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1、CREATE SHARED VALUE2023Bank of Communications Co.,Ltd.Annual ReportBank of Communications Co.,Ltd.(A joint stock company incorporated in the Peoples Republic of China with limited liability)Address and Postcode188 Yin Cheng Zhong Lu,Pudong New District,Shanghai,P.R.CBank of Communications Co.,Ltd.An
2、nual Report 2023 H ShareIMPORTANT REMINDERSI.The Board of Directors,the Board of Supervisors and Directors,Supervisors,Senior Management of the Bank are responsible for the authenticity,accuracy and completeness of the Annual Report,free of false records,misleading statements or material omissions a
3、nd assume individual and joint legal responsibilities.II.The 2023 Annual Report and its summary of the Bank were reviewed and approved at the 12th Meeting of the 10th Session of the Board of Directors of the Bank on 27 March 2024.The number of directors who should attend the meeting was 18,with 18 d
4、irectors attending the meeting in person.III.Mr.Ren Deqi,Chairman of the Bank,Mr.Liu Jun,Principal in charge of accounting and Mr.Chen Yu,Head of Accounting Department represent that they are responsible for the authenticity,accuracy and completeness of the financial statements in the Annual Report.
5、IV.The Groups financial statements that were prepared in accordance with China Accounting Standards were audited by KPMG Huazhen LLP.Those prepared in accordance with International Financial Reporting Standards were audited by KPMG,both with unqualified auditors reports issued.V.The proposal on prof
6、it distribution for the year of 2023 was reviewed by the Board of Directors:based on the total issued ordinary shares of 74.263 billion of the Bank as at the end of the Reporting Period,a cash dividend of RMB0.375(including tax)per share would be distributed to registered shareholders of A share and
7、 H share,totalling RMB27.849 billion.There is no proposal on bonus share or proposal on conversion of capital reserve into share capital for the current year.VI.Prospective statements involved in the report,such as future plans and development strategies,do not constitute a substantive commitment of
8、 the Group to investors.Investors and stakeholders are required to keep sufficient risk awareness and understand the differences between plan,forecasting and commitment.VII.The Groups operation is mainly exposed to risks including credit risk,market risk,operational risk and compliance risk.The Grou
9、p has taken and will continue to take various steps to effectively manage risks.For more details which requires investors attention,please refer to the section of“Management Discussion and Analysis Risk Management”.1Bank of Communications Co.,Ltd.Annual Report 2023 H ShareContentsImportant Reminders
10、2Definitions3General Information6Financial Highlights8Statement from Chairman of the Board of Directors12Statement from the President16Statement from the Chairman of the Board of SupervisorsManagement Discussion and Analysis19Economic and Financial Environment20Financial Statement Analysis38Business
11、 Review61Risk Management71Outlook72Major Concerns of Capital MarketCorporate Governance74Changes in Shares and Shareholders82Corporate Governance125Report of the Board of Directors132Report of the Board of Supervisors137Environmental and Social Responsibilities145Significant Events150Organisation Ch
12、art and List of InstitutionsFinancial Statements and Others158Independent Auditors Report167Consolidated Financial Statements174Notes to the Consolidated Financial Statements308Unaudited Supplementary Financial Information313Supplementary Information on Leverage Ratio,Liquidity Coverage Ratio and Ne
13、t Stable Funding Ratio2Bank of Communications Co.,Ltd.Annual Report 2023 H ShareDEFINITIONSThe following terms will have the following meanings in this report unless otherwise stated:“Bank”,“BoCom”Bank of Communications Co.,Ltd.“Group”The Bank and its subsidiaries“Ministry of Finance”Ministry of Fin
14、ance of the Peoples Republic of China“HSBC”The Hongkong and Shanghai Banking Corporation Limited“SSF”The National Council for Social Security Fund“PBOC”The Peoples Bank of China“NAFR”National Administration of Financial Regulation“CSRC”China Securities Regulatory Commission“SSE”The Shanghai Stock Ex
15、change“Hong Kong Stock Exchange”The Stock Exchange of Hong Kong Limited“Hong Kong Listing Rules”The Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited“Corporate Governance Code”Appendix C1 Corporate Governance Code of Hong Kong Listing Rules“the Articles of Associat
16、ion”The Articles of Association of Bank of Communications Co.,Ltd.“Win to Fortune”A corporate and interbank wealth management brand of the Bank,providing comprehensive one-stop wealth management solutions for corporate,government institutions and interbank financial customers through intelligent fin
17、ancial service and digital transformation.“OTO Fortune”A main brand of retail business of the Bank with the core value of“creating and sharing abundant wealth with noble virtue”devoted to realising value maintenance and appreciation of wealth for customers.“BoCom Yinongtong”The Banks unified brand o
18、f inclusive finance,comprising the online product“Inclusive e-Loan”and the offline product.“BoCom Zhanyetong”The Banks unified brand of rural rejuvenation,comprising the online product“Xingnong e-Loan”and the offline product.“Personal Mobile Banking”A mobile APP providing online business processing
19、and other services to personal customers of the Bank and covering a variety of financial products and life service needs of customers.“Corporate Mobile Banking”A portable and convenient channel providing online account opening,account enquiry,reconciliation management,transfer and payment,wealth man
20、agement and investment,financial information,business signing and termination for corporate customers through APPs on mobile phones and tablet computers,with close and convenient channels.“Corporate Online Banking”An electronic transaction system of the Bank providing financial services such as acco
21、unt enquiry,corporate payment,cash management,international business,wealth management and investment and financial services for corporate customers through the Internet.“Go Pay”A one-stop digital service platform of finance and life for all customers.“Benefit Loan”An online credit consumption loan
22、product of the Bank for qualified customers.“BOCOM On-cloud”An online and offline service brand,practicing the service concept of“institution online,employee online,product online,and service online”,building a“cloud outlet,cloud teller,and cloud butler”system based on remote video services,meeting
23、customers on-line and digitalised service needs through a new mode of online service as screen-to-screen service.“Yuan”Renminbi Yuan(RMB)This annual report is prepared in both Chinese and English.Should there be any inconsistency between the Chinese and English versions,the Chinese version should pr
24、evail.3Bank of Communications Co.,Ltd.Annual Report 2023 H ShareGENERAL INFORMATIONI.CORPORATE INFORMATIONChinese name:交通銀行股份有限公司Chinese abbreviation:交通銀行English name:Bank of Communications Co.,Ltd.Legal representative:Ren DeqiAuthorised representatives:Ren Deqi,He ZhaobinSecretary of the Board of D
25、irectors and Company Secretary:He ZhaobinRegistered address:188 Yin Cheng Zhong Lu,(Shanghai)Pilot Free Trade Zone,PRCContact and address:188 Yin Cheng Zhong Lu,Pudong New District,ShanghaiPostal code:200120Tel:86-21-58766688Fax:86-21-58798398E-mail:Official website:,Principal place of business in H
26、ong Kong:20 Pedder Street,Central,Hong KongInformation Disclosure Channels and Places Where the Annual Report is AvailableA share:China Securities Journal,Shanghai Securities News,Securities Times and website of the SSE at H share:Website of HKEXnews at www.hkexnews.hkPlaces where the annual report
27、is available:Board of Directors Office of the Bank and principal business locationsInformation of SharesStock exchangeStock exchangeStock nameStock codeA ShareShanghai Stock ExchangeBank of Communications601328H ShareThe Stock Exchange of Hong Kong LimitedBANKCOMM03328Domestic Preference ShareShangh
28、ai Stock ExchangeBOCOM PREF1360021Domestic auditor:KPMG Huazhen LLP 8/F,Office Tower E2,Oriental Plaza,1 East Chang An Avenue,Dongcheng District,Beijing,PRCName of auditor signed:SHI Haiyun,Li LiInternational auditor:KPMG(Registered Public Interest Entity Auditor)8/F,Princes Building,10 Chater Road,
29、Central,Hong Kong,PRCName of auditor signed:Chan Siu Tung ThomasPRC legal advisor:AllBright Law OfficesHong Kong legal advisor:DLA Piper Hong KongShare Registrar and Transfer OfficeA Share:China Securities Depository and Clearing Corporation Limited,Shanghai BranchNo.188 South Yanggao Road,Pudong Ne
30、w District,Shanghai,P.R.ChinaH Share:Computershare Hong Kong Investor Services LimitedFlat 1712-1716,17th Floor,Hopewell Centre,183 Queens Road East,Wanchai,Hong KongOther InformationUnified social credit code:9131000010000595XD4Bank of Communications Co.,Ltd.Annual Report 2023 H ShareGENERAL INFORM
31、ATIONII.COMPANY PROFILE AND PRINCIPAL ACTIVITIESFounded in 1908,the Bank is one of banks with the longest history in modern China.The Bank reopened after reorganisation on 1 April 1987 and became the first nationwide state-owned joint-stock commercial bank in China,with Head Office located in Shangh
32、ai.The Bank was listed on the Hong Kong Stock Exchange in June 2005 and on the Shanghai Stock Exchange in May 2007.In 2023,the Bank ranked 9th among global banks in terms of tier-1 capital.Guided by the strategic goal of“building a world-class banking group with distinctive advantages”,the Group reg
33、arded green finance as the keynote for operation development,continued to build four major business characteristics,which include inclusive finance,trade finance,sci-tech finance and wealth finance.The Group continuously improved the five professional capabilities of customer management,technology l
34、eadership,risk management,co-operation and resource allocation.With the construction of“Shanghai Base”and digital transformation as strategic breakthroughs,the Group was guided towards a high-quality development.Upon approval by the NAFR,the Bank provides comprehensive financial services including d
35、eposits and loans,supply chain finance,cash management,international settlement and trade financing,investment banking,asset custody,wealth management,bank cards,private banking,treasury businesses,etc.for 2.6192 million corporate customers and 192 million retail customers through online service cha
36、nnels such as mobile banking and online banking,as well as over 2,800 domestic outlets and 23 overseas branches(subsidiaries)and representative offices.The Group is involved in businesses such as financial leasing,fund,wealth management,trust,insurance,overseas securities,and debt-to-equity swap thr
37、ough wholly-owned or controlling subsidiaries.As a long-standing large-scale state-owned banking group with a long history,the bank will always keep in mind the“countrys most fundamental interests”,maintain strategic stability,strengthen comprehensive risk controls,practice the concept of“providing
38、finance for the people”,strive to provide high-quality services to our customers,create more value for shareholders,build a happy home for employees,and make greater contributions to society.During the Reporting Period,the Groups operating mode,primary businesses and key performance drivers had no s
39、ignificant change.5Bank of Communications Co.,Ltd.Annual Report 2023 H ShareGENERAL INFORMATIONTOP 9 Top 1000 World Banks 2023(ranked 9)The Banker(UK)First Prize of Shanghai Financial InnovationShanghai Municipal Peoples GovernmentFirst Prize of FinTech Development AwardThe Peoples Bank of ChinaBest
40、 Personal Mobile Banking AwardChina Financial Certification AuthorityBest Corporate Mobile Banking and Corporate Internet Banking AwardsChina Financial Certification AuthorityBank of Communications Financial Leasing Co.,Ltd.Gold Medal List of Chinese Financial Institutions“Best Financial Leasing Com
41、pany of the Year”Financial TimesBanking ESG Practices Green Finance Exemplary AwardChina Banking and Insurance NewsBest Financial Leasing Company of the YearGlobal Leasing Industry Competitiveness ForumBank of Communications Schroder Fund Management Co.,Ltd.Golden Bull Fund Management CompanyChina S
42、ecurities JournalTop 10 Star Fund Company AwardSecurities TimesGolden Fund Top Company AwardShanghai Securities JournalData Governance Best Practice AwardInternational Data Management AssociationBest Custodian,Pension,ChinaThe AssetESG Best Practice Examples for Listed Companies 2023China Listed Com
43、panies AssociationBOCOM Wealth Management Co.,Ltd.Golden Bull Award on Bank Wealth Management Company China Securities JournalThe Golden Shell Award on Excellent Wealth Management Company in 202321st Century Business HeraldBank of Communications International Trust Co.,Ltd.Integrity Trust Excellent
44、Company AwardShanghai Securities NewsGolden Bull Award for One-Year Trust TOF/FOF ProductsChina Securities JournalTop Ten Family Trust Management Innovation AwardThe BankerBOCOM MSIG Life Insurance Company LimitedExamples of Excellence in ESG PracticesThe Financial SectorGold Medal Insurance Product
45、 Ark AwardSecurities TimesIII.HONOURS AND REWARDS6Bank of Communications Co.,Ltd.Annual Report 2023 H ShareFINANCIAL HIGHLIGHTSI.KEY FINANCIAL DATA AND FINANCIAL INDICATORSThe Group has implemented IFRS 17 Insurance Contracts and its amendments as of January 1,2023,which was issued by IASB in May 20
46、17 and June 2020(the“new insurance contracts standard”).The new insurance contracts standard mainly includes the following revisions:1.adjusting the guidelines for recognising the revenue arising from insurance services;and 2.revising the method of measuring liabilities arising from insurance contra
47、cts.These changes in accounting policies did not have any material impact on the Groups financial position and operating results.In accordance with the transition provisions,the Group made retrospective adjustments to and re-presented the financial reports for each period of 2022 in accordance with
48、the new insurance contracts standard,and the relevant data for the year 2022 in this announcement have been re-presented in accordance with the financial reports retrospectively adjusted.As at the end of the Reporting Period,key financial data and financial indicators prepared by the Group under IFR
49、Ss are as follows:Items202320222022202120202019(Restated)(Before restatement)Full year results(in millions of RMB)Net interest income164,123169,882169,937161,693153,336144,083Net fee and commission income43,00444,85544,63947,57345,08643,625Net operating income258,014257,346273,528269,748246,724232,8
50、57Credit impairment losses56,90860,41160,41166,37162,05951,954Operating expenses77,36976,15176,82574,54566,00466,560Profit before tax99,69898,11598,21593,95986,42588,200Net profit(attributable to shareholders of the Bank)92,72892,10292,14987,58178,27477,281As at the end of the year(in millions of RM
51、B)Total assets14,060,47212,991,57112,992,41911,665,75710,697,6169,905,600Loans and advances to customers17,957,0857,294,9657,296,1556,560,4005,848,4245,304,275Total liabilities12,961,02211,958,04911,956,67910,688,5219,818,9889,104,688Deposits from customers18,551,2157,949,0727,949,0727,039,7776,607,
52、3306,072,908Shareholders equity(attributable to shareholders of the Bank)1,088,0301,022,0241,023,409964,647866,607793,247Per share(in RMB)Earnings per share(attributable to the ordinary shareholders of the Bank)21.151.141.141.100.991.00Net assets per share(attributable to the ordinary shareholders o
53、f the Bank)312.3011.4111.4310.649.879.347Bank of Communications Co.,Ltd.Annual Report 2023 H ShareFINANCIAL HIGHLIGHTSItems202320222022202120202019(Restated)(Before restatement)Key financial ratios(%)Return on average assets0.690.750.750.800.770.80Return on weighted-average shareholders equity29.681
54、0.3410.3310.7610.3511.20Net interest margin41.281.481.481.561.571.58Cost-to-income ratio530.0429.6528.1427.6726.8128.63Non-performing loan ratio1.331.351.351.481.671.47Provision coverage ratio195.21180.68180.68166.50143.87171.77Capital adequacy ratios(in millions of RMB unless otherwise stated)Net c
55、apital61,351,1161,250,3171,250,3171,139,9571,021,246911,256Including:Ne t common equity tier-1 capital6905,394840,164840,164783,877727,611689,489Other tier-1 capital6176,289176,480176,480176,348134,610100,057Tier-2 capital6269,433233,673233,673179,732159,025121,710Risk-weighted assets68,850,7868,350
56、,0748,350,0747,379,9126,695,4626,144,459Capital adequacy ratio(%)615.2714.9714.9715.4515.2514.83Tier-1 capital adequacy ratio(%)612.2212.1812.1813.0112.8812.85Common equity tier-1 capital adequacy ratio(%)610.2310.0610.0610.6210.8711.22Notes:1.Loans and advances to customers do not include interest
57、receivable of related loans and advances.Deposits from customers include interest payable of related deposits.2.Calculated pursuant to the requirements of Regulations on the Preparation of Information Disclosure for Companies Offering Securities to the Public No.9 Calculation and Disclosure of Retur
58、n on Net Assets and Earnings per Share(2010 Revision)issued by the China Securities Regulatory Commission(the“CSRC”).3.Refer to shareholders equity attributable to the ordinary shareholders of the Bank after the deduction of other equity instruments against the total issued ordinary shares as at the
59、 end of the period.4.Represented the ratio of net interest income to total average interest-bearing assets.5.Calculated pursuant to China Accounting Standards,as business and management fees divided by operating income,which is consistent with the financial report prepared under China Accounting Sta
60、ndards.6.Calculated pursuant to the Administrative Measures for the Capital Management of Commercial Banks(for Trial Implementation)by the Regulatory Authorities.8Bank of Communications Co.,Ltd.Annual Report 2023 H ShareSTATEMENT FROM CHAIRMAN OF THE BOARD OF DIRECTORSIn 2023,BoCom strictly abided b
61、y the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,and fully implemented the spirit of the 20th National Congress of the Communist Party of China,the Central Financial Work Conference and the Central Economic Work Conference.The Bank adhered to the general p
62、rinciple of making progress while maintaining stability and Ren DeqiChairman of the Board of Directorscoordinating development with security.With concerted efforts across the entire Bank,we successfully achieved the Groups operating targets.We were able to“make progress and improve quality while mai
63、ntaining stability”.Our comprehensive strength has reached a new level.The Groups total assets exceeded RMB14 trillion;both net operating income and net profit achieved positive growth;and the non-performing loan ratio declined steadily.These trends signify the Groups stable upward development,as we
64、ll as its positive prospects going forward.We were identified as a global systemically important bank(G-SIB)for the first time and ranked 9th in the“Top 1000 World Banks”published by The Banker magazine in the UK,demonstrating market recognition of our persistent efforts.The capital market also prov
65、ided positive feedback on BoComs stable development and long-term investment value,as our A-share and H-share prices rose by 29%and 17%respectively in 2023.By focusing on our strategic features,we consistently optimised our business structure and implemented strategies more effectively.We fulfilled
66、our responsibilities as a leading state-owned bank.We implement the Groups“14th Five-Year Plan”,build business strength in inclusive 9Bank of Communications Co.,Ltd.Annual Report 2023 H ShareSTATEMENT FROM CHAIRMAN OF THE BOARD OF DIRECTORSfinance,trade finance,sci-tech finance and wealth finance,st
67、rengthen the foundation for green finance,and closely integrate all the aforementioned efforts with the implementation of the“five priorities”of finance.The Bank provided precise support to the real economy,while improving the coverage and convenience of inclusive financial services.The balance of i
68、nclusive loans provided to small and micro enterprises rose by 29%,and the number of loan customers increased by 17%,as compared with the end of the previous year.The growth of the Banks consumption loans and business operating loans reached the highest level in its history,with the former increasin
69、g by 86%compared with the end of the previous year.By deeply participating the new“dual circulation”development,the Bank took measures to strengthen,supplement and extend the industrial chain,resulting in the rapid development of our industrial chain of the financing business.We focused on supportin
70、g high-level technological self-reliance and self-improvement as well as building the“BoCom Sci-tech Innovation”product series.As a result,the Banks balance of strategic emerging industry loans increased by 31%compared with the end of the previous year,with“SRDI(specialized,refined,differential,inno
71、vative)”small and medium-sized enterprises loans growing rapidly.We meet the diversified needs of wealth management and its individual financial assets under management(AUM)increased by 8%over the end of the previous year.We also enhanced financial support for the low-carbon transformation of tradit
72、ional industries and innovative development of green industries.The balance of green loans grew by nearly 30%over the end of the previous year.With construction of“Shanghai Base”and digital transformation as strategic breakthroughs,we drive the Banks strategic initiatives.To this end,we fully levera
73、ged the advantages of“Shanghai Base”and supported the development of the“five centres”in the city.Meanwhile,we focused on areas such as“Credit for Medical Treatment”,sci-tech finance,BOCOM-Government Connect,consumption and pensions to encourage innovative business to take root in the entire Bank.Bu
74、siness contributed by Shanghai continued to increase,with the net operating income of the Shanghai branch accounting for 10.5%of domestic branches.In addition,to align with trends in the digital economy,we consistently promoted the establishment of a new digitalised BoCom.To this end,we focused on p
75、rioritizing the retail business to develop a digital operating system and promote the overall construction of the enterprise-level structure,middle office and product factory.The Bank also launched new versions of personal mobile banking,corporate mobile banking and corporate online banking,and cult
76、ivated strong connectivity between BoCom On-cloud and physical outlets.We also continued to enhance our application of artificial intelligence(AI)in scenarios such as customer service,risk mitigation and control,and improve our online,scenario-based and intelligent services.10Bank of Communications
77、Co.,Ltd.Annual Report 2023 H ShareSTATEMENT FROM CHAIRMAN OF THE BOARD OF DIRECTORSWe strengthened risk management and closely monitored and managed the source of risk,so as to consolidate the foundation for strategic implementation.We continued to improve the Groups comprehensive risk management sy
78、stem and implemented the“four early”requirements in order to strengthen risk mitigation and control in key areas,promote standardized risk governance in subsidiaries,and strengthen the prudent and compliant operations of overseas branches.We also continuously enhanced our core capabilities in risk m
79、anagement,achieved orderly progress in the digital transformation of risk management,and improved our internal control and compliance management system.In addition,we achieved remarkable results in our“Year of Asset Quality Consolidation”campaign,with the Groups non-performing loan ratio decreasing
80、by 0.02 percentage point from the previous year to 1.33%,and the provision coverage ratio increasing by 14.53 percentage points over the previous year to 195.21%.We fulfilled our social responsibility,pursued our mission and promoted shared prosperity.We have supported programs for persons with disa
81、bilities for 16 consecutive years and donated a total of RMB112 million to the China Foundation for Disabled Persons.The Bank has also followed the political and people-oriented principle of protecting the rights and interests of financial consumers and was rated A in the Peoples Bank of Chinas Cons
82、umer Protection Rating.We actively supported rural revitalisation,social welfare initiatives,as well as rescue and disaster relief efforts.We donated more than RMB58 million to public welfare initiatives.We also continued to pursue innovation of rural financial products and services,and we strived t
83、o provide diversified and comprehensive financial support for“agriculture,rural areas and farmers”.Due to our active efforts to support comprehensive rural revitalisation,agriculture-related loans recorded double-digit growth for the third consecutive year.We receive care and support from the commun
84、ity during this year.The Board of Supervisors precisely and effectively carried out its duties,Senior Management and all staff devoted to their duties diligently,contributing significantly to the reform and development of BoCom.On behalf of the Board of Directors,I would like to extend my deep grati
85、tude to each of these individuals.In 2023,the Board of Directors recommended a distribution of cash dividends of RMB0.375 per ordinary share,totaling RMB27.849 billion,which represented 32.67%of the net profit.BOCOM has always shared the achievements of reform and development with shareholders and h
86、as remained cash dividend ratio above 30%for 11 consecutive years.In 2024,the external environment will be more complicated,tough and uncertain.The domestic economic cycle faces various obstacles,coupled with inadequate market demand,overcapacity in some industries,weak social expectations and the e
87、mergence of potential risks.However,with the rapid development of new quality productive forces,the quick implementation of policy packages to drive market demand,the continuous implementation of macroeconomic policies,the opportunities brought by development in key areas,and the implementation of m
88、ajor risk mitigation and control policies,Chinas economy will continue to improve and its long-term positive outlook remains unchanged.We are confident in this trend because the favourable factors outweigh the unfavourable factors,and there are more opportunities than challenges.The countrys economy
89、 still has huge untapped potential;and going forward,policy implementation and structural 11Bank of Communications Co.,Ltd.Annual Report 2023 H ShareSTATEMENT FROM CHAIRMAN OF THE BOARD OF DIRECTORSadjustments will bring about broader prospects for business development.Against this backdrop,we will
90、scientifically analyze the market landscape,seize development opportunities,focus on effectively implementing the“five priorities”of finance,effectively promote the“One-Four-Five”strategy,deepen reform and innovation,drive transformation and development,and forge ahead in building a world-class bank
91、ing group with distinctive strengths.Continue to build strategic features.Going forward,the Bank will focus on the virtuous circle of“Sci-tech Industry Finance”to build a sci-tech financial service system that aligns with national sci-tech policies and meets the needs of sci-tech enterprises.Meanwhi
92、le,we will consistently integrate green development concepts into business development and operations to support the achievement of the“dual carbon”goals.We will also focus on the principles and development goals of inclusive finance to improve relevant mechanisms so as to expand our inclusive finan
93、ce to better meet the diversified financial needs of the public and the real economy.Moreover,the Bank will further deepen its business for elderly customers and build a set of elderly financial products,services and promotional activities to create an elderly financial service brand.We will also de
94、eply integrate into the overall plan for building a Digital China and promote all-round transformation in financial services,product offerings,business operations and management that are driven by both data and technology.In this way,we aim to increase efficiency and empower high-quality development
95、.Leverage the leading role of the“Shanghai Base”to drive high-quality development for the bank.We will continue to deeply integrate into the development of the“five centres”in Shanghai,and seize the opportunities brought about by the comprehensive pilot reforms of Pudong,the development of new quali
96、ty productive forces,and the construction of a global offshore innovation base in Lin-Gang Special Area to improve the allocation of global resources.In addition,the Bank will optimise the“one thing”mechanism and promote the innovation achievements to reach a new level of business development.We wil
97、l also align our efforts with the national strategy of regional coordinated development and leverage our experience in Shanghai Base to accelerate business development in key regions.Continue to strengthen risk prevention and control to safeguard financial stability.In the coming year,we will adhere
98、 to a systematic approach in order to strengthen the comprehensive risk governance system,address weaknesses in governance,improve professional capabilities,focus on key areas,strengthen risk source control,and strictly adhere to the bottom line of preventing systemic financial risks.The year 2024 m
99、arks the 75th anniversary of the founding of the Peoples Republic of China,and it is also an important year for the implementation of the Groups 14th“Five-Year Plan”.We believe that grand aspirations make for grand contributions,and that exceptional diligence begets exceptional achievements.In 2024,
100、we will resolutely follow the path of Chinese-style financial development,and we will be neither tempted by fanciful ideas nor guided by falsehoods.Overall,we will strive to accelerate the development as a world-class banking group with distinctive strengths,in order to make a greater contribution t
101、o the effort to build China into a strong financial power and rejuvenate the nation!12Bank of Communications Co.,Ltd.Annual Report 2023 H ShareSTATEMENT FROM THE PRESIDENTIn 2023,amid a complex and dynamic business landscape,BOCOM delivered encouraging results that demonstrated strong resilience and
102、 vitality.With the support of our shareholders and customers,as well as for the diligent work of all our colleagues,Liu JunPresidentwe support Chinese-style modernisation with financial services.During the year,we transformed the blueprint that was drawn up at the beginning of the year into real and
103、 high-quality results.At the end of 2023,the Groups total assets increased by 8.23%over the end of the previous year to RMB14.06 trillion,and net profit attributable to the parent company increased by 0.68%on a year-on-year basis to RMB92.728 billion.Meanwhile,the Groups non-performing loan ratio de
104、creased by 2 basic points over the end of the previous year to 1.33%,and the provision coverage ratio increased by 14.53 percentage points over the end of the previous year to 195.21%.Our tier-1 capital ranked 9th in the“Top 1000 World Banks”published by The Banker magazine in the UK,and we were ide
105、ntified as a global systemically important bank(G-SIB)for the first time,demonstrating market recognition of the Groups stable,positive business operations.Our profile in the global banking industry has continued to rise,and we have strengthened our leading position in the international financial ce
106、ntre of Shanghai.13Bank of Communications Co.,Ltd.Annual Report 2023 H ShareSTATEMENT FROM THE PRESIDENTOver the past year,we devoted to our original mission of stimulating the real economy with financial services.We made every effort to empower market players and drive the market cycle,align with k
107、ey national strategies,contribute to a better life for the people,and consistently improve the coverage,availability and convenience of our financial services.The balance of RMB loans increased by 10.54%,and RMB bond investment increased by 7.1%,as compared with the beginning of the year.We expedite
108、d our effort to cultivate new quality productive forces,integrated and strengthened the“BoCom Sci-tech Innovation”brand,and developed synergies among stock,bonds,loan,custody and lease businesses.The balance of loans extended to the manufacturing sector,strategic emerging industries,“specialised and
109、 new”small and medium-sized enterprises(SMEs),and green initiatives increased by 15.59%,31.12%,73.95%and 29.37%respectively over the beginning of the year,and business volume of industrial chain financing increased by 21.2%year-on-year.We innovatively introduced full coverage,full life cycle,full sc
110、enario”financial solutions to provide comprehensive financial support for private enterprises and have put financial support for private enterprises into practice and into the hearts of entrepreneurs.By continuing to enhance the online and offline integrated service effectiveness of our inclusive fi
111、nance,balance of inclusive loan provided to small and micro-sized companies increased by 29.38%,and the balance of agriculture-related loans increased by 24.80%.By leveraging the Groups advantages in licensing,investment and research resources,we constantly enriched our personal pension product matr
112、ix,and obtained a market share of over 6%in new account openings.In addition,by proactively building a“financial bridge”to promote high-level opening-up and establishing cross-border e-commerce payment platforms,our settlement volume of new forms of foreign trade increased by 73.9%.Over the past yea
113、r,we insisted on innovation-driven development and used data technology to empower business management.The integration of data and business and the integration of data and technology could bring breakthroughs that create the new development advantages of the banking industry,representing a necessary
114、 path to optimising services,efficiency and experience.Against this backdrop,we are striving to reshape our technical architecture,business model and value curve to build new advantages and establish a digitalised BoCom.We launched new versions of personal mobile banking,corporate mobile banking and
115、 corporate online banking;and completed the construction of a modular,componentised and parameter-based product factory.In addition,we cultivated strong connectivity between BoCom On-cloud and the physical outlets,and gradually launched service solutions such as“Cloud inter-bank”and“BoCom Jiaoxinton
116、g”that enable capital management and digital transformation for enterprises.Our integrated efforts to push forward digital marketing,digital decision-making,digital management,management cockpits,value management platforms and account-manager working platforms have yielded fruitful results.We have a
117、lso accelerated the planning of new digital infrastructure and Pujiang Xintongcheng Data Centre has commenced operations in accordance with the highest standards.Our multi-architecture cloud platform won first prize in the 2022 FinTech Development Awards held by the PBOC,and a series of innovative a
118、pplications we have developed for enterprise-level AI platforms are currently in full swing.The number of valid accounts increased by 8.01%year-on-year,and the number of customers in private banking,OTO and the middle-end customer group increased by more than 5%for the third consecutive year.14Bank
119、of Communications Co.,Ltd.Annual Report 2023 H ShareSTATEMENT FROM THE PRESIDENTOver the past year,we have resolutely guarded the bottom line of risk and built a solid foundation for stable development with strong risk control.To manage risk in the era of the digital economy,we deploy a three-dimens
120、ional attack and defence structure that is integrated into our business operation.Through dynamic management of various risks,this structure generates endogenous forces that promote stable,long-term development.We continued to hold the“Year of Asset Quality Consolidation”campaign to promptly update
121、industry credit policies and strengthen risk monitoring,early warnings and forward-looking risk mitigation.We also improved our domestic and overseas post-loan(post-investment)management system.During the year,the volume of new non-performing loans decreased significantly on a year-on-year basis.We
122、strived to improve the integrated risk management system of the Group,and strengthened the differentiated guidance system for overseas branches and penetration management for non-banking subsidiaries.Moreover,we accelerated the construction of a digital risk control system and promoted the reform of
123、 the internal control compliance management system.We acted prudently to fulfil our role as a global systemically important bank,pushed forward the implementation of the new capital rules in an orderly manner and maintained a stable capital adequacy ratio.The year 2024 marks the 75th anniversary of
124、the founding of the Peoples Republic of China.The Central Financial Work Conference has sounded the trumpet of a new era and a new journey for the construction of a strong financial country,and has drawn up a roadmap for high-quality financial services.As we forge ahead in pursuit of financial devel
125、opment with Chinese characteristics,we will adhere to the principle of seeking high-quality growth in the new era,and fulfil our role as an important force to support the real economy and the ballast for maintaining financial stability.We will strive for excellence and contribute to the construction
126、 China into a great country and the great national renaissance.Gaining insight into the current landscape and striking a balance between stability and progress to maintain profitability.In the face of new changes in the domestic and overseas economic landscape,we can only achieve both stability and
127、growth by precisely promoting structural adjustment and business transformation and raising efficiency.In this way,we aim to stimulate the momentum of steady development and continue forging ahead.We will strengthen proactive,prudent,full-cycle planning and operations for traditional on-balance shee
128、t business,firmly uphold our retail transformation strategy,cultivate a resilient and flexible balance sheet,and coordinate the development of the asset and liability business of different operating units.Through these efforts,we will pursue stability through growth while also laying the foundation
129、for stable growth in the future.Coordinating quality and quantity to effectively implement the“five priorities”of finance in the smooth transition between“establishment and destruction”.We accelerated our transition towards the“service bank and commercial bank”model,and take advantage of our full bu
130、siness licenses and comprehensive business operations.In addition,we will leverage our capabilities in tiered and categorised customer management,rapid product development,and risk identification and pricing to establish a comprehensive customer system that covers retail middle and high-end customer
131、s and“long tail”customers,as well as all a full-range of corporate and 15Bank of Communications Co.,Ltd.Annual Report 2023 H ShareSTATEMENT FROM THE PRESIDENTinterbank customers.Through our adaptable,highly integrated,high speed,comprehensive financial products and service solutions,we can transform
132、“customer flow”into“customer retention”and deliver quality services to customers while enhancing our ability to create value.We can also effectively identify and sensitively capture new development channels and opportunities brought about by different structural policies,strengthen financing support
133、 for the upgrading of traditional industries,and expand emerging industries and cultivate future industries according to the timeframes,locations and needs of different customers.In this way,we will continue intensively implementing the five priorities of finance.Taking advantage of risks and opport
134、unities to enhance risk management and risk prevention and mitigation.We will continue to modernise our risk governance system and capabilities,enhance the predictability,proactiveness and effectiveness of the entire process of risk identification,measurement and disposal,elevate dynamic synergies b
135、etween“technical prevention”and“manual prevention”,embed smart risk controls in different systems and processes in a scientific manner,and effectively respond to various traditional and emerging risks,so as to maintain risk response ahead of the market.We will strengthen our fundamental ability in r
136、isk pricing,gradually expand service coverage,and precisely adjust and flexibly optimise our enterprise-level middle office so as to enhance risk perception,risk pricing and risk management capabilities for large-scale complex business operations spanning multiple regions.Meanwhile,by proactively bu
137、ilding a generative artificial intelligence(AI)framework embedded with risk control elements,we can strengthen the productivity of customer acquisition and retention and loyalty,and ultimately provide convenient and seamless services,enable close integration between business and technology.Gradually
138、 adjusting our current portfolio and pursuing growth to boost new development momentum.Our current portfolio provides the foundation for new growth,and new growth can also promote the upgrading of our current portfolio.Going forward,we will promote iterative improvements across three dimensions incr
139、emental business,incremental demand from customers and incremental expansion of current products in order to proactively tap the potential of multi-dimensional production capacity,adopt robust measures to improve net interest margin and reshape the yield curve of intermediate business from a long-te
140、rm perspective.In this way,we will form a robust and sustainable system for value creation.We will continue to make vigorous and determined efforts to perform our work and fulfil our duties.We firmly believe that we can only develop great qualities through diligent work and exploration.16Bank of Com
141、munications Co.,Ltd.Annual Report 2023 H ShareSTATEMENT FROM THE CHAIRMAN OF THE BOARD OF SUPERVISORSThe coming of spring heralds the beginning of the new year.2023 was the first year in which the spirit of the 20th National Congress of the Communist Party of China(CPC)was implemented,and it was als
142、o an important year for the implementation of the 14th Five-Xu JimingChairman of the Board of SupervisorsYear Plan.BoCom has always adhered to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era,and firmly implemented the major decisions and arrangements of the
143、 CPC Central Committee.In this way,we aim to adapt and overcome different obstacles,maintain positive growth momentum,and“make progress and improve quality while maintaining stability”in our business operations.During the year,the Board of Supervisors consistently fulfilled its duties in accordance
144、with the principles of faithfulness,diligence,compliance,efficiency,precision and pragmatism,and conducted its supervisory work proactively with a strong sense of responsibility and mission,with a view to pushing forward the further modernisation of corporate governance across the entire Bank.17Bank
145、 of Communications Co.,Ltd.Annual Report 2023 H ShareSTATEMENT OF THE CHAIRMAN OF THE BOARD OF SUPERVISORSActively integrating into the new development landscape and highlighting the role of strategic supervision.With a firm grasp of the political and popular nature of financial work,we focused our
146、supervisory resources on enhancing the quality and efficiency of our financial work and supporting major national strategies,key areas and weak links.To this end,we conducted in-depth investigations and research in service areas such as rural revitalisation and coordinated regional development to fu
147、rther the implementation of national strategies in BoCom.The Group attaches great importance to the results of the“One-Four-Five”Strategy,and we are committed to implementing the retail transformation strategy from a corporate governance perspective to facilitate the implementation of key tasks and
148、achievement of results.Further improving our working mechanism to enable high-quality supervision.We intensively developed the“three professional areas”supervision model,which entails focusing on promoting in-depth professional research,engaging in professional training to enhance peoples capabiliti
149、es and holding professional forums on a range of topics,so as to effectively improve our supervisory performance in a scientific and coordinated manner.During the year,we efficiently implemented key supervisory tasks,fully covering areas such as strategy,capital and finance,and risk and internal con
150、trol and compliance;and we put forward precise,constructive supervisory comments and followed up on the rationalisation of supervisory results in an effort to raise the quality and efficiency of our supervision.Adhering to compliant operation and providing strong support for compliance in the perfor
151、mance of duties.We have always strived to strengthen Party leadership by improving corporate governance,optimising the supervisory system of the Board of Supervisors,enhancing the efficiency of discussion processes,soundly carrying out performance supervision and evaluation,strengthening interaction
152、s with internal and external supervisory bodies,and ensuring the Board of Supervisors performs its duties in a compliant manner.Bearing in mind that one must start from near to go afar,we are forging ahead with unwavering commitment and perseverance.In 2024,the Board of Supervisors will continue to
153、thoroughly study and implement the spirit of the 20th CPC National Congress,the Central Financial Work Conference and the Central Economic Work Conference,accurately grasp the responsibilities and positioning of large state-owned financial institutions,closely coordinate with various governance bodi
154、es to jointly promote the construction of a modern corporate governance system,and contribute to the high-quality development of BoCom.19Bank of Communications Co.,Ltd.Annual Report 2023 H ShareI.ECONOMIC AND FINANCIAL ENVIRONMENTIn 2023,the global economys growth momentum weakened;the rate hike cyc
155、le in major developed economies drew close to an end;and the international financial market saw significant fluctuations.By withstanding external pressure and overcoming internal difficulties,Chinas economy experienced a positive recovery,and GDP grew by 5.2%.During the year,the structure of the cou
156、ntrys economy continued to improve;the leading role played by internal circulation was strengthened;and groundbreaking achievements in innovation continued to emerge.In addition,in 2023,the shift from old to new economic drivers accelerated,and China effectively promoted high-quality development.Dur
157、ing the year,proactive fiscal policy and prudent monetary policy were closely coordinated to promote high-quality development.In particular,certain tax policies were extended and optimised to alleviate difficulties for enterprises,encourage enterprises to pursue development,boost domestic demand and
158、 assist in the construction of a modernised industrial system.In 2023,we maintained reasonable growth in monetary credit,optimised fund supplies to promote structural transformation,and coordinated total volume and structure,quantity and price,as well as internal and external balance in order to eff
159、ectively serve the development of the real economy.During the year,financial supervision was strengthened to encourage banks to better serve the real economy.Regulatory measures such as the Measures for the Risk-based Classification of Financial Assets by Commercial Banks and the Administrative Meas
160、ures for the Capital Management of Commercial Banks were issued and revised to promote the high-quality development of inclusive finance and the growth of the private economy.Meanwhile,optimised and differentiated mortgage policies were released to further improve banks risk management,improve the e
161、fficiency of capital utilisation,and provide enhanced support for key areas and weak links.The banking industry has been continuously providing better support to the real economy and meet the financing needs of major projects and projects that support peoples livelihood.Credit extension has continue
162、d to tilt towards key areas,including the manufacturing sector,strategic emerging industries,sci-tech innovation industries,and inclusive small and micro enterprises.By further reducing financing costs for the real economy and maintaining the weighted average lending rate at a historically low level
163、,we are providing robust support for the high-quality development of the economy and society.20Bank of Communications Co.,Ltd.Annual Report 2023 H ShareMANAGEMENT DISCUSSION AND ANALYSISFINANCIAL STATEMENT ANALYSISII.FINANCIAL STATEMENT ANALYSISDuring the Reporting Period,the Group adhered to the ge
164、neral guideline of making progress while maintaining stability,coordinated development alongside security,successfully achieved the Groups operating targets,maintained and consolidated the development trend of“making progress and improving quality while maintaining stability”.The scale has steadily
165、increased.As at the end of the Reporting Period,the total assets of the Group increased by 8.23%over the end of the previous year to 14.06 trillion,of which,the Groups balance of loans and advances to customers increased by 662.120 billion or 9.08%over the end of the previous year to 7.96 trillion;b
166、alance of deposits from customers increased by 602.143 billion or 7.58%over the end of the previous year to 8.55 trillion.Operating efficiency remains resilient.During the Reporting Period,the Groups net profit(attributable to shareholders of the Bank)amounted to 92.728 billion,representing a year-o
167、n-year increase of 0.68%.The Groups net operating income amounted to 258.014 billion representing a year-on-year increase of 0.26%.Asset quality continues to consolidate.As at the end of the Reporting Period,non-performing loan ratio of the Group was 1.33%,decreased by 0.02 percentage point over the
168、 end of the previous year.Provision coverage ratio was 195.21%,representing an increase of 14.53 percentage points over the end of the previous year.1.Analysis on Key Income Statement Items(1)Profit before taxDuring the Reporting Period,the Groups profit before tax increased by 1.583 billion or 1.61
169、%on a year-on-year basis to 99.698 billion.The profit growth is primarily driven by a year-on-year increase in net non-interest income and a year-on-year decrease in credit impairment losses.During the Reporting Period,net non-interest income increased by 7.35%year-on-year,while credit impairment lo
170、sses decreased by 5.80%year-on-year.21Bank of Communications Co.,Ltd.Annual Report 2023 H ShareFINANCIAL STATEMENT ANALYSISThe selected items from the income statement of the Group during the periods indicated are shown below:(in millions of RMB unless otherwise stated)20232022Increase/(decrease)(%)
171、Net interest income164,123169,882(3.39)Net non-interest income93,89187,4647.35Including:Net fee and commission income43,00444,855(4.13)Net operating income258,014257,3460.26Credit impairment losses(56,908)(60,411)(5.80)Impairment losses on other assets(1,062)(1,897)(44.02)Other operating expenses(10
172、0,346)(96,923)3.53Including:Operating expenses(77,369)(76,151)1.60Profit before tax99,69898,1151.61Income tax(6,446)(6,160)4.64Net profit93,25291,9551.41Net profit attributable to shareholders of the Bank92,72892,1020.68The breakdown of the net operating income of the Group during the periods indica
173、ted is shown below:(in millions of RMB unless otherwise stated)ItemAmount2023Proportion(%)Increase/(decrease)(%)Net interest income164,12363.61(3.39)Net fee and commission income43,00416.67(4.13)Net gains arising from trading activities23,2249.0031.90Net gains arising from financial investments7270.
174、2847.17Net share of profits of associates and joint ventures3560.1421.92Other operating income26,58010.309.76Total net operating incomes258,014100.000.26(2)Net interest incomeDuring the Reporting Period,the Groups net interest income decreased by 5.759 billion on a year-on-year basis to 164.123 bill
175、ion,accounting for 63.61%of the net operating income,which was a major component of the Groups income.Net interest income decreased on a year-on-year basis mainly due to the multiple reductions in Loan Prime Rate(LPR)and the adjustment in outstanding mortgage rates.The decrease in the average rate o
176、f return on loans to customers,resulting in a lower-than-expected growth in interest income.At the same time,the continuous increase in long-term deposits together with the increasing cost of foreign currency liabilities had resulted in an increase in interest expenses.22Bank of Communications Co.,L
177、td.Annual Report 2023 H ShareMANAGEMENT DISCUSSION AND ANALYSISFINANCIAL STATEMENT ANALYSISThe average balances,associated interest income and expenses and average rate of return or average rate of cost of the Groups interest-bearing assets and interest-bearing liabilities during the periods indicat
178、ed are shown below:(in millions of RMB unless otherwise stated)From January to December 2023From January to December 2022Average BalanceInterest income(expense)Average rate of return/(cost)Average BalanceInterest income(expense)Average rate of return/(cost)(%)(%)AssetsCash and balances with central
179、banks797,41212,3931.55766,98911,0201.44Due from and placements with banks and other financial institutions961,88729,6713.08853,32817,8862.10Loans and advances to customers7,741,769306,1503.956,933,773291,8504.21Investment securities3,324,985111,6473.362,954,94097,3113.29Interest-bearing assets12,826
180、,053459,8613.5911,509,030418,0673.63Non-interest-bearing assets1,046,0131,103,512Total assets13,872,06612,612,542Liabilities and Shareholders EquityDeposits from customers8,277,139192,9822.337,466,070163,4572.19Due to and placements from banks and other financial institutions2,177,03455,1502.532,114
181、,88244,6962.11Debt securities and others1,637,09847,6062.911,415,96240,0322.83Interest-bearing liabilities12,091,271295,7382.4510,996,914248,1852.26Shareholders equity and non-interest-bearing liabilities1,780,7951,615,628Total liabilities and shareholders equity13,872,06612,612,542Net interest inco
182、me164,123169,882Net interest spread11.141.37Net interest margin21.281.48Notes:1.Represented the difference between the average rate of return on total average interest-bearing assets and the average rate of cost of total average interest-bearing liabilities.2.Represented the ratio of net interest in
183、come to total average interest-bearing asset.During the Reporting Period,the Groups net interest income decreased by 3.39%on a year-on-year basis.The net interest spread was 1.14%,representing a decrease of 23 basis points on a year-on-year basis.The net interest margin was 1.28%,representing a decr
184、ease of 20 basis points on a year-on-year basis.The net interest spread and net interest margin for each quarter during the periods indicated are shown below:2023(%)January MarchApril JuneJuly SeptemberOctober DecemberNet interest spread1.211.161.121.07Net interest margin1.331.301.271.2223Bank of Co
185、mmunications Co.,Ltd.Annual Report 2023 H ShareFINANCIAL STATEMENT ANALYSISThe table below illustrates the impact of changes in scales and interest rates on the Groups interest income and interest expenses.The changes in scales and interest rates are based on the changes in average balance and the c
186、hanges on interest rates of interest-bearing assets and interest-bearing liabilities during the periods indicated.(in millions of RMB)Comparison between 2023 and 2022 Increase/(Decrease)due toAmountInterest rateNet increase/(decrease)Interest-bearing assetsCash and balances with central banks4389351
187、,373Due from and placements with banks and other financial institutions2,2809,50511,785Loans and advances to customers34,017(19,717)14,300Investment securities12,1742,16214,336Changes in interest income48,909(7,115)41,794Interest-bearing liabilitiesDeposits from customers17,76211,76329,525Due to and
188、 placements from banks and other financial institutions1,3119,14310,454Debt securities and others6,2581,3167,574Changes in interest expenses25,33122,22247,553Changes in net interest income23,578(29,337)(5,759)During the Reporting Period,the Groups net interest income decreased by 5.759 billion on a
189、year-on-year basis.Within this total,changes in the average balance of all assets and liabilities increased net interest income by 23.578 billion,while changes in the average rate of return and average rate of cost decreased net interest income by 29.337 billion.Interest IncomeDuring the Reporting P
190、eriod,the Groups interest income increased by 41.794 billion or 10.00%on a year-on-year basis to 459.861 billion,of which interest income from loans and advances to customers,investment securities and cash and balances with central banks accounted for 66.57%,24.28%and 2.69%of total interest income,r
191、espectively.A.Interest income from loans and advances to customersInterest income from loans and advances to customers was the largest component of the Groups interest income.During the Reporting Period,interest income from loans and advances to customers increased by 14.300 billion or 4.90%on a yea
192、r-on-year basis to 306.150 billion,which was mainly due to the increase in the average balance of loans and advances to customers by 807.996 billion or 11.65%.24Bank of Communications Co.,Ltd.Annual Report 2023 H ShareMANAGEMENT DISCUSSION AND ANALYSISFINANCIAL STATEMENT ANALYSISAnalysis of the aver
193、age income of loans and advances to customers by business type and term structure(in millions of RMB unless otherwise stated)From January to December 2023From January to December 2022AveragebalanceInterest incomeAveragerate of return Average BalanceInterest incomeAverage rate of return(%)(%)Corporat
194、e loans5,087,425195,4773.844,412,329176,3854.00 Short-term loans1,555,00651,8963.341,390,25447,5823.42 Medium and long-term loans3,532,419143,5814.063,022,075128,8034.26Personal loans2,378,156106,7984.492,286,752111,3844.87 Short-term loans597,22028,0964.70583,40828,7944.94 Medium and long-term loan
195、s1,780,93678,7024.421,703,34482,5904.85Discounted bills276,1883,8751.40234,6924,0811.74Total loans and advances to customers7,741,769306,1503.956,933,773291,8504.21B.Interest income from investment securitiesDuring the Reporting Period,interest income from investment securities increased by 14.336 b
196、illion or 14.73%on a year-on-year basis to 111.647 billion,which was mainly due to the year-on-year increase by 370.045 billion or 12.52%in the average balance of investment securities.C.Interest income from cash and balances with central banksThe cash and balances with central banks mainly included
197、 balances in statutory reserves and excess reserves.During the Reporting Period,interest income from cash and balances with central banks increased by 1.373 billion or 12.46%on a year-on-year basis to 12.393 billion,which was mainly due to the year-on-year increase by 11 basis points in the average
198、rate return on cash and balances with central banks.D.Interest income from balances due from and placements with banks and other financial institutions During the Reporting Period,the interest income from balances due from and placements with banks and other financial institutions increased by 11.78
199、5 billion or 65.89%on a year-on-year basis to 29.671 billion,which was mainly due to the year-on-year increase by 98 basis points in the average rate of return on balances due from and placements with banks and other financial institutions.Interest expensesDuring the Reporting Period,the Groups inte
200、rest expenses increased by 47.553 billion or 19.16%on a year-on-year basis to 295.738 billion.A.Interest expenses on deposits from customersDeposits from customers is the Groups primary funding source.During the Reporting Period,interest expenses on deposits from customers increased by 29.525 billio
201、n or 18.06%on a year-on-year basis to 192.982 billion,accounting for 65.25%of total interest expenses.25Bank of Communications Co.,Ltd.Annual Report 2023 H ShareFINANCIAL STATEMENT ANALYSISAnalysis of the average cost of deposits from customers by product type(in millions of RMB unless otherwise sta
202、ted)From January to December 2023From January to December 2022Average BalanceInterest expenseAveragerate of cost Average BalanceInterest expenseAveragerate of cost(%)(%)Corporate deposits5,060,932116,6802.314,800,242102,3422.13 Demand deposits1,951,09121,6191.111,911,19618,4890.97 Time deposits3,109
203、,84195,0613.062,889,04683,8532.90Personal deposits3,216,20776,3022.372,665,82861,1152.29 Demand deposits819,6591,9470.24789,4682,3940.30 Time deposits2,396,54874,3553.101,876,36058,7213.13Total due to customers8,277,139192,9822.337,466,070163,4572.19 B.Interest expenses on balances due to and placem
204、ents from banks and other financial institutionsDuring the Reporting Period,interest expenses on balances due to and placements from banks and other financial institutions increased by 10.454 billion or 23.39%on a year-on-year basis to 55.150 billion,which was mainly due to a year-on-year increase b
205、y 42 basis points in the average rate of cost of balances due to and placements from banks and other financial institutions.C.Interest expenses on debt securities issued and other interest-bearing liabilitiesDuring the Reporting Period,interest expenses on debt securities issued and other interest-b
206、earing liabilities increased by 7.574 billion or 18.92%on a year-on-year basis to 47.606 billion,which was mainly due to a year-on-year increase by 221.136 billion or 15.62%in the average balance of debt securities issued and others.(3)Net fee and commission incomeDuring the Reporting Period,the Gro
207、up fully leveraged the advantage of full licenses to improve its comprehensive service offerings and one-stop cross marketing ability,actively expanded diversified sources of revenue growth from fee income,and strived to create a“second curve”of sustained profit growth through the efficient collabor
208、ation of“commercial bank+investment bank+fund management+fund custody”,“account+payment+products+fund supervision”,“online+offline”,and“domestic+overseas”.However,affected by factors such as the continued volatility in the capital market,a reduction in product rates,and a further reduction of fees a
209、nd charges,the Group recorded a net fee and commission income of 43.004 billion,representing a year-on-year decrease of 1.851 billion,or 4.13%,among which the wealth management revenues decreased by 2.346 billion or 23.10%on a year-on-year basis,and income from the investment banking business decrea
210、sed by 572 million or 18.49%on a year-on-year basis.26Bank of Communications Co.,Ltd.Annual Report 2023 H ShareMANAGEMENT DISCUSSION AND ANALYSISFINANCIAL STATEMENT ANALYSISThe breakdown of the Groups net fee and commission income for the periods indicated is shown below:(in millions of RMB unless o
211、therwise stated)20232022Increase/(decrease)(%)Bank cards18,76219,141(1.98)Wealth management business7,80810,154(23.10)Custody and other fiduciary businesses8,0047,4966.78Agency services5,2744,9805.90Investment banking2,5213,093(18.49)Guarantee and commitment3,2012,88410.99Settlement services1,3751,3
212、640.81Others203227(10.57)Total fee and commission income47,14849,339(4.44)Less:fee and commission expense(4,144)(4,484)(7.58)Net fee and commission income43,00444,855(4.13)(4)Other non-interest incomeThe structure of other non-interest income composition of the Group during the period is as follows:
213、(in millions of RMB unless otherwise stated)20232022Increase/(decrease)(%)Net gains arising from trading activities23,22417,60731.90Net gains arising from financial investments72749447.17Share of profits of associates and joint ventures35629221.92Other operating income26,58024,2169.76Total other non
214、-interest income50,88742,60919.43 During the Reporting Period,the Group recorded other non-interest income of 50.887 billion,of which net gains arising from trading activities amounted to 23.224 billion,representing an increase of 5.617 billion or 31.90%on a year-on-year basis,mainly attributable to
215、 the year-on-year increase in related income from investments in subsidiaries equity,as well as the year-on-year increase in the gains and losses on debt and interest-rate derivatives as affected by the increased scale and the fluctuation of the market interest rates.Besides,it also attributed to th
216、e decline in the gains and losses on the translation of US dollar(long position)and the increasing costs on certain currency swap products.27Bank of Communications Co.,Ltd.Annual Report 2023 H ShareFINANCIAL STATEMENT ANALYSIS(5)Operating expensesDuring the Reporting Period,the Groups operating expe
217、nses increased by 1.218 billion or 1.60%on a year-on-year basis to 77.369 billion;the Groups cost-to-income ratio was 30.04%,representing a year-on-year increase of 0.39 percentage point.The cost-to-income ratio was around 27%if the tax exemption effect of bond interest income and other income was r
218、estored.The breakdown of the Groups operating expenses for the periods indicated is shown below:(in millions of RMB unless otherwise stated)20232022Increase/(decrease)(%)Staff remuneration,bonus,allowance and welfare27,79726,9183.27Other staff costs13,29512,3967.25Operating expenses26,75028,187(5.10
219、)Depreciation and amortisation9,5278,65010.14Total operating expenses77,36976,1511.60 (6)Asset impairment lossesDuring the Reporting Period,the Groups asset impairment losses were 57.970 billion,representing a year-on-year decrease of 4.338 billion or 6.96%,of which the credit impairment losses on l
220、oans decreased by 3.965 billion or 6.82%on a year-on-year basis to 54.137 billion.The Group continued to adhere to the Implementation Measures for Expected Credit Losses Management in Commercial Banks and dynamically updated the impairment models parameters to fully reflect the impact of forward-loo
221、king information on expected credit losses.Concurrently,the Group continued to adhere to regulatory requirements of“accurate asset classification,full provision of reserves,and expedite disposal”to strengthen asset quality by making reasonable and adequate provisions based on accurate measurement,th
222、erefore,sufficient risk resistance and loss absorption capacity has been well established.(7)Income taxDuring the Reporting Period,the Groups income tax expenses increased by 286 million or 4.64%on a year-on-year basis to 6.446 billion.The effective tax rate of 6.47%was lower than the statutory tax
223、rate of 25%,which was mainly due to the tax exemption on interest income from treasury bonds and local treasury bonds held by the Group pursuant to the relevant tax provisions.2.Analysis on Key Balance Sheet Items(1)AssetsAs at the end of the Reporting Period,the Groups total assets increased by 1,0
224、68.901 billion or 8.23%over the end of the previous year to 14,060.472 billion,which was mainly due to the increase in the scale of loans and advances to customers as well as financial investments.28Bank of Communications Co.,Ltd.Annual Report 2023 H ShareMANAGEMENT DISCUSSION AND ANALYSISFINANCIAL
225、STATEMENT ANALYSISThe balances(after provision)of the key components of the Groups total assets and their proportions to the total assets as at the dates indicated are shown below:(in millions of RMB unless otherwise stated)31 December 202331 December 202231 December 2021BalanceProportion BalancePro
226、portion BalanceProportion(%)(%)(%)Loans and advances to customers7,772,06055.287,135,45454.936,412,20154.97Financial investments4,104,14229.193,955,20730.443,523,24930.20Cash and balances with central banks898,0226.39806,1026.20734,7286.30Due from and placements with banks and other financial instit
227、utions859,6426.11690,4215.31632,7085.42Others426,6063.03404,3873.12362,8713.11Total assets14,060,472100.0012,991,571100.0011,665,757100.00 Loans and advances to customersDuring the Reporting Period,the Group devoted its full efforts to stable growth,stable employment and stable commodity prices,inte
228、nsified the efforts on implementation of counter-cyclical and cross-cycle monetary policy tools,gave full play to the role of financial institutions in serving the“countrys most fundamental interests”,meeting the demands for effective financing of the real economy,and devoted precise efforts in addr
229、essing major strategies,key areas and weak links.The Group also provided further credit support to areas such as inclusive services to small and micro businesses,manufacturing,strategic emerging industries,green credit and agriculture-related businesses,for the purpose of driving reasonable growth i
230、n the total amount of loans and advances and the optimisation of structures.The balance and breakdown of the Groups loans and advances to customers at the dates indicated are shown below:(in millions of RMB unless otherwise stated)31 December 202331 December 202231 December 2021BalanceProportion Bal
231、anceProportion BalanceProportion(%)(%)(%)Corporate loans5,179,53365.094,711,35364.584,138,58263.09 Short-term loans1,496,42218.811,438,25219.721,309,29119.96 Medium and long-term loans3,683,11146.283,273,10144.862,829,29143.13Personal loans2,473,10031.082,365,31732.432,285,09634.83 Mortgage1,462,634
232、18.381,512,64820.741,489,51722.70 Credit card489,7256.15477,7466.55492,5807.51 Others520,7416.55374,9235.14302,9994.62Discounted bills304,4523.83218,2952.99136,7222.08Total7,957,085100.007,294,965100.006,560,400100.0029Bank of Communications Co.,Ltd.Annual Report 2023 H ShareFINANCIAL STATEMENT ANAL
233、YSISAs at the end of the Reporting Period,the Groups loans and advances to customers increased by 662.120 billion or 9.08%over the end of the previous year to 7,957.085 billion,among which the RMB loans from domestic institutions increased by 695.276 billion or 10.55%over the end of the previous yea
234、r to 7,282.574 billion.The corporate loan balance was 5,179.533 billion,representing an increase of 468.180 billion or 9.94%over the end of the previous year,the proportion of which in loans and advances to customers increased by 0.51 percentage point to 65.09%over the end of the previous year,among
235、 which short-term loans increased by 58.170 billion,and medium and long-term loans increased by 410.010 billion,the proportion of medium and long-term loans in loans and advances to customers increased to 46.28%.The personal loan balance was 2,473.100 billion,representing an increase of 107.783 bill
236、ion or 4.56%over the end of the previous year,the proportion of which in loans and advances to customers decreased by 1.35 percentage points to 31.08%over the end of the previous year,among which mortgage loans decreased by 50.014 billion or 3.31%over the end of the previous year.The proportion of m
237、ortgage loans in loans and advances to customers decreased by 2.36 percentage points to 18.38%over the end of the previous year,and credit card loans increased by 11.979 billion or 2.51%over the end of the previous year.Discounted bills increased by 86.157 billion or 39.47%over the end of the previo
238、us year.Distribution of loans and advances to customers by security types(In millions of RMB unless otherwise stated)31 December 202331 December 2022BalanceProportion BalanceProportion(%)(%)Unsecured loans2,883,27436.232,461,98833.75Guaranteed loans1,288,96316.201,179,38116.17Loans secured by collat
239、eral2,904,86136.512,579,86635.36Pledged loans879,98711.061,073,73014.72Total7,957,085100.007,294,965100.00Expected credit loss allowance for loans and advances to customers(in millions of RMB)31 December202331 December2022Balance at the end of the previous year178,019161,162Accrual/(Reversal)in the
240、period54,13758,102Write-offs and disposals in the period(31,099)(46,313)Recovered after written-off5,6795,146Other movements(427)(78)Balance at the end of the period206,309178,01930Bank of Communications Co.,Ltd.Annual Report 2023 H ShareMANAGEMENT DISCUSSION AND ANALYSISFINANCIAL STATEMENT ANALYSIS
241、 Financial investmentsAs at the end of the Reporting Period,the Groups net balance of financial investments increased by 148.935 billion or 3.77%over the end of the previous year to 4,104.142 billion.The breakdown of investments by nature(in millions of RMB unless otherwise stated)31 December 202331
242、 December 2022BalanceProportion BalanceProportion(%)(%)Bonds3,618,63988.173,416,63286.38Equity instruments and others485,50311.83538,57513.62Total4,104,142100.003,955,207100.00The breakdown of investments by the presentation basis of financial statements(in millions of RMB unless otherwise stated)31
243、 December 202331 December 2022BalanceProportion BalanceProportion(%)(%)Financial investments at fair value through profit and loss642,28215.65705,35717.83Financial investments at amortised cost2,573,91162.712,450,77561.97Financial investments at fair value through other comprehensive income887,94921
244、.64799,07520.20Total4,104,142100.003,955,207100.00As at the end of the Reporting Period,the balance of the Groups bonds investments increased by 202.007 billion or 5.91%over the end of the previous year to 3,618.639 billion.In the future,the Group will reinforce the research and judgement of the eco
245、nomic and financial situation,and focus on the allocation of incremental investment and optimisation of historical bonds investments.First,the Group will maintain the overall strategy of investing mainly in interest rate bonds and make arrangements for investment in treasury bonds and local treasury
246、 bonds,etc.Secondly,the Group will proactively meet the financing needs of debt issuers in areas such as scientific and technological innovation,advanced manufacturing,green development,rural revitalisation,as well as small and micro enterprises,and to make a sound project reserve for credit bonds a
247、nd investment arrangements in key regions such as the Beijing-Tianjin-Hebei Region,the Guangdong-Hong Kong-Macau Region and the Yangtze River Delta.Thirdly,the Group will increase the bonds transaction volume and expedite the turnover of treasury bonds and policy bank financial bonds.Fourthly,the Gr
248、oup will strengthen the market research and judgement to understand the characteristics of the changes in U.S.bond yields and yield curves after the Federal Reserve paused rate hikes,for the purpose of maintaining the value of foreign currency bonds based on good liquidity management.31Bank of Commu
249、nications Co.,Ltd.Annual Report 2023 H ShareFINANCIAL STATEMENT ANALYSISThe breakdown of securities investment by issuers(in millions of RMB unless otherwise stated)31 December 202331 December 2022BalanceProportion BalanceProportion(%)(%)Government and central banks2,836,60078.382,626,00576.86Public
250、 sector entities35,6530.9937,9301.11Interbank institutions and other financial institutions549,16615.18539,00915.78Corporate entities197,2205.45213,6886.25Total3,618,639100.003,416,632100.00As at the end of the Reporting Period,financial bonds held by the Group amounted to 549.166 billion,including
251、bonds issued by policy banks of 73.436 billion and by interbank institutions and non-bank financial institutions of 475.730 billion,which accounted for 13.37%and 86.63%,respectively.Top 10 financial bonds held by the Group(in millions of RMB unless otherwise stated)Bond nameFace valueAnnual interest
252、 rate Maturity dateImpairment allowance(%)Policy Bank Bond issued in 20176,3094.3908/09/20272.11Policy Bank Bond issued in 20185,2564.9812/01/20251.76Policy Bank Bond issued in 20223,405SOFR+1.0629/09/20270.99Policy Bank Bond issued in 20173,3724.3021/08/20241.13Policy Bank Bond issued in 20193,2222
253、.7019/03/20240.44Commercial Bank Subordinated Bond issued in 20233,0733.0730/08/2033Commercial Bank Bond issued in 20233,0152.7023/11/20261.01Commercial Bank Bond issued in 20222,9862.4511/11/20252.00Commercial Bank Bond issued In 20222,957SOFR+0.7828/04/20250.58Policy Bank Bond issued in 20182,8984
254、.8809/02/20280.97 Foreclosed assetThe selected information of the Groups foreclosed asset on the dates indicated is shown below:(in millions of RMB)31 December202331 December2022Original value of foreclosed assets1,3841,412Less:Impairment allowance(439)(412)Net value of foreclosed assets9451,00032Ba
255、nk of Communications Co.,Ltd.Annual Report 2023 H ShareMANAGEMENT DISCUSSION AND ANALYSISFINANCIAL STATEMENT ANALYSIS(2)LiabilitiesThe Group thoroughly implemented the Administrative Measures for the Management of Commercial Banks Liability Quality issued by NAFR with the aim of ensuring the securit
256、y,liquidity and efficiency of its operation,and continued to optimise and improve the liability quality management system that was suited with the size and complexity of its liabilities in accordance with the principle of adapting to the business strategy,risk appetite and overall business character
257、istics,for the purpose of continuously improving the capability and level of liability quality management.During the Reporting Period,the Group conscientiously implemented the requirements of the“six characteristics”1 of liability quality management,continued to expand the liability business,consoli
258、dated customer basis,and strengthened the monitoring and analysis of liability quality,resulting in a steady development of the liabilities business.The balance and proportion of the main components in the total liabilities of the Group as of the dates indicated are shown below:(in millions of RMB u
259、nless otherwise stated)31 December 202331 December 202231 December 2021BalanceProportionBalanceProportionBalanceProportion(%)(%)(%)Deposits from customers8,551,21565.987,949,07266.477,039,77765.86Due to and placements from interbank institutions and other financial institutions2,424,53718.712,034,89
260、417.021,947,76818.22Certificates of deposits issued1,027,4617.931,092,3669.13892,0208.35Debt securities issued592,1754.57530,8614.44503,5254.71Others365,6342.81350,8562.94305,4312.86Total liabilities12,961,022100.0011,958,049100.0010,688,521100.00As at the end of the Reporting Period,the Groups tota
261、l liabilities increased by 1,002.973 billion or 8.39%over the end of the previous year to 12,961.022 billion.Among them,deposits from customers increased by 602.143 billion or 7.58%over the end of the previous year,which accounted for 65.98%of total liabilities and represented a decrease of 0.49 per
262、centage point over the end of the previous year;the balance of due to and placements from interbank institutions and other financial institutions increased by 389.643 billion or 19.15%over the end of the previous year,which accounted for 18.71%of total liabilities and represented an increase of 1.69
263、 percentage points over the end of the previous year.1 Stability of liability sources,diversity of liability structures,rationality of matching liabilities and assets,initiative in acquiring liabilities,appropriateness of liability costs,and authenticity of liability projects.33Bank of Communication
264、s Co.,Ltd.Annual Report 2023 H ShareFINANCIAL STATEMENT ANALYSISDeposits from customersDeposits from customers is the Groups major funding source.As at the end of the Reporting Period,the Groups balance of deposits from customers increased by 602.143 billion or 7.58%over the end of the previous year
265、 to 8,551.215 billion.In terms of customer structure,the proportion of corporate deposits was 58.96%,representing a decrease of 2.40 percentage points over the end of the previous year,while the proportion of personal deposits was 39.27%,representing an increase of 2.09 percentage points over the en
266、d of the previous year.In terms of deposit tenure,the proportion of demand deposits decreased by 1.83 percentage points over the end of the previous year to 34.33%,while the proportion of time deposits increased by 1.52 percentage points over the end of the previous year to 63.90%.The balance and br
267、eakdown of the Groups deposits from customers as of the dates indicated are shown below:(in millions of RMB unless otherwise stated)31 December 202331 December 202231 December 2021BalanceProportionBalanceProportionBalanceProportion(%)(%)(%)Corporate deposits5,041,99158.964,877,03361.364,550,02064.63
268、 Demand deposits2,050,52423.981,989,38325.032,061,67229.28 Time deposits2,991,46734.982,887,65036.332,488,34835.35Personal deposits3,358,15639.272,955,72437.182,402,81234.13 Demand deposits884,74610.35885,01311.13850,83112.09 Time deposits2,473,41028.922,070,71126.051,551,98122.04Other deposits3,240
269、0.044,2270.053,3590.05Accrued interest147,8281.73112,0881.4183,5861.19Total8,551,215100.007,949,072100.007,039,777100.00(3)Off-balance sheet itemsThe Groups off-balance sheet items included derivative financial instruments,contingencies and commitments as well as collaterals.The Group entered into v
270、arious derivative financial instruments including interest rate contracts,exchange rate contracts,precious metals and commodity contracts for trading,hedging,asset and liability management and on behalf of customers.Please refer to the financial statements Note 18.Derivative Financial Instruments fo
271、r the details of nominal amount and fair value of the derivative financial instruments.The Groups contingencies and commitments mainly included outstanding litigations,credit related commitments and financial guarantees,capital expenditure commitments,operating leasing commitments,commitments on sec
272、urity underwriting and bond acceptance.Please refer to Note 37.Contingencies for the details of contingencies and Note 38.Commitments for the details of commitments.The Group uses part of its assets as collaterals for interbank repurchase arrangements and other liabilities-related business.Refer to
273、note 39 to the financial statements for details.34Bank of Communications Co.,Ltd.Annual Report 2023 H ShareMANAGEMENT DISCUSSION AND ANALYSISFINANCIAL STATEMENT ANALYSIS3.Analysis on Key Cash Flow ItemsAs at the end of the Reporting Period,the balance of Groups cash and cash equivalents increased by
274、 26.658 billion over the end of the previous year to 275.461 billion.The net cash inflows from operating activities decreased by 230.898 billion on a year-on-year basis to 137.323 billion,which was mainly due to the decrease in net cash inflow from deposits from customers and certificates of deposit
275、s issued.The net cash outflows from investing activities decreased by 168.274 billion on a year-on-year basis to 116.623 billion,which was mainly due to the decrease in net cash outflow from securities investment.The net cash inflows from financing activities increased by 37.863 billion on a year-on
276、-year basis to 4.888 billion,which was mainly due to the increase in net cash inflow from issuance and redemption of bonds.4.Segment Analysis(1)Operating results by geographical segmentsThe profit before tax and net operating income from each of the Groups geographical segments for the periods indic
277、ated are as below:(in millions of RMB unless otherwise stated)20232022Profitbefore taxProportion Netoperatingincome1Proportion Profitbefore taxProportion Netoperatingincome1Proportion(%)(%)(%)(%)Yangtze River Delta47,58447.7391,56635.4947,69548.6186,94633.79Pearl River Delta7,8767.9024,5219.5011,199
278、11.4125,1249.76Bohai Rim Economic Zone20,75920.8230,85411.968,6368.8031,68312.31Central China20,85920.9136,90914.3128,13328.6938,48914.96Western China8,8098.8422,8028.849,3809.5623,3369.07North Eastern China2,9382.957,2002.79320.037,3712.86Overseas5,9485.9717,7616.883,7913.8613,2865.15Head Office2(1
279、5,075)(15.12)26,40110.23(10,751)(10.96)31,11112.09Total399,698100.00258,014100.0098,115100.00257,346100.00Notes:1.Including net interest income,net fee and commission income,net gains arising from trading activities,net gains arising from financial investments,net share of profits of associates and
280、joint ventures as well as and other income.Same applies hereinafter.2.Including the Pacific Credit Card Centre.Same applies hereinafter.3.Including profit/(loss)attributable to non-controlling interests.4.The comparative information was prepared in accordance with the categorisation of the current p
281、eriod since the assessment rules of the income and expense distribution between various business segments have been adjusted.35Bank of Communications Co.,Ltd.Annual Report 2023 H ShareFINANCIAL STATEMENT ANALYSIS(2)Deposits and loans and advances by geographical segmentsThe Groups loans and advances
282、 balances by geographical segments as at the dates indicated are as below:(in millions of RMB unless otherwise stated)31 December 202331 December 2022Loans andadvances balancesProportionLoans andadvances balancesProportion(%)(%)Yangtze River Delta2,226,42227.981,999,17527.40Pearl River Delta1,051,20
283、413.21978,74913.42Bohai Rim Economic Zone1,288,07816.191,137,28215.59Central China1,290,88016.221,196,07516.40Western China947,51011.91875,47612.00North Eastern China265,2153.33250,1903.43Overseas359,4464.52376,2775.16Head Office528,3306.64481,7416.60Total7,957,085100.007,294,965100.00 The Groups de
284、posit balances by geographical segments as at the dates indicated are as below:(in millions of RMB unless otherwise stated)31 December 202331 December 2022Deposit balancesProportionDeposit balancesProportion(%)(%)Yangtze River Delta2,363,90727.642,157,81227.15Pearl River Delta1,057,76612.371,024,315
285、12.89Bohai Rim Economic Zone1,825,94521.351,671,92321.02Central China1,365,88115.991,260,42515.86Western China894,66210.46846,61010.65North Eastern China426,2744.98391,7194.93Overseas465,4635.44480,4086.04Head Office3,4890.043,7720.05Accrued interest147,8281.73112,0881.41Total8,551,215100.007,949,07
286、2100.00(3)Operating results by business segmentsThe Groups four main business segments are corporate banking,personal banking,treasury businesses and other businesses.36Bank of Communications Co.,Ltd.Annual Report 2023 H ShareMANAGEMENT DISCUSSION AND ANALYSISFINANCIAL STATEMENT ANALYSISThe Groups p
287、rofit before tax and net operating income by business segments for the periods indicated are as below:(in millions of RMB unless otherwise stated)20232022AmountProportionAmountProportion(%)(%)Net operating income258,014100.00257,346100.00Corporate banking127,58249.45125,00648.58Personal banking106,8
288、1841.40106,16241.25Treasury businesses22,9448.8925,1299.76Other businesses6700.261,0490.41Profit before tax99,698100.0098,115100.00Corporate banking50,55950.7142,41043.22Personal banking33,54033.6434,09134.75Treasury businesses15,77915.8321,29921.71Other businesses(180)(0.18)3150.32Note:The comparat
289、ive information was prepared in accordance with the categorisation of the current period since the assessment rules of the income and expense distribution between various business segments have been adjusted.5.Capital Adequacy RatioThe Group calculated the capital adequacy ratios pursuant to the Adm
290、inistrative Measures for the Capital Management of Commercial Banks(Trial Implementation)and the relevant requirements.As at the end of the Reporting Period,the Groups capital adequacy ratio,tier-1 capital adequacy ratio and common equity tier-1 capital adequacy ratio were 15.27%,12.22%,and 10.23%re
291、spectively,all of which complied with the regulatory requirements.(in millions of RMB unless otherwise stated)31 December 202331 December 2022The GroupThe BankThe GroupThe BankNet common equity tier-1 capital905,394753,713840,164701,902Net tier-1 capital1,081,683928,5031,016,644876,692Net capital1,3
292、51,1161,192,4731,250,3171,104,732Common equity tier-1 capital adequacy ratio(%)10.239.5510.069.40Tier-1 capital adequacy ratio(%)12.2211.7612.1811.74Capital adequacy ratio(%)15.2715.1014.9714.80Note:1.The above calculation excluded China BoCom Insurance Co.,Ltd.and BOCOM MSIG Life Insurance Company
293、Limited.2.According to regulatory requirements of the Implementation Scope of the Advanced Measurement Approach of Capital Management approved by the regulatory authorities,the credit risk was assessed by the internal rating-based approach,the market risk was assessed by the internal model approach,
294、and the operational risk was assessed by the standardised approach.The credit risk not covered by the internal rating-based approach was assessed by the weighted approach.The market risk not covered by the internal model approach was assessed by the standardised approach.The operational risk not cov
295、ered by the standardized approach was assessed by the basic-indicator approach.37Bank of Communications Co.,Ltd.Annual Report 2023 H ShareFINANCIAL STATEMENT ANALYSISFor further information on the Groups capital measurement,please refer to the 2023 Capital Adequacy Ratio Report of Bank of Communicat
296、ions Co.,Ltd.published at the website of SSE,the HKEXnewss website or the official website of the Bank.6.Leverage RatioThe Group calculated the leverage ratio pursuant to the Administrative Measures for the Leverage Ratio of Commercial Banks(Revised).As at the end of the Reporting Period,the Groups
297、leverage ratio was 7.03%,which complied with the regulatory requirements.(in millions of RMB unless otherwise stated)31 December202330 September202330 June202331 March2023Net tier-1 capital1,081,6831,054,8581,036,4711,039,682Balance of adjusted on-and off balance sheet assets15,397,02515,113,08615,1
298、50,64314,983,789Leverage ratio(%)7.036.986.846.94Please refer to“Supplementary Information on Leverage Ratio,Liquidity Coverage Ratio and Net Stable Funding Ratio”for more information on the leverage ratio of the Group.38Bank of Communications Co.,Ltd.Annual Report 2023 H ShareMANAGEMENT DISCUSSION
299、AND ANALYSISBUSINESS REVIEWIII.BUSINESS REVIEW1.Development Strategies and ImplementationGuided by the strategic goal of“building a world-class banking group with distinctive advantages”,the Group continued to build four major business characteristics while improving the quality and efficiency of se
300、rving the real economy,and regarded green finance as the keynote for the business operation and development of the entire group.With construction of“Shanghai Base”and digital transformation as strategic breakthroughs,the Group has continued to optimize the credit structure,promote product innovation
301、,increase resource investment,strengthen service capacity,maintain stable development quality,further improve comprehensive capabilities,and achieve strategic improvement of phased goals.(1)Creating business features while striving for excellence and achievementsInclusive finance.The Group continuou
302、sly increased financial support to small and micro enterprises and for rural revitalisation,being devoted to expanding domestic demand and boosting consumption,and steadily improving the quality and efficiency of inclusive financial businesses.As at the end of the Reporting Period,the balance of inc
303、lusive loans provided to small and micro enterprises and agriculture-related loans increased by 29.38%and 24.80%respectively compared with the end of last year,and by 159.99%and 54.94%respectively compared with the end of 2020.The number of customers of inclusive services provided to small and micro
304、 enterprises with a loan balance increased by 16.51%over the end of the previous year,and by 2.3 times over the end of 2020.Annual personal comprehensive consumption loans and personal business loans reached the highest level in history.Trade finance.The Group actively served the development of the
305、industrial chain and the supply chain and promoted the high-level opening-up to the outside world.The Group further stimulated the capability of trade finance in serving the real economy and the new development landscape of dual circulation.In 2023,the amount of trade finance incurred(1.5 trillion)a
306、nd industrial value chain financial business(577.7 billion)were 2.4 times and 2 times that of 2020,respectively.The amount of cross-border RMB receipts and payments(1.9 trillion)for the whole year was 2.5 times over that of 2020.Cross-border business income was 1.6 times over that of 2020.Sci-tech f
307、inance.The Group kept up with the pace of national technological self-reliance and industrial transformation and upgrading,concentrating financial resources on original and pioneering sci-tech research to achieve breakthroughs.The Group focused on serving strategic emerging industries,advanced manuf
308、acturing,technological innovation,traditional industry upgrading and other fields,and optimizing the customer structure and asset structure.As at the end of the Reporting Period,sci-tech finance credit customers increased by 41.2%over the end of the previous year;and strategic emerging industry loan
309、s,“SRDI(specialized,refined,differential,innovative)”small and medium-sized enterprises loans,and technology-based small and medium-sized enterprises loans increased by 31.12%,73.95%,and 39.54%,respectively.Wealth finance.The Group proactively implemented the development ideology of providing financ
310、e for the people,and created a full-chain wealth management operating system to match the multi-level wealth management needs of the people.As at the end of the Reporting Period,individual financial assets under 39Bank of Communications Co.,Ltd.Annual Report 2023 H ShareBUSINESS REVIEWmanagement(AUM
311、2)managed by domestic banking institutions increased by 8.23%over the end of the previous year,and by 28.21%over the end of 2020.The Group continued to expand our customer base and explore potential customers,with the number of middle and high-end customers increasing by 9.06%over the end of the pre
312、vious year,and by 39.22%over the end of 2020.The balance of the Groups wealth management products increased by 7.91%compared with the end of the previous year,and by 19.06%over the end of 2020.The proportion of net-worth wealth management products increased by 4.62 percentage points compared with th
313、e end of the previous year,and by 42.19 percentage points over the end of 2020.Green finance.The Group integrated the concept of green development into the entire process of creating distinctive business characteristics,and consistently strengthened efforts in supporting green and low-carbon transfo
314、rmation.The Group improved the“2+N”green finance policy system to integrate green development concepts into credit management procedures and promote the construction of a green intelligent identification and ESG evaluation system.The Group integrated green credit,green investment banking,green inclu
315、sive finance,and other products into a comprehensive service solution based on a variety of green development scenarios,and launched innovative green finance services such as green leasing and green industry investment.As at the end of the Reporting Period,the balance of green loans increased by 29.
316、37%over the end of the previous year,and by 126%over the end of 2020.The balance of green bond investments increased by 68.66%over the end of the previous year.The 2 Excluding the fair value of customers securities,same applies hereinafter.results of BoComs green finance initiatives have been includ
317、ed in the Green and Low-carbon Case Study of the First Carbon Neutrality Expo.(2)Continuing to exert efforts by focusing on two breakthroughsLeveraging the advantages and leading role of“Shanghai Base”.The Group continued to promote innovation and breakthroughs,and are focused on making“Shanghai Bas
318、e”a source of innovation for the Group.As at the end of the Reporting Period,the market shares of general deposits and general loans of the Shanghai branch increased by 0.17 percentage point and 0.21 percentage point respectively over the end of the previous year.In terms of serving economic and soc
319、ial development in Shanghai,the coverage rate of cooperation in major projects at the city and district level in Shanghai increased by 13.76 percentage points compared with the end of the previous year.The Group has supported the improvement of the core functions of Shanghai to develop as an interna
320、tional financial centre with the annual transaction trading volume of the interbank market for the year increased by 32%on a year-on-year basis and transaction volume in each market segment maintained as an active trader,and ranked first in clearing business market in Shanghai Clearing House.With a
321、focus on areas such as“Credit for Medical Treatment”,Sci-tech finance,BOCOM-Government Connect,consumption and pensions,the Group developed a series of cases showing innovation led by the main base to promote bank-wide transformation with the purpose of establishing innovative businesses within the
322、entire bank.40Bank of Communications Co.,Ltd.Annual Report 2023 H ShareMANAGEMENT DISCUSSION AND ANALYSISBUSINESS REVIEWDeeply promoting digital transformation.The Bank speeded up the construction of a“New Digital BoCom”and promoted the deep integration of technology and business.As at the end of th
323、e Reporting Period,the Bank continued to increase investment in digital transformation,with fintech talent accounting for 8.29%of the total number of employees of the Group.The Bank further improved the enterprise-level data standards system,with further enhancements in data support capabilities.The
324、 Group focused on prioritizing the retail business to develop a digital operating system and promote the overall construction of the enterprise-level structure,middle office and product factory,while at the same time implemented the retail credit and“BoCom Express Pay”enterprise-level structure proj
325、ects.New versions of personal mobile banking,corporate mobile banking and corporate online banking were launched.BOCOM On-cloud and physical outlets were deeply linked,and the proportion of customers acquired online for inclusive service provided to small to micro enterprises exceeded 80%.The Bank d
326、eepened the application of artificial intelligence(AI)in scenarios such as customer service,product promotion,and risk mitigation and control.The Bank also accelerated the planning of new digital infrastructures,including further promoting the initiative of“laying a strong foundation,building an eff
327、icient network,constructing a cloud platform,and consolidating the core business systems”,operating the new local data centre in Pujiang District to the highest standards,intensifying the construction of remote data centres,accelerating the development of“cloud”infrastructure,and speeding up the lau
328、nch of a new generation of distributed cloud computing architecture.2.Corporate Banking Business The Bank served the real economy by promoting an increase in total credit allocation with an excellent structure.During the Reporting Period,the Groups corporate loan balance increased by 468.180 billion
329、 or 9.94%over the end of the previous year,in which medium and long-term loans of the manufacturing industry,green credit,and agriculture-related loans increased by 39.41%,29.37%and 24.80%,respectively,all exceeding the average growth rate of the Groups loans.The Bank served national strategies and
330、supported the development of key areas.As at the end of the Reporting Period,the balance of loans of three major regions including the Yangtze River Delta,the Guangdong-Hong Kong-Macau Greater Bay Area and the Beijing-Tianjin-Hebei Region increased by 9.86%over the end of the previous year,exceeding
331、 the average growth rate of the Groups loans by 0.79 percentage point.Balance of loans in these three major regions accounted for 53.84%,representing an increase of 0.39 percentage point over the end of the previous year.The Bank is fully devoted to creating business features and has accelerated the
332、 development of sci-tech finance and industrial chain finance.At the end of the Reporting Period,the number of credit customers in sci-tech finance increased by 41.20%over the end of the previous year.The loan balance of strategic emerging industries increased by 31.12%over the end of the previous y
333、ear,and its proportion in corporate loans increased by 2.56 percentage points over the end of the previous year.The business volume of industrial value chain financing increased by 21.20%year-on-year.41Bank of Communications Co.,Ltd.Annual Report 2023 H ShareBUSINESS REVIEW(1)Customer developmentThe Bank continuously optimised the management of corporate customers by tiered classification and buil
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