招商银行股份有限公司(CHINA MERCHANTS BANK)2023年年度报告(英文版)(318页).pdf

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招商银行股份有限公司(CHINA MERCHANTS BANK)2023年年度报告(英文版)(318页).pdf

1、H Share Stock Code:03968Annual ReportChina Merchants BankAnnual Report 2023(H share)1ContentsContents2Definitions2Significant Risk Warning3Important Notice4Chairmans Statement8Presidents Statement12Chapter I Company Information18Chapter II Summary of Accounting Data and Financial Indicators22Chapter

2、 III Management Discussion and Analysis223.1 Analysis of Overall Operation223.2 Analysis of Income Statement293.3 Analysis of Balance Sheet333.4 Analysis of Loan Quality393.5 Analysis of Capital Adequacy423.6 Results of Operating Segments433.7 Other Financial Disclosures under the Regulatory Require

3、ments433.8 Implementation of Development Strategies483.9 Key Business Concerns in Operation573.10 Business Operation763.11 Risk Management823.12 Outlook and Coping Tactics85Chapter IV Environmental,Social and Governance(ESG)96Chapter V Corporate Governance137Chapter VI Important Events144Chapter VII

4、 Changes in Shares and Information on Shareholders153Chapter VIII Financial StatementsChina Merchants BankAnnual Report 2023(H share)2Definitions/Significant Risk WarningDefinitionsThe Company,the Bank,CMB or China Merchants Bank:China Merchants Bank Co.,Ltd.The Group:China Merchants Bank and its su

5、bsidiariesCSRC:China Securities Regulatory CommissionHong Kong Stock Exchange or SEHK:The Stock Exchange of Hong Kong LimitedHong Kong Listing Rules:The Rules Governing the Listing of Securities on the SEHKCMB Wing Lung Bank:CMB Wing Lung Bank LimitedCMB Wing Lung Group:CMB Wing Lung Bank and its su

6、bsidiariesCMB Financial Leasing or CMBFL:CMB Financial Leasing Co.,Ltd.CMB International Capital or CMBIC:CMB International Capital Holdings Corporation LimitedCMB Wealth Management:CMB Wealth Management Company LimitedChina Merchants Fund or CMFM:China Merchants Fund Management Co.,Ltd.CIGNA&CMAM:C

7、IGNA&CMB Asset Management Company LimitedCMB Europe S.A.:China Merchants Bank(Europe)Co.,Ltd.(招商銀行(歐洲)有限公司)CIGNA&CMB Life Insurance:CIGNA&CMB Life Insurance Co.,Ltd.MUCFC:Merchants Union Consumer Finance Company LimitedCMB YunChuang:CMB YunChuang Information Technology Co.,Ltd.with 100%equity intere

8、st held by the Company indirectlyCMB Network Technology:China Merchants Bank Network Technology(Shenzhen)Co.,Ltd.with 100%equity interest held by the Company indirectlyDeloitte Touche Tohmatsu Certified Public Accountants LLP:Deloitte Touche Tohmatsu Certified Public Accountants LLP(Special General

9、Partnership)SFO:Securities and Futures Ordinance(Chapter 571 of the Laws of Hong Kong)Model Code:Model Code for Securities Transactions by Directors of Listed Issuers of Hong Kong Stock ExchangeSignificant Risk WarningThe Company has disclosed herein the major risks involved in its operations and th

10、e proposed risk management measures.Please refer to Chapter III for the details in relation to risk management.China Merchants BankAnnual Report 2023(H share)3Important NoticeImportant Notice1.The Board of Directors,the Board of Supervisors,Directors,Supervisors and senior management of the Company

11、confirm that the contents in this annual report are true,accurate,and complete and have no false representations,misleading statements or material omissions,and they will severally and jointly accept legal responsibility for such contents.2.The 31st meeting of the Twelfth Session of the Board of Dir

12、ectors of the Company was convened at the Head Office of the Company in Shenzhen on 25 March 2024.The meeting was presided by Miao Jianmin,Chairman of the Board of Directors.12 out of 13 eligible Directors attended the meeting in person.Due to business engagement,Zhou Song,Non-Executive Director,was

13、 absent from the meeting and appointed Zhang Jian(Non-Executive Director)as his proxy to attend the meeting.8 Supervisors of the Company were present at the meeting.The convening of the meeting complied with the relevant provisions of the Company Law of the Peoples Republic of China and the Articles

14、 of Association of China Merchants Bank Co.,Ltd.3.Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche Tohmatsu(both being auditors of the Company)have separately audited the 2023 annual financial statements prepared in accordance with the PRC Generally Accepted Accounting P

15、rinciples and International Financial Reporting Standards,and have separately issued standard auditing reports with unqualified opinions.4.Unless otherwise stated,all monetary sums stated in this report are expressed in RMB.5.Miao Jianmin,Chairman of the Company,Wang Liang,President and Chief Execut

16、ive Officer,Peng Jiawen,Executive Vice President,Chief Financial Officer and Secretary of the Board of Directors and Zhang Dong,the person in charge of the Financial Accounting Department,hereby make representations in respect of the truthfulness,accuracy and completeness of the financial statements

17、 in this report.6.The Board of Directors of the Company recommended the payment of a cash dividend of RMB1.972(tax inclusive)for every ordinary share for the year of 2023.The implementation of the profit appropriation plan is subject to consideration and approval at the 2023 Annual General Meeting.I

18、n 2023,the Company did not transfer any capital reserve into share capital.7.We have included in this report certain forward-looking statements with respect to the financial position,operating results and business development of the Group.We use words such as“will”,“may”,“expect”,“try”,“strive”,“pla

19、n”,“anticipate”,“aim at”,and similar expressions to indicate forward-looking statements.These statements are based on current plans,estimates and projections.Although we believe that the expectations reflected in these forward-looking statements are reasonable,we give no assurance that these expecta

20、tions will turn into reality or prove to be correct.Therefore,they should not be deemed as the Groups commitments.Investors should not place undue reliance on such statements and should pay attention to investment risks.You are cautioned that such forward-looking statements are related to future eve

21、nts or future financial position,business,or other performances of the Group,and are subject to a number of uncertainties which may cause substantial differences from those in the actual results.China Merchants BankAnnual Report 2023(H share)4Chairmans StatementChairmans StatementIn 2023,the Chinese

22、 economy sought progress while maintaining stability,with high-quality development being solidly promoted.However,it still faced difficulties and challenges,including insufficient effective demand,excess capacity in certain industries,relatively weak market expectations,and a variety of potential ri

23、sks.Confronting these challenges head-on,CMB built a fortress-style balance sheet,continuously strengthened the management and control of all costs and risks,and maintained dynamically balanced development focusing on“Quality,Profitability and Scale”,thereby ensuring steady growth of profits and mai

24、ntaining the high-quality development momentum.In summary,the Banks performance in 2023 was primarily characterised by“unchanging fundamentals,solid foundation,and unwavering confidence”.We have made remarkable achievements in building the“three capabilities”.In terms of risk management capability,a

25、s of the end of 2023,the non-performing loan ratio was 0.95%,indicating overall stability in asset quality.The allowance coverage ratio remained at a high level,reaching 437.70%.The Bank further implemented the“Six All”1 risk management system,consistently promoted risk prevention and mitigation in

26、key areas such as real estate and credit cards,stepped up the management of risks associated with off-balance sheet businesses,launched the“dynamic rebalancing”asset allocation tactics,promoted risk management empowered by digitalisation,and resolutely upheld the risk bottom line.In terms of wealth

27、management capability,the number of retail customers was 197 million,and the balance of total assets under management(AUM)from retail customers exceeded RMB13 trillion.In terms of Fintech capability,CMB took the lead in the industry in achieving a full-scale cloud deployment,and the“Project of Full-

28、scale Cloud Deployment of CMB Banking System”won the first prize of Fintech Development Award of the Peoples Bank of China.The Bank initiated the construction of a large model ecosystem,and established a large model experience platform,connecting to multiple mainstream large models in China.We have

29、achieved initial success in building the“Malik Curve”.CMB increased its input in technology,and comprehensively pushed forward a digital reshaping focusing on online,data-based,intelligent,platform-based and ecological operation.“Stepping out of its comfort zone and daring to embrace new challenges”

30、,the Bank gradually established a financial services ecosystem and explored scenario-based applications of artificial intelligence.The Bank released the CMB APP 12.0 version with upgraded core scenario-based services such as accounting,loans,etc.with the number of users exceeding 200 million.Intelli

31、gent operation were applied in scenarios such as intelligent customer service,intelligent process,quality inspection and the Conch RPA+(Robotic Process Automation),and our staff were relieved from repetitive,time-consuming work equivalent to a workload of over 17,000 individuals.We have taken solid

32、steps towards building a“world-class value creation bank”.In terms of customer value,the Bank focused on value creation and actively fulfilled its mission of“serving the nation and the people with finance”.Through the steady growth in on-balance sheet and off-balance sheet businesses,the Bank suppor

33、ted the real economy at multiple levels,through multiple channels,and by multiple financing structures,with the balance of aggregate financing products to corporate customers(FPA)exceeding RMB5.5 trillion.The Bank employed a“people+digitalisation”mechanism to improve the breadth,depth,personal touch

34、 and precision of its services,and enhanced consumer rights protection,with 99.16%of customer complaints responded within one hour.In terms of employee value,CMB adopted a strict yet caring attitude in management of staff,and has been shortlisted as top ten“Best Employers of the Year”by Z for 13 con

35、secutive years.In terms of shareholder value,the return on average equity(ROAE)attributable to ordinary shareholders of the Bank remained above 16%,creating good returns for shareholders.In terms of partner value,the Bank continued to expand the“circle of friends”in the wealth management ecosystem.O

36、ur“Zhao Cai Hao(招財號)”,an open platform of wealth management business,has onboarded in total 152 asset management institutions with industrial representativeness.In terms of social value,CMB actively practiced the concept of“blue waters and green mountains are indeed gold and silver mountains”.Its ba

37、lance of green loans was nearly RMB450 billion.The Bank has won wide international acclaim in recognition of its excellent performance.It ranked first in the award of“Best Performing Chinese Bank”released by The Banker(UK)for three consecutive years,and achieved the first“5 Consecutive Championship”

38、in the history of the“Best Bank in China”selection by Euromoney.1 Six All:all risks,all branches and subsidiaries,all customers,all assets,all processes and all factors.China Merchants BankAnnual Report 2023(H share)5Chairmans StatementMiao JianminChairman China Merchants BankAnnual Report 2023(H sh

39、are)6Chairmans StatementThe 2023 Central Financial Work Conference marked a new milestone in the development history of Chinas financial industry,calling for accelerated actions to make China a financial powerhouse in the new era.Finance is an important part of Chinas core competitiveness,and its hi

40、gh-quality development plays a pivotal role in the overall success of Chinese style modernisation.In 2024,CMB will unswervingly follow the path of financial development with Chinese characteristics and contribute to the transformation of China into a financial powerhouse.We will maintain stable oper

41、ation,resolutely upholding the risk bottom line.We will forge ahead in a responsible and proactive manner,countering uncertainties of the environment with our own efforts.We will spearhead the trend,seizing the major development opportunities brought about by the large language model to establish an

42、 unassailable core competitiveness.We will shift paradigm,assessing and timely responding to the prevailing trends over interest rates,real estate,and population with forward-looking and strategic vision.We aim to grow stronger,better,and bigger through differentiated development.With accurate posit

43、ioning of our strategic direction,the Bank will unwaveringly adhere to our strategic goal of building a“world-class value creation bank”,maintain our existing characteristics and competitiveness,build a new moat centred around intelligent banking,and further strengthen all cost management.The Bank w

44、ill give full play to the differentiated competitive advantages in retail finance,extensive wealth management and digitalisation to deliver solid achievements in the“five priorities”of sci-tech finance,green finance,inclusive finance,retirement finance,and digital finance.In the national campaign to

45、 build global financial centre,the Bank will undauntedly shoulder responsibilities,grow and strengthen cross-border finance,consolidate and improve our business characteristics in syndicated loans,asset management,wealth management and other aspects in the Hong Kong market.We aim to strengthen risk

46、management and control in key areas.To maintain steady growth amidst a challenging and complex business environment,our greatest confidence lies in our prudent risk culture and effective risk management.We will stabilise the growth rate in scale,optimise the asset structure,and strive to form a new

47、balance among the growth rate of risk-weighted asset,the growth rate of profit,as well as capital endogeneity.We will closely monitor risks in key areas such as real estate,industries with overcapacity,and extensive wealth management.We will also deepen science and technology security management and

48、 strengthen compliance risk management.We aim to promote a financial culture with Chinese characteristics.Carrying with the“China Merchants Inheritance,Hailiao Spirit(海遼精神)and Shekou Gene”,CMB has cultivated an excellent corporate culture.Our entrepreneurial culture of“fighting spirit and dedication

49、”,service culture of“We are here just for you”,innovative culture that honours“pioneering spirit”,and risk culture prioritising“stability and prudence”have become the fundamental consensus among all employees of the Bank,contributing significantly to the formation of a positive brand image for CMB.W

50、e will effectively educate employees about the ideals and the financial culture with Chinese characteristics,establish righteous philosophies on business,performance and risk,solidify the foundation of financial culture,and safeguard the essence of the modern financial system with Chinese characteri

51、stics.China Merchants BankAnnual Report 2023(H share)7Chairmans StatementThe year 2024 marks the 75th anniversary of the founding of the Peoples Republic of China,and it is also a crucial year for implementing the“14th Five-Year”strategic plan.As the saying goes,“diligent ploughing in spring begets

52、bountiful harvest in autumn”.We will remain steadfast in our confidence,build on our capabilities,and work diligently with perseverance to achieve high-quality growth of CMB,thereby contributing to Chinas development into a financial powerhouse,while writing a new chapter for CMB on the journey of f

53、inancial development with Chinese characteristics.Paying tribute to history with a commitment to carrying forward its legacy,and creating history with an ambition to write our own story,we will strive to achieve greater successes on the Chinese path to modernisation.China Merchants Bank Co.,Ltd.Chai

54、rman25 March 2024China Merchants BankAnnual Report 2023(H share)8Presidents StatementPresidents StatementIn the face of the complicated and volatile business environment at home and abroad in 2023,the management of the Bank led all employees to earnestly fulfill the work requirements outlined by the

55、 national macroeconomic policies as well as the regulatory departments,and accomplish the objectives and tasks set by the Board of Directors.The Bank made stability as its top priority,sought progress while maintaining stability,adhered to high-quality development with the strategic objectives of bu

56、ilding a value creation bank,thereby achieving dynamically balanced development of“Quality,Profitability and Scale”.The Company continued to consolidate the fortress-style balance sheet,which boasted the financial indicators to maintain the good momentum featuring steady growth with improved quality

57、.We saw steady growth in business scale.As of the end of 2023,our total assets reached a new milestone of RMB11 trillion.Our operating efficiency remained stable.Annual net operating income amounted to RMB339.078 billion.Net profit attributable to shareholders of the Bank amounted to RMB146.602 bill

58、ion,with ROAA and ROAE being 1.39%and 16.22%,respectively.We maintained endogenous capital growth.The core Tier 1 capital adequacy ratio and capital adequacy ratio under the Advanced Measurement Approach were 13.73%and 17.88%respectively,up by 0.05 and 0.11 percentage point from the end of the previ

59、ous year,respectively.Asset quality has improved overall with a non-performing loan ratio of 0.95%,down by 0.01 percentage point from the end of the previous year.The allowance coverage ratio was 437.70%and allowance-to-loan ratio was 4.14%,maintaining strong risk compensation capability.We further

60、consolidated structural advantages by strengthening our capital-heavy business while expanding capital-light business operations,and realised more balanced and stable management of customer structure,asset structure,regional structure and income structure,relentlessly reinforcing the foundation for

61、sound operation.The Company continued to strengthen its featured and systematic competitive advantages and maintained the balanced and coordinated development.Our four major business segments kept steady growth momentum.We secured the dominant position of retail finance,while consolidating and expan

62、ding our systematic advantages.The number of retail customers we served reached 197 million,up by 7.07%from the end of the previous year,thanks to more retail customers choosing CMB.Total assets under management(AUM)from retail customers exceeded RMB13 trillion,and retail finance contributed more th

63、an 55%of total net operating income and total profit before tax.We consistently exceled in corporate finance,enhanced our services rendered to customers in terms of the breadth and depth,and established distinctive financial service systems including sci-tech finance,green finance,etc.The number of

64、our corporate customers reached 2,820,600,up by 11.66%from the end of the previous year,and the aggregate financing products(FPA)provided to real economy-based enterprise clients exceeded RMB5.5 trillion.We continued to pursue business specialisation and innovation in investment banking and financia

65、l markets business,and maintained a leading position in various specialised sectors such as M&A loans,bond underwriting,bond trading,bill business and asset custody.We continued to expand and strengthen our wealth management and asset management business,and our capability was constantly enhanced.Th

66、e number of retail customers holding our wealth management products exceeded 50 million,representing an increase of 19.13%as compared with the end of the previous year.The total asset management business scale reached RMB4.48 trillion,up by 1.59%from the end of the previous year.We made further prog

67、ress in comprehensive and international business operations,with subsidiaries and overseas branches continuing to enhance their competitiveness,and branches in key regions improving quality and efficiency of their development,further demonstrating the“flywheel effect”of coordinated development acros

68、s the Bank.The Company continued to strengthen the foundation of risk compliance management so as to uphold the bottom line of systemic risk.We reinforced the concept of“how far we can reach depends on our risk management capabilities”and advanced the establishment of the risk management system cove

69、ring“all risks,all branches and subsidiaries,all customers,all assets,all processes and all factors”,enhanced digital risk control capabilities and efficiency,and strengthened proactive risk prevention and control and differentiated management of the branches and subsidiaries.We actively prevented a

70、nd mitigated risks in key areas,increased efforts to dispose of non-performing assets,and firmly upheld the risk bottom line.We comprehensively strengthened internal control compliance,and enhanced sanction and money laundering risk management.The Company continued to improve refined management leve

71、l and enhanced high-quality development capabilities.We tightened up internal management,optimised assets and liabilities management,performance management,cost management,capital management,pricing management,budget management,etc.and steadily promoted the implementation of the New Capital Rules.We

72、 aim to provide solid support for the implementation of the value creation bank strategy and achieve balance among multiple goals.We deepened organisational reform,steadily advanced the reform of branch operational systems,optimised the Head Offices organisational structure and improved service syst

73、em,so at to further align our organisational structure with development strategies.China Merchants BankAnnual Report 2023(H share)9Presidents StatementThe Company continued to create new advantages in digital transformation and accelerate the construction of“Digital CMB”.We enhanced top-level design

74、 to develop a three-year plan of digital transformation,and sped up the transition from“Online CMB”to“Smart CMB”.We increased input in technology with the information technology input reaching 4.60%of the Banks net operating income,and R&D personnel accounting for 9.14%of our total employee headcoun

75、t.We set our sights on the cutting edge technologies,robustly strengthened the research and development as well as comprehensive applications of AI technology,and launched brand new intelligent wealth assistant“Xiao Zhao(小招)”.AI has relieved our staff from repetitive,time-consuming work equivalent t

76、o the workload of over 17,000 individuals.We improved our service capability of“people+digitalisation”,serving over 200 million users via the CMB APP;the online rate of our basic corporate banking business and financing business exceeded 92%;the digital application capabilities of all employees of t

77、he Bank continued to improve,further enhancing the quality and efficiency for integrated online and offline services.The Company continued to build up talent team and promote the CMB culture.We intensified the recruitment of talents with more than 10,000 people recruited throughout the year;we stren

78、gthened the selection and appointment of management staff and the development of talents across different organisational levels;we enhanced the career development path of employees,improved the talent training and cultivation system,boosted the professional quality of employees,and highlighted the a

79、pplication of the“Six Can-do”2 mechanism in order to stimulate the motivation and vitality of the talent team.We promoted the organic integration of financial culture with Chinese characteristics and CMB culture to inspire,unite and encourage our employees with such cultures,and enhance the soft pow

80、er in competition.The Company continued to practice ESG philosophy and fulfill social responsibilities.We facilitated the green and low-carbon transformation,developed green finance and promoted green operation.We enhanced consumer rights protection,conducted the“Service Quality Improvement Year”cam

81、paign,promoted the banking service transformation to be more respectful,suitable,and accessible for the elderly customers,and focused on strengthening network security,data security,and privacy protection.In the performance appraisal for targeted assistance and poverty alleviation projects,we receiv

82、ed the highest rating for three consecutive years,with an external donation of RMB115 million in the year,demonstrating our commitment to“benefiting from and giving back to society”.CMB overcame difficulties and challenges in 2023.Under the strong leadership of the Board of Directors,and with the un

83、wavering support of governments at all levels,regulatory departments,customers,investors,partners,and all walks of life,CMB spared no efforts to create greater value for all stakeholders.These hard-earned results have retained our fundamental stability of customers,market share and asset quality,dem

84、onstrating the resilience of sustainable development,as well as the strength and cohesion of the 110,000 CMBers.We would like to express our sincere gratitude to the people from all walks of life who care about and support the development of China Merchants Bank,and show our great respect to the 110

85、,000 CMBers for their hard work!Drawing a new blueprint in a new era,“high-quality development will be the top priority in the new stage”.The goal of“Accelerating Construction of a Financial Powerhouse”was proposed at the Central Financial Work Conference,and CMB will stride in tandem with the times

86、 and align with the direction of the Chinese path to modernisation.Steadfast in its strategic determination,the Company will continue to explore and forge a new model for high-quality financial development.A new model for high-quality development is anchored in value creation.As the saying goes,“Onl

87、y by taking the right path can we avoid going astray”.We will adhere to the goal of creating greater comprehensive value for customers,employees,shareholders,partners and society,serve the real economy and peoples aspiration for a better life,and follow the value creation logic of“volume growth-reve

88、nue growth-profit growth-value growth”,resolutely forging ahead on the right path.A new model of high-quality development honours long-term success.Bank operation is a marathon,and it is about the determination and endurance to secure steady and sustainable growth.The path of extensive development d

89、riven by scale expansion has been proved unsustainable,and the“100-1=0”effect of risk will be more prominent,highlighting the logic of development determined by management and driven by innovation.We will adhere to the development philosophy which“takes quality as the foundation and profitability as

90、 priority,while maintaining moderate scale and reasonable structure”to achieve long-term sustainable development through intensive growth.A new model of high-quality development is rooted in differentiation and specialisation.As one of the first batch of joint-stock commercial banks established in t

91、he mid to late 1980s,the Bank has been making every effort to become a new force serving the real economy and peoples livelihood,and a path-breaker for financial innovation and development.We will grow stronger,better and bigger through differentiated competition to serve a wider range of customers

92、and cater for more diversified financial needs to integrate ourselves into a multi-layered,wide-covered,and differentiated modern financial service system.A new model of high-quality development emphasises balance and coordination.Individual business and institution will find it difficult to meet cu

93、stomer needs through its own efforts only,which is also unsustainable.We will uphold the philosophy of“One CMB”and provide customers with comprehensive,global and integrated services,thus achieving balanced,coordinated and complementary development of various business segments and regional branches

94、and subsidiaries.2 Management staff can be promoted or demoted;qualified talents can be recruited and those unqualified can be dismissed;remuneration can be increased or decreased.China Merchants BankAnnual Report 2023(H share)10Presidents StatementWang Liang President and Chief Executive Officer Ch

95、ina Merchants BankAnnual Report 2023(H share)11Presidents StatementIn the new year,the Bank will insist on leveraging management and innovation as the two pivotal drivers for the new model of high-quality development.Holding strict management as a shield,the Company will strengthen the foundation,im

96、prove quality,reduce costs,increase efficiency,and establish a standardised,refined,empowering,systematic,and scientific management system to expand the breadth and depth of risk management,cost management,institutional management and talent management in all aspects,and improve the level of intensi

97、ve development.Upholding fundamental principles and breaking new ground(守正創新),the Company will seize the great opportunities along the Chinese path to modernisation,ride the wave of scientific and technological progress,and focus on the needs of the real economy and peoples livelihood to strive for

98、breakthroughs in scientific and technological innovation,product innovation,business innovation,model innovation,and management innovation,and create new advantages in more segment markets.We must“attain to the broad and great while addressing the delicate and minute”.Every bit of management improve

99、ment and micro-innovation,if sustained over time,will produce a compound effect in value creation and turn quantitative changes into qualitative changes.Lofty aspirations grounded in persevered actions will lead to great success.High-quality development is not only extolled in the grand narrative of

100、 the revolution of the banking operational philosophy,but also embedded in the perseverance of little efforts that lead to remarkable success.This year marks the 37th anniversary of the establishment of CMB.CMB was born out of reform and has risen with the times.Adhering to the spirit of“making our

101、country flourish by solid work”,the courage of“breaking new ground”,and the original aspiration of“creating a real commercial bank”,CMB sailed from Shekou,towards the whole country and towards the world.We will remain true to our original aspiration and forge ahead on the path of high-quality develo

102、pment to achieve the strategic goal of becoming a value creation bank and to build a world-class commercial bank.We will explore the CMB example for financial development with Chinese characteristics,and contribute to the efforts of the construction of a financial powerhouse.China Merchants Bank Co.

103、,Ltd.President and Chief Executive Officer25 March 2024China Merchants BankAnnual Report 2023(H share)12Chapter I Company InformationCompany Information1.1 Company Profile1.1.1 Registered Company Name in Chinese:招商銀行股份有限公司(Abbreviated Name in Chinese:招商銀行)Registered Company Name in English:China Mer

104、chants Bank Co.,Ltd.1.1.2 Legal Representative:Miao JianminAuthorised Representatives:Wang Liang,Peng JiawenSecretary of the Board of Directors:Peng JiawenJoint Company Secretaries:Peng Jiawen,Ho Wing Tsz WendySecurities Representative:Xia Yangfang1.1.3 Registered and Office Address:7088 Shennan Bou

105、levard,Futian District,Shenzhen,Guangdong Province,China1.1.4 Contact Details:Address:7088 Shennan Boulevard,Futian District,Shenzhen,Guangdong Province,ChinaPostcode:518040Tel:+86 755 8319 8888Fax:+86 755 8319 5555E-mail:Website:Customer complaint hotline:95555-7Credit card complaint hotline:+86 40

106、0 820 5555-71.1.5 Principal Place of Business in Hong Kong:31/F,Three Exchange Square,8 Connaught Place,Central,Hong Kong,the PRC1.1.6 Share Listing:A Shares:Shanghai Stock ExchangeAbbreviated Name of A Shares:CMBStock Code:600036H Shares:SEHKAbbreviated Name of H Shares:CM BANKStock Code:03968Domes

107、tic Preference Shares:Shanghai Stock ExchangeAbbreviated Name of Shares:Zhao Yin You 1(招銀優 1)Stock Code:360028China Merchants BankAnnual Report 2023(H share)13Chapter I Company Information1.1.7 Domestic Auditor:Deloitte Touche Tohmatsu Certified Public Accountants LLPOffice Address:30th Floor,Bund C

108、entre,222 Yanan Road East,Shanghai,ChinaCertified Public Accountants for Signature:Wu Lingzhi,Sun WeiqiInternational Auditor:Deloitte Touche TohmatsuOffice Address:35th Floor,One Pacific Place,88 Queensway,Hong Kong,the PRC1.1.8 Legal Advisor as to PRC Law:JunHe LLP Legal Advisor as to Hong Kong Law

109、:Herbert Smith Freehills1.1.9 Registrar for A Shares:China Securities Depository&Clearing Corporation Ltd.,Shanghai Branch Address:188 South-Yanggao Road,Pudong New Area,Shanghai,the PRC Tel:+86 4008 058 058Share Register and Transfer Office as to H Shares:Computershare Hong Kong Investor Services L

110、td.Address:Shops 1712-1716,17/F,Hopewell Centre,183 Queens Road East,Wanchai,Hong Kong,the PRCTel:+852 2862 8555Registrar for Domestic Preference Shares:China Securities Depository&Clearing Corporation Ltd.,Shanghai Branch1.1.10 Newspapers and Websites Designated for Information Disclosure:The Chine

111、se mainland:“China Securities Journal”(),“Securities Times”(),“Shanghai Securities News”()website of Shanghai Stock Exchange()website of the Company()Hong Kong:website of Hong Kong Exchanges and Clearing Limited(.hk)website of the Company()Place for maintenance of periodic reports:Office of the Boar

112、d of Directors of the Company and principal place of business of the CompanyChina Merchants BankAnnual Report 2023(H share)14Chapter I Company Information1.2 Corporate Business OverviewFounded in 1987,the Company is headquartered in Shenzhen,China.The Company mainly focuses on the market in China wi

113、th branches primarily covering major cities in the Chinese mainland,as well as international financial centres such as Hong Kong of China,New York,London,Singapore,Luxembourg and Sydney.The Company was listed on the Shanghai Stock Exchange in April 2002 and the SEHK in September 2006.The Company pro

114、vides customers with various wholesale and retail banking products and services,and maintains treasury businesses for proprietary purpose and on behalf of customers.Many innovative products and services of the Company have been well accepted by the market.Retail banking services include the account,

115、payment and settlement service based on the“All-in-one”multifunction debit card and credit card,segmented and classified wealth management services including the“Sunflower Wealth Management”services and private banking services,retail credit services,CMB APP,CMB Life APP,“All-in-one Net”comprehensiv

116、e online banking service platform,and other online services.Wholesale banking services include payment and settlement,wealth management,investment and financing and digital services,cash management,sci-tech finance,green finance,inclusive finance,retirement finance,digital finance,supply chain finan

117、ce and cross-border finance services,asset management,asset custody and investment banking services etc.The Company continues to tap further into the living and business circles of customers to provide customers with customised,intelligent and comprehensive solutions for their supply chains and inve

118、stment chains.The Company has come up with the strategic vision of“building the best value creation bank with innovation-driven development,leading model and distinguished features”based on the internal and external situation and its own development.In line with the trend of the acceleration in the

119、construction of Chinas modern industrial system,the Company consistently enhances its quality and efficiency in serving the real economy and social well-being,and strives to create more value for customers,employees,shareholders,partners and society,with the aim of making greater contributions to th

120、e modernisation process with Chinese characteristics.China Merchants BankAnnual Report 2023(H share)15Chapter I Company Information1.3 Development StrategiesStrategic vision:We are committed to building the best value creation bank with innovation-driven development,leading model and distinguished f

121、eatures.Strategic objectives:Building a value creation bank.The Company upholds the philosophy of win-win in business and business for common good to grow into a value creation bank in pursuit of maximising the comprehensive value of customers,employees,shareholders,partners and the society,aiming t

122、o become a world-class commercial bank.Core Value:Being customer-centric and creating values for customers.Strategic focus:Adhering to the concept of dynamically balanced development of“Quality,Profitability and Scale”,the Company focuses on the building of three core capacities of“wealth management

123、,Fintech and risk management”to promote the evolution of organisational culture consistently.Based on the needs of the country and enterprises and the ability of China Merchants Bank,we practically implement the ESG concept,serve the real economy and meet the needs of peoples livelihood to create a

124、new stage for high-quality growth.Enlarging wealth management business and accelerating the transformation of the business model.By adopting a customer-centric approach to business operations and focusing on the value creation chain of“volume growth revenue growth profit growth value growth”,the Com

125、pany aims to foster a flywheel effect by fully integrating its four major business segments:retail finance,corporate finance,investment banking and financial markets,wealth management and asset management,and will strive to deliver sustained growth in both total assets under management(AUM)from reta

126、il customers and the aggregate financing products to corporate customers(FPA).Optimising Fintech and accelerating comprehensive digital transformation.Focusing on the goal of online,data-based,intelligent,platform-based and ecological operation,we will comprehensively promote the digital reshaping o

127、f financial infrastructure and capability system,customers and channels,businesses and products,management and decision-making.In particular,we are actively exploring the new mode of“AI+Finance”to make artificial intelligence a more important part of China Merchants Banks intelligence,and build a va

128、lue creation bank through the“Digital CMB”.Strengthening risk management and building a fortress-style overall risk and compliance management system.Adhering to the prudent risk management principle,using Fintech as the tool,and taking a prudent risk appetite as a safeguard measure,we will create a“

129、Six All”risk management system covering all risks,all branches and subsidiaries,all customers,all assets,all processes,and all factors to support the operation of the value creation bank.Pursuing the core values and building the cultural and organisational foundation for a value creation bank.Firstl

130、y,we will uphold and enhance China Merchants Banks corporate culture focusing on entrepreneurship,service quality,innovation,risk management,compliance,management excellence,and people-orientation,with an aim to create a vibrant and evolving cultural system.Secondly,we will establish an organising t

131、eam for supporting our service strategies and creating value together,providing organisational support and talent foundations for a value creation bank.Thirdly,we will actively implement sustainable development principles in serving the real economy,actively fulfilling environmental and social respo

132、nsibilities,and enhancing the standard of our corporate governance.China Merchants BankAnnual Report 2023(H share)16Chapter I Company Information1.4 Honors and AwardsIn 2023,the Company received a number of honours and awards from organisations both at home and abroad,including:The Company ranked 10

133、th globally in“The Top 500 Banking Brands 2023”released by The Banker(UK)in February 2023,with a brand value of USD24.536 billion.In March 2023,the Company was awarded the“Best Retail Bank in China”in“Asia Trailblazer Awards 2023”hosted by Retail Banker International.In June 2023,the US-based Instit

134、utional Investor magazine released the results of the“2023 All-Asia Executive Team”,recognising the Company as the bank with the highest overall ranking and the most awards in the Asian region.The Company won several awards,including“Best Board of Directors”,“Asias Most Respected Company”,“Best IR C

135、ompany”and“Best ESG Company”.In July 2023,the Company ranked 11th on the list of“Top 1,000 World Banks 2023”released by The Banker(UK),ranking first in the best performing Chinese banks for three consecutive years.In July 2023,the Company received the award of“Best Bank in China”at the“2023 Awards f

136、or Excellence”ceremony staged by Euromoney(UK)for the fifth consecutive year,marking the first“5-year championship streak”in its awarding history,and was also the only Chinese bank to receive the“Awards for Excellence”in that year.The list of Fortune Global 500 was officially released in August 2023

137、,on which the Company ranked 179th and making the list for 12 consecutive years.In August 2023,the Company was recognised as the“Best CSR Bank in China”and“Best Investment Bank in China”at the awards ceremony for the“Best Banks in China 2023”hosted by Asiamoney.In September 2023,in the selection of

138、the“2023 China Star”organised by the US-based Global Finance magazine,the Company was honoured with three awards,namely,“Best Wealth Management Provider”,“Best Corporate Governance Bank”and“Best Transaction Service Bank”.In November 2023,the Company ranked among Chinas Most Admired Companies by Fort

139、une magazine.In December 2023,the Company won“Top 10 Best Employers 2023”,“Most Socially Responsible Employer”and“Most Admired Employer by Women”at the awards ceremony for the“Best Employer in China 2023”jointly organised by Z and Institute of Social Science Survey,Peking University,and has been sho

140、rtlisted in the top 10 list of“Best Employers of the Year”for 13 consecutive years.China Merchants BankAnnual Report 2023(H share)17Chapter II Summary of Accounting Data and Financial IndicatorsSummary of Accounting Data and Financial IndicatorsFacilitating digitaltransformation of enterprisesto ope

141、n a new chapter byriding on the momentumChina Merchants BankAnnual Report 2023(H share)18Chapter II Summary of Accounting Data and Financial IndicatorsSummary of Accounting Data and Financial Indicators2.1 Key Accounting Data and Financial Indicators of the Group(in millions of RMB,unless otherwise

142、specified)20232022Changes+/-%Operating ResultsNet operating income(1)339,078344,740-1.64Profit before tax176,618165,1136.97Net profit attributable to shareholders of the Bank146,602138,0126.22 Per Share(RMB yuan)Basic earnings attributable to ordinary shareholders of the Bank(2)5.635.267.03Diluted e

143、arnings attributable to ordinary shareholders of the Bank5.635.267.03 (in millions of RMB,unless otherwise specified)31 December 202331 December 2022Changes+/-%Volume IndicatorsTotal assets11,028,48310,138,9128.77 of which:total loans and advances to customers(3)6,508,8656,051,4597.56Total liabiliti

144、es9,942,7549,184,6748.25 of which:total deposits from customers(3)8,155,4387,535,7428.22Total equity attributable to shareholders of the Bank1,076,370945,50313.84Net assets per share attributable to ordinary shareholders of the Bank(RMB yuan)(2)36.7132.7112.23 Notes:(1)Net operating income is the su

145、m of net interest income,net fee and commission income,other net income as well as share of profits of joint ventures and associates.(2)The Company issued non-cumulative preference shares in 2017,and issued perpetual bonds in 2020,2021 and 2023,all of which were classified as other equity instrument

146、s.In addition,the Company paid dividends on preference shares and interests on perpetual bonds in 2023.Therefore,when calculating the indicators such as basic earnings per share attributable to ordinary shareholders,return on average equity attributable to ordinary shareholders and net assets per sh

147、are attributable to ordinary shareholders,dividends on the preference shares and interests on perpetual bonds have been deducted from“net profit attributable to shareholders of the Bank”,while the preference shares and perpetual bonds shall be deducted from both the“average equity”and the“net assets

148、”.(3)Unless otherwise stated,the balance of the relevant financial instrument items herein and set out below exclude accrued interest.China Merchants BankAnnual Report 2023(H share)19Chapter II Summary of Accounting Data and Financial Indicators2.2 Financial Ratios of the Group(%)20232022Changes Pro

149、fitability indicatorsReturn on average assets attributable to shareholders of the Bank1.391.42Decreased by 0.03 percentage pointReturn on average equity attributable to ordinary shareholders of the Bank16.2217.06Decreased by 0.84 percentage pointNet interest spread(1)2.032.28Decreased by 0.25 percen

150、tage pointNet interest margin(2)2.152.40Decreased by 0.25 percentage point As percentage of net operating income Net interest income63.3163.30Increased by 0.01 percentage point Net non-interest income36.6936.70Decreased by 0.01 percentage pointCost-to-income ratio(3)32.9732.89Increased by 0.08 perce

151、ntage point (%)31 December 202331 December 2022Changes over 2022 year-end Capital adequacy indicators under the Advanced Measurement Approach(4)Core Tier 1 capital adequacy ratio13.7313.68Increased by 0.05 percentage pointTier 1 capital adequacy ratio16.0115.75Increased by 0.26 percentage pointCapit

152、al adequacy ratio17.8817.77Increased by 0.11 percentage pointEquity to total assets9.849.41Increased by 0.43 percentage point Asset quality indicatorsNon-performing loan ratio0.950.96Decreased by 0.01 percentage pointAllowance coverage ratio(5)437.70450.79Decreased by 13.09 percentage pointsAllowanc

153、e-to-loan ratio(6)4.144.32Decreased by 0.18 percentage point 20232022Changes Credit cost ratio(7)0.740.78Decreased by 0.04 percentage point Notes:(1)Net interest spread=average yield of the total interest-earning assets average cost ratio of total interest-bearing liabilities.(2)Net interest margin=

154、net interest income/average balance of total interest-earning assets.(3)Cost-to-income ratio=operating expenses/net operating income.The numerator does not include taxes and surcharges,provisions for insurance claims and the depreciation charges on fixed assets under operating lease and investment p

155、roperties and others.(4)As at the end of the reporting period,the Groups Core Tier 1 capital adequacy ratio,Tier 1 capital adequacy ratio and capital adequacy ratio under the Weighted Approach were 11.86%,13.82%and 14.96%respectively.(5)Allowance coverage ratio=allowances for impairment losses/balan

156、ce of non-performing loans.(6)Allowance-to-loan ratio=allowances for impairment losses/total loans and advances to customers.(7)Credit cost ratio=expected credit losses of loans and advances to customers/the average of total loans and advances to customers,the average of total loans and advances to

157、customers=(total loans and advances to customers at the beginning of the period+total loans and advances to customers at the end of the period)/2.China Merchants BankAnnual Report 2023(H share)20Chapter II Summary of Accounting Data and Financial Indicators2.3 Five-year Financial Summary of the Grou

158、p(in millions of RMB)20232022202120202019 Results for the yearNet operating income339,078344,740331,407290,279269,788Operating expenses120,991122,061116,879102,81491,497Impairment losses41,46957,56666,35565,02561,159Profit before tax176,618165,113148,173122,440117,132Net profit attributable to share

159、holders of the Bank146,602138,012119,92297,34292,867 (RMB yuan)Per ShareDividend(tax inclusive)1.9721.7381.5221.2531.20Basic earnings attributable to ordinary shareholders of the Bank5.635.264.613.793.62Diluted earnings attributable to ordinary shareholders of the Bank5.635.264.613.793.62Year-end ne

160、t assets attributable to ordinary shareholders of the Bank36.7132.7129.0125.3622.89 (in millions of RMB)Year endShare capital25,22025,22025,22025,22025,220Total shareholders equity1,085,729954,238865,681730,354617,707Total liabilities9,942,7549,184,6748,383,3407,631,0946,799,533Deposits from custome

161、rs8,155,4387,535,7426,347,0785,628,3364,844,422Total assets11,028,48310,138,9129,249,0218,361,4487,417,240Total loans and advances to customers6,508,8656,051,4595,570,0345,029,1284,490,650 (%)Key Financial RatiosReturn on average assets attributable to shareholders of the Bank1.391.421.361.231.31Ret

162、urn on average equity attributable to ordinary shareholders of the Bank16.2217.0616.9615.7316.84Cost-to-income ratio32.9732.8933.1133.3332.08Non-performing loan ratio0.950.960.911.071.16Credit cost ratio0.740.780.700.981.29Core Tier 1 capital adequacy ratio under the Advanced Measurement Approach13.

163、7313.6812.6612.2911.95Tier 1 capital adequacy ratio under the Advanced Measurement Approach16.0115.7514.9413.9812.69Capital adequacy ratio under the Advanced Measurement Approach17.8817.7717.4816.5415.54 China Merchants BankAnnual Report 2023(H share)21Chapter III Management Discussion and AnalysisM

164、anagement Discussion and AnalysisPiecing every small dream together to fill-in the development blueprintChina Merchants BankAnnual Report 2023(H share)22Chapter III Management Discussion and AnalysisManagement Discussion and Analysis3.1 Analysis of Overall OperationIn 2023,the Group adhered to the c

165、oncept of dynamically balanced development of“Quality,Profitability and Scale”,took the strategic target of building a value creation bank and carried out various businesses in a sound manner.Both the scale of assets and liabilities and net profit grew steadily,and the overall asset quality was stab

166、le.During the reporting period,the Group realised the net operating income of RMB339.078 billion,representing a year-on-year decrease of 1.64%;realised a net profit attributable to shareholders of the Bank of RMB146.602 billion,representing a year-on-year increase of 6.22%;realised the net interest

167、income of RMB214.669 billion,representing a year-on-year decrease of 1.63%;and realised the net non-interest income of RMB124.409 billion,representing a year-on-year decrease of 1.66%.The return on average asset(ROAA)attributable to shareholders of the Bank and return on average equity(ROAE)attribut

168、able to ordinary shareholders of the Bank were 1.39%and 16.22%,down by 0.03 percentage point and 0.84 percentage point year-on-year,respectively.As at the end of the reporting period,the Groups total assets amounted to RMB11,028.483 billion,representing an increase of 8.77%as compared with the end o

169、f the previous year.The total loans and advances to customers amounted to RMB6,508.865 billion,representing an increase of 7.56%as compared with the end of the previous year.Total liabilities amounted to RMB9,942.754 billion,representing an increase of 8.25%as compared with the end of the previous y

170、ear.Total deposits from customers amounted to RMB8,155.438 billion,representing an increase of 8.22%as compared with the end of the previous year.As at the end of the reporting period,the Group had a balance of non-performing loans of RMB61.579 billion,representing an increase of RMB3.575 billion as

171、 compared with the end of the previous year.The non-performing loan ratio was 0.95%,representing a decrease of 0.01 percentage point as compared with the end of the previous year.The allowance coverage ratio was 437.70%,representing a decrease of 13.09 percentage points as compared with the end of t

172、he previous year;the allowance-to-loan ratio was 4.14%,representing a decrease of 0.18 percentage point as compared with the end of the previous year.3.2 Analysis of Income Statement3.2.1 Financial highlightsDuring the reporting period,the Group realised a profit before tax of RMB176.618 billion,rep

173、resenting a year-on-year increase of 6.97%.The effective income tax rate was 16.20%,representing a year-on-year increase of 0.56 percentage point.The following table sets out the major income/loss items of the Group for the periods indicated.(in millions of RMB)20232022 Net interest income214,669218

174、,235Net fee and commission income84,10894,275Other net income37,82529,705Operating expenses(120,991)(122,061)Expected credit losses(41,278)(56,751)Impairment losses on other assets(191)(815)Share of profits of joint ventures and associates2,4762,525Profit before tax176,618165,113Income tax(28,612)(2

175、5,819)Net profit148,006139,294Net profit attributable to shareholders of the Bank146,602138,012 China Merchants BankAnnual Report 2023(H share)23Chapter III Management Discussion and Analysis3.2.2 Net operating incomeDuring the reporting period,the Group realised net operating income of RMB339.078 b

176、illion,representing a year-on-year decrease of 1.64%,of which net interest income accounted for 63.31%and net non-interest income accounted for 36.69%with a year-on-year decrease of 0.01 percentage point.3.2.3 Interest incomeDuring the reporting period,the Group recorded an interest income of RMB375

177、.610 billion,representing a year-on-year increase of 6.29%,mainly due to the increase in interest-earning assets.Interest income from loans and advances to customers continued to be the largest component of the interest income of the Group.Interest income from loans and advances to customersDuring t

178、he reporting period,the interest income from loans and advances to customers of the Group was RMB268.240 billion,representing a year-on-year increase of 0.99%.The following table sets forth the average balance(daily average balance,same as below),interest income and average yield of each component o

179、f loans and advances to customers of the Group for the periods indicated.20232022 (in millions of RMB,except for percentages)AveragebalanceInterestincomeAverageyield(%)AveragebalanceInterestincomeAverageyield(%)Corporate loans2,523,21094,5263.752,250,66286,7543.85Retail loans3,308,043166,1045.023,08

180、9,371168,1745.44Discounted bills468,6527,6101.62510,24210,6732.09 Loans and advances to customers6,299,905268,2404.265,850,275265,6014.54 During the reporting period,from the perspective of the maturity structure of loans and advances to customers of the Group,the average balance of short-term loans

181、 was RMB2,189.539 billion with the interest income amounting to RMB102.214 billion,and the average yield reached 4.67%;the average balance of medium-and long-term loans was RMB4,110.366 billion with the interest income amounting to RMB166.026 billion,and the average yield reached 4.04%.The average y

182、ield of short-term loans was higher than that of medium-and long-term loans,which was mainly attributable to the higher yield of credit card loans and consumer loans(as short-term loans)and the higher proportion thereof.Interest income from investmentsDuring the reporting period,the interest income

183、from investments of the Group was RMB80.836 billion,representing a year-on-year increase of 22.84%,which was mainly influenced by the investment volume.The average yield of investments was 3.22%,representing a year-on-year decrease of 2 basis points,which was mainly attributable to the impact of the

184、 downward market interest rates.Interest income from balances and placements with banks and other financial institutionsDuring the reporting period,the interest income of the Group from balances and placements with banks and other financial institutions was RMB16.557 billion,representing a year-on-y

185、ear increase of 22.74%,and the average yield of balances and placements with banks and other financial institutions was 2.80%,representing a year-on-year increase of 71 basis points,which was primarily attributable to the increase in yield of balances and placements with banks and other financial in

186、stitutions denominated in foreign currencies because of the effect of the rate hikes by the US Federal Reserve.China Merchants BankAnnual Report 2023(H share)24Chapter III Management Discussion and Analysis3.2.4 Interest expenseDuring the reporting period,the interest expense of the Group was RMB160

187、.941 billion,representing a year-on-year increase of 19.09%,mainly due to the increase in the scale of the interest-bearing liabilities and the increase of the cost ratio of interest expense.Interest expense on deposits from customersDuring the reporting period,the Groups interest expense on deposit

188、s from customers was RMB128.809 billion,representing a year-on-year increase of 21.71%,mainly due to the sustained rapid growth of deposits from customers as well as the increase in the cost ratio of deposits.The following table sets forth the average balances,interest expense and average cost ratio

189、s of the deposits from corporate and retail customers of the Group for the periods indicated.20232022 (in millions of RMB,except for percentages)AveragebalanceInterestexpenseAveragecost ratio(%)AveragebalanceInterestexpenseAveragecost ratio(%)Deposits from corporate customers Demand2,670,77829,0021.

190、092,631,38927,7491.05 Time1,989,20053,1862.671,755,39446,6982.66 Subtotal4,659,97882,1881.764,386,78374,4471.70 Deposits from retail customers Demand1,857,2917,3370.401,655,0886,0730.37 Time1,415,75739,2842.77913,78625,3162.77 Subtotal3,273,04846,6211.422,568,87431,3891.22 Total7,933,026128,8091.626

191、,955,657105,8361.52 Interest expense on deposits and placements from banks and other financial institutionsDuring the reporting period,the interest expense on deposits and placements from banks and other financial institutions of the Group amounted to RMB19.866 billion,representing a year-on-year in

192、crease of 21.81%,which was primarily attributable to the year-on-year increase of cost ratio of deposits and placements from banks and other financial institutions denominated in foreign currencies resulting from the US Federal Reserves interest rate hike.Interest expense on debt securities issuedDu

193、ring the reporting period,the interest expense on debt securities issued of the Group amounted to RMB7.781 billion,representing a year-on-year decrease of 19.47%,mainly due to the sound growth in deposits from customers,resulting in the decrease in daily average scale of debt securities issued.China

194、 Merchants BankAnnual Report 2023(H share)25Chapter III Management Discussion and Analysis3.2.5 Net interest incomeDuring the reporting period,the Groups net interest income amounted to RMB214.669 billion,representing a year-on-year decrease of 1.63%.The following table sets out the average balances

195、,interest income/interest expense and average yield/cost ratio of assets and liabilities items of the Group for the periods indicated.20232022 (in millions of RMB,except for percentages)AveragebalanceInterestincomeAverageyield(%)AveragebalanceInterestincomeAverageyield(%)Interest-earning assetsLoans

196、 and advances to customers6,299,905268,2404.265,850,275265,6014.54Investments2,509,77480,8363.222,029,57865,8083.24Balances with the central bank586,7979,9771.70557,0318,4821.52Balances and placements with banks and other financial institutions591,32016,5572.80644,93813,4892.09 Total9,987,796375,610

197、3.769,081,822353,3803.89 (in millions of RMB,except for percentages)AveragebalanceInterestexpenseAveragecost ratio(%)AveragebalanceInterestexpenseAveragecost ratio(%)Interest-bearing liabilitiesDeposits from customers7,933,026128,8091.626,955,657105,8361.52Deposits and placements from banks and othe

198、r financial institutions950,59519,8662.09996,81916,3091.64Debt securities issued240,1637,7813.24322,7849,6622.99Borrowings from the central bank186,3404,0052.15122,1942,8282.31Lease liabilities12,7184803.7713,4085103.80 Total9,322,842160,9411.738,410,862135,1451.61 Net interest income214,669218,235N

199、et interest spread2.032.28Net interest margin2.152.40 During the reporting period,the average yield of the interest-earning assets of the Group was 3.76%,representing a year-on-year decrease of 13 basis points;the average cost ratio of our interest-bearing liabilities was 1.73%,representing a year-o

200、n-year increase of 12 basis points;the net interest spread was 2.03%,representing a year-on-year decrease of 25 basis points and the net interest margin was 2.15%,representing a year-on-year decrease of 25 basis points.For the analysis of the reasons behind the decrease in the net interest margin,pl

201、ease refer to 3.9.1“Net interest margin”in this Chapter.China Merchants BankAnnual Report 2023(H share)26Chapter III Management Discussion and AnalysisThe following table sets forth the breakdown of changes in interest income and interest expense due to changes in volumes and interest rates of the G

202、roup for the periods indicated.Changes in volume were measured by changes in average balances,while changes in interest rates were measured by changes in the average interest rates;the changes in interest income and interest expense due to changes in both volumes and interest rates have been include

203、d in the amounts of changes in interest income and interest expense due to changes in volume.2023 compared to 2022 Increase(decrease)due toNet increase(decrease)(in millions of RMB)VolumeInterest rate Interest-earning assetsLoans and advances to customers20,263(17,624)2,639Investments15,434(406)15,0

204、28Balances with the central bank4921,0031,495Balances and placements with banks and other financial institutions(1,511)4,5793,068 Changes in interest income34,678(12,448)22,230 Interest-bearing liabilitiesDeposits from customers21,2471,72622,973Deposits and placements from banks and other financial

205、institutions(929)4,4863,557Debt securities issued(2,688)807(1,881)Borrowings from the central bank1,373(196)1,177Lease liabilities(26)(4)(30)Changes in interest expense18,9776,81925,796 Changes in net interest income15,701(19,267)(3,566)The following table sets out the average balances,interest inco

206、me/interest expense and annualised average yield/cost ratio of assets and liabilities items of the Group for the periods indicated.October to December 2023July to September 2023 (in millions of RMB,except for percentages)AveragebalanceInterestincomeAnnualisedaverageyield(%)AveragebalanceInterestinco

207、meAnnualisedaverageyield(%)Interest-earning assetsLoans and advances to customers6,434,84466,1704.086,317,54367,4784.24Investments2,611,33621,1513.212,555,49520,4873.18Balances with the central bank601,6702,6571.75589,7412,5611.72Balances and placements with banks and other financial institutions546

208、,8624,4573.23555,6023,3152.37 Total10,194,71294,4353.6810,018,38193,8413.72 (in millions of RMB,except for percentages)AveragebalanceInterestexpenseAnnualisedaveragecost ratio(%)AveragebalanceInterestexpenseAnnualisedaveragecost ratio(%)Interest-bearing liabilitiesDeposits from customers8,116,79733,

209、5431.647,954,31132,8111.64Deposits and placements from banks and other financial institutions931,1735,2682.24926,1364,6341.99Debt securities issued204,1481,7763.45252,7782,1373.35Borrowings from the central bank249,2371,3502.15157,0118532.16Lease liabilities12,2341153.7312,8771163.57 Total9,513,5894

210、2,0521.759,303,11340,5511.73 Net interest income52,38353,290Net interest spread1.931.99Net interest margin2.042.11 In the fourth quarter of 2023,the net interest margin of the Group was 2.04%,representing a quarter-to-quarter decrease of 7 basis points,and its net interest spread was 1.93%,represent

211、ing a quarter-to-quarter decrease of 6 basis points.China Merchants BankAnnual Report 2023(H share)27Chapter III Management Discussion and Analysis3.2.6 Net non-interest incomeDuring the reporting period,the Group recorded a net non-interest income of RMB124.409 billion,representing a year-on-year d

212、ecrease of 1.66%.The components are as follows:Net fee and commission income amounted to RMB84.108 billion,representing a year-on-year decrease of 10.78%.Among the fee and commission income,fee and commission income from wealth management amounted to RMB28.466 billion,representing a year-on-year dec

213、rease of 7.89%;fee and commission income from asset management amounted to RMB11.474 billion,representing a year-on-year decrease of 7.89%;income from bank card fees amounted to RMB19.525 billion,representing a year-on-year decrease of 8.76%;income from settlement and clearing fees amounted to RMB15

214、.492 billion,representing a year-on-year increase of 2.93%;commission income from credit commitment and loan business amounted to RMB4.997 billion,representing a year-on-year decrease of 13.14%;commission income from custody businesses amounted to RMB5.328 billion,representing a year-on-year decreas

215、e of 8.00%;and income from others amounted to RMB7.552 billion,representing a year-on-year decrease of 37.16%.For analysis of the main reasons for changes in fee and commission income,please refer to“Net non-interest income”in 3.9.2 under this chapter.Other net non-interest income amounted to RMB40.

216、301 billion,representing a year-on-year increase of 25.04%,of which net investment income amounted to RMB19.700 billion,representing a year-on-year increase of 9.37%,which was mainly due to the increase of bond investment income;net profit from changes in fair value amounted to RMB1.846 billion,repr

217、esenting a year-on-year increase of RMB4.521 billion,mainly due to the increase in fair value of bond investment and non-money-market fund investment;the net exchange gain amounted to RMB4.132 billion,representing a year-on-year increase of 14.78%,mainly due to the increase in gains arising from the

218、 foreign currencies transactions;and other net income amounted to RMB12.147 billion,representing a year-on-year increase of 12.82%,mainly due to a year-on-year increase of 23.85%in income generated from operating leasing business of CMB Financial Leasing,which amounted to RMB10.880 billion.In terms

219、of business segments,the net non-interest income from retail finance amounted to RMB57.561 billion,representing a year-on-year decrease of 4.11%and accounting for 46.27%of the Groups net non-interest income;the net non-interest income from wholesale finance amounted to RMB50.599 billion,representing

220、 a year-on-year decrease of 2.01%and accounting for 40.67%of the Groups net non-interest income;the net non-interest income from other businesses amounted to RMB16.249 billion,representing a year-on-year increase of 9.47%and accounting for 13.06%of the Groups net non-interest income.(in millions of

221、RMB,except for percentages)20232022Changes+/-%Fee and commission income(note)92,834103,372-10.19 Fees and commissions from wealth management28,46630,903-7.89 Fees and commissions from asset management11,47412,457-7.89 Bank card fees19,52521,399-8.76 Settlement and clearing fees15,49215,0512.93 Commi

222、ssions from credit commitment and loan business4,9975,753-13.14 Commissions from custody businesses5,3285,791-8.00 Others7,55212,018-37.16Fee and commission expense(8,726)(9,097)-4.08 Net fee and commission income84,10894,275-10.78Other net non-interest income40,30132,23025.04 Other net income37,825

223、29,70527.34 Net investment income19,70018,0139.37 Net profit/(loss)from fair value change1,846(2,675)N/A Net exchange gain4,1323,60014.78 Other net income12,14710,76712.82 Share of profits of joint ventures and associates2,4762,525-1.94 Total net non-interest income124,409126,505-1.66 Note:Fees and

224、commissions from wealth management include income from agency distribution of funds,income from agency distribution of insurance policies,income from agency distribution of trust schemes,income from agency distribution of wealth management products,income from securities brokerage and income from ag

225、ency distribution of precious metals.Fees and commissions from asset management mainly include the income from the issuance and management of various asset management products such as funds,wealth management and asset management plans of our subsidiaries,namely China Merchants Fund,CMB International

226、 Capital,CMB Wealth Management and CIGNA&CMAM.Commissions from custody businesses include income from basic asset custody services and value-added services.Others mainly include income from underwriting of bonds and equity,income from service fees from securitisation of credit assets,income from con

227、sultancy and advisory services and income from other intermediate businesses.China Merchants BankAnnual Report 2023(H share)28Chapter III Management Discussion and Analysis3.2.7 Operating expensesDuring the reporting period,the Groups operating expenses amounted to RMB120.991 billion,representing a

228、year-on-year decrease of 0.88%,among which staff costs amounted to RMB70.348 billion,representing a year-on-year decrease of 0.44%.Other operating expenses amounted to RMB50.643 billion3,representing a year-on-year decrease of 1.48%.The cost-to-income ratio of the Group was 32.97%,representing an in

229、crease of 0.08 percentage point as compared with the corresponding period of the previous year.The Group has maintained the scale of input in Fintech construction and key strategic businesses,reduced traditional costs with technological innovation,strengthened the management and control of input-out

230、put monitoring,and improved the efficiency of the resource usage.Furthermore,the Group adhered to cost management.Through various measures,the Group has further cut back on venue operating costs and daily expenses,and refined the allocation of expenses and resources so as to continuously promote the

231、 optimisation of cost structure.The following table sets forth,for the periods indicated,the principal components of the operating expenses of the Group.(in millions of RMB)20232022 Staff costs70,34870,657Depreciation,amortisation and rental expenses16,35915,720Other general and administrative expen

232、ses31,32132,319Allowances for insurance claims360Taxes and surcharges2,9633,005 Total operating expenses120,991122,061 3.2.8 Expected credit lossesDuring the reporting period,the expected credit losses of the Group were RMB41.278 billion,representing a year-on-year decrease of 27.26%.The following t

233、able sets forth,for the periods indicated,the principal components of expected credit losses of the Group.(in millions of RMB)20232022 Loans and advances to customers46,63545,157Financial investments(218)3,879Amounts due from banks and other financial institutions(2,935)(3,284)Expected credit losses

234、 relating to financial guarantees and loan commitments(2,761)7,112Others5573,887 Total expected credit losses41,27856,751 According to the Recognition and Measurement Standards for Financial Instruments,the Group conducted impairment accounting for credit risk exposures on-and off-balance sheet and

235、recognised the allowances for credit risk losses by using the expected credit loss model and the risk quantification parameters such as the probability of customer defaults and the loss given defaults,after taking into consideration the adjustments in macro perceptiveness.During the reporting period

236、,the expected credit losses of loans and advances to customers of the Group were RMB46.635 billion,representing a year-on-year increase of RMB1.478 billion;the total expected credit losses relating to financial investment,amounts due from banks and other financial institutions and financial guarante

237、es and loan commitments amounted to RMB-5.914 billion,representing a year-on-year decrease of RMB13.621 billion,which was due to,on the one hand,the change in the scale of assets,on the other hand,the relative stability of the asset quality,and the decrease in the risk of individual customers and as

238、set collection,reversing the amount provided in the previous period.The expected credit losses relating to others amounted to RMB557 million,representing a year-on-year decrease of RMB3.330 billion,mainly due to the relatively large allowances for credit risk losses of assets such as lease receivabl

239、e,fees receivable and other receivables in the corresponding period of the previous year.3 Other operating expenses include depreciation,amortisation,leases,taxes and surcharges,allowances for insurance claims and various other administrative expenses.China Merchants BankAnnual Report 2023(H share)2

240、9Chapter III Management Discussion and Analysis3.3 Analysis of Balance Sheet3.3.1 AssetsAs at the end of the reporting period,the total assets of the Group amounted to RMB11,028.483 billion,up by 8.77%from the end of the previous year,which was mainly attributable to the increase in loans and advanc

241、es to customers and bond investments of the Group.The following table sets forth,as at the dates indicated,the components of the total assets of the Group.31 December 202331 December 2022 (in millions of RMB,except for percentages)AmountPercentage ofthe totalamount(%)AmountPercentage ofthe totalamou

242、nt(%)Total loans and advances to customers6,508,86559.026,051,45959.69Allowances for impairment losses on loans(1)(266,805)(2.42)(254,913)(2.51)Net loans and advances to customers6,242,06056.605,796,54657.18Investment securities and other financial assets3,209,47329.102,787,06627.49Cash,precious met

243、als and balances with the central bank(2)684,8216.21605,0685.97Inter-bank transactions(2)558,3815.06630,3026.22Goodwill9,9540.099,9990.10Other assets(3)323,7942.94309,9313.04 Total assets11,028,483100.0010,138,912100.00 Notes:(1)The allowances for impairment losses on loans represent the allowance f

244、or impairment losses on loans and advances to customers measured at amortised cost.(2)“Inter-bank transactions”include deposits and placements with banks and other financial institutions and amounts held under resale agreements.According to the relevant provisions of the Interim Measures for the Adm

245、inistration of Gold Leasing Business(Yin Ban Fa 2022 No.88)issued by the General Office of the Peoples Bank of China in July 2022,since 2023,for the gold leasing business carried out between the Group and financial institutions,the lease-out side was adjusted from“precious metals”to“placements with

246、banks and other financial institutions”,and the comparative figures are re-presented accordingly.(3)“Other assets”include fixed assets,right-of-use assets,intangible assets,investment properties,deferred tax assets,interest receivable and other assets.3.3.1.1 Loans and advances to customersAs at the

247、 end of the reporting period,total loans and advances to customers of the Group amounted to RMB6,508.865 billion,representing an increase of 7.56%as compared with the end of the previous year;total loans and advances to customers accounted for 59.02%of the total assets,representing a decrease of 0.6

248、7 percentage point as compared with the end of the previous year.For details of the loans and advances to customers of the Group,please refer to 3.4“Analysis of Loan Quality”in this chapter.China Merchants BankAnnual Report 2023(H share)30Chapter III Management Discussion and Analysis3.3.1.2 Investm

249、ent securities and other financial assetsThe Groups investment securities and other financial assets consist of listed and unlisted financial instruments denominated in RMB and foreign currencies.The following table sets forth,as at the dates indicated,the components of investment securities and oth

250、er financial assets of the Group by line items.31 December 202331 December 2022 (in millions of RMB,except for percentages)AmountPercentageof the totalamount(%)AmountPercentageof the totalamount(%)Derivative financial assets18,7330.5818,6710.67Financial investments at fair value through profit or lo

251、ss526,14516.40423,46715.19 Bond investments274,6878.57215,0817.72 Others(note)251,4587.83208,3867.47Debt investments at amortised cost1,728,62053.861,536,39755.13 Bond investments1,680,26252.361,452,49952.12 Non-standardised asset investments87,0692.71126,6984.55 Others6790.026480.02 Less:allowances

252、 for impairment losses(39,390)(1.23)(43,448)(1.56)Debt investments at fair value through other comprehensive income889,73627.72771,27127.67Equity investments designated at fair value through other comprehensive income19,6490.6113,4160.48Investments in joint ventures and associates26,5900.8323,8440.8

253、6 Total investment securities and other financial assets3,209,473100.002,787,066100.00 Note:Including equity investments,fund investments,wealth management products,long position in precious metal contracts and others.Derivative financial instrumentsAs at the end of the reporting period,the major ca

254、tegories and amount of derivative financial instruments held by the Group are indicated in the following table.For details,please refer to Note 60(f)to the financial statements.31 December 202331 December 2022 Fair valueFair value(in millions of RMB)NotionalamountAssetsLiabilitiesNotionalamountAsset

255、sLiabilities Interest rate derivatives1,819,2315,433(5,476)1,543,2376,428(6,109)Currency derivatives1,431,26211,815(10,667)874,23011,376(11,671)Other derivatives136,7591,485(1,300)92,258867(856)Total3,387,25218,733(17,443)2,509,72518,671(18,636)The above table shows the notional amount and fair valu

256、e of the Groups derivative financial instruments by their remaining maturity on each balance sheet date.The notional amount refers only to the transaction volumes that have not yet been due or completed on the balance sheet date,and does not represent the value at risk.During the reporting period,th

257、e fluctuation of the RMB exchange rate increased and the interest-rate derivatives market showed a wide range-bound feature.As an integrated market maker in the interbank RMB foreign exchange market and a quote provider for derivatives in the local currency market,the Group was committed to providin

258、g liquidity to the market and maintaining the stability of the market.Meanwhile,by continuously leveraging its professional strengths in financial market derivative transactions,the Group kept up its effort in publicising the“exchange rate risk-neutral”concept,helping customers carry out hedging tra

259、nsactions to improve their risk resistance capabilities and reduce financial costs,and facilitating the high-quality development of the real economy.China Merchants BankAnnual Report 2023(H share)31Chapter III Management Discussion and AnalysisFinancial investments at fair value through profit or lo

260、ssAs at the end of the reporting period,the balance of the financial investments at fair value through profit or loss of the Group amounted to RMB526.145 billion,with bond and fund investments etc.being the major categories.The investments were primarily made by the Group based on assessments of,amo

261、ng other factors,macro economy,monetary and fiscal policies,industrial policies and market supply and demand,so as to obtain investment return by capturing trading opportunities in the market.During the reporting period,funding was stable in general and bond yields trended downward amid fluctuations

262、.The Group actively expanded its bond investments while strengthening market timing,achieving favourable returns.For details,please refer to Note 23(a)to the financial statements.Debt investments at amortised costAs at the end of the reporting period,the balance of the Groups debt investments at amo

263、rtised cost amounted to RMB1,728.620 billion.Among them,the bond investments mainly involved bonds issued by government and policy banks.This type of investment was held on a long-term basis for the strategic allocation of assets and liabilities of the Group,based on the requirements of interest rat

264、e risk management of banking book and liquidity management,while taking into account returns and risks.For details,please refer to Note 23(b)to the financial statements.Debt investments at fair value through other comprehensive incomeAs at the end of the reporting period,the balance of debt investme

265、nts at fair value through other comprehensive income of the Group amounted to RMB889.736 billion,with interest rate bonds such as government bonds and policy bank bonds and medium-to-high rating quality credit bonds being the major categories.This type of investment was primarily based on the Groups

266、 research and analysis on the bond market,with the purpose of obtaining investment return by capturing investment and allocation opportunities in the market and constantly optimising asset allocation structure.For details,please refer to Note 23(c)to the financial statements.Equity investments desig

267、nated at fair value through other comprehensive incomeAs at the end of the reporting period,the balance of equity investments designated at fair value through other comprehensive income of the Group amounted to RMB19.649 billion.Such investments were mainly non-trading equity investments held by the

268、 Group in the investees over whom the Group had no control,joint control or significant influence.For details,please refer to Note 23(d)to the financial statements.The composition of the Groups total bond investments classified by the issuing entities(in millions of RMB)31 December 202331 December 2

269、022 Official authorities1,944,8201,600,274Policy banks503,459494,628Commercial banks and other financial institutions252,828232,923Others143,578111,026 Total bond investments2,844,6852,438,851 Note:“Official authorities”include the Ministry of Finance of the PRC,local governments and the central ban

270、k,etc.;“Others”mainly refer to enterprises.Investments in joint ventures and associatesAs at the end of the reporting period,the Groups investments in joint ventures and associates amounted to RMB26.590 billion,up 11.52%from the end of the previous year.As at the end of the reporting period,the bala

271、nce of allowances for impairment losses on investments in joint ventures and associates of the Group was zero.For details,please refer to Note 25 and Note 26 to the financial statements.3.3.1.3 GoodwillIn compliance with the International Financial Reporting Standards,at the end of the reporting per

272、iod,the Group conducted an impairment test on the goodwill arising from the acquisition of CMB Wing Lung Bank,China Merchants Fund and other companies and determined that allowances for impairment losses were not necessary for the reporting period.As at the end of the reporting period,the Group had

273、a balance of allowances for impairment losses on goodwill of RMB579 million and the carrying value of goodwill was RMB9.954 billion.China Merchants BankAnnual Report 2023(H share)32Chapter III Management Discussion and Analysis3.3.2 LiabilitiesAs at the end of the reporting period,the total liabilit

274、ies of the Group amounted to RMB9,942.754 billion,representing an increase of 8.25%as compared with the end of the previous year,which was primarily attributable to the steady growth in deposits from customers.The following table sets forth,as at the dates indicated,the components of the total liabi

275、lities of the Group.31 December 202331 December 2022 (in millions of RMB,except for percentages)AmountPercentageof the totalamount(%)AmountPercentageof the totalamount(%)Deposits from customers8,155,43882.027,535,74282.05Inter-bank transactions(1)888,4088.94957,65710.42Borrowings from the central ba

276、nk377,1893.79129,4381.41Financial liabilities at fair value through profit or loss and derivative financial liabilities(1)61,4010.6267,7800.74Debt securities issued174,7641.76222,2882.42Others(2)285,5542.87271,7692.96 Total liabilities9,942,754100.009,184,674100.00 Notes:(1)“Inter-bank transactions”

277、include deposits and placements with banks and other financial institutions and amounts sold under repurchase agreements.According to the relevant provisions of the Interim Measures for the Administration of Gold Leasing Business(Yin Ban Fa 2022 No.88)issued by the General Office of the Peoples Bank

278、 of China in July 2022,since 2023,for the gold leasing business carried out between the Group and financial institutions,the lease-in side was adjusted from“financial liabilities at fair value through profit or loss”to“placements from banks and other financial institutions”,and the comparative figur

279、es are re-presented accordingly.(2)“Others”include salaries and welfare payable,taxes payable,contract liabilities,lease liabilities,expected liabilities,deferred income tax liabilities,interest payable and other liabilities.Deposits from customersAs at the end of the reporting period,total deposits

280、 from customers of the Group amounted to RMB8,155.438 billion,representing an increase of 8.22%as compared with the end of the previous year,accounting for 82.02%of the total liabilities of the Group,which was the major funding source of the Group.The following table sets forth,as at the dates indic

281、ated,the deposits from customers of the Group by product type and customer type.31 December 202331 December 2022 (in millions of RMB,except for percentages)AmountPercentageof the totalamount(%)AmountPercentageof the totalamount(%)Corporate customer deposits Demand2,644,68532.432,762,67136.66 Time2,0

282、15,83724.721,668,88222.15 Subtotal4,660,52257.154,431,55358.81 Deposits from retail customers Demand1,829,61222.431,983,36426.32 Time1,665,30420.421,120,82514.87 Subtotal3,494,91642.853,104,18941.19 Total deposits from customers8,155,438100.007,535,742100.00 In 2023,the percentage of daily average b

283、alance of the demand deposits to that of the deposits from customers of the Group was 57.08%,representing a year-on-year decrease of 4.55 percentage points.Among these,the daily average balance of demand deposits from corporate customers accounted for 57.31%of that of the corporate customer deposits

284、,representing a year-on-year decrease of 2.67 percentage points;the daily average balance of demand deposits from retail customers accounted for 56.74%of that of the deposits from retail customers,representing a year-on-year decrease of 7.69 percentage points.Affected by the decline in the risk appe

285、tite of customers and insufficient liquidity activities of enterprises,customers demand for investment in time deposit products increased,leading to a decrease in the proportion of demand deposits.China Merchants BankAnnual Report 2023(H share)33Chapter III Management Discussion and Analysis3.3.3 Sh

286、areholders equityAs at the end of the reporting period,the Groups equity attributable to shareholders of the Bank was RMB1,076.370 billion,representing an increase of 13.84%as compared with the end of the previous year,among which retained profits amounted to RMB568.372 billion,representing an incre

287、ase of 15.30%as compared with the end of the previous year;investment revaluation reserve amounted to RMB13.656 billion,representing an increase of 15.58%as compared with the end of the previous year,mainly due to an increase in the valuation of financial assets at fair value through other comprehen

288、sive income as compared to the end of the previous year;exchange difference on translation of financial statements of foreign operations amounted to RMB2.934 billion,representing an increase of RMB925 million as compared with the end of the previous year,mainly due to the fluctuations in RMB exchang

289、e rate.3.4 Analysis of Loan Quality3.4.1 Distribution of loans by 5-tier loan classificationThe following table sets forth the 5-tier loan classification of the Group as at the dates indicated.31 December 202331 December 2022 (in millions of RMB,except for percentages)AmountPercentageof the total am

290、ount(%)AmountPercentageof the total amount(%)Normal6,375,95897.955,919,98597.83Special mention71,3281.1073,4701.21Substandard16,5760.2622,7700.38Doubtful21,5540.3323,7370.39Loss23,4490.3611,4970.19Total loans and advances to customers6,508,865100.006,051,459100.00Non-performing loans61,5790.9558,004

291、0.96 Note:Under the 5-tier loan classification system,non-performing loans of the Group include substandard loans,doubtful loans and loss loans.During the reporting period,the Group insisted on strict classification of asset risks to truly reflect the asset quality according to the new regulations o

292、n risk classification of financial assets.Affected by the unwinding of risks among some high-debt real estate customers and risks associated with retail banking business,the balance of non-performing loans of the Group increased as compared with the end of the previous year.As at the end of the repo

293、rting period,the balance of the Groups non-performing loans amounted to RMB61.579 billion,representing an increase of RMB3.575 billion as compared with the end of the previous year,with a non-performing loan ratio of 0.95%,representing a decrease of 0.01 percentage point as compared with the end of

294、the previous year.China Merchants BankAnnual Report 2023(H share)34Chapter III Management Discussion and Analysis3.4.2 Distribution of loans and non-performing loans by product type31 December 202331 December 2022 (in millions of RMB,except for percentages)Loans andadvances to customersPercentageof

295、the total loans(%)Non-performingloansNon-Performingloan ratio(%)(1)Loans andadvances to customersPercentageof the total loans(%)Non-performingloansNon-Performingloan ratio(%)(1)Corporate loans2,599,85539.9430,9921.192,375,61639.2629,9611.26 Working capital loans1,021,30515.698,0680.79821,26913.579,5

296、621.16 Fixed asset loans838,44912.8814,9151.78864,88014.2914,1231.63 Trade finance334,1505.131190.04289,6054.793300.11 Others(2)405,9516.247,8901.94399,8626.615,9461.49Discounted bills(3)471,1277.24514,0548.49Retail loans3,437,88352.8230,5870.893,161,78952.2528,0430.89 Micro-finance loans751,29711.5

297、44,5920.61631,03810.434,0310.64 Residential mortgage loans1,385,48621.295,1220.371,389,20822.964,9040.35 Credit card loans935,91014.3816,3831.75884,51914.6215,6501.77 Consumer loans301,5384.633,2851.09202,2253.342,1911.08 Others(4)63,6520.981,2051.8954,7990.901,2672.31 Total loans and advances to cu

298、stomers6,508,865100.0061,5790.956,051,459100.0058,0040.96 Notes:(1)Represents the percentage of the non-performing loans in a certain category to the total loans of that category.(2)Primarily consists of other corporate loans such as financial leasing,M&A loans and corporate mortgage loans.(3)Discou

299、nted bills will be transferred to corporate loans for accounting purposes once overdue.(4)Primarily consists of commercial housing loans,automobile loans,house decoration loans,education loans and other personal loans secured by monetary assets.With regard to corporate loans,the Group focused on the

300、 national macroeconomic policies,implemented the value creation bank strategy on a comprehensive scale,accelerated the transformation of business models,promoted optimisation of the structure of customers,continuously strengthened the origination and investment of high-quality assets,thereby maintai

301、ning stable asset quality.As at the end of the reporting period,the balance of the Groups corporate loans amounted to RMB2,599.855 billion,representing an increase of 9.44%as compared to the end of the previous year,with a proportion of corporate loans of 39.94%.As affected by significant risk expos

302、ure of some high-debt real estate customers and individual corporate customers with poor operation and management,the amount of non-performing corporate loans reached RMB30.992 billion,representing an increase of RMB1.031 billion as compared with the end of the previous year;and the non-performing l

303、oan ratio of corporate loans was 1.19%,down by 0.07 percentage point as compared with the end of the previous year.With regard to retail loans,the Group actively carried forward the innovation of products and business models,accelerated the origination of high-quality assets,and continuously increas

304、ed credit support for small-and micro-sized customers.The Group gave priority to customers with rigid and improving housing demands,and maintained an overall stability in residential mortgage loans.Furthermore,the Group adhered to its“stable and low-volatility”operational strategy by focusing on val

305、ue-based customer acquisition,optimising asset structure,and steadily developing its credit card business.As at the end of the reporting period,the balance of the Groups retail loans amounted to RMB3,437.883 billion,representing an increase of 8.73%as compared to the end of the previous year,with a

306、proportion of retail loans of 52.82%,of which micro-finance loans amounted to RMB751.297 billion,representing an increase of 19.06%as compared with the end of the previous year.As at the end of the reporting period,the balance of non-performing retail loans amounted to RMB30.587 billion,representing

307、 an increase of RMB2.544 billion as compared with the end of the previous year.The non-performing ratio of retail loans was 0.89%,which remained at the same level as compared to the end of the previous year,of which the balance of non-performing credit card loans amounted to RMB16.383 billion,repres

308、enting an increase of RMB733 million as compared with the end of the previous year;and the non-performing loan ratio of credit card loans was 1.75%,down by 0.02 percentage point as compared with the end of the previous year.China Merchants BankAnnual Report 2023(H share)35Chapter III Management Disc

309、ussion and Analysis3.4.3 Distribution of loans and non-performing loans by industry31 December 202331 December 2022 (in millions of RMB,except for percentages)Loans andadvances to customersPercentageof the totalloans(%)Non-performingloansNon-Performingloan ratio(%)(1)Loans andadvances to customersPe

310、rcentageof the totalloans(%)Non-performingloansNon-Performingloan ratio(%)(1)Corporate loans2,599,85539.9430,9921.192,375,61639.2629,9611.26 Transportation,storage and postal services513,2647.891,7390.34492,2488.149480.19 Property development326,6675.0217,1835.26375,9806.2115,3484.08 Manufacturing57

311、7,0268.873,0630.53465,7127.704,7811.03 Production and supply of electric power,heat,gas and water272,2234.184430.16212,8933.524680.22 Leasing and commercial services192,6702.961,4700.76161,7502.671,7841.10 Wholesale and retail197,7393.041,3300.67180,7092.991,8361.02 Finance133,6642.053870.29112,1141

312、.854400.39 Construction111,2001.713330.30105,7701.754350.41 Information transmission,software and IT service103,7171.597600.7389,8581.484060.45 Water conservancy,environment and public utilities43,2320.661010.2364,9961.071000.15 Mining47,2710.735671.2040,4950.675211.29 Others(2)81,1821.243,6164.4573

313、,0911.212,8943.96Discounted bills471,1277.24514,0548.49Retail loans3,437,88352.8230,5870.893,161,78952.2528,0430.89 Total loans and advances to customers6,508,865100.0061,5790.956,051,459100.0058,0040.96 Notes:(1)Represents the percentage of the non-performing loans in a certain category to the tota

314、l loans of that category.(2)Primarily consists of agriculture,forestry,animal husbandry,fishery,accommodation and catering,health and social work,etc.The Group continued to improve the quality and efficiency of its services for the real economy,focused on the development of key finance sectors,inclu

315、ding sci-tech finance,green finance,inclusive finance,retirement finance and digital finance,etc.,improved the capabilities of customer operation,further increased the effort of loan extension,and steadily promoted the structural adjustment of asset business.As at the end of the reporting period,the

316、 balance of the Groups loans extended to the manufacturing industry amounted to RMB577.026 billion,representing an increase of 23.90%as compared with the end of the previous year,accounting for 8.87%of the total loans and advances to customers,with the proportion by 1.17 percentage points as compare

317、d with the end of the previous year.Furthermore,the Group closely tracked changes in internal and external situations,and continuously prevented and defused risks in key areas such as real estate and local government financing platforms.During the reporting period,the non-performing loan ratios of t

318、he Group in terms of property development,information transmission,software and IT service as well as transportation,storage and postal services all increased due to the risk exposure of high-debt real estate enterprises and individual corporate customers with poor operation and management.China Mer

319、chants BankAnnual Report 2023(H share)36Chapter III Management Discussion and Analysis3.4.4 Distribution of loans and non-performing loans by region31 December 202331 December 2022 (in millions of RMB,except for percentages)Loans andadvances to customersPercentageof the totalloans(%)Non-performinglo

320、ansNon-Performingloan ratio(%)(1)Loans andadvances to customersPercentageof the totalloans(%)Non-performingloansNon-Performingloan ratio(%)(1)Head Office(2)973,64614.9618,0111.85942,00615.5717,8111.89Yangtze River Delta1,441,14722.1410,4890.731,338,76922.1210,5320.79Bohai Rim930,20514.295,7450.62828

321、,31113.695,1180.62Pearl River Delta and Western Taiwan Straits Economic Zone1,186,28618.237,9410.671,087,41017.974,6730.43North-eastern China168,9292.601,8621.10169,5662.802,0201.19Central China686,67310.556,5140.95641,55410.608,0481.25Western China686,70110.555,8200.85633,12910.465,4680.86Overseas8

322、0,3361.238511.0678,5671.305440.69Subsidiaries354,9425.454,3461.22332,1475.493,7901.14 Total loans and advances to customers6,508,865100.0061,5790.956,051,459100.0058,0040.96 Notes:(1)Represents the percentage of the non-performing loans in a certain category to the total loans of that category.(2)Th

323、e Head Office includes Credit Card Centre.The Group seized the development opportunities brought by national strategies of coordinated regional development,focused on advantageous industries within the region,strengthened the coordination of branches in key regions,promoted business synergy within t

324、he region,and accelerated the development of branches in key regions.Furthermore,the Group closely monitored market changes,conducted continuous research on regional credit policies,and implemented differentiated operational management strategies.3.4.5 Distribution of loans and non-performing loans

325、by type of guarantees31 December 202331 December 2022 (in millions of RMB,except for percentages)Loans andadvances to customersPercentageof the total loans(%)Non-performingloansNon-Performingloan ratio(%)(Note)Loans andadvances to customersPercentageof the total loans(%)Non-performingloansNon-Perfor

326、mingloan ratio(%)(Note)Credit loans2,592,09339.8224,1470.932,219,63536.6821,6620.98Guaranteed loans822,05912.6318,7282.28836,55013.8216,6982.00Collateralised loans2,244,12934.4814,0910.632,132,33735.2414,2460.67Pledged loans379,4575.834,6131.22348,8835.775,3981.55Discounted bills471,1277.24514,0548.

327、49 Total loans and advances to customers6,508,865100.0061,5790.956,051,459100.0058,0040.96 Note:Represents the percentage of the non-performing loans in a certain category to the total loans of that category.As at the end of the reporting period,the Groups collateralised loans and pledged loans incr

328、eased by 5.74%as compared with the end of the previous year;the guaranteed loans decreased by 1.73%as compared with the end of the previous year,and the credit loans increased by 16.78%as compared with the end of the previous year.Among them,the non-performing loan ratios of credit loans as well as

329、collateralised loans and pledged loans all decreased as compared with the end of the previous year,while the non-performing loan ratio of guaranteed loans increased as compared with the end of the previous year.China Merchants BankAnnual Report 2023(H share)37Chapter III Management Discussion and An

330、alysis3.4.6 Loans to the top ten single borrowers(in millions of RMB,except for percentages)Loans as at31 December2023Percentageof net capital(under theAdvancedMeasurementApproach)(%)Percentageof total loans(%)Top ten borrowersIndustry AFinance22,2801.890.34BTransportation,storage and postal service

331、s18,8761.600.29CTransportation,storage and postal services15,3631.300.24DTransportation,storage and postal services14,5481.230.22ETransportation,storage and postal services13,2761.120.20FTransportation,storage and postal services10,6450.900.17GTransportation,storage and postal services9,5280.810.15H

332、Property development9,3590.790.14IManufacturing9,2050.780.14JTransportation,storage and postal services7,6240.640.12 Total130,70411.062.01 As at the end of the reporting period,the total loan of the Groups largest single borrower amounted to RMB22.280 billion,representing 1.89%of the Groups net capi

333、tal under the Advanced Measurement Approach.The loan of the Groups top ten single borrowers totalled RMB130.704 billion,representing 11.06%of the Groups net capital under the Advanced Measurement Approach,11.42%of the Groups net capital under the Weighted Approach,and 2.01%of the Groups total loans,respectively.3.4.7 Distribution of loans by overdue term31 December 202331 December 2022 (in million

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