 4 (10), Note 5, Note 14, Note 23, and Note adjustments, and evaluated the rationality of
49(a) to the consolidated financial statements for relevant the key management judgements on those key
disclosures. parameters;

• assessed the internal credit risk rating

benchmark used in the ECL model by reviewing
its periodic validation and monitoring report to
evaluate the reasonableness of the validation
approach, completeness of the validation
scope and accuracy of the validation, and
selected samples to verify the accuracy of
internal rating calculation;

• verified, on a sample basis, the accuracy of

ECL model data input such as loan agreement
amount, due date, interest rate, guarantee
method;

• assessed the reasonableness of the selection

and weighting of economic indicators, multiple
macro-economic scenarios, and other inputs
and assumptions used by management in the
forward-looking adjustments; assessed the
reasonableness of forecasted macro-economic
indicators and industry data by comparing to
available third party information, and reviewed
the sensitivity analysis of economic indicators;

• verified, on a sample basis, the calculation of

ECL model, and tested whether the model
reasonably reflected management’s modelling
methodology;

• performed back-testing, and verified the results

of the model using actual observable data, and
evaluated whether there was any indication of
management bias.

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Key audit matters (continued)

Key audit matter How our audit addressed the key audit matter
Expected credit loss allowance of loans and advances
to customers measured at amortised cost (continued)
(3) Risk based sample selection for credit review

• selected samples for credit review by focusing

on industries that are significantly affected
by fluctuations of economic cycle and policy
regulations, regions with high credit risk
exposure, and loans with other high-risk
characteristics such as non-performing loans,
overdue performing loans, rescheduled loans
and borrowers with negative publicity;

• analysed the borrower’s financial and non-

financial information, and other available
information, and evaluated the reasonableness
of management’s judgement on staging,
including whether credit risk has increased
significantly since initial recognition and
whether credit impairment events have
occurred by reviewing the credit files,
interviewing management, independently
searching for publicly available information and
exercising professional judgement;

• performed credit assessments on borrower’s

and guarantor’s financial information,
collateral valuation and other sources of
repayment for the selected stage 3 credit-
impaired corporate loans and advances, tested
the recalculation of impairment provision
based on the recoverable cash flows and
discount rates, and evaluated whether there
was any material misstatement.

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Key audit matters (continued)

Key audit matter How our audit addressed the key audit matter
Consolidation of structured entities
Structured entities mainly include wealth management Our audit procedures in respect of consolidation of
products, investment funds, trust plans, asset management structured entities included the following:
plans and asset-backed securities in which the Group has
Understood, assessed and tested the related design and
interests in them through their initiation, management or
operating effectiveness of the internal controls relating to
investment.
the consolidation of structured entities.
In determining whether the Group has control and
Selected samples to perform the following audit
therefore should consolidate a structured entity,
procedures:
management is required to consider the power it
possesses, its exposure to variable returns, and its ability • inspected agreements relating to the structured
to use its power to affect returns. The Group is required entity and understood the purpose of its set
to collectively consider the relevant facts and substance to up; assessed the power the Group has over the
assess whether it has control over the structured entity. structured entity according to the Group’s rights and
obligations under different transaction structures and
We identified the consolidation of structured entities as a
its involvement with the structured entity;
key audit matter because the amount involved is significant
and the evaluation on whether the Group has control • verified the analysis on the Group’s variable
over the structured entities requires significant accounting return which includes, but is not limited to, fixed
judgement. management fee and performance fees obtained
through acting as asset manager, as well as the
Refer to Note 4(2), Note 5 and Note 42 to the consolidated
returns obtained from holding an interest in a
financial statements for relevant disclosures.
structured entity, and providing liquidity support or
other support;

• analysed the scope of the Group’s decision-

making power over the structured entity, the level
of remuneration obtained from providing asset
management services, the risk of variable return
borne by holding other interests in the structured
entity and the substantive rights held by other
participants, checked the Group’s analysis on the
magnitude and variability of variable return, and
assessed whether the Group acts as principal or
agent in the structured transaction;

• assessed the management’s decision on the

consolidation of structured entities through carrying
out the above procedures.

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 Independent Auditor’s Report

Key audit matters (continued)

Key audit matter How our audit addressed the key audit matter
Fair value of financial instruments
The valuation of the Group’s financial instruments Our audit procedures in respect of fair value assessment of
measured at fair value is based on readily available market financial instruments included the following:
data or valuation models. For financial instruments without
Understood, assessed and tested the design and operating
readily available market data such as debt securities,
effectiveness of internal controls relating to the valuation
equities, over-the-counter derivative contracts and
of financial instruments, independent pricing validation,
structured deposits, fair values are measured based on
and valuation model validation and approval.
valuation techniques. The selection of valuation techniques
and significant unobservable input data requires significant Selected samples to perform the following audit
accounting judgement and estimation by management. procedures:

As at 31 December 2021, the Group’s financial • evaluated the fair value of level 1 financial
assets that were measured at fair value amounted to instruments by comparing the fair value with publicly
RMB3,198,887 million, representing 9.10% of total available market observable data;
assets; financial liabilities that were measured at fair value
• evaluated the appropriateness of the Group’s
amounted to RMB454,645 million, representing 1.43%
valuation techniques, inputs and assumptions for
of total liabilities. Level 3 financial assets and liabilities
level 2 and 3 financial instruments, and compared
with significant unobservable input data amounted to
the observable market data with publicly available
RMB153,164 million and RMB1,993 million respectively.
market data;
We identified fair value assessment of financial instruments
• assessed and verified the valuation techniques used
as a key audit matter because the amount involved is
in the valuation of complex financial instruments
significant and the valuation requires significant judgement
valuation, selected samples to perform independent
and estimation, and particularly for level 3 financial
valuation and compared the results with the Group’s
instruments due to the uncertainty arising from the use of
valuation.
unobservable input data.

Refer to Note 4(7), Note 5, Note 21, Note 22, Note 23,
Note 24, Note 30, and Note 50 to the consolidated
financial statements for relevant disclosures.

Annual Report 2021

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Independent Auditor’s Report

Key audit matters (continued)

Key audit matter How our audit addressed the key audit matter
IT systems and controls over financial reporting
As a large banking group, the Group’s IT systems are Our audit procedures in respect of IT systems and controls
complex. over financial reporting included the following:

To ensure the accuracy of financial reports, IT over • understood, assessed and tested the design and
financial reporting and its related general controls and operating effectiveness of key internal controls of the
automated controls are required to be designed and IT systems relevant to financial reporting;
operated effectively. The related general controls include
• understood, assessed and tested the design and
IT governance, controls over program development and
operating effectiveness of automated controls
changes, access to programs and data and IT operations.
relevant to significant accounts and assertions or risk
Automated controls include system calculations and data
of material misstatement, and such IT automated
logic relating to significant accounts, as well as interfaces
controls include accuracy of system calculation
between business management systems and accounting
logic and consistency of data transmission, covering
systems.
business in corporate banking, personal banking,
With the rapid increase in the volume of on-line and financial markets, as well as financial reporting
transactions of the Group, as well as the continuous process;
development and application of new technologies and
• understood, assessed and tested the design and
open banking that increased third party network access,
operating effectiveness of controls over cyber
the Group faces increasing challenges on cyber security
security management mechanism, the operational
and data protection that warrant close monitoring of their
security of key information infrastructure, data and
potential impact on financial reporting related IT systems.
customer information management, and system
We identified IT systems and controls over financial operation monitoring and emergency management.
reporting as a key audit matter because the Group’s
financial accounting and reporting systems are highly
reliant on complex IT systems and control processes,
and the IT systems are required to serve the Group’s
global customer base, handle large volumes of frequent
transactions, and continue to develop in response to
changing business needs.

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 Independent Auditor’s Report

Other information
The Directors are responsible for the other information. The other information comprises all the information included in the
annual report, other than the consolidated financial statements and our auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the consolidated financial statements

The Directors are responsible for the preparation of the consolidated financial statements that give a true and fair view in
accordance with IFRSs issued by IASB and the disclosure requirements of the Hong Kong Companies Ordinance, and for such
internal control as the Directors determine is necessary to enable the preparation of consolidated financial statements that
are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Directors are responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative
but to do so.

The Directors are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group’s financial
reporting process.

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion solely
to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person
for the contents of this report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations or the override of internal control.

Annual Report 2021

151
Independent Auditor’s Report

Auditor’s responsibilities for the audit of the consolidated financial statements (continued)
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s
internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the Directors.

• Conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue
as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the Audit Committee regarding, among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding
independence and communicate with them all relationships and other matters that may reasonably be thought to bear on
our independence and, where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the Audit Committee, we determine those matters that were of most significance in
the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Wu Wei Jun, David.

Deloitte Touche Tohmatsu

Certified Public Accountants
Hong Kong

30 March 2022

152
Consolidated Statement of Profit or Loss
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Notes 2021 2020

Interest income 6 1,162,218 1,092,521
Interest expense 6 (471,538) (445,756)
NET INTEREST INCOME 6 690,680 646,765
Fee and commission income 7 148,727 146,668
Fee and commission expense 7 (15,703) (15,453)
NET FEE AND COMMISSION INCOME 7 133,024 131,215
Net trading income 8 8,955 2,222
Net gains on financial investments 9 16,440 11,829
Other operating income, net 10 11,781 8,044
OPERATING INCOME 860,880 800,075
Operating expenses 11 (236,227) (206,585)
Impairment losses on assets 14 (202,623) (202,668)
OPERATING PROFIT 422,030 390,822
Share of results of associates and joint ventures 2,869 1,304
PROFIT BEFORE TAXATION 424,899 392,126
Income tax expense 15 (74,683) (74,441)
PROFIT FOR THE YEAR 350,216 317,685
Profit for the year attributable to:
  Equity holders of the parent company 348,338 315,906
  Non-controlling interests 1,878 1,779
PROFIT FOR THE YEAR 350,216 317,685
EARNINGS PER SHARE
  — Basic (RMB yuan) 18 0.95 0.86
  — Diluted (RMB yuan) 18 0.95 0.86

The accompanying notes form part of these consolidated financial statements.

Annual Report 2021

153
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Note 2021 2020

Profit for the year 350,216 317,685
Other comprehensive income (after tax, net): 40
  (a) Items that will not be reclassified to profit or loss:
   (i) Changes in fair value of equity instruments designated as at
     fair value through other comprehensive income (1,180) 1,289
   (ii) Other comprehensive income recognised under
     the equity method 15 (5)
  (iii) Other 28 8
  (b) Items that may be reclassified subsequently to profit or loss:
   (i) Changes in fair value of debt instruments measured at
     fair value through other comprehensive income 1,623 (3,042)
   (ii) Credit losses of debt instruments measured at fair value through
     other comprehensive income 1,827 1,051
   (iii) Reserve from cash flow hedging instruments 442 (253)
   (iv) Other comprehensive income recognised under the equity
     method 541 14
   (v) Foreign currency translation differences (12,353) (16,212)
  (vi) Other 885 1,311
Subtotal of other comprehensive income for the year (8,172) (15,839)
Total comprehensive income for the year 342,044 301,846
Total comprehensive income for the year attributable to:
  Equity holders of the parent company 340,089 300,536
  Non-controlling interests 1,955 1,310
342,044 301,846

The accompanying notes form part of these consolidated financial statements.

154
Consolidated Statement of Financial Position
As at 31 December 2021
(In RMB millions, unless otherwise stated)

Notes 31 December 2021 31 December 2020

ASSETS
Cash and balances with central banks 19 3,098,438 3,537,795
Due from banks and other financial institutions 20 827,150 1,081,897
Derivative financial assets 21 76,140 134,155
Reverse repurchase agreements 22 663,496 739,288
Loans and advances to customers 23 20,109,200 18,136,328
Financial investments 24 9,257,760 8,591,139
  — Financial investments measured at fair value through
     profit or loss 623,223 784,483
  — Financial investments measured at fair value through
     other comprehensive income 1,803,604 1,540,988
  — Financial investments measured at amortised cost 6,830,933 6,265,668
Investments in associates and joint ventures 26 61,782 41,206
Property and equipment 27 290,296 286,279
Deferred tax assets 28 79,259 67,713
Other assets 29 707,862 729,258
TOTAL ASSETS 35,171,383 33,345,058

The accompanying notes form part of these consolidated financial statements.

Annual Report 2021

155
Consolidated Statement of Financial Position
As at 31 December 2021
(In RMB millions, unless otherwise stated)

Notes 31 December 2021 31 December 2020

LIABILITIES
Due to central banks 39,723 54,974
Financial liabilities designated as at fair value through profit or loss 30 87,180 87,938
Derivative financial liabilities 21 71,337 140,973
Due to banks and other financial institutions 31 2,921,029 2,784,259
Repurchase agreements 32 365,943 293,434
Certificates of deposit 33 290,342 335,676
Due to customers 34 26,441,774 25,134,726
Income tax payable 92,443 89,785
Deferred tax liabilities 28 5,624 2,881
Debt securities issued 35 791,375 798,127
Other liabilities 36 789,355 712,770
TOTAL LIABILITIES 31,896,125 30,435,543
EQUITY
Equity attributable to equity holders of the parent company
  Share capital 37 356,407 356,407
  Other equity instruments 38 354,331 225,819
 Reserves 39 926,375 800,718
  Retained earnings 1,620,642 1,510,558
3,257,755 2,893,502
Non-controlling interests 17,503 16,013
TOTAL EQUITY 3,275,258 2,909,515
TOTAL EQUITY AND LIABILITIES 35,171,383 33,345,058

Chen Siqing Liao Lin Liu Yagan

Chairman Vice Chairman General Manager of
and President Finance and Accounting Department

The accompanying notes form part of these consolidated financial statements.

156
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Attributable to equity holders of the parent company

Reserves
Foreign
Other Investment currency Cash flow Non-
Share equity Capital Surplus General revaluation translation hedging Other Retained controlling Total
capital instruments reserve reserve reserve reserve reserve reserve reserves Subtotal earnings Total interests equity
Balance as at 1 January 2021 356,407 225,819 148,640 322,911 339,701 22,377 (27,882) (4,725) (304) 800,718 1,510,558 2,893,502 16,013 2,909,515
Profit for the year – – – – – – – – – – 348,338 348,338 1,878 350,216
Other comprehensive income – – – – – 1,917 (12,117) 482 1,469 (8,249) – (8,249) 77 (8,172)
Total comprehensive income – – – – – 1,917 (12,117) 482 1,469 (8,249) 348,338 340,089 1,955 342,044
Dividends — ordinary shares 2020 final
  (note 17) – – – – – – – – – – (94,804) (94,804) – (94,804)
Distributions to other equity instrument
holders (note 17) – – – – – – – – – – (9,607) (9,607) – (9,607)
Appropriation to surplus reserve (i) – – – 34,258 – – – – – 34,258 (34,258) – – –
Appropriation to general reserve (ii) – – – – 99,251 – – – – 99,251 (99,251) – – –
Capital injection by
  other equity instrument holders – 139,730 – – – – – – – – – 139,730 – 139,730
Capital reduction by
  other equity instrument holders – (11,218) 63 – – – – – – 63 – (11,155) – (11,155)
Dividends to non-controlling shareholders – – – – – – – – – – – – (465) (465)
Other comprehensive income
  transferred to retained earnings – – – – – 334 – – – 334 (334) – – –
Balance as at 31 December 2021 356,407 354,331 148,703 357,169 438,952 24,628 (39,999) (4,243) 1,165 926,375 1,620,642 3,257,755 17,503 3,275,258

(i) Includes the appropriation made by overseas branches and subsidiaries in the amounts of RMB56 million and RMB1,764
million, respectively.

(ii) Includes the appropriation made by overseas branches and subsidiaries in the amounts of RMB47 million and RMB1,746
million, respectively.

The accompanying notes form part of these consolidated financial statements.

Annual Report 2021

157
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Attributable to equity holders of the parent company

Reserves
Foreign
Other Investment currency Cash flow Non-
Share equity Capital Surplus General revaluation translation hedging Other Retained controlling Total
capital instruments reserve reserve reserve reserve reserve reserve reserves Subtotal earnings Total interests equity
Balance as at 1 January 2020 356,407 206,132 149,139 292,291 305,019 23,280 (18,568) (4,453) (1,597) 745,111 1,368,536 2,676,186 15,817 2,692,003
Profit for the year – – – – – – – – – – 315,906 315,906 1,779 317,685
Other comprehensive income – – – – – (672) (15,753) (272) 1,327 (15,370) – (15,370) (469) (15,839)
Total comprehensive income – – – – – (672) (15,753) (272) 1,327 (15,370) 315,906 300,536 1,310 301,846
Dividends — ordinary shares 2019 final
  (note 17) – – – – – – – – – – (93,664) (93,664) – (93,664)
Distributions to other equity instrument
  holders (note 17) – – – – – – – – – – (8,839) (8,839) – (8,839)
Appropriation to surplus reserve (i) – – – 31,485 – – – – – 31,485 (31,485) – – –
Appropriation to general reserve (ii) – – – – 34,682 – – – – 34,682 (34,682) – – –
Capital injection by other equity
  instrument holders – 19,687 – – – – – – – – – 19,687 – 19,687
Change in shareholding in subsidiaries – – (499) – – – – – – (499) – (499) (780) (1,279)
Dividends to non-controlling shareholders – – – – – – – – – – – – (337) (337)
Other comprehensive income transferred
  to retained earnings – – – – – (221) – – – (221) 218 (3) 3 –
Other – – – (865) – (10) 6,439 – (34) 5,530 (5,432) 98 – 98
Balance as at 31 December 2020 356,407 225,819 148,640 322,911 339,701 22,377 (27,882) (4,725) (304) 800,718 1,510,558 2,893,502 16,013 2,909,515

(i) Includes the appropriation made by overseas branches and subsidiaries in the amounts of RMB101 million and RMB935
million, respectively.

(ii) Includes the appropriation made by overseas branches and subsidiaries in the amounts of RMB11 million and RMB1,435
million, respectively.

The accompanying notes form part of these consolidated financial statements.

158
Consolidated Statement of Cash Flows
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Notes 2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 424,899 392,126
Adjustments for:
  Share of results of associates and joint ventures (2,869) (1,304)
 Depreciation 28,194 27,046
 Amortisation 11 3,125 2,607
  Impairment losses on assets 14 202,623 202,668
  Unrealised gains on foreign exchange (22,300) (12,642)
  Interest expense on debt securities issued 27,673 25,549
  Accreted interest on impaired loans (1,964) (1,710)
  Net gains on financial investments (18,349) (9,814)
  Interest income on financial investments (262,827) (245,294)
  Net gains on changes in fair value (14,473) (12,797)
  Net gains on disposal and stocktake of property and equipment and
   other assets (other than repossessed assets) (2,077) (1,238)
  Dividend income 9 (3,388) (2,355)
358,267 362,842
Net decrease/(increase) in operating assets:
  Due from central banks 155,880 75,762
  Due from banks and other financial institutions 157,890 (16,064)
  Financial assets measured at fair value through profit or loss 143,496 284,342
  Reverse repurchase agreements 99,863 123,955
  Loans and advances to customers (2,184,611) (2,079,400)
  Other assets (43,570) (51,517)
(1,671,052) (1,662,922)
Net (decrease)/increase in operating liabilities:
  Financial liabilities designated as at fair value through profit or loss (853) (7,530)
  Due to central banks (15,161) 53,959
  Due to banks and other financial institutions 158,557 563,361
  Repurchase agreements 77,427 30,155
  Certificates of deposit (37,420) 269
  Due to customers 1,261,998 2,219,487
  Other liabilities 311,773 82,547
1,756,321 2,942,248
Net cash flows from operating activities before tax 443,536 1,642,168
Income tax paid (82,654) (84,552)
Net cash flows from operating activities 360,882 1,557,616

The accompanying notes form part of these consolidated financial statements.

Annual Report 2021

159
Consolidated Statement of Cash Flows
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Note 2021 2020

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of property and equipment and other assets (27,584) (38,005)
  Proceeds from disposal of property and equipment and other assets
   (other than repossessed assets) 13,008 8,539
  Purchases of financial investments (3,344,684) (3,191,273)
  Proceeds from sale and redemption of financial investments 2,423,298 1,845,743
  Investments in associates and joint ventures (21,207) (11,690)
  Proceeds from disposal of associates and joint ventures 206 627
  Investment returns received 282,407 250,962
Net cash flows from investing activities (674,556) (1,135,097)
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of other equity instruments 139,793 19,716
  Proceeds from issuance of debt securities 835,441 927,759
  Interest paid on debt securities (26,320) (25,137)
  Repayment of debt securities (836,623) (858,858)
  Cash payment for redemption of other equity instruments (11,155) —
  Acquisition of non-controlling interests — (1,279)
  Dividends paid on ordinary shares (94,804) (93,664)
  Dividends or interest paid to other equity instrument holders (9,607) (8,839)
  Dividends paid to non-controlling shareholders (465) (337)
  Cash payment for other financing activities (7,813) (6,310)
Net cash flows from financing activities (11,553) (46,949)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (325,227) 375,570
  Cash and cash equivalents at beginning of the year 1,791,122 1,450,413
  Effect of exchange rate changes on cash and cash equivalents (29,138) (34,861)
CASH AND CASH EQUIVALENTS AT END OF THE YEAR 41 1,436,757 1,791,122
NET CASH FLOWS FROM OPERATING ACTIVITIES INCLUDE:
  Interest received 939,737 902,804
  Interest paid (351,322) (393,080)

The accompanying notes form part of these consolidated financial statements.

160
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

1. CORPORATE INFORMATION
Industrial and Commercial Bank of China Limited (the “Bank”), which was previously known as Industrial and Commercial
Bank of China (“ICBC”), used to be a wholly-state-owned commercial bank established on 1 January 1984 based on
the authorisation of the State Council and the People’s Bank of China (the “PBOC”) of the People’s Republic of China
(the “PRC”). On 28 October 2005, with the approval of the State Council, ICBC was restructured and incorporated as
a joint-stock limited company. The joint-stock limited company undertook all the assets and liabilities of ICBC upon the
restructuring. On 27 October 2006, the Bank was listed on both Shanghai Stock Exchange and The Stock Exchange of Hong
Kong Limited.

The Bank obtained authorisation to carry out banking business with an institution code of No. B0001H111000001 from the
China Banking and Insurance Regulatory Commission (the “CBIRC”) of the PRC. The Bank obtained its business license with
unified social credit code 91100000100003962T from the State Administration for Industry and Commerce of the PRC. The
legal representative is Mr. Chen Siqing and the registered office is located at No. 55 Fuxingmennei Avenue, Xicheng District,
Beijing, the PRC.

The Bank’s stock codes of A Shares and H Shares listed on Shanghai Stock Exchange and The Stock Exchange of Hong Kong
Limited are 601398 and 1398, respectively. The Bank’s offshore preference shares are listed on The Stock Exchange of Hong
Kong Limited and the stock code is 4620. The Bank’s domestic preference shares are listed on Shanghai Stock Exchange and
the stock codes are 360011 and 360036.

The principal activities of the Bank and its subsidiaries (collectively referred to as the “Group”) comprise corporate and
personal financial services, treasury operations, investment banking, asset management, trust, financial leasing, insurance
and other financial services. Domestic establishments refer to the Head Office of the Bank, branches and subsidiaries
established in Chinese mainland. Overseas establishments refer to branches and subsidiaries established in jurisdictions
outside Chinese mainland.

2. BASIS OF PREPARATION
(1) Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRSs”) promulgated by the International Accounting Standards Board (the “IASB”), and the disclosure requirements of the
Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong
Limited.

(2) Basis of preparation of the financial statements

The consolidated financial statements have been prepared under the historical cost convention, except for certain financial
instruments, and certain non-financial assets measured at fair value, as further explained in the respective accounting policies
below.

The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.
Actual results may differ from these estimates. Judgements made by management in the application of IFRSs that have
significant effect on the financial statements and major sources of estimation uncertainty are disclosed in Note 5.

Annual Report 2021

161
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

3. APPLICATION OF THE NEW AND AMENDMENTS TO IFRSs

(1) Mandatory amendments to IFRSs effective for the current year
In the current year, the Group has applied, for the first time, the following amendments to IFRSs issued by the IASB which
are mandatorily effective for the annual periods beginning on or after 1 January 2021 for the preparation of the Group’s
consolidated financial statements:

— Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest Rate Benchmark Reform (Phase 2)

Changes in the basis for determining the contractual cash flows as a result of interest rate
benchmark reform

For changes in the basis for determining the contractual cash flows of a financial asset or financial liability as a result of
interest rate benchmark reform, the Group applies the practical expedient to account for these changes by updating the
effective interest rate. Such change in effective interest rate normally has no significant effect on the carrying amount of the
relevant financial asset or financial liability.

A change in the basis for determining the contractual cash flows is required by interest rate benchmark reform if and only if,
both these conditions are met:

— the change is necessary as a direct consequence of interest rate benchmark reform; and

— the new basis for determining the contractual cash flows is economically equivalent to the previous basis.

For other changes made to a financial asset or financial liability in addition to changes to the basis for determining the
contractual cash flows required by interest rate benchmark reform, the Group first applies the practical expedient to
the changes required by interest rate benchmark reform by updating the effective interest rate. The Group then applies
the applicable requirements in IFRS 9 Financial Instruments on modification of a financial asset or a financial liability for
additional changes to which the practical expedient does not apply.

Transition and summary of effects

The Group’s business impacted by interest rate benchmark reform are mainly those linked with London Interbank Offered
Rate, consisting of loans, debt investments and derivatives. The Group considered the application of this amendment had no
material impact on the Group’s financial positions and performance for the current period.

The Group has early adopted amendments to IFRS 16 — COVID 19 Related Rent Concession Beyond 30 June 2021. The
amendment has no significant financial and operational impacts to the Group.

162
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(2) Issued but not yet effective IFRSs and amendments to IFRSs
The Group has not applied the following new and revised IFRSs that have been issued but are not yet effective.
2
IFRS 17: Insurance Contracts and the related Amendments

Amendments to IFRS 3: Reference to the Conceptual Framework1

Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture3

Amendments to IAS 1: Classification of Liabilities as Current or Non-current2

Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies2

Amendments to IAS 8: Definition of Accounting Estimates2

Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction2

Amendments to IAS 16: Property, Plant and Equipment: Proceeds before Intended Use1

Amendments to IAS 37: Onerous Contracts — Cost of Fulfilling a Contract1

Amendments to IFRSs: Annual Improvements to IFRSs 2018–20201

1 Effective for annual periods beginning on or after 1 January 2022.

2 Effective for annual periods beginning on or after 1 January 2023.

3 Effective for annual periods beginning on or after a date to be determined.

Further information about those changes that are expected to affect the Group:

IFRS 17 Insurance Contracts and the related amendments

IFRS 17 is issued to resolve the comparability issues created by IFRS 4 Insurance Contracts by setting out a single principle-
based standard for the recognition, measurement, presentation and disclosure of insurance contracts in the financial
statements of the issuers of those contracts.

The IASB issued the amendments to IFRS 17 in 2020 to provide response to the stakeholders and are designed to:

— reduce costs by simplifying certain requirements in the IFRS 17;

— make financial performance easier to explain; and

— ease transition by deferring the effective date of IFRS 17 to 2023 and by providing additional relief to reduce the effort
required when applying IFRS 17 for the first time.

The Group is currently assessing the impact of the standard and its amendments on the Group’s financial position and
financial performance.

Other new and revised IFRSs that have been issued but are not yet effective are expected to have no material impact on the
financial position and financial performance of the Group.

Annual Report 2021

163
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1) Functional currency and foreign currency translation
Functional currency

The functional currency of the Group’s domestic establishments is Renminbi (“RMB”). The overseas establishments
determine their own functional currencies which best represent the economic environment they operate in. These financial
statements are presented in RMB millions except when otherwise indicated.

Foreign currency translation

Foreign currency transactions are initially recorded in the functional currency using the exchange rates at the dates of the
transactions or deemed exchange rates. Monetary assets and liabilities denominated in foreign currencies are retranslated
into the functional currency at the applicable exchange rates ruling at the end of the reporting period. Exchange differences
arising on the settlement of monetary items or on translating monetary items at period end rates are recognised in profit or
loss, with the exception that they are taken directly to other comprehensive income when the monetary items are designated
as part of the hedge of the Bank’s net investment in a foreign entity, and the aggregate exchange differences are not
recognised in profit or loss until the disposal of such net investment.

Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates as
at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated
using the exchange rates as at the date when the fair value is determined. Any goodwill arising on the acquisition of a
foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition
are treated as foreign assets and liabilities of the foreign operation and translated at the deemed rates at the end of the
reporting period. The exchange differences are recognised in profit or loss or in other comprehensive income, depending on
the nature of non-monetary items.

As at the end of the reporting period, the assets and liabilities of foreign operations are translated into the presentation
currency of the Bank at the exchange rates ruling at the end of the reporting period. For overseas business not operating in a
hyperinflationary economy, all items within equity except for retained earnings are translated at the exchange rates ruling at
the dates of the initial transactions. Income and expenses in the statement of profit or loss are translated using the exchange
rates at the date of the transactions or deemed exchange rates. The exchange differences arising on the above translation
are taken to other comprehensive income. On disposal of a foreign operation, the deferred cumulative amount recognised
in other comprehensive income relating to that particular foreign operation is recognised in profit or loss. The effect of
exchange rate changes on cash and cash equivalents is presented separately in the statement of cash flows.

(2) Subsidiaries
Subsidiaries are entities (including structured entities) controlled by the Group. The Group controls an entity if it is exposed,
or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. The Group reassesses whether it has control if there are changes to one or more of the elements of
control. This includes circumstances in which protective rights held (e.g. those resulting from a lending relationship) become
substantive and lead to the Group having power over an entity.

A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding
who controls the entity, and the relevant activities are directed by means of contractual or other arrangements.

An investment in a subsidiary is consolidated into the consolidated financial statements from the date that control
commences until the date that control ceases. Intra-group balances, transactions and any unrealised profit or loss arising
from intra-group transactions are eliminated in full in preparing the consolidated financial statements.

In the Bank’s statement of financial position, investments in subsidiaries are stated at cost less impairment losses.

164
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(3) Non-controlling interests

Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to a parent.

Non-controlling interests are presented in the consolidated statement of financial position within equity, separately from
equity attributable to the equity holders of the Bank. Non-controlling interests in the results of the Group are presented
on the face of the consolidated statement of profit or loss and the consolidated statement of profit or loss and other
comprehensive income as an allocation of the total profit or loss and total comprehensive income for the year between non-
controlling interests and the equity holders of the Bank.

Changes in the Group’s interests in a subsidiary that do not result in a loss of control are accounted for as equity
transactions, whereby adjustments are made to the amounts of controlling and non-controlling interests within consolidated
statement of equity to reflect the change in relative interests, but no adjustments are made to goodwill and no gain or loss
is recognised.

(4) Associates and joint ventures

An associate is an entity in which the Group has significant influence. A joint venture is an arrangement whereby the
Group and other parties contractually agree to share control of the arrangement, and have rights to the net assets of the
arrangement. Other than those measured at fair value through profit or loss, the Group’s investments in associates or joint
ventures are accounted for using the equity method.

Under the equity method, an investment in an associate or joint venture is carried in the consolidated statement of financial
position at cost plus post-acquisition changes in the Group’s share of the net assets of the associate or joint venture, less any
impairment losses. The consolidated statement of profit or loss reflects the share of the results of operations of the associate
or joint venture. Unrealised profits and losses resulting from transactions between the Group and the associates or joint
ventures are eliminated to the extent of the Group’s interests in the associates or joint ventures.

If an investment in an associate becomes an investment in a joint venture, the retained interest is not re-measured. Instead,
the investment continues to be accounted under the equity method, and vice versa.

In the Bank’s statement of financial position, investments in associates and joint ventures are stated at cost less impairment
losses.

(5) Business combination and goodwill

Business combinations are accounted for by applying the acquisition method. The Group can elect to apply an optional
concentration test, on a transaction-by-transaction basis, that permits a simplified assessment of whether the acquired set
of assets is not a business. If the concentration test is met, the set of assets is determined not to be a business; otherwise,
the Group shall then perform an assessment in accordance with the requirements of business. The consideration transferred
is measured at acquisition date fair value which is the sum of the acquisition date fair values of assets transferred by the
Group, liabilities assumed by the Group to the former owners of the acquiree and the equity interests issued by the Group in
exchange for control of the acquiree. Any costs directly attributable to the combination are recognised in profit or loss when
incurred.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition
date. This includes the separation of embedded derivatives from host contracts of the acquiree.

If the business combination is achieved in stages, the acquirer’s previously-held equity interest in the acquiree is re-measured
to the acquisition date fair value through profit or loss.

Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is classified as a financial asset or financial liability, is
recognised in profit or loss. If the contingent consideration is classified as equity, it shall not be re-measured, and its
subsequent settlement is accounted for within equity.

Annual Report 2021

165
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the amount
recognised for non-controlling interests and the fair value of the acquirer’s previously-held equity interest in the acquiree
over the net of the acquisition-date amounts of the identifiable assets and liabilities acquired. If the sum of this consideration
and other items is lower than the fair value of the net assets of the subsidiary acquired, the difference is, after reassessment,
recognised in profit or loss as gains on bargain purchase.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for
impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be
impaired. The Group performs its annual impairment test of goodwill at year end date. For the purpose of impairment
testing, goodwill arising in a business combination is, from the acquisition date, allocated to each of the Group’s cash-
generating units (“CGU”), or group of CGUs, that are expected to benefit from the synergies of the combination,
irrespective of whether other assets or liabilities of the Group are assigned to those units or groups of units.

Impairment is determined by assessing the recoverable amount of the CGU or group of CGUs to which the goodwill relates.
Where the recoverable amount of the CGU or group of CGUs is less than the carrying amount, an impairment loss is
recognised. An impairment loss recognised for goodwill is not reversed in subsequent period.

Where goodwill forms part of a CGU or group of CGUs and part of the operation within that unit is disposed of, the
goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining
the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative
values of the operation disposed of and the portion of the CGU or group of CGUs retained.

(6) Related parties

A party is considered to be related to the Group if:

(a) the party is a person or a close member of that person’s family and that person:

(i) has control or joint control over the Group;

(ii) has significant influence over the Group; or

(iii) is a member of the key management personnel of the Group or of a parent of the Group;

or

(b) the party is an entity where any of the following conditions applies:

(i) the entity and the Group are members of the same group;

(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow subsidiary of the
other entity);

(iii) the entity and the Group are joint ventures of the same third party;

(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;

(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity
related to the Group;

(vi) the entity is controlled or jointly controlled by a person identified in (a);

(vii) a person identified in (a)(i) has significant influence over the entity or is a member of the key management
personnel of the entity (or of a parent of the entity); or

(viii) the entity, or any member of a Group of which it is a part, provides key management personnel services to the
Group or to the Group’s parent.

166
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(7) Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity.

(i) Initial recognition and measurement of financial instruments

At initial recognition, financial assets and financial liabilities are measured at fair value. For financial assets and financial
liabilities measured at fair value through profit or loss (“FVTPL”), any related directly attributable transaction costs are
charged to profit or loss; for other categories of financial assets and financial liabilities, any related directly attributable
transaction costs are included in their initial recognised value.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.

When measuring fair value, the Group shall take into account the characteristics of the asset or liability if market participants
would take those characteristics into account when pricing the asset or liability at the measurement date (including the
condition of the asset; and restrictions, if any, on the sale or use of the asset), and use valuation techniques that are
appropriate in the circumstances and for which sufficient data and other information are available to measure fair value. The
adopted valuation techniques mainly include market approach, income approach and cost approach.

(ii) Classification and subsequent measurement of financial assets

Classification of financial assets

The classification of financial assets is generally based on the business model in which a financial asset is managed and its
contractual cash flow characteristics. On initial recognition, a financial asset is classified as measured at amortised cost, at
fair value through other comprehensive income (“FVTOCI”), or at FVTPL.

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for
managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting
period following the change in the business model.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

— it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

— its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.

A financial asset is measured at FVTOCI if it meets both of the following conditions and is not designated as at FVTPL:

— it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling
financial assets; and

— its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present
subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an investment-
by-investment basis, and the investment should meet the definition of an equity instrument from perspective of the issuer.

All financial assets not classified as measured at amortised cost or FVTOCI as described above are measured at FVTPL. On
initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be
measured at amortised cost or at FVTOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch
that would otherwise arise.

Annual Report 2021

167
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

The business model refers to how the Group manages its financial assets in order to generate cash flows. That is, the
Group’s business model determines whether cash flows will result from collecting contractual cash flows, selling financial
assets or both. The Group determines the business model for managing the financial assets according to the facts and based
on the specific business objective for managing the financial assets determined by the Group’s key management personnel.

In assessing whether the contractual cash flows are solely payments of principal and interest on the principal amount
outstanding, the Group considers the contractual terms of the instrument. For the purposes of this assessment, principal is
defined as the fair value of the financial asset on initial recognition. Interest is defined as consideration for the time value
of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for
other basic lending risks and costs, as well as a profit margin. The Group also assesses whether the financial asset contains
a contractual term that could change the timing or amount of contractual cash flows such that it would not meet the above
contractual cash flows characteristics.

Subsequent measurement of financial assets

Financial assets measured at FVTPL

These financial assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend
income, are recognised in profit or loss unless the financial assets are part of a hedging relationship.

Financial assets measured at amortised cost

These assets are subsequently measured at amortised cost using the effective interest method. A gain or loss on a financial
asset that is measured at amortised cost and is not part of a hedging relationship shall be recognised in profit or loss when
the financial asset is derecognised, through the amortisation process or in order to recognise impairment gain or loss.

Debt instruments measured at FVTOCI

These assets are subsequently measured at fair value. Interest income calculated using the effective interest method,
impairment and foreign exchange gains and losses are recognised in profit or loss. Other net gains and losses are recognised
in other comprehensive income. On derecognition, gains and losses accumulated in other comprehensive income are
reclassified to profit or loss.

Equity instruments measured at FVTOCI

These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss. Other net
gains and losses are recognised in other comprehensive income. On derecognition, gains and losses accumulated in other
comprehensive income are reclassified to retained earnings.

(iii) Classification and subsequent measurement of financial liabilities

Financial liabilities are classified as measured at FVTPL and other financial liabilities.

Financial liabilities measured at FVTPL

A financial liability is classified as measured at FVTPL if it is classified as held-for-trading (including derivative financial liability)
or it is designated as such on initial recognition.

Financial liabilities measured at FVTPL are subsequently measured at fair value and net gains and losses (including any
interest expense) are recognised in profit or loss, unless the financial liabilities are part of a hedging relationship.

168
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

For the financial liabilities designated as at FVTPL, the gains and losses from changes in fair value of the financial liability
arising from changes in the Group’s own credit risk are included in other comprehensive income; other changes in fair value
of the financial liabilities are recognised in profit or loss. If the treatment of the impact of changes in the financial liabilities’
own credit risk will create or enlarge the accounting mismatch in profit or loss, the Group shall recognise the entire gains
or losses of the financial liabilities (including the amount of the impact of changes in its own credit risk) in profit and loss.
When these liabilities are derecognised, the cumulative gains or losses previously recognised in other comprehensive income
are reclassified from reserve to retained earnings.

Other financial liabilities

Other financial liabilities are subsequently measured at amortised cost using the effective interest method.

(iv) Financial instruments reclassification

The Group will reclassify all related financial assets when it changes its business model for managing financial assets, and
the reclassification applies prospectively from the reclassification date (the first day of the first reporting period following the
change in business model).

(8) Trade date accounting

All regular way purchases and sales of financial assets are recognised at the trade date, which is the date that the Group
commits to purchase or sell the assets. A regular way purchase or sale is the purchase or sale of financial assets that requires
delivery of assets within the time frame generally established by regulation or convention in the marketplace.

(9) Presentation of financial instruments

Financial assets and financial liabilities are generally presented separately in the statement of financial position and shall not
be offset. However, a financial asset and a financial liability are offset and the net amount is presented in the statement of
financial position when both the following conditions are satisfied:

— the Group currently has a legally enforceable right to set off the recognised amounts; and

— the Group intends either to settle on a net basis, or to realise the financial asset and settle the financial liability
simultaneously.

(10) Impairment of financial assets

The Group recognises loss allowances for expected credit loss (“ECL”) on:

— financial assets measured at amortised cost;

— debt instruments measured at FVTOCI; and

— loan commitments and financial guarantee contracts.

Financial assets measured at fair value, including debt or equity instruments measured at FVTPL, equity instruments
designated as at FVTOCI and derivative financial assets, are not subject to ECL assessment.

Measurement of ECL

ECL is a probability-weighted amount that is determined with the respective risks of default occurring as the weight. Credit
losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in
accordance with the contract and the cash flows that the Group expects to receive).

Annual Report 2021

169
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

The Group’s method of measuring ECL of financial instruments reflects the following elements: (i) unbiased weighted
average probability determined by the results of evaluating a range of possible outcomes; (ii) time value of money; (iii)
reasonable and evidence-based information about past events, current conditions, and future economic forecasts that are
available at no additional cost or effort at the end of the reporting period.

The maximum period considered when estimating ECL is the maximum contractual period (including extension options) over
which the Group is exposed to credit risk.

Lifetime ECL is the ECL that result from all possible default events over the expected life of a financial instrument.

12-month ECL is the portion of ECL that result from default events that are possible within the 12 months after the end of
the reporting period (or a shorter period if the expected life of the instrument is less than 12 months).

The Group classifies financial instruments into three stages and provides provisions for ECL accordingly, depending on
whether credit risk on that financial instrument has increased significantly since initial recognition.

The three risk stages are defined as follows:

Stage 1: A financial instrument of which the credit risk has not significantly increased since initial recognition. The amount
that equals to 12-month ECL is recognised as loss allowance.

Stage 2: A financial instrument with a significant increase in credit risk since initial recognition but is not considered to be
credit-impaired. The amount that equals to lifetime ECL is recognised as loss allowance. Refer to Note 49(a) credit risk for
the description of how the Group determines when a significant increase in credit risk has occurred.

Stage 3: A financial instrument is considered to be credit-impaired as at the end of the reporting period. The amount that
equals to lifetime ECL is recognised as loss allowance. Refer to Note 49(a) credit risk for the definition of credit-impaired
financial assets.

Presentation of allowance for ECL

ECL is re-measured at the end of each reporting period to reflect changes in the financial instrument’s credit risk since
initial recognition. Any change in the ECL amount is recognised as an impairment gain or loss in profit or loss. The Group
recognises impairment gains or losses for financial instruments measured at amortised cost with a corresponding adjustment
to their carrying amount through allowance for impairment loss. For debt instruments that are measured at FVTOCI, the
loss allowance is recognised in other comprehensive income, which does not decrease the carrying amount of the financial
assets. The Group recognises loss allowance for loan commitments and financial guarantee contracts through other liabilities
(provisions for credit commitments).

Write-off

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic
prospect of recovery. A write-off constitutes a derecognition event. This is generally the case when the Group determines
that the debtor does not have assets or sources of income that could generate sufficient cash flows to repay the amounts
subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order
to comply with the Group’s procedures for recovery of amounts due. Subsequent recoveries of an asset that was previously
written off are recognised as a reversal of impairment in profit or loss in the period in which the recovery occurs.

(11) Modification of financial assets contracts

In some cases (such as renegotiating loans), the Group may renegotiate or otherwise modify the financial assets contracts.
The Group would assess whether or not the new contractual terms are substantially different to the original terms. If the
terms are substantially different, the Group derecognises the original financial asset and recognises a new asset under the
revised terms. If the renegotiation or modification does not result in derecognition, but leads to changes in contractual cash
flows, when assessing whether a significant increase in credit risk has occurred, the Group compares the risk of a default
occurring under the revised terms as at the end of the reporting period with that as at the date of initial recognition under
original terms.

170
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(12) Derecognition of financial assets and liabilities

Derecognition of financial assets

Financial asset is derecognised when one of the following conditions is met:

— the Group’s contractual rights to the cash flows from the financial asset expire;

— the financial asset has been transferred and the Group transfers substantially all of the risks and rewards of ownership
of the financial asset; or

— the financial asset has been transferred, although the Group neither transfers nor retains substantially all of the risks
and rewards of ownership of the financial asset, it does not retain control over the transferred asset.

Where the Group has transferred its rights to receive cash flows from an asset or has retained its rights to receive cash
flows from the asset but assumed the obligation to pay those cash flows to the eventual recipients and meanwhile meet the
conditions of the transfer of financial assets, and has neither transferred nor retained substantially all the risks and rewards
of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement
in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower
of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to
repay.

Securitisation

As part of its operational activities, the Group securitises credit assets. When a securitisation of financial assets does not
qualify for derecognition, the relevant financial assets are not derecognised, and the consideration paid by third parties are
recorded as a financial liability; when the securitisation of financial assets partially qualifies for derecognition, the Group
continues to recognise the transferred assets to the extent of its continuing involvement, and derecognises the remaining
portion. The carrying amount of the transferred assets is apportioned between the derecognised portion and the retained
portion based on their relative fair values, and the difference between the carrying amount of the derecognised portion and
the total consideration paid for the derecognised portion is recorded in profit or loss.

Sales of assets on condition of repurchase

The derecognition of financial assets sold on condition of repurchase is determined by the economic substance of the
transaction. If a financial asset is sold under an agreement to repurchase the same or substantially the same asset at a
fixed price or at the sale price plus a reasonable return, the Group will not derecognise the asset. If a financial asset is
sold together with an option to repurchase the financial asset at its fair value at the time of repurchase, the Group will
derecognise the financial asset.

Derecognition of financial liabilities

The Group derecognises a financial liability (or part of it) only when its contractual obligation (or part of it) is extinguished.

(13) Derivatives and hedge accounting

Derivatives

Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered
into and are subsequently re-measured at fair value. Derivatives are carried as assets when the fair value is positive and as
liabilities when the fair value is negative.

Annual Report 2021

171
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

If the host contract included in the hybrid contract is a financial asset, the embedded derivative is no longer split from the
main contract of the financial asset, and the hybrid financial instrument as a whole is related to the classification of the
financial asset provision. If the host contract included in the hybrid contract is not a financial asset, when the embedded
derivative’s economic characteristics and risks are not closely related to those of the hybrid contract, those separate
instruments with the same terms as the embedded derivative would meet the definition of a derivative, and the hybrid
instrument is not carried at FVTPL, derivatives embedded in other financial instruments should be split from the hybrid
contract and treated as separate derivatives. These embedded derivatives are measured at fair value with the changes in fair
value recognised in profit or loss.

Any gains or losses arising from changes in fair value on derivatives that do not qualify for hedge accounting are taken
directly to profit or loss.

For less complex derivative products, the fair values are principally determined by valuation models which are commonly used
by market participants. Inputs to valuation models are determined from observable market data wherever possible, including
foreign exchange spot and forward rates and interest rate yield curves. For more complex derivative products, the fair values
are mainly determined by quoted prices from dealers.

Hedge accounting

At the inception of a hedging relationship, the Group formally designates the hedging instruments and the hedged items,
and documents the hedging relationship to which the Group wishes to apply hedge accounting and the risk management
objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the
hedged item or transaction, the nature of the risk being hedged and how the entity will assess the hedging instrument’s
effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged
risk. Such hedges are expected to meet the hedge effectiveness in achieving offsetting changes in fair value or cash
flows and are assessed on an on-going basis to analyse the sources of hedge ineffectiveness which are expected to affect
the hedging relationship in remaining hedging period. If a hedging relationship ceases to meet the hedge effectiveness
requirement relating to the hedge ratio, but the risk management objective for that designated hedging relationship remains
the same, the Group would rebalance the hedging relationship.

Certain derivative transactions, while providing effective economic hedges under the Group’s risk management positions,
do not qualify for hedge accounting and are therefore treated as derivatives held for trading with fair value gains or losses
recognised in profit or loss.

Fair value hedges

Fair value hedges are hedges of the Group’s exposure to changes in fair value of a recognised asset or liability or an
unrecognised firm commitment, or an identified portion of such an asset, liability or unrecognised firm commitment, that
is attributable to a particular risk and could affect the profit or loss or other comprehensive income. Among them, the
circumstances affecting other comprehensive income are limited to the hedging for the risk exposure from fair value change
of non-trading equity investment designated as at FVTOCI. For fair value hedges, the carrying amount of the hedged item
not already measured at fair value is adjusted for the gain or loss attributable to the risk being hedged and is taken to profit
or loss or other comprehensive income. The gains or losses for hedging instrument re-measured at fair value are taken to
profit or loss or other comprehensive income.

When the hedged item in a fair value hedge is measured at amortised cost, any hedge adjustment to its carrying amount is
amortised to profit or loss. The amortisation is based on a recalculated effective interest rate at the date when amortisation
begins.

When an unrecognised firm commitment is designated as a hedged item, the subsequent cumulative change in fair value of
the firm commitment attributable to the hedged risk is recognised as an asset or liability with a corresponding gain or loss
recognised in profit or loss. The changes in fair value of the hedging instrument are also recognised in profit or loss.

The Group discontinues fair value hedge accounting when the hedging relationship ceases to meet the qualifying criteria
after taking into account any rebalancing of the hedging relationship, including the hedging instrument has expired or has
been sold, terminated or exercised. If the hedged items are derecognised, the unamortised adjustment to carrying amount is
recorded in profit or loss.

172
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Cash flow hedges

Cash flow hedges are hedges of the Group’s exposure to variability in cash flows that is attributable to a particular risk
associated with a recognised asset or liability, a highly probable forecast transaction or a component of any such item, and
could affect profit or loss. For designated and qualifying cash flow hedges, the effective portion of the gain or loss on the
hedging instrument is initially recognised directly in other comprehensive income. The ineffective portion of the gain or loss
on the hedging instrument is recognised immediately in profit or loss.

When the hedged cash flow affects profit or loss, the gain or loss on the hedging instrument recognised directly in other
comprehensive income is recycled in the corresponding income or expense line of the statement of profit or loss. When
the hedging relationship ceases to meet the qualifying criteria after taking into account any rebalancing of the hedging
relationship, including the hedging instrument has expired or has been sold, terminated or exercised, any cumulative gains or
losses existing in other comprehensive income at that time remains in other comprehensive income until the hedged forecast
transaction ultimately occurs. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that
was reported in other comprehensive income is immediately transferred to profit or loss.

Net investment hedges

A net investment hedge is a hedge of the currency risk of a net investment in a foreign institution operation.

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the
hedging instrument relating to the effective portion of the hedge is recognised directly in other comprehensive income; the
gain or loss relating to the ineffective portion is recognised in profit or loss immediately. Gains and losses accumulated in
other comprehensive income are included in profit or loss when the foreign operation is disposed of as part of the gains or
losses on the disposal.

(14) Repurchase and reverse repurchase transactions (including securities borrowing and
lending)
Assets sold under agreements to repurchase at a specified future date (“repos”) are not derecognised from the statement
of financial position. The corresponding cash received, including accrued interest, is recognised on the statement of financial
position as a “repurchase agreement”. The difference between the sale and repurchase prices is treated as an interest
expense and is amortised over the life of the agreement using the effective interest method.

Conversely, assets purchased under agreements to resell at a specified future date (“reverse repos”) are not recognised on
the statement of financial position. The corresponding cash paid, including accrued interest, is recognised on the statement
of financial position as a “reverse repurchase agreement”.

According to the policy of classification of financial assets, the reverse repurchase agreements held by the Group were
divided into different classifications according to the entity’s business model for managing the financial instruments and the
contractual cash flow characteristics of the assets: financial assets measured at amortised cost and financial assets measured
at FVTPL. The difference between the purchase and resale prices of reverse repurchase agreements measured at amortised
cost is treated as an interest income and is amortised over the life of the agreement using the effective interest method.

Securities borrowing and lending transactions are usually collateralised by securities or cash. The transfer of the securities
to counterparties is only reflected on the statement of financial position if the risks and rewards of ownership are also
transferred. Cash advanced or received as collateral is recorded as an asset or liability.

Securities borrowed are not recognised in the statement of financial position, unless they are then sold to third parties, in
which case the obligation to return the securities is recorded as a financial liability held for trading and measured at fair
value with any gains or losses included in profit or loss.

Annual Report 2021

173
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(15) Insurance contracts

Insurance contracts classification

The Group’s insurance subsidiary executes the contract with the policyholder. Where the Group undertakes insurance risk
(other than financial risk) transferred from the policyholders, the contract is classified as an insurance contract. Insurance risk
refers to the risk that the combined cost of claims, administration and policy acquisitions may exceed the aggregate amount
of premiums received and investment income over time. Where the Group undertakes the risks other than insurance risk, the
contract is classified as a non-insurance contract. Where the Group undertakes both insurance risk and other risks, forming a
contract with mixed risks, the following stipulations are applied:

(i) where the insurance risk and other risks can be distinguished from each other and separately measured, the insurance
risk is separated from other risks. The insurance risk is accounted for as an insurance contract and other risks are
accounted for according to the relevant accounting standards;

(ii) where the insurance risk and other risks cannot be distinguished from each other, or can be distinguished but cannot
be separately measured, an umbrella contract applies and a significant insurance risk test shall be performed based on
it. If the insurance risk is significant, the contract is accounted for as an insurance contract; otherwise, it is accounted
for as a non-insurance contract.

Insurance income recognition

Insurance premium income is recognised when:

(i) the insurance contract is issued, and related insurance risk is taken on by the Group;

(ii) the related economic benefits are likely to flow to the Group; and

(iii) related income can be reliably measured.

Insurance contract liabilities

When measuring insurance contract liabilities, the Group classifies insurance contracts whose insurance risks are of similar
nature as a measurement unit. Insurance contract liabilities are measured based on a reasonably estimated amount of
payment that the Group is obliged to pay to fulfill relevant obligations under the insurance contract. At the end of each
reporting period, the adequacy of liability is tested. If the insurance contract liabilities re-calculated with the insurance
actuarial method exceed their carrying amounts on the date of the liability adequacy test, an additional provision shall be
made for the respective insurance contract liabilities based on the difference. Otherwise, no adjustment is made to the
respective insurance contract liabilities.

(16) Leases
A lease is when the lessor conveys the right to control the use of an asset for a period of time in exchange for the
consideration of the lessee.

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease
if the contract conveys the right to control the use of one or more identified assets for a period of time in exchange for
consideration.

To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

— the contract involves the use of an identified asset. An identified asset may be specified explicitly or implicitly in a
contract and should be physically distinct, or a capacity portion or other portion of an asset that is not physically
distinct but represents substantially all of the capacity of the asset and thereby provides the customer with the right to
obtain substantially all of the economic benefits from the use of the asset. If the supplier has a substantive substitution
right throughout the period of use, then the asset is not identified;

174
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

— the lessee has the right to obtain substantially all of the economic benefits from use of the asset throughout the
period of use;

— the lessee has the right to direct the use of the asset.

For a contract that contains more than one separate lease components, the lessee and the lessor separate lease components
and account for each lease component as a lease separately. For a contract that contains lease and non-lease components,
the lessee and the lessor separate lease components from non-lease components. However, for the leases in which the
Group is a lessee, the Group has elected not to separate lease components from non-lease components and accounts for the
lease and non-lease components as a single lease component.

(i) As a lessee

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is
initially measured at cost, which comprises the initial amount of the lease liability, any lease payments made at or before
the commencement date (less any lease incentives received), any initial direct costs incurred and an estimate of costs to
dismantle and remove the underlying asset or to restore the site on which it is located or restore the underlying asset to the
condition required by the terms and conditions of the lease.

The right-of-use asset is depreciated using the straight-line method. If the lessee is reasonably certain to exercise a purchase
option by the end of the lease term, the right-of-use asset is depreciated over the remaining useful lives of the underlying
asset. Otherwise, the right-of-use asset is depreciated from the commencement date to the earlier of the end of the useful
life of the right-of-use asset or the end of the lease term. Impairment losses of right-of-use assets are accounted for in
accordance with the accounting policy described in Note 4(23).

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement
date. In calculating the present value of lease payments, the Group uses the incremental borrowing rate if the interest rate
implicit in the lease is not readily determinable. Each institution of the Group uses an interest rate that a lessee would have
to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to
the right-of-use asset in a similar economic environment as the incremental borrowing rate.

A constant periodic rate is used to calculate the interest on the lease liability in each period during the lease term with a
corresponding charge to profit or loss or included in the cost of assets where appropriate. Variable lease payments not
included in the measurement of the lease liability are charged to profit or loss or included in the cost of assets where
appropriate as incurred.

Under the following circumstances after the commencement date, the Group re-measures lease liabilities based on the
present value of revised lease payments:

— there is a change in the amounts expected to be payable under a residual value guarantee;

— there is a change in future lease payments resulting from a change in an index or a rate used to determine those
payments;

— there is a change in the assessment of whether the Group will exercise a purchase, extension or termination option, or
there is a change in the exercise of the extension or termination option.

When the lease liability is re-measured, a corresponding adjustment is made to the carrying amount of the right-of-use asset,
or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have a lease term of
12 months or less and leases of low-value assets. The Group recognises the lease payments associated with these leases in
profit or loss or as the cost of the assets where appropriate using the straight-line method over the lease term.

Annual Report 2021

175
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(ii) As a lessor

The Group determines at lease inception whether each lease is a finance lease or an operating lease. A lease is classified as
a finance lease if it transfers substantially all the risks and rewards incidental to ownership of an underlying asset irrespective
of whether the legal title to the asset is eventually transferred. An operating lease is a lease other than a finance lease.

When the Group is a sub-lessor, it assesses the lease classification of a sub-lease with reference to the right-of-use asset
arising from the head lease, not with reference to the underlying asset. If the head lease is a short-term lease to which the
Group applies practical expedient described above, then it classifies the sub-lease as an operating lease.

Under a finance lease, at the commencement date, the Group recognises the finance lease receivable and derecognises the
finance lease asset. The finance lease receivable is initially measured at an amount equal to the net investment in the lease.
The net investment in the lease is measured at the aggregate of the unguaranteed residual value and the present value of
the lease receivable that are not received at the commencement date, discounted using the interest rate implicit in the lease.

The Group recognises finance income over the lease term, based on a pattern reflecting a constant periodic rate of return.
The impairment and derecognition of the finance lease receivable are recognised in accordance with the accounting policy
in Note 4(10) and 4(12). Variable lease payments not included in the measurement of net investment in the lease are
recognised as income as they are earned.

Lease receipts from operating leases is recognised as income using the straight-line method over the lease term. The initial
direct costs incurred in respect of the operating lease are initially capitalised and subsequently amortised in profit or loss over
the lease term on the same basis as the lease income. Variable lease payments not included in lease receipts are recognised
as income as they are earned.

(17) Financial guarantee contracts

The Group issues financial guarantee contracts, including letters of credit, letters of guarantee and acceptance. These
financial guarantee contracts provide for specified payments to be made to reimburse the holders for the losses they incur
when a guaranteed party defaults under the original or modified terms of a debt instrument, loan or any other obligation.

The Group initially measures all financial contracts at fair value, in other liabilities, being the premium received. This
amount is recognised ratably over the period of the contract as fee and commission income. Subsequently, the liabilities are
measured at the higher of the amount of the loss allowance determined in accordance with impairment policies of financial
instruments and the amount initially recognised less the cumulative amount of income. Any increase in the liability relating
to a financial guarantee is taken to the statement of profit or loss.

(18) Fiduciary activities

When the Group acts in a fiduciary capacity such as custodian or agent, assets arising thereon together with related
undertakings to return such assets to customers are excluded from the statement of financial position.

The asset custody services of the Group refer to the business that the Group as trustee approved by regulatory authorities,
signs custody agreement with clients and takes the responsibility of trustee in accordance with relevant laws and regulations.
The assets under custody are not recorded on the statement of financial position as the Group merely fulfils the responsibility
as trustee and charges fees in accordance with these agreements without retaining any risks or rewards of the assets under
custody.

The Group grants entrusted loans on behalf of trustors, which are recorded off-balance sheet. The Group, as a trustee,
grants such entrusted loans to borrowers under the direction of those trustors who fund these loans. The Group has been
contracted by those trustors to manage the administration and collection of these loans on their behalf. Those trustors
determine both the underwriting criteria for and the terms of all entrusted loans including their purposes, amounts, interest
rates, and repayment schedules. The Group charges a commission related to its activities in connection with entrusted loans
which are recognised ratably over the period in which the service is provided. The risk of loss is borne by those trustors.

176
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(19) Precious metals

Precious metals comprise gold, silver and other precious metals. Precious metals that are not related to the Group’s precious
metals trading activities are initially measured at acquisition cost and subsequently measured at the lower of cost and
net realisable value. Precious metals acquired by the Group for trading purposes are initially measured at fair value and
subsequent changes in fair value are recorded in the statement of profit or loss.

The Group records the precious metals received as an asset. A liability to return the amount of precious metals deposited is
also recognised. The precious metals deposited with the Group are measured at fair value both on initial recognition and in
subsequent measurement.

(20) Property and equipment

Property and equipment, other than construction in progress are stated at costs less accumulated depreciation and
any impairment loss. The cost of an item of property and equipment comprises its purchase price, tax and any directly
attributable costs of bringing the asset to its present working condition and location for its intended use. Expenditure
incurred after items of property and equipment have been put into operation, such as repairs and maintenance, is normally
charged to profit or loss in the period in which it is incurred. In situations where the recognition criteria are satisfied, the
expenditure for a major inspection is capitalised in the carrying amount of the asset as a replacement.

Construction in progress comprises the direct costs of construction during the period of construction and is not depreciated.
Construction in progress is reclassified to the appropriate category of property and equipment when completed and ready
for use.

The carrying values of property and equipment are reviewed for impairment when events or changes in circumstances
indicate that the carrying values may not be recoverable.

Depreciation is calculated on the straight-line basis to write off the cost of each item of property and equipment, less any
estimated residual value, over the estimated useful life. The estimated useful life, estimated residual value and the annual
depreciation rate of each item of property and equipment (excluding aircraft and vessels) are as follows:

Estimated Estimated residual Annual

useful life value rate depreciation rate
Properties and buildings 5–50 years 0%–3% 1.94%–20%
Office equipment and motor vehicles
  (excluding aircraft and vessels) 2–7 years – 14.29%–50%
The shorter of the economic useful
Leasehold improvements lives and remaining lease terms

Equipment under operating leases where the Group is the lessor contains aircraft, aircraft engines and vessels. The estimated
useful lives and depreciation methods are determined according to the conditions of individual aircraft and vessel. The
residual values are assessed by an independent appraiser based on historical data. The estimated useful lives range from 15
to 25 years.

For an impaired fixed asset, the depreciation is calculated based on the carrying value less the cumulative impairment loss.

Where parts of an item of property and equipment have different useful lives, the cost of that item is allocated on a
reasonable basis among the parts and each part is depreciated separately.

Residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at least at each financial
year end.

An item of property and equipment is derecognised upon disposal or when no future economic benefits are expected from
its use or disposal. Any gain or loss arising from derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss in the year the asset is
derecognised.

Annual Report 2021

177
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(21) Land use rights

Land use rights are recognised at cost, being the fair value at the time of injection from the central government of the PRC
(the “Government”) during the Group’s restructuring or the consideration paid. The rights are amortised using the straight-
line method over the periods of the leases. When the prepaid land lease payments cannot be allocated reliably between the
land and buildings elements, the entire lease payments are included in the costs of properties and buildings as finance leases
in property and equipment.

(22) Repossessed assets

Repossessed assets are initially recognised at fair value of assets not retained plus related costs, and are subsequently
measured at the lower of the carrying value and net recoverable amount. If the recoverable amount is lower than the
carrying value of the repossessed assets, the assets are written down to the recoverable amount.

(23) Non-financial asset impairment

The Group assesses at the end of each reporting period whether there is any indication that property and equipment,
land use rights, right-of-use assets, associates and joint ventures and other non-financial assets may be impaired. If any
such indication exists, or when impairment testing for an asset is required, the Group makes an estimate of the asset’s
recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and
is determined on an individual basis, unless the asset does not generate cash inflows that are largely independent of those
from other assets or groups of assets, in which case the recoverable amount is determined for the CGU to which the asset
belongs. Where the gross carrying amount of an asset exceeds its recoverable amount, the asset is considered to be impaired
and is written down to its recoverable amount. In assessing value in use of an asset, the estimated future cash flows are
discounted to their present values using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset.

An assessment is made at the end of each reporting period as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to
determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying
amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that
would have been determined, net of any depreciation or amortisation, had no impairment loss been recognised for the asset
in prior years. Any such reversal is recognised in profit or loss. After such a reversal, the depreciation or amortisation charge
is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over
its remaining useful life.

(24) Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that an
outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be
made of the amount of the obligation.

A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation.
When the effect of the time value of money is material, the best estimate is determined by discounting the related future
cash outflows. When determining the best estimate, the Group considers factors pertaining to a contingency such as
risks, uncertainties and time value of money. Where there is a range of possible outcome, and each possible outcome in
that range is as likely as any other, the best estimate is the mid-point of that range. In other cases, the best estimate is
determined according to the following circumstances:

— where the contingency involves a single item, the best estimate is the most likely outcome;

— where the contingency involves a large population of items, the best estimate is determined by weighting all possible
outcomes by their associated probabilities.

The Group reviews the carrying amount of a provision at the end of reporting period. The carrying amount is adjusted to the
current best estimate.

178
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(25) Contingent liabilities

A contingent liability is a possible obligation that arises from past events and whose existence will only be confirmed by
the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. It
can also be a present obligation arising from past events that is not recognised because it is not probable that an outflow
of economic resources will be required or the amount of obligation cannot be measured reliably. Contingent liabilities are
disclosed in the notes to the financial statements. When a change in the probability of an outflow occurs so that outflow is
probable and can be reliably estimated, it will then be recognised as a provision.

(26) Convertible instruments

Convertible instruments issued by the Group that can be converted to equity shares, where the number of shares to be
issued and the value of consideration to be received at that time do not vary, are accounted for as compound financial
instruments containing both liability and equity components.

The initial carrying amount of a compound financial instrument is allocated to its equity and liability components. The
amount recognised in equity is the difference between the fair value of the instrument as a whole and the separately
determined fair value of the liability component (including the value of any embedded derivatives other than the equity
component). Transaction costs that relate to the issue of a compound financial instrument are allocated to the liability and
equity components in proportion to the allocation of proceeds.

Subsequent to initial recognition, the liability component is measured at amortised cost using the effective interest method,
unless it is designated upon recognition at FVTPL. The equity component is not re-measured.

If the convertible instrument is converted, the liability component, together with the equity component, are transferred
to equity. If the convertible instrument is redeemed, the consideration paid and transaction fees for the redemption are
allocated to the liability and equity components. The method used to allocate the consideration and transaction costs is
the same as that used for issuance. After allocating the consideration and transaction costs, the difference between the
allocated and carrying amounts is charged to profit and loss if it relates to the liability component or directly recognised in
equity if it relates to the equity component.

(27) Preference shares and perpetual bonds

At initial recognition, the Group classifies the preference shares, perpetual bonds issued or their components as financial
liabilities or equity instruments based on their contractual terms and their economic substance after considering the
definition of financial liabilities and equity instruments. Preference shares and perpetual bonds issued containing both equity
and liability components are accounted for using the accounting policy for convertible instruments containing an equity
component.

Preference shares and perpetual bonds issued that should be classified as equity instruments are recognised in equity based
on the actual amount received. Any distribution of dividends or interests during the instrument’s duration is treated as profit
appropriation. When the preference shares and perpetual bonds are redeemed according to the contractual terms, the
redeemed amount is charged to equity.

(28) Cash and cash equivalents

Cash and cash equivalents refer to monetary assets, which are short-term, highly liquid, readily convertible into known
amounts of cash and subject to an insignificant risk of changes in value. Cash and cash equivalents comprise cash,
unrestricted balances with central banks, amounts due from banks and other financial institutions and reverse repurchase
agreements with original maturity of less than three months.

Annual Report 2021

179
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(29) Revenue recognition

Interest income

For all financial instruments measured at amortised cost and interest-generating financial instruments classified as financial
assets measured at FVTOCI, interest income is recorded at the effective interest rate, which is the rate that exactly discounts
estimated future cash receipts or payments through the expected life of the financial instrument, where appropriate, to the
gross carrying amount of the financial asset, or the amortised cost of financial liability. The calculation takes into account all
contractual terms of the financial instrument (for example, prepayment options) and includes any fees or incremental costs
that are directly attributable to the instrument and are an integral part of the effective interest rate, but not expected credit
losses.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial assets and is
recognised as interest income, except for:

(i) purchased or originated credit-impaired financial assets, whose interest income is calculated, since initial recognition,
by applying the credit adjusted effective interest rate to their amortised cost; and

(ii) purchased or originated financial assets that are not credit-impaired but have subsequently become credit-impaired,
whose interest income is calculated by applying the effective interest rate to their amortised cost (i.e. net of the
expected credit loss provision). If, in a subsequent period, the financial assets quality improve so that they are no
longer credit-impaired and the improvement in credit quality is related objectively to a certain event occurring after the
application of the above-mentioned rules, then the interest income is calculated by applying the effective interest rate
to their gross carrying amount.

Fee and commission income

The Group earns fee and commission income from a diverse range of services it provides to its customers. The fee and
commission income recognised by the Group reflects the amount of consideration to which the Group expects to be entitled
in exchange for transferring promised services to customers, and income is recognised when its performance obligation in
contracts is satisfied.

(i) The Group recognises income over time by measuring the progress towards the complete satisfaction of a
performance obligation, if one of the following criteria is met:

— the customer simultaneously receives and consumes the benefits provided by the Group’s performance as the
Group performs;

— the customer controls the service provided by the Group in the course of performance; or

— the Group does not provide service with an alternative use to the Group, and the Group has an enforceable right
to payment for performance completed to date.

(ii) In other cases, the Group recognises revenue at a point in time at which a customer obtains control of the promised
services.

Dividend income

Dividend income is recognised when the Group’s right to receive payment is established, it is probable that the related
economic benefits will flow to the Group and the related income can be reliably measured.

(30) Employee benefits

Employee benefits refer to all forms of consideration and other related expenditure given by the Group in exchange for
services rendered by employees. The benefits payable are recognised as liabilities during the period in which the employees
have rendered services to the Group. If the effect of discounting the benefits payable which are payable after one year from
the end of the reporting period is significant, the Group will present them at their present value.

180
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Short-term employee benefits

Employee wages or salaries, bonuses, social security contributions such as medical insurance, work injury insurance,
maternity insurance and housing fund, measured at the amount incurred or at the applicable benchmarks and rates, are
recognised as a liability as the employee provides services, with a corresponding charge to profit or loss or included in the
cost of assets where appropriate.

All eligible employees outside Chinese mainland participate in local defined contribution schemes. The Group contributes to
these defined contribution schemes based on the requirements of the local regulatory bodies and charge to profit or loss or
included in the cost of assets where appropriate.

Post-employment benefits-defined contribution plans

Pursuant to the relevant laws and regulations of the PRC, the Group participates in a defined contribution basic pension
insurance and unemployment insurance in the social insurance system established and managed by government
organisations. The Group makes contributions to basic pension insurance and unemployment insurance plans based on
the applicable benchmarks and rates stipulated by the government. Basic pension insurance and unemployment insurance
contributions are recognised as liabilities with a corresponding charge to profit or loss or included in the cost of assets where
appropriate as the related services are rendered by the employees.

In addition, employees in Chinese mainland also participate in a defined contribution retirement benefit plan established
by the Group (the “Annuity Plan”). The Group and its employees are required to contribute a certain percentage of the
employees’ previous year basic salaries to the Annuity Plan. The Group pays a fixed contribution into the Annuity Plan and
has no obligation to pay further contributions if the Annuity Plan does not hold sufficient assets to pay all employee benefits.
The contribution is charged to profit or loss when it is incurred.

Termination benefits

Termination benefits are payable as a result of either the Group’s decision to terminate an employee’s employment before
the due date of labor contract or an employee’s decision to accept an offer of benefits in exchange for the termination of
employment. The Group recognises termination benefits in profit or loss at the earlier of:

— when the Group can no longer withdraw an offer of those benefits;

— when the Group has a specific, formal restructure plan involving payment of termination benefits, and the plan has
started or informed each affected party about the influence of the plan, therefore each party formed reasonable
expectations.

Early retirement benefits

According to the Bank’s policy on early retirement benefits, certain employees are entitled to take leave of absence and
in return receive a certain level of staff salaries and related benefits from the Bank. The salaries and benefit payments are
made from the date of early retirement to the normal retirement date. Differences arising from changes in assumptions and
estimates of the present value of the liabilities are recognised in profit or loss.

(31) Income tax

Income tax comprises current and deferred tax. Income tax is recognised in the statement of profit or loss except that it
relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from
or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted by the end of each reporting period.

Annual Report 2021

181
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Deferred tax

Deferred tax is provided using the balance sheet liability method on temporary differences at the end of the reporting period
between the tax bases of assets and liabilities and their carrying amounts.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

(i) where the taxable temporary difference arises from the initial recognition of goodwill;

(ii) where the taxable temporary difference arises from the initial recognition of assets and liabilities in a transaction that
is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable
income (or deductible expenses).

In respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures,
deferred tax liabilities are recognised except where the timing of the reversal of the temporary differences can be controlled
and it is probable that the temporary differences will not be reversed in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused
tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except that deferred tax assets
are not recognised if the temporary difference arises from the initial recognition of assets and liabilities in a transaction and
that:

(i) transaction is not a business combination;

(ii) at the time of the transaction, it affects neither the accounting profit nor taxable income (or deductible expenses).

In respect of deductible temporary differences associated with investments in subsidiaries, associates and joint ventures,
deferred tax assets are recognised only to the extent that it is probable that the temporary differences will be reversed in the
foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

Deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when
the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted by the end of the reporting period, and reflect the corresponding tax effect.

The carrying amount of deferred tax assets is reviewed at the end of the reporting period and reduced to the extent that
it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred tax asset to be
utilised. When it is virtually probable that sufficient taxable income will be available, the reduced amount can be reversed
accordingly.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(32) Dividends
Dividends are recognised as a liability and deducted from equity when they are approved by the Bank’s shareholders in
general meetings and declared. Interim dividends are deducted from equity when they are approved and declared, and
no longer at the discretion of the Bank. A dividend for the year that is approved after the end of the reporting period is
disclosed as an event after the reporting period.

182
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

5. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES

In the process of applying the Group’s accounting policies, management is required to make judgements, estimates and
assumptions of the effects of uncertain future events on the financial statements. The most significant use of judgements,
estimates and assumptions concerning the uncertainty of the future at the end of the reporting period that have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
described below.

Measurement of the ECL allowance

The measurement of the ECL allowance for financial assets measured at amortised cost and FVTOCI and with exposure
arising from loan commitments and financial guarantee contracts, is an area that requires the use of complex models and
significant assumptions about future economic conditions and credit behavior (the likelihood of customers defaulting and
the resulting losses). Refer to Note 49(a) credit risk for the explanation of the inputs, assumptions and estimation techniques
used in measuring ECL.

Impairment of goodwill
The Group assesses whether goodwill is impaired at least on an annual basis and when circumstances indicate that the
carrying value may be impaired. The Group allocates the goodwill to the CGU or group of CGUs and makes an estimate
of the expected future cash flows from the CGU or group of CGUs and also to choose a suitable discount rate in order to
calculate the present value of those cash flows.

Income tax
Determining income tax provisions requires the Group to estimate the future tax treatment of certain transactions. The
Group evaluates tax implications of transactions in accordance with prevailing tax regulations and makes tax provisions
accordingly. In addition, deferred tax assets are recognised to the extent that it is probable that future taxable profit will be
available against which the deductible temporary differences can be utilised. This requires significant judgement on the tax
treatments of certain transactions and also significant assessment on the probability that adequate future taxable profits will
be available for the deferred tax assets to be recovered.

Fair value of financial instruments

If the market for a financial instrument is not active, the Group determines the fair value by using valuation technique,
including using recent arm’s length market transactions between knowledgeable and willing parties, if available, reference to
the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing
models. Valuation technique makes maximum use of observable market input. However, where observable market inputs are
not available, management makes estimates on such unobservable market inputs.

Determination of control over investees

Management applies its judgement to determine whether the control indicators set out in Note 4(2) indicate that the Group
controls securitisation vehicles, wealth management products, investment funds, trust plans, asset management plans and
asset-backed securities.

Annual Report 2021

183
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Securitisation vehicles

Certain securitisation vehicles sponsored by the Group under its securitisation programme are run according to
predetermined criteria at the initial set up of the vehicles. In addition, the Group is exposed to variability of returns from the
vehicles through holding interests in the vehicles and the day-to-day servicing of the underlying assets in the vehicles which
is carried out by the Group under a servicing contract. Key decisions are usually required only when underlying assets go into
default. Therefore, in considering whether it has control, the Group considers whether it can use its power to influence these
vehicles’ returns.

Wealth management products, investment funds, trust plans, asset management plans and
asset-backed securities

The Group acts as manager or investor in a number of wealth management products, investment funds, trust plans, asset
management plans and assets-backed securities. When assessing whether the Group controls such a structured entity, the
Group would determine whether it exercises the decision-making rights as a principal or an agent and usually focuses on the
assessment of the aggregate economic interests of the Group in the entity (comprising any carried interests and expected
management fees) and the decision-making authority of the entity. The Group would also determine whether another entity
with decision-making rights is acting as an agent for it.

6. NET INTEREST INCOME

2021 2020
Interest income on:
  Loans and advances to customers: 832,136 766,407
   Corporate loans and advances 467,973 436,520
  Personal loans 353,733 318,272
  Discounted bills 10,430 11,615
  Financial investments 262,827 243,545
  Due from central banks 42,027 42,022
  Due from banks and other financial institutions (i) 25,228 40,547
1,162,218 1,092,521
Interest expense on:
  Due to customers (397,625) (364,173)
  Due to banks and other financial institutions (ii) (44,387) (51,477)
  Debt securities issued and certificates of deposit (29,526) (30,106)
(471,538) (445,756)
Net interest income 690,680 646,765

(i) Includes interest income on reverse repurchase agreements.

(ii) Includes interest expense on due to central banks and repurchase agreements.

The above interest income and expense are related to financial instruments which are not measured at fair value through
profit or loss.

184
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

7. NET FEE AND COMMISSION INCOME

2021 2020
Settlement, clearing business and cash management 41,270 39,101
Personal wealth management and private banking services (i) 30,001 29,630
Investment banking business 22,416 21,460
Bank card business 16,679 18,623
Corporate wealth management services (i) 15,165 15,554
Guarantee and commitment business 9,756 10,101
Asset custody business (i) 8,738 7,545
Trust and agency services (i) 1,808 1,617
Other 2,894 3,037
Fee and commission income 148,727 146,668
Fee and commission expense (15,703) (15,453)
Net fee and commission income 133,024 131,215

(i) Included in personal wealth management and private banking services, corporate wealth management services, asset
custody business and trust and agency services above is an amount of RMB20,999 million (2020: RMB16,584 million)
with respect to trust and other fiduciary activities for 2021.

8. NET TRADING INCOME

2021 2020
Debt securities 6,781 5,964
Derivatives and other 2,370 (6,938)
Equity investments (196) 3,196
8,955 2,222

The above amounts mainly include gains and losses arising from the buying and selling of, the interest income and expense
on, and the changes in fair value of financial assets and liabilities held for trading.

9. NET GAINS ON FINANCIAL INVESTMENTS

2021 2020
Dividend income from equity investments designated as at FVTOCI, including: 3,388 2,355
  Derecognised during the year 291 133
  Held at the year end 3,097 2,222
Gains on financial instruments measured at FVTPL, net, including: 10,739 7,402
  Net losses on financial instruments designated as at FVTPL (17,674) (8,859)
Net gains on disposal of financial instruments measured at FVTOCI, net 2,084 2,389
Other 229 (317)
16,440 11,829

Annual Report 2021

185
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

10. OTHER OPERATING INCOME, NET

2021 2020
Net premium income 46,024 47,573
Operating cost of insurance business (49,706) (53,366)
Lease income 13,016 12,756
Net gains on disposal of property and equipment, repossessed assets and other 2,182 1,323
Other 265 (242)
11,781 8,044

11. OPERATING EXPENSES

2021 2020
Staff costs:
  Salaries and bonuses 90,250 82,416
  Staff benefits 30,800 29,915
  Post-employment benefits — defined contribution plans (i) 18,313 14,241
139,363 126,572
Property and equipment expenses:
  Depreciation charge for property and equipment 14,596 13,689
  Depreciation charge for right-of-use assets and other leasing expense 8,173 8,348
  Repairs and maintenance charges 4,106 4,086
  Utility expenses 1,947 1,837
28,822 27,960
Amortisation 3,125 2,607
Other administrative expenses (ii) 26,539 25,686
Taxes and surcharges 9,318 8,524
Other 29,060 15,236
236,227 206,585

(i) The defined contribution plans mainly include pension insurance, unemployment insurance and the Annuity Plan.

(ii) The principal auditor’s remuneration of RMB183 million for the year (2020: RMB224 million) is included in other
administrative expenses.

186
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

12. DIRECTORS’ AND SUPERVISORS’ REMUNERATION

Details of the directors’ and supervisors’ remuneration before tax, as disclosed pursuant to the Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited and the Hong Kong Companies Ordinance, are as follows:

Year ended 31 December 2021

Contribution by
the employer
to social
insurance,
housing
allowance,
annuities, and
Remuneration additional Total
paid medical remuneration
Name Position before tax insurances Fees before tax
RMB’000 RMB’000 RMB’000 RMB’000
(1) (2) (3) (4)=(1)+(2)+(3)
Chen Siqing Chairman, Executive Director 619 201 – 820
Liao Lin (i) Vice Chairman, Executive Director, President 614 197 – 811
Huang Liangbo (ii) Chairman of the Board of Supervisors 310 100 – 410
Zheng Guoyu (iii) Executive Director, Senior Executive
  Vice President 186 65 – 251
Wang Jingwu (iv) Executive Director, Senior Executive
  Vice President, Chief Risk Officer 557 194 – 751
Lu Yongzhen Non-executive Director – – – –
Feng Weidong Non-executive Director – – – –
Cao Liqun Non-executive Director – – – –
Chen Yifang (v) Non-executive Director – – – –
Dong Yang (vi) Non-executive Director – – – –
Anthony Francis Neoh Independent Non-executive Director – – 520 520
Yang Siu Shun Independent Non-executive Director – – 470 470
Shen Si Independent Non-executive Director – – 470 470
Nout Wellink Independent Non-executive Director – – 470 470
Fred Zuliu Hu Independent Non-executive Director – – 410 410
Zhang Wei Shareholder Supervisor 939 278 – 1,217
Huang Li Employee Supervisor – – 50 50
Wu Xiangjiang Employee Supervisor – – 50 50
Shen Bingxi External Supervisor – – – –
Zhang Jie (vii) External Supervisor – – 24 24
Yang Guozhong (viii) Former Chairman of the Board of Supervisors 104 33 – 137
Zheng Fuqing (ix) Former Non-executive Director – – – –
Mei Yingchun (x) Former Non-executive Director – – – –
Qu Qiang (xi) Former External Supervisor – – 163 163
Total 3,329 1,068 2,627 7,024

Note: Since January 2015, the remuneration to the Chairman of the Board of Directors, the President, the Chairman of the Board
of Supervisors and other executives of the Bank has followed the State’s policies relating to the remuneration reform on
executives of central enterprises.

The total compensation packages for the Chairman of the Board of Directors, President, Chairman of the Board of
Supervisors, Executive Directors, and Shareholder Representative Supervisors of the Bank have not been finalised in
accordance with the regulations of the PRC relevant authorities. The remuneration not yet accrued is not expected to have a
significant impact on the Group’s 2021 consolidated financial statements. The total compensation packages will be further
disclosed when determined by the relevant authorities.

Annual Report 2021

187
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

In accordance with applicable national regulations, the incentive income for 2018–2020 was paid to the Chairman, the
President and Senior Executive Vice President of the Bank in 2021 based on their specific tenure and performance appraisal
results. Accordingly, the Bank accrued RMB16 thousand, RMB9 thousand and RMB7 thousand for Mr. Chen Siqing, Mr. Liao
Lin and Mr. Wang Jingwu respectively, as additional contribution to the Annuity Plan in 2021.

Fees of Mr. Huang Li and Mr. Wu Xiangjiang are their allowances obtained as Employee Supervisors of the Bank, excluding
their remuneration with the Bank in accordance with the employee remuneration system.

As at the approval date of these financial statements, changes of directors and supervisors of the Bank were as follows:

(i) On 25 February 2021, the Board of Directors elected Mr. Liao Lin as Vice Chairman of the Bank and appointed Mr. Liao
Lin as President of the Bank, and his qualification was approved by CBIRC in March 2021. Mr. Liao Lin ceased to act as
Chief Risk Officer of the Bank after he took office as President.

(ii) At the First Extraordinary General Meeting of 2021 held on 29 July 2021, Mr. Huang Liangbo was elected as
Shareholder Supervisor of the Bank, and his term of office as Shareholder Supervisor of the Bank started from the day
of approval by the Shareholders’ General Meeting, and his term of office as Chairman of the Board of Supervisors of
the Bank took effect simultaneously.

(iii) On 24 September 2021, the Board of Directors appointed Mr. Zheng Guoyu as Senior Executive Vice President of the
Bank. At the Second Extraordinary General Meeting of 2021 held on 25 November 2021, Mr. Zheng Guoyu was elected
as Executive Director of the Bank, and his qualification was approved by CBIRC in December 2021.

(iv) At the First Extraordinary General Meeting of 2021 held on 29 July 2021, Mr. Wang Jingwu was elected as Executive
Director of the Bank, and his qualification was approved by CBIRC in September 2021. On 24 September 2021, the
Board of Directors appointed Mr. Wang Jingwu as Chief Risk Officer of the Bank.

(v) At the Annual General Meeting for the Year 2020 held on 21 June 2021, Ms. Chen Yifang was elected as Non-
executive director of the Bank, and her qualification was approved by CBIRC in August 2021.

(vi) At the Second Extraordinary General Meeting of 2021 held on 25 November 2021, Mr. Dong Yang was elected as Non-
executive Director of the Bank, and his qualification was approved by CBIRC in January 2022.

(vii) At the Second Extraordinary General Meeting of 2021 held on 25 November 2021, Mr. Zhang Jie was elected as
External Supervisor of the Bank, and his term of office as External Supervisor of the Bank started from the day of
approval by the Shareholders’ General Meeting.

(viii) In March 2021, Mr. Yang Guozhong ceased to act as Shareholder Supervisor and Chairman of the Board of Supervisors
of the Bank due to change of job assignments.

(ix) In January 2022, Mr. Zheng Fuqing ceased to act as Non-executive Director of the Bank due to expiration of his term of
office.

(x) In February 2021, Ms. Mei Yingchun ceased to act as Non-executive Director of the Bank due to expiration of her term
of office.

(xi) In November 2021, Mr. Qu Qiang ceased to act as External Supervisor of the Bank due to change of job assignments.

188
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Year ended 31 December 2020

Contribution
by the
employer to
social
insurance,
housing
allowance,
annuities and Actual
additional Total Of which: amount of
Discretionary medical emoluments deferred remuneration
Name Position Fees Remuneration bonuses insurances before tax payment paid before tax
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(1) (2) (3) (4) (5)=(1)+(2)+(3)+(4) (6) (7)=(5)-(6)
Chen Siqing Chairman, Executive Director – 354 498 159 1,011 – 1,011
Liao Lin (i) Vice Chairman, Executive Director, President – 319 448 154 921 – 921
Lu Yongzhen Non-executive Director – – – – – – –
Zheng Fuqing Non-executive Director – – – – – – –
Feng Weidong Non-executive Director – – – – – – –
Cao Liqun Non-executive Director – – – – – – –
Anthony Francis Neoh Independent Non-executive Director 520 – – – 520 – 520
Yang Siu Shun Independent Non-executive Director 470 – – – 470 – 470
Shen Si (ii) Independent Non-executive Director 470 – – – 470 – 470
Nout Wellink Independent Non-executive Director 470 – – – 470 – 470
Fred Zuliu Hu Independent Non-executive Director 410 – – – 410 – 410
Zhang Wei Shareholder Supervisor – 580 1,285 234 2,099 515 1,584
Huang Li Employee Supervisor 50 – – – 50 – 50
Wu Xiangjiang (iii) Employee Supervisor 13 – – – 13 – 13
Qu Qiang External Supervisor 250 – – – 250 – 250
Shen Bingxi External Supervisor – – – – – – –
Gu shu (iv) Former Vice Chairman of the Board
  of Directors, Executive Director, President – 354 498 159 1,011 – 1,011
Yang Guozhong (v) Former Chairman of the Board of Supervisors – 354 498 159 1,011 – 1,011
Hu Hao Former Executive Director, Senior Executive
  Vice President – 27 37 13 77 – 77
Ye Donghai Former Non-executive Director – – – – – – –
Mei Yingchun (vi) Former Non-executive Director – – – – – – –
Dong Shi Former Non-executive Director – – – – – – –
Sheila Colleen Bair (vii) Former Independent Non-executive Director 115 – – – 115 – 115
Hui Ping (viii) Former Employee Supervisor 37 – – – 37 – 37

2,805 1,988 3,264 878 8,935 515 8,420

Note: Since January 2015, the remuneration to the Chairman of the Board of Directors, the President, the Chairman of the Board
of Supervisors and other executives of the Bank has followed the State’s policies relating to the remuneration reform on
executives of central enterprises.

The remuneration before tax payable to Directors and Supervisors for 2020 set out in the table above represents the total
amount of annual remuneration for each of these individuals, which include the amounts disclosed in the 2020 Annual
Report.

Pursuant to the PRC relevant regulations, a portion of the discretionary bonus payments for the Chairman of the Board
of Directors, the President, the Chairman of the Board of Supervisors, Executive Directors and other senior management
members are deferred based on the future performance.

Fees of Mr. Huang Li, Mr. Wu Xiangjiang and Mr. Hui Ping were their allowances obtained as Employee Supervisors of the
Bank, excluding their remuneration with the Bank in accordance with the employee remuneration system.

Annual Report 2021

189
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

As at the approval date of the consolidated financial statements for the year ended 31 December 2020, changes of directors
and supervisors of the Bank were as follows:

(i) At the Annual General Meeting of the Bank for the Year 2019 held on 12 June 2020, Mr. Liao Lin was elected as
Executive Director of the Bank, and his qualification was approved by CBIRC in July 2020. On 25 February 2021,
the Board of Directors of the Bank elected Mr. Liao Lin as Vice Chairman of the Bank and appointed Mr. Liao Lin as
President of the Bank, and his qualification was approved by CBIRC in March 2021. Mr. Liao Lin ceased to act as Chief
Risk Officer of the Bank after he took office as President.

(ii) At the Annual General Meeting of the Bank for the Year 2019 held on 12 June 2020, Mr. Shen Si was re-elected as
Independent Non-executive Director of the Bank, and his new term of office started from the day of approval at the
Annual General Meeting.

(iii) At the special meeting of the first session of employee representative assembly of the Bank held on 15 September
2020, Mr. Wu Xiangjiang was elected as Employee Supervisor of the Bank, and his term of office started from the day
of approval by the employee representative assembly.

(iv) In December 2020, Mr. Gu Shu ceased to act as Vice Chairman, Executive Director and President of the Bank due to
change of job assignments.

(v) At the First Extraordinary General Meeting of 2020 held on 8 January 2020, Mr. Yang Guozhong was elected as
Shareholder Supervisor of the Bank, and his new term of office started from the day of approval by the Shareholders’
General Meeting, and his term of office as Chairman of the Board of Supervisors of the Bank took effect
simultaneously. In March 2021, Mr. Yang Guozhong ceased to act as Shareholder Supervisor and Chairman of the
Board of Supervisors of the Bank due to change of job assignments. 

(vi) In February 2021, Ms. Mei Yingchun ceased to act as Non-executive Director of the Bank due to expiration of her term
of office.

(vii) In March 2020, Ms. Sheila Colleen Bair ceased to act as Independent Non-executive Director of the Bank due to
expiration of her term of office.

(viii) In September 2020, Mr. Hui Ping ceased to act as Employee Supervisor of the Bank due to his age.

The Non-executive Directors of the Bank who were recommended by Huijin received emoluments from Huijin in respect of
their services during the year.

In 2021, there was no arrangement under which a Director or a Supervisor of the Bank waived or agreed to waive any
remuneration (2020: Nil).

In 2021, no emolument was paid by the Group to any of the Directors or Supervisors as an inducement to join or upon
joining the Group or as a compensation for loss of office (2020: Nil).

190
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

13. FIVE HIGHEST PAID INDIVIDUALS

The five highest paid individuals of the Group are employees of the Bank’s subsidiaries. Their emoluments were determined
based on the prevailing market rates in the respective countries/regions where the subsidiaries are operating. None of them
are directors, supervisors or key management personnel of the Bank whose emoluments are disclosed in notes 12 and 47(g)
to the consolidated financial statements. Details of the emoluments in respect of the five highest paid individuals are as
follows:

2021 2020
RMB’000 RMB’000
Salaries and allowances 15,998 15,889
Discretionary bonuses 66,495 39,256
Other 349 8,772
82,842 63,917

The number of these individuals whose emoluments fell within the following bands is set out below:

Number of employees
2021 2020
RMB10,500,001 Yuan to RMB11,000,000 Yuan 1 2
RMB11,000,001 Yuan to RMB11,500,000 Yuan 1 –
RMB11,500,001 Yuan to RMB12,000,000 Yuan 1 –
RMB13,500,001 Yuan to RMB14,000,000 Yuan – 1
RMB14,000,001 Yuan to RMB14,500,000 Yuan – 1
RMB14,500,001 Yuan to RMB15,000,000 Yuan – 1
RMB23,500,001 Yuan to RMB24,000,000 Yuan 1 –
RMB25,000,001 Yuan to RMB25,500,000 Yuan 1 –
5 5

In 2021, no emoluments were paid by the Group to any of these non-director and non-supervisor individuals as an
inducement to join or upon joining the Group (2020: Nil).

14. IMPAIRMENT LOSSES ON ASSETS

2021 2020
Loans and advances to customers (note 23) 168,267 171,830
Other 34,356 30,838
202,623 202,668

Annual Report 2021

191
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

15. INCOME TAX EXPENSE

(a) Income tax expense

2021 2020
Current income tax expense:
  Chinese mainland 79,459 74,022
  Hong Kong SAR and Macau SAR 1,768 1,776
  Other overseas jurisdictions 1,950 2,347
83,177 78,145
Deferred income tax expense (8,494) (3,704)
74,683 74,441

(b) Reconciliation between income tax and accounting profit

PRC statutory income tax rate is 25%. Taxes on profits assessable elsewhere have been calculated at the applicable rates
of tax prevailing in the countries/regions in which the Group operates in. The Group has reconciled income tax expense
applicable to profit before taxation at the PRC statutory income tax rate to actual income tax expense for the Group as
follows:

2021 2020
Profit before taxation 424,899 392,126
Tax at the PRC statutory income tax rate 106,225 98,032
Effects of different applicable rates of tax prevailing in other countries/regions (827) (1,521)
Effects of non-deductible expenses (i) 22,319 20,478
Effects of non-taxable income (ii) (51,427) (42,803)
Effects of profits attributable to associates and joint ventures (717) (326)
Effects of other (890) 581
Income tax expense 74,683 74,441

(i) The non-deductible expenses mainly represent non-deductible impairment provision and write-offs.

(ii) The non-taxable income mainly represents interest income arising from the PRC government bonds and municipal
debts.

16. PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT COMPANY

The consolidated profit attributable to equity holders of the parent company for the year ended 31 December 2021 includes
a profit of RMB323,100 million (2020: RMB304,267 million) which has been dealt with in the financial statements of the
Bank (Note 51).

192
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

17. DIVIDENDS

2021 2020
Dividends on ordinary shares declared and paid:
  Final dividend on ordinary shares for 2020: RMB0.2660 per share
   (2019: RMB0.2628 per share) 94,804 93,664
Dividends or interests declared and paid to other equity instrument holders:
  Dividends on preference shares 6,047 5,279
  Interests on perpetual bonds 3,560 3,560
9,607 8,839

2021 2020
Dividends on ordinary shares proposed for approval
  (not recognised as at 31 December):
  Final dividend on ordinary shares for 2021: RMB0.2933 per share
   (2020: RMB0.2660 per share) 104,534 94,804

18. EARNINGS PER SHARE

2021 2020
Earnings:
  Profit for the year attributable to equity holders of the parent company 348,338 315,906
  Less: P rofit for the year attributable to other equity instrument
  holders of the parent company (9,607) (8,839)
  Profit for the year attributable to ordinary shareholders of the parent company 338,731 307,067
Shares:
  Weighted average number of ordinary shares in issue (in million shares) 356,407 356,407
Basic earnings per share (RMB yuan) 0.95 0.86
Diluted earnings per share (RMB yuan) 0.95 0.86

Basic and diluted earnings per share were calculated using the profit for the year attributable to ordinary shareholders of the
parent company divided by the weighted average number of ordinary shares in issue. 

Annual Report 2021

193
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

19. CASH AND BALANCES WITH CENTRAL BANKS

31 December 31 December
2021 2020
Cash on hand 62,872 64,833
Balances with central banks
  Mandatory reserves (i) 2,459,402 2,601,657
  Surplus reserves (ii) 338,551 619,968
  Fiscal deposits and other 236,211 249,836
Accrued interest 1,402 1,501
3,098,438 3,537,795

(i) The Group is required to place mandatory reserve deposits and other restricted deposits with the PBOC and certain
central banks of overseas countries or regions where it has operations. They are not available for use in the Group’s
daily operations. As at 31 December 2021, the mandatory deposit reserve ratios of the domestic branches of the Bank
in respect of customer deposits denominated in RMB and foreign currencies were 10%(31 December 2020: 11%) and
9% (31 December 2020: 5%) respectively. The mandatory reserve funds placed by domestic subsidiaries of the Group
are determined by the PBOC. The amounts of mandatory reserve deposits placed with the central banks of those
countries or regions outside Chinese mainland are determined by local jurisdictions.

(ii) Surplus reserves with the PBOC include funds for the purpose of cash settlement and other kinds of unrestricted
deposits.

20. DUE FROM BANKS AND OTHER FINANCIAL INSTITUTIONS

31 December 31 December
2021 2020
Deposits with banks and other financial institutions:
  Banks operating in Chinese mainland 243,440 433,575
  Other financial institutions operating in Chinese mainland 10,508 2,728
  Banks and other financial institutions operating outside Chinese mainland 90,511 82,807
  Accrued interest 2,347 4,294
346,806 523,404
Less: Allowance for impairment losses (349) (491)
346,457 522,913
Placements with banks and other financial institutions:
  Banks operating in Chinese mainland 97,106 88,934
  Other financial institutions operating in Chinese mainland 188,935 204,585
  Banks and other financial institutions operating outside Chinese mainland 192,030 262,922
  Accrued interest 3,364 3,279
481,435 559,720
Less: Allowance for impairment losses (742) (736)
480,693 558,984
827,150 1,081,897

194
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

21. DERIVATIVE FINANCIAL INSTRUMENTS

A derivative is a financial instrument, the value of which changes in response to the changes in a specified interest rate,
financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or
other similar variables. The Group uses derivative financial instruments including forwards, swaps, options and futures.

The notional amount of a derivative represents the underlying amount of the specific financial instruments mentioned above.
It indicates the volume of business transacted by the Group but does not reflect the risk.

The notional amounts and fair values of derivative financial instruments held by the Group are set out below:

31 December 2021 31 December 2020

Notional Fair values Notional Fair values
amounts Assets Liabilities amounts Assets Liabilities
Exchange rate contracts 5,107,815 44,956 (41,578) 5,779,609 95,260 (91,559)
Interest rate contracts 2,018,010 15,706 (15,457) 2,199,849 23,002 (25,248)
Commodity derivatives and other 975,169 15,478 (14,302) 804,987 15,893 (24,166)
8,100,994 76,140 (71,337) 8,784,445 134,155 (140,973)

(1) Cash flow hedges

The Group’s cash flow hedges consist of interest rate swap contracts, currency swap contracts, equity and other derivatives
that are used to protect against exposures to variability of future cash flows.

Included in the above derivative financial instruments, those designated as hedging instruments in cash flow hedges are set
out below:

31 December 2021
Notional amounts with remaining maturity of Fair values
Over three Over one
Within months year but
three but within within Over
months one year five years five years Total Assets Liabilities
Interest rate swap contracts 64 2,878 5,283 127 8,352 8 (146)
Currency swap contracts 47,204 43,049 1,391 – 91,644 436 (948)
Equity and other derivatives 4,383 1,243 49 4 5,679 – (96)
51,651 47,170 6,723 131 105,675 444 (1,190)

31 December 2020
Notional amounts with remaining maturity of Fair values
Over three Over one
Within months year but
three but within within Over
months one year five years five years Total Assets Liabilities
Interest rate swap contracts 209 15,909 8,730 239 25,087 61 (546)
Currency swap contracts 71,490 77,779 1,211 – 150,480 4,150 (1,243)
Equity derivatives 29 3 33 3 68 – (15)
71,728 93,691 9,974 242 175,635 4,211 (1,804)

Annual Report 2021

195
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Details of the Group’s hedged risk exposures in cash flow hedges and the corresponding effect on equity are as follows:

31 December 2021

Carrying amount of hedged items Hedging instruments

Effect on other Accumulated
comprehensive effect on other
income during comprehensive
Assets Liabilities the current year income
Debt securities (i) 19,617 (35,786) 192 161
Loans and advances to customers 4,708 – 74 (8)
Other (ii) 14,027 (28,533) 108 (4,416)
38,352 (64,319) 374 (4,263)

(i) Debt securities are included in financial investments measured at FVTOCI, financial investments measured at amortised
cost and debt securities issued.

(ii) Other hedged items are included in due from banks and other financial institutions, other assets, due to banks and
other financial institutions, customer deposits and other liabilities.

31 December 2020

Carrying amount of hedged items Hedging instruments

Effect on other Accumulated
comprehensive effect on other
income during comprehensive
Assets Liabilities the current year income
Debt securities (i) 58,998 (14,779) (62) (31)
Loans and advances to customers 2,278 – (65) (82)
Other (ii) 58,190 (308,298) (19) (4,524)
119,466 (323,077) (146) (4,637)

(i) Debt securities are included in financial investments measured at FVTOCI, financial investments measured at amortised
cost and debt securities issued.

(ii) Other hedged items are included in due from banks and other financial institutions, other assets, due to banks and
other financial institutions, certificates of deposit, customer deposits and other liabilities.

There was no ineffectiveness recognised in profit or loss that arises from the cash flow hedges in 2021 (2020: Nil).

(2) Fair value hedges

Fair value hedges are used by the Group to protect against changes in fair value of financial assets and financial liabilities
due to movements in market interest rates. The Group mainly used interest rate swaps as hedging instruments to hedge the
interest risk of financial assets and financial liabilities.

The changes in fair value of the hedging instruments and net gains or losses arising from the hedged risk relating to the
hedged items are set out below:

2021 2020
Gain/(loss) arising from fair value hedges, net:
  Hedging instruments 2,207 (1,486)
  Hedged risk relating to the hedged items (2,258) 1,437
(51) (49)

196
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Included in the above derivative financial instruments, those designated as hedging instruments in fair value hedges are
interest rate swaps and the details are set out below:

Notional amounts with remaining maturity of Fair values

Over three Over one
Within months year but
three but within within Over
months one year five years five years Total Assets Liabilities
31 December 2021 4,623 7,187 41,439 21,108 74,357 627 (1,071)
31 December 2020 3,074 31,267 38,119 24,984 97,444 277 (3,119)

Details of the Group’s hedged risk exposures in fair value hedges are set out below:

31 December 2021
Accumulated adjustments
Carrying amount of hedged items to the fair value of hedged items
Assets Liabilities Assets Liabilities
Debt securities (i) 62,768 (339) 21 (3)
Loans and advances to customers 2,441 – (21) –
Other (ii) 955 (6,954) (1) 59
66,164 (7,293) (1) 56

(i) Debt securities are included in financial investments measured at FVTOCI, financial investments measured at amortised
cost and debt securities issued.

(ii) Other hedged items are included in due from banks and other financial institutions, repurchase agreements and
customer deposits.

31 December 2020
Accumulated adjustments
Carrying amount of hedged items to the fair value of hedged items
Assets Liabilities Assets Liabilities
Debt securities (i) 58,827 (5,062) 6,908 (237)
Loans and advances to customers 5,435 – 1,462 –
Other (ii) 13,289 (10,028) 166 68
77,551 (15,090) 8,536 (169)

(i) Debt securities are included in financial investments measured at FVTOCI, financial investments measured at amortised
cost and debt securities issued.

(ii) Other hedged items are included in reverse repurchase agreements, due to banks and other financial institutions,
repurchase agreements and certificates of deposit.

(3) Net investment hedges

The Group’s consolidated statement of financial position is affected by exchange differences between the functional
currency of the Bank and functional currencies of its branches and subsidiaries. The Group hedges such exchange exposures
under certain circumstances. Hedging is undertaken by using customer deposits taken in the same currencies as the
functional currencies of related branches and subsidiaries which are accounted for as hedges of certain net investments in
foreign operations.

As at 31 December 2021, an accumulated net gains from the hedging instrument of RMB1,650 million was recognised in
other comprehensive income (31 December 2020: accumulated net gains of RMB889 million). As at 31 December 2021,
there was no ineffectiveness in profit or loss that arises from the net investment hedges (31 December 2020: Nil).

Annual Report 2021

197
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(4) Offsetting of financial instruments

In accordance with the principle of offsetting financial instruments, the Group offsets certain derivative financial assets and
derivative financial liabilities, and presents the net amounts after offsetting in the financial statements.

31 December 2021 31 December 2020

Gross amounts Net amounts Gross amounts Net amounts
Derivative financial assets 36,220 25,442 48,896 37,045
Derivative financial liabilities 41,792 31,014 51,690 39,839

(5) Counterparty credit risk-weighted assets of derivative financial instruments

The credit risk-weighted assets in respect of the above derivatives of the Group as at the end of the reporting period are as
follows:

31 December 31 December
2021 2020
Counterparty credit default risk-weighted assets 126,653 147,747
  Including: Non-netting settled credit default risk-weighted assets 120,128 76,703
        Netting settled credit default risk-weighted assets 6,525 71,044
Credit value adjustment risk-weighted assets 67,911 48,366
Central counterparties credit risk-weighted assets 1,751 2,351
196,315 198,464

The credit risk-weighted assets of derivative financial instruments were calculated with reference to Regulation Governing
Capital of Commercial Banks (Provisional).

22. REVERSE REPURCHASE AGREEMENTS

31 December 31 December
2021 2020
Measured at amortised cost:
  Reverse repurchase agreements-bills 96,863 186,189
  Reverse repurchase agreements-securities 409,047 398,535
  Accrued interest 59 69
  Less: Allowance for impairment losses (128) (117)
505,841 584,676
Measured at FVTPL:
  Reverse repurchase agreements-securities 114,994 126,192
  Cash advanced as collateral on securities borrowing 42,661 28,420
157,655 154,612
663,496 739,288

198
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(i) Based on master repurchase agreements and related supplementary agreements, the Group offsets certain reverse
repurchase agreements and repurchase agreements, and presents net asset (or liability) amounts as reverse repurchase
agreements (or repurchase agreements) in the consolidated financial statements in accordance with the accounting
policy of offsetting.

31 December 2021 31 December 2020

Gross amounts Net amounts Gross amounts Net amounts
Reverse repurchase agreements 236,536 104,765 203,791 116,390
Repurchase agreements 263,394 131,623 218,583 131,182

(ii) As part of the reverse repurchase agreements, the Group has received securities that it is allowed to sell or repledge in
the absence of default by their owners. As at 31 December 2021, the Group had received securities with a fair value
of approximately RMB143,559 million on such terms (31 December 2020: RMB184,324 million). Of these, securities
with a fair value of approximately RMB107,698 million had been repledged under repurchase agreements (31
December 2020: RMB119,984 million). The Group has an obligation to return the securities to its counterparties at the
maturity of the contract. If the collateral received declines in value, the Group may, in certain circumstances, require
additional collateral.

23. LOANS AND ADVANCES TO CUSTOMERS

23.1 Loans and advances to customers by type of measurement:

31 December 31 December
2021 2020
Measured at amortised cost:
  Corporate loans and advances 12,181,841 11,087,741
  — Loans 12,000,191 10,913,984
   — Finance lease 181,650 173,757
  Personal loans 7,944,781 7,115,279
  Discounted bills 2,370 3,091
  Accrued interest 45,707 42,311
20,174,699 18,248,422
Less: A
 llowance for impairment losses of loans and advances to customers
  measured at amortised cost (note 23.2(a)) (603,764) (530,300)
19,570,935 17,718,122
Measured at FVTOCI:
  Corporate loans and advances
  — Loans 9,271 11,078
  Discounted bills 525,388 403,205
  Accrued interest 12 9
534,671 414,292
Measured at FVTPL:
  Corporate loans and advances
  — Loans 3,594 3,914
20,109,200 18,136,328

As at 31 December 2021, the Group’s allowance for impairment losses on loans and advances to customers measured at
FVTOCI was RMB219 million, refer to note 23.2(b) (31 December 2020: RMB861 million).

Annual Report 2021

199
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

23.2 Impairment provision

(a) Movements of the allowance for impairment losses on loans and advances to customers
measured at amortised cost are as follows:

Stage 1 Stage 2 Stage 3 Total

Balance at 1 January 2021 223,703 89,151 217,446 530,300
Transfer:
  — to stage 1 17,860 (15,581) (2,279) –
  — to stage 2 (9,856) 14,056 (4,200) –
  — to stage 3 (3,534) (35,319) 38,853 –
Charge for the year 41,831 58,906 67,614 168,351
Write-offs and transfer out – – (100,447) (100,447)
Recoveries of loans and advances
  previously written off – – 9,020 9,020
Other movements (628) (564) (2,268) (3,460)
Balance at 31 December 2021 269,376 110,649 223,739 603,764

Stage 1 Stage 2 Stage 3 Total

Balance at 1 January 2020 215,316 78,494 184,688 478,498
Transfer:
  — to stage 1 24,002 (22,507) (1,495) –
  — to stage 2 (6,913) 9,311 (2,398) –
  — to stage 3 (4,838) (53,754) 58,592 –
(Reverse)/charge for the year (2,984) 78,244 95,941 171,201
Write-offs and transfer out – (7) (120,317) (120,324)
Recoveries of loans and advances
  previously written off – – 4,977 4,977
Other movements (880) (630) (2,542) (4,052)
Balance at 31 December 2020 223,703 89,151 217,446 530,300

200
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(b) Movements of the allowance for impairment losses on loans and advances to customers
measured at FVTOCI are as follows:

Stage 1 Stage 2 Stage 3 Total

Balance at 1 January 2021 211 – 650 861
Transfer:
  — to stage 1 – – – –
  — to stage 2 – – – –
  — to stage 3 – – – –
Reverse for the year (13) – (71) (84)
Write-offs and transfer out – – (551) (551)
Other movements (7) – – (7)
Balance at 31 December 2021 191 – 28 219

Stage 1 Stage 2 Stage 3 Total

Balance at 1 January 2020 227 – 5 232
Transfer:
  — to stage 1 – – – –
  — to stage 2 – – – –
  — to stage 3 – – – –
(Reverse)/charge for the year (16) – 645 629
Other movements (0) – – (0)
Balance at 31 December 2020 211 – 650 861

24. FINANCIAL INVESTMENTS

31 December 31 December
2021 2020
Financial investments measured at FVTPL (a) 623,223 784,483
Financial investments measured at FVTOCI (b) 1,803,604 1,540,988
Financial investments measured at amortised cost (c) 6,830,933 6,265,668
9,257,760 8,591,139

Annual Report 2021

201
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(a) Financial investments measured at FVTPL

31 December 31 December
2021 2020
Financial investments held for trading
Debt securities, analysed by type of issuers:
  Governments and central banks 97,364 73,219
  Policy banks 12,670 14,794
  Banks and other financial institutions 58,218 56,114
  Corporate entities 92,666 102,630
260,918 246,757
Equity investments 9,417 10,497
270,335 257,254
Financial investments designated as at FVTPL
Debt securities, analysed by type of issuers:
  Governments and central banks – 12,858
  Policy banks – 1,755
  Banks and other financial institutions – 3,370
  Corporate entities – 19
– 18,002
Funds and other investments 21,791 154,776
21,791 172,778
Other financial investments measured at FVTPL
Debt securities, analysed by type of issuers:
  Policy banks 11,192 11,082
  Banks and other financial institutions 143,637 188,144
  Corporate entities 4,536 1,827
159,365 201,053
Equity investments 81,329 83,231
Funds and other investments 90,403 70,167
331,097 354,451
623,223 784,483
Analysed into:
Debt securities:
  Listed in Hong Kong SAR 3,301 2,802
  Listed outside Hong Kong SAR 21,164 30,847
 Unlisted 395,818 432,163
420,283 465,812
Equity investments:
  Listed in Hong Kong SAR 1,783 2,493
  Listed outside Hong Kong SAR 31,675 20,122
 Unlisted 57,288 71,113
90,746 93,728
Funds and other investments:
  Listed in Hong Kong SAR 4,044 3,349
  Listed outside Hong Kong SAR 1,521 1,226
 Unlisted 106,629 220,368
112,194 224,943
623,223 784,483

202
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(b) Financial investments measured at FVTOCI

31 December 31 December
2021 2020
Debt securities, analysed by type of issuers:
  Governments and central banks 653,774 479,505
  Policy banks 171,130 169,478
  Banks and other financial institutions 310,160 281,215
  Corporate entities 551,757 509,422
  Accrued interest 17,343 19,398
1,704,164 1,459,018
Equity investments 99,440 81,970
1,803,604 1,540,988
Analysed into:
Debt securities:
  Listed in Hong Kong SAR 119,453 172,667
  Listed outside Hong Kong SAR 229,406 219,291
 Unlisted 1,355,305 1,067,060
1,704,164 1,459,018
Equity investments:
  Listed in Hong Kong SAR 2,656 2,385
  Listed outside Hong Kong SAR 5,414 8,569
 Unlisted 91,370 71,016
99,440 81,970
1,803,604 1,540,988

The Group designates certain non-trading equity investments as financial investments measured at FVTOCI. In 2021,
dividend income from such equity investments was RMB3,388 million (2020: RMB2,355 million). There was RMB291 million
dividend income from equity investments derecognised in 2021 (2020: RMB133 million). In 2021, the value of equity
investments disposed of was RMB6,963 million (2020: RMB2,247 million) and the cumulative losses transferred into retained
earnings from other comprehensive income after disposal was RMB334 million (2020: cumulative gains of RMB221 million).

Movements of the allowance for impairment loss on financial investments measured at FVTOCI are accounted for in the
following way. Allowance for impairment losses on financial investments measured at FVTOCI is recognised in other
comprehensive income without decreasing the carrying amount of financial investments presented in the consolidated
statement of financial position, and any impairment gain or loss is recognised in the profit or loss.

Annual Report 2021

203
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Stage 1 Stage 2 Stage 3 Total

Balance at 1 January 2021 2,206 22 240 2,468
Transfer:
  — to stage 1 – – – –
  — to stage 2 (12) 12 – –
  — to stage 3 (44) – 44 –
Charge for the year 585 322 1,070 1,977
Other movements (61) (1) (13) (75)
Balance at 31 December 2021 2,674 355 1,341 4,370

Stage 1 Stage 2 Stage 3 Total

Balance at 1 January 2020 1,778 80 198 2,056
Transfer:
  — to stage 1 78 (78) – –
  — to stage 2 (2) 2 – –
  — to stage 3 – – – –
Charge for the year 406 18 48 472
Other movements (54) – (6) (60)
Balance at 31 December 2020 2,206 22 240 2,468

(c) Financial investments measured at amortised cost

31 December 31 December
2021 2020
Debt securities, analysed by type of issuers:
  Governments and central banks (i) 5,661,784 5,205,346
  Policy banks 559,808 528,587
  Banks and other financial institutions (ii) 432,980 370,300
  Corporate entities 61,257 46,759
  Accrued interest 84,598 78,888
6,800,427 6,229,880
Other investments (iii) 38,341 40,699
Accrued interest 122 162
38,463 40,861
6,838,890 6,270,741
Less: Allowance for impairment losses (7,957) (5,073)
6,830,933 6,265,668
Analysed into:
Debt securities:
  Listed in Hong Kong SAR 31,439 42,226
  Listed outside Hong Kong SAR 147,531 79,031
 Unlisted 6,615,869 6,106,393
6,794,839 6,227,650
Other investments:
 Unlisted 36,094 38,018
36,094 38,018
6,830,933 6,265,668
Market value of listed securities 179,807 123,820

204
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Movements of the allowance for impairment losses on financial investments measured at amortised cost are as follows:

Stage 1 Stage 2 Stage 3 Total

Balance at 1 January 2021 2,234 2,718 121 5,073
Transfer:
  — to stage 1 402 (402) – –
  — to stage 2 – – – –
  — to stage 3 – – – –
Charge/(reverse) for the year 3,008 (116) – 2,892
Other movements (5) – (3) (8)
Balance at 31 December 2021 5,639 2,200 118 7,957

Stage 1 Stage 2 Stage 3 Total

Balance at 1 January 2020 2,255 1,339 127 3,721
Transfer:
  — to stage 1 3 (3) – –
  — to stage 2 (19) 19 – –
  — to stage 3 – – – –
Charge/(reverse) for the year 16 1,572 (1) 1,587
Other movements (21) (209) (5) (235)
Balance at 31 December 2020 2,234 2,718 121 5,073

(i) This includes a special government bond, which is a non-negotiable bond with a nominal value of RMB85,000 million
(31 December 2020: RMB85,000 million) issued by the Ministry of Finance of the People’s Republic of China (the
“MOF”) to the Bank in 1998. The bond will mature in 2028 and bears interest at a fixed rate of 2.25% per annum.

(ii) This includes Huarong bonds of RMB90,309 million (31 December 2020: RMB90,309 million). Huarong bonds are a
series of long-term bonds issued by China Huarong Asset Management Co., Ltd. (“Huarong”) in the year of 2000
and 2001 to the Bank, with an aggregate amount of RMB312,996 million. The proceeds from the issuance of the
bonds were used to purchase non-performing loans of the Bank. The bonds are non-negotiable, with a tenure of 10
years and bear interest at a fixed rate of 2.25% per annum. The MOF provides funding support for the repayment
of principal and interest of the bonds. In 2010, the Bank received a notice from the MOF that the maturity dates of
the Huarong bonds were extended for ten years. In 2020, the Bank received a notice from the MOF to adjust the
interest rate of the Huarong bonds, starting from 1 January 2020. Interest rate would be determined on yearly basis
with reference to the average level of five-year government bond yield in the previous year. In January 2021, the Bank
received notice from the MOF that the maturity dates of Huarong bonds were further extended for ten years. As at
31 December 2021, the Bank had received accumulated early repayments amounting to RMB222,687 million (31
December 2020: RMB222,687 million).  

(iii) Other investments include debt investment plans, asset management plans and trust plans with fixed or determinable
payments. They will mature from January 2022 to November 2032 and bear interest rates ranging from 4.25% to
6.60% per annum.

25. INVESTMENTS IN SUBSIDIARIES

31 December 31 December
2021 2020
Listed investments, at cost 2,712 2,712
Unlisted investments, at cost 160,571 144,671
163,283 147,383

Annual Report 2021

205
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Particulars of the Group’s principal subsidiaries as at the end of the reporting period are as follows:

Nominal value
of issued share/ Place of
Percentage of equity interest % paid-in capital Amount incorporation/
31 December 31 December 31 December invested registration Principal
Name 2021 2020 2021 by the Bank and operations activities
Industrial and Commercial Bank of China 100 100 HKD44,188 million HKD54,738 million Hong Kong SAR, the PRC Commercial banking
  (Asia) Limited (“ICBC Asia”)
ICBC International Holdings Limited 100 100 HKD5,963 million HKD5,963 million Hong Kong SAR, the PRC Investment banking
  (“ICBC International”)
Industrial and Commercial Bank of China 89.33 89.33 MOP589 million MOP12,064 million Macau SAR, the PRC Commercial banking
  (Macau) Limited (“ICBC Macau”)
PT. Bank ICBC Indonesia 98.61 98.61 IDR3,706,100 million USD361 million Jakarta, Indonesia Commercial banking
Industrial and Commercial Bank of China 100 100 MYR833 million MYR833 million Kuala Lumpur, Malaysia Commercial banking
  (Malaysia) Berhad
Industrial and Commercial Bank of China 97.86 97.86 THB20,132 million THB23,711 million Bangkok, Thailand Commercial banking
  (Thai) Public Company Limited (“ICBC Thai”)
Industrial and Commercial Bank of China 100 100 KZT8,933 million KZT8,933 million Almaty, Kazakhstan Commercial banking
  (Almaty) Joint Stock Company
Industrial and Commercial Bank of China 100 100 NZD234 million NZD234 million Auckland, New Zealand Commercial banking
  (New Zealand) Limited (“ICBC New Zealand”)
Industrial and Commercial Bank of China 100 100 EUR437 million EUR437 million Luxembourg Commercial banking
  (Europe) S.A.
ICBC (London) PLC 100 100 USD200 million USD200 million London, United Kingdom Commercial banking
ICBC Standard Bank PLC 60 60 USD1,083 million USD839 million London, United Kingdom Banking
Bank ICBC (Joint stock company) 100 100 RUB10,810 million RUB10,810 million Moscow, Russia Commercial banking
ICBC Turkey Bank Anonim ŞSirketi
¸ 92.84 92.84 TRY860 million USD425 million Istanbul, Turkey Commercial banking
ICBC Austria Bank GmbH 100 100 EUR200 million EUR200 million Vienna, Austria Commercial banking
Industrial and Commercial Bank of China 80 80 USD369 million USD306 million New York, United States Commercial banking
  (USA) NA
Industrial and Commercial Bank of China 100 100 USD50 million USD50.25 million Delaware and Broker dealer and
  Financial Services LLC New York, United States margin trading
Industrial and Commercial Bank of China 80 80 CAD208 million CAD218.66 million Toronto, Canada Commercial banking
 (Canada)
Industrial and Commercial Bank of China 100 100 MXN1,597 million MXN1,597 million Mexico City, Mexico Commercial banking
  Mexico S.A.
Industrial and Commercial Bank of China 100 100 Real202 million Real202 million Sao Paulo, Brazil Commercial banking
  (Brasil) S.A.
Industrial and Commercial Bank of China 100 100 ARS28,415 million USD904 million Buenos Aires, Argentina Commercial banking
  (Argentina) S.A
ICBC Peru Bank (“ICBC Peru”) 100 100 USD120 million USD120 million Lima, Peru Commercial banking
ICBC Credit Suisse Asset Management Co., Ltd.* 80 80 RMB200 million RMB433 million Beijing, the PRC Fund management
ICBC Financial Leasing Co., Ltd.* 100 100 RMB18,000 million RMB11,000 million Tianjin, the PRC Leasing
  (“ICBC Leasing”)
ICBC-AXA Assurance Co., Ltd.* 60 60 RMB12,505 million RMB7,980 million Shanghai, the PRC Insurance
ICBC Financial Asset Investment Co., Ltd.* 100 100 RMB27,000 million RMB27,000 million Nanjing, the PRC Financial asset
  (“ICBC Investment”) investment
ICBC Wealth Management Co., Ltd.* 100 100 RMB16,000 million RMB16,000 million Beijing, the PRC Wealth
management
Zhejiang Pinghu ICBC Rural Bank Co., Ltd.* 60 60 RMB200 million RMB120 million Zhejiang, the PRC Commercial banking
Chongqing Bishan ICBC Rural Bank Co., Ltd.* 100 100 RMB100 million RMB100 million Chongqing, the PRC Commercial banking

* These subsidiaries incorporated in Chinese mainland are all limited liability companies.

As at 31 December 2021 and 31 December 2020, the Group held 97.98% voting rights of ICBC Thai. Apart from ICBC Thai,
voting rights of other subsidiaries of the Group are in line with the Group’s equity interests.

The above table lists the principal subsidiaries of the Bank. To give details of other subsidiaries would, in the opinion of the
management, result in particulars of excessive length.

There is no subsidiary of the Group which has material non-controlling interests during the reporting period.

206
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

26. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

31 December 31 December
2021 2020
Interests in associates 60,572 39,776
Interests in joint ventures 1,210 1,430
61,782 41,206

31 December 31 December
2021 2020
Share of net assets 47,108 32,110
Goodwill 15,039 9,444
62,147 41,554
Less: Allowance for impairment losses (365) (348)
61,782 41,206

(a) Carrying value of the Group’s associates and joint ventures are as follows:

31 December 31 December
2021 2020
Standard Bank 24,621 25,415
Other 37,161 15,791
61,782 41,206

Standard Bank Group Limited (“Standard Bank”) is a listed commercial bank registered in Johannesburg, the Republic of
South Africa with an issued capital of ZAR162 million and a strategic partner of the Group. As at 31 December 2021 and 31
December 2020, the Group’s equity interest and voting rights were 20.06%.

The accounting policies of Standard Bank are consistent with those of the Group. Its financial information is significant to
the Group and summarised as follows:

As at/ As at/
year ended year ended
31 December 31 December
2021 2020
The associate
 Assets 1,091,181 1,129,310
 Liabilities 993,965 1,033,331
  Net assets 97,216 95,979
  Profit from continuing operations 10,725 5,459
Equity method of the associate
  Net assets of the associate attributable to the parent company 82,364 81,530
  Group’s effective interest 20.06% 20.06%
Group’s share of net assets of the associate 16,522 16,355
Goodwill 8,447 9,408
Balance of the Group’s interest in Standard Bank in the
  consolidated financial statements 24,969 25,763

Annual Report 2021

207
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(b) Movements of associates and joint ventures investments of the Group are as follows:

Movements during 2021

Investment
income Balance of
recognised Declared allowance for
Balance under Other distribution of Balance impairment
Name of at beginning Increase Decrease the equity comprehensive cash dividends at end at end
investee of the year in capital in capital method income or profits Others of the year of the year
Joint ventures 1,430 7 (193) 72 3 (102) (7) 1,210 –
Associates
  Standard Bank 25,763 – – 2,101 537 (875) (2,557) 24,969 (348)
 Other 14,361 21,200 (13) 696 16 (38) (254) 35,968 (17)
Subtotal 40,124 21,200 (13) 2,797 553 (913) (2,811) 60,937 (365)
Total 41,554 21,207 (206) 2,869 556 (1,015) (2,818) 62,147 (365)

27. PROPERTY AND EQUIPMENT

Office
equipment
Properties and Construction Leasehold and motor Aircraft and
buildings in progress improvements vehicles vessels Total
Cost:
  At 1 January 2020 161,359 39,752 11,928 76,898 164,941 454,878
 Additions 1,221 12,277 1,108 10,012 11,128 35,746
  CIP transfer in/(out) 7,806 (16,517) – 138 8,573 –
 Disposals (2,077) (301) (211) (7,163) (15,469) (25,221)
  At 31 December 2020 and 1 January 2021 168,309 35,211 12,825 79,885 169,173 465,403
 Additions 1,143 8,521 997 9,212 10,527 30,400
  CIP transfer in/(out) 19,850 (24,915) – 51 5,014 –
 Disposals (2,353) (601) (232) (7,516) (3,769) (14,471)
  At 31 December 2021 186,949 18,216 13,590 81,632 180,945 481,332
Accumulated depreciation and impairment:
  At 1 January 2020 65,704 38 9,983 61,791 30,801 168,317
  Depreciation charge for the year 6,099 – 907 6,683 5,554 19,243
  Impairment charge for the year – – – – 3,691 3,691
 Disposals (979) – (104) (6,960) (4,084) (12,127)
  At 31 December 2020 and 1 January 2021 70,824 38 10,786 61,514 35,962 179,124
  Depreciation charge for the year 6,353 – 866 7,377 5,901 20,497
  Impairment charge for the year – – – 4 2,282 2,286
 Disposals (1,374) (4) (159) (6,555) (2,779) (10,871)
  At 31 December 2021 75,803 34 11,493 62,340 41,366 191,036
Carrying amount:
  At 31 December 2020 97,485 35,173 2,039 18,371 133,211 286,279
  At 31 December 2021 111,146 18,182 2,097 19,292 139,579 290,296

208
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

As at 31 December 2021, the process of obtaining the legal titles for the Group’s properties and buildings with an aggregate
carrying amount of RMB12,798 million (31 December 2020: RMB11,203 million) was still in progress. Management is of the
view that the aforesaid matter would neither affect the rights of the Group to these assets nor have any significant impact
on the business operation of the Group.

As at 31 December 2021, the carrying amount of aircraft and vessels leased out by the Group under operating leases was
RMB139,579 million (31 December 2020: RMB133,211 million).

As at 31 December 2021, the carrying amount of aircraft and vessels owned by the Group that have been pledged as
security for liabilities due to banks and other financial institutions was RMB92,426 million (31 December 2020: RMB77,858
million).

As at 31 December 2021, the construction in progress for aircraft and vessels was RMB9,101 million (31 December 2020:
RMB12,623 million).

28. DEFERRED TAX ASSETS AND LIABILITIES

(a) Analysed by nature
Deferred tax assets:

31 December 2021 31 December 2020

Deductible/ Deferred Deductible/ Deferred
(taxable) tax (taxable) tax
temporary assets/ temporary assets/
differences (liabilities) differences (liabilities)
Allowance for impairment losses 328,794 81,662 281,442 70,094
Change in fair value of financial instruments
  measured at FVTPL (13,823) (3,455) (9,858) (2,470)
Change in fair value of financial instruments
  measured at FVTOCI (22,620) (5,635) (21,224) (5,417)
Accrued staff costs 34,823 8,684 26,512 6,628
Other (7,847) (1,997) (5,106) (1,122)
319,327 79,259 271,766 67,713

Deferred tax liabilities:

31 December 2021 31 December 2020

Taxable/ Deferred Taxable/ Deferred
(deductible) tax (deductible) tax
temporary liabilities/ temporary liabilities/
differences (assets) differences (assets)
Allowance for impairment losses (535) (268) (3,273) (937)
Change in fair value of financial instruments
  measured at FVTPL 15,692 3,635 7,236 1,809
Change in fair value of financial instruments
  measured at FVTOCI 2,737 690 4,823 1,149
Other 6,285 1,567 3,465 860
24,179 5,624 12,251 2,881

Annual Report 2021

209
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(b) Movements of deferred income tax

Deferred tax assets:

Recognised
in other
1 January Recognised in comprehensive 31 December
2021 profit or loss income 2021
Allowance for impairment losses 70,094 11,568 – 81,662
Change in fair value of financial instruments
  measured at FVTPL (2,470) (985) – (3,455)
Change in fair value of financial instruments
  measured at FVTOCI (5,417) – (218) (5,635)
Accrued staff costs 6,628 2,056 – 8,684
Other (1,122) (943) 68 (1,997)
67,713 11,696 (150) 79,259

Deferred tax liabilities:

Recognised
in other
1 January Recognised in comprehensive 31 December
2021 profit or loss income 2021
Allowance for impairment losses (937) 669 – (268)
Change in fair value of financial instruments
  measured at FVTPL 1,809 1,826 – 3,635
Change in fair value of financial instruments
  measured at FVTOCI 1,149 – (459) 690
Other 860 707 – 1,567
2,881 3,202 (459) 5,624

Deferred tax assets:

Recognised
in other
1 January Recognised in comprehensive 31 December
2020 profit or loss income 2020
Allowance for impairment losses 62,888 7,206 – 70,094
Change in fair value of financial instruments
  measured at FVTPL (851) (1,619) – (2,470)
Change in fair value of financial instruments
  measured at FVTOCI (5,781) – 364 (5,417)
Accrued staff costs 6,290 338 – 6,628
Other (10) (1,005) (107) (1,122)
62,536 4,920 257 67,713

210
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Deferred tax liabilities:

Recognised
in other
1 January Recognised in comprehensive 31 December
2020 profit or loss income 2020
Allowance for impairment losses (535) (402) – (937)
Change in fair value of financial instruments
  measured at FVTPL 636 1,173 – 1,809
Change in fair value of financial instruments
  measured at FVTOCI 1,357 – (208) 1,149
Other 415 445 – 860
1,873 1,216 (208) 2,881

As at 31 December 2021, the Group did not have significant unrecognised deferred tax assets (31 December 2020: Nil).

29. OTHER ASSETS

31 December 31 December
2021 2020
Settlement and clearing balances 267,342 349,590
Precious metals 267,239 278,429
Right-of-use assets (i) 31,913 34,068
Land use rights 15,593 16,225
Goodwill (ii) 8,518 8,945
Advance payments 8,242 8,878
Repossessed assets 6,211 7,357
Interest receivable 2,283 1,985
Other 110,574 28,858
717,915 734,335
Less: Allowance for impairment losses (10,053) (5,077)
707,862 729,258

Annual Report 2021

211
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(i) Right-of-use assets

Leased Leased Leased office

properties aircraft equipment and
and buildings and vessels motor vehicles Total
Cost:
  At 1 January 2020 22,463 16,534 1,628 40,625
 Additions 9,317 1,357 93 10,767
 Decreases (1,251) (1,341) (775) (3,367)
  At 31 December 2020 and 1 January 2021 30,529 16,550 946 48,025
 Additions 6,926 – 91 7,017
 Decreases (3,191) (441) (680) (4,312)
  At 31 December 2021 34,264 16,109 357 50,730
Accumulated depreciation:
  At 1 January 2020 5,720 1,143 104 6,967
  Depreciation charge for the year 7,089 623 91 7,803
 Decreases (714) (39) (60) (813)
  At 31 December 2020 and 1 January 2021 12,095 1,727 135 13,957
  Depreciation charge for the year 7,011 570 116 7,697
 Decreases (2,582) (222) (33) (2,837)
  At 31 December 2021 16,524 2,075 218 18,817
Impairment:
  At 1 January 2020 24 173 – 197
  Impairment charge for the year 18 101 – 119
  At 31 December 2020 and 1 January 2021 42 274 – 316
 Decreases (10) (55) – (65)
  At 31 December 2021 32 219 – 251
Carrying amount:
  At 31 December 2020 18,392 14,549 811 33,752
  At 31 December 2021 17,708 13,815 139 31,662

(ii) Goodwill

2021 2020
At 1 January 8,945 9,517
Exchange difference (427) (572)
Subtotal 8,518 8,945
Less: Allowance for impairment losses (349) (359)
Net carrying amount 8,169 8,586

Goodwill arising from business combinations has been allocated to the Group’s CGU, which is not larger than the reportable
segment of the Group, for impairment testing.

The recoverable amount of the CGU is determined based on the discounted future cash flows of the CGU. The cash flow
projections are based on financial forecasts approved by management of the subsidiaries. The average growth rates are
projected based on the similar rates which do not exceed the long-term average growth rate for the business in which the
CGU operates in. The discount rate is the before-tax rate and reflects the specific risk associated with the CGU.

212
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

30. FINANCIAL LIABILITIES DESIGNATED AS AT FAIR VALUE THROUGH PROFIT OR LOSS

31 December 31 December
2021 2020
Interbank wealth management products (i) – 4,889
Financial liabilities related to precious metals
  and account-based investment products (ii) 64,488 60,704
Debt securities issued (ii) 18,409 11,574
Other 4,283 10,771
87,180 87,938

(i) The principal-guaranteed interbank wealth management products issued by the Group and the financial assets which
the aforesaid products held form part of a group of financial instruments that were managed together on a fair
value basis, and were classified as financial liabilities and financial assets designated as at FVTPL, respectively. As at
31 December 2020, the fair value of the interbank wealth management products was approximately the same as the
amount that the Group would be contractually required to pay to the holders of the wealth management products
upon maturity.

(ii) Financial liabilities related to precious metals and account-based investment products, and certain issued debt
securities have been matched with precious metals and derivatives of the Group as part of a documented risk
management strategy to mitigate market risk. An accounting mismatch would arise if these financial liabilities were
accounted for at amortised cost, whereas the related precious metals and derivative were measured at fair value with
movements in fair value taken through the statement of profit or loss. By designating these financial liabilities at
FVTPL, the movement in their fair values is recorded in the statement of profit or loss. As at 31 December 2021 and 31
December 2020, the difference between the fair values of the financial liabilities related to precious metals, account-
based investment products and issued debt securities and the amounts that the Group would be contractually required
to pay to the holders of the financial liabilities related to precious metals, account-based investment products and
issued debt securities upon maturity was not significant.

For 2021 and 2020, there were no significant changes in the credit spread of the Group and therefore the amounts of
changes in fair value of the financial liabilities arising from changes in the credit risk and the accumulated amounts as at the
end of the respective years were not significant. The changes in fair value of the financial liabilities were mainly attributable
to changes in other market factors.

31. DUE TO BANKS AND OTHER FINANCIAL INSTITUTIONS

31 December 31 December
2021 2020
Deposits:
  Banks and other financial institutions operating in Chinese mainland 2,286,492 2,179,522
  Banks and other financial institutions operating outside Chinese mainland 143,928 134,346
  Accrued interest 1,269 1,775
2,431,689 2,315,643
Money market takings:
  Banks and other financial institutions operating in Chinese mainland 226,907 159,590
  Banks and other financial institutions operating outside Chinese mainland 258,465 304,413
  Accrued interest 3,968 4,613
489,340 468,616
2,921,029 2,784,259

Annual Report 2021

213
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

32. REPURCHASE AGREEMENTS

31 December 31 December
2021 2020
Repurchase agreements-bills 8,110 7,874
Repurchase agreements-securities 341,718 274,446
Cash received as collateral on securities lending 16,015 10,924
Accrued interest 100 190
365,943 293,434

33. CERTIFICATES OF DEPOSIT

Certificates of deposit issued by certain of the Bank’s overseas branches and subsidiaries are measured at amortised cost.

34. DUE TO CUSTOMERS

31 December 31 December
2021 2020
Demand deposits:
  Corporate customers 7,533,110 7,455,160
  Personal customers 5,390,582 5,196,607
12,923,692 12,651,767
Time deposits:
  Corporate customers 5,798,353 5,489,700
  Personal customers 7,107,386 6,463,929
12,905,739 11,953,629
Other 250,349 261,389
Accrued interest 361,994 267,941
26,441,774 25,134,726

As at 31 December 2021, pledged deposits included in above amounted to RMB228,227 million (31 December 2020:
RMB249,915 million).

35. DEBT SECURITIES ISSUED

31 December 31 December
2021 2020
Subordinated bonds and tier 2 capital bonds (a)
  Issued by the Bank 458,688 419,032
  Issued by subsidiaries 4,116 4,285
  Accrued interest 8,002 6,747
470,806 430,064
Other debt securities (b)
  Issued by the Bank 188,243 232,356
  Issued by subsidiaries 130,558 134,038
  Accrued interest 1,768 1,669
320,569 368,063
791,375 798,127

As at 31 December 2021, the amount of debt securities issued that were due within one year was RMB124,031 million (31
December 2020: RMB120,429 million).

214
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(a) Subordinated bonds and tier 2 capital bonds

The Bank:

As approved by the PBOC and the CBIRC, the Bank issued callable subordinated bonds and tier 2 capital bonds through
open market bidding. These subordinated bonds and tier 2 capital bonds were traded on the National Interbank Bond
Market. The relevant information is set out below:

Issued and
Issue price nominal amount Coupon Maturity
Name Issue date (In RMB) (In RMB million) rate Value date date Circulation date
11 ICBC 01 29/06/2011 100 Yuan 38,000 5.56% 30/06/2011 30/06/2031 30/08/2011
12 ICBC 01 11/06/2012 100 Yuan 20,000 4.99% 13/06/2012 13/06/2027 13/07/2012
17 ICBC 01 Tier 2 Bond 06/11/2017 100 Yuan 44,000 4.45% 08/11/2017 08/11/2027 10/11/2017
17 ICBC 02 Tier 2 Bond 20/11/2017 100 Yuan 44,000 4.45% 22/11/2017 22/11/2027 23/11/2017
19 ICBC 01 Tier 2 Bond 21/03/2019 100 Yuan 45,000 4.26% 25/03/2019 25/03/2029 26/03/2019
19 ICBC 02 Tier 2 Bond 21/03/2019 100 Yuan 10,000 4.51% 25/03/2019 25/03/2034 26/03/2019
19 ICBC 03 Tier 2 Bond 24/04/2019 100 Yuan 45,000 4.40% 26/04/2019 26/04/2029 28/04/2019
19 ICBC 04 Tier 2 Bond 24/04/2019 100 Yuan 10,000 4.69% 26/04/2019 26/04/2034 28/04/2019
20 ICBC 01 Tier 2 Bond 22/09/2020 100 Yuan 60,000 4.20% 24/09/2020 24/09/2030 25/09/2020
20 ICBC 02 Tier 2 Bond 12/11/2020 100 Yuan 30,000 4.15% 16/11/2020 16/11/2030 17/11/2020
20 ICBC 03 Tier 2 Bond 12/11/2020 100 Yuan 10,000 4.45% 16/11/2020 16/11/2035 17/11/2020
21 ICBC 01 Tier 2 Bond 19/01/2021 100 Yuan 30,000 4.15% 21/01/2021 21/01/2031 22/01/2021
21 ICBC 02 Tier 2 Bond 13/12/2021 100 Yuan 50,000 3.48% 14/12/2021 15/12/2031 15/12/2021
21 ICBC 03 Tier 2 Bond 13/12/2021 100 Yuan 10,000 3.74% 14/12/2021 15/12/2036 15/12/2021

The Bank has the option to redeem these bonds on specific dates at par value in future upon the approval of the relevant
regulatory authorities.

In 2015, the Bank issued tier 2 capital bonds denominated in USD. The bonds were approved for listing and dealing by The
Stock Exchange of Hong Kong Limited. The relevant information is set out below:

Issued Ending
amount balance
(In original Coupon
Name Issue date Currency Issued price currency) (In RMB) rate Value date Maturity date Circulation date
(million) (million)
15 USD
  Tier 2 capital bonds 21/09/2015 USD 99.189 2,000 12,700 4.875% 21/09/2015 21/09/2025 22/09/2015

The bonds cannot be redeemed before maturity.

The Bank has not had any defaults in respect of payments of principal or interest or other breaches with respect to the
subordinated bonds and tier 2 capital bonds in 2021 (2020: Nil).

Subsidiaries:

On 23 March 2018, ICBC Thai issued a tier 2 capital bond with an aggregate nominal amount of THB5,000 million, bearing
a fixed interest rate of 3.5%. The bond will mature on 23 September 2028.

On 12 September 2019, ICBC Macau issued a tier 2 capital bond with an aggregate nominal amount of USD500 million,
bearing a fixed interest rate of 2.875% per annum. The bond will mature on 12 September 2029.

The above tier 2 capital bonds are separately listed on the Thai Bond Market Association and The Stock Exchange of Hong
Kong Limited. ICBC Thai and ICBC Macau have not had any defaults of principal or interest or other breaches with respect to
the tier 2 capital bonds in 2021 (2020: Nil).

Annual Report 2021

215
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(b) Other debt securities issued

The Bank:

(i) Head Office issued debt securities denominated in RMB at fixed interest rates amounting to RMB20,075 million in total
with maturities between 2023 and 2024.

(ii) Sydney Branch issued notes denominated in AUD, RMB, HKD and USD at fixed or floating interest rates amounting to
an equivalent of RMB11,372 million in total with maturities between 2022 and 2026.

(iii) Singapore Branch issued notes denominated in RMB, USD and EUR at fixed or floating interest rates amounting to an
equivalent of RMB48,080 million in total with maturities between 2022 and 2025.

(iv) Tokyo Branch issued notes denominated in JPY at fixed interest rate amounting to an equivalent of RMB249 million in
total that will mature in 2022.

(v) New York Branch issued notes denominated in USD at fixed interest rates amounting to an equivalent of RMB14,572
million in total with maturities between 2022 and 2027.

(vi) Luxembourg Branch issued notes denominated in USD and EUR at fixed or floating interest rates amounting to an
equivalent of RMB18,114 million in total with maturities between 2022 and 2024.

(vii) Dubai (DIFC) Branch issued notes denominated in USD at floating interest rates amounting to an equivalent of
RMB13,415 million in total with maturities between 2022 and 2024.

(viii) Hong Kong Branch issued notes denominated in USD at fixed or floating interest rates amounting to an equivalent of
RMB45,726 million in total with maturities between 2022 and 2026.

(ix) London Branch issued notes denominated in GBP, USD and EUR at fixed or floating interest rates amounting to an
equivalent of RMB13,401 million in total with maturities between 2022 and 2025.

(x) Macau Branch issued notes denominated in MOP at fixed interest rates amounting to an equivalent of RMB3,239
million in total with maturities between 2022 and 2023.

Subsidiaries:

(i) ICBC Asia issued medium-term debt securities and notes denominated in RMB and USD at fixed or floating interest
rates amounting to an equivalent of RMB8,469 million in total with maturities between 2022 and 2024.

(ii) ICBC Leasing issued medium-term debt securities and notes denominated in RMB and USD at fixed or floating interest
rates amounting to an equivalent of RMB70,528 million in total with maturities between 2022 and 2031.

(iii) ICBC Thai issued medium-term debt securities and notes denominated in THB at fixed interest rates amounting to an
equivalent of RMB8,367 million in total with maturities between 2022 and 2026.

(iv) ICBC International issued medium-term debt securities and notes denominated in USD at fixed interest rates
amounting to an equivalent of RMB12,709 million in total with maturities between 2022 and 2025.

(v) ICBC New Zealand issued medium-term debt securities and notes denominated in NZD at fixed or floating interest
rates amounting to an equivalent of RMB2,331 million in total with maturities between 2022 and 2024.

(vi) ICBC Investment issued medium-term debt securities and notes denominated in RMB at fixed interest rates amounting
to RMB28,000 million in total with maturities between 2022 and 2025.

(vii) ICBC Peru issued short-term debt securities denominated in PEN at fixed interest rates amounting to an equivalent of
RMB154 million in total that will mature in 2022.

216
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

36. OTHER LIABILITIES

31 December 31 December
2021 2020
Settlement and clearing balances 317,591 394,880
Insurance contract liabilities 213,457 170,846
Lease liabilities (i) 28,340 29,825
Provisions for credit commitments 24,449 26,710
Salaries, bonuses, allowances and subsidies payables (ii) 32,751 24,807
Sundry tax payables 16,454 15,595
Promissory notes 1,081 1,193
Early retirement benefits 32 490
Other 155,200 48,424
789,355 712,770

(i) Lease liabilities

31 December 31 December
2021 2020
Less than one year 8,315 8,090
One to two years 6,749 6,515
Two to three years 4,542 5,658
Three to five years 5,210 6,008
More than five years 5,113 6,221
Undiscounted lease liabilities 29,929 32,492
Ending balance of lease liabilities 28,340 29,825

(ii) There were no overdue payment for staff salaries, bonuses, allowances and subsidies payable as at 31 December 2021 (31
December 2020: Nil).

37. SHARE CAPITAL

31 December 2021 31 December 2020

Number Number
of shares Nominal of shares Nominal
(millions) value (millions) value
Issued and fully paid:
  H shares of RMB1 Yuan each 86,795 86,795 86,795 86,795
  A shares of RMB1 Yuan each 269,612 269,612 269,612 269,612
356,407 356,407 356,407 356,407

Except for the dividends for H shares which are payable in Hong Kong dollars, all of the ordinary A shares and H shares rank
pari passu with each other in respect of dividends on ordinary shares.

Annual Report 2021

217
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

38. OTHER EQUITY INSTRUMENTS

(1) Preference shares
(a) Preference shares outstanding (“Preference Shares”):

Amount In original
Financial instrument Accounting Dividend (million currency In RMB Conversion
outstanding Issue date classification rate Issue price shares) (million) (million) Maturity condition Conversion
Offshore Preference
 Shares:
 USD 23/09/2020 Equity 3.58% 20USD/Share 145 2,900 19,716 None Mandatory No
Domestic Preference
 Shares:
 RMB2015 18/11/2015 Equity 4.58% 100RMB/Share 450 45,000 45,000 None Mandatory No
 RMB2019 19/09/2019 Equity 4.20% 100RMB/Share 700 70,000 70,000 None Mandatory No
Total 134,716
Less: issue fees (102)
Book value 134,614

(b) Main clauses and basic information

(i) Dividend

Offshore and domestic dividends are paid annually.

Offshore and domestic dividends are set at a fixed rate for 5 years after issuance, and are reset every 5 years thereafter to
the sum of the benchmark rate and the fixed spread. The fixed spread is equal to the spread between the initial dividend
rate and the benchmark rate at the time of issuance. The fixed spread remains unchanged throughout the term of the
Preference Shares.

(ii) Conditions to distribution of dividends

The Bank can pay offshore and domestic dividends when it has distributable after-tax profit after making up previous years’
losses, contributing to the statutory reserve and making general provisions, and the Bank’s capital adequacy ratios meet
regulatory requirements. Preference shareholders of the Bank are senior to the ordinary shareholders in respect of the right
to dividends. The order of payment of Domestic Preference Shares is equal to Offshore Preference Shares. The Bank may
elect to cancel all or part of offshore and domestic dividends and this shall not constitute a default for any purpose, but such
cancellation will require a shareholder’s resolution to be passed.

(iii) Dividend stopper and setting mechanism

For Offshore and Domestic Preference Shares, if the Bank cancels all or part of the dividends to the Preference Shares, the
Bank shall not make any dividend distribution to ordinary shareholders before the Bank pays the dividends to the preference
shareholders in full for the current dividend period.

Non-cumulative dividend is a dividend on Offshore and Domestic Preference Shares which does not cumulate upon omission
of payment and the passed or omitted dividend of one year is not carried to the following year. After receiving a dividend at
the agreed dividend rate, preference shareholders of the Bank will not participate in the distribution of residual profits with
ordinary shareholders.

The Bank shall distribute dividends for Offshore and Domestic Preference Shares in cash, based on the liquidation preference
amount for the issued and outstanding Offshore Preference Shares or total amount of issued and outstanding Domestic
Preference Shares during the corresponding period (i.e. the product of the issue price of Preference Shares and the number
of the issued and outstanding Preference Shares).

218
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(iv) Order of distribution and liquidation method

The offshore preference shareholders and domestic preference shareholders will rank equally for payment. The preference
shareholders will be subordinated to the depositors, general creditors and holders of convertible bonds, holders of
subordinated debts, holders of tier 2 capital bonds and holders of other tier 2 capital instruments of the Bank, but will be
senior to the ordinary shareholders of the Bank.

(v) Mandatory conversion trigger events

For Domestic Preference Shares, upon the occurrence of an Additional Tier 1 Capital Trigger Event (Core Tier 1 Capital
Adequacy Ratio of the Bank falling to 5.125% or below), the Bank shall have the right without the need for the consent of
the domestic preference shareholders to convert all or part of the outstanding face value of Domestic Preference Shares into
A shares, in order to restore the Core Tier 1 Capital Adequacy Ratio of the Bank to above 5.125%. If Domestic Preference
Shares were converted into A shares, they cannot be converted to Preference Shares again under any circumstances. Upon
the occurrence of a Tier 2 Capital Trigger Event, the Bank shall have the right without the need for the consent of the
domestic preference shareholders to convert all the outstanding face value of Domestic Preference Shares into A shares. If
Domestic Preference Shares were converted into A share, they cannot be converted to Preference Shares again under any
circumstances.

For Offshore Preference Shares, upon the occurrence of any Non-Viability Trigger Event, the Bank shall have the right
to irrevocably and compulsorily convert all or part of the outstanding Offshore Preference Shares into H shares, under
the consent of the CBIRC but without the need for the consent of the offshore preference shareholders or the ordinary
shareholders. If the Offshore Preference Shares were converted into H shares, they cannot be converted to Preference Shares
again under any circumstances.

The initial mandatory conversion prices are HKD5.73 for Offshore Preference Shares per H share; RMB3.44 for Domestic
2015 Preference Shares and RMB5.43 for Domestic 2019 Preference Shares. In case of stock dividends distribution of H or A
shares of the Bank or other circumstances, the Bank will make cumulative adjustment to the compulsory conversion price in
turn.

(vi) Redemption

Subject to obtaining the approval of the CBIRC and satisfying the conditions of redemption, the Bank has the right to
redeem all or part of the Offshore Preference Shares at the first call date and subsequent any dividend payment date.
Redemption price of Offshore Preference Shares is equal to liquidation preference price plus any declared but unpaid
dividend in current period. The first redemption date of Offshore Preference Shares is five years after issuance.

Under the premise of obtaining the approval of the CBIRC and compliance with relevant requirements, the Bank has the
right to redeem all or part of Domestic Preference Shares, after five years having elapsed since the date of issuance/the date
of closing. The redemption period of Domestic Preference Shares is from the start date of redemption to the date of full
redemption or conversion. Redemption price of Domestic Preference Shares is equal to book value plus any declared but
unpaid dividend in current period.

Annual Report 2021

219
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(c) Changes in preference shares outstanding

1 January 2021 Movement during the year 31 December 2021

Financial In original In original In original

instrument Amount currency In RMB Amount currency In RMB Amount currency In RMB
outstanding (million shares) (million) (million) (million shares) (million) (million) (million shares) (million) (million)
Offshore Preference
 Shares:
 EUR 40 600 4,558 (40) (600) (4,558) – – –
 USD 145 2,900 19,716 – – – 145 2,900 19,716
Domestic Preference
 Shares:
 RMB2015 450 45,000 45,000 – – – 450 45,000 45,000
 RMB2019 700 70,000 70,000 – – – 700 70,000 70,000
Total 139,274 (4,558) 134,716

The Bank redeemed all of the EUR Offshore Preference Shares on 10 December 2021.

(2) Perpetual bond

(a) Perpetual bond outstanding

Financial Amount In original

instrument Accounting (million currency In RMB Conversion
outstanding Issue date classification Interest rate Issue price units) (million) (million) Maturity condition Conversion
Offshore
  USD Perpetual bond 24/09/2021 Equity 3.20% Note (i) N/A 6,160 39,793 None None No
Domestic
 RMB2019
  Perpetual bond 26/07/2019 Equity 4.45% 100RMB/Unit 800 80,000 80,000 None None No
 RMB2021
   Perpetual bond Series 1 04/06/2021 Equity 4.04% 100RMB/Unit 700 70,000 70,000 None None No
 RMB2021
   Perpetual bond Series 2 24/11/2021 Equity 3.65% 100RMB/Unit 300 30,000 30,000 None None No
Total 219,793
Less: issue fees (76)
Book value 219,717

(i) Offshore USD Perpetual Bonds were issued in specific denomination of USD200,000 and integral multiplies of
USD1,000 in excess thereof at an issue price of 100%.

(b) Main clauses and basic information

With the approvals of relevant regulatory authorities, the Bank issued RMB80 billion, RMB70 billion and RMB30 billion of
undated capital bonds on 26 July 2019, 4 June 2021 and 24 November 2021 (hereinafter referred to as “2019 Domestic
Perpetual Bond”, “2021 Domestic Perpetual Bond Series 1” and “2021 Domestic Perpetual Bond Series 2” respectively,
collectively ”Domestic Perpetual Bonds”) in the National Interbank Bond Market.

The Bank issued USD6.16 billion of undated capital bonds (hereinafter referred to as “Offshore Perpetual Bond”) on The
Stock Exchange of Hong Kong Limited on 24 September 2021. The funds raised by the Bank from the bonds will be used
to supplement additional tier 1 capital of the Bank in accordance with the relevant laws and approvals by regulatory
authorities.

220
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(i) Interest

Each Domestic Perpetual Bond has a par value of RMB100, and the interest rate of the bonds for the first five years are
4.45% for 2019 Domestic Perpetual Bond, 4.04% for 2021 Domestic Perpetual Bond Series 1, and 3.65% for 2021
Domestic Perpetual Bond Series 2, resetting every 5 years. The rates are determined by a benchmark rate plus a fixed spread.
The initial fixed spreads are the difference between the interest rate and the benchmark rate as determined at the time
of issuance. The fixed spread will not be adjusted once determined during the duration period. The interest of Domestic
Perpetual Bond shall be paid annually.

The interest rate of Offshore Perpetual Bond for the first five years is 3.20%, resetting every 5 years. The rate is determined
by a benchmark rate plus a fixed spread. The dividend shall be paid semi-annually.

(ii) Interest stopper and setting mechanism

The interest payment for both the Domestic Perpetual Bonds and Offshore Perpetual Bond is non-cumulative. The Bank
shall have the right to cancel, in whole or in part, distributions on the interest payment and any such cancellation shall not
constitute an event of default. The Bank may, at its sole discretion, use the proceeds from the cancelled distributions to meet
other obligations as they fall due. However, the Bank shall not distribute profits to ordinary shareholders until resumption of
full interest payment.

(iii) Order of distribution and liquidation method

The claims in respect of Domestic Perpetual Bonds will be subordinated to claims of depositors, general creditors, and
subordinated indebtedness that rank senior to Domestic Perpetual Bonds, and will rank in priority to all classes of shares held
by shareholders of the Bank. The claims in respect of Offshore Perpetual Bonds will be subordinated to claims of depositors,
general creditors, tier 2 capital bond holders and subordinated indebtedness that rank senior to the Offshore Perpetual
Bond, and will rank in priority to all classes of shares held by shareholders of the Bank. Domestic Perpetual Bond and
Offshore Perpetual Bond will rank pari passu with the claims in respect of any other Additional Tier 1 Capital instruments of
the Bank that rank pari passu with the perpetual bonds.

(iv) Write down conditions

For 2019 Domestic Perpetual Bond, upon the occurrence of an Additional Tier 1 Capital Trigger Event (Core Tier 1 Capital
Adequacy Ratio of the Bank falling to 5.125% or below), the Bank has the right to write down all or part of the total
nominal amount of the outstanding 2019 Domestic Perpetual Bond with the consent of the CBIRC but without the need for
the consent of the bond holders, in order to restore the Core Tier 1 Capital Adequacy Ratio of the Bank to above 5.125%.
Upon the occurrence of a Tier 2 Capital Trigger Event, without the need for consent of the bond holders, the Bank has the
right to write down all of the total nominal amount of the outstanding 2019 Domestic Perpetual Bond.

For 2021 Domestic Perpetual Bond Series 1 and 2021 Domestic Perpetual Bond Series 2, upon the occurrence of a Non-
Viability Trigger Event, the Bank has the right to write down all or part of the nominal amount of the outstanding perpetual
bonds without the need for the consent of the bond holders.

For Offshore Perpetual Bond, upon the occurrence of a Non-Viability Trigger Event, the Bank has the right to write down all
the perpetual bonds issued and outstanding at that time up to the total nominal value without the need for the consent of
the bond holders.

Annual Report 2021

221
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(v) Redemption

The duration of the Domestic Perpetual Bonds and Offshore Perpetual Bond is the same as the continuing operation of the
Bank. Five years after the issuance date of the Domestic Perpetual Bonds and Offshore Perpetual Bond, the Bank shall have
the right to redeem them in whole or in part on each distribution payment date (including the fifth distribution payment
date since the issuance). In the event that the perpetual bond is not classified as additional tier 1 capital due to unpredicted
changes in regulations, the Bank shall have the right to redeem Domestic Perpetual Bonds and Offshore Perpetual Bond fully
instead of partly.

(c) Changes in perpetual bond outstanding

1 January 2021 Movement during the year 31 December 2021

Financial In original In original In original
instrument Amount currency In RMB Amount currency In RMB Amount currency In RMB
outstanding (million units) (million) (million) (million units) (million) (million) (million units) (million) (million)
Offshore
  USD2016 Perpetual bond(i) 1 1,000 6,691 (1) (1,000) (6,691) – – –
  USD2021 Perpetual bond – – – N/A 6,160 39,793 N/A 6,160 39,793
Domestic
  RMB2019 Perpetual bond 800 80,000 80,000 – – – 800 80,000 80,000
  RMB2021 Perpetual bond
  Series 1 – – – 700 70,000 70,000 700 70,000 70,000
  RMB2021 Perpetual bond
  Series 2 – – – 300 30,000 30,000 300 30,000 30,000
Total 86,691 133,102 219,793

(i) The Group exercised its call option to redeem all of the outstanding USD2016 Perpetual Bond on 21 July 2021.

(3) Interests attributable to equity instruments’ holders

31 December 31 December
Items 2021 2020
1. Total equity attributable to equity holders of the parent company 3,257,755 2,893,502
(1) Equity attributable to ordinary shareholders of the parent company 2,903,424 2,667,683
(2) Equity attributable to other equity instrument holders of the parent company 354,331 225,819
2. Total equity attributable to non-controlling interests 17,503 16,013
(1) Equity attributable to ordinary shareholders of non-controlling interests 17,503 16,013
(2) Equity attributable to other equity instrument holders of non-controlling interests – –

222
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

39. RESERVES
(a) Capital reserve
Capital reserve mainly includes share premium arising from the issuance of new shares at prices in excess of par value.

(b) Surplus reserves

(i) Statutory surplus reserve

The Bank is required to appropriate 10% of its profit for the year, as determined under the Accounting Standards for
Business Enterprises and other relevant requirements (“PRC GAAP”), pursuant to the Company Law of the PRC and the
Articles of the Bank to the statutory surplus reserve until the reserve balance reaches 50% of its registered capital.

Subject to the approval of the shareholders, the statutory surplus reserve may be used to offset accumulated losses of the
Bank, if any, and may also be converted into capital of the Bank, provided that the balance of the statutory surplus reserve
after such capitalisation is not less than 25% of the registered capital immediately before capitalisation.

Pursuant to the resolution of the board of directors’ meeting held on 30 March 2022, the total appropriation to surplus
reserve of the Bank was RMB32,494 million (2020: RMB30,550 million), among which an appropriation of 10% of the profit
of the Bank for the year determined under the PRC GAAP to the statutory surplus reserve, in the amount of RMB32,438
million (2020: RMB30,449 million) was approved and a total surplus reserve made by overseas branches was RMB56 million
(2020: RMB101 million) pursuant to the requirements of local authorities.

(ii) Discretionary surplus reserve

After making the appropriation to the statutory surplus reserve, the Bank may also appropriate its profit for the year
determined under the PRC GAAP to the discretionary surplus reserve upon approval by the shareholders in general meeting.
Subject to the approval by the shareholders, the discretionary surplus reserve may be used to offset accumulated losses of
the Bank, if any, and may be converted into capital.

(iii) Other surplus reserve

The Bank’s overseas entities appropriate their profits to other surplus reserves or statutory reserve in accordance with the
relevant laws and regulations promulgated by the local regulatory bodies.

(c) General reserve

In accordance with the “Administrative Measures for the Provision of Reserves of Financial Enterprises” (Cai Jin [2012] No.
20) issued by the MOF, the Bank maintains a general reserve within equity, through the appropriation of profit, which should
not be less than 1.5% of the period-end balance of its risk assets, to partially cover unidentified possible losses.

The Bank’s subsidiaries appropriate their profits to the general reserve according to the applicable local regulations.

Pursuant to the resolution of the board of directors’ meeting held on 30 March 2022, the total appropriation to general
reserve of the Bank was RMB97,505 million (2020: RMB33,247 million), The general reserve balance of the Bank as at 31
December 2021 amounted to RMB426,714 million, which reached 1.5% of the year-end balance of the Bank’s risk assets.

(d) Investment revaluation reserve

The investment revaluation reserve records the fair value changes and impairment provision of financial investments
measured at FVTOCI.

Annual Report 2021

223
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(e) Foreign currency translation reserve

The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial
statements of the subsidiaries and branches incorporated outside Chinese mainland.

(f) Cash flow hedge reserve

The cash flow hedge reserve comprises the effective portion of the gains or losses on the hedging instruments.

(g) Other reserves

Other reserves represent reserves other than the items listed above, including other comprehensive income recognised under
the equity method.

(h) Distributable profits

The Bank’s distributable profit is based on its retained earnings as determined under PRC GAAP and IFRSs, whichever is
lower. The amount that the Bank’s subsidiaries can legally distribute is determined by referring to their profits as reflected
in their financial statements prepared in accordance with the accounting regulations and principles promulgated by the
local regulatory bodies. These profits may differ from those dealt with in these financial statements, which are prepared in
accordance with IFRSs.

40. OTHER COMPREHENSIVE INCOME

(a) Other comprehensive income attributable to equity holders of the parent company in
the consolidated statement of financial position

Foreign
currency
Investment translation
revaluation differences Other Total
1 January 2020 23,280 (18,568) (5,978) (1,266)
Movement during 2020 (903) (9,314) 1,055 (9,162)
31 December 2020 and 1 January 2021 22,377 (27,882) (4,923) (10,428)
Movement during 2021 2,251 (12,117) 1,951 (7,915)
31 December 2021 24,628 (39,999) (2,972) (18,343)

224
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(b) Other comprehensive income in the consolidated statement of profit or loss and other
comprehensive income

2021 2020
Items that will not be reclassified to profit or loss:
  (i) Changes in fair value of equity instruments designated as at FVTOCI (1,180) 1,289
  (ii) Other comprehensive income recognised under the equity method 15 (5)
 (iii) Other 28 8
Items that may be reclassified subsequently to profit or loss:
  (i) Changes in fair value of debt instruments measured at FVTOCI 5,777 (5,036)
  Less: A  mount transferred to profit or loss from other comprehensive
  income and income tax effect (4,154) 1,994
1,623 (3,042)
  (ii) Credit losses of debt instruments measured at FVTOCI 1,827 1,051
  (iii) Reserve from cash flow hedging instruments Gain/(loss) during the year 374 (146)
  Less: Income tax effect 68 (107)
442 (253)
  (iv) Other comprehensive income recognised under the equity method 541 14
  (v) Foreign currency translation differences (12,353) (16,212)
 (vi) Other 885 1,311
(8,172) (15,839)

41. CASH AND CASH EQUIVALENTS

31 December 31 December
2021 2020
Cash on hand 62,872 64,833
Balances with central banks other than restricted deposits 338,551 619,968
Deposits with banks and other financial institutions with
  original maturity of three months or less 228,082 241,109
Placements with banks and other financial institutions with
  original maturity of three months or less 157,323 239,428
Reverse repurchase agreements with original maturity of three months or less 649,929 625,784
1,436,757 1,791,122

Annual Report 2021

225
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

42. INTERESTS IN STRUCTURED ENTITIES

(a) Structured entities sponsored by third party institutions in which the Group holds an
interest
The Group holds an interest in some structured entities sponsored by third party institutions through investments in
the products issued by these structured entities. Such structured entities include investment funds, wealth management
products, asset management plans and asset-backed securities, trust plans and the Group does not consolidate these
structured entities. The nature and purpose of these structured entities are to generate fees from managing assets on behalf
of investors and are financed through the issuance of investment products to investors.

The following table sets out an analysis of the carrying amounts and maximum exposure of interests held by the Group in
the structured entities sponsored by third party institutions:

31 December 2021 31 December 2020

Carrying Maximum Carrying Maximum
amount exposure amount exposure
Investment funds 36,702 36,702 32,100 32,100
Wealth management products – – 311 311
Asset management plans and
  asset-backed securities 77,997 77,997 257,977 257,977
Trust plans 20,903 20,903 44,204 44,204
135,602 135,602 334,592 334,592

The maximum loss exposures in the above investment funds, wealth management products, asset management plans and
asset-backed securities, trust plans are the carrying amounts which are measured at amortised cost or the fair value of the
investments held by the Group at the reporting date.

The following tables set out an analysis of the line items in the consolidated statement of financial position in which assets
were recognised relating to the Group’s interests in structured entities sponsored by third party institutions:

31 December 2021
Financial Financial Financial
investments investments investments
measured at measured at measured at
FVTPL FVTOCI amortised cost
Investment funds 36,702 – –
Asset management plans and asset-backed securities 18,661 2,740 56,596
Trust plans 1,435 – 19,468
56,798 2,740 76,064

31 December 2020
Financial Financial Financial
investments investments investments
measured at measured at measured at
FVTPL FVTOCI amortised cost
Investment funds 32,100 – –
Wealth management products 311 – –
Asset management plans and asset-backed securities 204,344 7,975 45,658
Trust plans 22,807 – 21,397
259,562 7,975 67,055

226
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(b) Structured entities sponsored by the Group in which the Group does not consolidate
but holds an interest
The types of unconsolidated structured entities sponsored by the Group include non-principal-guaranteed wealth
management products and investment funds. The nature and purpose of these structured entities are to generate fees from
managing assets on behalf of investors. These structured entities are financed through the issuance of investment products
to investors. Interest held by the Group includes investments in the products issued by these unconsolidated structured
entities and fees charged for providing management services. As at 31 December 2021 and 31 December 2020, the carrying
amounts of the investments in the products issued by these structured entities and fee receivables being recognised were
not material in the consolidated financial statements. Management income earned by the Group was included in fee and
commission income of personal wealth management and private banking services and corporate wealth management
services set out in Note 7.

As at 31 December 2021, the amount of assets held by the unconsolidated non-principal-guaranteed wealth management
products and investment funds, which are sponsored by the Group, were RMB2,586,393 million (31 December 2020:
RMB2,708,427 million) and RMB1,810,281 million (31 December 2020: RMB1,462,393 million) respectively.

In 2021, the amount of the average exposure of financing transactions through placements and reverse repurchase
agreements from the Group with non-principal-guaranteed wealth management products sponsored by the Group was
RMB26,699 million (2020: RMB72,587 million). The transactions were conducted in the ordinary course of business under
normal terms and conditions and at market rates.

(c) Consolidated structured entities

The consolidated structured entities of the Group are primarily the principal-guaranteed wealth management products,
certain investment funds, asset-backed securities and asset management plans issued or initiated and invested by the Group
or purchased due to regulatory requirements related to wealth management business. The Group controls these entities
because the Group has power over, is exposed to, or has rights to variable returns from its involvement with these entities
and has the ability to use its power over these entities to affect the amount of the Group’s returns.

43. TRANSFERRED FINANCIAL ASSETS

The Group enters into transactions in the ordinary course of business by which it transfers recognised financial assets to
third parties or structured entities. In some cases these transfers may give rise to full or partial derecognition of the financial
assets concerned. In other cases where the transferred assets do not qualify for derecognition as the Group has retained
substantially all the risks and rewards of these assets, the Group continues to recognise the transferred assets.

Repurchase transactions and securities lending transactions

Transferred financial assets that do not qualify for derecognition mainly include debt securities held by counterparties as
collateral under repurchase agreements and debt securities lent to counterparties under securities lending agreements.
The counterparties are allowed to sell or repledge those securities in the absence of default by the Group, but has an
obligation to return the securities at the maturity of the contract. If the securities increase or decrease in value, the Group
may in certain circumstances require additional cash collateral from counterparties or return part of the cash collateral
to counterparties. The Group has determined that it retains substantially all the risks and rewards of these securities and
therefore has not derecognised them. In addition, it recognises a financial liability for cash received as collateral.

Annual Report 2021

227
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

The following table analyses the carrying amount of the aforementioned financial assets transferred to third parties that did
not qualify for derecognition and their associated financial liabilities:

31 December 2021 31 December 2020

Carrying Carrying Carrying Carrying
amount of amount of amount of amount of
transferred associated transferred associated
assets liabilities assets liabilities
Repurchase agreements 33,039 32,012 42,124 40,760
Securities lending agreements 361,344 – 255,660 –
394,383 32,012 297,784 40,760

Securitisation transactions
The Group transfers credit assets to structured entities which issue asset-backed securities to investors. The Group may
acquire some asset-backed securities at the subordinated tranche level and accordingly, may retain parts of the risks and
rewards of the transferred credit assets. The Group would determine whether or not to derecognise the associated credit
assets by evaluating the extent to which it retains the risks and rewards of the assets.

For those in which the Group has neither transferred nor retained substantially all the risks and rewards of the transferred
credit assets, and retained control of the credit assets, the Group recognises the assets on the consolidated statement
of financial position to the extent of the Group’s continuing involvement and the rest is derecognised. The extent of the
Group’s continuing involvement is the extent of the risks and rewards undertaken by the Group with value changes of the
transferred financial assets. As at 31 December 2021, loans with an original carrying amount of RMB619,736 million at the
time of derecognition (31 December 2020: RMB521,314 million) have been securitised by the Group under arrangements in
which the Group retained a continuing involvement in such assets. The carrying amount of assets that the Group continues
to recognise on the consolidated statement of financial position was RMB74,121 million as at 31 December 2021 (31
December 2020: RMB63,808 million).

As at 31 December 2021, the carrying amount of asset-backed securities held by the Group in securitisation transactions
that were qualified for derecognition was RMB973 million (31 December 2020: RMB1,029 million), and its maximum
exposure approximated to the carrying amount.

With respect to the securitisation of financial assets that do not qualify for derecognition, the relevant financial assets are
not derecognised, and the consideration received is recorded as a financial liability. As at 31 December 2021, transferred
credit assets that were not qualified for derecognition of the Group amounted to RMB132 million at the time of transfer (31
December 2020: Nil).

44. ASSETS PLEDGED AS SECURITY

Financial assets of the Group including securities and bills have been pledged as collateral for liabilities or contingent
liabilities, mainly for repurchase agreements and derivative contracts. As at 31 December 2021, the carrying amount of the
financial assets of the Group pledged as collateral amounted to approximately RMB319,877 million (31 December 2020:
approximately RMB249,499 million).

45. SHARE APPRECIATION RIGHTS PLAN

The Bank’s share appreciation rights plan was approved in 2006, which allows share appreciation rights to be granted to
eligible participants including directors, supervisors, senior management and other key personnel designated by the board of
directors. The share appreciation rights will be granted and exercised based on the price of the Bank’s H shares and will be
valid for 10 years. As at the approval date of these financial statements, no share appreciation rights have been granted.

228
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

46. COMMITMENTS AND CONTINGENT LIABILITIES

(a) Capital commitments
At the end of the reporting period, the Group had capital commitments as follows:

31 December 31 December
2021 2020
Contracted but not provided for 31,307 42,797

(b) Credit commitments

The Group has outstanding commitments to extend credit including approved loans and undrawn credit card limits.

The Group provides letters of credit and financial guarantees to guarantee the performance of customers to third parties.

Bank acceptances comprise undertakings by the Group to pay bills of exchange drawn on customers. The Group expects
most acceptances to be settled simultaneously with the reimbursement from the customers.

The contractual amounts of credit commitments by category are set out below. The amounts disclosed in respect of loan
commitments and undrawn credit card limits are under the assumption that the amounts will be fully advanced. The
amounts for bank acceptances, letters of credit and guarantees represent the maximum potential losses that would be
recognised at the end of the reporting period had the counterparties failed to perform as contracted.

31 December 31 December
2021 2020
Bank acceptances 449,141 343,233
Guarantees issued
  — Financing letters of guarantees 50,114 54,361
  — Non-financing letters of guarantees 444,418 446,460
Sight letters of credit 54,466 51,517
Usance letters of credit and other commitments 114,733 129,015
Loan commitments
  — With an original maturity of under one year 50,199 91,410
  — With an original maturity of one year or over 497,892 574,420
Undrawn credit card limits 1,069,406 1,021,038
2,730,369 2,711,454

31 December 31 December
2021 2020
Credit risk-weighted assets of credit commitments 1,082,099 1,106,377

Annual Report 2021

229
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(c) Operating leases

At the end of the reporting period, the Group’s total future minimum lease receivables in respect of non-cancellable
operating leases of assets are as follows:

31 December 31 December
2021 2020
Within one year 16,451 17,218
Over one year but within two years 15,920 16,043
Over two years but within three years 15,937 18,975
Over three years but within five years 27,840 32,192
Over five years 59,648 73,626
135,796 158,054

(d) Legal proceedings and arbitrations

The Group is involved in lawsuits and arbitrations during its normal course of operations. As at 31 December 2021, there
were a number of legal proceedings and arbitrations outstanding against the Bank and/or its subsidiaries with a total claimed
amount of RMB6,165 million (31 December 2020: RMB4,928 million).

In the opinion of management, the Group has made adequate allowance for any probable losses based on the current facts
and circumstances, and the ultimate outcome of these lawsuits and arbitrations will not have a significant impact on the
financial position or operations of the Group.

(e) Redemption commitments of government bonds and securities underwriting

commitments
As an underwriting agent of the MOF, the Bank underwrites certain PRC government bonds and sells the bonds to the
general public. The Bank is obliged to redeem these bonds at the discretion of the holders at any time prior to maturity. The
redemption price for the bonds is based on the nominal value of the bonds plus any interest accrued up to the redemption
date. The MOF will not provide funding for the early redemption of these PRC government bonds on a back-to-back basis
but is obliged to repay the principal and the respective interest upon maturity. The redemption obligations, which represent
the nominal value of government bonds underwritten and sold by the Group, but not yet matured as at 31 December 2021
were RMB75,553 million (31 December 2020: RMB81,112 million). Management expects that the redemption obligation of
these PRC government bonds by the Bank prior to maturity will not be material.

As at 31 December 2021, the Group’s outstanding securities underwriting commitments were RMB6,350 million (31
December 2020: Nil).

(f) Designated funds and loans

31 December 31 December
2021 2020
Designated funds 2,783,961 2,361,366
Designated loans 2,783,778 2,361,289

The designated funds represent the funding that the trustors have instructed the Group to use to make loans to third parties
as designated by them. The credit risk remains with the trustors.

The designated loans represent the loans granted to specific borrowers designated by the trustors on their behalf according
to the entrust agreements signed by the Group and the trustors. The Group does not bear any risk.

230
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(g) Fiduciary activities

The Group provides custody, trust and asset management services to third parties. Revenue from such activities is included in
“net fee and commission income” set out in Note 7. Those assets held in a fiduciary capacity are not included in the Group’s
consolidated statement of financial position.

47. RELATED PARTY DISCLOSURES

In addition to the transactions detailed elsewhere in these consolidated financial statements, the Group had the following
transactions with related parties during the year:

(a) The MOF

The MOF is a ministry under the State Council of the PRC, primarily responsible for, among others, state fiscal revenues,
expenses and taxation policies. As at 31 December 2021, the MOF directly owned approximately 31.14% (31 December
2020: approximately 31.14%) of the issued share capital of the Bank. The Group enters into banking transactions with the
MOF in its ordinary course of business. Details of the major transactions are as follows:

31 December 31 December
2021 2020
Balances at end of the year:
The PRC government bonds and the special government bond 1,563,353 1,495,673

2021 2020
Transactions during the year:
Interest income on the government bonds 42,953 43,609

Other related party transactions between the Group and enterprises under the control or joint control of the MOF are
disclosed in note 47(i) “transactions with state-owned entities in the PRC”.

(b) Huijin
Central Huijin Investment Ltd. (“Huijin”) is a wholly-owned subsidiary of China Investment Corporation, and in accordance
with the authorisation of the State Government, Huijin makes equity investments in major state-owned financial enterprises,
and shall, to the extent of its capital contribution, exercise the rights and perform the obligations as an investor on behalf
of the Government in accordance with applicable laws, to achieve the goal of preserving and enhancing the value of state-
owned financial assets. Huijin does not conduct any other businesses or commercial activities nor intervene in the day-to-
day business operations of the financial enterprises in which it invests. Huijin was established on 16 December 2003 with a
total registered and paid-in capital of RMB828,209 million. As at 31 December 2021, Huijin directly owned approximately
34.71% (31 December 2020: approximately 34.71%) of the issued share capital of the Bank.

As at 31 December 2021, bonds issued by Huijin (“the Huijin Bonds”) held by the Group are of an aggregate face value
of RMB63.66 billion (31 December 2020: RMB71.39 billion), with terms ranging from one to thirty years and coupon rates
ranging from 2.15% to 4.38% per annum. The Huijin Bonds are government-backed bonds, short-term bills and medium-
term notes. The Group’s subscription of the Huijin Bonds was conducted in the ordinary course of business, in compliance
with relevant regulatory and the corporate governance requirements of the Group.

Annual Report 2021

231
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

The Group entered into banking transactions with Huijin in the ordinary course of business under normal commercial terms
and the transactions are priced based on market rates. Details of the major transactions are as follows:

31 December 31 December
2021 2020
Balances at end of the year:
Debt securities purchased 64,841 72,472
Loans and advances to customers – 4,005
Due to customers 60,331 15,957

2021 2020
Transactions during the year:
Interest income on debt securities purchased 2,306 2,360
Interest income on loans and advances to customers 74 561
Interest expense on amounts due to customers 799 149

Huijin holds equity interests in certain other banks and financial institutions under the direction of the State Government.
The Group enters into transactions with these banks and financial institutions in the ordinary course of business under
normal commercial terms and the transactions are priced based on market rates. Management considers that these banks
and financial institutions are competitors of the Group. Details of major transactions during the year conducted with these
banks and financial institutions are as follows:

31 December 31 December
2021 2020
Balances at end of the year:
Debt securities purchased 536,655 633,728
Due from banks and other financial institutions 198,607 251,578
Loans and advances to customers 3,794 10,610
Derivative financial assets 7,375 20,669
Due to banks and other financial institutions 289,661 299,691
Derivative financial liabilities 6,318 20,007
Due to customers 917 1,065
Credit commitments 8,750 12,690

2021 2020
Transactions during the year:
Interest income on debt securities purchased 17,805 18,634
Interest income on amounts due from banks and other financial institutions 665 582
Interest income on loans and advances to customers 52 110
Interest expense on amounts due to banks and other financial institutions 1,026 1,068
Interest expense on amounts due to customers 10 54

232
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(c) National Council for Social Security Fund of the People’s Republic of China
National Council for Social Security Fund (the ‘SSF’) is a public institution managed by the MOF. It is the management and
operating organisation of the national social security fund. As at 31 December 2021, the SSF held 5.69% (31 December
2020: 5.69%) of the Bank’s issued share capital. The Group entered into banking transactions with the SSF in the ordinary
course of business under normal commercial terms and the transactions are priced based on market rates. Details of the
major transactions are as follows:

31 December 31 December
2021 2020
Balances at end of the year:
Due to customers 38,000 30,000

2021 2020
Transactions during the year:
Interest expense on amounts due to customers 1,284 775

(d) Subsidiaries

31 December 31 December
2021 2020
Balances at end of the year:
Financial investments 33,753 30,425
Due from banks and other financial institutions 437,377 375,028
Loans and advances to customers 45,269 45,958
Derivative financial assets 7,897 4,945
Due to banks and other financial institutions 151,307 183,059
Derivative financial liabilities 8,519 5,004
Credit commitments 60,280 53,161

2021 2020
Transactions during the year:
Interest income on financial investments 1,386 982
Interest income on amounts due from banks and other financial institutions 728 523
Interest income on loans and advances to customers 653 681
Interest expense on amounts due to banks and other financial institutions 599 993
Fee and commission income 5,636 6,233

The major balances and transactions with subsidiaries have been eliminated in the consolidated financial statements. 

Annual Report 2021

233
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(e) Associates and affiliates

31 December 31 December
2021 2020
Balances at end of the year:
Debt securities purchased 13,162 12,680
Due from banks and other financial institutions 13,843 8,549
Loans and advances to customers 3,672 983
Derivative financial assets 1,797 3,244
Due to banks and other financial institutions 9,858 6,051
Due to customers 638 3
Derivative financial liabilities 2,436 3,283
Credit commitments 6,145 3,023

2021 2020
Transactions during the year:
Interest income on debt securities purchased 387 479
Interest income on amounts due from banks and other financial institutions 181 80
Interest income on loans and advances to customers 33 62
Interest expense on amounts due to banks and other financial institutions 95 186
Interest expense on amounts due to customers 0 0

Transactions between the Group and the associates and their affiliates were conducted under normal commercial terms and
conditions and priced based on market rates.

(f) Joint ventures and affiliates

31 December 31 December
2021 2020
Balances at end of the year:
Loans and advances to customers – 65
Due to customers 18 7

2021 2020
Transactions during the year:
Interest income on loans and advances to customers 0 2
Interest expense on amounts due to customers 0 0

Transactions between the Group and joint ventures and their affiliates were conducted in the ordinary course of business
under normal terms and conditions and priced based on market rates.

234
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(g) Key management personnel

The key management personnel are those persons who have the authority and responsibility to plan, direct and control the
activities of the Group, directly or indirectly, including members of the board of directors and the board of supervisors, and
executive officers.

The aggregate compensation of key management personnel for the year, other than those disclosed in note 12 above, is as
follows:

2021 2020
In RMB’000 In RMB’000
Salaries and other short-term employment benefits 6,787 9,154
Post-employment benefits 355 216
7,142 9,370

The above remuneration before tax payable to key management personnel for 2020 represents the total amount of their
annual remunerations, which includes the amount disclosed in the 2020 annual report.

The total compensation packages for senior management have not been finalised in accordance with the regulations of the
PRC relevant authorities. The total remuneration not yet accrued is not expected to have a significant impact on the Group’s
2021 financial statements. The total compensation packages will be further disclosed when determined by the relevant
authorities.

Related parties of the Group include key management personnel of the Group and their close relatives, as well as companies
controlled, jointly controlled or significantly influenced by key management personnel or their close relatives.

In 2021, there were no material transactions and balances with key management personnel individually or in the aggregate
(2020: Immaterial). The Group entered into banking transactions with key management personnel in the ordinary course of
business.

The aggregate balance of loans and credit card overdrafts to the persons who are considered as related parties according
to the relevant rules of Shanghai Stock Exchange was RMB12.23 million as at 31 December 2021 (31 December 2020:
RMB15.29 million).

The transactions between the Group and the aforementioned parties were conducted in the ordinary course of business
under normal terms and conditions and priced based on market rates.

Annual Report 2021

235
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(h) Annuity Fund

Apart from the obligations for defined contributions to the Annuity Fund established by the Bank, Annuity Fund held A
shares of the Bank with market value of RMB3.16 million (31 December 2020: RMB39.17 million), and bonds issued by the
Bank of RMB324.13 million as at 31 December 2021 (31 December 2020: RMB10.00 million).

(i) Transactions with state-owned entities in the PRC

The Group operates in an economic environment predominated by enterprises directly or indirectly owned and/or controlled
by the Government through its authorities, affiliates or other organisations (collectively the “state-owned entities”). During
the year, the Group entered into extensive banking transactions with these state-owned entities including, but are not
limited to, lending and deposit taking, taking and placing of interbank balances, entrusted lending and the provision of
intermediary services, the sale, purchase, underwriting and redemption of bonds issued by other state-owned entities, and
the sale, purchase, and leasing of properties and other assets.

The transactions with state-owned entities are activities conducted in the ordinary course of business under normal terms
and conditions and priced based on market rates, and that the dealings of the Group have not been significantly or unduly
affected by the fact that the Group and those state-owned entities are ultimately controlled or owned by the Government.
The Group has also established pricing policies for products and services and such pricing policies do not depend on whether
or not the customers are state-owned entities.

(j) Proportion of major related party transactions

The major balances and transactions with subsidiaries have been eliminated in the consolidated financial statements. When
calculating the proportion of related party transactions, transactions with the subsidiaries are excluded.

31 December 2021 31 December 2020

Balance Percentage Balance Percentage
Financial investments 2,178,011 23.53% 2,214,553 25.78%
Due from banks and other financial institutions 212,450 25.68% 260,127 24.04%
Loans and advances to customers 7,466 0.04% 15,663 0.09%
Derivative financial assets 9,172 12.05% 23,913 17.82%
Due to banks and other financial institutions 299,519 10.25% 305,742 10.98%
Derivative financial liabilities 8,754 12.27% 23,290 16.52%
Due to customers 99,904 0.38% 47,032 0.19%
Credit commitments 14,895 0.55% 15,713 0.58%

2021 2020
Amount Percentage Amount Percentage
Interest income 64,456 5.55% 66,479 6.08%
Interest expense 3,214 0.68% 2,232 0.50%

236
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

48. SEGMENT INFORMATION

(a) Operating segments
The Group is organised into different operating segments, namely corporate banking, personal banking and treasury
operations, based on internal organisation structure, management requirements and internal reporting system.

Corporate banking

The corporate banking segment covers the provision of financial products and services to corporations, government agencies
and financial institutions. The products and services include corporate loans, trade financing, deposit-taking activities,
corporate wealth management services, custody activities and various types of corporate intermediary services.

Personal banking

The personal banking segment covers the provision of financial products and services to individual customers. The products
and services include personal loans, deposit-taking activities, card business, personal wealth management services and
various types of personal intermediary services.

Treasury operations

The treasury operations segment covers the Group’s treasury operations which include money market transactions,
investment securities, foreign exchange transactions and the holding of derivative positions, for its own accounts or on
behalf of customers.

Other

This segment covers the Group’s assets, liabilities, income and expenses that are not directly attributable or cannot be
allocated to a segment on a reasonable basis.

Management monitors the operating results of the Group’s business units separately for the purpose of making decisions
about resources allocation and performance assessment. Segment information is prepared in conformity with the accounting
policies adopted for preparing and presenting the financial statements of the Group.

Transactions between segments mainly represent the provision of funding to and from individual segments. The internal
transfer pricing of these transactions are determined with reference to the market rates and have been reflected in the
performance of each segment. Net interest income and expense arising on internal fund transfer are referred to as “internal
net interest income or expense”. Net interest income and expense relating to third parties are referred to as “external net
interest income or expense”.

Annual Report 2021

237
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Segment revenues, expenses, results, assets and liabilities include items directly attributable to a segment as well as those
that can be allocated on a reasonable basis. The basis for allocation is mainly based on occupation of or contribution to
resources. Income taxes are managed on a group basis and are not allocated to operating segments. 

2021
Corporate Personal Treasury
banking banking operations Other Total
External net interest income 292,402 146,911 251,367 – 690,680
Internal net interest income/(expense) 17,262 148,301 (165,563) – –
Net fee and commission income 78,082 53,760 1,182 – 133,024
Other income/(expense), net (i) 10,627 (2,800) 24,292 5,057 37,176
Operating income 398,373 346,172 111,278 5,057 860,880
Operating expenses (94,823) (121,173) (16,885) (3,346) (236,227)
Impairment losses on assets (162,981) (29,341) (9,067) (1,234) (202,623)
Operating profit 140,569 195,658 85,326 477 422,030
Share of results of associates and joint ventures – – – 2,869 2,869
Profit before taxation 140,569 195,658 85,326 3,346 424,899
Income tax expense (74,683)
Profit for the year 350,216
Other segment information:
  Depreciation and amortisation 10,452 10,901 3,370 125 24,848
  Capital expenditure 18,219 19,027 5,870 215 43,331
31 December 2021
Segment assets 12,436,885 8,399,240 14,086,517 169,482 35,092,124
Including: Investments in associates and joint ventures – – – 61,782 61,782
Property and equipment 112,952 120,366 37,432 19,546 290,296
Other non-current assets (ii) 43,468 20,945 6,304 9,944 80,661
Unallocated assets 79,259
Total assets 35,171,383
Segment liabilities 13,960,681 13,213,984 4,425,332 198,061 31,798,058
Unallocated liabilities 98,067
Total liabilities 31,896,125
Other segment information:
  Credit commitments 1,674,769 1,055,600 – – 2,730,369

(i) Includes net trading income, net gains on financial investments and other net operating income.

(ii) Includes intangible assets, goodwill, long-term deferred expenses, right-of-use assets and other non-current assets.

238
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

2020
Corporate Personal Treasury
banking banking operations Other Total
External net interest income 275,644 131,043 240,078 – 646,765
Internal net interest income/(expense) 32,948 131,818 (164,766) – –
Net fee and commission income 76,173 53,761 1,281 – 131,215
Other income, net (i) 8,896 1,436 7,338 4,425 22,095
Operating income 393,661 318,058 83,931 4,425 800,075
Operating expenses (85,731) (103,482) (14,730) (2,642) (206,585)
Impairment losses on assets (161,027) (40,107) (1,002) (532) (202,668)
Operating profit 146,903 174,469 68,199 1,251 390,822
Share of results of associates and joint ventures – – – 1,304 1,304
Profit before taxation 146,903 174,469 68,199 2,555 392,126
Income tax expense (74,441)
Profit for the year 317,685
Other segment information:
  Depreciation and amortisation 10,360 9,262 3,509 317 23,448
  Capital expenditure 22,759 20,475 7,696 600 51,530
31 December 2020
Segment assets 11,339,394 7,454,567 14,366,145 117,239 33,277,345
Including: Investments in associates and joint ventures – – – 41,206 41,206
Property and equipment 110,846 101,573 37,244 36,616 286,279
Other non-current assets (ii) 42,553 18,012 6,601 15,357 82,523
Unallocated assets 67,713
Total assets 33,345,058
Segment liabilities 13,733,030 12,126,286 4,376,074 107,487 30,342,877
Unallocated liabilities 92,666
Total liabilities 30,435,543
Other segment information:
  Credit commitments 1,716,094 995,360 – – 2,711,454

(i) Includes net trading income, net gains or losses on financial investments and other net operating income.

(ii) Includes intangible assets, goodwill, long-term deferred expenses, right-of-use assets and other non-current assets.

Annual Report 2021

239
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(b) Geographical information

The Group operates principally in Chinese mainland, and also has branches and subsidiaries operating outside Chinese
mainland. The distribution of the geographical areas is as follows:

Chinese mainland (Head Office and domestic branches)

Head Office (“HO”): the HO business divisions (including institutions directly managed by the HO and its offices);
Yangtze River Delta: including Shanghai, Jiangsu, Zhejiang and Ningbo;
Pearl River Delta: including Guangdong, Shenzhen, Fujian and Xiamen;
Bohai Rim: including Beijing, Tianjin, Hebei, Shandong and Qingdao;
Central China: including Shanxi, Henan, Hubei, Hunan, Anhui, Jiangxi and Hainan;
Western China: including Chongqing, Sichuan, Guizhou, Yunnan, Guangxi, Shaanxi, Gansu, Qinghai, Ningxia,
Xinjiang, Inner Mongolia and Tibet; and
Northeastern China: including Liaoning, Heilongjiang, Jilin and Dalian.

Overseas and other

Branches located outside Chinese mainland, domestic and overseas subsidiaries, and investments in associates and joint
ventures.

2021

Chinese mainland (HO and domestic branches)

Yangtze Pearl Bohai Central Western Northeastern Overseas

Head Office River Delta River Delta Rim China China China and other Eliminations Total
External net interest income 268,554 79,643 83,851 24,702 77,869 105,129 12,041 38,891 – 690,680
Internal net interest (expense)/income (202,860) 39,174 11,381 106,166 20,293 12,805 15,066 (2,025) – –
Net fee and commission income 47,014 21,368 14,503 17,067 8,623 11,540 2,361 12,120 (1,572) 133,024
Other income/(expense), net (i) 22,780 (3,641) (2,261) (2,275) (1,428) (2,675) 114 25,059 1,503 37,176

Operating income 135,488 136,544 107,474 145,660 105,357 126,799 29,582 74,045 (69) 860,880
Operating expenses (32,376) (34,986) (26,051) (37,142) (33,208) (38,426) (12,923) (21,184) 69 (236,227)
Impairment losses on assets (45,081) (17,638) (21,724) (44,135) (25,034) (22,896) (15,400) (10,715) – (202,623)
Operating profit 58,031 83,920 59,699 64,383 47,115 65,477 1,259 42,146 – 422,030
Share of results of associates and joint
 ventures – – – – – – – 2,869 – 2,869

Profit before taxation 58,031 83,920 59,699 64,383 47,115 65,477 1,259 45,015 – 424,899
Income tax expense (74,683)
Profit for the year 350,216
Other segment information:
  Depreciation and amortisation 3,910 3,412 2,584 3,939 3,358 4,040 1,450 2,155 – 24,848
  Capital expenditure 6,089 4,639 3,845 3,710 4,100 4,625 1,501 14,822 – 43,331

240
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

31 December 2021

Chinese mainland (HO and domestic branches)

Yangtze Pearl Bohai Central Western Northeastern Overseas

Head Office River Delta River Delta Rim China China China and other Eliminations Total
Assets by geographical areas 8,145,032 8,248,981 5,870,705 5,186,815 3,786,925 4,553,489 1,333,077 4,100,318 (6,133,218) 35,092,124
Including: Investments in associates and
     joint ventures – – – – – – – 61,782 – 61,782
      Property and equipment 13,971 33,190 13,729 20,726 18,911 23,331 8,865 157,573 – 290,296
      Other non-current assets (ii) 16,056 7,371 6,075 7,087 8,457 9,685 2,317 23,613 – 80,661
Unallocated assets 79,259
Total assets 35,171,383
Liabilities by geographical areas 5,470,908 8,944,022 5,645,178 7,928,583 3,568,847 3,745,729 1,539,014 1,088,995 (6,133,218) 31,798,058
Unallocated liabilities 98,067
Total liabilities 31,896,125
Other segment information:
  Credit commitments 1,123,767 1,172,580 791,688 1,001,597 450,171 611,013 147,856 631,815 (3,200,118) 2,730,369

(i) Includes net trading income, net gains on financial investments and other net operating income.

(ii) Includes intangible assets, goodwill, long-term deferred expenses, right-of-use assets and other non-current assets.

2020

Chinese mainland (HO and domestic branches)

Yangtze Pearl Bohai Central Western Northeastern Overseas

Head Office River Delta River Delta Rim China China China and other Eliminations Total

External net interest income 270,017 69,071 74,150 20,128 71,669 95,814 13,968 31,948 – 646,765
Internal net interest (expense)/income (219,971) 41,775 14,623 112,918 20,533 15,508 13,027 1,587 – –
Net fee and commission income 42,859 23,086 15,433 16,336 8,646 12,950 2,445 10,729 (1,269) 131,215
Other income/(expense), net (i) 14,900 (3,508) (1,304) (3,455) (1,997) (2,936) 2,902 16,324 1,169 22,095

Operating income 107,805 130,424 102,902 145,927 98,851 121,336 32,342 60,588 (100) 800,075
Operating expenses (22,438) (30,917) (23,339) (32,781) (29,820) (35,113) (12,127) (20,161) 111 (206,585)
Impairment losses on assets (51,286) (24,212) (12,180) (36,824) (26,376) (19,625) (17,622) (14,543) – (202,668)

Operating profit 34,081 75,295 67,383 76,322 42,655 66,598 2,593 25,884 11 390,822
Share of results of associates and joint
 ventures – – – – – – – 1,304 – 1,304
Profit before taxation 34,081 75,295 67,383 76,322 42,655 66,598 2,593 27,188 11 392,126
Income tax expense (74,441)
Profit for the year 317,685
Other segment information:
  Depreciation and amortisation 2,883 3,168 2,533 3,849 3,382 3,931 1,425 2,277 – 23,448
  Capital expenditure 4,692 5,269 3,925 6,346 4,072 5,413 1,356 20,457 – 51,530

Annual Report 2021

241
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

31 December 2020

Chinese mainland (HO and domestic branches)

Yangtze Pearl Bohai Central Western Northeastern Overseas

Head Office River Delta River Delta Rim China China China and other Eliminations Total

Assets by geographical areas 9,665,936 7,183,515 4,935,763 4,994,061 3,334,445 4,249,027 1,246,742 4,024,527 (6,356,671) 33,277,345
Including: Investments in associates and
     joint ventures – – – – – – – 41,206 – 41,206
      Property and equipment 13,929 32,725 12,791 21,477 18,374 23,164 9,088 154,731 – 286,279
      Other non-current assets (ii) 14,352 7,817 6,065 7,534 8,580 9,950 2,256 25,969 – 82,523
Unallocated assets 67,713
Total assets 33,345,058
Liabilities by geographical areas 7,250,493 7,840,257 4,886,621 7,507,515 3,203,936 3,811,490 1,360,916 838,331 (6,356,682) 30,342,877
Unallocated liabilities 92,666
Total liabilities 30,435,543
Other segment information:
  Credit commitments 1,077,366 999,018 683,005 785,796 371,823 565,802 145,460 675,725 (2,592,541) 2,711,454

(i) Includes net trading income, net gains or losses on financial investments and other net operating income.

(ii) Includes intangible assets, goodwill, long-term deferred expenses, right-of-use assets and other non-current assets.

49. FINANCIAL RISK MANAGEMENT

The board of directors (the “Board”) has the ultimate responsibility for risk management and oversees the Group’s risk
management functions through the Risk Management Committee and the Audit Committee of the Board.

The President supervises risk management and reports directly to the Board. He chairs two management committees
including the Risk Management Committee and the Asset and Liability Management Committee, which set the risk
management strategies and appetite, evaluate and formulate risk management policies and procedures, and make
recommendations through the President to the Risk Management Committee of the Board. The Chief Risk Officer assists the
President to supervise the Bank’s risk management.

The Group has clearly defined the roles of each department in monitoring financial risks within the Group. The Credit and
Investment Management Department monitors credit risk, the Risk Management Department together with the Asset and
Liability Management Department monitor market and liquidity risks, and the Internal Control and Compliance Department
monitors operational risk. The Risk Management Department is primarily responsible for establishing and coordinating a
comprehensive risk management framework, preparing consolidated reports on credit risk, market risk and operational risk
and reporting directly to the Chief Risk Officer.

The Bank maintains a dual-reporting risk management structure at the branch level. Under this structure, the risk
management department of the branches report to both the Group risk management department and the management of
the branches.

242
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(a) Credit risk

Definition and scope

Credit risk is the risk of loss arising from a borrower or counterparty’s failure to perform its obligations. Operational failures
which result in unauthorised or inappropriate guarantees, financial commitments or investments by the Group may also give
rise to credit risk. The Group’s credit risk is mainly attributable to its loans, due from banks and other financial institutions
and financial investments.

The Group is also exposed to credit risk in other areas. The credit risk arising from derivative financial instruments is limited
to derivative financial assets recorded in the consolidated statement of financial position. In addition, the Group provides
guarantees for customers and may therefore be required to make payments on their behalf. These payments would be
recovered from customers in accordance with the terms of the agreement. Therefore, the Group assumes a credit risk similar
to that arising from loans and applies the same risk control procedures and policies to reduce risks.

Credit risk assessment method

Stage of financial instruments

The Group classifies financial instruments into three stages and makes provisions for expected credit loss accordingly,
depending on whether credit risk on that financial instrument has increased significantly and whether the assets have been
impaired since initial recognition. Refer to Note 4(10) Impairment of financial assets for the definition of the three stages.

Significant increase in credit risk

The assessment of significant increase in credit risk and whether the assets have been impaired since initial recognition is
performed at least on a quarterly basis for financial instruments held by the Group. The Group takes into consideration all
reasonable and supportable information (including forward-looking information) that reflects significant change in credit
risk for the purposes of classifying financial instruments. The main considerations are regulatory and operating environment,
internal and external credit risk rating, debt-servicing capacity, operating capabilities, contractual terms, and repayment
records. The Group compares the risk of default of a single financial instrument or a portfolio of financial instruments with
similar credit risk characteristics as at the end of the reporting period and its risk of default at the date of initial recognition
to determine changes in the risk of default over the expected lifetime of a financial instrument or a portfolio of financial
instruments. In determining whether credit risk of a financial instrument has increased significantly since initial recognition,
the Group considers factors indicating whether the probability of default has risen sharply, whether the financial instrument
has been past due for more than 30 days, whether the market price has been falling continuously and other indicators.

The Group has provided credit facilities for further extension of deferral in principal repayment and interest payment to the
inclusive loans to micro and small-sized businesses in accordance with the government’s regulations. The Group classifies the
credit risk based on the actual situation of the borrower and the judgement of the substantive risk of the business for those
loans with deferred principal repayment and interest payment. However, the temporary deferral in principal repayment and
interest payment are not considered as an automatic trigger event for a significant increase in credit risk.

Annual Report 2021

243
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Definition of default

The Group defines a corporate borrower as in default when it meets one or more of the following criteria:

(i) The principal or interest of loan is past due more than 90 days to the Group;

(ii) The corporate borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to
actions such as liquidation against collateral; or

(iii) The corporate borrower has the matters refer to in (i) or (ii) above in other financial institutions.

The Group defines a retail business borrower as in default when any single credit asset of a borrower meets one or more of
the following criteria:

(i) The principal or interest of loan is past due more than 90 days to the Group;

(ii) Write-offs of loan; or

(iii) The Group considers the borrower is unlikely to pay its credit obligations to the Group in full.

Impairment assessment

A financial asset is generally considered to be credit-impaired if:

• It has been overdue for more than 90 days;

• In light of economic, legal or other factors, the Group has made concessions to a borrower in financial difficulties,
which would otherwise have been impossible under normal circumstances;

• It is probable that the borrower will be insolvent or carry out other financial restructurings;

• Due to serious financial difficulties, the financial asset cannot continue to be traded in an active market;

• There are other objective evidences that indicate the financial asset is impaired.

Parameters, assumptions and estimation techniques

ECL for a financial instrument is measured at an amount equal to 12-month ECL or lifetime ECL depending on whether a
significant increase in credit risk on that financial instrument has occurred since initial recognition and whether an asset is
considered to be credit-impaired. The loss allowance for loans and advances to customers, other than those corporate loans
and advance to customers which are credit-impaired, is measured using the risk parameters method. The key parameters
include Probability of Default (“PD”), Loss Given Default (“LGD”), and Exposure at Default (“EAD”), considering the time
value of money.

PD is the possibility that a customer will default on its obligation within a certain period of time in light of forward-looking
information. The Group’s PD is adjusted based on the results of the Internal Ratings-Based Approach under the New Basel
Capital Accord, taking the forward-looking information into account and deducting the prudential adjustment to reflect the
debtor’s point-in-time PD under the current macro-economic environment.

LGD is the magnitude of the likely loss if there is a default in light of forward-looking information. LGD depends on the type
of counterparty, the method and priority of the recourse, and the type of collaterals, taking the forward-looking adjustments
into account.

EAD refers to the total amount of on- and off-balance sheet exposures in the event of default and is determined based on
the historical repayment records.

The assumptions underlying the ECL calculation, such as how the PDs and LGDs of different maturity profiles change are
monitored and reviewed on a quarterly basis by the Group.

There have been no significant changes in estimation techniques or significant assumptions adopted in ECL calculation
during the year.

244
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

The impairment loss on credit-impaired corporate loans and advance to customers applied discounted cash flow method. If
there is objective evidence that an impairment loss on a loan or advance has incurred, the amount of the loss is measured as
the difference between the asset’s gross carrying amount and the present value of estimated future cash flows discounted
at the asset’s original effective interest rate. The allowance for impairment loss is deducted in the carrying amount. The
impairment loss is recognised in the consolidated statement of profit or loss. In determining allowances on an individual
basis, the following factors are considered:

• The sustainability of the borrower’s business plan;

• The borrower’s ability to improve performance when a financial difficulty arises;

• The estimated recoverable cash flows from projects and liquidation;

• The availability of other financial support and the realisable value of collateral; and

• The timing of the expected cash flows.

It may not be possible to identify a single, or discrete events that result in the impairment, but it may be possible to identify
impairment through the combined effect of several events. The impairment losses are evaluated at the end of each reporting
period, unless unforeseen circumstances require more careful attention.

Forward-looking information contained in ECL

The calculation of ECL incorporates forward-looking information. The Group has performed historical data analysis and
identified Gross Domestic Product (“GDP”), Consumer Price Index (“CPI”), Purchasing Managers' Index (“PMI”) and other
macro-economic indicators as impacting the ECL for each portfolio. The impact of these economic variables on the PD and
LGD has been determined by performing statistical regression analysis to understand the correlations among the historical
changes of the economic variables, PD and LGD. Forecasts of these economic variables are carried out at least quarterly by
the Group that provide the best estimate view of the economy over the next year.

When calculating the weighted average ECL provision, the Group determines the optimistic, neutral and pessimistic scenarios
and their weightings through a combination of macro-statistical analysis and expert judgement.

As at 31 December 2021, the Group has taken into account different macro-economic scenarios, combined with the impact
of factors such as COVID-19 on economic development trends, and made forward-looking forecasts of macro-economic
indicators. Of which, the year-on-year GDP growth rate used to estimate ECL is 5.5% in the neutral scenario for 2022.

The Group has carried out sensitivity analysis of macro-economic indicators used in forward-looking measurement. As at
31 December 2021, when the key economic indicators in the neutral scenario moved up or down by 10%, the ECL did not
change by more than 5% (31 December 2020: less than 5%). 

Financial assets contract modification

The Group might modify the terms of loan with a customer based on commercial renegotiations, or when the customer is in
financial difficulty, with a view to maximise the recovery of loan.

Such modifications include restructuring the loan to provide extended payment term arrangements, payment holidays
or payment forgiveness. Restructuring policies and practices are based on indicators or criteria which, in the judgement
of management, indicate that payment will most likely continue, and reviewed regularly. Such restructures are especially
common for medium-term loans. The classification of a rescheduled loan shall not be upgraded unless it has met certain
criteria and after an observation period of at least 6 months.

The following table includes carrying amount of rescheduled loans and advance to customers:

31 December 31 December
2021 2020
Rescheduled loans and advances to customers 19,134 11,960
Impaired loans and advances to customers included in above 7,455 4,504

Annual Report 2021

245
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Collaterals and other credit enhancements

The amount and type of collateral required depends on the assessment of credit risk of the counterparty. Guidelines are in
place specifying the types of collateral and valuation parameters which can be accepted.

Reverse repurchase business is mainly collateralised by bills and investment securities. As part of certain reverse repurchase
agreements, the Group has received securities that it is allowed to sell or repledge in the absence of default by their owners.

Corporate loans and discounted bills are mainly collateralised by properties or other assets. As at 31 December 2021, the
gross carrying amount of corporate loans and discounted bills amounted to RMB12,722,464 million (31 December 2020:
RMB11,509,029 million), of which credit exposure covered by collateral amounted to RMB3,849,616 million (31 December
2020: RMB3,534,852 million).

Retail loans are mainly collateralised by residential properties. As at 31 December 2021, the gross carrying amount of retail
loans amounted to RMB7,944,781 million (31 December 2020: RMB7,115,279 million), of which credit exposure covered by
collateral amounted to RMB7,056,652 million (31 December 2020: RMB6,269,321 million).

The Group prefers more liquid collateral with relatively stable market value and does not accept collateral that is illiquid, with
difficulties in registration or high fluctuations in market value. The value of collateral should be appraised and confirmed by
the Group or valuation specialists engaged by the Group. The value of collateral should adequately cover the outstanding
balance of loans. The Group takes into consideration the types of collateral, state of condition, liquidity, price volatility and
realisation cost to determine the loan-to-value ratio of collateral. All collateral has to be registered in accordance with the
relevant laws and regulations. The credit officers inspect the collateral and assess the changes in the value of collateral
regularly.

The Group monitors the market value of the collaterals and when needed, require additional collateral according to
agreements. The Group disposes of repossessed assets in an orderly manner.

In 2021, the Group took possession of collateral held as security with a carrying amount of RMB41 million (2020: RMB377
million).

(i) Maximum exposure to credit risk without taking into account of any collateral and other
credit enhancements

As at the end of the reporting period, the maximum credit risk exposure of the Group without taking into account of any
collateral and other credit enhancements is set out below:

31 December 31 December
2021 2020
Balances with central banks 3,035,566 3,472,962
Due from banks and other financial institutions 827,150 1,081,897
Derivative financial assets 76,140 134,155
Reverse repurchase agreements 663,496 739,288
Loans and advances to customers 20,109,200 18,136,328
Financial investments
  — Financial investments measured at FVTPL 465,064 638,485
  — Financial investments measured at FVTOCI 1,704,164 1,459,018
  — Financial investments measured at amortised cost 6,830,933 6,265,668
Other 294,960 377,563
34,006,673 32,305,364
Credit commitments 2,730,369 2,711,454
Total maximum credit risk exposure 36,737,042 35,016,818

(ii) Risk concentrations

Credit risk is often greater when counterparties are concentrated in one single industry or geographic location, or have
comparable economic features. In addition, different geographic areas and industrial sectors have their unique characteristics
in terms of economic development, and could present a different credit risk. 

246
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(1) Loans and advances to customers

By geographical distribution

The composition of the Group’s gross loans and advances to customers (excluding accrued interest) by geographical
distribution is analysed as follows:

31 December 2021 31 December 2020

Amount Percentage Amount Percentage
Head Office 791,994 3.83% 772,372 4.15%
Yangtze River Delta 4,163,732 20.15% 3,582,682 19.24%
Pearl River Delta 3,134,781 15.17% 2,746,019 14.74%
Bohai Rim 3,371,325 16.31% 3,030,552 16.27%
Central China 3,133,539 15.16% 2,789,085 14.98%
Western China 3,746,867 18.13% 3,369,916 18.09%
Northeastern China 895,238 4.33% 841,595 4.52%
Overseas and other 1,429,769 6.92% 1,492,087 8.01%
Total 20,667,245 100.00% 18,624,308 100.00%

By industry distribution

The composition of the Group’s gross loans and advances to customers (excluding accrued interest) by industry is analysed as
follows:

31 December 31 December
2021 2020
Transportation, storage and postal services 3,017,397 2,659,916
Manufacturing 1,801,933 1,718,400
Leasing and commercial services 1,739,367 1,517,265
Water, environment and public utility management 1,388,883 1,177,193
Production and supply of electricity, heating, gas and water 1,152,584 1,085,151
Real estate 932,390 958,314
Wholesale and retail 559,559 549,412
Finance 357,229 310,559
Construction 343,860 292,748
Science, education, culture and sanitation 312,352 272,189
Mining 239,155 219,701
Other 349,997 341,885
Subtotal for corporate loans 12,194,706 11,102,733
Personal mortgage and business loans 7,065,126 6,249,953
Other 879,655 865,326
Subtotal for personal loans 7,944,781 7,115,279
Discounted bills 527,758 406,296
Total for loans and advances to customers 20,667,245 18,624,308

Annual Report 2021

247
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

By collaterals

The composition of the Group’s gross loans and advances to customers (excluding accrued interest) by collaterals is analysed
as follows:

31 December 31 December
2021 2020
Unsecured loans 6,988,877 6,259,230
Guaranteed loans 2,459,887 2,260,445
Loans secured by mortgages 9,497,898 8,703,068
Pledged loans 1,720,583 1,401,565
Total 20,667,245 18,624,308

Overdue loans and advances to customers

The composition of the Group’s gross overdue loans and advances to customers (excluding accrued interest) by collaterals is
as follows:

31 December 2021
Overdue Overdue for Overdue Overdue
for 1 to 91 days to for 1 to for over
90 days 1 year 3 years 3 years Total
Unsecured loans 22,405 22,502 29,315 3,269 77,491
Guaranteed loans 10,326 15,031 26,406 6,117 57,880
Loans secured by mortgages 38,491 30,029 33,485 8,546 110,551
Pledged loans 1,222 2,495 4,041 1,221 8,979
Total 72,444 70,057 93,247 19,153 254,901

31 December 2020
Overdue Overdue for Overdue Overdue
for 1 to 91 days to for 1 to for over
90 days 1 year 3 years 3 years Total
Unsecured loans 34,753 23,590 16,796 4,107 79,246
Guaranteed loans 19,315 20,100 18,985 7,639 66,039
Loans secured by mortgages 40,909 27,878 31,687 8,161 108,635
Pledged loans 3,986 3,252 4,999 1,350 13,587
Total 98,963 74,820 72,467 21,257 267,507

248
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(2) Debt securities investments

By issuers distribution

The following tables present an analysis of debt securities (excluding accrued interest) by types of issuers and investments:

31 December 2021
Financial Financial Financial
investments investments investments
measured at measured at measured at
FVTPL FVTOCI amortised cost Total
Governments and central banks 97,364 653,774 5,658,676 6,409,814
Policy banks 23,862 171,130 559,727 754,719
Banks and other financial institutions 201,855 310,160 430,758 942,773
Corporate entities 97,202 551,757 61,080 710,039
420,283 1,686,821 6,710,241 8,817,345

31 December 2020
Financial Financial Financial
investments investments investments
measured at measured at measured at
FVTPL FVTOCI amortised cost Total
Governments and central banks 86,077 479,505 5,203,858 5,769,440
Policy banks 27,631 169,478 528,516 725,625
Banks and other financial institutions 247,628 281,215 369,815 898,658
Corporate entities 104,476 509,422 46,572 660,470
465,812 1,439,620 6,148,761 8,054,193

By rating distribution

The Group adopts a credit rating approach to manage the credit risk of the debt securities portfolio held. The ratings are
obtained from Bloomberg Composite, or major rating agencies where the issuers of debt securities are located. The carrying
amounts of debt securities investments (excluding accrued interest) analysed by rating as at the end of the reporting period
are as follows:

31 December 2021
Unrated AAA AA A Below A Total
Governments and central banks 1,890,581 4,454,127 18,348 18,747 28,011 6,409,814
Policy banks 698,003 38,194 6,324 12,167 31 754,719
Banks and other
  financial institutions 380,276 382,264 12,010 103,667 64,556 942,773
Corporate entities 165,078 384,700 4,868 98,708 56,685 710,039
3,133,938 5,259,285 41,550 233,289 149,283 8,817,345

Annual Report 2021

249
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

31 December 2020
Unrated AAA AA A Below A Total
Governments and central banks 1,826,872 3,878,911 13,444 23,941 26,272 5,769,440
Policy banks 710,867 – 1,703 11,822 1,233 725,625
Banks and other
  financial institutions 333,991 372,867 23,110 95,765 72,925 898,658
Corporate entities 141,253 369,783 5,317 81,893 62,224 660,470
3,012,983 4,621,561 43,574 213,421 162,654 8,054,193

(iii) Three-stage analysis of financial instruments’ risk exposure

The Group’s credit risk stages of financial instruments are as follows:

31 December 2021
Gross carrying amount Provision for ECL
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
Financial assets measured
  at amortised cost
Cash and balances
  with central banks 3,098,438 – – 3,098,438 – – – –
Due from banks and
  other financial institutions 828,241 – – 828,241 (1,091) – – (1,091)
Reverse repurchase agreements 505,969 – – 505,969 (128) – – (128)
Loans and advances
  to customers 19,380,019 501,286 293,394 20,174,699 (269,376) (110,649) (223,739) (603,764)
Financial investments 6,832,308 6,425 157 6,838,890 (5,639) (2,200) (118) (7,957)
Precious metal leasing
  and lending 166,184 298 24 166,506 (1,177) (58) (21) (1,256)
Total 30,811,159 508,009 293,575 31,612,743 (277,411) (112,907) (223,878) (614,196)

31 December 2021
Gross carrying amount Provision for ECL
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
Financial assets measured
  at FVTOCI
Loans and advances
  to customers 534,636 – 35 534,671 (191) – (28) (219)
Financial investments 1,703,228 630 306 1,704,164 (2,674) (355) (1,341) (4,370)
Total 2,237,864 630 341 2,238,835 (2,865) (355) (1,369) (4,589)
Credit commitments 2,711,256 17,598 1,515 2,730,369 (19,881) (3,581) (987) (24,449)

250
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

31 December 2020
Gross carrying amount Provision for ECL
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
Financial assets measured
  at amortised cost
Cash and balances
  with central banks 3,537,795 – – 3,537,795 – – – –
Due from banks and
  other financial institutions 1,073,777 9,347 – 1,083,124 (1,214) (13) – (1,227)
Reverse repurchase agreements 584,793 – – 584,793 (117) – – (117)
Loans and advances
  to customers 17,580,020 375,083 293,319 18,248,422 (223,703) (89,151) (217,446) (530,300)
Financial investments 6,262,762 7,819 160 6,270,741 (2,234) (2,718) (121) (5,073)
Precious metal leasing
  and lending 177,581 951 161 178,693 (479) (120) (104) (703)
Total 29,216,728 393,200 293,640 29,903,568 (227,747) (92,002) (217,671) (537,420)

31 December 2020
Gross carrying amount Provision for ECL
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
Financial assets measured
  at FVTOCI
Loans and advances
  to customers 413,633 – 659 414,292 (211) – (650) (861)
Financial investments 1,458,639 326 53 1,459,018 (2,206) (22) (240) (2,468)
Total 1,872,272 326 712 1,873,310 (2,417) (22) (890) (3,329)
Credit commitments 2,682,556 24,509 4,389 2,711,454 (22,021) (2,957) (1,732) (26,710)

Annual Report 2021

251
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(b) Liquidity risk

Liquidity risk is the risk that funds will not be sufficient or funds will not be raised at a reasonable cost in a timely manner to
meet the need of asset growth or repayment of debts due, although the Group remains solvent. This may arise from amount
or maturity mismatches of assets and liabilities.

The Group manages its liquidity risk through the Asset and Liability Management Department and aims at:

— Optimising the structure of assets and liabilities;

— Maintaining the stability of the deposit base;

— Projecting cash flows and evaluating the level of current assets; and

— Maintaining an efficient internal fund transfer mechanism to ensure sufficient liquidity at branch level.

(i) Maturity analysis of assets and liabilities

The tables below summarise the maturity profile of the Group’s assets and liabilities. The Group’s expected remaining
maturity of its financial instruments may vary significantly from the following analysis. For example, demand deposits from
customers are expected to maintain a stable or increasing balance although they have been classified as repayable on
demand in the following tables.

31 December 2021
Overdue/ One to Three
repayable Less than three months to One to Over Undated
on demand one month months one year five years five years (***) Total
Assets:
Cash and balances with central banks 621,110 9,741 1,965 6,220 – – 2,459,402 3,098,438
Due from banks and other financial institutions (*) 239,523 778,638 225,730 204,230 39,484 3,041 – 1,490,646
Derivative financial assets 261 12,784 14,924 29,509 11,996 6,666 – 76,140
Loans and advances to customers 17,882 1,097,463 849,883 3,116,875 3,219,890 11,723,988 83,219 20,109,200
Financial investments
  — Financial investments measured at FVTPL 88,573 6,662 23,625 163,412 81,410 167,956 91,585 623,223
  — Financial investments measured at FVTOCI – 66,225 206,666 347,980 702,386 380,896 99,451 1,803,604
  — Financial investments measured at
  amortised cost – 81,718 137,289 748,029 2,831,810 3,029,696 2,391 6,830,933
Investments in associates and joint ventures – – – – – – 61,782 61,782
Property and equipment – – – – – – 290,296 290,296
Other 106,055 279,318 59,652 136,411 80,479 23,055 102,151 787,121
Total assets 1,073,404 2,332,549 1,519,734 4,752,666 6,967,455 15,335,298 3,190,277 35,171,383
Liabilities:
Due to central banks – – 1,111 36,252 2,360 – – 39,723
Financial liabilities designated as at FVTPL 64,944 622 1,304 12,378 3,689 4,243 – 87,180
Derivative financial liabilities 165 10,670 13,773 26,766 12,768 7,195 – 71,337
Due to banks and other financial institutions (**) 2,268,162 488,000 175,347 278,804 52,944 23,715 – 3,286,972
Certificates of deposit – 65,193 106,765 109,507 8,877 – – 290,342
Due to customers 13,002,739 1,546,301 1,491,308 4,409,851 5,972,715 18,860 – 26,441,774
Debt securities issued – 9,544 28,189 86,298 203,003 464,341 – 791,375
Other – 301,667 117,672 170,157 173,032 124,894 – 887,422
Total liabilities 15,336,010 2,421,997 1,935,469 5,130,013 6,429,388 643,248 – 31,896,125
Net liquidity gap (14,262,606) (89,448) (415,735) (377,347) 538,067 14,692,050 3,190,277 3,275,258

(*) Includes reverse repurchase agreements.

(**) Includes repurchase agreements.

(***) Undated loans and advances to customers and financial investments are impaired or not impaired but overdue for more than
one month.

252
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

31 December 2020
Overdue/ One to Three
repayable Less than three months to One to Over Undated
on demand one month months one year five years five years (***) Total
Assets:
Cash and balances with central banks 910,499 2,101 3,238 20,301 – – 2,601,656 3,537,795
Due from banks and other financial institutions (*) 227,610 866,392 339,155 345,966 36,773 5,289 – 1,821,185
Derivative financial assets 1,139 20,613 25,841 59,392 16,793 10,377 – 134,155
Loans and advances to customers 36,494 943,639 743,562 2,603,777 3,038,875 10,659,555 110,426 18,136,328
Financial investments
  — Financial investments measured at FVTPL 10,868 21,033 27,728 244,359 79,888 240,195 160,412 784,483
  — Financial investments measured at FVTOCI – 77,937 102,340 269,234 683,550 325,957 81,970 1,540,988
  — Financial investments measured at
  amortised cost – 108,859 199,800 642,382 2,751,810 2,560,607 2,210 6,265,668
Investments in associates and joint ventures – – – – – – 41,206 41,206
Property and equipment – – – – – – 286,279 286,279
Other 324,947 179,867 138,401 28,909 18,471 39,108 67,268 796,971
Total assets 1,511,557 2,220,441 1,580,065 4,214,320 6,626,160 13,841,088 3,351,427 33,345,058
Liabilities:
Due to central banks 51 – 555 52,373 1,995 – – 54,974
Financial liabilities designated as at FVTPL 60,714 1,669 5,268 1,212 14,535 4,540 – 87,938
Derivative financial liabilities 1,738 21,579 32,207 58,840 15,722 10,887 – 140,973
Due to banks and other financial institutions (**) 2,130,667 390,573 202,816 272,281 54,030 27,326 – 3,077,693
Certificates of deposit – 59,478 111,560 154,694 9,944 – – 335,676
Due to customers 13,499,762 1,233,220 1,336,721 3,849,682 5,194,433 20,908 – 25,134,726
Debt securities issued – 10,717 19,554 90,158 258,867 418,831 – 798,127
Other 128,581 167,625 81,164 298,621 95,489 33,956 – 805,436
Total liabilities 15,821,513 1,884,861 1,789,845 4,777,861 5,645,015 516,448 – 30,435,543
Net liquidity gap (14,309,956) 335,580 (209,780) (563,541) 981,145 13,324,640 3,351,427 2,909,515

(*) Includes reverse repurchase agreements.

(**) Includes repurchase agreements.

(***) Undated loans and advances to customers and financial investments are impaired or not impaired but overdue for more than
one month.

Annual Report 2021

253
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(ii) Maturity analysis of undiscounted contractual cash flows

The tables below summarise the maturity profile of the Group’s financial instruments based on the undiscounted contractual
cash flows. The balances of some items in the tables below are different from the balances in the consolidated statement
of financial position as the tables incorporate all cash flows relating to both principal and interest. The Group’s actual cash
flows on these instruments may vary significantly from the following analysis. For example, demand deposits from customers
are expected to maintain a stable or increasing balance although they have been classified as repayable on demand in the
following tables.

31 December 2021
Overdue/ One to Three
repayable Less than three months to One to Over Undated
on demand one month months one year five years five years (***) Total
Non-derivative cash flows:
Financial assets:
Cash and balances with central banks 621,110 9,748 1,978 6,356 – – 2,459,402 3,098,594
Due from banks and other financial institutions (*) 239,524 779,758 227,507 208,024 42,720 3,340 – 1,500,873
Loans and advances to customers (**) 22,930 1,194,834 1,025,340 3,837,204 6,198,405 19,491,028 468,472 32,238,213
Financial investments
  — Financial investments measured at FVTPL 88,573 6,717 24,438 173,529 106,924 184,838 92,607 677,626
  — Financial investments measured at FVTOCI – 69,799 212,545 385,083 777,859 444,114 99,726 1,989,126
  — Financial investments measured at amortised cost – 116,381 167,261 919,230 3,404,308 3,666,299 3,147 8,276,626
Other 98,177 279,659 49,188 128,358 83,643 5,041 3 644,069
1,070,314 2,456,896 1,708,257 5,657,784 10,613,859 23,794,660 3,123,357 48,425,127

(*) Includes reverse repurchase agreements.

(**) The maturity profile of the rescheduled loans’ undiscounted contractual cash flows is determined according to the negotiated
terms.

(***) Undated loans and advances to customers and financial investments are impaired or not impaired but overdue for more than
one month.

31 December 2021
Overdue/ One to Three
repayable Less than three months to One to Over
on demand one month months one year five years five years Undated Total
Non-derivative cash flows:
Financial liabilities:
Due to central banks – 1 1,114 36,614 2,360 – – 40,089
Financial liabilities designated as at FVTPL 64,944 623 1,306 12,476 3,701 4,249 – 87,299
Due to banks and other financial institutions (*) 2,268,538 488,702 175,898 290,018 61,495 24,381 – 3,309,032
Certificates of deposit – 65,201 106,862 109,863 9,076 – – 291,002
Due to customers 13,003,897 1,551,479 1,510,507 4,519,399 6,274,552 21,447 – 26,881,281
Debt securities issued – 10,862 31,300 108,543 298,841 535,026 – 984,572
Other – 286,731 36,804 16,089 100,695 7,190 – 447,509
15,337,379 2,403,599 1,863,791 5,093,002 6,750,720 592,293 – 32,040,784
Derivative cash flows:
Derivative financial instruments settled on net basis – 215 1,308 2,138 493 260 – 4,414
Derivative financial instruments settled on gross basis
Including: Cash inflow 65,958 1,097,393 450,359 647,297 179,297 23,254 – 2,463,558
     Cash outflow (65,601) (1,080,685) (449,200) (638,174) (181,812) (22,948) – (2,438,420)
357 16,708 1,159 9,123 (2,515) 306 – 25,138

(*) Includes repurchase agreements.

254
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

31 December 2020
Overdue/ One to Three
repayable Less than three months to One to Over Undated
on demand one month months one year five years five years (***) Total
Non-derivative cash flows:
Financial assets:
Cash and balances with central banks 910,499 2,101 6,750 20,301 – – 2,601,656 3,541,307
Due from banks and other financial institutions (*) 227,824 867,500 341,302 352,359 40,478 298,328 – 2,127,791
Loans and advances to customers (**) 41,245 1,041,610 983,897 3,570,003 6,424,534 17,121,574 527,557 29,710,420
Financial investments
  — Financial investments measured at FVTPL 10,953 21,431 28,274 227,824 115,710 271,393 150,441 826,026
  — Financial investments measured at FVTOCI – 82,953 104,163 290,770 765,296 386,509 75,956 1,705,647
  — Financial investments measured at amortised cost – 109,760 207,927 761,694 3,331,990 3,136,236 3,150 7,550,757
Other 595,580 27,405 19,349 8,449 9,248 88 791 660,910
1,786,101 2,152,760 1,691,662 5,231,400 10,687,256 21,214,128 3,359,551 46,122,858

(*) Includes reverse repurchase agreements.

(**) The maturity profile of the rescheduled loans’ undiscounted contractual cash flows is determined according to the negotiated
terms.

(***) Undated loans and advances to customers and financial investments are impaired or not impaired but overdue for more than
one month.

31 December 2020
Overdue/ One to Three
repayable Less than three months to One to Over
on demand one month months one year five years five years Undated Total
Non-derivative cash flows:
Financial liabilities:
Due to central banks 52 – 526 52,403 1,987 – – 54,968
Financial liabilities designated as at FVTPL 61,159 1,671 5,278 1,212 14,658 4,540 – 88,518
Due to banks and other financial institutions (*) 2,167,704 391,443 203,992 276,707 58,071 32,352 – 3,130,269
Certificates of deposit – 59,707 113,008 154,446 10,474 – – 337,635
Due to customers 13,506,194 1,233,820 1,376,867 3,957,547 5,401,402 21,395 – 25,497,225
Debt securities issued – 11,012 23,469 112,222 353,643 495,458 – 995,804
Other 498,427 9,467 5,647 14,894 62,143 28,620 – 619,198
16,233,536 1,707,120 1,728,787 4,569,431 5,902,378 582,365 – 30,723,617
Derivative cash flows:
Derivative financial instruments settled on net basis – 2,743 (1,860) 6,822 (581) (47) – 7,077
Derivative financial instruments settled on gross basis
Including: Cash inflow 97,545 980,305 655,210 1,119,090 189,256 26,883 – 3,068,289
     Cash outflow (95,502) (873,719) (494,113) (846,380) (179,399) (25,437) – (2,514,550)
2,043 106,586 161,097 272,710 9,857 1,446 – 553,739

(*) Includes repurchase agreements.

Annual Report 2021

255
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(iii) Analysis of credit commitments by contractual expiry date

Management does not expect all of the commitments to be drawn down before the expiry of the commitments.

31 December 2021
Three
Repayable Less than One to months to One to Over
on demand one month three months one year five years five years Total
Credit commitments 1,211,830 105,556 215,011 497,709 420,178 280,085 2,730,369

31 December 2020
Three
Repayable Less than One to months to One to Over
on demand one month three months one year five years five years Total
Credit commitments 1,179,024 113,370 214,884 528,653 361,217 314,306 2,711,454

(c) Market risk

Market risk is the risk of loss, in respect of the Group’s on- and off-balance sheet activities, arising from adverse movements
in market rates including interest rates, foreign exchange rates, commodity prices and stock prices. Market risk arises from
both the Group’s trading and non-trading businesses.

The Group is primarily exposed to structural interest rate risk arising from commercial banking and interest rate risk arising
from treasury business positions. Interest rate risk is inherent in many of its businesses and largely arises from mismatches
between the repricing dates of interest-generating assets and interest-bearing liabilities. The analysis of the interest rate risk
in the banking book is disclosed in note 49(d).

The Group’s currency risk mainly results from the risk arising from exchange rate fluctuations on its foreign exchange
exposures. Foreign exchange exposures include the mismatch of foreign currency assets and liabilities, and off-balance sheet
foreign exchange positions arising from derivative transactions.

The Group considers the market risk arising from stock price fluctuations in respect of its investment portfolios to be
immaterial.

Sensitivity analysis, interest rate repricing gap analysis and foreign exchange risk concentration analysis are the major market
risk management tools used by the Group. The Bank monitors market risk separately in respect of trading and other non-
trading portfolios. The Value-at-risk (“VaR”) analysis is a major tool used by the Bank to measure and monitor the market
risk of its trading portfolios. The following sections include a VaR analysis by risk type of the Group’s trading portfolios and a
sensitivity analysis based on the Group’s currency risk exposure and interest rate risk exposure (both trading and non-trading
portfolios).

256
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(i) VaR

VaR analysis is a statistical technique which estimates the potential maximum losses that could occur on risk positions taken
due to movements in interest rates, foreign exchange rates or prices over a specified time horizon and at a specified level
of confidence. The Bank adopts a historical simulation model to calculate and monitor trading portfolio VaR with 250 days’
historical market data (with a 99% confidence level, and one-day holding period) on a daily basis.

A summary of VaRs by risk type of trading portfolios is as follows:

2021
Year end Average Maximum Minimum
Interest rate risk 72 88 153 46
Currency risk 95 172 288 71
Commodity risk 14 37 105 12
Total portfolio VaR 144 198 347 80

2020
Year end Average Maximum Minimum
Interest rate risk 64 49 161 29
Currency risk 230 157 268 62
Commodity risk 41 40 94 14
Total portfolio VaR 264 171 284 73

VaR for each risk factor is the derived largest potential loss due to fluctuations solely in that risk factor. As there is a
diversification effect due to the correlation amongst the risk factors, the individual VaRs do not add up to the total portfolio
VaR.

Although VaR is an important tool for measuring market risk under normal market environment, the assumptions on which
the model is based do give rise to some limitations, mainly including the following:

(1) VaR does not reflect liquidity risk. In the VaR model, a one-day holding period assumes that it is possible to hedge
or dispose positions within that period without restriction, the price of the financial instruments will fluctuate in the
specified range, and the correlation between these market prices will remain unchanged. This may not fully reflect
the market risk arising at times of severe illiquidity, when a one-day holding period may be insufficient to liquidate or
hedge all positions fully;

(2) Even though positions may change throughout the day, VaR only represents the risk of the portfolios at the close of
each business day, and it does not account for any losses that may occur beyond the 99% confidence level; and

(3) VaR relies heavily on historical data to provide information and may not clearly predict the future changes and
modifications of the risk factors, especially those of an exceptional nature due to significant market moves.

Annual Report 2021

257
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(ii) Currency risk

The Group conducts its businesses mainly in RMB, with certain transactions denominated in USD, HKD, and other currencies
to a lesser extent. The exchange rate of RMB to USD is managed under a floating exchange rate system. The HKD exchange
rate has been pegged to the USD and therefore the exchange rate of RMB to HKD has fluctuated in line with the changes in
the exchange rate of RMB to USD. Transactions in foreign currencies mainly arise from the Group’s foreign currency treasury
operations, foreign exchange dealings and overseas investments.

The Group manages its currency risk through various methods, including limit management and risk hedging to hedge
currency risk, and performs currency risk sensitivity analysis and stress testing regularly.

The tables below indicate a sensitivity analysis of exchange rate changes to which the Group had significant on- and off-
balance sheet exposure on its monetary assets and liabilities and its forecasted cash flows. The analysis calculates the effect
of a reasonably possible movement in the currency rates against RMB, with all other variables held constant, on profit before
taxation and equity. A negative amount in the table reflects a potential net reduction in profit before taxation or equity,
while a positive amount reflects a potential net increase. While the table below indicates the effect on profit before taxation
and equity of a 1% depreciation of USD and HKD against RMB, there will be an opposite effect with the same amount if
the currencies appreciate by the same percentage. This effect, however, is based on the assumption that the Group’s foreign
exchange exposures as at the end of the reporting period are kept unchanged and, therefore, have not incorporated actions
that would be taken by the Group to mitigate the adverse impact of this currency risk.

Effect on profit
before taxation Effect on equity
Change in 31 December 31 December 31 December 31 December
Currency currency rate 2021 2020 2021 2020
USD -1% (210) (155) (448) (402)
HKD -1% 566 306 (1,331) (1,552)

258
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

A breakdown of the assets and liabilities analysed by currency is as follows:

31 December 2021
USD HKD Other Total
(in RMB (in RMB (in RMB (in RMB
RMB equivalent) equivalent) equivalent) equivalent)
Assets:
Cash and balances with central banks 2,724,409 174,831 66,652 132,546 3,098,438
Due from banks and other financial institutions (*) 871,298 515,224 25,637 78,487 1,490,646
Derivative financial assets 24,951 33,808 5,804 11,577 76,140
Loans and advances to customers 18,705,303 780,912 319,687 303,298 20,109,200
Financial investments
  — Financial investments measured at FVTPL 565,961 37,844 6,913 12,505 623,223
  — Financial investments measured at FVTOCI 1,300,499 338,301 54,886 109,918 1,803,604
  — Financial investments measured at amortised cost 6,641,400 106,016 6,607 76,910 6,830,933
Investments in associates and joint ventures 35,768 1,010 130 24,874 61,782
Property and equipment 143,897 143,589 673 2,137 290,296
Other 454,407 79,085 23,585 230,044 787,121
Total assets 31,467,893 2,210,620 510,574 982,296 35,171,383
Liabilities:
Due to central banks 37,360 – – 2,363 39,723
Financial liabilities designated as at FVTPL 611 6,719 – 79,850 87,180
Derivative financial liabilities 18,897 35,831 5,687 10,922 71,337
Due to banks and other financial institutions (**) 2,354,265 702,938 42,953 186,816 3,286,972
Certificates of deposit 41,707 177,383 20,490 50,762 290,342
Due to customers 24,914,524 864,226 366,861 296,163 26,441,774
Debt securities issued 528,377 227,278 593 35,127 791,375
Other 741,923 117,020 9,600 18,879 887,422
Total liabilities 28,637,664 2,131,395 446,184 680,882 31,896,125
Net long position 2,830,229 79,225 64,390 301,414 3,275,258
Credit commitments 2,085,604 395,773 76,881 172,111 2,730,369

(*) Includes reverse repurchase agreements.

(**) Includes repurchase agreements.

Annual Report 2021

259
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

31 December 2020
USD HKD Other Total
(in RMB (in RMB (in RMB (in RMB
RMB equivalent) equivalent) equivalent) equivalent)
Assets:
Cash and balances with central banks 3,258,416 143,125 21,381 114,873 3,537,795
Due from banks and other financial institutions (*) 1,083,840 591,437 23,981 121,927 1,821,185
Derivative financial assets 77,834 31,640 10,693 13,988 134,155
Loans and advances to customers 16,643,324 822,891 337,456 332,657 18,136,328
Financial investments
  — Financial investments measured at FVTPL 736,199 30,251 5,377 12,656 784,483
  — Financial investments measured at FVTOCI 1,089,386 311,551 29,136 110,915 1,540,988
  — Financial investments measured at amortised cost 6,078,227 107,089 10,743 69,609 6,265,668
Investments in associates and joint ventures 14,354 1,019 169 25,664 41,206
Property and equipment 147,506 136,037 713 2,023 286,279
Other 381,037 157,713 6,613 251,608 796,971
Total assets 29,510,123 2,332,753 446,262 1,055,920 33,345,058
Liabilities:
Due to central banks 50,796 523 – 3,655 54,974
Financial liabilities designated as at FVTPL 13,183 6,207 179 68,369 87,938
Derivative financial liabilities 84,174 32,326 10,787 13,686 140,973
Due to banks and other financial institutions (**) 2,182,407 686,933 32,959 175,394 3,077,693
Certificates of deposit 39,224 178,537 23,957 93,958 335,676
Due to customers 23,571,992 883,119 377,699 301,916 25,134,726
Debt securities issued 478,569 272,067 4,744 42,747 798,127
Other 583,037 196,560 11,170 14,669 805,436
Total liabilities 27,003,382 2,256,272 461,495 714,394 30,435,543
Net long/(short) position 2,506,741 76,481 (15,233) 341,526 2,909,515
Credit commitments 2,001,018 464,057 70,784 175,595 2,711,454

(*) Includes reverse repurchase agreements.

(**) Includes repurchase agreements.

260
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(d) Interest rate risk in the banking book

Interest rate risk in the banking book is defined as the risk of loss in the overall return and the economic value of the
banking book arising from adverse movements in interest rate and term structure. This type of risk may occur in the
following situations:

• The repricing period of different financial instruments are different when the interest rate changes;

• Despite the similarities in maturity periods, changes in the benchmark interest rate vary among on- and off-balance
sheet business with different pricing benchmark interest rates;

• The Bank or the counterparty can elect to change the level or the maturity of future cash flows of financial instruments
when the Bank holds equity derivative or when there are embedded option terms or implied options in the on- and
off-banking book businesses; and

• Due to changes in expected default levels or market liquidity, the market’s assessment of the credit quality of financial
instruments changes, leading to changes in credit spreads.

The Group manages the interest rate risk in the banking book through the Asset and Liability Management Department, and
the following methods have been adopted:

• Interest rate prediction: analysing the macro-economic factors that may impact the PBOC benchmark interest rates and
market interest rates;

• Duration management: optimising the differences in timing between contractual repricing (maturities) of interest-
generating assets and interest-bearing liabilities;

• Pricing management: managing the deviation of the pricing of interest-generating assets and interest-bearing liabilities
from the benchmark interest rates or market interest rates;

• Limit management: optimising the positions of interest-generating assets and interest-bearing liabilities and controlling
the impact on profit or loss and equity; and

• Hedging: using interest rate derivatives for hedging management in a timely manner.

The Group measures interest rate risk mainly by analysing the sensitivity of projected net interest income under various
interest rate movements (scenario analysis). The Group aims to mitigate the impact of prospective interest rate movements
which might reduce future net interest income, while balancing the cost of hedging on the current revenue.

The following tables demonstrate the sensitivity to a reasonably possible change in interest rate, with all other variables held
constant, on the Group’s net interest income and equity.

The effect on net interest income is the impact of the assumed changes in interest rates on the net interest income, arising
from the financial assets and financial liabilities held at the end of the reporting period that are subject to repricing within
the coming year, including the effect of hedging instruments. The effect on equity is the impact of the assumed changes in
interest rates on other comprehensive income, calculated by revaluing fixed rate financial assets measured at FVTOCI held at
the end of the reporting period, including the effect of any associated hedges.

Annual Report 2021

261
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

31 December 2021
Increased by 100 basis points Decreased by 100 basis points
Effect on Effect on
net interest Effect on net interest Effect on
Currency income equity income equity
RMB (27,350) (39,969) 27,350 43,662
USD 1,551 (5,873) (1,551) 6,126
HKD (958) (140) 958 142
Other 1,029 (1,661) (1,029) 1,694
Total (25,728) (47,643) 25,728 51,624

31 December 2020
Increased by 100 basis points Decreased by 100 basis points
Effect on Effect on
net interest Effect on net interest Effect on
Currency income equity income equity
RMB (27,286) (31,709) 27,286 34,753
USD (169) (7,340) 169 7,345
HKD (1,734) (68) 1,734 68
Other (30) (1,766) 30 1,769
Total (29,219) (40,883) 29,219 43,935

The interest rate sensitivities set out in the tables above are for illustration only and are based on simplified scenarios. The
figures represent the effect of the expected movements in net interest income and equity based on the projected yield curve
scenarios and the Group’s current interest rate risk profile. This effect, however, does not incorporate actions other than
hedging that would be taken by management to mitigate the impact of interest rate risk. The projections above also assume
that interest rates of all maturities move by the same degree and, therefore, do not reflect the potential impact on net
interest income and equity in the case where some rates change while others remain unchanged.

262
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

The tables below summarise the contractual repricing or maturity dates, whichever is earlier, of the Group’s assets and
liabilities.

31 December 2021
Less than Three Non-
three months to One to Over interest-
months one year five years five years bearing Total
Assets:
Cash and balances with central banks 2,786,830 – – – 311,608 3,098,438
Due from banks and
  other financial institutions (*) 1,207,522 202,551 36,170 3,041 41,362 1,490,646
Derivative financial assets – – – – 76,140 76,140
Loans and advances to customers 7,520,367 11,830,293 386,803 327,354 44,383 20,109,200
Financial investments
  — Financial investments
  measured at FVTPL 33,045 150,390 69,283 164,957 205,548 623,223
  — Financial investments
  measured at FVTOCI 334,480 340,866 642,215 369,260 116,783 1,803,604
  — Financial investments
  measured at amortised cost 350,431 735,724 2,718,515 2,939,372 86,891 6,830,933
Investments in associates and
  joint ventures – – – – 61,782 61,782
Property and equipment – – – – 290,296 290,296
Other – 4,385 70,493 – 712,243 787,121
Total assets 12,232,675 13,264,209 3,923,479 3,803,984 1,947,036 35,171,383
Liabilities:
Due to central banks 1,108 36,252 2,360 – 3 39,723
Financial liabilities
  designated as at FVTPL 1,069 7,214 1,066 – 77,831 87,180
Derivative financial liabilities – – – – 71,337 71,337
Due to banks and other financial
  institutions (**) 2,919,746 302,294 31,688 1,547 31,697 3,286,972
Certificates of deposit 174,720 109,344 5,947 – 331 290,342
Due to customers 15,457,811 4,353,175 5,951,386 18,530 660,872 26,441,774
Debt securities issued 116,340 62,391 146,410 456,464 9,770 791,375
Other 1,968 9,834 86,118 7,133 782,369 887,422
Total liabilities 18,672,762 4,880,504 6,224,975 483,674 1,634,210 31,896,125
Interest rate mismatch (6,440,087) 8,383,705 (2,301,496) 3,320,310 N/A N/A

( *) Includes reverse repurchase agreements.

(**) Includes repurchase agreements.

The data set out in the above table includes trading book data.

Annual Report 2021

263
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

31 December 2020
Less than Three Non-
three months to One to Over interest-
months one year five years five years bearing Total
Assets:
Cash and balances with central banks 3,190,119 – – – 347,676 3,537,795
Due from banks and other
  financial institutions (*) 1,405,431 345,048 35,806 5,289 29,611 1,821,185
Derivative financial assets – – – – 134,155 134,155
Loans and advances to customers 6,912,607 10,463,879 406,172 336,693 16,977 18,136,328
Financial investments
  — Financial investments
  measured at FVTPL 117,682 130,810 71,188 147,550 317,253 784,483
  — Financial investments
  measured at FVTOCI 272,625 258,282 614,011 314,100 81,970 1,540,988
  — Financial investments
  measured at amortised cost 384,141 638,819 2,688,862 2,553,846 – 6,265,668
Investments in associates and
  joint ventures – – – – 41,206 41,206
Property and equipment – – – – 286,279 286,279
Other 3,121 70 – – 793,780 796,971
Total assets 12,285,726 11,836,908 3,816,039 3,357,478 2,048,907 33,345,058
Liabilities:
Due to central banks 574 52,373 1,992 – 35 54,974
Financial liabilities
  designated as at FVTPL 4,972 63 11,618 14 71,271 87,938
Derivative financial liabilities – – – – 140,973 140,973
Due to banks and other financial
  institutions (**) 2,715,947 268,836 52,264 27,239 13,407 3,077,693
Certificates of deposit 174,300 154,366 7,010 – – 335,676
Due to customers 15,597,045 3,808,680 5,137,289 20,242 571,470 25,134,726
Debt securities issued 169,119 60,501 149,678 418,829 – 798,127
Other 2,625 5,987 16,703 6,426 773,695 805,436
Total liabilities 18,664,582 4,350,806 5,376,554 472,750 1,570,851 30,435,543
Interest rate mismatch (6,378,856) 7,486,102 (1,560,515) 2,884,728 N/A N/A

(*) Includes reverse repurchase agreements.

(**) Includes repurchase agreements.

The data set out in the above table includes trading book data.

264
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(e) Capital management

The Group has set the following capital management objectives:

• Maintain sound capital adequacy to meet regulatory requirements on capital, keep stable capital base to ensure the
Group’s business growth and the implementation of business development and strategic plans in order to achieve
comprehensive, balanced, and sustainable development;

• Adopt the advanced capital measurement approach, improve the internal capital adequacy assessment process
(ICAAP), publicly disclose information on capital management, cover all types of material risks, and ensure stable
operations of the Group;

• Leverage on the results of quantitative assessments of material risks for daily risk management, establish a bank-
wide value management mechanism with a core of economic capital, improve the aligned policies, processes, and
applications in business management, strengthen the capital constraints and capital incentives mechanism, enhance
the product pricing and decision-making support, and improve the capital allocation efficiency; and

• Make effective use of various capital instruments, continuously enhance capital strengths, refine the capital structure,
improve capital quality, reduce capital costs, and maximise shareholders' returns.

The Group manages its capital structure and makes adjustments in light of changes in economic conditions and the risk
profiles of its business operations. In order to maintain or adjust the capital structure, the Group may adjust its profit
distribution policies, issue or repurchase its own shares, qualified additional tier 1 capital instruments, eligible tier 2 capital
instruments, or convertible bonds.

The management monitors the capital adequacy ratios regularly based on regulations issued by the CBIRC. The required
information is semi-annually and quarterly filed with the CBIRC by the Group and the Bank.

Since 1 January 2013, the Group commenced calculating the capital adequacy ratios in accordance with the Regulation
Governing Capital of Commercial Banks (Provisional) and other relevant regulations. In April 2014, the CBIRC officially
approved the Bank to adopt the advanced capital management approach. Within the approved scope of risk exposures that
meet the regulatory requirements, the Bank can adopt the foundation internal ratings-based (IRB) approach for its corporate
credit risk exposures, the IRB approach for its retail credit risk exposures, the internal model approach (IMA) for its market
risk exposures, and the standardised approach for its operational risk exposures.

According to Regulation Governing Capital of Commercial Banks (Provisional), Measures for the Assessment of Systemically
Important Banks, Additional Regulation of Systemically Important Banks (Provisional), and the capital surcharge applied to
global systemically important banks as required by the Basel Committee on Banking Supervision, the minimum core tier 1
capital adequacy ratio, the tier 1 capital adequacy ratio and the capital adequacy ratio shall not be lower than 9%, 10% and
12% respectively. In addition, overseas entities are directly regulated by local banking regulators, and the required capital
adequacy ratios differ by countries or regions.

The Group calculates the following core tier 1 capital adequacy ratio, the tier 1 capital adequacy ratio and the capital
adequacy ratio in accordance with the Regulation Governing Capital of Commercial Banks (Provisional) and relevant
requirements. The requirements pursuant to these regulations may be different from those applicable in Hong Kong SAR and
other jurisdictions.

The capital adequacy ratios and related components of the Group are calculated based on the statutory financial statements
of the Group prepared under the PRC GAAP. During the year, the Group has complied in full with all its externally imposed
regulatory capital requirements. 

Annual Report 2021

265
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

The core tier 1 capital adequacy ratio, the tier 1 capital adequacy ratio and the capital adequacy ratio calculated after
implementation of the advanced capital measurement approaches approved by the CBIRC are as follows:

31 December 2021 31 December 2020

Core tier 1 capital 2,903,516 2,669,055
  Paid-in capital 356,407 356,407
  Valid portion of capital reserve 148,597 148,534
  Surplus reserve 356,849 322,692
  General reserve 438,640 339,486
  Retained profits 1,618,142 1,508,562
  Valid portion of minority interests 3,539 3,552
 Other (18,658) (10,178)
Core tier 1 capital deductions 17,138 16,053
 Goodwill 7,691 8,107
  Other intangible assets other than land use rights 5,669 4,582
  Cash flow hedge reserve that relates to the hedging of items that
   are not fair-valued on the balance sheet (4,202) (4,616)
  Investments in core tier 1 capital instruments issued by financial
   institutions that are under control but not subject to consolidation 7,980 7,980
Net core tier 1 capital 2,886,378 2,653,002
Additional tier 1 capital 354,986 219,790
  Additional tier 1 capital instruments and related premiums 354,331 219,143
  Valid portion of minority interests 655 647
Net tier 1 capital 3,241,364 2,872,792
Tier 2 capital 668,305 523,394
  Valid portion of tier 2 capital instruments and related premiums 418,415 351,568
  Surplus provision for loan impairment 248,774 170,712
  Valid portion of minority interests 1,116 1,114
Net capital base 3,909,669 3,396,186
Risk-weighted assets (i) 21,690,349 20,124,139
Core tier 1 capital adequacy ratio 13.31% 13.18%
Tier 1 capital adequacy ratio 14.94% 14.28%
Capital adequacy ratio 18.02% 16.88%

(i) Refers to risk-weighted assets after the capital floor and adjustments.  

50. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Group has established policies and internal controls with respect to the measurement of fair values, specifically the
framework of fair value measurement of financial instruments, fair value measurement methodologies and procedures. Fair
value measurement policies specify valuation techniques, parameter selection and relevant concepts, models and parameter-
seeking methods. Operating procedures specify measurement procedures, timing of valuation, market parameter selection
and corresponding allocation of responsibilities. In the process of fair value measurement, front office is responsible for daily
transaction management. The Financial Accounting Department plays a lead role in formulating accounting policies of fair
value measurement, valuation methodologies and system implementation. The Risk Management Department is responsible
for verifying trade details and validating models.
Fair value estimates are generally subjective in nature, and are made as of a specific point in time based on the characteristics
of the financial instruments and relevant market information. The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments:
Level 1 inputs: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2 inputs: valuation techniques for which all inputs that have a significant effect on the recorded fair value are
observable, either directly or indirectly; and
Level 3 inputs: valuation techniques for which certain inputs that have a significant effect on the recorded fair value are not
based on observable market data.

266
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

The following is a description of the fair value of financial instruments measured at fair value which are determined using
valuation techniques. They incorporate the Group’s estimate of assumptions that a market participant would make when
valuing the instruments.

Financial investments
Financial investments that use valuation techniques for their valuation include debt securities, asset-backed securities and
unlisted equity instruments. The Group values such securities by incorporating either only observable data or both observable
and unobservable data. Observable inputs include assumptions regarding current interest rates; unobservable inputs include
assumptions regarding expected future default rates, prepayment rates and market liquidity discounts.

The majority of the debt securities classified as level 2 are RMB bonds. The fair value of these bonds are determined based
on the valuation results provided by China Central Depository & Clearing Co., Ltd., which are determined based on a
valuation technique for which all significant inputs are observable market data.

Derivatives
Derivatives that use valuation techniques with market observable inputs are mainly interest rate swaps, foreign exchange
forwards, swaps and options. The most frequently applied valuation techniques include discounted cash flow model and
Black-Scholes model. The models incorporate various inputs including foreign exchange spot and forward rates, foreign
exchange rate volatility, interest rate yield curves.

Structured products are mainly valued using dealer’s quotations.

Loans and advances to customers

The loans and advances to customers that use valuation techniques are mainly the bill business and discounted cash flow
model is used. For bank acceptance bill, based on the different credit risk of the acceptor, interest rate yield curve is set up
using the actual market data; for commercial bill, based on the interbank offered rate, interest rate yield curve is constructed
according to the credit risk and liquidity point difference adjustment.

Other liabilities at fair value through profit or loss

For unquoted other liabilities at FVTPL, discounted cash flow model is used based on current yield curve appropriate for
the remaining term to maturity adjusted for market liquidity and credit spreads; and Heston model is applied based on
parameters including yields, foreign exchange forward rates, foreign exchange rate volatilities, which are calibrated by active
market quotes of standard European option with the same underlying items.

Annual Report 2021

267
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(a) Financial instruments measured at fair value

31 December 2021
Level 1 Level 2 Level 3 Total
Financial assets:
Derivative financial assets 4,440 70,634 1,066 76,140
Reverse repurchase agreements measured
  at FVTPL – 157,655 – 157,655
Loans and advances to customers measured
  at FVTPL – 3,488 106 3,594
Loans and advances to customers measured
  at FVTOCI – 534,671 – 534,671
Financial investments measured at FVTPL
  Debt securities 24,430 392,013 3,840 420,283
  Equity investments 15,308 16,751 58,687 90,746
  Funds and other investments 52,995 26,400 32,799 112,194
92,733 435,164 95,326 623,223
Financial investments measured at FVTOCI
  Debt securities 293,759 1,407,578 2,827 1,704,164
  Equity investments 5,855 39,746 53,839 99,440
299,614 1,447,324 56,666 1,803,604
396,787 2,648,936 153,164 3,198,887
Financial liabilities:
Due to customers – 296,128 – 296,128
Financial liabilities designated as at FVTPL 15 86,598 567 87,180
Derivative financial liabilities 4,822 65,089 1,426 71,337
4,837 447,815 1,993 454,645

268
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

31 December 2020
Level 1 Level 2 Level 3 Total
Financial assets:
Derivative financial assets 4,691 127,773 1,691 134,155
Reverse repurchase agreements measured
  at FVTPL – 154,612 – 154,612
Loans and advances to customers measured
  at FVTPL – 3,586 328 3,914
Loans and advances to customers measured
  at FVTOCI – 414,292 – 414,292
Financial investments measured at FVTPL
  Debt securities 7,580 392,186 66,046 465,812
  Equity investments 17,300 2,718 73,710 93,728
  Funds and other investments 24,128 175,252 25,563 224,943
49,008 570,156 165,319 784,483
Financial investments measured at FVTOCI
  Debt securities 349,978 1,108,576 464 1,459,018
  Equity investments 8,504 14,250 59,216 81,970
358,482 1,122,826 59,680 1,540,988
412,181 2,393,245 227,018 3,032,444
Financial liabilities:
Due to customers – 693,173 – 693,173
Financial liabilities designated as at FVTPL 331 86,992 615 87,938
Derivative financial liabilities 5,846 133,531 1,596 140,973
6,177 913,696 2,211 922,084

Annual Report 2021

269
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(b) Movement of level 3 financial instruments measured at fair value

The following table shows the movement of level 3 financial assets and financial liabilities measured at fair value during the
year:

Total
Total effects
(losses)/gains in other Transfer
1 January recorded in comprehensive Disposals and in/(out) of 31 December
2021 profit or loss income Additions settlements level 3 2021
Financial assets:
Derivative financial assets 1,691 (191) – 57 (589) 98 1,066
Loans and advances to customers
  measured at FVTPL 328 (9) – – (213) – 106
Financial investments measured at FVTPL
  Debt securities 66,046 (154) – 1,001 (356) (62,697) 3,840
  Equity investments 73,710 (2,826) – 1,878 (9,187) (4,888) 58,687
  Funds and other investments 25,563 4,220 – 9,976 (5,559) (1,401) 32,799
Financial investments measured at FVTOCI
  Debt securities 464 – (39) 2,092 (311) 621 2,827
  Equity investments 59,216 – (2,898) 10,733 (6,894) (6,318) 53,839
227,018 1,040 (2,937) 25,737 (23,109) (74,585) 153,164
Financial liabilities:
Financial liabilities designated as at FVTPL (615) 48 – – – – (567)
Derivative financial liabilities (1,596) (82) – (28) 203 77 (1,426)
(2,211) (34) – (28) 203 77 (1,993)

Total
Total effect
gains/(losses) in other Transfer
1 January recorded in comprehensive Disposals and in/(out) of 31 December
2020 profit or loss income Additions settlements level 3 2020
Financial assets:
Derivative financial assets 1,010 782 – 33 (345) 211 1,691
Loans and advances to customers
  measured at FVTPL 1,149 (61) – – (760) – 328
Financial investments measured at FVTPL
  Debt securities 52,913 1,679 – 13,909 (2,436) (19) 66,046
  Equity investments 64,172 1,319 – 12,604 (2,203) (2,182) 73,710
  Funds and other investments 55,444 (117) – 6,575 (24,268) (12,071) 25,563
Financial investments measured at FVTOCI
  Debt securities 47 – – 464 (47) – 464
  Equity investments 44,895 – (528) 18,298 (2,025) (1,424) 59,216
219,630 3,602 (528) 51,883 (32,084) (15,485) 227,018
Financial liabilities:
Financial liabilities designated as at FVTPL (592) (23) – – – – (615)
Derivative financial liabilities (1,052) 108 – (2) 377 (1,027) (1,596)
(1,644) 85 – (2) 377 (1,027) (2,211)

270
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Net gains or losses on level 3 financial instruments are set out below:

2021 2020
Realised 296 1,012
Unrealised 710 2,675
1,006 3,687

(c) Transfers between levels

(i) Transfers between level 1 and level 2

Due to changes in market conditions for certain securities, quoted prices in active markets were available for these securities.
Therefore, these securities were transferred from level 2 to level 1 of the fair value hierarchy as at the end of the reporting
period.

Due to changes in market conditions for certain securities, quoted prices in active markets were no longer available for
these securities. However, there was sufficient information available to measure the fair values of these securities based on
observable market inputs. Therefore, these securities were transferred from level 1 to level 2 of the fair value hierarchy as at
the end of the reporting period.

In 2021, the transfers between level 1 and level 2 of the fair value hierarchy for financial assets and liabilities of the Group
were not significant.

(ii) Transfers between level 2 and level 3

At the end of the reporting period, certain financial instruments were transferred out from level 2 to level 3 of the fair
value hierarchy for financial assets and liabilities when significant inputs used in their fair value measurements, which was
previously observable became unobservable.

At the end of the reporting period, certain financial instruments were transferred out from level 3 of the fair value hierarchy
for financial assets and liabilities, when significant inputs used in their fair value measurements, which was previously
unobservable became observable, or when there was a change in valuation technique.

(d) Valuation of financial instruments with significant unobservable inputs

Financial instruments valued with significant unobservable inputs primarily include certain structured derivatives, certain debt
securities and asset-backed securities. These financial instruments are valued using discounted cash flow model. The models
incorporate various unobservable assumptions such as discount rates and market rate volatilities.

As at 31 December 2021, the effects of changing the significant unobservable assumptions to reasonably possible alternative
assumptions were not significant (31 December 2020: not significant).

Annual Report 2021

271
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(e) Fair value of financial assets and financial liabilities not carried at fair value
There are no significant differences between the carrying amount and the fair value of financial assets and financial liabilities
not measured at fair value, except for the following items:

31 December 2021
Carrying
amount Fair value Level 1 Level 2 Level 3
Financial assets
Financial investments measured at amortised cost 6,830,933 6,886,188 29,158 6,644,213 212,817
Financial liabilities
Subordinated bonds and tier 2 capital bonds 470,806 481,954 – 481,954 –

31 December 2020
Carrying
amount Fair value Level 1 Level 2 Level 3
Financial assets
Financial investments measured at amortised cost 6,265,668 6,299,526 88,094 6,072,770 138,662
Financial liabilities
Subordinated bonds and tier 2 capital bonds 430,064 432,954 – 432,954 –

Subject to the existence of an active market such as an authorised stock exchange, the market value is the best reflection
of the fair value of a financial instrument. As there is no available market value for certain financial assets held and financial
liabilities issued by the Group, discounted cash flow or other valuation methods described below are adopted to determine
the fair values of these financial assets and financial liabilities:

(i) The fair values of financial investments measured at amortised cost relating to the restructuring of the Bank are
estimated on the basis of the stated interest rates and the consideration of the relevant special clauses of the
instruments evaluated in the absence of any other relevant observable market data, and the fair values approximate
to their carrying amounts. The fair values of financial investments measured at amortised cost irrelevant to the
restructuring of the Bank are determined based on the available market values. If quoted market prices are not
available, fair values are estimated on the basis of pricing models or discounted cash flows.

(ii) The fair values of subordinated bonds and tier 2 capital bonds are determined with reference to the available market
values. If quoted market prices are not available, fair values are estimated on the basis of pricing models or discounted
cash flows.

All of the aforementioned assumptions and methods provide a consistent basis for the calculation of the fair values of the
Group’s financial assets and financial liabilities. However, other institutions may use different assumptions and methods.
Therefore, the fair values disclosed by different financial institutions may not be entirely comparable.

272
 Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

51. STATEMENT OF FINANCIAL POSITION AND STATEMENT OF CHANGES IN EQUITY OF

THE BANK
The statement of financial position of the Bank are set out below.

31 December 2021 31 December 2020

ASSETS
Cash and balances with central banks 2,959,034 3,459,273
Due from banks and other financial institutions 998,406 1,242,972
Derivative financial assets 47,218 90,669
Reverse repurchase agreements 523,897 560,271
Loans and advances to customers 19,310,688 17,307,271
Financial investments 8,562,631 7,948,361
  — Financial investments measured at FVTPL 396,261 574,295
  — Financial investments measured at FVTOCI 1,522,578 1,265,920
  — Financial investments measured at amortised cost 6,643,792 6,108,146
Investments in subsidiaries 163,283 147,383
Investments in associates 35,042 34,242
Property and equipment 133,698 131,865
Deferred tax assets 76,066 65,858
Other assets 630,440 642,714
TOTAL ASSETS 33,440,403 31,630,879
LIABILITIES
Due to central banks 39,648 54,304
Financial liabilities designated as at FVTPL 70,256 70,938
Derivative financial liabilities 39,994 94,891
Due to banks and other financial institutions 2,821,165 2,707,115
Repurchase agreements 178,256 90,113
Certificates of deposit 238,632 277,683
Due to customers 25,659,484 24,338,306
Income tax payable 91,029 87,273
Debt securities issued 655,515 658,765
Other liabilities 503,623 461,743
TOTAL LIABILITIES 30,297,602 28,841,131
EQUITY
Share capital 356,407 356,407
Other equity instruments 354,331 219,143
Reserves 945,798 816,623
Retained earnings 1,486,265 1,397,575
TOTAL EQUITY 3,142,801 2,789,748
TOTAL LIABILITIES AND EQUITY 33,440,403 31,630,879

Chen Siqing Liao Lin Liu Yagan

Chairman Vice Chairman and President General Manager of
Finance and Accounting Department

Annual Report 2021

273
Notes to the Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

The statement of changes in equity of the Bank are set out below.
Reserves
Foreign
Other Investment currency Cash flow
Share equity Capital Surplus General revaluation translation hedging Other Retained Total
capital instruments reserve reserve reserve reserve reserve reserve reserves Subtotal earnings equity
Balance as at 1 January 2020 356,407 199,456 153,303 287,353 295,962 23,949 (76) (4,239) (89) 756,163 1,259,397 2,571,423
Profit for the year – – – – – – – – – – 304,267 304,267
Other comprehensive income – – – – – (1,396) (2,021) 157 152 (3,108) – (3,108)
Total comprehensive income – – – – – (1,396) (2,021) 157 152 (3,108) 304,267 301,159
Dividends — ordinary shares 2019 final
(note 17) – – – – – – – – – – (93,664) (93,664)
Distributions to
other equity instrument holders
(note 17) – – – – – – – – – – (8,839) (8,839)
Appropriation to surplus reserve (i) – – – 30,550 – – – – – 30,550 (30,550) –
Appropriation to general reserve (ii) – – – – 33,247 – – – – 33,247 (33,247) –
Capital injection by
other equity instrument holders – 19,687 – – – – – – – – – 19,687
Other comprehensive income
transferred to retained earnings – – – – – (211) – – – (211) 211 –
Other – – (18) – – – – – – (18) – (18)
Balance as at 31 December 2020 and
1 January 2021 356,407 219,143 153,285 317,903 329,209 22,342 (2,097) (4,082) 63 816,623 1,397,575 2,789,748
Profit for the year – – – – – – – – – – 323,100 323,100
Other comprehensive income – – – – – 1,764 (2,676) 86 (61) (887) – (887)
Total comprehensive income – – – – – 1,764 (2,676) 86 (61) (887) 323,100 322,213
Dividends — ordinary shares 2020 final
(note 17) – – – – – – – – – – (94,804) (94,804)
Distributions to
other equity instrument holders
(note 17) – – – – – – – – – – (9,607) (9,607)
Appropriation to surplus reserve (i) – – – 32,494 – – – – – 32,494 (32,494) –
Appropriation to general reserve (ii) – – – – 97,505 – – – – 97,505 (97,505) –
Capital injection by
other equity instrument holders – 139,730 – – – – – – – – – 139,730
Capital reduction by
other equity instrument holders – (4,542) 63 – – – – – – 63 – (4,479)
Balance as at 31 December 2021 356,407 354,331 153,348 350,397 426,714 24,106 (4,773) (3,996) 2 945,798 1,486,265 3,142,801

(i) Includes the appropriation made by overseas branches in the amount of RMB56 million (2020: RMB101 million).
(ii) Includes the appropriation made by overseas branches in the amount of RMB47 million (2020: RMB11 million).

52. EVENTS AFTER THE REPORTING PERIOD

A final dividend of RMB0.2933 (pre-tax) per share after the appropriation of statutory surplus reserve and general reserve,
was approved at the board of directors' meeting held on 30 March 2022, and is subject to the approval of the Bank’s
shareholders at the forthcoming annual general meeting. Based on the number of ordinary shares issued as at 31 December
2021, the final dividend amounted to approximately RMB104,534 million in total. The dividend payable was not recognised
as a liability in the consolidated financial statements.

53. COMPARATIVE AMOUNTS

Certain comparative amounts have been reclassified to conform to the current year’s presentation.

54. APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements were approved by the board of directors on 30 March 2022.

274
Unaudited Supplementary Information To The Consolidated Financial
Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

1. Statement of differences between the financial statements prepared under IFRSs and
those prepared in accordance with PRC GAAP
There are no differences between the profit attributable to equity holders of the parent company under PRC GAAP and IFRSs
for year ended 31 December 2021 and 2020. There are no differences between the equity attributable to equity holders of
the parent company under PRC GAAP and IFRSs as at 31 December 2021 and 31 December 2020.

2. Currency concentrations
31 December 2021
USD HKD Other Total
Spot assets 2,066,021 509,771 955,285 3,531,077
Spot liabilities (2,115,377) (446,184) (680,182) (3,241,743)
Forward purchases 2,112,979 166,543 385,249 2,664,771
Forward sales (2,210,989) (153,095) (580,802) (2,944,886)
Net option position 1,342 2,443 32 3,817
Net (short)/long position (146,024) 79,478 79,582 13,036
Net structural position 128,581 803 26,055 155,439

31 December 2020
USD HKD Other Total
Spot assets 2,195,697 445,380 1,028,233 3,669,310
Spot liabilities (2,240,038) (461,495) (713,341) (3,414,874)
Forward purchases 2,856,506 327,221 457,654 3,641,381
Forward sales (2,864,682) (208,738) (754,429) (3,827,849)
Net option position (14,060) 3,651 (1,597) (12,006)
Net (short)/long position (66,577) 106,019 16,520 55,962
Net structural position 120,822 882 26,634 148,338

The net option position is calculated using the delta equivalent approach required by the Hong Kong Monetary Authority.
The net structural position of the Group includes the structural positions of the Bank’s overseas branches, banking
subsidiaries and other subsidiaries substantially involved in foreign exchange. Structural assets and liabilities include:

• property and equipment, net of depreciation charges;

• capital and statutory reserves of overseas branches; and

• investments in overseas subsidiaries, associates and joint ventures.

Annual Report 2021

275
Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

3. Loans and advances to customers (excludes accrued interest)

(i) Overdue loans and advances to customers

31 December 31 December
2021 2020
Gross loans and advances to customers of the Group which have been overdue
  with respect to either principal or interest for periods of:
  Between 3 and 6 months 28,208 32,328
  Between 6 and 12 months 41,849 42,492
  Over 12 months 112,400 93,724
182,457 168,544
As a percentage of the total gross loans and advances to customers:
  Between 3 and 6 months 0.14% 0.17%
  Between 6 and 12 months 0.20% 0.23%
  Over 12 months 0.54% 0.50%
0.88% 0.90%

The definition of overdue loans and advances to customers is set out as follows:

Loans and advances with a specific repayment date are classified as overdue when the principal or interest is overdue.

For loans and advances repayable by regular instalments, if part of the instalments is overdue, the whole amount of the
loans and advances would be classified as overdue.

(ii) Overdue loans and advances to customers by geographical distribution

31 December 31 December
2021 2020
Head Office 35,969 36,358
Bohai Rim 50,790 46,167
Western China 33,400 40,207
Central China 37,461 38,411
Pearl River Delta 28,978 28,398
Yangtze River Delta 30,210 41,772
Northeastern China 27,324 25,489
Overseas and other 10,769 10,705
254,901 267,507

(iii) Rescheduled loans and advances to customers

31 December 2021 31 December 2020

% of total % of total
loans and loans and
advances advances
Rescheduled loans and advances 19,134 0.09% 11,960 0.06%
  Less: R
 escheduled loans and advances
  overdue for more than three months (2,301) (0.01%) (2,055) (0.01%)
Rescheduled loans and advances overdue
  for less than three months 16,833 0.08% 9,905 0.05%

276
 Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

4. Exposures to non-bank entities in Chinese mainland

The Bank is a commercial bank incorporated in Chinese mainland with its banking business primarily conducted in Chinese
mainland. As at 31 December 2021 and 31 December 2020, substantial amounts of the Bank’s exposures arose from
businesses with entities or individuals in Chinese mainland. Analyses of various types of exposures by counterparty have been
disclosed in the respective notes to the financial statements.

5. Correspondence between balance sheet in published financial statements and capital

composition
The disclosure of correspondence between balance sheet in published financial statements and capital composition is based
on the Notice on Issuing Regulatory Documents on Capital Regulation for Commercial Banks (Yin Jian Fa, No. 33, 2013)
Appendix 2 Notice on Enhancing Disclosure Requirements for Composition of Capital.

(i) Capital composition

31 December 31 December
Item 2021 2020 Reference
Core tier 1 capital:
1 Paid-in capital 356,407 356,407 X18
2 Retained earnings 2,413,631 2,170,740
2a Surplus reserve 356,849 322,692 X21
2b General reserve 438,640 339,486 X22
2c Retained profits 1,618,142 1,508,562 X23
3 Accumulated other comprehensive income (and other 129,939 138,356
public reserve)
3a Capital reserve 148,597 148,534 X19
3b Other (18,658) (10,178) X24
4 Valid portion to core tier 1 capital during the transition – –
period (only applicable to non-joint stock companies.
Fill in 0 for joint stock banks)
5 Valid portion of minority interests 3,539 3,552 X25
6 Core tier 1 capital before regulatory adjustments 2,903,516 2,669,055
Core tier 1 capital: Regulatory adjustments
7 Prudential valuation adjustments – –
8 Goodwill (net of deferred tax liabilities) 7,691 8,107 X16
9 Other intangible assets other than land use rights (net of 5,669 4,582 X14–X15
deferred tax liabilities)
10 Deferred tax assets that rely on future profits excluding – –
those arising from temporary differences (net of
deferred tax liabilities)
11 Cash flow hedge reserve that relates to the hedging of (4,202) (4,616) X20
items that are not fair-valued on the balance sheet
12 Shortfall of provision for loan impairment – –
13 Gain on sales related to asset securitisation – –
14 Unrealised gains and losses due to changes in own credit – –
risk on fair-valued liabilities
15 Defined-benefit pension fund net assets (net of deferred – –
tax liabilities)
16 Direct or indirect investments in own ordinary shares – –
17 Reciprocal cross-holdings in core tier 1 capital between – –
banks, or between banks and other financial institutions

Annual Report 2021

277
Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

31 December 31 December
Item 2021 2020 Reference
18 Deductible amount of non-significant minority – –
investments in core tier 1 capital instruments issued
by financial institutions that are not subject to
consolidation
19 Deductible amount of significant minority investments – –
in core tier 1 capital instruments issued by financial
institutions that are not subject to consolidation
20 Mortgage servicing rights N/A N/A
21 Deferred tax assets arising from temporary differences – –
(amount above 10% threshold, net of deferred tax
liabilities)
22 Deductible amount exceeding the 15% threshold for – –
significant minority capital investments in core tier 1
capital instruments issued by financial institutions
that are not subject to consolidation and undeducted
portion of deferred tax assets arising from temporary
differences (net of deferred tax liabilities)
23   Including: D  eductible amount of significant minority – –
  investments in core tier 1 capital
  instruments issued by financial institutions
24   Including: D  eductible amount of mortgage servicing N/A N/A
 rights
25   Including: D  eductible amount in deferred tax assets – –
  arising from temporary differences
26a Investments in core tier 1 capital instruments issued by 7,980 7,980 X11
financial institutions that are under control but not
subject to consolidation
26b Shortfall in core tier 1 capital instruments issued by – –
financial institutions that are under control but not
subject to consolidation
26c Other that should be deducted from core tier 1 capital – –
27 Undeducted shortfall that should be deducted from – –
additional tier 1 capital and tier 2 capital
28 Total regulatory adjustments to core tier 1 capital 17,138 16,053
29 Core tier 1 capital 2,886,378 2,653,002
Additional tier 1 capital:
30 Additional tier 1 capital instruments and related premiums 354,331 219,143
31   Including: Portion classified as equity 354,331 219,143 X28+X32
32   Including: Portion classified as liabilities – –
33 Invalid instruments to additional tier 1 capital after the – –
transition period
34 Valid portion of minority interests 655 647 X26
35   Including: Invalid portion to additional tier 1 capital – –
  after the transition period
36 Additional tier 1 capital before regulatory 354,986 219,790
adjustments
Additional tier 1 capital: Regulatory adjustments
37 Direct or indirect investments in own additional tier 1 – –
instruments

278
 Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

31 December 31 December
Item 2021 2020 Reference
38 Reciprocal cross-holdings in additional tier 1 capital – –
between banks, or between banks and other financial
institutions
39 Deductible amount of non-significant minority – –
investments in additional tier 1 capital instruments
issued by financial institutions that are not subject to
consolidation
40 Significant minority investments in additional tier 1 – –
capital instruments issued by financial institutions that
are not subject to consolidation
41a Investments in additional tier 1 capital instruments issued – –
by financial institutions that are under control but not
subject to consolidation
41b Shortfall in additional tier 1 capital instruments issued – –
by financial institutions that are under control but not
subject to consolidation
41c Other that should be deducted from additional tier 1 capital – –
42 Undeducted shortfall that should be deducted from tier 2 – –
capital
43 Total regulatory adjustments to additional tier 1 – –
capital
44 Additional tier 1 capital 354,986 219,790
45 Tier 1 capital (core tier 1 capital + additional tier 1 3,241,364 2,872,792
capital)
Tier 2 capital:
46 Tier 2 capital instruments and related premiums 418,415 351,568 X17
47 Invalid instruments to tier 2 capital after the transition 20,285 40,570
period
48 Valid portion of minority interests 1,116 1,114 X27
49   Including: Invalid portion to tier 2 capital after the – –
  transition period
50 Valid portion of surplus provision for loan impairment 248,774 170,712 X02+X04
51 Tier 2 capital before regulatory adjustments 668,305 523,394
Tier 2 capital: Regulatory adjustments
52 Direct or indirect investments in own tier 2 instruments – –
53 Reciprocal cross-holdings in tier 2 capital between banks, – –
or between banks and other financial institutions
54 Deductible portion of non-significant minority investments – –
in tier 2 capital instruments issued by financial
institutions that are not subject to consolidation
55 Significant minority investments in tier 2 capital – – X31
instruments issued by financial institutions that are not
subject to consolidation
56a Investments in tier 2 capital instruments issued by financial – –
institutions that are under control but not subject to
consolidation
56b Shortfall in tier 2 capital instruments issued by financial – –
institutions that are under control but not subject to
consolidation

Annual Report 2021

279
Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

31 December 31 December
Item 2021 2020 Reference
56c Other that should be deducted from tier 2 capital – –
57 Total regulatory adjustments to tier 2 capital – –
58 Tier 2 capital 668,305 523,394
59 Total capital (tier 1 capital+ tier 2 capital) 3,909,669 3,396,186
60 Total risk-weighted assets 21,690,349 20,124,139
Requirements for capital adequacy ratio and reserve capital
61 Core tier 1 capital adequacy ratio 13.31% 13.18%
62 Tier 1 capital adequacy ratio 14.94% 14.28%
63 Capital adequacy ratio 18.02% 16.88%
64 Institution specific buffer requirements 4.0% 4.0%
65   Including: Capital conservation buffer requirements 2.5% 2.5%
66   Including: Countercyclical buffer requirements – –
67   Including: G-SIB buffer requirements 1.5% 1.5%
68 Percentage of core tier 1 capital meeting buffers to 8.31% 8.18%
risk-weighted assets
Domestic minima for regulatory capital
69 Core tier 1 capital adequacy ratio 5.0% 5.0%
70 Tier 1 capital adequacy ratio 6.0% 6.0%
71 Capital adequacy ratio 8.0% 8.0%
Amounts below the thresholds for deduction
72 Undeducted portion of non-significant minority 155,815 138,247 X05+X07+X08+
investments in capital instruments issued by financial X09+X12+X29+X30
institutions that are not subject to consolidation
73 Undeducted portion of significant minority investments 28,773 32,452 X06+X10+X13
in capital instruments issued by financial institutions
that are not subject to consolidation
74 Mortgage servicing rights (net of deferred tax liabilities) N/A N/A
75 Deferred tax assets arising from temporary differences 74,611 65,719
(net of deferred tax liabilities)
Valid caps of surplus provision for loan impairment in
  tier 2 capital
76 Provision for loan impairment under the weighted approach 24,545 23,204 X01
77 Valid cap of surplus provision for loan impairment in 15,909 7,802 X02
tier 2 capital under the weighted approach
78 Surplus provision for loan impairment under the internal 579,219 507,096 X03
ratings-based approach
79 Valid cap of surplus provision for loan impairment in 232,865 162,910 X04
tier 2 capital under the internal ratings-based approach
Capital instruments subject to phase-out arrangements
80 Valid cap to core tier 1 capital instruments for – –
the current period due to phase-out arrangements
81 Excluded from core tier 1 capital due to cap – –
82 Valid cap to additional tier 1 capital instruments for the – –
current period due to phase-out arrangements
83 Excluded from additional tier 1 capital due to cap – –
84 Valid cap to tier 2 capital instruments for the current 20,285 40,570
period due to phase-out arrangements
85 Excluded from tier 2 capital for the current period 37,740 67,463
due to cap

280
 Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

(ii) Consolidated financial statements

31 December 2021 31 December 2021 31 December 2020 31 December 2020

Consolidated Balance sheet Consolidated Balance sheet
balance sheet under balance sheet under
as in published regulatory as in published regulatory
financial scope of financial scope of
statements* consolidation* statements* consolidation*
Assets
Cash and balances with central banks 3,098,438 3,098,438 3,537,795 3,537,795
Due from banks and other financial 346,457 301,191 522,913 489,231
 institutions
Precious metals 265,962 265,962 277,705 277,705
Placements with banks and 480,693 480,693 558,984 558,984
  other financial institutions
Derivative financial assets 76,140 76,140 134,155 134,155
Reverse repurchase agreements 663,496 662,544 739,288 738,958
Loans and advances to customers 20,109,200 20,107,266 18,136,328 18,134,777
Financial investments 9,257,760 9,060,427 8,591,139 8,429,328
  — F inancial investments measured at 623,223 560,683 784,483 732,478
  FVTPL
  — F inancial investments measured at 1,803,604 1,743,097 1,540,988 1,498,008
 FVTOCI
  — F inancial investments measured at 6,830,933 6,756,647 6,265,668 6,198,842
  amortised cost
Long-term equity investments 61,782 69,762 41,206 49,186
Fixed assets 270,017 269,952 249,067 249,008
Construction in progress 18,182 18,172 35,173 35,166
Deferred tax assets 79,259 79,259 67,713 67,713
Other assets 443,997 430,485 453,592 440,548
Total assets 35,171,383 34,920,291 33,345,058 33,142,554
Liabilities
Due to central banks 39,723 39,723 54,974 54,974
Due to banks and other financial institutions 2,431,689 2,431,689 2,315,643 2,315,643
Placements from banks and other financial 489,340 489,340 468,616 468,616
 institutions
Financial liabilities measured at FVTPL 87,180 87,180 87,938 87,938
Derivative financial liabilities 71,337 71,337 140,973 140,973
Repurchase agreements 365,943 351,049 293,434 282,458
Certificates of deposit 290,342 290,342 335,676 335,676
Due to customers 26,441,774 26,441,774 25,134,726 25,134,726
Employee benefits payable 41,083 40,659 32,460 32,073
Taxes payable 108,897 108,871 105,380 105,356
Debt securities issued 791,375 791,375 798,127 798,127
Deferred tax liabilities 5,624 4,648 2,881 1,994
Other liabilities 731,818 508,191 664,715 483,519
Total liabilities 31,896,125 31,656,178 30,435,543 30,242,073

( *) Prepared in accordance with PRC GAAP.

Annual Report 2021

281
Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

31 December 2021 31 December 2021 31 December 2020 31 December 2020

Consolidated Balance sheet Consolidated Balance sheet
balance sheet under balance sheet under
as in published regulatory as in published regulatory
financial scope of financial scope of
statements* consolidation* statements* consolidation*
Equity
Share capital 356,407 356,407 356,407 356,407
Other equity instruments 354,331 354,331 225,819 225,819
Capital reserve 148,597 148,597 148,534 148,534
Other comprehensive income (18,343) (18,658) (10,428) (10,178)
Surplus reserve 357,169 356,849 322,911 322,692
General reserve 438,952 438,640 339,701 339,486
Retained profits 1,620,642 1,618,142 1,510,558 1,508,562
Equity attributable to equity holders of the 3,257,755 3,254,308 2,893,502 2,891,322
  parent company
Minority interests 17,503 9,805 16,013 9,159
Total equity 3,275,258 3,264,113 2,909,515 2,900,481

( *) Prepared in accordance with PRC GAAP. 

(iii) Description of related items

31 December 2021
Balance sheet
under regulatory
scope of
Item consolidation Reference
Loans and advances to customers 20,107,266
  Total loans and advances to customers 20,711,030
  Less: Provision for loan impairment under the weighted approach 24,545 X01
   Including: V  alid cap of surplus provision for loan impairment in tier 2 15,909 X02
  capital under the weighted approach
  Less: Provision for loan impairment under the internal ratings-based approach 579,219 X03
   Including: V  alid cap of surplus provision for loan impairment in tier 2 232,865 X04
  capital under the internal ratings-based approach
Financial investments
  Financial investments measured at FVTPL 560,683
   Including: N  on-significant minority investments in core tier 1 206 X05
  capital instruments issued by financial institutions that
  are not subject to consolidation
   Including: S ignificant minority investments in core tier 1 21 X06
  capital instruments issued by financial institutions that
  are not subject to consolidation
   Including: N  on-significant minority investments in additional tier 1 – X07
  capital instruments issued by financial institutions that
  are not subject to consolidation
   Including: N  on-significant minority investments in tier 2 140,871 X08
  capital instruments issued by financial institutions that
  are not subject to consolidation

282
 Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

31 December 2021
Balance sheet
under regulatory
scope of
Item consolidation Reference
  Financial investments measured at FVTOCI 1,743,097
   Including: N  on-significant minority investments in core tier 1 13,052 X09
  capital instruments issued by financial institutions that
  are not subject to consolidation
   Including: S ignificant minority investments in core tier 1 2,468 X10
  capital instruments issued by financial institutions that
  are not subject to consolidation
   Including: N  on-significant minority investments in tier 2 – X29
  capital instruments issued by financial institutions that
  are not subject to consolidation
  Financial investments measured at amortised cost 6,756,647
   Including: N  on-significant minority investments in tier 2 – X30
  capital instruments issued by financial institutions that
  are not subject to consolidation
   Including: S ignificant minority investments in tier 2 – X31
  capital instruments issued by financial institutions that
  are not subject to consolidation
  Long-term equity investments 69,762
   Including: Investments in core tier 1 capital instruments issued by financial 7,980 X11
  institutions that are under control but not subject to consolidation
   Including: U  ndeducted portion of non-significant minority 1,686 X12
  investments in capital instruments issued by
  financial institutions that are not subject to consolidation
   Including: U  ndeducted portion of significant minority investments in 26,284 X13
  capital instruments issued by financial institutions that
  are not subject to consolidation
Other asset 430,485
  Interest receivable 2,283
  Intangible assets 21,175 X14
   Including: Land use rights 15,506 X15
  Other receivables 274,468
 Goodwill 7,691 X16
  Long-term deferred expenses 5,541
  Repossessed assets 3,946
 Other 115,381
Debt securities issued 791,375
  Including: Valid portion of tier 2 capital instruments and their premiums 418,415 X17
Share capital 356,407 X18
Other equity instruments 354,331
  Including: Preference shares 134,614 X28
  Including: Perpetual bonds 219,717 X32
Capital reserve 148,597 X19
Other comprehensive income (18,658) X24
  Reserve for changes in fair value of financial assets 24,435
  Reserve for cash flow hedging (4,243)
   Including: C  ash flow hedge reserve that relates to the hedging of (4,202) X20
  items that are not fair-valued on the balance sheet

Annual Report 2021

283
Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

31 December 2021
Balance sheet
under regulatory
scope of
Item consolidation Reference
  Changes in share of other owners’ equity of associates and joint ventures (752)
  Foreign currency translation reserve (39,707)
 Other 1,609
Surplus reserve 356,849 X21
General reserve 438,640 X22
Retained profits 1,618,142 X23
Minority interests 9,805
  Including: Valid portion of core tier 1 capital 3,539 X25
  Including: Valid portion of additional tier 1 capital 655 X26
  Including: Valid portion of tier 2 capital 1,116 X27

(iv) Main features of eligible capital instruments

Main features of regulatory Ordinary shares Ordinary shares Preference shares

capital instrument (A share) (H share) (Domestic)
Issuer The Bank The Bank The Bank
Unique identifier 601398 1398 360011
Governing law(s) of the instrument Securities Law of the Securities and Futures Company Law of the
People’s Republic of Ordinance of Hong Kong/ People’s Republic of China,
China/China Hong Kong SAR, China Securities Law of the
People’s Republic of China.
Guidance of the
State Council on
Launch of Preference
Shares Pilot, Trial
Administrative Measures on
Preference Shares,
Guidance on
the Issuance of
Preference Shares of
Commercial Banks
to Replenish Tier 1
Capital/China
Regulatory treatment
  Including: Transition arrangement Core tier 1 capital Core tier 1 capital Additional tier 1 capital
   of Regulation Governing Capital
   of Commercial Banks (Provisional)
  Including: Post-transition arrangement of Core tier 1 capital Core tier 1 capital Additional tier 1 capital
   Regulation Governing Capital of
   Commercial Banks (Provisional)

284
 Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Main features of regulatory Ordinary shares Ordinary shares Preference shares

capital instrument (A share) (H share) (Domestic)
  Including: Eligible to the parent company/ Parent company/ Parent company/ Parent company/
  group level Group Group Group
Instrument type Core tier 1 Core tier 1 Additional tier 1
capital instrument capital instrument capital instrument
Amount recognised in regulatory capital RMB336,554 RMB168,374 RMB44,947
  (in millions, as at the latest reporting date)
Par value of instrument (in millions) RMB269,612 RMB86,795 RMB45,000
Accounting treatment Share capital, Share capital, Other equity
capital reserve capital reserve
Original date of issuance 19 October 2006 19 October 2006 18 November 2015
Perpetual or dated Perpetual Perpetual Perpetual
  Including: Original maturity date No maturity date No maturity date No maturity date
Issuer call (subject to prior supervisory No No Yes
 approval)
  Including: Optional call date, contingent call N/A N/A The First Redemption Date
   dates and redemption amount is 18 November 2020,
in full or partial amount
  Including: Subsequent call dates, N/A N/A Commences on the
  if applicable First Redemption Date
(18 November 2020) and ends
on the completion date of
redemption or
conversion of all the
Domestic Preference Shares
Coupons/dividends
  Including: Fixed or floating dividend/coupon Floating Floating Fixed to floating
  Including: Coupon rate and any related index N/A N/A 4.5% (dividend rate) before
23 November 2020,
4.58% (dividend rate)
between 23 November 2020
and 22 November 2025
  Including: Existence of a dividend stopper N/A N/A Yes
  Including: Fully discretionary, Fully discretionary Fully discretionary Fully discretionary
   partially discretionary or mandatory
   cancellation of coupons/dividends
  Including: Redemption incentive mechanism No No No
  Including: Non-cumulative or cumulative Non-cumulative Non-cumulative Non-cumulative
Convertible or non-convertible No No Yes

Annual Report 2021

285
Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Main features of regulatory Ordinary shares Ordinary shares Preference shares

capital instrument (A share) (H share) (Domestic)
  Including: If convertible, conversion trigger(s) N/A N/A Additional Tier 1 Capital
Trigger Event or Tier 2
Capital Trigger Event
  Including: If convertible, fully or partially N/A N/A Fully or partially
convertible when an
Additional Tier 1 Capital
Trigger Event occurs;
fully convertible when
a Tier 2 Capital Trigger
Event occurs
  Including: If convertible, conversion rate N/A N/A The initial conversion price
is equal to the average
trading price of the A shares
of the Bank for the
20 trading days preceding
25 July 2014, the date of
publication of the Board
resolution in respect of
the issuance plan
  Including: If convertible, mandatory or N/A N/A Mandatory
  optional conversion
  Including: If convertible, specify instrument N/A N/A Core tier 1 capital
   type convertible into
  Including: If convertible, specify issuer of N/A N/A The Bank
   instrument it converts into
Write-down feature No No No
  Including: If write-down, write-down trigger(s) N/A N/A N/A
  Including: If write-down, full or partial N/A N/A N/A
  Including: If write-down, permanent or temporary N/A N/A N/A
   Including: If temporary write-down, N/A N/A N/A
    description of write-up mechanism
Position in subordination hierarchy in liquidation Subordinated to depositor, Subordinated to depositor, Subordinated to deposits,
  (specify instrument type immediately general creditor, general creditor, general debts,
  senior to instrument) creditor of the creditor of the subordinated debts,
subordinated subordinated tier 2 capital bonds and
debts and debts and undated additional
preference shareholders preference shareholders tier 1 capital bonds
Non-compliant transitioned features No No No
  Including: If yes, specify non-compliant features N/A N/A N/A

286
 Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Main features of regulatory Preference shares Preference shares Undated additional tier 1
capital instrument (Domestic) (Offshore) capital bonds (Domestic)
Issuer The Bank The Bank The Bank
Unique identifier 360036 4620 1928018
Governing law(s) of the instrument Company Law of the People’s The creation and issue of the Governed by the Commercial
Republic of China, Securities Offshore Preference Shares Banking Law of the People’s
Law of the People’s Republic and the rights and obligations Republic of China, the
of China, Guidance of the (including non-contractual Regulation Governing
State Council on Launch of rights and obligations) Capital of Commercial Banks
Preference Shares Pilot, Trial attached to them are governed (Provisional) and the Measures
Administrative Measures on by, and shall be construed in for Administration of Financial
Preference Shares, Guidance accordance with, PRC law Bond Issuance in China’s
on the Issuance of Preference Inter-bank Bond Market, as
Shares of Commercial Banks to well as other applicable laws,
Replenish Tier 1 Capital/China regulations and normative
documents/China
Regulatory treatment
  Including: Transition arrangement Additional tier 1 capital Additional tier 1 capital Additional tier 1 capital
   of Regulation Governing Capital
   of Commercial Banks (Provisional)
  Including: Post-transition arrangement of Additional tier 1 capital Additional tier 1 capital Additional tier 1 capital
   Regulation Governing Capital of
   Commercial Banks (Provisional)
  Including: Eligible to the parent Parent company/Group Parent company/Group Parent company/Group
  company/group level
Instrument type Additional tier 1 capital Additional tier 1 capital Additional tier 1 capital
instrument instrument instrument
Amount recognised in regulatory capital RMB69,981 RMB equivalent 19,687 RMB79,987
  (in millions, as at the latest reporting date)
Par value of instrument (in millions) RMB70,000 USD2,900 RMB80,000
Accounting treatment Other equity Other equity Other equity
Original date of issuance 19 September 2019 23 September 2020 26 July 2019
Perpetual or dated Perpetual Perpetual Perpetual
  Including: Original maturity date No maturity date No maturity date No maturity date
Issuer call (subject to prior supervisory approval) Yes Yes Yes
  Including: Optional call date, contingent The First Redemption Date is The First Redemption Date is The First Redemption Date is
   call dates and redemption amount 24 September 2024, in 23 September 2025, in 30 July 2024, in
full or partial amount full or partial amount full or partial amount

Annual Report 2021

287
Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Main features of regulatory Preference shares Preference shares Undated additional tier 1
capital instrument (Domestic) (Offshore) capital bonds (Domestic)
  Including: Subsequent call dates, if applicable Commences on the 23 September in each year Redemption of present bonds
First Redemption Date after the First Redemption in full or in part on each
(24 September 2024) and Date Distribution Payment Date
ends on the completion date since the First Redemption
of redemption or conversion Date (30 July 2024).
of all the Domestic Preference The Issuer has the right to
Shares redeem the present bonds in
full rather than in part if the
present bonds are no longer
qualified as additional tier 1
capital after
they are issued due to
unpredictable changes in
regulatory rules
Coupons/dividends
  Including: Fixed or floating dividend/coupon Fixed to floating Fixed to floating Fixed to floating
  Including: Coupon rate and any related index 4.2% (dividend rate) 3.58% (dividend rate) 4.45% (interest rate)
before 24 September 2024 before 23 September 2025 before 30 July 2024
  Including: Existence of a dividend stopper Yes Yes Yes
  Including: Fully discretionary, partially Fully discretionary Fully discretionary Fully discretionary
   discretionary or mandatory cancellation
  of coupons/dividends
  Including: Redemption incentive mechanism No No No
  Including: Non-cumulative or cumulative Non-cumulative Non-cumulative Non-cumulative
Convertible or non-convertible Yes Yes No
  Including: If convertible, conversion trigger(s) Additional Tier 1 Capital Non-viability Trigger Event N/A
Trigger Event or Tier 2 Capital
Trigger Event
  Including: If convertible, fully or partially Fully or partially convertible Fully or partially convertible N/A
when an Additional Tier 1 when a Non-viability Trigger
Capital Trigger Event occurs; Event occurs
fully convertible when a Tier 2
Capital Trigger Event occurs

288
 Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Main features of regulatory Preference shares Preference shares Undated additional tier 1
capital instrument (Domestic) (Offshore) capital bonds (Domestic)
  Including: If convertible, conversion rate The initial conversion price is The initial conversion price is N/A
equal to the equal to the average trading
average trading price of the price of the H shares of the
A shares of the Bank for the Bank for the 20 trading days
20 trading days preceding preceding 30 August 2018,
30 August 2018, the date the date of publication of the
of publication of the Board Board resolution in respect of
resolution in respect of the the issuance plan
issuance plan
  Including: If convertible, mandatory or Mandatory Mandatory N/A
  optional conversion
  Including: If convertible, specify Core tier 1 capital Core tier 1 capital N/A
   instrument type convertible into
  Including: If convertible, specify The Bank The Bank N/A
   issuer of instrument it converts into
Write-down feature No No Yes
  Including: If write-down, write-down trigger(s) N/A N/A Additional Tier 1 Capital
Trigger Event or Tier 2 Capital
Trigger Event
  Including: If write-down, full or partial N/A N/A Full or partial
write-down when an
Additional Tier 1 Capital
Trigger Event occurs; full write-
down when a Tier 2 Capital
Trigger Event occurs
  Including: If write-down, permanent N/A N/A Permanent write-down
  or temporary
   Including: If temporary write-down, N/A N/A N/A
    description of write-up mechanism
Position in subordination hierarchy in liquidation Subordinated to deposits, Subordinated to deposits, Subordinated to deposits,
  (specify instrument type immediately general debts, subordinated general debts, subordinated general debts, subordinated
  senior to instrument) debts, tier 2 capital bonds debts, tier 2 capital bonds debts and tier 2 capital bonds
and undated additional tier 1 and undated additional tier 1
capital bonds capital bonds
Non-compliant transitioned features No No No
  Including: If yes, specify non-compliant features N/A  N/A N/A

Annual Report 2021

289
Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Main features of regulatory Undated additional tier 1 Undated additional tier 1 Undated additional tier 1
capital instrument capital bonds (Domestic) capital bonds (Offshore) capital bonds (Domestic)
Issuer The Bank The Bank The Bank
Unique identifier 2128021 Regulation S 2128044
ISIN: XS2383421711
Governing law(s) of the instrument Governed by the Commercial The Notes and any other non- Governed by the Commercial
Banking Law of the People’s contractual obligations arising Banking Law of the People’s
Republic of China, the out of or in connection with Republic of China, the
Regulation Governing them shall be governed by Regulation Governing
Capital of Commercial Banks and construed in accordance Capital of Commercial Banks
(Provisional) and the Measures with English law. However, (Provisional) and the Measures
for Administration of Financial the provisions in the terms for Administration of Financial
Bond Issuance in China’s and conditions of the Notes Bond Issuance in China’s
Inter-bank Bond Market, as relating to subordination of Inter-bank Bond Market, as
well as other applicable laws, the Notes shall be governed by well as other applicable laws,
regulations and normative and construed in accordance regulations and normative
documents/China with PRC law and regulations documents/China
Regulatory treatment
Including: Transition arrangement Additional tier 1 capital Additional tier 1 capital Additional tier 1 capital
  of Regulation Governing Capital
  of Commercial Banks (Provisional)
Including: Post-transition Additional tier 1 capital Additional tier 1 capital Additional tier 1 capital
  arrangement of Regulation
  Governing Capital of Commercial
  Banks (Provisional)
Including: Eligible to the parent company/group level Parent company/Group Parent company/Group Parent company/Group
Instrument type Additional tier 1 capital Additional tier 1 capital Additional tier 1 capital
instrument instrument instrument
Amount recognised in regulatory RMB69,992 RMB equivalent 39,742 RMB29,997
  capital (in millions, as at the latest reporting date)
Par value of instrument (in millions) RMB70,000 USD6,160 RMB30,000
Accounting treatment Other equity Other equity Other equity
Original date of issuance 4 June 2021 24 September 2021 24 November 2021
Perpetual or dated Perpetual Perpetual Perpetual
  Including: Original maturity date No maturity date No maturity date No maturity date
Issuer call (subject to prior supervisory approval) Yes Yes Yes
  Including: Optional call date, contingent call dates The First Redemption The First Redemption Date is The First Redemption Date is
   and redemption amount Date is 8 June 2026, 24 September 2026, 26 November 2026
in full or partial amount in full or partial amount in full or partial amount
  Including: Subsequent call dates, if applicable Redemption of present bonds Redemption of present bonds Redemption of present bonds
in full or in part on each in full or in part on each in full or in part on each
Distribution Payment Date Distribution Payment Date Distribution Payment Date
since the First Redemption since the First Redemption since the First Redemption
Date (8 June 2026). Date (24 September 2026). Date (26 November 2026).
The Issuer has the right to The Issuer has the right to The Issuer has the right to
redeem the present bonds in redeem the present bonds in redeem the present bonds in
full rather than in part if the full rather than in part if the full rather than in part if the
present bonds are no longer present bonds are no longer present bonds are no longer
qualified as additional tier 1 qualified as additional tier 1 qualified as additional tier 1
capital after capital after capital after
they are issued due to they are issued due to they are issued due to
unpredictable changes in unpredictable changes in unpredictable changes in
regulatory rules regulatory rules regulatory rules

290
 Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Main features of regulatory Undated additional tier 1 Undated additional tier 1 Undated additional tier 1
capital instrument capital bonds (Domestic) capital bonds (Offshore) capital bonds (Domestic)
Coupons/dividends
  Including: Fixed or floating dividend/coupon Fixed to floating Fixed to floating Fixed to floating
  Including: Coupon rate and any related index 4.04% (interest rate) before 3.20% (interest rate) before 3.65% (interest rate) before
8 June 2026 24 September 2026 26 November 2026
  Including: Existence of a dividend stopper Yes Yes Yes
  Including: Fully discretionary, Fully discretionary Fully discretionary Fully discretionary
   partially discretionary or
   mandatory cancellation of coupons/dividends
  Including: Redemption incentive mechanism No No No
  Including: Non-cumulative or cumulative Non-cumulative Non-cumulative Non-cumulative
Convertible or non-convertible No No No
  Including: If convertible, conversion trigger(s) N/A N/A N/A
  Including: If convertible, fully or partially N/A N/A N/A
  Including: If convertible, conversion rate N/A N/A N/A
  Including: If convertible, mandatory or N/A N/A N/A
  optional conversion
  Including: If convertible, specify instrument N/A N/A N/A
   type convertible into
  Including: If convertible, specify issuer of N/A N/A N/A
   instrument it converts into
Write-down feature Yes Yes Yes
  Including: If write-down, write-down trigger(s) Non-viability Trigger Event Non-viability Trigger Event Non-viability Trigger Event
  Including: If write-down, full or partial Full or partial write-down Full or partial write-down Full or partial write-down
when a Non-viability Trigger when a Non-viability Trigger when a Non-viability Trigger
Event occurs Event occurs Event occurs
  Including: If write-down, permanent or temporary Permanent write-down Permanent write-down Permanent write-down
   Including: If temporary write-down, N/A N/A N/A
    description of write-up mechanism
Position in subordination hierarchy in liquidation Subordinated to deposits, Subordinated to deposits, Subordinated to deposits,
  (specify instrument type immediately senior to general debts, subordinated general debts, subordinated general debts, subordinated
instrument) debts and tier 2 capital bonds debts and tier 2 capital bonds debts and tier 2 capital bonds
Non-compliant transitioned features No No No
  Including: If yes, specify non-compliant features N/A N/A  N/A

Annual Report 2021

291
Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Main features of regulatory

capital instrument Tier 2 capital bonds Tier 2 capital bonds Tier 2 capital bonds
Issuer The Bank The Bank The Bank
Unique identifier Rule 144A 1728021 1728022
ISIN: US455881AD47
Regulation S
ISIN: USY39656AC06
Governing law(s) of the instrument The Notes and the Fiscal Governed by the Commercial Governed by the Commercial
Agency Agreement shall be Banking Law of the People’s Banking Law of the People’s
governed by, and shall be Republic of China, the Republic of China, the
construed in accordance with Regulation Governing Regulation Governing
New York law, except that Capital of Commercial Banks Capital of Commercial Banks
the provisions of the Notes (Provisional) and the Measures (Provisional) and the Measures
relating to subordination shall for Administration of Financial for Administration of Financial
be governed by, and construed Bond Issuance in China’s Bond Issuance in China’s
in accordance with PRC law Inter-bank Bond Market, as Inter-bank Bond Market, as
well as other applicable laws, well as other applicable laws,
regulations and normative regulations and normative
documents documents
Regulatory treatment
  Including: Transition arrangement Tier 2 capital Tier 2 capital Tier 2 capital
   of Regulation Governing Capital
   of Commercial Banks (Provisional)
  Including: Post-transition Tier 2 capital Tier 2 capital Tier 2 capital
   arrangement of Regulation
   Governing Capital of Commercial
  Banks (Provisional)
  Including: Eligible to the parent Parent company/Group Parent company/Group Parent company/Group
  company/group level
Instrument type Tier 2 capital instrument Tier 2 capital instrument Tier 2 capital instrument
Amount recognised in regulatory capital RMB equivalent 10,127 RMB44,000 RMB44,000
  (in millions, as at the latest reporting date)
Par value of instrument (in millions) USD2,000 RMB44,000 RMB44,000
Accounting treatment Debt securities issued Debt securities issued Debt securities issued
Original date of issuance 21 September 2015 6 November 2017 20 November 2017
Perpetual or dated Dated Dated Dated
  Including: Original maturity date 21 September 2025 8 November 2027 22 November 2027
Issuer call (subject to prior supervisory approval) No Yes Yes
  Including: Optional call date, contingent N/A 8 November 2022, in full 22 November 2022, in full
   call dates and redemption amount amount amount
  Including: Subsequent call dates, if applicable N/A N/A N/A
Coupons/dividends
  Including: Fixed or floating dividend/coupon Fixed Fixed Fixed
  Including: Coupon rate and any related index 4.875% 4.45% 4.45%
  Including: Existence of a dividend stopper No No No
  Including: Fully discretionary, partially discretionary Mandatory Mandatory Mandatory
   or mandatory cancellation of coupons/dividends
  Including: Redemption incentive mechanism No No No
  Including: Non-cumulative or cumulative Non-cumulative Non-cumulative Non-cumulative

292
 Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Main features of regulatory

capital instrument Tier 2 capital bonds Tier 2 capital bonds Tier 2 capital bonds
Convertible or non-convertible No No No
  Including: If convertible, conversion trigger(s) N/A N/A N/A
  Including: If convertible, fully or partially N/A N/A N/A
  Including: If convertible, conversion rate N/A N/A N/A
  Including: If convertible, mandatory or N/A N/A N/A
  optional conversion
  Including: If convertible, specify instrument type N/A N/A N/A
  convertible into
  Including: If convertible, specify issuer of N/A N/A N/A
   instrument it converts into
Write-down feature Yes Yes Yes
  Including: If write-down, write-down trigger(s) Whichever occurs earlier: Whichever occurs earlier: Whichever occurs earlier:
(i) CBIRC having decided that (i) CBIRC having decided that (i) CBIRC having decided that
a write-down is necessary, a write-down is necessary, a write-down is necessary,
without which the Issuer without which the Issuer without which the Issuer
would become non-viable; would become non-viable; would become non-viable;
or (ii) any relevant authority or (ii) any relevant authority or (ii) any relevant authority
having decided that a public having decided that a public having decided that a public
sector injection of capital sector injection of capital sector injection of capital
or equivalent support is or equivalent support is or equivalent support is
necessary, without which the necessary, without which the necessary, without which the
Issuer would become Issuer would become Issuer would become
non-viable non-viable non-viable
  Including: If write-down, full or partial Partial or full Partial or full Partial or full
write-down write-down write-down
  Including: If write-down, permanent or temporary Permanent write-down Permanent write-down Permanent write-down
   Including: If temporary write-down, N/A N/A N/A
    description of write-up mechanism

Annual Report 2021

293
Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Main features of regulatory

capital instrument Tier 2 capital bonds Tier 2 capital bonds Tier 2 capital bonds
Position in subordination hierarchy in liquidation Subordinated to depositor and Subordinated to depositor and Subordinated to depositor and
  (specify instrument type immediately general creditor, general creditor; but senior general creditor; but senior
  senior to instrument) pari passu with other to equity capital, additional to equity capital, additional
subordinated debts tier 1 capital instruments and tier 1 capital instruments and
hybrid capital bonds; pari hybrid capital bonds; pari
passu with other subordinated passu with other subordinated
debts that have been issued by debts that have been issued by
the Issuer and are pari passu the Issuer and are pari passu
with the present bonds; and with the present bonds; and
pari passu with other tier 2 pari passu with other tier 2
capital instruments that will capital instruments that will
possibly be issued in the future possibly be issued in the future
and are pari passu with the and are pari passu with the
present bonds present bonds
Non-compliant transitioned features No No No
  Including: If yes, specify non-compliant features N/A N/A N/A

Main features of regulatory

capital instrument Tier 2 capital bonds Tier 2 capital bonds Tier 2 capital bonds
Issuer The Bank The Bank The Bank
Unique identifier 1928006 1928007 1928011
Governing law(s) of the instrument Governed by the Commercial Governed by the Commercial Governed by the Commercial
Banking Law of the People’s Banking Law of the People’s Banking Law of the People’s
Republic of China, the Republic of China, the Republic of China, the
Regulation Governing Regulation Governing Regulation Governing
Capital of Commercial Banks Capital of Commercial Banks Capital of Commercial Banks
(Provisional) and the Measures (Provisional) and the Measures (Provisional) and the Measures
for Administration of Financial for Administration of Financial for Administration of Financial
Bond Issuance in China’s Bond Issuance in China’s Bond Issuance in China’s
Inter-bank Bond Market, as Inter-bank Bond Market, as Inter-bank Bond Market, as
well as other applicable laws, well as other applicable laws, well as other applicable laws,
regulations and normative regulations and normative regulations and normative
documents documents documents
Regulatory treatment
  Including: Transition arrangement Tier 2 capital Tier 2 capital Tier 2 capital
   of Regulation Governing Capital
   of Commercial Banks (Provisional)

294
 Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Main features of regulatory

capital instrument Tier 2 capital bonds Tier 2 capital bonds Tier 2 capital bonds
  Including: Post-transition Tier 2 capital Tier 2 capital Tier 2 capital
   arrangement of Regulation
   Governing Capital of Commercial
  Banks (Provisional)
  Including: Eligible to the parent Parent company/Group Parent company/Group Parent company/Group
  company/group level
Instrument type Tier 2 capital instrument Tier 2 capital instrument Tier 2 capital instrument
Amount recognised in regulatory capital RMB45,000 RMB10,000 RMB45,000
  (in millions, as at the latest reporting date)
Par value of instrument (in millions) RMB45,000 RMB10,000 RMB45,000
Accounting treatment Debt securities issued Debt securities issued Debt securities issued
Original date of issuance 21 March 2019 21 March 2019 24 April 2019
Perpetual or dated Dated Dated Dated
  Including: Original maturity date 25 March 2029 25 March 2034 26 April 2029
Issuer call (subject to prior supervisory approval) Yes Yes Yes
  Including: Optional call date, contingent call dates 25 March 2024, in full amount 25 March 2029, in full amount 26 April 2024, in full amount
   and redemption amount
  Including: Subsequent call dates, if applicable N/A N/A N/A
Coupons/dividends
  Including: Fixed or floating dividend/coupon Fixed Fixed Fixed
  Including: Coupon rate and any related index 4.26% 4.51% 4.40%
  Including: Existence of a dividend stopper No No No
  Including: Fully discretionary, partially discretionary Mandatory Mandatory Mandatory
   or mandatory cancellation of coupons/dividends
  Including: Redemption incentive mechanism No No No
  Including: Non-cumulative or cumulative Non-cumulative Non-cumulative Non-cumulative
Convertible or non-convertible No No No
  Including: If convertible, conversion trigger(s) N/A N/A N/A
  Including: If convertible, fully or partially N/A N/A N/A
  Including: If convertible, conversion rate N/A N/A N/A
  Including: If convertible, mandatory or N/A N/A N/A
  optional conversion
  Including: If convertible, specify instrument type N/A N/A N/A
  convertible into

Annual Report 2021

295
Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Main features of regulatory

capital instrument Tier 2 capital bonds Tier 2 capital bonds Tier 2 capital bonds
  Including: If convertible, specify issuer of N/A N/A N/A
   instrument it converts into
Write-down feature Yes Yes Yes
  Including: If write-down, write-down trigger(s) Whichever occurs earlier: Whichever occurs earlier: Whichever occurs earlier:
(i) CBIRC having decided that (i) CBIRC having decided that (i) CBIRC having decided that
a write-down is necessary, a write-down is necessary, a write-down is necessary,
without which the Issuer without which the Issuer without which the Issuer
would become non-viable; would become non-viable; would become non-viable;
or (ii) any relevant authority or (ii) any relevant authority or (ii) any relevant authority
having decided that a public having decided that a public having decided that a public
sector injection of capital sector injection of capital sector injection of capital
or equivalent support is or equivalent support is or equivalent support is
necessary, without which the necessary, without which the necessary, without which the
Issuer would become Issuer would become Issuer would become
non-viable non-viable non-viable
  Including: If write-down, full or partial Partial or full Partial or full Partial or full
write-down write-down write-down
  Including: If write-down, permanent or temporary Permanent write-down Permanent write-down Permanent write-down
   Including: If temporary write-down, description N/A N/A N/A
   of write-up mechanism
Position in subordination hierarchy in liquidation Subordinated to depositor and Subordinated to depositor and Subordinated to depositor and
  (specify instrument type immediately general creditor; but senior general creditor; but senior general creditor; but senior
   senior to instrument) to equity capital, additional to equity capital, additional to equity capital, additional
tier 1 capital instruments and tier 1 capital instruments and tier 1 capital instruments and
hybrid capital bonds; pari hybrid capital bonds; pari hybrid capital bonds; pari
passu with other subordinated passu with other subordinated passu with other subordinated
debts that have been issued by debts that have been issued by debts that have been issued by
the Issuer and are pari passu the Issuer and are pari passu the Issuer and are pari passu
with the present bonds; and with the present bonds; and with the present bonds; and
pari passu with other tier 2 pari passu with other tier 2 pari passu with other tier 2
capital instruments that will capital instruments that will capital instruments that will
possibly be issued in the future possibly be issued in the future possibly be issued in the future
and are pari passu with the and are pari passu with the and are pari passu with the
present bonds present bonds present bonds
Non-compliant transitioned features No No No
  Including: If yes, specify non-compliant features N/A N/A N/A

296
 Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Main features of regulatory

capital instrument Tier 2 capital bonds Tier 2 capital bonds Tier 2 capital bonds Tier 2 capital bonds
Issuer The Bank The Bank The Bank The Bank
Unique identifier 1928012 2028041 2028049 2028050
Governing law(s) of the instrument Governed by the Governed by the Governed by the Governed by the
Commercial Banking Commercial Banking Commercial Banking Commercial Banking
Law of the People’s Law of the People’s Law of the People’s Law of the People’s
Republic of China, the Republic of China, the Republic of China, the Republic of China, the
Regulation Governing Regulation Governing Regulation Governing Regulation Governing
Capital of Commercial Capital of Commercial Capital of Commercial Capital of Commercial
Banks (Provisional) Banks (Provisional) Banks (Provisional) Banks (Provisional)
and the Measures and the Measures and the Measures and the Measures
for Administration of for Administration of for Administration of for Administration of
Financial Bond Issuance Financial Bond Issuance Financial Bond Issuance Financial Bond Issuance
in China’s Inter-bank in China’s Inter-bank in China’s Inter-bank in China’s Inter-bank
Bond Market, as well Bond Market, as well Bond Market, as well Bond Market, as well
as other applicable as other applicable as other applicable as other applicable
laws, regulations and laws, regulations and laws, regulations and laws, regulations and
normative documents normative documents normative documents normative documents
Regulatory treatment
  Including: Transition arrangement Tier 2 capital Tier 2 capital Tier 2 capital Tier 2 capital
   of Regulation Governing Capital
   of Commercial Banks (Provisional)
  Including: Post-transition Tier 2 capital Tier 2 capital Tier 2 capital Tier 2 capital
   arrangement of Regulation
   Governing Capital of Commercial
  Banks (Provisional)
  Including: Eligible to the parent Parent company/Group Parent company/Group Parent company/Group Parent company/Group
  company/group level
Instrument type Tier 2 capital Tier 2 capital Tier 2 capital Tier 2 capital
instrument instrument instrument instrument
Amount recognised in regulatory capital RMB10,000 RMB60,000 RMB30,000 RMB10,000
  (in millions, as at the latest reporting date)
Par value of instrument (in millions) RMB10,000 RMB60,000 RMB30,000 RMB10,000
Accounting treatment Debt securities issued Debt securities issued Debt securities issued Debt securities issued
Original date of issuance 24 April 2019 22 September 2020 12 November 2020 12 November 2020
Perpetual or dated Dated Dated Dated Dated
  Including: Original maturity date 26 April 2034 24 September 2030 16 November 2030 16 November 2035
Issuer call (subject to prior supervisory approval) Yes Yes Yes Yes
  Including: Optional call date, contingent 26 April 2029, in full 24 September 2025, in 16 November 2025, in 16 November 2030, in
   call dates and redemption amount amount full amount full amount full amount
  Including: Subsequent call dates, if applicable N/A N/A N/A N/A
Coupons/dividends
  Including: Fixed or floating dividend/coupon Fixed Fixed Fixed Fixed
  Including: Coupon rate and any related index 4.69% 4.20% 4.15% 4.45%
  Including: Existence of a dividend stopper No No No No
  Including: Fully discretionary, Mandatory Mandatory Mandatory Mandatory
   partially discretionary or
   mandatory cancellation of coupons/dividends

Annual Report 2021

297
Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Main features of regulatory

capital instrument Tier 2 capital bonds Tier 2 capital bonds Tier 2 capital bonds Tier 2 capital bonds
  Including: Redemption incentive mechanism No No No No
  Including: Non-cumulative or cumulative Non-cumulative Non-cumulative Non-cumulative Non-cumulative
Convertible or non-convertible No No No No
  Including: If convertible, conversion trigger(s) N/A N/A N/A N/A
  Including: If convertible, fully or partially N/A N/A N/A N/A
  Including: If convertible, conversion rate N/A N/A N/A N/A
  Including: If convertible, mandatory or N/A N/A N/A N/A
  optional conversion
  Including: If convertible, specify instrument type N/A N/A N/A N/A
  convertible into
  Including: If convertible, specify issuer of N/A N/A N/A N/A
   instrument it converts into
Write-down feature Yes Yes Yes Yes
  Including: If write-down, write-down trigger(s) Whichever occurs Whichever occurs Whichever occurs Whichever occurs
earlier: (i) CBIRC having earlier: (i) CBIRC having earlier: (i) CBIRC having earlier: (i) CBIRC having
decided that a write- decided that a write- decided that a write- decided that a write-
down is necessary, down is necessary, down is necessary, down is necessary,
without which the without which the without which the without which the
Issuer would become Issuer would become Issuer would become Issuer would become
non-viable; or (ii) any non-viable; or (ii) any non-viable; or (ii) any non-viable; or (ii) any
relevant authority relevant authority relevant authority relevant authority
having decided that a having decided that a having decided that a having decided that a
public sector injection public sector injection public sector injection public sector injection
of capital or equivalent of capital or equivalent of capital or equivalent of capital or equivalent
support is necessary, support is necessary, support is necessary, support is necessary,
without which the without which the without which the without which the
Issuer would become Issuer would become Issuer would become Issuer would become
non-viable non-viable non-viable non-viable
  Including: If write-down, full or partial Partial or full Partial or full Partial or full Partial or full
write-down write-down write-down write-down
  Including: If write-down, Permanent write-down Permanent write-down Permanent write-down Permanent write-down
   permanent or temporary
   Including: If temporary write-down, N/A N/A N/A N/A
   description of
   write-up mechanism

298
 Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Main features of regulatory

capital instrument Tier 2 capital bonds Tier 2 capital bonds Tier 2 capital bonds Tier 2 capital bonds
Position in subordination hierarchy in liquidation Subordinated to Subordinated to Subordinated to Subordinated to
  (specify instrument type immediately depositor and general depositor and general depositor and general depositor and general
   senior to instrument) creditor; but senior creditor; but senior creditor; but senior creditor; but senior
to equity capital, to equity capital, to equity capital, to equity capital,
additional tier 1 capital additional tier 1 capital additional tier 1 capital additional tier 1 capital
instruments and instruments and instruments and instruments and
hybrid capital bonds; hybrid capital bonds; hybrid capital bonds; hybrid capital bonds;
pari passu with other pari passu with other pari passu with other pari passu with other
subordinated debts subordinated debts subordinated debts subordinated debts
that have been issued that have been issued that have been issued that have been issued
by the Issuer and are by the Issuer and are by the Issuer and are by the Issuer and are
pari passu with the pari passu with the pari passu with the pari passu with the
present bonds; and pari present bonds; and pari present bonds; and pari present bonds; and pari
passu with other tier passu with other tier passu with other tier passu with other tier
2 capital instruments 2 capital instruments 2 capital instruments 2 capital instruments
that will possibly be that will possibly be that will possibly be that will possibly be
issued in the future and issued in the future and issued in the future and issued in the future and
are pari passu with the are pari passu with the are pari passu with the are pari passu with the
present bonds present bonds present bonds present bonds
Non-compliant transitioned features No No No No
  Including: If yes, specify non-compliant features N/A N/A N/A N/A

Main features of regulatory capital instrument Tier 2 capital bonds Tier 2 capital bonds Tier 2 capital bonds
Issuer The Bank The Bank The Bank
Unique identifier 2128002 2128051 2128052
Governing law(s) of the instrument Governed by the Commercial Governed by the Commercial Governed by the Commercial
Banking Law of the People’s Banking Law of the People’s Banking Law of the People’s
Republic of China, the Republic of China, the Republic of China, the
Regulation Governing Regulation Governing Regulation Governing
Capital of Commercial Banks Capital of Commercial Banks Capital of Commercial Banks
(Provisional) and the Measures (Provisional) and the Measures (Provisional) and the Measures
for Administration of Financial for Administration of Financial for Administration of Financial
Bond Issuance in China’s Bond Issuance in China’s Bond Issuance in China’s
Inter-bank Bond Market, as Inter-bank Bond Market, as Inter-bank Bond Market, as
well as other applicable laws, well as other applicable laws, well as other applicable laws,
regulations and normative regulations and normative regulations and normative
documents documents documents
Regulatory treatment
  Including: Transition arrangement of Tier 2 capital Tier 2 capital Tier 2 capital
  Regulation Governing
   Capital of Commercial Banks (Provisional)
  Including: Post-transition Tier 2 capital Tier 2 capital Tier 2 capital
   arrangement of Regulation
   Governing Capital of Commercial
  Banks (Provisional)
  Including: Eligible to the parent Parent company/Group Parent company/Group Parent company/Group
  company/group level
Instrument type Tier 2 capital instrument Tier 2 capital instrument Tier 2 capital instrument
Amount recognised in regulatory RMB30,000 RMB50,000 RMB10,000
  capital (in millions, as at the
  latest reporting date)
Par value of instrument (in millions) RMB30,000 RMB50,000 RMB10,000
Accounting treatment Debt securities issued Debt securities issued Debt securities issued
Original date of issuance 19 January 2021 13 December 2021 13 December 2021

Annual Report 2021

299
Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

Main features of regulatory capital instrument Tier 2 capital bonds Tier 2 capital bonds Tier 2 capital bonds
Perpetual or dated Dated Dated Dated
  Including: Original maturity date 21 January 2031 15 December 2031 15 December 2036
Issuer call (subject to prior supervisory approval) Yes Yes Yes
  Including: Optional call date, 21 January 2026, in full 15 December 2026, in full 15 December 2031,
   contingent call dates and redemption amount amount amount in full amount
  Including: Subsequent call dates, if applicable N/A N/A N/A
Coupons/dividends
  Including: Fixed or floating dividend/coupon Fixed Fixed Fixed
  Including: Coupon rate and any related index 4.15% 3.48% 3.74%
  Including: Existence of a dividend stopper No No No
  Including: Fully discretionary, partially discretionary Mandatory Mandatory Mandatory
   or mandatory cancellation of coupons/dividends
  Including: Redemption incentive mechanism No No No
  Including: Non-cumulative or cumulative Non-cumulative Non-cumulative Non-cumulative
Convertible or non-convertible No No No
  Including: If convertible, conversion trigger(s) N/A N/A N/A
  Including: If convertible, fully or partially N/A N/A N/A
  Including: If convertible, conversion rate N/A N/A N/A
  Including: If convertible, mandatory or N/A N/A N/A
  optional conversion
  Including: If convertible, N/A N/A N/A
   specify instrument type convertible into
  Including: If convertible, N/A N/A N/A
   specify issuer of instrument it converts into
Write-down feature Yes Yes Yes
  Including: If write-down, write-down trigger(s) Whichever occurs earlier: Whichever occurs earlier: Whichever occurs earlier:
(i) CBIRC having decided that (i) CBIRC having decided that (i) CBIRC having decided that
a write-down is necessary, a write-down is necessary, a write-down is necessary,
without which the Issuer without which the Issuer without which the Issuer
would become non-viable; would become non-viable; would become non-viable;
or (ii) any relevant authority or (ii) any relevant authority or (ii) any relevant authority
having decided that a public having decided that a public having decided that a public
sector injection of capital sector injection of capital sector injection of capital
or equivalent support is or equivalent support is or equivalent support is
necessary, without which the necessary, without which the necessary, without which the
Issuer would become Issuer would become Issuer would become
non-viable non-viable non-viable
  Including: If write-down, full or partial Partial or full write-down Partial or full write-down Partial or full write-down
  Including: If write-down, permanent or temporary Permanent write-down Permanent write-down Permanent write-down
   Including: If temporary write-down, N/A N/A N/A
    description of write-up mechanism
Position in subordination hierarchy in liquidation Subordinated to depositor and Subordinated to depositor and Subordinated to depositor and
  (specify instrument type immediately senior general creditor; but senior to general creditor; but senior to general creditor; but senior to
  to instrument) equity capital, additional tier 1 equity capital, additional tier 1 equity capital, additional tier 1
capital instruments and hybrid capital instruments and hybrid capital instruments and hybrid
capital bonds; pari passu with capital bonds; pari passu with capital bonds; pari passu with
other subordinated debts other subordinated debts other subordinated debts
that have been issued by the that have been issued by the that have been issued by the
Issuer and are pari passu with Issuer and are pari passu with Issuer and are pari passu with
the present bonds; and pari the present bonds; and pari the present bonds; and pari
passu with other tier 2 capital passu with other tier 2 capital passu with other tier 2 capital
instruments that will possibly instruments that will possibly instruments that will possibly
be issued in the future and are be issued in the future and are be issued in the future and are
pari passu with the present pari passu with the present pari passu with the present
bonds bonds bonds
Non-compliant transitioned features No No No
  Including: If yes, specify non-compliant features N/A N/A N/A

300
 Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

6. Disclosure of Leverage Ratio

The following information is disclosed in accordance with the Administrative Measures for Leverage Ratio of Commercial
Banks (Revised) (CBRC No.1, 2015).

(i) Correspondence between Regulatory Leverage Ratio Items and Accounting Items and their
differences

31 December 31 December
S/N Item 2021 2020
1 Total consolidated assets as per published financial statements 35,171,383 33,345,058
2 Consolidated adjustments for accounting purposes but outside (251,092) (202,504)
  the scope of regulatory consolidation
3 Adjustments for fiduciary assets – –
4 Adjustments for derivative financial instruments 104,865 85,324
5 Adjustment for securities financing transactions 40,027 29,188
6 Adjustment for off-balance sheet items 2,244,477 2,059,325
7 Other adjustments (17,138) (16,053)
8 Balance of adjusted on- and off-balance sheet assets 37,292,522 35,300,338

(ii) Leverage Ratio, Net Tier 1 Capital, Balance of Adjusted On- and Off-balance Sheet Assets
and Related Information

31 December 31 December
S/N Item 2021 2020
1 On-balance sheet items (excluding derivatives and SFTs, but including 34,436,056 32,598,277
collateral)
2 Less: Asset amounts deducted in determining Basel III tier 1 capital (17,138) (16,053)
3 Balance of adjusted on-balance sheet assets (excluding derivatives and SFTs) 34,418,918 32,582,224
4 Replacement cost associated with all derivatives transactions (i.e. net of 84,898 146,069
eligible cash variation margin)
5 Add-on amounts for PFE associated with all derivatives transactions 91,940 67,843
6 Gross-up for derivatives collateral provided where deducted from the – –
balance sheet assets pursuant to the operative accounting framework
7 Less: Deductions of receivables assets for cash variation margin provided in – –
derivatives transactions
8 Less: Exempted CCP leg of client-cleared trade exposures (128) (12,330)
9 Effective notional amount of written credit derivatives 37,702 42,669
10 Less: Adjusted effective notional deductions for written credit derivatives (33,407) (12,858)
11 Total derivative exposures 181,005 231,393
12 Gross SFT assets (with no recognition of netting), after adjusting for sale 408,095 398,208
accounting transactions
13 Less: Netted amounts of cash payables and cash receivables of gross – –
SFT assets
14 CCR exposure for SFT assets 40,027 29,188
15 Agent transaction exposures – –
16 Total securities financing transaction exposures 448,122 427,396
17 Off-balance sheet exposure at gross notional amount 6,328,760 5,727,987
18 Less: Adjustments for conversion to credit equivalent amounts (4,084,283) (3,668,662)
19 Balance of adjusted off-balance sheet assets 2,244,477 2,059,325
20 Net tier 1 capital 3,241,364 2,872,792
21 Balance of adjusted on- and off-balance sheet assets 37,292,522 35,300,338
22 Leverage ratio 8.69% 8.14%

Annual Report 2021

301
Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

7. Quantitative Information Disclosure of Liquidity Coverage Ratio Using Advanced

Capital Management Approach
The Group discloses liquidity coverage ratio using Advanced Capital Management Approach in accordance with Measures for
the Disclosure of Information on Liquidity Coverage Ratio by Commercial Banks (Yin Jian Fa [2015] No. 52).

Fourth-quarter 2021
Total Total
unweighted weighted
S/N Item value value
High-quality liquid assets
1 Total high-quality liquid assets (HQLA) 5,840,091
Cash outflows
2 Retail deposits and deposits form small business customers of which: 13,206,445 1,317,060
3   Stable deposits 56,472 2,063
4   Less stable deposits 13,149,973 1,314,997
5 Unsecured wholesale funding, of which: 14,765,584 4,798,151
6   Operational deposits (excluding those generated from correspondent 8,996,693 2,187,318
  banking activities)
7   Non-operational deposits (all counterparties) 5,699,530 2,541,472
8   Unsecured debt 69,361 69,361
9 Secured funding 11,893
10 Additional requirements, of which: 3,070,500 1,261,208
11   Outflows related to derivative exposures and other collateral requirements 1,111,158 1,111,158
12   Outflows related to loss of funding on debt products – –
13   Credit and liquidity facilities 1,959,342 150,050
14 Other contractual funding obligations 77,534 77,512
15 Other contingent funding obligations 5,289,975 106,897
16 Total cash outflows 7,572,721
Cash inflows
17 Secured lending (including reverse repos and securities borrowing) 528,439 292,256
18 Inflows from fully performing exposures 1,501,023 963,271
19 Other cash inflows 1,112,279 1,109,461
20 Total cash inflows 3,141,741 2,364,988
Total Adjusted
Value
21 Total HQLA 5,840,091
22 Total net cash outflows 5,207,733
23 Liquidity coverage ratio (%) 112.20%

Data of the above table are the simple arithmetic average of the 92 calendar days’ figures of the recent quarter.

302
 Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

8. Quantitative Information Disclosure of Net Stable Funding Ratio (NSFR) Using

Advanced Capital Management Approach
The Group discloses net stable funding ratio information in accordance with Measures for the Disclosure of Information on
Net Stable Funding Ratio by Commercial Banks (Yin Bao Jian Fa [2019] No. 11).

31 December 2021
Unweighted value
6 months to Weighted
No. Item No maturity < 6 months < 1 year ≥ 1 year value
Available stable funding (ASF) item
1 Capital: 3,514,552 – – 418,412 3,932,964
2   Regulatory capital 3,514,552 – – 418,412 3,932,964
3   Other capital instruments – – – – –
4 Retail deposits and deposits from 6,534,836 7,093,483 17,538 10,164 12,295,976
  small business customers:
5   Stable deposits 37,393 42,896 10,502 6,973 93,225
6   Less stable deposits 6,497,443 7,050,587 7,036 3,191 12,202,751
7 Wholesale funding: 8,598,100 6,565,799 309,032 226,568 7,450,606
8   Operational deposits 8,253,459 574,876 14,226 4,293 4,425,573
9   Other wholesale funding 344,641 5,990,923 294,806 222,275 3,025,033
10 Liabilities with – – – – –
  matching interdependent assets
11 Other liabilities: 10,434 1,002,488 24,738 654,537 629,422
12   NSFR derivative liabilities 47,918
13   All other liabilities and 10,434 1,002,488 24,738 606,619 629,422
   equities not included
   in the above categories
14 Total ASF 24,308,968
Required stable funding (RSF) item
15 Total NSFR high-quality 979,487
  liquid assets (HQLA)
16 Deposits held at 165,913 37,813 1,457 914 104,314
  other financial institutions for
  operational purposes
17 Loans and securities: 1,266 3,844,322 2,622,168 16,955,026 17,156,499
18   Loans to financial institutions – 479,994 1,701 136 72,421
   secured by Level 1 HQLA
19   Loans to financial institutions – 745,042 247,457 171,280 406,765
   secured by non-Level 1 HQLA
   and unsecured loans to
  financial institutions
20   Loans to retail and – 2,327,769 2,194,968 9,550,942 10,295,054
   small business customers,
  non-financial institutions,
   sovereigns, central banks and
   PSEs, of which:
21    With a risk weight of – 491,444 360,373 298,663 607,380
   less than or equal to 35%
   under the Basel II
   standardised approach for
  credit risk

Annual Report 2021

303
Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

31 December 2021
Unweighted value
6 months to Weighted
No. Item No maturity < 6 months < 1 year ≥ 1 year value
22   Residential mortgages, of which: – 2,093 3,384 6,376,331 5,419,938
23    With a risk weight of – 428 429 14,451 10,029
    less than or equal to 35%
    under the Basel II
   standardised approach for
   credit risk
24   Securities that are not in 1,266 289,424 174,658 856,337 962,321
   default and do not qualify as
  HQLA, including
  exchange-traded equities
25 Assets with matching – – – – –
  interdependent liabilities
26 Other assets: 329,722 418,055 37,139 148,589 775,134
27   Physical traded commodities, 16,881 14,349
  including gold
28   Assets posted as initial margin for 4,638 3,942
   derivative contracts and
  contributions to
   default funds of CCPs
29   NSFR derivative assets 61,801 13,883
30   NSFR derivative liabilities with 56,602* 11,320
   additional variation margin
  posted
31   All other assets not included in 312,841 418,055 37,139 82,150 731,640
   the above categories
32 Off-balance sheet items 8,033,526 247,195
33 Total RSF 19,262,629
34 Net Stable Funding Ratio (%) 126.20%

(*) The amount of derivative liabilities shall be filled in for this item, which is the amount of NSFR derivative liabilities without
regard to maturity before deducting variation margin. It is excluded from the item 26 “Other assets”.

304
 Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

30 September 2021
Unweighted value
6 months to Weighted
No. Item No maturity < 6 months < 1 year ≥ 1 year value
Available stable funding (ASF) item
1 Capital: 3,379,104 – – 358,573 3,737,677
2   Regulatory capital 3,379,104 – – 358,573 3,737,677
3   Other capital instruments – – – – –
4 Retail deposits and deposits from 6,408,762 7,201,693 11,731 10,364 12,275,079
  small business customers:
5   Stable deposits 39,189 50,721 5,065 6,613 96,838
6   Less stable deposits 6,369,573 7,150,972 6,666 3,751 12,178,241
7 Wholesale funding: 8,877,598 6,778,034 286,206 228,739 7,724,111
8   Operational deposits 8,523,272 590,924 6,131 1,459 4,561,622
9   Other wholesale funding 354,326 6,187,110 280,075 227,280 3,162,489
10 Liabilities with – – – – –
  matching interdependent assets
11 Other liabilities: 12,026 893,556 32,890 655,168 637,737
12   NSFR derivative liabilities 45,902
13   All other liabilities and 12,026 893,556 32,890 609,266 637,737
   equities not included in
   the above categories
14 Total ASF 24,374,604
Required stable funding (RSF) item
15 Total NSFR high-quality 928,319
  liquid assets (HQLA)
16 Deposits held at 169,469 47,218 2,362 828 110,594
  other financial institutions for
  operational purposes
17 Loans and securities: 1,204 3,989,223 2,716,285 16,646,113 16,962,615
18   Loans to financial institutions – 474,018 177 1,589 72,037
   secured by Level 1 HQLA
19   Loans to financial institutions – 869,764 338,972 150,690 450,640
   secured by non-Level 1 HQLA
   and unsecured loans to
  financial institutions
20   Loans to retail and – 2,285,305 2,251,951 9,481,714 10,237,311
   small business customers,
  non-financial institutions,
   sovereigns, central banks and
   PSEs, of which:
21    With a risk weight of – 387,544 380,370 292,979 562,690
    less than or equal to 35%
    under the Basel II
   standardised approach for
   credit risk
22   Residential mortgages, of which: – 1,811 2,854 6,174,334 5,248,281
23    With a risk weight of – 428 426 16,370 12,105
    less than or equal to 35%
    under the Basel II
   standardised approach for
   credit risk

Annual Report 2021

305
Unaudited Supplementary Information To The Consolidated Financial Statements
For the year ended 31 December 2021
(In RMB millions, unless otherwise stated)

30 September 2021
Unweighted value
6 months to Weighted
No. Item No maturity < 6 months < 1 year ≥ 1 year value
24   Securities that are not in 1,204 358,325 122,331 837,786 954,346
   default and do not qualify as
  HQLA, including
  exchange-traded equities
25 Assets with matching – – – – –
  interdependent liabilities
26 Other assets: 338,265 398,452 33,460 127,440 767,339
27   Physical traded commodities, 46,394 39,435
  including gold
28   Assets posted as initial margin for 35,643 30,297
   derivative contracts and
  contributions to
   default funds of CCPs
29   NSFR derivative assets 63,978 18,076
30   NSFR derivative liabilities with 50,086* 10,017
   additional variation margin
  posted
31   All other assets not included 291,871 398,452 33,460 27,819 669,514
   in the above categories
32 Off-balance sheet items 8,051,576 246,740
33 Total RSF 19,015,607
34 Net Stable Funding Ratio (%) 128.18%

(*) The amount of derivative liabilities shall be filled in for this item, which is the amount of NSFR derivative liabilities without
regard to maturity before deducting variation margin. It is excluded from the item 26 “Other assets”.

306
List of Domestic and Overseas Branches and Offices

Domestic Institutions
ANHUI BRANCH GUANGXI BRANCH HUNAN BRANCH
Address: No. 189 Wuhu Road, Address: No. 15-1 Jiaoyu Road, Address: No. 619 Furong Middle
Hefei City, Anhui Province, Nanning City, Guangxi Road Yi Duan, Changsha
China Zhuang Autonomous City, Hunan Province,
Postcode: 230001 Region, China China
Tel: 0551-62869178/62868101 Postcode: 530022 Postcode: 410011
Fax: 0551-62868077 Tel: 0771-5316617 Tel: 0731-84428833/84420000
Fax: 0771-5316617/2806043 Fax: 0731-84430039
BEIJING BRANCH
Address: T ower B, Tianyin Mansion, GUIZHOU BRANCH JILIN BRANCH
No. 2 Fuxingmen South Address: No. 200 Zhonghua North Address: No. 9559 Renmin Avenue,
Street, Xicheng District, Road, Yunyan District, Changchun City,
Beijing, China Guiyang City, Guizhou Jilin Province, China
Postcode: 100031 Province, China Postcode: 130022
Tel: 010-66410579 Postcode: 550001 Tel: 0431-89569718/89569007
Fax: 010-66410579 Tel: 0851-88606280/88620018 Fax: 0431-88923808
Fax: 0851-85963911
CHONGQING BRANCH JIANGSU BRANCH
HAINAN BRANCH Address: No. 408 Zhongshan
Address: No. 61 Taichang Road,
Address: No. 54 Heping South South Road, Nanjing City,
Nan’an District,
Road, Haikou City, Hainan Jiangsu Province, China
Chongqing, China
Province, China Postcode: 210006
Postcode: 400061
Postcode: 570203 Tel: 025-52858000
Tel: 023-62918002
Tel: 0898-65303138/65342829 Fax: 025-52858111
Fax: 023-62918059
Fax: 0898-65342986
DALIAN BRANCH JIANGXI BRANCH
HEBEI BRANCH Address: No. 233, Fuhe North Road,
Address: No. 5 Zhongshan Square, Address: Tower B, Zhonghua
Dalian City, Liaoning Nanchang City, Jiangxi
Shangwu Tower, No. 188 Province, China
Province, China Zhongshan West Road,
Postcode: 116001 Postcode: 330008
Shijiazhuang City, Hebei Tel: 0791-86695682/86695018
Tel: 0411-82378888 Province, China
Fax: 0411-82808377 Fax: 0791-86695230
Postcode: 050051
FUJIAN BRANCH Tel: 0311-66000001 LIAONING BRANCH
Fax: 0311-66000002 Address: No. 88 Nanjing North
Address: No. 108 Gutian Road,
Road, Heping District,
Fuzhou City, Fujian HENAN BRANCH
Shenyang City, Liaoning
Province, China Address: No. 99 Jingsan Road,
Province, China
Postcode: 350005 Zhengzhou City, Henan
Postcode: 110001
Tel: 0591-88087819/88087000 Province, China
Tel: 024-23491600
Fax: 0591-83353905/83347074 Postcode: 450011
Fax: 024-23491609
GANSU BRANCH Tel: 0371-65776888/65776808
Fax: 0371-65776889/65776988 INNER MONGOLIA BRANCH
Address: No. 408 Qingyang Road,
Address: No. 10 East 2nd Ring Road,
Chengguan District, HEILONGJIANG BRANCH
Address: No. 218 Zhongyang Street, Xincheng District, Hohhot
Lanzhou City, Gansu
Daoli District, Harbin City, City, Inner Mongolia
Province, China
Heilongjiang Province, Autonomous Region,
Postcode: 730030
China China
Tel: 0931-8434172
Postcode: 150010 Postcode: 010060
Fax: 0931-8435166
Tel: 0451-84668023/84668577 Tel: 0471-6940833/6940297
GUANGDONG BRANCH Fax: 0451-84698115 Fax: 0471-6940048
Address: No. 123 Yanjiang West Road, NINGBO BRANCH
Guangzhou City, HUBEI BRANCH
Address: No. 31 Zhongbei Road, Address: No. 218 Zhongshan
Guangdong Province, West Road, Ningbo City,
China Wuchang District, Wuhan
City, Hubei Province, China Zhejiang Province, China
Postcode: 510120 Postcode: 315010
Tel: 020-81308130 Postcode: 430071
Tel: 027-69908676/69908658 Tel: 0574-87361162
Fax: 020-81308789 Fax: 0574-87361190
Fax: 027-69908040

Annual Report 2021

307
List of Domestic and Overseas Branches and Offices

NINGXIA BRANCH SICHUAN BRANCH ICBC Financial Leasing Co., Ltd.

Address: No. 67 Zhonghai Road, Address: No. 45 Zongfu Road, Address: Taida MSD-B1,
Jinfeng District, Yinchuan Jinjiang District, Chengdu No. 62 Second Street,
City, Ningxia Autonomous City, Sichuan Province, Economic Development
Region, China China Zone, Tianjin, China
Postcode: 750002 Postcode: 610020 Postcode: 300457
Tel: 0951-5890912 Tel: 028-82866000 Tel: 022-66283766/010-66105888
Fax: 0951-5890917 Fax: 028-82866025 Fax: 022-66224510/010-66105999
QINGDAO BRANCH TIANJIN BRANCH
Address: No. 25 Shandong Road, Address: No. 123 Weidi Road, Hexi ICBC-AXA Assurance Co., Ltd.
Shinan District, Qingdao District, Tianjin, China Address: 19/F Mirae Asset Tower,
City, Shandong Province, Postcode: 300074 No. 166 Lujiazui Ring
China Tel: 022-28400648 Road, Pudong New Area,
Postcode: 266071 Fax: 022-28400123/022-28400647 Shanghai, China
Tel: 0532-66211001 Postcode: 200120
XIAMEN BRANCH Tel: 021-58792288
Fax: 0532-85814711 Address: No. 17 Hubin North Fax: 021-58792299
QINGHAI BRANCH Road, Xiamen City, Fujian
Address: No. 2 Shengli Road, Xining Province, China ICBC Financial Asset Investment
City, Qinghai Province, Postcode: 361012 Co., Ltd.
China Tel: 0592-5292000 Address: 19–20/F, Tower B, Yang
Postcode: 810001 Fax: 0592-5054663 Zi S&T Innovation Center
Tel: 0971-6169722/6152326 XINJIANG BRANCH Phase I, Jiangbei New
Fax: 0971-6152326 Address: No. 231 Renmin Road, Area, No. 211 Pubin Road,
SHANDONG BRANCH Tianshan District, Urumqi, Nanjing City, Jiangsu
Address: No. 310 Jingsi Road, Jinan Xinjiang Autonomous Province, China
City, Shandong Province, Region, China Postcode: 211800
China Postcode: 830002 Tel: 025-58172219
Postcode: 250001 Tel: 0991-5981888
Tel: 0531-66681114 Fax: 0991-2828608 ICBC Wealth Management Co.,
Fax: 0531-87941749/66681200 Ltd.
TIBET BRANCH Address: No. 6 Financial Street,
SHANXI BRANCH Address: No. 31 Jinzhu Mid-Rd.,
Xicheng District,
Address: No. 145 Yingze Street, Lhasa, Tibet Autonomous
Beijing, China
Taiyuan City, Shanxi Region
Postcode: 100032
Province, China Postcode: 850000
Tel: 010-86509184
Postcode: 030001 Tel: 0891-6898002
Fax: 010-86509901
Tel: 0351-6248888/6248011 Fax: 0891-6898001
Fax: 0351-6248004 YUNNAN BRANCH Chongqing Bishan ICBC Rural
SHAANXI BRANCH Address: Bank Mansion, No. 395 Bank Co., Ltd.
Address: No. 395 Dongxin Street, Qingnian Road, Kunming Address: No.8 Xianshan Road,
Xi’an City, Shaanxi City, Yunnan Province, Biquan Street, Bishan
Province, China China District, Chongqing, China
Postcode: 710004 Postcode: 650021 Postcode: 402760
Tel: 029-87602608/87602630 Tel: 0871-65536313 Tel: 023-85297704
Fax: 029-87602999 Fax: 0871-63134637 Fax: 023-85297709
SHANGHAI BRANCH ZHEJIANG BRANCH
Address: No. 8 Yincheng Road, Address: No. 66 Juyuan Road, Zhejiang Pinghu ICBC Rural
Pudong New District, Jianggan District, Bank Co., Ltd.
Address: No.258 Chengnan West
Shanghai, China Hangzhou City, Zhejiang
Road, Pinghu City,
Postcode: 200120 Province, China
Zhejiang Province, China
Tel: 021-58885888/68088888 Postcode: 310016
Postcode: 314200
Fax: 021-58882888 Tel: 0571-87803888
Tel: 0573-85139616
SHENZHEN BRANCH Fax: 0571-87808207
Fax: 0573-85139626
Address: North Block Financial ICBC Credit Suisse Asset
Center, No. 5055 Management Co., Ltd.
Shennan East Road, Luohu Address: Tower A, Xinsheng Plaza,
District, Shenzhen City, No. 5 Financial Street,
Guangdong Province, Xicheng District, Beijing,
China China
Postcode: 518015 Postcode: 100033
Tel: 0755-82246400 Tel: 010-66583349
Fax: 0755-82246247 Fax: 010-66583158

308
 List of Domestic and Overseas Branches and Offices

Overseas Institutions

Hong Kong SAR and Macau Asia-Pacific PT. Bank ICBC Indonesia
SAR Address: The City Tower 32nd Floor,
Industrial and Commercial Bank Jl. M.H. Thamrin No. 81,
Industrial and Commercial Bank of China Limited, Tokyo Branch Jakarta Pusat 10310,
of China Limited, Hong Kong Address: 5-1 Marunouchi 1-Chome, Indonesia
Branch Chiyoda-Ku Tokyo, Email: [email protected]
Address: 33/F, ICBC Tower, 100-6512, Japan Tel: +62-2123556000
3 Garden Road, Central, Email: [email protected] Fax: +62-2131996016
Hong Kong SAR, China Tel: +813-52232088 SWIFT: ICBKIDJA
Email: [email protected] Fax: +813-52198525
Tel: + 852-25881188 SWIFT: ICBKJPJT Industrial and Commercial Bank
Fax: + 852-25881160 of China (Malaysia) Berhad
SWIFT: ICBKHKHH Industrial and Commercial Bank Address: Level 10, Menara Maxis,
of China Limited, Seoul Branch Kuala Lumpur City Centre,
Industrial and Commercial Bank Address: 16th Floor, Taepyeongno 50088 Kuala Lumpur,
of China (Asia) Limited Bldg., #73 Sejong-daero, Malaysia
Address: 33/F, ICBC Tower, Jung-gu, Seoul 100-767, Email: [email protected]
3 Garden Road, Central, Korea Tel: +603-23013399
Hong Kong SAR, China Email: [email protected] Fax: +603-23013388
Email: [email protected] Tel: +82-237886670 SWIFT: ICBKMYKL
Tel: +852-35108888 Fax: +82-27553748
Fax: +852-28051166 SWIFT: ICBKKRSE Industrial and Commercial Bank
SWIFT: UBHKHKHH of China Limited, Manila Branch
Industrial and Commercial Bank Address: 24F, The Curve,
ICBC International Holdings of China Limited, Busan Branch 32nd Street Corner,
Limited Address: 1st Floor, ABL Life Bldg., 3rd Ave, BGC, Taguig City,
Address: 37/F, ICBC Tower, # 640 Jungang-daero, Manila 1634, Philippines
3 Garden Road, Central, Busanjin-gu, Busan 47353, Email: [email protected]
Hong Kong SAR, China Korea Tel: +63-282803300
Email: [email protected] Email: [email protected] Fax: +63-284032023
Tel: +852-26833888 Tel: +82-514638868 SWIFT: ICBKPHMM
Fax: +852-26833900 Fax: +82-514636880
SWIFT: ICILHKH1 SWIFT: ICBKKRSE Industrial and Commercial Bank
of China (Thai) Public Company
Industrial and Commercial Bank Industrial and Commercial Bank Limited
of China (Macau) Limited of China Limited, Mongolia Address: 622 Emporium Tower
Address: 18th Floor, ICBC Tower, Representative Office 11th–13th Fl., Sukhumvit
Macau Landmark, 555 Address: Suite 1108, 11th floor, Road, Khlong Ton, Khlong
Avenida da Amizade, Shangri-la Office, Toei, Bangkok, Thailand
Macau SAR, China Shangri-la Centre, Tel: +66-26295588
Email: [email protected] 19A Olympic Street, Fax: +66-26639888
Tel: +853-28555222 Sukhbaatar District-1, SWIFT: ICBKTHBK
Fax: +853-28338064 Ulaanbaatar, Mongolia
SWIFT: ICBKMOMX Email: [email protected] Industrial and Commercial Bank
Tel: +976-77108822, of China Limited, Hanoi Branch
Industrial and Commercial Bank +976-77106677 Address: 3rd Floor Daeha Business
of China Limited, Macau Branch Fax: +976-77108866 Center, No.360, Kim Ma
Address: Alm. Dr. Carlos Str., Ba Dinh Dist., Hanoi,
d’Assumpcao, Industrial and Commercial Bank Vietnam
No.393–437, 9 Andar, of China Limited, Singapore Email: [email protected]
Edf. Dynasty Plaza, Branch Tel: +84-2462698888
Macau SAR, China Address: 6 Raffles Quay #12-01, Fax: +84-2462699800
Email: [email protected] Singapore 048580 SWIFT: ICBKVNVN
Tel: +853-28555222 Email: [email protected]
Fax: +853-28338064 Tel: +65-65381066
SWIFT: ICBKMOMM Fax: +65-65381370
SWIFT: ICBKSGSG

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List of Domestic and Overseas Branches and Offices

Industrial and Commercial Bank Industrial and Commercial Bank Industrial and Commercial Bank
of China Limited, Ho Chi Minh of China Limited, Karachi Branch of China Limited, Doha (QFC)
City Representative Office Address: 15th & 16th Floor, Ocean Branch
th
Address: 12 floor Deutsches Haus Tower, G-3, Address: Level 20, Burj Doha, Al
building, 33 Le Duan Block-9, Scheme # 5, Corniche Street, West Bay,
Street, District 1, Ho Chi Main Clifton Road, Doha, Qatar
Minh City, Vietnam Karachi, P.O. BOX: 11217
Email: [email protected] Pakistan.P.C:75600 Email: [email protected]
Tel: +84-28-35208991 Email: [email protected] Tel: +974-44072758
Tel: +92-2135208988 Fax: +974-44072751
Industrial and Commercial Bank Fax: +92-2135208930 SWIFT: ICBKQAQA
of China Limited, Vientiane SWIFT: ICBKPKKA
Branch Industrial and Commercial Bank
Address: Asean Road, Home Industrial and Commercial of China Limited, Riyadh Branch
No.358, Unit 12, Bank of China Limited, Mumbai Address: Level 4&8, A1 Faisaliah
Sibounheuang Village, Branch Tower Building
Chanthabouly District, Address: 801, 8th Floor, A Wing, No: 7277-King Fahad Road
Vientiane Capital, Lao PDR One BKC, C-66, G Al Olaya, Zip Code: 12212,
Email: [email protected] Block, Bandra Kurla Additional No.: 3333,
Tel: +856-21258888 Complex, Bandra East, Unit No.:95,
Fax: +856-21258897 Mumbai-400051, India Kingdom of Saudi Arabia
SWIFT: ICBKLALA Email: [email protected] Email: [email protected]
Tel: +91-2271110300 Tel: +966-112899800
Industrial and Commercial Bank Fax: +91-2271110353 Fax: +966-112899879
of China Limited, Phnom Penh SWIFT: ICBKINBB SWIFT: ICBKSARI
Branch
Address: 17th Floor, Exchange Industrial and Commercial Bank Industrial and Commercial
Square, No. 19–20, of China Limited, Dubai (DIFC) Bank of China Limited, Kuwait
Street 106, Phnom Penh, Branch Branch
Cambodia Address: Floor 5&6, Gate Village Address: Building 2A(Al-Tijaria
Email: [email protected] Building 1, Dubai Tower), Floor 7&8,
Tel: +855-23955880 International Financial Al-Soor Street, Al-Morqab,
Fax: +855-23965268 Center, Dubai, Block 3, Kuwait City,
SWIFT: ICBKKHPP United Arab Emirates Kuwait
P.O. Box: 506856 Email: [email protected]
Industrial and Commercial Email: [email protected] Tel: +965-22281777
Bank of China Limited, Yangon Tel: +971-47031111 Fax: +965-22281799
Branch Fax: +971-47031199 SWIFT: ICBKKWKW
Address: ICBC Center, Crystal SWIFT: ICBKAEAD
Tower, Kyun Taw Road, Industrial and Commercial
Kamayut Township, Industrial and Commercial Bank Bank of China Limited, Sydney
Yangon, Myanmar of China Limited, Abu Dhabi Branch
Tel: +95-019339258 Branch Address: Level 42, Tower 1,
Fax: +95-019339278 Address: Addax Tower Offices International Towers,
SWIFT: ICBKMMMY 5207, 5208 and 5209, 100 Barangaroo Avenue,
Al Reem Island, Abu Dhabi, Sydney NSW 2000
Industrial and Commercial Bank United Arab Emirates Australia
of China (Almaty) Joint Stock P.O. Box 62108 Email: [email protected]
Company Email: [email protected] Tel: +612-94755588
Address: 150/230, Abai/Turgut Tel: +971-24998600 Fax: +612-82885878
Ozal Street, Almaty, Fax: +971-24998622 SWIFT: ICBKAU2S
Kazakhstan. 050046 SWIFT: ICBKAEAA
Email: [email protected] Industrial and Commercial Bank
Tel: +7-7272377085 of China (New Zealand) Limited
SWIFT: ICBKKZKX Address: Level 11, 188 Quay Street,
Auckland 1010,
New Zealand
Email: [email protected]
Tel: +64-93747288
Fax: +64-93747287
SWIFT: ICBKNZ2A

310
 List of Domestic and Overseas Branches and Offices

Industrial and Commercial Bank Industrial and Commercial Industrial and Commercial Bank
of China Limited, Auckland Bank of China (Europe) S.A. of China (Europe) S.A. Greece
Branch Amsterdam Branch Representative Office
Address: Level 11, 188 Quay Street, Address: Johannes Vermeerstraat Address: Amerikis 13, Athens 106
Auckland 1010, 7–9, 1071 DK, 72 Greece
New Zealand Amsterdam, Email: [email protected]
Email: [email protected] the Netherlands Tel: +30-2166868888
Tel: +64-93747288 Email: [email protected] Fax: +30-2166868889
Fax: +64-93747287 Tel: +31-205706666
SWIFT: ICBKNZ22 Fax: +31-205706603 ICBC (London) PLC
SWIFT: ICBKNL2A Address: 81 King William Street,
Europe London EC4N 7BG, UK
Industrial and Commercial Bank Email: [email protected]
Industrial and Commercial Bank of China (Europe) S.A. Brussels Tel: +44-2073978888
of China Limited, Frankfurt Branch Fax: +44-2073978899
Branch Address: 81, Avenue Louise, SWIFT: ICBKGB2L
Address: Bockenheimer Anlage 15, 1050 Brussels, Belgium
60322 Frankfurt am Main, Email: [email protected] Industrial and Commercial
Germany Tel: +32-2-5398888 Bank of China Limited, London
Email: [email protected] Fax: +32-2-5398870 Branch
Tel: +49-6950604700 SWIFT: ICBKBEBB Address: 81 King William Street,
Fax: +49-6950604708 London EC4N 7BG, UK
SWIFT: ICBKDEFF Industrial and Commercial Bank Email: [email protected]
of China (Europe) S.A. Milan Tel: +44-2073978888
Industrial and Commercial Bank Branch Fax: +44-2073978890
of China Limited, Luxembourg Address: Via Tommaso Grossi 2, SWIFT: ICBKGB3L
Branch 20121, Milano, Italy
Address: 32, Boulevard Royal, Email: [email protected] ICBC Standard Bank PLC
L-2449 Luxembourg, Tel: +39-0200668899 Address: 20 Gresham Street,
B.P.278 L-2012 Fax: +39-0200668888 London, United Kingdom,
Luxembourg SWIFT: ICBKITMM EC2V 7JE
Email: [email protected] Email: londonmarketing@
Tel: +352-2686661 Industrial and Commercial Bank icbcstandard.com
Fax: +352-26866666 of China (Europe) S.A. Sucursal Tel: +44-2031455000
SWIFT: ICBKLULL en España Fax: +44-2031895000
Address: Paseo de Recoletos, 12, SWIFT: SBLLGB2L
Industrial and Commercial Bank 28001, Madrid, España
of China (Europe) S.A. Email: [email protected] Bank ICBC (joint stock
Address: 32, Boulevard Royal, Tel: +34-912168837 company)
L-2449 Luxembourg, Fax: +34-912168866 Address: Building 29,
B.P.278 L-2012 SWIFT: ICBKESMM Serebryanicheskaya
Luxembourg embankment, Moscow,
Email: [email protected] Industrial and Commercial Bank Russia Federation 109028
Tel: +352-2686661 of China (Europe) S.A. Poland Email: [email protected]
Fax: +352-26866666 Branch Tel: +7-4952873099
SWIFT: ICBKLULU Address: Plac Trzech Krzyży 18, Fax: +7-4952873098
00-499, Warszawa, Poland SWIFT: ICBKRUMM
Industrial and Commercial Bank Email: [email protected]
of China (Europe) S.A. Paris Tel: +48-222788066 ICBC Turkey Bank Anonim
Branch Fax: +48-222788090 Şirketi
Address: 73 Boulevard Haussmann, SWIFT: ICBKPLPW Address: Maslak Mah. Dereboyu,
75008, Paris, France 2 Caddesi
Email: [email protected] No:13 34398 Sariyer,
Tel: +33-140065858 İSTANBUL
Fax: +33-140065899 Email: [email protected]
SWIFT: ICBKFRPP Tel: +90-2123355011
SWIFT: ICBKTRIS

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List of Domestic and Overseas Branches and Offices

Industrial and Commercial Industrial and Commercial Bank Industrial and Commercial Bank
Bank of China Limited, Prague of China Financial Services LLC of China (Argentina) S.A.U.
Branch, odštěpný závod Address: 1633 Broadway, Address: Blvd. Cecilia Grierson 355,
Address: 12F City Empiria, 28th Floor, New York, (C1107 CPG)
Na Strži 1702/65, NY, 10019, USA Buenos Aires, Argentina
14000 Prague 4-Nusle, Email: [email protected] Email: [email protected]
Czech Republic Tel: +1-2129937300 Tel: +54-1148203784
Email: [email protected] Fax: +1-2129937349 Fax: +54-1148201901
Tel: +420-237762888 SWIFT: ICBKUS3F SWIFT: ICBKARBA
Fax: +420-237762899
SWIFT: ICBKCZPP Industrial and Commercial Bank ICBC Investments Argentina
of China (Canada) S.A.U. Sociedad Gerente de
Industrial and Commercial Bank Address: Unit 3710, Bay Adelaide Fondos Comunes de Inversión
of China Limited, Beijing, Centre, 333 Bay Street, Address: Blvd.Cecilia Grierson 355,
Zurich Branch Toronto, Ontario, Piso 14, (C1107CPG)
Address: Nüschelerstrasse 1, M5H 2R2, Canada CABA, Argentina
CH-8001, Zurich, Email: [email protected] Email: [email protected]
Switzerland Tel: +1-4163665588 Tel: +54-1143949432
Email: [email protected] Fax: +1-4166072000
Tel: +41-58-9095588 SWIFT: ICBKCAT2 Inversora Diagonal S.A.U.
Fax: +41-58-9095577 Address: Florida 99, (C1105CPG)
SWIFT: ICBKCHZZ Industrial and Commercial Bank CABA, Argentina
of China Mexico S.A. Tel: +54-1148202200
ICBC Austria Bank GmbH Address: Paseo de la Reforma 250,
Address: Kolingasse 4, Piso 18, Col. Juarez, Industrial and Commercial
1090 Vienna, Austria C.P.06600, Bank of China Limited, Panama
Email: [email protected] Del. Cuauhtemoc, Branch
Tel: +43-1-9395588 Ciudad de Mexico Address: MMG Tower | 20th Floor |
Fax: +43-1-9395588-6800 Email: [email protected] Ave. Paseo del Mar |
SWIFT: ICBKATWW Tel: +52-5541253388 Costa del Este
SWIFT: ICBKMXMM Panama City,
Americas Republic of Panama
Industrial and Commercial Bank Email: [email protected]
Industrial and Commercial Bank of China (Brasil) S.A. Tel: +507-3205901
of China Limited, New York Address: Av. Brigadeiro Faria Lima, SWIFT: ICBKPAPA
Branch 3477-Block B-6 andar-SAO
Address: 725 Fifth Avenue, PAULO/SP-Brasil Africa
20th Floor, New York, Email: [email protected]
NY 10022, USA Tel: +55-1123956600 Industrial and Commercial
Email: [email protected] SWIFT: ICBKBRSP Bank of China Limited, African
Tel: +1-2128387799 Representative Office
Fax: +1-2125752517 ICBC PERU BANK Address 1: 4 7 Price Drive,
SWIFT: ICBKUS33 Address: Calle Las Orquideas 585, Constantia, Cape Town,
Oficina 501, San Isidro, South Africa, 7806
Industrial and Commercial Bank Lima, Peru Address 2: T 11, 2nd Floor East,
of China (USA) NA Email: [email protected] 30 Baker Street,
Address: 1185 Avenue of the Americas, Tel: +51-16316800 Rosebank,
16th Floor, New York, Fax: +51-16316802 Johannesburg, Gauteng,
NY 10036 SWIFT: ICBKPEPL South Africa, 2196
Email: [email protected] Email: [email protected]
Tel: +1-2122388208 Tel: +27-608845323
Fax: +1-2122193211
SWIFT: ICBKUS3N

312
 Stock Code: 1398

2021 Annual Report

2021
Annual Report

中國北京市西城區復興門內大街55號 郵編：100140
55 Fuxingmennei Avenue, Xicheng District, Beijing, China Post Code: 100140
www.icbc.com.cn, www.icbc-ltd.com