刊发发售通函及定价补充文件 - 中信银行股份有限公司伦敦分行在本行5,000,000,000美元中期票据计划下发行于2027年到期的300,000,000美元浮动利率票据（代号:5122）

香港交易及结算所有限公司及香港联合交易所有限公司对本公告的内容概不负责，对其准确性或完整性亦不发表任何声明，并明确表示，概不就因本公告全部或任何部份内容而产生或因倚赖该等内容而引致的任何损失承担任何责任。 本公告仅供参考，并不构成收购、购买或认购本公告所述证券的邀请或要约。本公告并非作为在美国境内出售发行人（定义见下文）或本行（定义见下文）证券的要约或招揽购买发行人或本行证券的要约。本公告所述证券未曾亦不会根据经修订的1933年《美国证券法》（「证券法」）或美国任何州的证券法登记，且除获免遵守美国证券法规定或属不受其规限之交易外，证券亦不可在美国境内或向美国人士或以其名义或为其利益（定义见证券法下的S规例）提呈发售或出售。本公告及其所含资料不得直接或间接在或向美国境内进行分发。本公告所述证券并无且将不会于美国境内进行公开发售。 本公告及其所述上市文件乃按香港联合交易所有限公司证券上市规则规定发布且仅供参考，并不构成提呈出售任何证券的要约或招揽购买任何证券的要约。本公告及其所述任何内容（包括上市文件）并非任何合约或承诺的依据。为免生疑问，就香港法例第32章公司（清盘及杂项条文）条例而言，刊发本公告及其所述上市文件不应视为根据发行人或本行或发行人或本行的代表刊发的招股章程提出的证券发售要约，且就香港法例第571章证券及期货条例而言，亦不构成载有向公众人士发出邀请以订立或建议订立有关购买、出售、认购或包销证券的协议的广 告、邀请或文件。 香港投资者敬请注意：各发行人及本行确认，该等票据（定义见下文）拟仅供专业投资者（定义见香港联合交易所有限公司证券上市规则第37章）购买，且已按该基准于香港联合交易所有限公司上市。因此，各发行人及本行确认该等票据不适合作为香港散户的投资。投资者应审慎考虑所涉及的风险。 刊发发售通函及定价补充文件（在中华人民共和国注册成立的股份有限公司）（股份代号：998）（「本行」）中信银行股份有限公司伦敦分行 China CITIC Bank Corporation Limited London Branch（「发行人」） 在本行5000000000美元中期票据计划（「该计划」）下发行 于2027年到期的300000000美元浮动利率票据（代号：5122）（「该等票据」） –1–本公告乃根据香港联合交易所有限公司（「香港联交所」）证券上市规则（「上市规则」）第37.39A条刊发。 敬请参阅分别随附于本公告的日期为2024年6月18日有关该计划的发售通函（「发售通函」）及日期为2024年7月2日有关该等票据的定价补充文件（「定价补充文件」）（发售通函及定价补充文件统称「上市文件」，各为一份「上市文件」）。诚如上市文件所披露，该等票据拟仅供专业投资者（定义见上市规则第37章）购买，且已按该基准于香港联交所上市。 上市文件并不构成向任何司法辖区的公众提呈出售任何证券的招股章程、通 告、通函、宣传册或广告。其并非向公众发出邀请以作出认购或购买任何证券的要约，亦非供传阅以邀请公众发出认购或购买任何证券的要约。 上市文件概不得视为认购或购买发行人、本行或本行任何分行的任何该等票 据的劝诱，亦无意进行有关劝诱。 承董事会命中信银行股份有限公司方合英董事长 2024年7月10日 于本公告日期，本行执行董事为方合英先生（董事长）及刘成先生（行长）；非执行董事为曹国强先生、黄芳女士及王彦康先生；及独立非执行董事为廖子彬先 生、周伯文先生、王化成先生及宋芳秀女士。 –2–目录日期为2024年6月18日的发售通函日期为2024年7月2日的定价补充文件 – 3 –IMPORTANT NOTICE THIS OFFERING IS AVAILABLE ONLY TO INVESTORS WHO ARE ADDRESSEES OUTSIDE OF THE UNITED STATES AND (IN THE CASE OF NOTES OFFERED OR SOLD IN RELIANCE ON CATEGORY 2 OF REGULATION S) ARE NOT U.S. PERSONS.IMPORTANT: You must read the following disclaimer before continuing. The following disclaimer applies to the attached offering circular (the “Offering Circular”). You are advised to read this disclaimer carefully before accessing reading or making any other use of the Offering Circular. In accessing the Offering Circular you agree to be bound by the following terms and conditions including any modifications to them from time to time each time you receive any information from us as a result of such access.Confirmation of your representation: The Offering Circular is being sent to you at your request and by accepting the e-mail and accessing the attached document you shall be deemed to represent to China CITIC Bank Corporation Limited (the “Bank”) or any branch of the Bank as specified in the relevant Pricing Supplement (each a “BranchIssuer” and together with the Bank the “Issuers” and each an “Issuer”) and China CITIC Bank International Limited (the “Arranger”) that (1) you and any customers you represent are not U.S. persons (as defined in Regulation S under the U.S. Securities Act of 1933 as amended (the “Securities Act”)) and that the e-mail address that you gave us and to which this e-mail has been delivered is not located in the United States its territories or possessions and (2) that you consent to the delivery of the attached and any amendments or supplements thereto by electronic transmission.The attached document has been made available to you in electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of transmission and consequently none of the Bank the Issuers the Arranger the dealers named herein (the “Dealers”) the agents named herein (the “Agents”) nor their respective affiliates and their respective directors officers employees representatives agents and each person who controls the Bank the Issuers the Arranger a Dealer an Agent or their respective affiliates accepts any liability or responsibility whatsoever in respect of any discrepancies between the document distributed to you in electronic format and the hard copy version available to you on request from the Arranger or Dealers.THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD OR (IN THE CASE OF SECURITIES IN BEARER FORM) DELIVERED WITHIN THE UNITED STATES OR (IN THE CASE OF NOTES BEING SOLD OR OFFERED IN RELIANCE ON CATEGORY 2 OF REGULATION S) TO OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS EXCEPT PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. THIS OFFERING IS MADE SOLELY TO NON-U.S. PERSONS IN OFFSHORE TRANSACTIONS PURSUANT TO REGULATION S UNDER THE SECURITIES ACT.Nothing in this electronic transmission constitutes an offer or an invitation by or on behalf of the Bank the Issuers the Arranger or the Dealers to subscribe for or purchase any of the securities described therein and access has been limited so that it shall not constitute in the United States or elsewhere directed selling efforts (within the meaning of Regulation S under the Securities Act). If a jurisdiction requires that the offering be made by a licensed broker or dealer and an Arranger or a Dealer or any affiliate of it is a licensed broker or dealer in that jurisdiction the offering shall be deemed to be made by it or such affiliate on behalf of the Issuers in such jurisdiction.You are reminded that you have accessed the Offering Circular on the basis that you are a person into whose possession the Offering Circular may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not nor are you authorised to deliver this document electronically or otherwise to any other person. If you have gained access to this transmission contrary to the foregoing restrictions you are not allowed to purchase any of the securities described in the attached.Actions that you may not take: If you receive this document by e-mail you should not reply by e-mail to this document and you may not purchase any securities by doing so. Any reply e-mail communications including those you generate by using the “Reply” function on your e-mail software will be ignored or rejected.YOU ARE NOT AUTHORISED TO AND YOU MAY NOT FORWARD OR DELIVER THE OFFERING CIRCULAR ELECTRONICALLY OR OTHERWISE TO ANY OTHER PERSON OR REPRODUCE SUCH OFFERING CIRCULAR IN ANY MANNER WHATSOEVER. ANY FORWARDING DISTRIBUTION OR REPRODUCTION OF THE OFFERING CIRCULAR IN WHOLE OR IN PART IS UNAUTHORISED.FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.You are responsible for protecting against viruses and other destructive items. If you receive this document by e-mail your use of this e-mail is at your own risk and it is your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive nature.CHINA CITIC BANK CORPORATION LIMITED中信银行股份有限公司 (a joint stock company incorporated in the People’s Republic of China with limited liability) (Hong Kong Stock Exchange Stock Code: 00998; Shanghai Stock Exchange Stock Code: 601998) U.S.$5000000000 Medium Term Note Programme Under the Medium Term Note Programme (the “Programme”) China CITIC Bank Corporation Limited 中信银行股份有限公司 (the “Bank”) or any branch of the Bank as specified in the relevant Pricing Supplement (as defined below) (a “Branch Issuer” and together with the Bank the “Issuers” and each an “Issuer”) subject to compliance with all relevant laws regulations and directives may from time to time issue notes (the “Notes”) denominated in any currency agreed between the relevant Issuer and the relevant Dealer (as defined below).Notes may be issued in bearer or registered form (respectively “Bearer Notes” and “Registered Notes”). The maximum aggregate nominal amount of all Notes from time to time outstanding under the Programme will not exceed U.S.$5000000000 (or its equivalent in other currencies calculated as described in the Dealer Agreement described herein) subject to increase as described herein.The Notes may be issued on a continuing basis to one or more of the Dealers specified under “Summary of the Programme” and any additional Dealer appointed under the Programme from time to time by the Bank (each a “Dealer” and together the “Dealers”) which appointment may be for a specific issue or on an ongoing basis. References in this Offering Circular to the “relevant Dealer” shall in the case of an issue of Notes being (or intended to be) subscribed by more than one Dealer be to all Dealers agreeing to subscribe such Notes.Application has been made to The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) for the listing of the Programme by way of debtissues to professional investors (as defined in Chapter 37 of the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange) (“ProfessionalInvestors”) only during the 12-month period after the date of this Offering Circular on the Hong Kong Stock Exchange. This Offering Circular is for distribution to Professional Investors only.Notice to Hong Kong investors: The Issuer confirms that the Notes are intended for purchase by Professional Investors only and the Programme and the Notes (to the extent such Notes are to be listed on the Hong Kong Stock Exchange) will be listed on the Hong Kong Stock Exchange on that basis.Accordingly the Issuer confirms that the Notes are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved.The Hong Kong Stock Exchange has not reviewed the contents of this Offering Circular other than to ensure that the prescribed form disclaimer and responsibility statements and a statement limiting distribution of this Offering Circular to Professional Investors only have been reproduced in this Offering Circular. Listing of the Programme or the Notes on the Hong Kong Stock Exchange is not to be taken as an indication of the commercial merits or credit quality of the Programme the Notes the Issuer the Bank or the Group or quality of disclosure in this document. Hong Kong Exchanges and Clearing Limited and the Hong Kong Stock Exchange take no responsibility for the contents of this Offering Circular make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Offering Circular.Where applicable for a relevant Tranche (as defined under “Terms and Conditions of the Notes”) of Notes the Notes will be issued within the relevant annual foreign debt issuance quota granted to the Bank or its affiliate by the National Development and Reform Commission of the PRC (the “NDRC”) or registration will be completed by the Bank with the NDRC pursuant to the Administrative Measures for Examination and Registration of Medium- and Long-term Foreign Debt of Enterprises (企业中长期外债审核登记管理办法（国家发展和改革委员会令第56号）) issued by the NDRC and effective as of 10 February 2023 and anyimplementation rules regulations certificates circulars or notices in connection therewith as issued by the NDRC from time to time (the “NDRC AdministrativeMeasures”). After the issuance of such relevant Tranche of Notes the Bank intends to provide the requisite information and documents on the issuance of such Notes to the NDRC within the time period as required by the NDRC.Notice of the aggregate nominal amount of Notes interest (if any) payable in respect of Notes the issue price of Notes and any other terms and conditions not contained herein which are applicable to each Tranche of Notes will be set out in a pricing supplement (the “Pricing Supplement”).The language of this Offering Circular is English. Certain legislative references and technical terms have been cited in their original language in order that the correct technical meaning may be ascribed to them under applicable law.The Programme provides that Notes may be listed or admitted to trading as the case may be on such other stock exchanges or markets as may be agreed between the relevant Issuer and the relevant Dealers. The relevant Issuer may also issue unlisted Notes.The Notes have not been and will not be registered under the United States Securities Act of 1933 as amended (the “Securities Act”) and may not be offered or sold within the United States or (in the case of Notes offered or sold in reliance on Category 2 of Regulation S) to or for the account or benefit of U.S. persons except pursuant to an exemption from or in a transaction not subject to the registration requirements of the Securities Act. For a description of these and certain further restrictions on offers and sales of the Notes and the distribution of this Offering Circular see “Subscription and Sale” below.Each Tranche of Notes of each Series (as defined in “Form of the Notes”) in bearer form will be represented on issue by a temporary global note in bearer form (each a “Temporary Bearer Global Note” or “Temporary Global Note”) or a permanent global note in bearer form (each a “Permanent Bearer Global Note” or “Permanent Global Note”). Notes in registered form will initially be represented by a global note in registered form (each a “Registered Global Note” or “Global Certificate” and together with any Temporary Bearer Global Notes and Permanent Bearer Global Notes the “Global Notes” and each a “Global Note”).Registered Global Notes will be registered in the name of or in the name of a nominee for one or more clearing systems. Global Notes may be deposited on the issue date with a common depositary for Euroclear Bank SA/NV (“Euroclear”) and Clearstream Banking S.A. (“Clearstream”). Global Notes may also be deposited with a sub-custodian for the Hong Kong Monetary Authority (the “HKMA”) as operator of the Central Moneymarkets Unit Service operated by the HKMA (the “CMU”). The provisions governing the exchange of interests in Global Notes for other Global Notes and definitive Notes are described in “Form ofthe Notes”.The relevant Issuer may agree with any Dealer that the Notes may be issued in a form not contemplated by the terms and conditions of the Notes set out herein under “Terms and Conditions of the Notes” (the “Terms and Conditions of the Notes”) in which event (in the case of Notes intended to be listed on the Hong Kong Stock Exchange) a supplemental offering circular if appropriate will be made available which will describe the effect of the agreement reached in relation to such Notes.The Bank has been rated Baa2 by Moody’s Investors Service Inc. (“Moody’s”) A- by S&P Global Ratings (“S&P”) and BBB+ by Fitch Ratings Ltd. (“Fitch”).The Programme has been rated BBB+ by S&P. Notes issued under the Programme may be rated or unrated. Where an issue of a certain series of Notes is rated its rating will not necessarily be the same as the rating applicable to the Programme and (where applicable) such rating will be specified in the relevant Pricing Supplement. A rating is not a recommendation to buy sell or hold securities and may be subject to suspension change or withdrawal at any time by the assigning rating agency. A suspension reduction or withdrawal of the rating assigned to the Notes may adversely affect the market price of the Notes.Investing in Notes issued under the Programme involves certain risks and may not be suitable for all investors. Investors should have sufficient knowledge and experience in financial and business matters to evaluate the information contained in this Offering Circular and in the applicable Pricing Supplement and the merits and risks of investing in a particular issue of the Notes in the context of their financial position and particular circumstances.Investors also should have the financial capacity to bear the risks associated with an investment in Notes. Investors should not purchase Notes unless they understand and are able to bear risks associated with the Notes. Investors should be aware that there are various other risks relating to the Notes the Issuers the Bank and its subsidiaries their business and their jurisdictions of operations which investors should familiarise themselves with before making an investment in the Notes. See “Risk Factors” beginning on page 13 for a discussion of certain factors to be considered in connection with an investment in the Notes.Arranger and Dealer China CITIC Bank International The date of this Offering Circular is 18 June 2024.IMPORTANT NOTICE The Bank having made all reasonable enquiries confirms that to the best of its knowledge and belief: (i) this Offering Circular contains all information with respect to the Bank and its subsidiaries taken as a whole (the “Group”) and to the Notes which is material in the context of the issue and offering of the Notes (including all information which according to the particular nature of the Bank and of the Notes is necessary to enable investors to make an informed assessment of the assets and liabilities financial position profits and losses and prospects of the Group and of the rights attaching to the Notes); (ii) the statements contained herein relating to the Bank the Group and the Notes are in every material respect true and accurate and not misleading; and (iii) there are no other facts in relation to the Bank the Group or the Notes the omission of which would in the context of the issue and offering of the Notes make any statement in this Offering Circular misleading in any material aspect.This Offering Circular includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Issuer and the Bank and the Group. Each of the Issuer and the Bank accepts full responsibility for the accuracy of the information contained in this Offering Circular and confirms having made all reasonable enquiries that the information contained in this Offering Circular is in accordance with the facts and that to the best of its knowledge and belief there are no other facts the omission of which would make any statements herein misleading.No person is or has been authorised by the Issuers or the Bank to give any information or to make any representations other than those contained in this Offering Circular in connection with the Programme or the Notes and if given or made such information or representations must not be relied upon as having been authorised by the Issuers the Bank the Arranger or the Dealers or any of their respective directors officers employees agents representatives or affiliates.The Arranger and the Dealers have not separately verified the information contained in this Offering Circular to the fullest extent permitted by law. None of the Arranger or the Dealers or any of their respective directors officers employees agents representatives or affiliates makes any representation warranty or undertaking express or implied or accepts any responsibility with respect to the accuracy or completeness of any of the information in this Offering Circular. To the fullest extent permitted by law none of the Arranger or the Dealers or any of their respective directors officers employees agents representatives or affiliates accepts any responsibility for the contents of this Offering Circular. Each of the Arranger and the Dealers or any of their respective directors officers employees agents representatives or affiliates accordingly disclaims all and any liability whether arising in tort or contract or otherwise (save as referred to above) which it might otherwise have in respect of this Offering Circular or any such statement. Neither this Offering Circular nor any financial statements included or incorporated herein are intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by any of the Issuers the Bank the Arranger or the Dealers or any of their respective directors officers employees agents representatives or affiliates that any recipient of this Offering Circular or any such financial statements should purchase the Notes. Each potential purchaser of Notes should determine for itself the relevance of the information contained in this Offering Circular and make its own independent investigation of the financial condition and affairs and its own appraisal of the creditworthiness of the relevant Issuer the Bank and the risks involved. The purchase of Notes by investors should be based upon their investigation as they deem necessary. None of the Arranger nor the Dealers or any of their respective directors officers employees agents representatives or affiliates undertakes to review the financial condition or affairs of the Issuers the Bank and the Group during the life of the arrangements contemplated by this Offering Circular nor to advise any investor or potential investor in the Notes of any information coming to the attention of any of the Arranger or the Dealers or any of their respective directors officers employees agents representatives or affiliates.– i –Neither this Offering Circular nor any other information supplied in connection with the Programme or the issue of any Notes constitutes an offer or invitation by or on behalf of the relevant Issuer the Bank any of the Arranger or the Dealers or any of their respective directors officers employees agents representatives or affiliates to any person to subscribe for or to purchase any Notes.Neither the delivery of this Offering Circular or any Pricing Supplement nor the offering sale or delivery of any Notes shall in any circumstances imply that the information contained herein concerning the relevant Issuer or the Bank is correct at any time subsequent to the date hereof or that any other information supplied in connection with the Programme is correct as of any time subsequent to the date indicated in the document containing the same. The Arranger and the Dealers or any of their respective directors officers employees agents representatives or affiliates expressly do not undertake to review the financial condition or affairs of the Issuers or the Bank during the life of the Programme or to advise any investor in the Notes of any information coming to their attention. Investors should review inter alia the most recently published documents incorporated by reference into this Offering Circular when deciding whether or not to purchase any Notes.IN CONNECTION WITH THE ISSUE OF ANY TRANCHE OF NOTES THE DEALER OR DEALERS (IF ANY) NAMED AS THE STABILISATION MANAGER(S) (OR PERSON(S) ACTING ON BEHALF OF ANY STABILISATION MANAGER(S)) IN THE APPLICABLE PRICING SUPPLEMENT MAY OVER-ALLOT NOTES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE PRICE OF THE NOTES OF THE SERIES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL FOR A LIMITED PERIOD AFTER THE ISSUE DATE OF THE RELEVANT TRANCHE OF NOTES. HOWEVER STABILISATION MAY NOT NECESSARILY OCCUR. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE RELEVANT TRANCHE OF NOTES IS MADE AND IF BEGUN MAY CEASE AT ANY TIME BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE RELEVANT TRANCHE OF NOTES AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE RELEVANT TRANCHE OF NOTES. ANY STABILISATION ACTION OR OVER-ALLOTMENT MUST BE CONDUCTED BY THE RELEVANT STABILISATION MANAGER(S) (OR PERSON(S) ACTING ON BEHALF OF ANY STABILISATION MANAGER(S)) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.The Notes have not been and will not be registered under the U.S. Securities Act of 1933 as amended (the “Securities Act”) and Bearer Notes are subject to U.S. tax law requirements. Subject to certain exceptions the Notes may not be offered sold or (in the case of Bearer Notes) delivered within the United States or (in the case of Notes offered or sold in reliance on Category 2 of Regulation S) to or for the account or benefit of U.S. persons (as defined in Regulation S under the Securities Act). For a further description of certain restrictions on the offering and sale of the Notes and on distribution of this Offering Circular see “Subscription and Sale” and the applicable Pricing Supplement.Notice to capital market intermediaries and prospective investors pursuant to paragraph 21 of the Hong Kong SFC Code of Conduct — Important Notice to Prospective Investors Prospective investors should be aware that certain intermediaries in the context of certain offerings of Notes pursuant to this Programme (each such offering a “CMI Offering”) including certain Dealers may be “capital market intermediaries” (together the “CMIs”) subject to Paragraph 21 of the Code ofConduct for Persons Licensed by or Registered with the Securities and Futures Commission (the “SFCCode”). This notice to prospective investors is a summary of certain obligations the SFC Code imposes on such CMIs which require the attention and cooperation of prospective investors. Certain CMIs may also be acting as “overall coordinators” (together the “OCs”) for a CMI Offering and are subject to additional requirements under the SFC Code. The application of these obligations will depend on the role(s) undertaken by the relevant Dealer(s) in respect of each CMI Offering.– ii –Prospective investors who are the directors employees or major shareholders of the relevant Issuer a CMI or its group companies would be considered under the SFC Code as having an association (“Association”) with the relevant Issuer the CMI or the relevant group company. Prospective investors associated with the relevant Issuer or any CMI (including its group companies) should specifically disclose this when placing an order for the relevant Notes and should disclose at the same time if such orders may negatively impact the price discovery process in relation to the relevant CMI Offering.Prospective investors who do not disclose their Associations are hereby deemed not to be so associated.Where prospective investors disclose their Associations but do not disclose that such order may negatively impact the price discovery process in relation to the relevant CMI Offering such order is hereby deemed not to negatively impact the price discovery process in relation to the relevant CMI Offering.Prospective investors should ensure and by placing an order prospective investors are deemed to confirm that orders placed are bona fide are not inflated and do not constitute duplicated orders (i.e. two or more corresponding or identical orders placed via two or more CMIs). A rebate may be offered by the relevant Issuer to all private banks for orders they place (other than in relation to Notes subscribed by such private banks as principal whereby it is deploying its own balance sheet for onward selling to investors) payable upon closing of the relevant CMI Offering based on the principal amount of the Notes distributed by such private banks to investors. Private banks are deemed to be placing an order on a principal basis unless they inform the CMIs otherwise. As a result private banks placing an order on a principal basis (including those deemed as placing an order as principal) will not be entitled to and will not be paid the rebate. Details of any such rebate will be set out in the applicable Pricing Supplement or otherwise notified to prospective investors. If a prospective investor is an asset management arm affiliated with any relevant Dealer such prospective investor should indicate when placing an order if it is for a fund or portfolio where the relevant Dealer or its group company has more than 50 per cent. interest in which case it will be classified as a “proprietary order” and subject to appropriate handling by CMIs in accordance with the SFC Code and should disclose at the same time if such “proprietary order” may negatively impact the price discovery process in relation to the relevant CMI Offering. Prospective investors who do not indicate this information when placing an order are hereby deemed to confirm that their order is not a “proprietary order”. If a prospective investor is otherwise affiliated with any relevant Dealer such that its order may be considered to be a “proprietary order” (pursuant to the SFC Code) such prospective investor should indicate to the relevant Dealer when placing such order. Prospective investors who do not indicate this information when placing an order are hereby deemed to confirm that their order is not a “proprietary order”. Where prospective investors disclose such information but do not disclose that such “proprietary order” may negatively impact the price discovery process in relation to the relevant CMI Offering such “proprietary order” is hereby deemed not to negatively impact the price discovery process in relation to the relevant CMI Offering.Prospective investors should be aware that certain information may be disclosed by CMIs (including private banks) which is personal and/or confidential in nature to the prospective investor. By placing an order prospective investors are deemed to have understood and consented to the collection disclosure use and transfer of such information by the relevant Dealers and/or any other third parties as may be required by the SFC Code including to the relevant Issuer any OCs relevant regulators and/or any other third parties as may be required by the SFC Code it being understood and agreed that such information shall only be used for the purpose of complying with the SFC Code during the bookbuilding process for the relevant CMI Offering. Failure to provide such information may result in that order being rejected.IMPORTANT — EEA RETAIL INVESTORS — If the Pricing Supplement in respect of any Notes includes a legend entitled “Prohibition of sales to EEA Retail Investors” the Notes are not intended to be offered sold or otherwise made available to and should not be offered sold or otherwise made available to any retail investor in the European Economic Area (“EEA”). For these purposes a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended “MiFID II”) or (ii) a customer within the meaning of Directive (EU) – iii –2016/97 (the “Insurance Distribution Directive”) where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Directive Regulation (EU) 2017/1129 (the “Prospectus Regulation”). Consequently no keyinformation document required by Regulation (EU) No. 1286/2014 (as amended the “PRIIPsRegulation”) for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.IMPORTANT — UK RETAIL INVESTORS — If the Pricing Supplement in respect of any Notes includes a legend entitled “Prohibition of sales to UK Retail Investors” the Notes are not intended to be offered sold or otherwise made available to and should not be offered sold or otherwise made available to any retail investor in the United Kingdom (“UK”). For these purposes a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (“EUWA”); or (ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (“FSMA”) and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97 where that customer would not qualify as a professional client as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the EUWA. Consequently no key information document required by Regulation (EU) No 1286/2014 as it forms part of domestic law by virtue of the EUWA (the “UK PRIIPs Regulation”) for offering or selling the Notes or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.MiFID II product governance/target market — The Pricing Supplement in respect of any Notes may include a legend entitled “MiFID II Product Governance” which will outline the target market assessment in respect of the Notes and which channels for distribution of the Notes are appropriate. Any person subsequently offering selling or recommending the Notes (a “distributor”) should take into consideration such target market; however a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the target market assessment) and determining appropriate distribution channels.A determination will be made in relation to each issue about whether for the purpose of the MiFIDProduct Governance rules under EU Delegated Directive 2017/593 (the “MiFID Product GovernanceRules”) any Dealer subscribing for any Notes is a manufacturer in respect of such Notes but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the MiFID Product Governance Rules.UK MiFIR product governance/target market — The Pricing Supplement in respect of any Notes may include a legend entitled “UK MiFIR product governance” which will outline the target market assessment in respect of the Notes and which channels for distribution of the Notes are appropriate. Any person subsequently offering selling or recommending the Notes (a “distributor”) should take into consideration the target market assessment; however a distributor subject to the FCA Handbook Product Intervention and Product Governance Sourcebook (the “UK MiFIR Product Governance Rules”) is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the target market assessment) and determining appropriate distribution channels.A determination will be made in relation to each issue about whether for the purpose of the UK MiFIR Product Governance Rules any Dealer subscribing for any Notes is a manufacturer in respect of such Notes but otherwise neither the Arranger nor the Dealers nor any of their respective affiliates will be a manufacturer for the purpose of the UK MiFIR Product Governance Rules.– iv –PRODUCT CLASSIFICATION PURSUANT TO SECTION 309B OF THE SECURITIES AND FUTURES ACT 2001 (2020 REVISED EDITION) OF SINGAPORE — The Pricing Supplement inrespect of any Notes may include a legend entitled “Singapore Securities and Futures Act ProductClassification” which will state the product classification of the Notes pursuant to section 309B(1) of the Securities and Futures Act 2001 (2020 revised edition) of Singapore (the “SFA”). The relevant Issuer will make a determination in relation to each issue about the classification of the Notes being offered for purposes of section 309B(1)(a). Any such legend included on the relevant Pricing Supplement will constitute notice to “relevant persons” for purposes of section 309B(1)(c) of the SFA.This Offering Circular does not constitute an offer to sell or the solicitation of an offer to buy any Notes in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The distribution of this Offering Circular or any Pricing Supplement and the offer or sale of Notes may be restricted by law in certain jurisdictions. None of the Issuers the Bank the Arranger or the Dealers or any of their respective directors officers employees agents representatives or affiliates represents that this Offering Circular or any Pricing Supplement may be lawfully distributed or that any Notes may be lawfully offered in compliance with any applicable registration or other requirements in any such jurisdiction or pursuant to an exemption available thereunder or assumes any responsibility for facilitating any such distribution or offering. In particular no action has been taken by any of the Issuers the Bank the Arranger or the Dealers or any of their respective directors officers employees agents representatives or affiliates which would permit a public offering of any Notes or distribution of this Offering Circular or any Pricing Supplement in any jurisdiction where action for that purpose is required.Accordingly no Notes may be offered or sold directly or indirectly and neither this Offering Circular nor any Pricing Supplement or any advertisement or other offering material may be distributed or published in any jurisdiction except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this Offering Circular or any Notes may come must inform themselves about and observe any such restrictions on the distribution of this Offering Circular and the offering and sale of Notes. In particular there are restrictions on the distribution of this Offering Circular and the offer or sale of the Notes in the United States the European Economic Area the United Kingdom Singapore Japan Hong Kong and the People’s Republic of China.See “Subscription and Sale” and the relevant Pricing Supplement.Industry and Market Data Market data and certain information and statistics included in this Offering Circular have been obtained from both public and private sources including market research publicly available information and industry publications. Although the Issuers believe the information to be reliable it has not been independently verified by the Issuers the Bank the Arranger the Dealers or the Agents or their respective affiliates directors officers employees agents advisers or representatives and none of the Issuers the Bank the Arranger the Dealers or the Agents or their respective affiliates directors officers employees agents advisers or representatives makes any representation as to the accuracy or completeness of such information. In addition third party information providers may have obtained information from market participants and such information may not have been independently verified. In making an investment decision each investor must rely on its own examination of the relevant Issuer the Bank the Group and the terms of the offering and the Notes including the merits and risks involved.Where information has been sourced from a third party the relevant Issuer confirms that this information has been accurately reproduced and that as far as the relevant Issuer is aware and is able to ascertain from information published by third parties no facts have been omitted which would render the reproduced information to be inaccurate or misleading.– v –All hyperlink references in this Offering Circular to a website or webpage are guidance to sources of other information as is in the public domain only. The contents of such website or webpage (the “Contents”) do not form part of this Offering Circular or the Programme. Neither the Bank any Issuer the Dealers nor any of them accept responsibility for any damages or losses incurred or suffered arising out of or in connection with the use of such hyperlink or such Contents. Such Contents have neither been prepared for the Programme nor for incorporation into this Offering Circular. Such hyperlink or Contents may be limited to persons located or residing in only that particular jurisdiction and may not be intended for persons located or residing in jurisdictions that restrict the distribution of such hyperlink or Contents.– vi –PRESENTATION OF FINANCIAL INFORMATION This Offering Circular contains the audited consolidated financial statements of the Group as at and for the year ended 31 December 2022 (the “2022 Annual Financial Statements”) and the auditedconsolidated financial statements of the Group as at and for the year ended 31 December 2023 (the “2023Annual Financial Statements”). The 2022 Annual Financial Statements and the 2023 Annual Financial Statements were prepared in accordance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).The 2022 Annual Financial Statements have been audited by PricewaterhouseCoopers Certified Public Accountants Hong Kong (“PricewaterhouseCoopers”) the then independent auditor of the Bank in accordance with Hong Kong Standards on Auditing (“HKSAs”) and are included elsewhere in this Offering Circular.The 2023 Annual Financial Statements have been audited by KPMG Certified Public Accountants Hong Kong (“KPMG”) independent auditor of the Bank in accordance with HKSAs and are included elsewhere in this Offering Circular.– vii –CERTAIN DEFINITIONS Unless otherwise specified or the context requires references herein to the “Bank” refer to China CITIC Bank Corporation Limited; references to the “Issuer” refer to the Bank or any branch of the Bank as specified in the relevant Pricing Supplement as being the issuer of a Series of Notes; references to the “Group” refer to the Bank and its subsidiaries taken as a whole; references to “U.S. dollars” and “U.S.$” are to the lawful currency of the United States of America (the “USA” or the “U.S.”); references to “HongKong dollars” “HK dollars” and “HK$” are to the lawful currency of Hong Kong; references to “Renminbi” and “RMB” are to the lawful currency of the People’s Republic of China (the “PRC”); references to “Sterling” and “?” are to the lawful currency of the United Kingdom and references to “EUR” “euro” and “€” are to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty on the Functioning of the European Union as amended.In addition references to “Hong Kong” are to the Hong Kong Special Administrative Region of the PRC references to “Macau” are to the Macau Special Administrative Region of the PRC references to “Mainland China” are to the PRC excluding Hong Kong and Macau and references to “Greater China” are to the PRC including Hong Kong and Macau.Unless otherwise specified or the context requires references to: * “CIAM” refer to CITIC International Assets Management Limited; * “CIFH” refer to CITIC International Financial Holdings Limited; * “CITIC aiBank” refer to CITIC aiBank Corporation Limited; * “CITIC Corporation Limited” refer to CITIC Corporation Limited (formerly known as CITIC Limited prior to renaming in August 2014); * “CITIC Financial Holdings” refer to China CITIC Financial Holdings Co. Ltd.; * “CITIC Financial Leasing” refer to CITIC Financial Leasing Co. Ltd.; * “CITIC Group” refer to CITIC Group Corporation Limited (formerly known as CITIC Group Corporation prior to restructuring in December 2011); * “CITIC Limited” refer to CITIC Limited (formerly known as CITIC Pacific Limited prior to renaming in August 2014); * “CITIC Wealth Management” refer to CITIC Wealth Management Corporation Limited; * “CNCB Investment” refer to CNCB (Hong Kong) Investment Co. Ltd. (formerly known as China Investment and Finance Limited); * “CNCBI” refer to China CITIC Bank International Limited (formerly known as CITIC Ka Wah Bank Limited); * “CSRC” refer to the China Securities Regulatory Commission; * “former CBIRC” refer to former China Banking and Insurance Regulatory Commission or its relevant local counterpart; * “former CBRC” refer to former China Banking Regulatory Commission or its relevant local counterpart; – viii –* “GDP” refer to gross domestic product; * “IT” refer to information technology; * “MOF” refer to the Ministry of Finance of the PRC; * “MOFCOM” refer to the Ministry of Commerce of the PRC; * “NAO” refer to the National Audit Office of the PRC; * “NFRA” refer to National Financial Regulatory Administration or its relevant local counterpart; * “NPL” refer to non-performing loans; * “PBOC” refer to the People’s Bank of China the central bank of the PRC; * “relevant PRC Banking Regulatory Authority” refer to former CBRC former CBIRC or NFRA as applicable; * “SAFE” refer to the State Administration of Foreign Exchange of the PRC; and * “SAMR” refer to the State Administration for Market Regulation of the PRC.Any discrepancies in any table between totals and sums of the amounts listed are due to rounding. Unless otherwise specified where financial information has been translated into U.S. dollars it has been so translated for information purposes only in the case of Renminbi at the rate of RMB7.0999 equal to U.S.$1.00 on 29 December 2023 as set forth in the H.10 statistical release of the Federal Reserve Board.No representation is made that the Hong Kong dollar Renminbi Euro or U.S. dollar amounts referred to herein could have been or could be converted into Hong Kong dollars Renminbi Euro or U.S. dollars as the case may be at any particular rate or at all.The English names of the PRC nationals entities departments facilities laws regulations certificates titles and the like are translations of their Chinese names and are included for identification purpose only.In the event of any inconsistency the Chinese name prevails.– ix –FORWARD-LOOKING STATEMENTS The Bank has included statements in this Offering Circular which contain words or phrases such as “will” “would” “aim” “aimed” “is likely” “are likely” “believe” “expect” “expected to” “willcontinue” “anticipated” “estimate” “estimating” “intend” “plan” “seeking to” “future” “objective” “should” “can” “could” “may” and similar expressions or variations of such expressions that are “forward-looking statements”. Actual results may differ materially from those suggested by the forward-looking statements due to certain risks or uncertainties associated with the relevant Issuer’s expectations with respect to but not limited to its ability to successfully implement its strategy its ability to integrate recent or future mergers or acquisitions into its operations future levels of non-performing assets and restructured assets its growth and expansion the adequacy of its provision for credit and investment losses technological changes investment income its ability to market new products cash flow projections the outcome of any legal or regulatory proceedings it is or becomes a party to the future impact of new accounting standards its ability to pay dividends its ability to roll over its short-term funding sources its exposure to operational market credit interest rate and currency risks and the market acceptance of and demand for internet banking services. These forward-looking statements speak only as of the date of this Offering Circular. The Issuers expressly disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein whether as a result of new information future events or otherwise.– x –CONTENTS Page DOCUMENTS INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 GENERAL DESCRIPTION OF THE PROGRAMME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 SELECTED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 SUMMARY OF THE PROGRAMME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 FORM OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 FORM OF PRICING SUPPLEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 TERMS AND CONDITIONS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 CAPITALISATION AND INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 DESCRIPTION OF THE BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 DIRECTORS SUPERVISORS AND SENIOR MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . 156 BOOK-ENTRY CLEARANCE SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 REGULATION AND SUPERVISION IN THE PRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 PRC CURRENCY CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 SUBSCRIPTION AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . F-1 – xi –DOCUMENTS INCORPORATED BY REFERENCE The following documents published or issued from time to time after the date hereof shall be deemed to be incorporated in and to form part of this Offering Circular: (a) the most recently published audited consolidated financial statements of the Group and the most recently published unaudited but reviewed consolidated interim financial statements of the Group together with any audit or review reports prepared in connection therewith and the most recently published unaudited and unreviewed consolidated quarterly financial statements of the Group; and (b) all supplements or amendments to this Offering Circular circulated by any Issuer from time to time save that any statement contained herein or in a document which is deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purpose of this Offering Circular to the extent that a statement contained in any such subsequent document which is deemed to be incorporated by reference herein modifies or supersedes such earlier statement (whether expressly by implication or otherwise). Any statement so modified or superseded shall not be deemed except as so modified or superseded to constitute a part of this Offering Circular.Where consolidated quarterly financial information is included or incorporated by reference into this Offering Circular none of such consolidated quarterly financial information in respect of the three months ended 31 March and nine months ended 30 September of each financial year of the Bank has been audited or reviewed by any auditors and such financial information may not provide the same type or quality of information associated with information that has been audited or reviewed. Potential investors must exercise caution when using such data to evaluate the Bank’s financial condition and results of operations and must not place undue reliance on such financial information.The relevant Issuer will provide without charge to each person to whom a copy of this Offering Circular has been delivered upon the request of such person a copy of any or all of the documents deemed to be incorporated herein by reference unless such documents have been modified or superseded as specified above. Requests for such documents should be directed to the relevant Issuer at its office as set out at the end of this Offering Circular. In addition such documents will be available free of charge from the office of Citicorp International Limited (the “Fiscal Agent”) at 40/F Champion Tower 3 Garden Road Central Hong Kong. Pricing Supplements relating to unlisted Notes will only be available for inspection by a holder of such Notes and such holder must produce evidence satisfactory to the relevant Issuer or the relevant Paying Agent as to its holding of Notes and its identity.If the terms of the Programme are modified or amended in a manner which would make this Offering Circular as so modified or amended inaccurate or misleading a new or supplemental offering circular will be prepared.– 1 –GENERAL DESCRIPTION OF THE PROGRAMME Under the Programme the Issuers may from time to time issue Notes denominated in any currency subject to those matters set out herein. A summary of the terms and conditions of the Programme and the Notes appears below. The applicable terms of any Notes will be agreed between the relevant Issuer and the relevant Dealer prior to the issue of the Notes and will be set out in the Terms and Conditions of the Notes endorsed on attached to or incorporated by reference into the Notes as modified and supplemented by the applicable Pricing Supplement attached to or endorsed on such Notes as more fully described under “Form of the Notes”.This Offering Circular and any supplement hereto will only be valid for Notes issued under the Programme during the period of 12 months from the date of this Offering Circular in an aggregate nominal amount which when added to the aggregate nominal amount then outstanding of all Notes previously or simultaneously issued under the Programme does not exceed U.S.$5000000000 or its equivalent in other currencies.– 2 –SELECTED FINANCIAL INFORMATION The following tables set forth the Group’s selected consolidated financial information as at and for the periods indicated.The selected consolidated financial information as at and for the years ended 31 December 2021 2022 and 2023 as set forth below has been derived from and should be read in conjunction with the respective 2022 Annual Financial Statements and the 2023 Annual Financial Statements. The 2022 Annual Financial Statements were audited by PricewaterhouseCoopers in accordance with Hong Kong Standards on Auditing and are included elsewhere in this Offering Circular. The 2023 Annual Financial Statements were audited by KPMG in accordance with Hong Kong Standards on Auditing and are included elsewhere in this Offering Circular. The 2022 Annual Financial Statements and the 2023 Annual Financial Statements have been prepared by the Bank in accordance with the IFRS.CONSOLIDATED ANNUAL STATEMENT OF FINANCIAL POSITION As at 31 December 202120222023 (RMB in millions) Assets Cash and balances with central banks . . . . . . . . . . . . . . . . . 435383 477381 416442 Deposits with banks and non-bank financial institutions . . . . . 107856 78834 81075 Precious metals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9645 5985 11674 Placements with and loans to banks and non-bank financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143918 218164 237742 Derivative financial assets . . . . . . . . . . . . . . . . . . . . . . . . . 22721 44383 44675 Financial assets held under resale agreements . . . . . . . . . . . . 91437 13730 104773 Loans and advances to customers . . . . . . . . . . . . . . . . . . . . 4748076 5038967 5383750 Financial investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .– At fair value through profit or loss . . . . . . . . . . . . . . . . 495810 557594 613824 – At amortised cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1170229 1135452 1085598 – At fair value through other comprehensive income . . . . . 651857 804695 888677 – Designated at fair value through other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4745 5128 4807 Investments in associates and joint ventures . . . . . . . . . . . . . 5753 6341 6945 Investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 547 516 528 Property plant and equipment . . . . . . . . . . . . . . . . . . . . . . . 34184 34430 38309 Right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10638 10824 10643 Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2925 3715 4595 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 833 903 926 Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46905 55011 52480 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59422 55490 65021 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8042884 8547543 9052484 – 3 –As at 31 December 202120222023 (RMB in millions) Liabilities Borrowings from central banks . . . . . . . . . . . . . . . . . . . . . . 189198 119422 273226 Deposits from banks and non-bank financial institutions . . . . 1174763 1143776 927887 Placements from banks and non-bank financial institutions . . 78331 70741 86327 Financial liabilities at fair value through profit or loss . . . . . . 1164 1546 1588 Derivative financial liabilities . . . . . . . . . . . . . . . . . . . . . . . 22907 44265 41850 Financial assets sold under repurchase agreements . . . . . . . . 98339 256194 463018 Deposits from customers . . . . . . . . . . . . . . . . . . . . . . . . . . 4789969 5157864 5467657 Accrued staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19253 21905 22420 Taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10753 8487 3843 Debt securities issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . 958203 975206 965981 Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9816 10272 10245 Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11927 9736 10846 Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3 1 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35627 42296 42920 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7400258 7861713 8317809 Equity Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48935 48935 48967 Other equity instruments . . . . . . . . . . . . . . . . . . . . . . . . . . 118076 118076 118060 Capital reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59216 59216 59400 Other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . 1644 (1621) 4057 Surplus reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48937 54727 60992 General reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95490 100580 105127 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254005 285505 320619 Total equity attributable to equity holders of the Bank . . . 626303 665418 717222 Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . 16323 20412 17453 Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 642626 685830 734675 Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . 8042884 8547543 9052484 – 4 –CONSOLIDATED ANNUAL STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 December 202120222023 (RMB in millions) Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306165 313609 317692 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (158269) (162962) (174153) Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147896 150647 143539 Fee and commission income . . . . . . . . . . . . . . . . . . . . . . . . 40604 41051 36999 Fee and commission expense . . . . . . . . . . . . . . . . . . . . . . . (4734) (3959) (4616) Net fee and commission income . . . . . . . . . . . . . . . . . . . . 35870 37092 32383 Net trading gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5168 4881 7138 Net gain from investment securities . . . . . . . . . . . . . . . . . . . 14874 17771 21103 Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . 746 718 1407 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204554 211109 205570 Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (62224) (66838) (69214) Operating profit before impairment . . . . . . . . . . . . . . . . . . . 142330 144271 136356 Credit impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . (77005) (71359) (61926) Impairment losses on other assets . . . . . . . . . . . . . . . . . . . . (43) (45) (278) Revaluation losses on investment properties . . . . . . . . . . . . . 23 (74) (1) Share of profit of associates and joint ventures . . . . . . . . . . . 212 623 736 Profit before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65517 73416 74887 Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9140) (10466) (6825) Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56377 62950 68062 Net profit attributable to: Equity holders of the Bank . . . . . . . . . . . . . . . . . . . . . . . . . 55641 62103 67016 Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . 736 847 1046 Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56377 62950 68062 Other comprehensive income net of tax Items that will not be reclassified to profit or loss (net of tax): – Fair value changes on financial investments designated at fair value through other comprehensive income . . . . . . 30 237 (144) – Changes in defined benefit plan liabilities . . . . . . . . . . . (1) – – Items that may be reclassified subsequently to profit or loss (net of tax): – Other comprehensive income transferable to profit or loss under equity method . . . . . . . . . . . . . . . . . . . . . . . . . (12) (28) 39 – Fair value changes on financial assets at fair value through other comprehensive income . . . . . . . . . . . . . 2394 (8191) 4989 – Impairment allowance on financial assets at fair value through other comprehensive income . . . . . . . . . . . . . 32 145 (512) – Exchange difference on translation of financial statements (1081) 4132 1198 – Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133 4 5 Other comprehensive income net of tax . . . . . . . . . . . . . . 1495 (3701) 5575 Total comprehensive income for the year . . . . . . . . . . . . . 57872 59249 73637 Total comprehensive income attribute to: Equity holders of the Bank . . . . . . . . . . . . . . . . . . . . . . . . . 57176 58681 72508 Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . 696 568 1129 Earnings per share attributable to the ordinary shareholders of the Bank Basic earnings per share (RMB) . . . . . . . . . . . . . . . . . . . . . 1.08 1.17 1.27 Diluted earnings per share (RMB) . . . . . . . . . . . . . . . . . . . . 0.98 1.06 1.14 – 5 –CONSOLIDATED ANNUAL STATEMENT OF CASH FLOWS For the year ended 31 December 202120222023 (RMB in millions) Operating activities Profit before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65517 73416 74887 Adjustments for: – Revaluation gain on investments derivatives and investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . (455) (964) (521) – Investment gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14113) (14287) (19843) – Net losses/(gains) on disposal of property plant and equipment intangible assets and other assets . . . . . . . . . (26) 32 (9) – Unrealised foreign exchange (gains)/losses . . . . . . . . . . . . (835) 52 (3013) – Credit impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . 77005 71359 61926 – Impairment losses on other assets . . . . . . . . . . . . . . . . . . . 43 45 278 – Depreciation and amortisation . . . . . . . . . . . . . . . . . . . . . 3457 4110 4868 – Interest expense on debt securities issued . . . . . . . . . . . . . 26962 27082 24996 – Dividend income from equity investment . . . . . . . . . . . . . . (35) (102) (169) – Depreciation of right-of-use assets and interest expense on lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3696 3731 3710 – Income tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (12880) (18043) (13523) Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148336 146431 133587 Changes in operating assets and liabilities: Decrease/(Increase) in balances with central banks . . . . . . . . 7878 (3363) 8361 (Increase)/Decrease in deposits with banks and non?-bank financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3832) 8921 1760 Increase in placements with and loans to banks and non-bank financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . (20787) (85386) 6115 (Increase)/Decrease in financial assets held under resale agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19642 77922 (90988) Increase in loans and advances to customers . . . . . . . . . . . . . (432361) (347961) (380326) (Increase)/Decrease at fair value through the profit or loss in financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8469) 2550 (79755) Increase/(Decrease) in borrowings from central banks . . . . . . (35315) (69087) 152670 (Decrease)/Increase in deposits from banks and non-bank financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9758 (30317) (215881) (Decrease)/Increase in placements from banks and non-bank financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20966 (8820) 17387 Increase/(Decrease) in financial liabilities at fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . (7386) (680) 5 Increase in financial assets sold under repurchase agreements . . 23303 157583 206389 (Decrease)/Increase in deposits from customers . . . . . . . . . . 216620 340067 286207 Decrease/(Increase) in other operating assets . . . . . . . . . . . . (28945) (17411) (46723) (Decrease)/Increase in other operating liabilities . . . . . . . . . . 15198 24617 274 Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (223730) 48635 (134505) Net cash flows (used in)/from operating activities . . . . . . . (75394) 195066 (918) – 6 –For the year ended 31 December 202120222023 (RMB in millions) Investing activities Proceeds from disposal and redemption of investments . . . . . 3045391 2580725 2768331 Proceeds from disposal of property plant and equipment land use rights and other assets . . . . . . . . . . . . . . . . . . . . 168 127 83 Cash received from equity investment income . . . . . . . . . . . . 438 507 653 Cash received from disposal of associates . . . . . . . . . . . . . . – 39 70 Payments on acquisition of investments . . . . . . . . . . . . . . . . (3248304) (2690472) (2753726) Payments on acquisition of property plant and equipment land use rights and other assets . . . . . . . . . . . . . . . . . . . . (4481) (6799) (13524) Net cash flows (used in)/from investing activities . . . . . . . . (206788) (115873) 1887 Financing activities Cash received from issuing other equity Instruments . . . . . . . 43852 3990 – Cash received from debt securities issued . . . . . . . . . . . . . . . 903846 850086 1096139 Cash paid for redemption of other equity instruments . . . . . . (3324) – (3516) Cash paid for redemption of debt securities issued . . . . . . . . (678912) (836677) (1106000) Interest paid on debt securities issued . . . . . . . . . . . . . . . . . (26252) (26513) (24724) Cash paid for dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . (15812) (20035) (21492) Cash paid in connection with other financing activities . . . . . (3480) (3390) (3509) Net cash flows from/(used in) financing activities . . . . . . . 219918 (32539) (63102) Net (decrease)/increase in cash and cash equivalents . . . . . (62264) 46654 (62133) Cash and cash equivalents as at 1 January . . . . . . . . . . . . . . 319566 252818 307871 Effect of exchange rate changes on cash and cash equivalents . . (4484) 8399 3264 Cash and cash equivalents as at the year end . . . . . . . . . . 252818 307871 249002 Cash flows from operating activities include: Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323057 320205 318778 Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (119881) (131295) (136150) – 7 –SUMMARY OF THE PROGRAMME The following summary does not purport to be complete and is taken from and is qualified in its entirety by the remainder of this Offering Circular and in relation to the terms and conditions of any particularTranche of Notes the applicable Pricing Supplement. Words and expressions defined in “Form of theNotes” and “Terms and Conditions of the Notes” shall have the same meanings in this summary.Bank . . . . . . . . . . . . . . . . . . . China CITIC Bank Corporation Limited (中信银行股份有限公司) Issuer . . . . . . . . . . . . . . . . . . . The Bank or any branch of the Bank as specified in the relevant Pricing Supplement as being the Issuer of a Series of Notes Description . . . . . . . . . . . . . . Medium Term Note Programme Arranger . . . . . . . . . . . . . . . . China CITIC Bank International Limited Dealers . . . . . . . . . . . . . . . . . China CITIC Bank International Limited and any other Dealer appointed from time to time either by the Bank generally in respect of the Programme or by the relevant Issuer in relation to a particular Series of Notes Certain Restrictions . . . . . . . . Each issue of Notes denominated in a currency in respect of which particular laws guidelines regulations restrictions or reporting requirements apply will only be issued in circumstances which comply with such laws guidelines regulations restrictions orreporting requirements from time to time (see “Subscription andSale” and the relevant Pricing Supplement) including the following restrictions applicable at the date of this Offering Circular.Notes having a maturity of less than one year Notes having a maturity of less than one year will if the proceeds of the issue are received in the United Kingdom constitute deposits for the purposes of the prohibition on accepting deposits contained in Section 19 of the Financial Services and Markets Act 2000 unless they are issued to a limited class of professional investors and have a denomination of at least ?100000 or its equivalent. See “Subscription and Sale”.Fiscal Agent . . . . . . . . . . . . . . Citicorp International Limited Registrar and Transfer Citibank N.A. London Branch Agent . . . . . . . . . . . . . . . . .CMU Lodging and Paying Citicorp International Limited Agent . . . . . . . . . . . . . . . . .Principal Paying Agent . . . . . Citibank N.A. London Branch – 8 –Programme Size . . . . . . . . . . . Up to U.S.$5000000000 (or its equivalent in other currenciescalculated as described under “General Description of theProgramme”) outstanding at any time. The Bank may increase the amount of the Programme in accordance with the terms of the Dealer Agreement.Distribution . . . . . . . . . . . . . . Notes may be distributed by way of private or public placement and in each case on a syndicated or non-syndicated basis. The Notes may be issued in series (each a “Series”) having one or more issue dates (each tranche within such Series a “Tranche”) and on terms otherwise identical (or identical other than in respect of the first payment of interest) the Notes of each Series being intended to be interchangeable with all other Notes of that Series. Each Series may be issued in tranches on the same or different issue dates. The specific terms of each Tranche (which will be supplemented where necessary with supplemental terms and conditions and save in respect of the issue date issue price first payment of interest and nominal amount of the Tranche will be identical to the terms of other Tranches of the same Series) will be set out in a Pricing Supplement.Interest . . . . . . . . . . . . . . . . . Notes may be interest bearing or non-interest bearing. Interest (if any) may accrue at a fixed rate or a floating rate or other variable rate and the method of calculating interest may vary between the issue date and the maturity date of the relevant Series. All such information will be set out in the relevant Pricing Supplement.Denominations . . . . . . . . . . . . Notes will be issued in such denominations as may be specified in the relevant Pricing Supplement subject to compliance with all applicable legal and/or regulatory and/or central bank requirements.Currencies . . . . . . . . . . . . . . . Subject to any applicable legal or regulatory restrictions any other currency agreed between the relevant Issuer and the relevant Dealer.Maturities . . . . . . . . . . . . . . . Such maturities as may be agreed between the relevant Issuer and the relevant Dealer subject to such minimum or maximum maturities as may be allowed or required from time to time by the relevant central bank (or equivalent body) or any laws or regulations applicable to the relevant Issuer or the relevant Specified Currency.Issue Price . . . . . . . . . . . . . . . Notes may be issued on a fully-paid or a partly-paid basis and at an issue price which is at par or at a discount to or premium over par.Form of Notes . . . . . . . . . . . . The Notes will be issued in bearer or registered form as described in “Form of the Notes”. Registered Notes will not be exchangeable for Bearer Notes and vice versa.Fixed Rate Notes . . . . . . . . . . Fixed interest will be payable on such date or dates as may be agreed between the relevant Issuer and the relevant Dealer and on redemption and will be calculated on the basis of such Day Count Fraction as may be agreed between the relevant Issuer and the Dealer.– 9 –Floating Rate Notes . . . . . . . . The rate of interest in respect of Floating Rate Notes for each Interest Accrual Period shall be determined in accordance with either ISDA Determination or Screen Rate Determination as specified in the relevant Terms and Conditions of the Notes in respect of the Floating Rate Notes.Benchmark discontinuation . . See Conditions 5(b)(iv) and 5(b)(v).Index Linked Notes . . . . . . . . Payments of principal in respect of Index Linked Redemption Notes or of interest in respect of Index Linked Interest Notes will be calculated by reference to such index and/or formula or to changes in the prices of securities or commodities or to such other factors as the relevant Issuer and the relevant Dealer may agree.Other provisions in relation Floating Rate Notes and Index Linked Interest Notes may also have a to Floating Rate Notes maximum interest rate a minimum interest rate or both. Interest on and Index-Linked Floating Rate Notes and Index Linked Interest Notes in respect of Interest Notes . . . . . . . . . . . each Interest Period as agreed prior to issue by the relevant Issuer and the relevant Dealer will be payable on such Interest Payment Dates and will be calculated on the basis of such Day Count Fraction as may be agreed between the relevant Issuer and the relevant Dealer.Dual Currency Notes . . . . . . . Payments (whether in respect of principal or interest and whether at maturity or otherwise) in respect of Dual Currency Notes will be made in such currencies and based on such rates of exchange as the relevant Issuer and the relevant Dealer may agree.Zero Coupon Notes . . . . . . . . Zero Coupon Notes will be offered and sold at a discount to their nominal amount or offered and sold at their nominal amount and be redeemed at a premium and will not bear interest.Redemption . . . . . . . . . . . . . . The applicable Pricing Supplement will indicate either that the relevant Notes cannot be redeemed prior to their stated maturity (other than in specified instalments if applicable or for taxation reasons or pursuant to a winding-up of the relevant Issuer following an Event of Default) or that such Notes will be redeemable at the option of the relevant Issuer and/or the Noteholders upon giving notice to the Noteholders or the relevant Issuer as the case may be on a date or dates specified prior to such stated maturity and at a price or prices and on such other terms as may be agreed between the relevant Issuer and the relevant Dealer.The applicable Pricing Supplement may provide that Notes may be redeemable in two or more instalments of such amounts and on such dates as are indicated in the applicable Pricing Supplement.The applicable Pricing Supplement may provide that Notes may be redeemable in two or more instalments of such amounts and on such dates as are indicated in the applicable Pricing Supplement.– 10 –Denomination of Notes . . . . . . Notes will be issued in such denominations as may be agreed between the relevant Issuer and the relevant Dealer save that the minimum denomination of each Note will be such as may be allowed or required from time to time by the central bank (or equivalent body) or any laws or regulations applicable to the relevant Specified Currency. See “Certain Restrictions” above.Taxation . . . . . . . . . . . . . . . . . All payments of principal and interest in respect of the Notes Receipts and Coupons will be made without deduction for or on account of withholding taxes imposed by the PRC and if the relevant Issuer is a branch of the Bank the jurisdiction where that branch is located or in each case any political subdivision or any authority therein or thereof having power to tax to which the relevant Issuer becomes subject in respect of payments made by it in respect of the Notes Receipts and the Coupons subject as provided in Condition 8.In the event that any such deduction is made the relevant Issuer will save in certain limited circumstances provided in Condition 8 be required to pay additional amounts to cover the amounts so deducted.Events of Default . . . . . . . . . . Events of Default for the Notes are set out in Condition 10.Cross-Acceleration . . . . . . . . The terms of the Notes will contain a cross-acceleration provision as further described in Condition 10(c).Status of the Notes . . . . . . . . . The Notes and the Receipts and the Coupons relating to them will constitute direct unconditional unsubordinated and unsecured obligations of the relevant Issuer ranking pari passu and without any preference among themselves. The payment obligations of the relevant Issuer under the Notes and the Receipts and the Coupons relating to them shall save for such exceptions as may be provided by applicable legislation at all times rank at least equally with all other unsecured and unsubordinated indebtedness and monetary obligations of the relevant Issuer present and future.Listing . . . . . . . . . . . . . . . . . . Application has been made to the Hong Kong Stock Exchange for the listing of the Programme by way of debt issues to Professional Investors only on the Hong Kong Stock Exchange during the 12-month period after the date of this Offering Circular. Separate application will be made for the listing of Notes issued under the Programme on the Hong Kong Stock Exchange.Notes listed on the Hong Kong Stock Exchange will be traded on the Hong Kong Stock Exchange in a board lot size of at least HK$500000 (or its equivalent in other currencies).Unlisted Notes may also be issued.The applicable Pricing Supplement will state whether or not the relevant Notes are to be listed and if so on which stock exchange(s).– 11 –Ratings . . . . . . . . . . . . . . . . . Tranches of Notes will be rated or unrated. Where a Tranche of Notes is to be rated such rating will be specified in the relevant Pricing Supplement.A rating is not a recommendation to buy sell or hold securities and may be subject to suspension revision reduction or withdrawal at any time by the assigning rating agency.Governing Law . . . . . . . . . . . The Notes the Receipts the Coupons and the Talons and any non-contractual obligations arising out of or in connection with them will be governed by and shall be construed in accordance with English law.Jurisdiction . . . . . . . . . . . . . . The courts of Hong Kong are to have exclusive jurisdiction to settle any disputes that may arise out of or in connection with any Notes Receipts Coupons or Talons and accordingly any legal action or proceedings arising out of or in connection with any Notes Receipts Coupons or Talons may be brought in such courts.Selling Restrictions . . . . . . . . There are restrictions on the offer sale and transfer of the Notes in the United States the United Kingdom the European Economic Area Singapore Japan Hong Kong and the PRC and such other restrictions as may be required in connection with the offering and sale of a particular Tranche of Notes. See “Subscription and Sale” and the relevant Pricing Supplement.United States Selling Regulation S Category 1 or 2 as specified in the applicable Pricing Restrictions . . . . . . . . . . . . Supplement. Whether TEFRA C or D rules apply or whether TEFRA is not applicable will be specified in the applicable Pricing Supplement.Clearing Systems . . . . . . . . . . The CMU Euroclear Clearstream and/or any other clearing systemas specified in the applicable Pricing Supplement. See “Form of theNotes”.– 12 –RISK FACTORS Investors should carefully consider together with all other information contained in this Offering Circular the risks and uncertainties described below. The business financial condition or results of operations of the Bank and the Group may be adversely affected by any of these risks. The risks described below are not the only ones relevant to the Bank or the Notes. The Bank believe the risks described below represent the principal risks inherent when considering an investment in the Notes. Additional risks and uncertainties not presently known to the Bank or which the Bank currently deems immaterial may also have an adverse effect on an investment in the Notes. All of these factors are contingencies which may or may not occur and the Bank is not in a position to express a view on the likelihood of any such contingency occurring.The Bank does not represent that the statements below regarding the risk factors of holding any Notes are exhaustive. Prospective investors should also read the detailed information set out elsewhere in this Offering Circular and reach their own views prior to making any investment decision.This Offering Circular also contains forward-looking statements that involve risks and uncertainties. The Bank’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors including the considerations described below and elsewhere in this Offering Circular.RISKS RELATING TO THE BANK’S BUSINESS If the Bank is unable to maintain effectively the quality of its loan portfolio its financial condition and results of operations may be materially and adversely affected.The Bank’s results of operations are negatively impacted by its NPLs and the sustainability of its growth primarily depends on its ability to manage its credit risk and maintain the quality of its loan portfolio (including related party loans) effectively. The Bank has undertaken various initiatives to improve its credit risk management policies procedures and systems. As at 31 December 2021 2022 and 2023 the Group’s NPLs were RMB67.46 billion RMB65.21 billion and RMB64.80 billion respectively representing NPL ratios of 1.39 per cent. 1.27 per cent. and 1.18 per cent. respectively. As at 31 December 2023 the Group’s NPLs were mainly concentrated in three industry sectors which are manufacturing real estate and wholesale and retail with their NPL balances collectively taking up 58.07 per cent. of the total corporate NPLs. As for the distribution of NPLs the Group’s NPLs were mainly concentrated in the Bohai Rim Western China as well as the Pearl River Delta and the West Strait with the combined NPL balance reaching RMB44.715 billion accounting for 69.00 per cent. of the total. In terms of incremental NPLs Western China registered the largest amount of RMB5.74 billion and its NPL ratio rose by 0.75 percentage points from 2022; Central China registered the second largest amount of incremental NPLs recording RMB1.08 billion incremental NPLs and a 0.07 percentage points increase in its NPL ratio from 2022.There is no assurance that the macro-economic and micro-economic environment would not continue to have impact on the above-mentioned industries and regions and if the Group’s customers in these industries or regions fail to cope with the adverse impact or to maintain their market competitiveness the quality of the Group’s loans will be materially adversely affected which in turn could materially affect the Group’s financial condition and results of operations.– 13 –Actual losses on the Bank’s loan portfolio may exceed its allowance for impairment losses in the future.As at 31 December 2023 the Group’s allowance for impairment losses on loans and advances to customers was RMB49.84 billion while the ratio1 of its allowance for loan impairment losses to total loans was 2.45 per cent. and the allowance coverage ratio2 was 207.59 per cent. The amount of the allowance is based on the Group’s current assessment of various factors affecting the quality of its loan portfolio and its expectation of changes to these factors that may affect the quality of its loan portfolio in the future. These factors include among other things: (i) the financial condition repayment ability and repayment intention of the Group’s borrowers; (ii) the realisable value of any collateral and the ability of the guarantor to perform its obligations; and (iii) general factors relating to the PRC’s economy such as macroeconomic and monetary policies of the PRC government interest rates exchange rates and the legal and regulatory environment. Although the Bank has made provisions based on what it believes to be a prudent assessment of these factors and expectation of changes to those factors the Bank cannot assure potential investors that its assessment and expectations concerning these factors will not differ from actual developments or that the quality of its loan portfolio will not deteriorate due to the uncertainty of the future development of these factors and the fact that these factors are partially or entirely beyond its control. The occurrence of any of the foregoing factors will result in the Bank’s allowance for impairment losses being inadequate to cover its actual losses and the Bank may need to make additional provisions for impairment losses which may have a material and adverse effect on the Bank’s financial condition and results of operations.The Bank has a concentration of credit exposure to certain customers and any deterioration in the loans to such customers may adversely affect its asset quality financial condition and results of operations.As at 31 December 2023 loans to the Group’s ten largest single borrowers totalled RMB82.63 billion representing 1.52 per cent. of its total loans and 9.50 per cent. of its net capital both in compliance with requirements of the regulatory authorities. The Bank is a subsidiary of CITIC Group and extends related party loans in the ordinary course of its business. Although its credit concentration is in accordance with the criteria set by government authorities if any of the loans to such single or group borrower (including CITIC Group and its subsidiaries and other related parties) deteriorate its asset quality will be adversely affected. In addition the Bank’s allowance for impairment losses may not be adequate to cover its actual losses and the Bank then may need to make additional allowance which may have a material and adverse effect on the Bank’s asset quality financial condition and results of operations.The Bank has a concentration of credit exposure to certain industry sectors and regions and any significant or extended downturn in the financial condition of any of these industry sectors or regions may adversely affect its financial condition and results of operations.As at 31 December 2023 rental and business services and manufacturing were the top two industry sectors of the Group’s outstanding corporate loans recording loan balances of RMB531.42 billion and RMB500.00 billion respectively. The balance of loans granted to the manufacturing industry accounted for 18.54 per cent. of the total corporate loans an increase of 1.92 percentage points comparing with the balance at 31 December 2022. The balance of loans granted to the real estate industry stood at RMB259.36 billion accounting for 9.62 per cent. of the total corporate loans down by 1.36 percentage 1 The ratio of allowance for loan impairment losses to total loans = balance of allowance for impairment losses on loans and advances to customers (excluding allowance for impairment losses on accrued interest)/total loans and advances to customers. 2 Allowance coverage ratio = balance of allowance for impairment losses on loans and advances to customers (excluding allowance for impairment losses on accrued interest)/balance of NPLs.– 14 –points from 31 December 2022. As at 31 December 2023 the Group’s NPLs were mainly concentrated in three industry sectors namely manufacturing real estate and wholesale and retail with their NPL balances collectively taking up 58.07 per cent. of the total corporate NPLs.Although the Bank has formulated credit policies with respect to extensions of credit to different industry sectors and has been persistently committed to risk management by diversifying its loan portfolio by industry sectors the Bank still faces concentration risks in certain industry sectors. If any of the industry sectors in which the Bank faces concentration risks experiences a significant downturn whether as a result of general economic downturn or otherwise its asset quality financial condition and results of operations may be materially and adversely affected.The Bank’s loans are mainly extended to borrowers concentrated in developed eastern and southern coastal regions of the PRC such as the Bohai Rim the Yangtze River Delta as well as the Pearl River Delta and the West Strait. As at 31 December 2021 2022 and 2023 the Group’s loans extended to borrowers in the above regions represented 68.27 per cent. 68.19 per cent. and 68.08 per cent.respectively of its total loans. As at 31 December 2023 the balances of loans and advances to customers in the Yangtze River Delta the Bohai Rim and Central China ranked top three recording RMB1538.27 billion RMB1423.03 billion and RMB790.48 billion and accounting for 27.97 per cent. 25.88 per cent.and 14.38 per cent. of the Group’s total loans respectively. As for the distribution of NPLs the Group’s NPLs were mainly concentrated in the Bohai Rim Western China as well as the Pearl River Delta and the West Strait with the combined NPL balance reaching RMB44.715 billion accounting for 69.00 per cent.of the total.If any of the above regions in which the Bank faces concentration risks experiences a significant downturn whether as a result of global economic environment change or otherwise or in the event that the Bank cannot accurately evaluate or control the credit risks of borrowers located in any of the above regions the Bank’s asset quality financial condition and results of operations may be materially and adversely affected.The Bank’s real estate-related loans and loans to government financing platforms are subject to various risks which may lead to a deterioration in the value of its loan portfolio.Real estate related loans The Bank’s real estate-related loans consist of corporate loans extended to real estate customers corporate loans with real estate as collateral and housing mortgage loans which may be affected by the various risks related to the real estate market. As at 31 December 2023 the balance of the Group’s corporate real estate-related financing that bore credit risk including loans bank acceptance drafts letters of guarantee bond investment and non-standard investments stood at RMB345.24 billion a decrease of RMB28.20 billion from the balance as at 31 December 2022. Among these the balance of corporate real estate loans was RMB259.36 billion (accounting for 9.62 per cent. of the Group’s total loans) a decrease of RMB17.81 billion from the balance as at 31 December 2022. As at 31 December 2023 the balance of personal housing mortgage loans of the Bank reached RMB971.17 billion an increase of RMB27.08 billion from the balance as at 31 December 2022.Despite the Bank’s effort to keep the quality of its real estate-related loans stable any significant adverse change whether as a result of changes in macroeconomic environment fierce volatility in the real estate market changes in the national laws regulatory and policy environment or other economic or regulatory changes may materially and adversely affect the increment and quality of the Bank’s real estate-related loans and thus the Bank’s asset quality financial condition and results of operations may be materially and adversely affected.Loans to government financing platforms The Bank proactively implemented national requirements of defusing risks in local debts and cooperated with local governments in such area. In accordance with market-oriented and law-based principles it – 15 –worked to exit risky assets thus promoting the quality development of its local government business. As at 31 December 2023 its balance of local government hidden debts stood at RMB209.87 billion (on-balance sheet loans) down by RMB31.48 billion from the balance as at 31 December 2022. Loans were mostly granted to infrastructure projects that have a significant impact on the economy of the country and the well-being of the people which was beneficial to improving local investment and financing environment and created positive externalities to local economic development.A substantial portion of the Bank’s loans are secured by collateral or guarantees. Any significant decline in the value of the collateral or deterioration of the financial condition of the guarantors or any failure by the Bank to enforce its rights as a creditor may adversely affect its financial condition and results of operations.As at 31 December 2023 37.43 per cent. of the Group’s loans were secured by collateral. Any significant decline in the value of the collateral securing its loans whether as a result of macroeconomic policy measures general economic downturn or otherwise may should borrowers default on their loans result in a decrease in the recovery rate and the Bank may need to make additional allowance for impairment losses. Moreover under certain circumstances the Bank’s rights to the collateral securing its loans may have lower priority than other creditors. In addition the procedures for liquidating or otherwise realising the value of collateral provided by the borrowers in the PRC can be protracted and/or ultimately unsuccessful as the enforcement process in the PRC may be difficult for legal and practical reasons.Based on the foregoing reasons the Bank may be unable to realise the expected value on collateral in a timely manner or at all.A certain portion of the Bank’s loans are backed by guarantees provided by related parties of the borrowers or a third party where there may be no collateral. As at 31 December 2023 17.52 per cent. of the Group’s loans were guaranteed. A significant deterioration in the financial condition of the guarantors may significantly limit the amounts the Bank may recover from them should the loans be in default by the borrowers. Moreover the Bank is subject to the risk of guarantees being deemed invalid by a court if a guarantor fails to satisfy the requirements of the PRC laws under certain circumstances.If the borrowers lose their repayment ability and the Bank fails to realise the full value on all or a portion of the collateral securing its loans or guarantees in a timely manner the Bank’s asset quality financial condition and results of operations may be adversely affected.The Bank faces risks in relation to its operating licences.The PRC regulatory authorities currently require the segregation of the operations of banks securities companies and insurance companies. Consequently as a commercial bank the Bank’s business scope is under strict restriction and must be conducted in accordance with corresponding operating licences. The Bank’s operating licences permit it to operate as a full-range commercial bank. However if regulatory policies are amended in future or the permitted business scope of financial institutions is amended or expanded the Bank may not be able to obtain new operating licences in a timely manner which may result in loss of business and which may therefore have a material and adverse effect on the Bank’s competitiveness. Furthermore in order to obtain new operating licences the Bank may need to increase investment in research and development operation management and infrastructures which may in turn increase its operating costs.The Bank’s expanding range of products and services exposes it to new risks.The Bank has experienced rapid expansion in recent years and intends to continue to expand the range of its products and services. While contributing to its results of operations expansion of the Bank’s business activities also exposes it to a number of risks and challenges including: * the Bank may have insufficient experience in certain new business areas and therefore the Bank may not compete effectively in these areas; – 16 –* the Bank may fail to obtain regulatory approval for its new products or services; * the Bank cannot assure potential investors that its new business activities will meet its expectations of profitability; * the Bank may not be able to hire additional qualified personnel; and * the Bank must continually enhance the capability of its risk management and upgrade its information technology (“IT”) systems to support a broader range of business activities.If the Bank is unable to achieve the expected results in new business areas due to any of the above or other factors the Bank’s business results of operations and financial condition may be materially and adversely affected. In addition if the Bank fails to promptly identify and expand into new business areas to meet increasing customer demand for certain products and services the Bank may fail to maintain its market share or lose some of its existing customers.The Bank has expanded its business to jurisdictions other than the PRC which has increased the complexity of the risks that it faces.The Bank has in recent years been implementing its internationalisation strategy and promoting its internationalised operations. The Bank’s expansion into multiple jurisdictions exposes it to a new variety of regulatory and business risks such as interest rate risks credit risks regulatory and compliance risks reputational risks and operational risks unique to those foreign jurisdictions. Regulators of those jurisdictions have the power to bring administrative or judicial proceedings against the Bank or its employees representatives agents and third-party service providers which could among other things result in the suspension or revocation of one or more of the Bank’s licences or the imposition of cease and desist orders fines civil penalties criminal penalties or other disciplinary actions against the Bank.Any failure to manage effectively the risks associated with the Bank’s internationalised operations may have a material and adverse effect on the Bank’s business financial condition and results of operations.The Bank is subject to credit risks associated with its off-balance sheet commitments and guarantees.In the normal course of its business the Bank makes commitments and guarantees which are not reflected as liabilities on its balance sheet including the provision of financial guarantees and letters of credit to guarantee the performance of its customers to third parties and the provision of bank acceptances. As at 31 December 2023 the Group’s off-balance sheet credit commitments totalled RMB2187.95 billion. The Bank is subject to credit risks on its commitments and guarantees because certain of its commitments and guarantees may need to be fulfilled as a result of non-performance by its customers. If the Bank is not able to compel its customers to perform their obligations or to obtain repayment from its customers in respect of these commitments and guarantees the Bank’s business financial condition and results of operations may be materially and adversely affected.The Bank is subject to risks associated with its derivative transactions.The Bank enters into swaps options and other derivative arrangements primarily for hedging purposes and to a lesser extent on behalf of its customers. For the year ended 31 December 2023 the nominal amount of the derivatives of the Group totalled RMB6738.84 billion. The Bank is subject to market and operational risks associated with these arrangements. With respect to derivative transactions on behalf of its customers the Bank is also exposed to the risk of its customers’ failure to consummate transactions with the Bank. At present the regulation of the PRC’s derivative market is still under development and requires further improvement and the PRC courts lack experience in dealing with derivative-related – 17 –cases both of which factors increase the risks of the derivative transactions into which the Bank enters.As a result the Bank enters into reverse transactions with certain counterparties so as to minimise the credit risks associated with its derivative transactions. However the Bank cannot assure potential investors that the counterparties with high-risk exposure will perform under the contracts and pay the contractual amount upon maturity of the derivative contracts as agreed. Any significant losses the Bank may incur as a result of the derivative transactions the Bank enters into may have a material and adverse effect on the Bank’s financial condition and results of operations.The Bank’s provisioning policies and loan classification may be different in certain respects from those applicable to banks in other countries.The Bank determines the level of allowance for impairment losses and recognises any related provisions made under IFRS 9 and the relevant loan impairment regulations of accounting standards of the PRC. Its provisioning policies may be different in certain respects from those of banks which do not assess loans under IFRS 9. As a result its allowance for impairment losses as determined under IFRS 9 may differ from those that would be reported if other accounting standards or policies were used.The Bank also classifies its loans as “pass” “special mention” “substandard” “doubtful” and “loss” by using the five-category classification system according to the relevant PRC Banking Regulatory Authority’s requirements. The five-category classification system is particular to the banking industry in the PRC and may be different in certain respects from those used in certain other countries or regions if any. As a result the five-category classification system may be incomparable with other classification systems and may reflect a different degree of risk than what would be reported in other countries.Consolidated quarterly financial information of the Bank has not been audited or reviewed.Where consolidated quarterly financial information is incorporated by reference into this Offering Circular none of such consolidated quarterly financial information in respect of the three months ended 31 March and nine months ended 30 September of each financial year of the Bank has been audited or reviewed by any auditors and such financial information may not provide the same type or quality of information associated with information that has been audited or reviewed. Potential investors must exercise caution when using such data to evaluate the Bank’s financial condition and results of operations and must not place undue reliance on such financial information.The Bank cannot assure potential investors that its risk management and internal control policies and procedures can adequately control or protect it against credit market operational liquidity and other risks.The Bank has significantly revamped and enhanced its risk management and internal control policies andprocedures in recent years details of which are set out in the paragraphs headed “Description of the Bank— Risk Management” and “Description of the Bank — Internal Control”. However the Bank cannot assure potential investors that its risk management and internal control policies and procedures will adequately control or protect it against all credit market operational liquidity and other risks. Moreover the Bank cannot assure potential investors that its employees will be able to consistently comply with or correctly apply these policies and procedures.The Bank’s risk management capabilities and implementation of internal control policies and procedures are limited by the information tools and technologies available to the Bank. Furthermore its ability to control risks is constrained by the applicable PRC laws and regulations that restrict the types of financial instruments and investments it may hold. If the Bank is unable to implement effectively the enhanced risk management and internal control policies and procedures or if the Bank cannot achieve its intended results of such policies and procedures in a timely manner the Bank’s business financial condition and results of operations may be materially and adversely affected.– 18 –The Bank’s business is highly dependent on the proper functioning and improvement of its information technology infrastructure.The Bank depends on its IT infrastructure to deliver services to its customers manage risks implement its internal control systems and manage and monitor its business operations. The Bank’s business generates and processes a large quantity of personal and transaction data. It is also subject to domestic and international laws relating to the collection use retention security and transfer of personally identifiable information with respect to its customers and employees. The Bank faces risks inherent in handling large volumes of data and in protecting the security of such data. In particular the Bank faces a number of challenges relating to data from transactions and other activities on its platforms including: * protecting the data in and hosted on the Bank’s system including against attacks on its system by outside parties or fraudulent behaviour by its employees; * addressing concerns related to privacy and sharing safety security and other factors; and * complying with applicable laws rules and regulations relating to the collection use retention disclosure or security of personal information including any requests from regulatory and government authorities relating to such data.The Bank has overall planning for digital risk control continuously improves the research and development capability of digital risk control technology through the application of big data and artificial intelligence technologies. It established disaster backup systems and recovery plans covering all the important activities in order to minimise any unforeseen interruption. Insurance cover is arranged to mitigate potential losses associated with certain disruptive events. However the Bank does not back up all systems on a real-time basis (whether within the same city or between cities) and the effectiveness of its back-up system depends on whether the Bank can successfully implement complex procedures with the support and cooperation of all units with the Bank. As a result the Bank cannot assure potential investors that its business activities will not be disrupted if there is a partial or complete failure of any of its main IT systems or communication networks. Such failures could be caused by among other things software flaws computer virus attacks malicious programs or system upgrade problems.In addition despite the efforts of the Bank to ensure that all of its employees follow strictly implemented protocols with respect to the protection of customer information and operational data the misappropriation of data by the Bank’s employees or other people any security breach caused by unauthorised access to its systems or any destruction or loss or corruption of data software hardware or other computer equipment could have a material and adverse effect on the Bank’s business results of operations and financial condition.The Bank strives to upgrade its IT systems on a timely and cost-effective basis. Any failure to successfully and timely improve or upgrade its IT systems may lead to malfunctioning or slowdown in its systems which in turn may impact its ability to operate to meet customers’ increasing demand for certain products and services and the Bank’s reputation business financial condition results of operations and prospects may be materially and adversely affected. In addition any systems failure or security breach or lapse that result in the release of user data could harm the Bank’s reputation and brand and consequently its business in addition to exposing it to potential legal liability. Any failure or perceived failure by the Bank to comply with its privacy policies or with any regulatory requirements or privacy protection-related laws rules and regulations could result in proceedings or actions against it by governmental entities or others. These proceedings or actions may subject the Bank to significant penalties and negative publicity require the Bank to change its business practices increase its costs and severely disrupt its business.– 19 –The Bank may be involved in legal and other disputes from time to time arising out of its operations and may face potential liabilities as a result.The Bank is often involved in legal and other disputes for a variety of reasons which generally arise because it seeks to recover outstanding amounts from borrowers or because customers or other claimants bring actions against it. The majority of these cases arise in the ordinary course of the Bank’s business.Where the Bank assesses that there is a probable risk of loss it is the Bank’s policy to make provisions for the loss. The Bank has made provisions with respect to pending legal proceedings and other disputes against it.However there can be no assurance that the judgments in any of the litigation in which the Bank is involved would be favourable to it or that the Bank’s litigation provisions are adequate to cover the losses arising from legal proceedings or other disputes. In addition if the Bank’s assessment of the risk changes its view on provisions will also change. It is expected that the Bank will continue to be involved in various legal and other disputes in the future which may subject it to additional risks and losses. These disputes may relate to among others the amount of the unpaid obligations of the relevant borrowers the terms for such borrowers to perform their obligations and the application of statute of limitations. In addition the Bank may have to advance legal costs associated with such disputes including fees relating to appraisal notarisation auction execution and legal counsel’s services. These and other disputes may lead to legal administrative or other proceedings and may result in damage to the reputation of the Bank additional operational costs and a diversion of resources and management’s attention from its core business operations. There can be no assurance that the outcomes of future or current disputes or proceedings will be favourable to the Bank. If the outcomes of disputes or proceedings are unfavourable to the Bank the Bank’s business financial condition and results of operations may be materially and adversely affected.The Bank may not detect and prevent fraud or other misconduct committed by its employees or third parties in a timely manner.As at 31 December 2023 the Bank had 1451 outlets in 153 large and medium-sized cities in China.Although the Bank has continuously sought to enhance management and supervision of its branches and sub-branches (including putting in place policies on employee conduct) as the branches and sub-branches have relatively significant autonomy in their operations and management within the scope of authorisation the Bank cannot assure potential investors that it can always timely detect or prevent operational or management problems within its branches and sub-branches.Fraud or other misconduct committed by the Bank’s current or past employees or third parties could subject it to financial losses and sanctions imposed by government authorities which may at the same time cause serious damage to its reputation. Such misconduct may include among other things fraud allegations of corruption theft mishandling of customer deposits misappropriation of customers’ funds and misappropriation of bank funds. In addition penalties or government sanctions may be imposed on the Bank as a result of its current or past employees’ misconduct. If such misconduct occurs the Bank may be required to cooperate with the relevant authorities in its investigations directed against any current or past employees or third parties and the Bank’s reputation results of operations and financial condition may be materially and adversely affected arising from the illegal actions taken or as a result of any negative publicity arising from such illegal actions by its current or past employees or by third parties.The Bank may not be able to detect money laundering or other illegal or improper activities which could expose it to additional liability and negatively affect its business.The Bank is required to comply with applicable anti-money laundering anti-terrorism laws and other regulations in the PRC and other jurisdictions where it has operations which require it among other things to adopt and enforce “know your customer” policies and procedures and to report suspicious and large transactions to the applicable regulatory authorities in different jurisdictions.– 20 –The Bank has adopted policies and procedures aimed at detecting and preventing the use of its banking network for money laundering activities and by terrorists terrorist-related organisations and individuals.However due to the fact that such policies and procedures are newly adopted the Bank may not entirely eliminate instances where the Bank’s facilities may be used by other parties to engage in money laundering and other illegal and improper activities. To the extent the Bank may fail to fully comply with applicable laws and regulations the relevant government authorities to whom it reports in the various jurisdictions have the power and authority to impose fines and other penalties on it. In addition money laundering or other illegal or improper activities conducted by the Bank’s customers using its facilities may have a material and adverse effect on the Bank’s business operations financial condition and reputation.The Bank may not be able to satisfy the regulatory requirements on capital adequacy ratios in the future.As at 31 December 2023 the Group’s core tier-one capital adequacy ratio tier-one capital adequacy ratio and capital adequacy ratio were 8.99 per cent. 10.75 per cent. and 12.93 per cent. respectively. Although these capital adequacy ratios were in compliance with the applicable PRC requirements certain developments could affect the Bank’s ability to satisfy applicable capital adequacy requirements in the future.On 7 June 2012 the relevant PRC Banking Regulatory Authority promulgated the Provisional Measuresfor Capital Management of Commercial Banks (商业银行资本管理办法（试行）) (the “ProvisionalCapital Management Regulations”) which came into effect on 1 January 2013 and implemented Basel III in the PRC. The Provisional Capital Management Regulations clarified and refined the categorisations and methods of measurement in respect of the capital instruments of commercial banks. According to the Provisional Capital Management Regulations the regulatory requirements on the capital adequacy ratio of commercial banks shall cover the requirements on the minimum capital reserve capital and counter-cyclical capital supplementary capital for systemically important banks as well as second pillar-capital which shall be reached by commercial banks by the end of 2018. In order to smoothly transition to the full adoption of the Provisional Capital Management Regulations the relevant PRC Banking Regulatory Authority promulgated the Circular on Issues Concerning the Implementation of the Provisional Administrative Measures on Capital Management of Commercial Banks in Transitional Period (中国银监会关于实施《商业银行资本管理办法（试行）》过渡期安排相关事项的通知) (the “Transitional Circular”) on 30 November 2012 pursuant to which commercial banks shall reach the minimum capital requirement by 1 January 2013. Within the transitional period for reaching required targets the Provisional Capital Management Regulations and the Transitional Circular require commercial banks to formulate and implement feasible plans for reaching capital adequacy ratio targets step by step and submit the same to the relevant PRC Banking Regulatory Authority for approval. On 26 October 2023 the Measures for Capital Management of Commercial Banks (商业银行资本管理办法) (the “Capital Management Regulations”) was promulgated which came into effect on 1 January 2024 and replaced the Provisional Capital Management Regulations. Also on 26 October 2023 the Circular on Issues Concerning the Implementation of the Measures for Capital Management of Commercial Banks ( 国家金融监督管理总局关于实施《商业银行资本管理办法》相关事项的通知) was promulgated which aimed to steadily promote the implementation of the Capital Management Regulations and came into effect on the same day.Given the requirement of capital adequacy ratio under the Capital Management Regulations the Bank’s capital adequacy may be substantially affected. Although the Bank is currently in compliance with the requirement for capital adequacy new requirements and regulations may adversely affect the Bank’s compliance with capital adequacy ratios and it is possible that the Bank may face difficulties in meeting the requirement of the regulations regarding capital adequacy.– 21 –In addition certain regulatory developments may affect the Bank’s ability to maintain compliance with capital adequacy requirements including the raising of minimum capital adequacy ratios by the relevant PRC Banking Regulatory Authority and the changes in calculations of capital adequacy ratios by the relevant PRC Banking Regulatory Authority. If any of these circumstances occurs the Bank may be unable to comply with the regulatory requirements of the relevant PRC Banking Regulatory Authority.There can be no assurance that the Bank will be able to meet these requirements in the future at all times and any failure to meet these requirements may have a material and adverse effect on the Bank’s business financial condition and results of operations.In order to support its steady growth and development the Bank may need to raise more capital to ensure that its capital complies with or exceeds the minimum regulatory requirement. The Bank’s capital-raising ability may be restricted by the Bank’s future business financial condition and results of operations the Bank’s credit rating necessary regulatory approvals and overall market conditions including the PRC’s and global economic political and other conditions at the time of capital raising.The Bank is subject to various risks in relation to the PRC and overseas regulatory requirements.The Bank is subject to periodic inspections and examinations relating to compliance with the relevant laws regulations and guidelines by PRC regulatory authorities including the MOF the PBOC the relevant PRC Banking Regulatory Authority SAMR SAFE and the tax authorities at different levels as well as by overseas regulatory authorities for its overseas operations. The Bank cannot however assure potential investors that future examinations by PRC or other regulatory authorities would not result in fines and penalties that could materially and adversely affect its reputation business results of operations and financial condition.From time to time the NAO conducts audits on state-controlled enterprises and publishes the audit results. If the Bank is found to have any material misconduct or non-compliance in future NAO audits it will be subject to fines and other administrative penalties which could materially and adversely affect its reputation business and prospects.The Bank’s overseas branches subsidiaries and representative offices are subject to various overseas regulatory requirements as well as periodic inspections examinations and inquiries conducted by overseas regulatory authorities in respect of its compliance with such requirements. The Bank cannot assure potential investors that it will be able to meet all the applicable regulatory requirements and guidelines or comply with all the applicable regulations at all times. The Bank may be subject to sanctions fines or other penalties in the future as a result of any non-compliance with laws and regulations. If any such sanction fine or other penalty is imposed on the Bank for failing to comply with applicable regulatory requirements or guidelines the Bank’s business financial condition results of operations and reputation may be materially and adversely affected.In addition the PRC United States European Union United Kingdom Hong Kong United Nations Security Council and other applicable jurisdictions currently impose various economic sanctions on certain countries regions territories entities and specific sectors in certain countries regions or territories. These sanctions are intended to address a variety of policy concerns among other things denying certain countries and certain individuals and entities the ability to support international terrorism and to pursue weapons of mass destruction and missile programmes. For example the United States currently impose various economic sanctions administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) which apply only to U.S. persons and in certain cases to foreign subsidiaries of U.S. persons or to transactions involving certain items subject to U.S. jurisdiction.OFAC prohibits such persons from directly or indirectly investing or otherwise doing business in or with certain countries (such as the Crimea region Cuba Iran North Korea Syria Donetsk and Luhansk) and with certain persons or businesses that have been specially designated by OFAC or other U.S. government – 22 –agencies. Other governments and international or regional organisations also administer similar economic sanctions. Further sanctions laws are subject to change sometimes with little advance notice.If the Group is in the future determined to have engaged in any prohibited transactions or otherwise violated applicable sanctions regulations the Group could be subject to penalties and sanctions and its reputation and ability to conduct future business in the relevant jurisdictions may be materially and adversely affected.The uncertainties in the global economy the global financial markets and in particular in the PRC could materially and adversely affect the financial condition and results of operations of the Bank and the Group.The global economic slowdown and turmoil in the global financial markets that started in the second half of 2008 had a negative and lasting impact on the world economy which in turn affected the PRC real estate industry and many other industries. Subsequently global markets and economic conditions were adversely affected by the credit crisis in Europe the credit rating downgrade of the United States and heightened market volatility in major stock markets. Following a referendum vote on 23 June 2016 and a formal notice given by the UK to the European Union on 29 March 2017 under Article 50 of the Treaty on European Union the United Kingdom left the European Union on 31 January 2020 at 11 p.m. local time (“Brexit”). With Brexit taking full effect after 31 December 2020 economic relations between the United Kingdom and the remaining members of the European Union will continue to evolve and it is unclear how Brexit would ultimately affect the fiscal monetary and regulatory landscape within the United Kingdom the European Union and the rest of the world.It is expected that the world economy and financial markets will continue face uncertainty due to various conflicts sanctions market disruptions sovereign debt issues inflation political unrest and trade wars.The Russo-Ukrainian conflict and the conflict in Israel and Gaza have caused volatility in the global markets and may have a negative impact on the region and the global economies especially on the sectors of oil natural gas and food. Several European countries struggle with sovereign debt problems and the risk of default or restructuring which may affect the stability of the eurozone and the European Union.Major economies around the world have experienced high inflation levels as a result of liberal monetary policies which may erode the purchasing power of consumers and businesses and affect the growth prospects. Political unrest in various countries in the Middle East Eastern Europe and Africa has resulted in economic instability and uncertainty which may affect the security and the development of the regions. China’s economic growth has moderated due to weakened exports and the trade war with the United States which has imposed significant tariffs on Chinese goods and vice versa. Although the two countries have signed the first stage of a trade deal the trade tensions remain high and the economic relief is unclear.The uncertainties in the global and the PRC’s economies may adversely affect the Bank’s financial condition and results of operations in many ways including among other things: * during a period of economic slowdown there is a greater likelihood that more of the Bank’s customers or counterparties could become delinquent in respect of their loan repayments or other obligations to the Bank which in turn could result in a higher level of NPLs allowance for impairment losses and write-offs all of which would adversely affect its results of operations and financial condition; * the increased regulation and supervision of the financial services industry in response to the financial crisis in certain jurisdictions where the Bank operates may restrict its business flexibility and increase compliance costs which may adversely affect its business operations; * the value of the Bank’s investments in the debt securities issued by overseas governments and financial institutions may significantly decline which may adversely affect its financial condition; – 23 –* the Bank’s ability to raise additional capital on favourable terms or at all could be adversely affected; and * trade and capital flows may further contract as a result of protectionist measures being introduced in certain markets which could cause a further slowdown in economies and adversely affect the Bank’s business prospects.There can be no assurance that the PRC’s economy or the global economy will maintain sustainable growth. If further economic downturn occurs or continues the business results of operations and financial condition of the Bank could be materially and adversely affected.The PRC’s economic political and social conditions as well as government policies could affect the Bank’s business financial condition and results of operations.A substantial majority of the Bank’s businesses assets and operations are located in the PRC.Accordingly the Bank’s financial condition results of operations and business prospects are to a significant degree subject to the economic political and legal developments in the PRC.The PRC government exercises significant control over the PRC’s economic growth by allocating resources setting monetary policy and providing preferential treatment to particular industries or companies. The Bank may not benefit from certain such measures. The PRC government also has the power to implement macroeconomic control measures affecting the PRC’s economy. These measures are aimed at benefitting the overall economy of the PRC but some of them may have negative effects on certain industries including the commercial banking industry. For example the Group’s operating results may be adversely affected by government control over capital investments or changes in the interpretation of and application of applicable tax regulations. In addition in recent years the PBOC has instituted broad reform of the PRC’s monetary policy. If the Group is unable to adjust its operations in accordance with these reforms its business financial condition and results of operations could be materially and adversely affected.The PRC has been one of the world’s fastest growing economies as measured by GDP growth in recent years. However the PRC may not be able to sustain such a growth rate. If the PRC’s economy experiences a decrease in growth rate or a significant downturn the unfavourable business environment and economic condition for the Bank’s customers could negatively impact their ability or willingness to repay the Bank’s loans and reduce their demand for the Bank’s banking services. The Bank’s financial condition results of operations and business prospects may be materially and adversely affected.The Bank is subject to the PRC government controls on currency conversion and risks relating to fluctuations in exchange rates.The Bank receives a substantial majority of its revenue in Renminbi. A portion of this revenue must be converted into other currencies in order to meet the Bank’s foreign currency obligations. For example the Bank needs to obtain foreign currency to make payments of declared dividends if any on its H shares.Under the PRC’s existing foreign exchange regulations by complying with certain procedural requirements the Bank will be able to undertake current account foreign exchange transactions including payment of dividends without prior approval from the SAFE. However in the future the PRC government may at its discretion take measures to restrict access to foreign currencies for capital account and current account transactions under certain circumstances.The value of the Renminbi against the U.S. dollar and other currencies fluctuates and is affected by among other things changes in the PRC’s and international political and economic conditions and the PRC government’s fiscal and currency policies. Although the Bank seeks to reduce its exchange rate risk through currency derivatives or otherwise it cannot assure investors that it will be able to reduce its foreign currency risk exposure relating to its foreign currency-dominated assets. In addition there are – 24 –limited instruments available for the Bank to reduce its foreign currency risk exposure at reasonable cost.Any appreciation of the Renminbi against the U.S. dollar or any other foreign currencies may materially and adversely affect the financial conditions of certain of the Bank’s customers particularly those deriving substantial income from exporting products or engaging in related businesses and in turn affect their ability to service their obligations to the Bank. Furthermore the Bank is also currently required to obtain the approval of the SAFE before converting significant sums of foreign currencies into Renminbi.All of these factors could materially and adversely affect the Bank’s financial condition results of operations and compliance with capital adequacy ratios and operational ratios.Any force majeure events including future occurrence of natural disasters or outbreaks of contagious diseases in the PRC and globally may have a material and adverse effect on the Bank’s business operations financial condition and results of operations.Any future force majeure events such as the occurrence of natural disasters or outbreaks of health epidemics and contagious diseases including avian influenza severe acute respiratory syndrome or SARS or swine flu caused by H1N1 virus or H1N1 Flu or variants thereof or COVID-19 pandemic may materially and adversely affect the Bank’s business financial condition and results of operations.Possible force majeure events may give rise to additional costs to be borne by the Bank and have adverse effects on the quality of its assets business financial condition and results of operations. An outbreak of a health epidemic or contagious disease could result in a widespread health crisis and restrict the level of business activity in affected areas which may in turn adversely affect the Bank’s business. There is no assurance that such outbreak will not lead to decreased demand for services the Bank provides; nor is there assurance that the outbreak’s adverse impact on the PRC economy and the Bank’s customers will not adversely affect the level of non-performing loans.Moreover the PRC has experienced natural disasters like earthquakes floods and drought in the past few years. Any future occurrence of severe natural disasters in the PRC may adversely affect its economy and in turn the Bank’s business. There can be no guarantee that any future occurrence of natural disasters or outbreaks of avian influenza SARS H1N1 Flu or other epidemics or the measures taken by the PRC government or other countries in response to a future outbreaks of avian influenza SARS H1N1 Flu COVID-19 or other epidemics will not seriously interrupt the Bank’s operations or those of its customers which may have a material and adverse effect on its business financial condition and results of operations.The Bank may not be able to hire train or retain a sufficient number of qualified employees.Most aspects of the Bank’s business are dependent on the quality of its professional employees. The Bank devotes considerable resources to recruitment and staff-training. However the Bank faces increased competition in recruiting and retaining these individuals as other banks are competing for the same pool of potential employees. The loss of members of the Bank’s senior management team or professional staff may materially and adversely affect its business customer base and results of operations.RISKS RELATING TO THE BANKING INDUSTRY The Bank’s business and operations are highly regulated and its business financial condition results of operations and future prospects may be materially and adversely affected by regulatory changes or other governmental policies including their interpretation and application.The Bank’s business and operations are directly affected by changes in the PRC’s policies laws and regulations relating to the banking industry such as those affecting the extent to which it can engage in specific businesses as well as changes in other governmental policies. Since its establishment as the primary banking industry regulator assuming the majority of the bank regulatory functions from the PBOC in 2003 the relevant PRC Banking Regulatory Authority has promulgated a series of banking regulations and guidelines. The banking regulatory regime in the PRC is currently undergoing significant – 25 –changes most of which are applicable to the Bank and may result in additional costs or restrictions on its activities. For instance in March 2011 the relevant PRC Banking Regulatory Authority the PBOC and the NDRC jointly issued a notice stipulating the cancellation of 34 service fees classified under 11 categories of domestic commercial banks effective from 1 July 2011. On 14 February 2014 the NDRC and the relevant PRC Banking Regulatory Authority jointly issued Measures for the Administration of the Service Prices of Commercial Banks (the “Measure”) which came into effect on 1 August 2014.According to the Measure the prices of basic banking services that are widely used by clients and have significant influence on the PRC’s economic development shall be subject to the guidance or determination of the government. The NDRC and the relevant PRC Banking Regulatory Authority also jointly issued a circular on Printing and Distributing the Catalogue of Government-guided and Government-determined Prices for Services Provided by Commercial Banks (the “Catalogue”).According to the Catalogue the prices of basic financial services provided by commercial banks for bank clients shall be subject to government guided-prices and government pricing. Such basic financial services include part of commercial banks’ service items such as wire transfer remittance by cash encashment and bills and specific charge items and charging standards shall be subject to the Catalogue.There can be no assurance that the policies laws and regulations governing the banking industry will not change in the future or that any such changes will not materially and adversely affect the Bank’s business financial condition and results of operations nor can the Bank assure investors that it will be able to adapt to all such changes on a timely basis. In addition there may be uncertainties regarding the interpretation and application of new policies laws and regulations. Failure to comply with the applicable policies laws and regulations may result in fines and restrictions on the Bank’s activities which could also have a significant impact on its business financial condition and results of operations.The Bank’s business and operations are directly affected by changes in the PRC’s policies laws and regulations relating to the banking industry such as those affecting the extent to which it can engage in specific businesses as well as changes in other governmental policies. There can be no assurance that the policies laws and regulations governing the banking industry will not change in the future or that any such changes will not materially and adversely affect the Bank’s business financial condition and results of operations nor can there be any assurance that the Bank will be able to adapt to all such changes on a timely basis. In addition there may be uncertainties regarding the interpretation and application of new policies laws and regulations which may result in penalties and restrictions on the Bank’s activities which may have a material and adverse effect on the Bank’s financial condition and results of operations.The Bank is subject to changes in interest rates and other market risks and the Bank’s ability to hedge market risks is limited.As with most commercial banks the Bank’s results of operations depend to a great extent on its net interest income. For the years ended 31 December 2021 2022 and 2023 the Group’s net interest income represented 72.30 per cent. 71.36 per cent. and 69.82 per cent. of its operating income respectively.Interest rates in the PRC historically were highly regulated but have been gradually liberalised in recent years. Under current PBOC regulations commercial banks in the PRC cannot set interest rates above 150 per cent. of the relevant PBOC benchmark rate for RMB-denominated deposits. There also used to be a restriction with respect to the lower limit of the interest rates for RMB-denominated deposits. However the PBOC promulgated the Notice on Further Promoting the Market-oriented Reform of Interest Rates on 19 July 2013 eliminating such restriction on RMB-denominated loans except for residential mortgage loans. As at 20 August 2020 the ceiling on private lending interest rate has been significantly lowered to four times one-year LPR (13.8 per cent. announced by National Interbank Funding Center on 20 May 2024) from the previous ceiling which was set between 24 per cent. and 36 per cent. There is no assurance that the ceiling on private lending interest rates will not be further lowered in the future nor is there assurance that such adjustments in interest rate caps will not have a material adverse impact on the Bank’s business financial condition and results of operations.– 26 –The PBOC may further liberalise the existing interest rate restrictions on RMB-denominated loans and deposits. If the existing regulations were substantially liberalised or eliminated competition in the PRC’s banking industry would likely intensify as the PRC’s commercial banks seek to offer more attractive rates to customers. Further liberalisation by the PBOC would result in the narrowing of the spread in the average interest rates between RMB-denominated loans and RMB-denominated deposits thereby materially and adversely affecting the Bank’s results of operations. Furthermore the Bank cannot assure investors that it will be able to adjust the composition of its asset and liability portfolios and its pricing mechanism to enable it to effectively respond to further liberalisation of interest rates.In recent years the PBOC has adjusted the benchmark rates several times. Any adjustments by the PBOC in the benchmark interest rates on loans or deposits or changes in market interest rates may adversely affect the Bank’s financial condition and results of operations in different ways. For example changes in the PBOC benchmark interest rates could affect the average yield on the Bank’s interest-earning assets differently from the average cost on its interest-bearing liabilities and therefore may narrow its net interest margin and reduce its net interest income which may materially and adversely affect its results of operations and financial condition. In addition an increase in interest rates may result in increases in the finance costs of the Bank’s customers and thus reduce overall demand for loans and accordingly adversely affect the growth of the Bank’s loan portfolio as well as increase the risk of customer default.As a result changes in interest rates may adversely affect the Bank’s net interest income financial condition and results of operations.The Bank also undertakes trading and investment activities involving certain financial instruments both in the PRC and abroad. The Bank’s income from these activities is subject to volatilities caused by among other things changes in interest rates and foreign currency exchange rates. For example increases in interest rates generally have an adverse effect on the value of the Bank’s fixed rate securities portfolio which may materially and adversely affect its results of operations and financial condition. Furthermore as the derivatives market has yet to mature in the PRC there are limited risk management tools available to enable the Bank to reduce market risks.The growth rate of the PRC’s banking industry may not be sustainable.The Bank expects the banking industry in the PRC to continue to grow as a result of anticipated growth in the PRC economy increases in household income further social welfare reforms demographic changes and the opening of the PRC’s banking industry to foreign participants. However it is not clear how certain trends and events such as the pace of the PRC’s economic growth the PRC’s implementation of its commitment to WTO accession the development of its domestic capital and insurance markets and the ongoing reform of its social welfare system will affect the PRC’s banking industry. In addition there can be no assurance that the banking industry in the PRC is free from systemic risks. Consequently there can be no assurance that the growth and development of the PRC’s banking industry will be sustainable.The effectiveness of the Bank’s credit risk management is affected by the quality and scope of information available in the PRC.The information infrastructure in the PRC is relatively undeveloped. PRC national individual and corporate credit information databases developed by the PBOC commenced operation in 2006.However due to their short operational history they can only provide limited information. Therefore the Bank’s assessment of the credit risk associated with a particular customer may not be based on complete accurate or reliable information. Until these nationwide credit information databases become more fully developed the Bank has to rely on other publicly available resources and its internal resources which are not as extensive or as effective as a unified nationwide credit information system. As a result the Bank’s ability to manage effectively its credit risk and in turn its asset quality is limited and its financial condition and results of operations may be materially and adversely affected.– 27 –The Bank faces intense competition in the PRC’s banking industry as well as competition from alternative corporate financing and investment channels.The Bank faces competition from other commercial banks and financial institutions in all of its principal areas of business. It competes primarily with other large commercial banks nationwide joint stock commercial banks city commercial banks and foreign banks in the PRC.Additionally following the removal of regulatory restrictions on its geographical presence customer base and operating licence in the PRC in December 2006 as part of the PRC’s World Trade Organisation accession commitments the Bank has experienced increased competition from foreign invested commercial banks. Furthermore the Mainland and Hong Kong Closer Economic Partnership Arrangement the Mainland and Macau Closer Economic Partnership Arrangement and the Cross-Straits Economic Co-operation Framework Agreement which permit Hong Kong Macau and Taiwan banks to operate in the PRC have also increased competition in the PRC’s banking industry.Moreover the PRC government has in recent years implemented a series of measures designed to further liberalise the banking industry including among others with respect to interest rates and non-interest-based products and services which are changing the basis on which the Bank competes with other banks for customers.The Bank competes with many of its competitors for substantially the same loan deposit and fee-based business customers. Such competition may adversely affect the Bank’s business and future prospects by for example: * reducing its market share in its principal products and services; * slowing down the growth of its loan or deposit portfolios and other products and services; * decreasing its interest income or increasing its interest expenses thereby reducing its net interest income; * reducing its fee and commission income; * increasing its non-interest expenses such as marketing expenses; * adversely affecting its asset quality; and * increasing competition for senior management and qualified professional personnel.The Bank may also face competition from direct corporate financing such as the issuance of securities in the domestic and international capital markets. The domestic securities markets have experienced and are expected to continue to experience expansion and growth. If a substantial number of its customers choose alternative financing to fund their capital needs the Bank’s business financial condition and results of operations may be adversely affected.Moreover the Bank may face competition from other forms of investment alternatives as the PRC capital markets continue to develop. As the PRC equity and bond markets continue to develop and become more viable and attractive investment alternatives the Bank’s deposit customers may elect to transfer their funds into equity and bond investments which may reduce its deposit base and adversely affect its business financial condition and results of operations.– 28 –The PRC regulators have implemented measures relating to lending to small and medium-sized enterprises (“SMEs”) and the Bank may be subject to future regulatory changes.The relevant PRC Banking Regulatory Authority has promulgated a series of measures including theGuidance on Issues Relevant to Establishing Special Agencies for Small Business Lending by Banks《( 关于银行建立小企业金融服务专营机构的指导意见》) and the Notice on Further Supporting CommercialBanks’ Improvement of Financial Services to Small Enterprises《( 关于支持商业银行进一步改进小企业金融服务的通知》) to encourage banking insti tutions to implement the PRC government’s macroeconomic policies and in particular to proactively support continued healthy economic growth by increasing lending activities to SMEs while effectively controlling risk.SMEs are more vulnerable to fluctuations in the macroeconomy compared with large enterprises due to relatively limited capital management or other resources required to cope with the adverse impact of major economic or regulatory changes. In addition SMEs may not be able to provide reliable information necessary for the Bank to assess the credit risks involved. In the absence of accurate assessment of the relevant credit risks the non-performing loans of the Bank may be significantly increased if its SME clients are affected by economic or regulatory changes which could materially and adversely affect the Group’s business results of operations and financial condition.There can be no assurance that the policies laws and regulations governing the PRC banking industry in particular those relating to lending to SMEs will not change in the future or that any such changes will not materially and adversely affect the Bank’s business financial condition and results of operations.Certain PRC regulations limit the Bank’s ability to diversify its investments and as a result a decrease in the value of a particular type of investment may have a material adverse effect on its financial condition and results of operations.As a result of the current PRC regulatory restrictions substantially all of the Bank’s RMB-denominated investment assets are concentrated in a limited number of investments permitted for PRC commercial banks such as PRC governmental bonds bonds issued by PRC policy banks and bonds issued on the inter-bank market. These restrictions to a certain extent limit the Bank’s ability to diversify its investment portfolio and to seek returns on its investments when compared with those of banks in other countries or to manage the Bank’s liquidity in the same manner as banks in other countries. In addition the Bank is exposed to a certain level of risk as a result of the concentration of its RMB-denominated investment securities. For instance any deterioration of the financial condition of commercial banks in the PRC would increase the risks associated with holding their bonds and subordinated notes. A decrease in the value of any of these types of investments could have a material adverse effect on the Bank’s financial condition and results of operations.The Group may be affected by Basel III Reforms and related reforms and the Financial Institutions (Resolution) Ordinance.The Basel Committee has proposed a number of fundamental reforms to the regulatory capital framework for internationally active banks which are designed in part to ensure that capital instruments issued by such banks fully absorb losses before taxpayers are exposed to loss (the “Basel III Reforms”) the principal elements of which are set out in its papers dated 16 December 2010 (as revised in June 2011) and its press release dated 13 January 2011. The implementation of the Basel III Reforms in the PRC is currently under way. In addition to Basel III Reforms many jurisdictions have started to propose various reforms related or similar to the Basel III Reforms. As the Group operates its business globally it may the subject of recent international regulatory guidance and proposals for reform.– 29 –On 7 July 2017 the Financial Institutions (Resolution) Ordinance (Cap. 628) of Hong Kong (the “FIRO”) came into operation. The FIRO provides for among other things the establishment of a resolution regime for authorised institutions and other within scope financial institutions in Hong Kong which may be designated by the relevant resolution authorities which may in the future include members of the Group (a “FIRO Group Entity”). The resolution regime seeks to provide the relevant resolution authorities with administrative powers to bring about timely and orderly resolution in order to stabilise and secure continuity for a failing authorised institution or within scope financial institution in Hong Kong. In particular in the context of a resolution of any FIRO Group Entity the relevant resolution authority may have the ability to resolve other entities within the Group as if they were themselves a within scope financial institution for the purposes of FIRO and take certain actions and make certain directions in relation to such entities. Any such actions could potentially affect contractual and property rights relating to the relevant entity. The implementation of FIRO remains untested and certain details relating to FIRO has been or will be set out through secondary legislation and supporting rules.Therefore the Bank is unable to assess the full impact of FIRO on the financial system generally the Bank’s counterparties the Bank any of its consolidated subsidiaries or other Group entities the Bank’s operations and/or its financial position.RISKS RELATING TO THE NOTES Potential investors should not place undue reliance on the financial information incorporated by reference that is not audited.This Offering Circular incorporates the most recently published unaudited but reviewed interim consolidated financial statements of the Bank published from time to time after the date of this Offering Circular in each case together with any review reports prepared in connection therewith as well as the most recently published unaudited and unreviewed quarterly financial information published subsequent to the most recently published consolidated financial statements of the Bank. The Bank publishes its consolidated quarterly interim reports in respect of the three months ended 31 March and 30 September of each financial year. A copy of the quarterly interim reports can be found on the website of the Hong Kong Stock Exchange.The quarterly interim financial information has not been and will not be audited or reviewed by the Bank’s independent auditors. The quarterly interim financial information should not be relied upon by investors to provide the same quality of information associated with information that has been subject to an audit or review. Potential investors should exercise caution when using such data to evaluate the Bank’s financial condition and results of operations. The half-yearly or quarterly interim financial information should not be taken as an indication of the expected financial condition or results of operations of the Group for the relevant full financial year.Notes may not be a suitable investment for all investors.Each potential investor in any Notes must determine the suitability of that investment in light of its own circumstances. In particular each potential investor should: (i) have sufficient knowledge and experience to make a meaningful evaluation of the relevant Notes the merits and risks of investing in the relevant Notes and the information contained or incorporated by reference in this Offering Circular or any applicable supplement to this Offering Circular or any Pricing Supplement; (ii) have access to and knowledge of appropriate analytical tools to evaluate in the context of its particular financial situation an investment in the relevant Notes and the impact such investment will have on its overall investment portfolio; (iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the relevant Notes including where principal or interest is payable in one or more currencies or where the currency for principal or interest payments is different from the potential investor’s currency; – 30 –(iv) understand thoroughly the terms of the relevant Notes and be familiar with the behaviour of any relevant indices and financial markets; and (v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic interest rate and other factors that may affect its investment and its ability to bear the applicable risks.Certain Series of Notes may be complex financial instruments. Sophisticated investors generally do not purchase complex financial instruments as standalone investments but rather purchase such complex financial instruments as a way to reduce risk or enhance yield with an understood measured appropriate addition of risk to their overall portfolios. A potential investor should not invest in such Notes unless it has the expertise (either alone or with the help of a financial adviser) to evaluate how such Notes will perform under changing conditions the resulting effects on the value of such Notes and the impact this investment will have on the potential investor’s overall investment portfolio.The Financial Institutions (Resolution) Ordinance may adversely affect the Notes where the Issuer is the Hong Kong Branch.On 7 July 2017 the FIRO came into operation. The FIRO provides for among other things the establishment of a resolution regime for authorised institutions and other within scope financial institutions in Hong Kong which may be designated by the relevant resolution authorities which may include the Bank to the extent the Bank conducts licensed activities in Hong Kong. The resolution regime seeks to provide the relevant resolution authorities with administrative powers to bring about timely and orderly resolution in order to stabilise and secure continuity for a failing authorised institution or within scope financial institution in Hong Kong. In particular the relevant resolution authority is provided with powers to affect contractual and property rights as well as payments (including in respect of any priority of payment) that creditors would receive in resolution. These may include but are not limited to powers to cancel write off modify convert or replace all or a part of the Notes or the principal amount of or interest on the Notes and powers to amend or alter the contractual provisions of the Notes all of which may adversely affect the value of the Notes and the holders thereof may suffer a loss of some or all of their investment as a result if the Issuer is the Hong Kong Branch. In the event that the Issuer is the Hong Kong Branch holders of Notes may become subject to and bound by the FIRO.The implementation of FIRO remains untested and certain details relating to FIRO will be set out through secondary legislation and supporting rules. Therefore it is unable to assess the full impact of FIRO on the financial system generally the Bank’s counterparties the Bank any of the Bank’s consolidated subsidiaries the Bank’s operations and/or financial position.The Notes are subordinated to all secured debt of each of the Issuer and the Bank.Each Tranche of Notes will be unsecured and will rank at least equally with all other unsecured and unsubordinated indebtedness (except for creditors whose claims are preferred by law and which rank ahead of the holders of the Notes) that each of the Issuer and the Bank has issued or may issue. Payments under the Notes are effectively subordinated to all secured debt of each of the Issuer and the Bank to the extent of the value of the assets securing such debt.As a result of such security interests given to the relevant Issuer’s and the Bank’s secured lenders in the event of a bankruptcy liquidation dissolution reorganisation or similar proceeding involving the relevant Issuer and the Bank the affected assets of the relevant Issuer and the Bank may not be used to pay the Noteholders until after: * all secured claims against the affected entity have been fully paid; and – 31 –* if the affected entity is a subsidiary of the Bank all other claims against such subsidiary including trade payables have been fully paid.In the event that an Issuer (where such Issuer is an overseas branch of the Bank) failed to fully perform its obligations under the Notes performance by the Bank of such obligations may be subject to registration with or verification by the PRC government authorities.According to the Law of the People’s Republic of China on Commercial Banks (中华人民共和国商业银行法) and the circular issued by the PBOC dated 7 August 1995 named “Reply on the Issues Regardingthe Civil Liabilities of the Branches of Commercial Banks” (关于对商业银行分支机构民事责任问题的 覆函) in the event that a branch of a commercial bank fails to fully perform its obligations to the extent of the assets of the branch such commercial bank shall fulfil such obligations to the extent that the branch has failed to perform them.Therefore in the event a Branch Issuer is unable to or does not perform its obligations under the Notes the Bank will assume all civil obligations of such Branch Issuer under the Notes. The remittance of funds outside the PRC by the Bank in order to perform such obligations may be subject to registration or verification of the SAFE.An active trading market for the Notes may not develop. Notes issued under the Programme will be new securities which may not be widely distributed and for which there is currently no active trading market (unless in the case of any particular Tranche such Tranche is to be consolidated with and form a single series with a Tranche of Notes which is already issued).The Dealers are not obliged to make a market in any Tranche of Notes and any such market-making if commenced may be discontinued at any time at the sole discretion of the Dealers. Therefore investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. In addition even if a market develops for the Notes it may not be liquid and the holders of the Notes may encounter difficulties in selling those Notes.Such lack of liquidity may result in investors suffering losses on the Notes in secondary resales regardless of the performance of the Bank. In addition to the extent that the Bank is not able to obtain or maintain a listing and quotation of any Tranche of Notes that are listed on the Hong Kong Stock Exchange or any other stock exchange the sustainability and liquidity of such Notes may be adversely affected. The market for investment grade has been subject to disruptions that have caused volatility in prices of securities similar to the Notes issued under the Programme. If a Tranche of Notes is issued to a single investor or a limited number of investors this may result in an even more illiquid or volatile market in such Notes. Accordingly there is no assurance as to the development or liquidity of any trading market or that disruptions will not occur for any particular Tranche of Notes.There could be conflicts of interest arising out of the different roles played by the Bank and its subsidiaries and the Bank’s other activities may affect the value of the Notes.The Bank’s subsidiary is appointed as an Arranger and Dealer for the Programme. The Bank or its subsidiaries may also issue other competing financial products which may affect the value of the Notes.Investors should also note that potential and actual conflicts of interest may arise from the different roles played by the Bank and its subsidiaries in connection with the Notes and the economic interests in each role may be adverse to the investors’ interests in the Notes. Although the Bank has internal control policies and procedures to minimise any potential conflict of interest the Bank owes no duty to investors to avoid such conflicts.– 32 –Investors shall be aware of the effect of change of law.The Terms and Conditions of the Notes are governed by English law. No assurance can be given as to the impact of any possible judicial decision or change to English law or the laws as specified in the Pricing Supplement or administrative practices after the date of this Offering Circular.Credit Ratings may not reflect all risks and any credit rating of the Notes may be downgraded or withdrawn.One or more independent credit rating agencies may assign credit ratings to an issue of Notes. The ratings may not reflect the potential impact of all risks related to structure market and additional factors discussed above and other factors that may affect the value of the Notes. As at the date of this Offering Circular the Bank has been assigned a rating of Baa2 by Moody’s A- by S&P and BBB+ by Fitch. A credit rating is not a recommendation to buy sell or hold securities and may be revised or withdrawn by the rating agency at any time.Each Tranche of Notes may be rated or unrated as specified in the applicable Pricing Supplement. The rating represents the opinion of the relevant rating agency and its assessment of the ability of the relevant Issuer to perform its obligations under the Notes and credit risks in determining the likelihood that payments will be made when due under the Notes. A rating is not a recommendation to buy sell or hold securities. The rating can be lowered or withdrawn at any time. The relevant Issuer is not obligated to inform holders of the Notes if a rating is lowered or withdrawn. A reduction or withdrawal of a rating may adversely affect the market price of the Notes.Investors shall pay attention to any modifications and waivers.The Terms and Conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority.The Terms and Conditions of the Notes may be amended modified or varied in relation to any Series of Notes by the terms of the relevant Pricing Supplement in relation to such Series. The Terms and Conditions of the Notes also provide that the parties to the amended and restated fiscal agency agreement dated 18 June 2024 entered into in relation to the Notes between the Bank (on behalf of itself and on behalf of its branches) Citicorp International Limited as Fiscal Agent CMU Lodging and Paying Agent and the other Agents named therein (the “Fiscal Agency Agreement”) may agree to modify any provision thereof but the Bank shall not agree without the consent of the Noteholders to any such modification unless it is of a formal minor or technical nature it is made to correct a manifest error or to comply with mandatory provisions of the law.The Notes may be represented by Global Notes and holders of a beneficial interest in a Global Note must rely on the procedures of the relevant Clearing System(s).Notes issued under the Programme may be represented by one or more Global Notes. Such Global Notes will be deposited with a common depositary for Euroclear and Clearstream or lodged with the CMU (each of Euroclear Clearstream and the CMU a “Clearing System”). Except in the circumstances described in the relevant Global Note investors will not be entitled to receive definitive Notes. The relevant Clearing System(s) will maintain records of the beneficial interests in the Global Notes. While the Notes are represented by one or more Global Notes investors will be able to trade their beneficial interests only through the Clearing Systems. While the Notes are represented by one or more Global Notes the relevant Issuer will discharge its payment obligations under the Notes by making payments to the common depositary for Euroclear and Clearstream or as the case may be to the relevant paying agent in the case – 33 –of the CMU for distribution to their account holders. A holder of a beneficial interest in a Global Note must rely on the procedures of the relevant Clearing System(s) to receive payments under the relevant Notes. The relevant Issuer has no responsibility or liability for the records relating to or payments made in respect of beneficial interests in the Global Notes. Holders of beneficial interests in the Global Notes will not have a direct right to vote in respect of the relevant Notes. Instead such holders will be permitted to act only to the extent that they are enabled by the relevant Clearing System(s) to appoint appropriate proxies.Noteholders should be aware that definitive Notes which have a denomination that is not an integral multiple of the minimum denomination may be illiquid and difficult to trade.Notes may be issued with a minimum denomination. The Pricing Supplement of a Tranche of Notes may provide that for so long as the Notes are represented by a Global Note and the relevant Clearing System(s) so permit the Notes will be tradeable in nominal amounts (i) equal to or integral multiples of the minimum denomination and (ii) the minimum denomination plus integral multiples of an amount lower than the minimum denomination. In relation to any issue of Notes in registered form definitive Certificates will only be issued if the relevant Clearing System(s) is/are closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announce(s) an intention to permanently cease business. The Pricing Supplement may provide that if definitive Notes are issued such Notes will be issued in respect of all holdings of Notes equal to or greater than the minimum denomination. However Noteholders should be aware that definitive Notes that have a denomination that is not an integral multiple of the minimum denomination may be illiquid and difficult to trade. Definitive Notes will in no circumstances be issued to any person holding Notes in an amount lower than the minimum denomination and such Notes will be cancelled and holders will have no rights against the relevant Issuer (including rights to receive principal or interest or to vote) in respect of such Notes.The Notes are redeemable in the event of certain withholding taxes being applicable.There can be no assurance as to whether or not payments on the Notes may be made free and clear of and without withholding or deduction for any taxes duties assessments or governmental charges of whatever nature imposed levied collected withheld or assessed by or within a Relevant Jurisdiction.Where such withholding or deduction is made by the relevant Issuer by or within the PRC up to and including the rate applicable on the Issue Date (the “Applicable Rate”) such Issuer will increase the amounts paid by it to the extent required so that the net amount received by Noteholders and Couponholders equals the amounts which would otherwise have been received by them had no such withholding or deduction been required. In the event the relevant Issuer is required to make a deduction or withholding in respect of (i) PRC tax in excess of the Applicable Rate and/or (ii) any tax in a Relevant Jurisdiction other than the PRC such Issuer is required pay such additional amounts as shall result in receipt by the Noteholders and Couponholders of such amounts as would have been received by them had no such withholding or deduction been required but can also choose to redeem the Notes at their Early Redemption Amount (as defined in the Terms and Conditions of the Notes) (together with interest accrued to the date fixed for redemption) if the conditions described in the Terms and Conditions of the Notes are satisfied. If the relevant Issuer redeems the Notes prior to their maturity dates investors may not receive the same economic benefits they would have received had they held the Notes to maturity and they may not be able to reinvest the proceeds they receive in a redemption in similar securities. In addition such Issuer’s ability to redeem the Notes may reduce the market price of the Notes.Legal investment considerations may restrict certain investments.The investment activities of certain investors are subject to legal investment laws and regulations or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (i) the Notes are legal investments for it (ii) the Notes can be used as collateral for various types of borrowing and (iii) other restrictions apply to its purchase or pledge of – 34 –any Notes. Investors should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of the Notes under any applicable risk-based capital or similar rules.Gains on the transfer of the Notes may become subject to income taxes under PRC tax laws.Under the PRC Enterprise Income Tax Law which took effect on 1 January 2008 and was later amended on 24 February 2017 and 29 December 2018 and its implementation rules which took effect on 1 January 2008 and were later amended on 23 April 2019 any gain realised on the transfer of the Notes by non-resident enterprise holders may be subject to enterprise income tax if such gain is regarded as income derived from sources within the PRC. However there remains uncertainty as to whether the gain realised from the transfer of the Notes would be treated as income derived from sources within the PRC and be subject to PRC tax. This will depend on how the PRC tax authorities interpret apply or enforce the PRC Enterprise Income Tax Law and its implementation rules. According to the arrangement between the PRC and Hong Kong for the avoidance of double taxation residents of Hong Kong including enterprise holders and individual holders will not be subject to PRC tax on any capital gains derived from a sale or exchange of the Notes.Therefore if non-resident enterprise holders are required to pay PRC income tax on gains on the transfer of the Notes (such enterprise income tax is currently levied at the rate of 10 per cent. Of the gross proceeds unless there is an applicable tax treaty between PRC and the jurisdiction in which such non-resident enterprise holders of the Notes reside that reduces or exempts the relevant tax) the value of their investment in the Notes may be materially and adversely affected.The interpretation of the NDRC Order 56 may affect the enforceability and/or effective performance of the Notes. Any failure to complete the relevant filings and/registration under the NDRC Order 56 within the prescribed time frames may have adverse consequences for the relevant Issuer and/or the investors of the Notes.The NDRC issued the NDRC Order 56 on 5 January 2023 which came into effect on 10 February 2023.According to the NDRC Order 56 domestic enterprises and their overseas controlled entities shall procure the registration of any debt securities with a term not less than one year issued outside the PRC with the NDRC prior to the issue of the securities and notify the particulars of the relevant issues within the timeframe prescribed by the NDRC after the completion of the relevant issue. Under the NDRC Order 56 the Bank shall (i) file or cause to be filed with the NDRC the requisite information and documents within ten PRC business days after each foreign debt issuance and the expiration of the Certificate with respect to the relevant Notes in accordance with the NDRC Order 56 (ii) file or cause to be filed with the NDRC the requisite information and documents within five PRC business days before the end of January and the end of July each year and (iii) file or cause to be filed the requisite information and documents upon the occurrence of any material event that may affect the enterprise’s due performance of its debt obligations.Failure to comply with the NDRC post-issue and continuing filing obligations (such as post-issue filing pre-issuance approval expiration filing periodical filing and major event filing etc.) under articles 24 and 26 of the NDRC Order 56 may result in the relevant entities being ordered to make corrections within a time limit and in the case of aggravating circumstances or in the case that such corrections are not made within the prescribed time limit relevant entities and their main person-in-charge will be warned. The aforesaid regulatory violations committed by enterprises shall be publicised on the “Credit China” website and the national enterprise credit information publicity system among others.The Bank undertakes to file or cause to be filed with the NDRC within the relevant prescribed timeframes after the relevant Issue Date the requisite information and documents in respect of the relevant Notes in accordance with the NDRC Order 56 and any implementation rules or policies as issued by the NDRC from time to time.– 35 –However the NDRC Order 56 is new and the administration and enforcement of the NDRC Order 56 may be subject to executive and policy discretion of the NDRC. While the NDRC Order 56 has set out the legal consequences for debtors and involved professional parties in cases of non-compliance of the NDRC Order 56 the NDRC Order 56 is silent on whether any such non-compliance would affect the validity and enforceability of the Notes. There is no assurance that the failure to comply with the NDRC Order 56 would not result in adverse consequences on the relevant Issuer’s or the Bank’s ability to perform in accordance with the Terms and Conditions of the Notes or the enforceability of the Notes.The Bank may be subject to the filing requirements in relation to issue of Notes from respective authorities within the PRC.On 12 January 2017 the PBOC issued the Circular of the People’s Bank of China on the Macro-prudence Management of Cross-border Financing in Full Aperture (中国人民银行关于全口径跨境融资宏观审慎 管理有关事宜的通知) (the “2017 PBOC Circular”) which applies to cross-border financing activities by companies and financial institutions (including banks) incorporated in the mainland. According to the 2017 PBOC Circular 27 mainland banks (including the Bank) are required to make filings with the PBOC in respect of their offshore bond offerings.In connection with the establishment of the Programme or any issuance by an overseas branch the Bank has not made and does not intend to make any filing with the PBOC under the 2017 PBOC Circular. To the extent and if the Bank or any of its branches which are located within the PRC issues Notes under the Programme or any overseas bank intends to remit any proceeds from any Note issue under the Programme to the mainland the Bank will make the requisite filing with the PBOC in compliance with the 2017 PBOC Circular.The PBOC has yet to publish any detailed implementation rules and guidance on the 2017 PBOC Circular. The aforementioned views are based on the Bank’s PRC legal advisors’ understanding and interpretation of the 2017 PBOC Circular. There is no assurance that PBOC would take the same view or the 2017 PBOC Circular would not be interpreted in a different way. If the PBOC takes a different view or any change will be made to such regulations the Bank will comply with the requirements of such and any other regulatory authorities.Additional procedures may be required to be taken to hear English law governed matters in the Hong Kong courts.Additional procedures may be required to effect service of process upon or to enforce against the Bank or its directors supervisors or members its senior management who reside in the PRC in connection with judgements obtained in non-PRC courts.The Notes and the Deed of Covenant are governed by English law whereas parties to these documents have submitted to the exclusive jurisdiction of the Hong Kong courts. In order to hear English law governed matters Hong Kong courts may require certain additional procedures to be taken.The Bank is a company incorporated under the laws of the PRC and a substantial majority of its businesses assets and operations are located in the PRC. In addition a substantial majority of the Bank’s directors supervisors and executive officers reside in the PRC and substantially all of their assets are located in the PRC.On 18 January 2019 the Supreme People’s Court and the Department of Justice of the Hong Kong Special Administrative Region jointly promulgated the Arrangement for Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Cases by the Courts of the Mainland and of the Hong Kong Special Administrative Region (关于内地与香港特别行政区法院相互认可和执行民商事案件判 决的安排) (the “2019 Arrangement”) which became effective on 29 January 2024. The 2019 – 36 –Arrangement facilitates the mutual recognition and enforcement of court judgments between the mainland and Hong Kong and covers matters which are considered to be of a “civil and commercial” nature under both Hong Kong and mainland law. Non-judicial proceedings and judicial proceedings relating to administrative or regulatory matters are excluded. Subject to the provisions in the 2019 Arrangement judgments in civil and commercial matters of the courts of the mainland and Hong Kong are expected to be mutually recognisable and enforceable.While it is expected that the PRC courts will recognise and enforce a judgment given by Hong Kong courts there can be no assurance that the PRC courts will do so for all such judgments as there is no established practice in this area. The holders of the Notes will be deemed to have submitted to the exclusive jurisdiction of the Hong Kong courts and thus the holders’ ability to initiate a claim outside of Hong Kong will be uncertain.Investment in the Notes is subject to risks related to the market generally.Set out below is a brief description of certain market risks including liquidity risk exchange rate risk interest rate risk and credit risk.The secondary market generally.An active secondary market in respect of the Notes may never be established or may be illiquid and this would adversely affect the value at which an investor could sell their Notes.Notes may have no established trading market when issued and one may never develop. If a market does develop it may not be very liquid. Therefore investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. This is particularly the case for Notes that are especially sensitive to interest rate currency or market risks are designed for specific investment objectives or strategies are being issued to a single investor or a limited number of investors or have been structured to meet the investment requirements of limited categories of investors. These types of Notes generally would have a more limited secondary market and more price volatility than conventional debt securities.Exchange rate risks and exchange controls.The relevant Issuer will pay principal and interest (where applicable) on the Notes in the currency specified in the relevant Pricing Supplement (the “Specified Currency”). This presents certain risks relating to currency conversions if an investor’s financial activities are denominated principally in a currency or currency unit (the “Investor’s Currency”) other than the Specified Currency. These include the risk that exchange rates may significantly change (including changes due to devaluation of the Specified Currency or revaluation of the Investor’s Currency) and the risk that authorities with jurisdiction over the Investor’s Currency may impose or modify exchange controls. An appreciation in the value of the Investor’s Currency relative to the Specified Currency would decrease (i) the Investor’s Currency-equivalent yield on the Notes (ii) the Investor’s Currency equivalent value of the principal payable on the Notes and/or (iii) the Investor’s Currency equivalent market value of the Notes.Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate. As a result investors may receive less interest and/or principal than expected or no interest or principal.Interest rate risks.Investment in the Fixed Rate Notes involves the risk that if market interest rates subsequently increase above the rate paid on the Fixed Rate Notes this will adversely affect the value of the Fixed Rate Notes.– 37 –Credit ratings may not reflect all risks.One or more independent credit rating agencies may assign credit ratings to an issue of Notes. The ratings may not reflect the potential impact of all risks related to structure market additional factors discussed above and other factors that may affect the value of the Notes. A credit rating is not a recommendation to buy sell or hold securities and may be revised or withdrawn by the rating agency at any time.There are risks related to the structure of a particular issue of Notes.A wide range of Notes may be issued under the Programme. A number of these Notes may have features which contain particular risks for potential investors. Set out below is a description of certain such features: Notes subject to optional redemption by the relevant Issuer.An optional redemption feature is likely to limit the market value of the Notes. During any period when the relevant Issuer may elect to redeem Notes the market value of those Notes will generally not rise substantially above the price at which they can be redeemed. This may also be true prior to any redemption period.The relevant Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on the Notes. At those times an investor would generally not be able to reinvest the redemption proceeds at an effective interest rate as high as the interest rate on the Notes being redeemed and may only be able to do so at a significantly lower rate. Potential investors should consider reinvestment risk in light of other investments available at that time.Index Linked Notes and Dual Currency Notes.The relevant Issuer may issue Notes with principal or interest payable in respect of the Notes being determined by reference to an index or formula to changes in the prices of securities or commodities to movements in currency exchange rates or other factors (each a “Relevant Factor”). In addition the relevant Issuer may issue Notes with principal or interest payable in one or more currencies which may be different from the currency in which the Notes are denominated. Potential investors should be aware that: (i) the market price of such Notes may be volatile; (ii) they may receive no interest; (iii) the payment of principal or interest may occur at a different time or in a different currency than expected; (iv) the amount of principal payable at redemption may be less than the nominal amount of such Notes or even zero; (v) a Relevant Factor may be subject to significant fluctuations that may not correlate with changes in interest rates currencies or other indices; (vi) the effect of any multiplier of leverage factor that is applied to the Relevant Factor is that the impact of any changes in the Relevant Factor on the amount of principal or interest payable will be magnified; and (vii) the timing of changes in a Relevant Factor may affect the actual yield to investors even if the average level is consistent with their expectations. In general the earlier the change in the Relevant Factor the greater the effect on yield.– 38 –Partly Paid Notes.The relevant Issuer may issue Notes where the issue price is payable in more than one instalment. Failure to pay any subsequent instalment could result in an investor losing all of its investment.Variable Rate Notes with a multiplier or other leverage factor.Notes with variable interest rates can be volatile investments. If they are structured to include multipliers or other leverage factors or caps or floors or any combination of those features or other similar related features their market values may be even more volatile than those for securities that do not include those features.Inverse Floating Rate Notes.Inverse Floating Rate Notes have an interest rate equal to a fixed rate minus a rate based upon a reference rate such as EURIBOR. The market values of such Notes are typically more volatile than market values of other conventional floating rate debt securities based on the same reference rate (and with otherwise comparable terms). Inverse Floating Rate Notes are more volatile because an increase in the reference rate not only decreases the interest rate of the Notes but may also reflect an increase in prevailing interest rates which further adversely affects the market value of those Notes.Fixed/Floating Rate Notes.Fixed/Floating Rate Notes may bear interest at a rate that the relevant Issuer may elect to convert from a fixed rate to a floating rate or from a floating rate to a fixed rate. The relevant Issuer’s ability to convert the interest rate will affect the secondary market and the market value of such Notes since the relevant Issuer may be expected to convert the rate when it is likely to produce a lower overall cost of borrowing.If the relevant Issuer converts from a fixed rate to a floating rate the spread on the Fixed/Floating Rate Notes may be less favourable than then-prevailing spreads on comparable Floating Rate Notes tied to the same reference rate. In addition the new floating rate at any time may be lower than the rates on other Notes. If the relevant Issuer converts from a floating rate to a fixed rate the fixed rate may be lower than then-prevailing rates on its Notes.The regulation and reform of “benchmark” rates of interest and indices may adversely affect the value of Notes linked to or referencing such “benchmarks”.Interest rates and indices which are deemed to be or used as “benchmarks” are the subject of recent national international regulatory and other regulatory guidance and proposals for reform. Some of these reforms are already effective whilst others are still to be implemented. These reforms may cause such benchmarks to perform differently than in the past or to disappear entirely or have other consequences which cannot be predicted. Any such consequence could have a material adverse effect on any Note linked to or referencing such a benchmark.Regulation (EU) 2016/1011 (the “EU Benchmarks Regulation”) applies subject to certain transitional provisions to the provision of benchmarks the contribution of input data to a benchmark and the use of a benchmark within the EU. Among other things it (i) requires benchmark administrators to be authorised or registered (or if non-EU-based to be subject to an equivalent regime or otherwise recognised or endorsed) and (ii) prevents certain uses by EU supervised entities of benchmarks of administrators that are not authorised or registered (or if non-EU based not deemed equivalent or recognised or endorsed). Regulation (EU) 2016/1011 as it forms part of domestic law by virtue of the EUWA (the “UK Benchmarks Regulation”) among other things applies to the provision of benchmarks and the use of a benchmark in the UK. Similarly it prohibits the use in the UK by UK supervised entities of benchmarks of administrators that are not authorised by the United Kingdom Financial Conduct Authority (“FCA”) or registered on the FCA register (or if non-UK based not deemed equivalent or recognised or endorsed).– 39 –The EU Benchmarks Regulation and/or the UK Benchmarks Regulation as applicable could have a material impact on any Notes linked to or referencing a benchmark in particular if the methodology or other terms of the benchmark are changed in order to comply with the requirements of the EU Benchmarks Regulation and/or the UK Benchmarks Regulation as applicable. Such changes could among other things have the effect of reducing increasing or otherwise affecting the volatility of the published rate or level of the relevant benchmark.More broadly any of the international national or other proposals for reforms or the general increased regulatory scrutiny of benchmarks could increase the costs and risks of administering or otherwise participating in the setting of a benchmark and complying with any such regulations or requirements. The euro risk free-rate working group for the euro area has published a set of guiding principles and high level recommendations for fallback provisions in amongst other things new euro denominated cash products (including bonds) referencing EURIBOR. The guiding principles indicate amongst other things that continuing to reference EURIBOR in relevant contracts (without robust fallback provisions) may increase the risk to the euro area financial system. On 11 May 2021 the euro risk-free rate working group published its recommendations on EURIBOR fallback trigger events and fallback rates. Such factors may have (without limitation) the following effects on certain benchmarks: (i) discouraging market participants from continuing to administer or contribute to a benchmark; (ii) triggering changes in the rules or methodologies used in the benchmark and/or (iii) leading to the disappearance of the “benchmark”. Any of the above changes or any other consequential changes as a result of international or national reforms or other initiatives or investigations could have a material adverse effect on the value of and return on any Notes linked to referencing or otherwise dependent (in whole or in part) upon a benchmark.The Terms and Conditions of the Notes provide for certain fallback arrangements in the event that a Benchmark Event (as defined in the Terms and Conditions of the Notes) occurs including if an interbank offered rate (such as EURIBOR) or other relevant reference rate (which could include without limitation any mid-swap rate) and/or any page on which such benchmark may be published (or any successor service) becomes unavailable or if any Paying Agent Calculation Agent the relevant Issuer or other party is no longer permitted lawfully to calculate interest on any Notes by reference to such benchmark.Such fallback arrangements include the possibility that the rate of interest could be set by reference to a Successor Rate or an Alternative Benchmark Rate (both as defined in the Terms and Conditions of the Notes) with the application of an Adjustment Spread (which could be positive negative or zero) and may include amendments to the Terms and Conditions of the Notes to ensure the proper operation of the new benchmark all as determined by the relevant Issuer (acting in good faith and in consultation with an Independent Adviser) and as more fully described at Condition 5(b)(iv) and Condition 5(b)(v). It is possible that the adoption of a Successor Rate or Alternative Benchmark Rate including any Adjustment Spread may result in any Notes linked to or referencing an original Reference Rate performing differently (which may include payment of a lower Rate of Interest) than they would if the original Reference Rate were to continue to apply in its current form. There is also a risk that the relevant fallback provisions may not operate as expected or intended at the relevant time.Furthermore in certain circumstances the ultimate fallback for the purposes of calculation of Rate of Interest for a particular Interest Accrual Period may result in the Rate of Interest for the last preceding Interest Accrual Period being used. This may result in the effective application of a fixed rate for Floating Rate Notes based on the rate which was last observed on the Relevant Screen Page.Investors should consult their own independent advisers and make their own assessment about the potential risks imposed by the EU Benchmarks Regulation and/or the UK Benchmarks Regulation as applicable or any other international or national reforms in making any investment decision with respect to any Notes linked to or referencing a benchmark.The use of Secured Overnight Financing Rate (“SOFR”) as a reference rate is subject to important limitations.The rate of interest on the Floating Rate Notes may be calculated on the basis of SOFR (as further described under Condition 5(b)(iii)(c) of the Terms and Conditions of the Notes).– 40 –In June 2017 the New York Federal Reserve’s Alternative Reference Rates Committee (the “ARRC”) announced SOFR as its recommended alternative to U.S. dollar London Interbank Offered Rate (the “LIBOR”). However the composition and characteristics of SOFR are not the same as those of LIBOR.SOFR is a broad U.S. Treasury repo-financing rate that represents overnight secured funding transactions. This means that SOFR is fundamentally different from LIBOR for two key reasons. First SOFR is a secured rate while LIBOR is an unsecured rate. Second SOFR is an overnight rate while LIBOR represents interbank funding over different maturities. As a result there can be no assurance that SOFR will perform in the same way as LIBOR would have at any time including without limitation as a result of changes in interest and yield rates in the market market volatility or global or regional economic financial political or regulatory events. For example since publication of SOFR began in April 2018 daily changes in SOFR have on occasion been more volatile than daily changes in comparable benchmark or other market rates.As SOFR is an overnight funding rate interest on SOFR-based Notes with interest periods longer than overnight will be calculated on the basis of either the arithmetic mean of SOFR over the relevant interest period or compounding SOFR during the relevant interest period. As a consequence of this calculation method the amount of interest payable on each interest payment date will only be known a short period of time prior to the relevant interest payment date. Noteholders therefore will not know in advance the interest amount which will be payable on such Notes.Although the Federal Reserve Bank of New York has published historical indicative SOFR information going back to 2014 such prepublication of historical data inherently involves assumptions estimates and approximations. Noteholders should not rely on any historical changes or trends in the SOFR as an indicator of future changes in the SOFR.The Federal Reserve Bank of New York notes on its publication page for SOFR that use of the SOFR is subject to important limitations and disclaimers including that the Federal Reserve Bank of New York may alter the methods of calculation publication schedule rate revision practices or availability of the SOFR at any time without notice. In addition SOFR is published by the Federal Reserve Bank of New York based on data received from other sources. The Bank has no control over its determination calculation or publication. There can be no guarantee that the SOFR will not be discontinued or fundamentally altered in a manner that is materially adverse to the interests of the Noteholders. If the manner in which the SOFR is calculated is changed or if SOFR is discontinued that change or discontinuance may result in a reduction or elimination of the amount of interest payable on the Notes and a reduction in the trading prices of the Notes which would negatively impact the Noteholders who could lose part of their investment.The Terms and Conditions of the Notes provide for certain fallback arrangements in the event that a Benchmark Event (as defined under Condition 5(b)(v)) in respect of SOFR occurs which is based on the ARRC recommended language. There is however no guarantee that the fallback arrangements will operate as intended at the relevant time or operate on terms commercially acceptable to all Noteholders.Any of the fallbacks may result in interest payments that are lower than or do not otherwise correlate over time with the payments that would have been made on the Notes if SOFR had been provided by the Federal Reserve Bank of New York in its current form. Investors should consult their own independent advisers and make their own assessment about the potential risks in making any investment decision with respect to any Notes linked to SOFR.– 41 –The market continues to develop in relation to SOFR as a reference rate for Floating Rate Notes.Investors should be aware that the market continues to develop in relation to SOFR and its adoption as an alternative to U.S. dollar LIBOR. Market participants and relevant working groups are exploring alternative reference rates based on SOFR (which seek to measure the market’s forward expectation of a SOFR rate over a designated term). The market or a significant part thereof may adopt an application of SOFR that differs significantly from that set out in the Terms and Conditions of the Notes. In addition the manner of adoption or application of SOFR in the bond markets may differ materially compared with the application and adoption of SOFR in other markets such as the derivatives and loan markets. Investors should carefully consider how any mismatch between the adoption of SOFR in the bond loan and derivatives markets may impact any hedging or other financial arrangements which they may put in place in connection with any acquisition holding or disposal of Notes referencing SOFR. In addition the development of SOFR as an interest reference rate for the bond markets as well as continued development of SOFR-based rates indices and averages for such markets and the market infrastructure for adopting such rates could result in reduced liquidity or increased volatility or could otherwise affect the market price of Notes referencing SOFR. Similarly if SOFR do not prove widely used in securities such as the Notes referencing SOFR investors may not be able to sell such Notes referencing SOFR at all or the trading price of the Notes referencing SOFR may be lower than those of bonds linked to indices that are more widely used.The use of SOFR as a reference rate for bonds is nascent and may be subject to change and development both in terms of the substance of the calculation and in the development and adoption of market infrastructure for the issuance and trading of bonds referencing such rates. Notes referencing SOFR may have no established trading market when issued and an established trading market may never develop or may not be very liquid which in turn may reduce the trading price of such Notes or mean that investors in such Notes may not be able to sell such Notes at all or may not be able to sell such Notes at prices that will provide them with a yield comparable to similar investments that have a developed secondary market and may consequently suffer from increased pricing volatility and market risk. Investors should consider these matters when making their investment decision with respect to Notes referencing SOFR.Notes issued at a substantial discount or premium.The market values of securities issued at a substantial discount or premium to their nominal amount tend to fluctuate more in relation to general changes in interest rates than do prices for conventional interest-bearing securities. Generally the longer the remaining term of the securities the greater the price volatility as compared with conventional interest-bearing securities with comparable maturities.Investors may lose part or all of their investment in any Index-Linked Notes issued.If in the case of a particular Tranche of Notes the relevant Pricing Supplement specifies that the Notes are Index-Linked Notes or variable redemption amount Notes there is a risk that the investor may lose the value of its entire investment or part of it.If the relevant Issuer does not satisfy its obligations under the Notes Noteholders’ remedies will be limited.Payment of principal of the Notes may be accelerated only in the event of certain events involving the relevant Issuer’s bankruptcy winding-up or dissolution or similar events or otherwise if certain conditions have been satisfied. See “Terms and Conditions of the Notes — Events of Default”.– 42 –RISKS RELATING TO RENMINBI-DENOMINATED NOTES Notes denominated in RMB (the “RMB Notes”) may be issued under the Programme. A description of risks which may be relevant to an investor in RMB Notes is set out below.There are restrictions on the remittance of Renminbi into and out of the PRC which may adversely affect the liquidity of RMB Notes.The PRC government regulates conversion between Renminbi and foreign currencies including the Hong Kong dollar. However there has been a significant reduction in control by the PRC government in recent years particularly over trade transactions involving the import and export of goods and services as well as other frequent routine foreign exchange transactions. These transactions are known as current account items.On the other hand remittance of Renminbi into and out of the PRC for the settlement of capital account items such as capital contributions debt financing and securities investment is generally only permitted upon obtaining specific approvals from or completing specific registrations or filings with the relevant authorities on a case-by-case basis and is subject to a strict monitoring system. Regulations in the PRC on the remittance of Renminbi into and out of the PRC for settlement of capital account items are being adjusted from time to time to match the policies of the PRC government.Although the PBOC has implemented policies improving accessibility to Renminbi to settle cross-border transactions in the past there is no assurance that the PRC government will continue to gradually liberalise control over cross-border remittances of Renminbi in the future that the schemes for Renminbi cross-border utilisation will not be discontinued or that new regulations in the PRC will not be promulgated in the future which have the effect of restricting or eliminating the remittance of Renminbi into or out of the PRC. Despite the Renminbi internationalisation pilot programme and efforts in recent years to internationalise the currency there can be no assurance that the PRC government will not impose interim or long-term restrictions on the cross-border remittance of Renminbi. In the event that funds cannot be repatriated out of the PRC in Renminbi this may affect the overall availability of Renminbi outside the PRC and the ability of the relevant Issuer to source Renminbi to finance its obligations under RMB Notes.There is only limited availability of Renminbi outside the PRC which may affect the liquidity of RMB Notes and the relevant Issuer’s ability to source Renminbi outside the PRC to service such RMB Notes.As a result of the restrictions imposed by the PRC government on cross border Renminbi fund flows the availability of Renminbi outside the PRC is limited. While the PBOC has entered into agreements (the “Settlement Arrangements”) on the clearing of Renminbi business with financial institutions (each a “RMB Clearing Bank”) in a number of financial centres and cities including but not limited to Hong Kong has established the Cross-Border InterBank Payments System (CIPS) to facilitate cross-border Renminbi settlement and is further in the process of establishing Renminbi clearing and settlement mechanisms in several other jurisdictions the current size of Renminbi-denominated financial assets outside the PRC is limited.There are restrictions imposed by the PBOC on Renminbi business participating banks in respect of cross-border Renminbi settlement such as those relating to direct transactions with PRC enterprises.Furthermore Renminbi business participating banks do not have direct Renminbi liquidity support from the PBOC although the PBOC has gradually allowed participating banks to access the PRC’s onshore interbank market for the purchase and sale of Renminbi. The RMB Clearing Banks only have limited access to onshore liquidity support from the PBOC for the purpose of squaring open positions of participating banks for limited types of transactions and are not obliged to square for participating banks – 43 –any open positions resulting from other foreign exchange transactions or conversion services. In cases where the participating banks cannot source sufficient Renminbi through the above channels they will need to source Renminbi from outside the PRC to square such open positions.Although it is expected that the offshore Renminbi market will continue to grow in depth and size its growth is subject to many constraints as a result of PRC laws and regulations on foreign exchange. There is no assurance that new PRC regulations will not be promulgated or the Settlement Arrangements will not be terminated or amended in the future which will have the effect of restricting the availability of Renminbi outside the PRC. The limited availability of Renminbi outside the PRC may affect the liquidity of the RMB Notes. To the extent the relevant Issuer is required to source Renminbi in the offshore market to service its RMB Notes there is no assurance that the relevant Issuer will be able to source such Renminbi on satisfactory terms if at all.Remittance of proceeds in Renminbi into or out of the PRC.In the event that the relevant Issuer decides to remit some or all of the proceeds into the PRC in Renminbi its ability to do so will be subject to obtaining all necessary approvals from and/or registration or filing with the relevant PRC government authorities. However there is no assurance that the necessary approvals from and/or registration or filing with the relevant PRC government authorities will be obtained at all or if obtained they will not be revoked or amended in the future.There is no assurance that the PRC government will continue to gradually liberalise control over cross-border Renminbi remittances in the future that the PRC government will not impose any interim or long-term restrictions on capital inflow or outflow which may restrict cross-border Renminbi remittances that the pilot schemes introduced will not be discontinued or that new PRC regulations will not be promulgated in the future which have the effect of restricting or eliminating the remittance of Renminbi into or outside the PRC. In the event that the relevant Issuer does remit some or all of the proceeds into the PRC in Renminbi and such Issuer subsequently is not able to repatriate funds out of the PRC in Renminbi it will need to source Renminbi outside the PRC to finance its obligations under the RMB Notes and its ability to do so will be subject to the overall availability of Renminbi outside the PRC.Investment in RMB Notes is subject to exchange rate risks.The value of Renminbi against other foreign currencies fluctuates from time to time and is affected by changes in the PRC and international political and economic conditions as well as many other factors.The PBOC has in recent years implemented changes to the way it calculates the Renminbi’s daily mid-point price against the U.S. dollar to take into account market-maker quotes before announcing such daily mid-point price. This change and other changes such as widening the trading band that may be implemented may increase the volatility in the value of the Renminbi against foreign currencies. All payments of interest and principal will be made in Renminbi with respect to RMB Notes unless otherwise specified. As a result the value of these Renminbi payments may vary with the changes in the prevailing exchange rates in the marketplace. If the value of Renminbi depreciates against another foreign currency the value of the investment made by a holder of the RMB Notes in that foreign currency will decline. In addition there may be tax consequences for investors as a result of any foreign currency gains resulting from any investment in the RMB Notes.– 44 –Gains on the transfer of the RMB Notes may become subject to income taxes under PRC tax laws.Under the PRC Enterprise Income Tax Law the PRC Individual Income Tax Law and the relevant implementing rules as amended from time to time any gain realised on the transfer of RMB Notes by non-PRC resident enterprises or individual Noteholders may be subject to PRC enterprise income tax (“EIT”) or PRC individual income tax (“IIT”) if such gain is regarded as income derived from sources within the PRC. The PRC Enterprise Income Tax Law levies EIT at the rate of 20 per cent. Of the PRC-sourced gains derived by such non-PRC resident enterprises from the transfer of RMB Notes but its implementation rules have reduced the EIT rate to 10 per cent. The PRC Individual Income Tax Law levies IIT at a rate of 20 per cent. Of the PRC-sourced gains derived by such non-PRC resident individual Noteholders from the transfer of RMB Notes.However uncertainty remains as to whether the gain realised from the transfer of RMB Notes by non-PRC resident enterprises or individual Noteholders would be treated as income derived from sources within the PRC and thus become subject to EIT or IIT. This will depend on how the PRC tax authorities interpret apply or enforce the PRC Enterprise Income Tax Law the PRC Individual Income Tax Law and the relevant implementing rules. According to the arrangement between the PRC and Hong Kong for avoidance of double taxation Noteholders who are residents of Hong Kong including enterprise Noteholders and individual Noteholders will not be subject to EIT or IIT on capital gains derived from a sale or exchange of the Notes.Therefore if enterprise or individual resident Noteholders which are non-PRC residents are required to pay PRC income tax on gains derived from the transfer of RMB Notes unless there is an applicable tax treaty between PRC and the jurisdiction in which such non-PRC enterprise or individual Noteholders of RMB Notes reside that reduces or exempts the relevant EIT or IIT the value of their investment in RMB Notes may be materially and adversely affected.Investment in the RMB Notes is subject to interest rate risks.The PRC government has gradually liberalised its regulation of interest rates in recent years. Further liberalisation may increase interest rate volatility. In addition the interest rate for Renminbi in markets outside the PRC may significantly deviate from the interest rate for Renminbi in the PRC as a result of foreign exchange controls imposed by PRC law and regulations and prevailing market conditions.As RMB Notes may carry a fixed interest rate the trading price of the RMB Notes will consequently vary with the fluctuations in the Renminbi interest rates. If holders of the RMB Notes propose to sell their RMB Notes before their maturity they may receive an offer lower than the amount they have invested.Payments with respect to the RMB Notes may only be made in the manner designated in the RMB Notes.All payments to investors in respect of the RMB Notes will be made solely (i) for so long as the RMB Notes are represented by Global Certificates held with the common depositary for Clearstream Banking S.A. and Euroclear Bank SA/NV or any alternative clearing system by transfer to a Renminbi bank account maintained in Hong Kong or a financial centre in which an RMB Clearing Bank clears and settles Renminbi if so specified in the Pricing Supplement (ii) for so long as the RMB Notes are represented by Global Certificates lodged with a sub-custodian for or registered with the CMU by transfer to a Renminbi bank account maintained in Hong Kong in accordance with prevailing CMU rules and procedures or (iii) for so long as the RMB Notes are in definitive form by transfer to a Renminbi bank account maintained in Hong Kong or a financial centre in which an RMB Clearing Bank clears and settles Renminbi if so specified in the Pricing Supplement in accordance with prevailing rules and regulations.The relevant Issuer cannot be required to make payment by any other means (including in any other currency or by transfer to a bank account in the PRC).– 45 –USE OF PROCEEDS Unless otherwise specified in the Pricing Supplement the net proceeds of each issue of the Notes will be applied by the Issuer for working capital and general corporate purposes.– 46 –FORM OF THE NOTES The Notes of each Series will be in either bearer form with or without interest coupons attached or registered form without interest coupons attached.BEARER NOTES Each Tranche of Bearer Notes will be in bearer form and will be initially issued in the form of a Temporary Bearer Global Note or if so specified in the applicable Pricing Supplement a Permanent Bearer Global Note which in either case will be delivered (a) prior to the original issue date of the Tranche to either (i) a common depositary (the “Common Depositary”) for Euroclear and Clearstream or (ii) a sub-custodian for the CMU or (b) at such other time on such other date to such other person and in such other place in accordance with the Fiscal Agency Agreement.Whilst any Bearer Note is represented by a Temporary Bearer Global Note payments of principal interest (if any) and any other amount payable in respect of the Notes subject as provided by such Temporary Bearer Global Note will be made upon presentation and (when no further payment is due in respect of such Temporary Bearer Global Note) surrender of such Temporary Bearer Global Note. On and after the date (the “Exchange Date”) which is 40 days after a Temporary Bearer Global Note is issued interests in such Temporary Bearer Global Note will be exchangeable (free of charge to the holder) upon a request as described therein either for (a) interests in a Permanent Bearer Global Note of the same Series or (b) if so specified in the applicable Pricing Supplement for definitive Bearer Notes of the same Series provided that if the applicable Pricing Supplement specifies that TEFRA D rules apply there shall have been certification (in a form to be provided) with respect to such nominal amount submitted for such exchange dated no earlier than the Exchange Date to the effect that the beneficial owners of interests in such Temporary Bearer Global Note are not U.S. persons or persons who have purchased for resale to any U.S. person as required by U.S. Treasury regulations. The CMU may require that any such exchange for a Permanent Bearer Global Note is made in whole and not in part and in such event no such exchange will be effected until all relevant account holders (as set out in a CMU Issue Position Report or any other relevant notification supplied to the CMU Lodging and Paying Agent by the CMU) have so certified. The holder of a Temporary Bearer Global Note will not be entitled to collect any payment of interest principal or other amount due on or after the Exchange Date unless upon due certification exchange of the Temporary Bearer Global Note for an interest in a Permanent Bearer Global Note or for definitive Bearer Notes is improperly withheld or refused.Payments of principal interest (if any) or any other amounts on a Permanent Bearer Global Note will be made upon presentation and (when no further payment is due in respect of such Permanent Bearer Global Note) surrender of such Permanent Bearer Global Note without any requirement for certification.In respect of a Bearer Global Note held through the CMU any payments of principal interest (if any) or any other amounts shall be made to the person(s) for whose account(s) interests in the relevant Bearer Global Note are credited (as set out in a CMU Issue Position Report or any other relevant notification supplied to the CMU Lodging and Paying Agent by the CMU) and save in the case of final payment no presentation of the relevant Bearer Global Note shall be required for such purpose.A Permanent Bearer Global Note will be exchangeable (free of charge to the holder) on or after the Exchange Date in whole but not except as provided by such Permanent Bearer Global Note in part for definitive Bearer Notes (a) if such Permanent Bearer Global Note is held on behalf of Euroclear Clearstream the CMU or any other clearing system (an “Alternative Clearing System”) and any such clearing system is closed for business for a continuous period of 14 days (other than by reason of holidays statutory or otherwise) or announces an intention permanently to cease business or does in fact do so or (b) if principal in respect of such Permanent Bearer Global Note is not paid when due by the holder giving notice to the Paying Agent or CMU Lodging and Paying Agent (as applicable) of its – 47 –election for such exchange. For these purposes “Exchange Date” means a day falling not less than 60 days or in the case of exchange following failure to pay principal in respect of such Permanent Bearer Global Note when due 30 days after that on which the notice requiring exchange is given and on which banks are open for business in the city in which the specified office of the Paying Agent or CMU Lodging and Paying Agent (as applicable) is located and except in the case of exchange pursuant to (a) above in the cities in which Euroclear and Clearstream and the CMU (as applicable) or if relevant the Alternative Clearing System are located.The following legend will appear on all Bearer Notes and on all receipts and interest coupons relating to such Notes:“ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TOLIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS INCLUDING THE LIMITATIONS PROVIDED IN SECTIONS 165(J) AND 1287(A) OF THE INTERNAL REVENUECODE.” The sections referred to provide that United States holders with certain exceptions will not be entitled to deduct any loss on Bearer Notes receipts or interest coupons and will not be entitled to capital gains treatment of any gain on any sale disposition redemption or payment of principal in respect of such Notes receipts or interest coupons.Notes which are represented by a Bearer Global Note will only be transferable in accordance with the rules and procedures for the time being of Euroclear Clearstream or the CMU as the case may be.REGISTERED NOTES The Registered Notes of each Tranche offered and sold in reliance on Regulation S which will be soldoutside the United States will initially be represented by a global note in registered form (a “RegisteredGlobal Note” together with any Bearer Global Note the “Global Notes”).Registered Global Notes will be deposited with a Common Depositary for and registered in the name of a common nominee of Euroclear Clearstream and/or deposited with a sub-custodian for the CMU (if applicable) or such other person in such other place in accordance with the Fiscal Agency Agreement.Payments of principal interest or any other amount in respect of the Registered Notes in global form will in the absence of provision to the contrary be made to the person shown on the Register (as defined in Condition 1) as the registered holder of the Registered Global Notes. None of the Issuer the Bank the Fiscal Agent any Paying Agent or the Registrar will have any responsibility or liability for any aspect of the records relating to or payments or deliveries made on account of beneficial ownership interests in the Registered Global Notes or for maintaining supervising or reviewing any records relating to such beneficial ownership interests.Payments of principal interest or any other amount in respect of the Registered Notes in definitive form will in the absence of provision to the contrary be made to the persons shown on the Register on the relevant Record Date (as defined in Condition 7(b)(ii) of the Terms and Conditions of the Notes) immediately preceding the due date for payment in the manner provided in that Condition.TRANSFER OF INTERESTS Interests in a Registered Global Note may subject to compliance with all applicable restrictions be transferred to a person who wishes to hold such interest in another Registered Global Note. No beneficial owner of an interest in a Registered Global Note will be able to transfer such interest except in accordance with the applicable procedures of Euroclear Clearstream and the CMU in each case to the extent applicable.– 48 –GENERAL For so long as a Global Note or a Global Certificate is lodged with the CMU (i) the CMU Lodging and Paying Agent shall pay any amounts of principal and interest due on a Global Note or a Global Certificate to the person(s) notified by the CMU to the CMU Lodging and Paying Agent as being the person(s) for whose account(s) interest(s) in that Global Note or Global certificate is credited and the CMU Lodging and Paying Agent shall not endorse that Global Note or Global Certificate and (ii) the records of the CMU (in the absence of manifest error) shall be conclusive evidence of the identity of the persons to whose accounts interests in that Global Note or Global Certificate are credited and the principal amount(s) of the interest(s) and of the Tranche of Notes represented by that Global Note or evidenced by that Global Certificate. Save in the case of manifest error the CMU Lodging and Paying Agent shall be entitled to rely on any CMU Issue Position Report or any other statement by the CMU of the identities and interests of persons credited with interests in that Global Note or Global Certificate. If and for so long as a Global Note or Global Certificate is not lodged with the CMU the Paying Agent and the other Agents shall make all payments in respect of that Global Note or Global Certificate against presentation (and in the case of its redemption in full surrender) of that Global Note or Global Certificate and (unless that Global Note or Global Certificate is surrendered) shall on behalf of the relevant Issuer endorse or procure the endorsement of a memorandum of each such payment in the relevant schedule to that Global Note or Global Certificate and return it or cause it to be returned to its bearer or holder.A Note may be accelerated by the holder thereof in certain circumstances described in Condition 10. If principal in respect of any Notes represented by a Global Note is not paid when due (but subject as provided below) the holder thereof may from time to time elect that Direct Rights under the provisions of (and as defined in) the amended and restated deed of covenant (as further supplemented and/or amended the “Deed of Covenant”) executed by the Bank as of 18 June 2024 shall come into effect in respect of a nominal amount of Notes up to the aggregate nominal amount in respect of which such failure to pay principal has occurred. Such election shall be made by notice to and presentation of the Global Note to the Paying Agent or the CMU Lodging and Paying Agent (as applicable) for reduction of the nominal amount of Notes represented by such Global Note by such amount as may be stated in such notice. Upon each such notice being given such Global Note shall become void to the extent of the nominal amount stated in such notice save to the extent that the appropriate Direct Rights shall fail to take effect for whatever reason.– 49 –FORM OF PRICING SUPPLEMENT The form of Pricing Supplement that will be issued in respect of each Tranche subject only to the deletion of non-applicable provisions is set out below: [PROHIBITION OF SALES TO EEA RETAIL INVESTORS — The Notes are not intended to be offered sold or otherwise made available to and should not be offered sold or otherwise made available to any retail investor in the European Economic Area (“EEA”). For these purposes a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended “MiFID II”); (ii) a customer within the meaning of Directive (EU) 2016/97 (the “Insurance Distribution Directive”) where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in Regulation (EU) 2017/1129 (the “Prospectus Regulation”). Consequently no key information document required by Regulation (EU) No 1286/2014 (as amended the “PRIIPs Regulation”) for offering or selling the Notes or otherwise making them available to retail investors in the EEA has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation.] [PROHIBITION OF SALES TO UK RETAIL INVESTORS — The Notes are not intended to be offered sold or otherwise made available to and should not be offered sold or otherwise made available to any retail investor in the United Kingdom (“UK”). For these purposes a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (“EUWA”); (ii) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (“FSMA”) and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97 where that customer would not qualify as a professional client as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the EUWA. Consequently no key information document required by Regulation (EU) No 1286/2014 as it forms part of domestic law by virtue of the EUWA (the “UK PRIIPs Regulation”) for offering or selling the Notes or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.] [MiFID II product governance/Professional investors and ECPs only target market — Solely for the purposes of [the/each] manufacturer’s product approval process the target market assessment in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is eligible counterpartiesand professional clients only each as defined in [Directive 2014/65/EU (as amended “MiFIDII”)]/[MiFID II]; and (ii) all channels for distribution of the Notes to eligible counterparties and professional clients are appropriate. [Consider any negative target market] Any person subsequently offering selling or recommending the Notes (a “distributor”) should take into consideration the manufacturer[’s/s’] target market assessment; however a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturer[’s/s’] target market assessment) and determining appropriate distribution channels.] – 50 –[UK MiFIR product governance/Professional investors and ECPs only target market — Solely for the purposes of [the/each] manufacturer’s product approval process the target market assessment in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is only eligible counterparties as defined in the FCA Handbook Conduct of Business Sourcebook (“COBS”) and professional clients as defined in Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (“UK MiFIR”); and (ii) all channels for distribution of the Notes to eligible counterparties and professional clients are appropriate. [Consider any negative target market] Any person subsequently offering selling or recommending the Notes (a “distributor”) should take into consideration the manufacturer[’s/s’] target market assessment; however a distributor subject tothe FCA Handbook Product Intervention and Product Governance Sourcebook (the “UK MiFIR ProductGovernance Rules”) is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturer[’s/s’] target market assessment) and determining appropriate distribution channels.] [Singapore SFA Product Classification: In connection with Section 309B of the Securities and Futures Act 2001 (2020 revised edition) of Singapore (the “SFA”) and the Securities and Futures (Capital Markets Products) Regulations 2018 of Singapore (the “CMP Regulations 2018”) the Issuer has determined and hereby notifies all relevant persons (as defined in Section 309A(1) of the SFA) that the Notes are [prescribed capital markets products]/[capital markets products other than prescribed capital markets products] (as defined in the CMP Regulations 2018) [and [are] [Excluded]/[Specified] Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).]]3 3 For any Notes to be offered to Singapore investors the Issuer to consider whether it needs to re-classify the Notes pursuant to Section 309B of the SFA prior to the launch of the offer.– 51 –Pricing Supplement dated [●] [ISSUER] (a joint stock company incorporated in the People’s Republic of China with limited liability) Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes] due [●] (the “Notes”) under the U.S.$5000000000 Medium Term Note Programme (the “Programme”) This document constitutes the Pricing Supplement for the Notes described herein. This document must be read in conjunction with the Offering Circular dated 18 June 2024 [and the supplement to it dated [●]] ([together] the “Offering Circular”). Full information on the Issuer and the offer of the Notes is only available on the basis of the combination of this Pricing Supplement and the Offering Circular. [Copies of the Offering Circular may be obtained from [address]].Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions (the “Conditions”) set forth in the Offering Circular.[The following language applies where the relevant Series of Notes will be listed on the Hong Kong Stock Exchange: This document is for distribution to professional investors (as defined in Chapter 37 of the RulesGoverning the Listing of Securities on The Stock Exchange of Hong Kong Limited) (the “ProfessionalInvestors”) only.The Stock Exchange of Hong Kong Limited (“HKSE”) has not reviewed the contents of this document other than to ensure that the prescribed form disclaimer and responsibility statements and a statement limiting distribution of this document to Professional Investors only have been reproduced in this document. Listing of the Programme or the Notes on HKSE is not to be taken as an indication of the commercial merits or credit quality of the Programme the Notes or the Issuer the Bank or the Group or quality of disclosure in this document. Hong Kong Exchanges and Clearing Limited and HKSE take no responsibility for the contents of this document make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.Notice to Hong Kong investors: The Issuer confirms that the Notes are intended for purchase by Professional Investors only and will be listed on the HKSE on that basis. Accordingly the Issuer confirms that the Notes are not appropriate as an investment for retail investors in Hong Kong.Investors should carefully consider the risks involved.This document together with the Offering Circular includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Issuer the Bank and the Group. The Issuer accepts full responsibility for the accuracy of the information contained in this document and confirms having made all reasonable enquiries that to the best of its knowledge and belief there are no other facts the omission of which would make any statement herein misleading.] – 52 –1. Issuer: [Name of the Issuer] 2. (i) [Series Number:] [●] (ii) [Tranche Number (If fungible [●] with an existing Series details of that Series including the date on which the Notes become fungible.)] 3. Specified Currency or Currencies: [●] 4. Aggregate Nominal Amount: [●] (i) [Series:] [●] (ii) [Tranche:] [●] 5. (i) [Issue Price:] [●] per cent. of the Aggregate Nominal Amount [plus accrued interest from [insert date] (in the case of fungible issues only if applicable)] (ii) [Net Proceeds:] [●] (Required only for listed issues)] (iii) [Use of proceeds: [●] (Required if different from the Offering Circular)] 6. (i) Specified Denominations: [●](1) (ii) Calculation Amount(4): [●] (If only one Specified Denomination insert the Specified Denomination. If more than one Specified Denomination insert the highest common factor. Note: There must be a common factor in the case of two or more Specified Denominations.) 7. (i) Issue Date: [●] (ii) Interest Commencement Date: [Specify/Issue date/Not Applicable] 8. Maturity Date: [specify date (for Fixed Rate Notes) or (for Floating Rate Notes) Interest Payment Date falling in or nearest to the relevant month and year](2) 9. Interest Basis: [[●] per cent. Fixed Rate] [specify reference rate] +/– [●] per cent.Floating Rate] [Zero Coupon] [Index Linked Interest] [Other (Specify)] (further particulars specified below) – 53 –10. Redemption/Payment Basis: [Redemption at par] [Index Linked Redemption] [Dual Currency] [Partly Paid] [Instalment] [Other (Specify)] 11. Change of Interest or [Specify details of any provision for convertibility of Redemption/Payment Basis: Notes into another interest or redemption/payment basis] 12. Put/Call Options: [Put] [Call] [(further particulars specified below)] 13. Status of the Notes: Senior Notes 14. Listing: [Hong Kong/Other (specify)/None (For Notes to be listed on the Hong Kong Stock Exchange insert the expected effective listing date of the Notes) 15. Method of distribution: [Syndicated/Non-syndicated] PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE 16. Fixed Rate Note Provisions [Applicable/Not Applicable] (If not applicable delete the remaining sub-paragraphs of this paragraph) (i) Rate[(s)] of Interest: [●] per cent. per annum [payable [annually/semi-annually/quarterly/monthly] in arrear] (ii) Interest Payment Date(s): [●] in each year(3) [adjusted in accordance with [specify Business Day Convention and any applicable Business Centre(s) for the definition of “Business Day”]/not adjusted] (iii) Fixed Coupon Amount[(s)]: [●] per Calculation Amount(4) (iv) Broken Amount: [●] per Calculation Amount payable on the Interest Payment Date falling [in/on] [●] [Insert particulars of any initial or final broken interest amounts which do not correspond with the Fixed Coupon Amount[(s)] and the Interest Payment Date(s) to which they relate] (v) Day Count Fraction [30/360/Actual/Actual (ICMA/ISDA)/Actual/365 (Condition 5(j)): (Fixed)(10)/Other] (Day count fraction should be Actual/Actual- ICMA for all fixed rate issues other than those Denominated in U.S. dollars Renminbi or Hong Kong dollars unless the client requests otherwise) – 54 –(vi) Determination Date(s) [●] in each year. [Insert regular interest payment dates (Condition 5(j)): ignoring issue date or maturity date in the case of a long or short first or last coupon](5) (vii) Other terms relating to the [Not Applicable/give details] method of calculating interest for Fixed Rate Notes: 17. Floating Rate Note Provisions [Applicable/Not Applicable] (If not applicable delete the remaining sub-paragraphs of this paragraph) (i) Interest Period(s): [●] (ii) Specified Interest Payment [●] Dates: (iii) Interest Period Date(s): [Not Applicable/specify dates] (Not applicable unless different from Interest Payment Date) (iv) Business Day Convention: [Floating Rate Note Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/other (give details)] (v) Business Centre(s) (Condition [●] 5(j)): (vi) Manner in which the Rate(s) [Screen Rate Determination/ISDA Determination/other of Interest is/are to be (give details)] determined: (vii) Party responsible for [●] calculating the Rate(s) of Interest and Interest Amount(s): (viii) Screen Rate Determination (Condition 5(b)(iii)(B)): – Reference Rate: [●] – Interest Determination [[●] [T2] Business Days in [specify city] Date(s): for [specify currency] prior to [the first day in each Interest Accrual Period/each Interest Payment Date]] – Relevant Screen Page: [●] – 55 –(ix) Screen Rate Determination (SOFR) (Condition 5(b)(iii)(C)): – SOFR Benchmark: [Simple SOFR Average/Compounded Daily SOFR/ Compounded SOFR Index] – Compounded Daily SOFR [Not Applicable/SOFR Lag/SOFR Observation Method: Shift/SOFR Payment Delay/SOFR Lockout] (Only applicable in the case of Compounded Daily SOFR) – Interest Determination [The [●] U.S. Government Securities Business Day prior Date(s): to the last day of each Interest Accrual Period — only applicable in the case of Simple SOFR Average/SOFR Lag/SOFR Observation Shift/SOFR Lockout/Compounded SOFR Index] [The Interest Period Date at the end of each Interest Period provided that the Interest Determination Date with respect to the final Interest Accrual Period will be the U.S. Government Securities Business Day immediately following the relevant SOFR Rate Cut-Off Date — only applicable in the case of SOFR Payment Delay] – Lookback Days: [Not Applicable/[●] U.S. Government Securities Business Day(s)] (Only applicable in the case of SOFR Lag) – SOFR Observation Shift [Not Applicable / [●] U.S. Government Securities Days: Business Days] (Only applicable in the case of SOFR Observation Shift or Compounded SOFR Index) – Interest Payment Delay [Not Applicable/[●] U.S. Government Securities Days: Business Day(s)] (Only applicable in the case of SOFR Payment Delay) – SOFR Rate Cut-Off Date: [Not Applicable/The day that is the [●] U.S. Government Securities Business Day(s) prior to the end of each Interest Accrual Period] (Only applicable in the case of Simple SOFR Average Compounded Daily SOFR: SOFR Payment Delay or Compounded Daily SOFR: SOFR Lockout) – 56 –– SOFR IndexStart [Not Applicable/[●] U.S. Government Securities Business Day(s)] (Only applicable in the case of Compounded SOFR Index) – SOFR IndexEnd [Not Applicable/[●] U.S. Government Securities Business Day(s)] (Only applicable in the case of Compounded SOFR Index) (x) ISDA Determination (Condition 5(b)(iii)(A)): – Floating Rate Option: [●] – Designated Maturity: [●] – Reset Date: [●] – ISDA Definitions: 2006 (if different to those set out in the Conditions please specify) (xi) Margin(s): [+/–] [●] per cent. per annum (xii) Minimum Rate of Interest: [●] per cent. per annum (xiii) Maximum Rate of Interest: [●] per cent. per annum (xiv) Day Count Fraction [●] (Condition 5(j)): (xv) Fall back provisions rounding [Benchmark Discontinuation (General) (Condition provisions denominator and 5(b)(iv))/Benchmark Discontinuation (SOFR) (Condition any other terms relating to the 5(b)(v))/specify other if different from those set out in the method of calculating interest Conditions] on Floating Rate Notes if different from those set out in the Conditions: 18. Zero Coupon Note Provisions [Applicable/Not Applicable] (If not applicable delete the remaining sub-paragraphs of this paragraph) (i) Amortisation Yield (Condition [●] per cent. per annum 6(b)): (ii) Day Count Fraction [●] (Condition 5(j)): (iii) Any other formula/basis of [●] determining amount payable: – 57 –19. Index Linked Interest Note [Applicable/Not Applicable] (If not applicable delete the Provisions remaining sub-paragraphs of this paragraph) (i) Index/Formula: [Give or annex details] (ii) Party responsible for [●] calculating the Rate(s) of Interest and/or Interest Amount(s) (if not the [Agent]): (iii) Provisions for determining [●] Coupon where calculation by reference to Index and/or Formula is impossible or impracticable: (iv) Interest Period(s): [●] (v) Specified Interest Payment [●] Dates: (vi) Business Day Convention: [Floating Rate Business Day Convention/Following Business Day Convention/Modified Following Business Day Convention/Preceding Business Day Convention/other (give details)] (vii) Business Centre(s) (Condition [●] 5(j)): (viii) Minimum Rate of Interest: [●] per cent. per annum (ix) Maximum Rate of Interest: [●] per cent. per annum (x) Day Count Fraction [●] (Condition 5(j)): 20. Dual Currency Note Provisions [Applicable/Not Applicable] (If not applicable delete the remaining sub-paragraphs of this paragraph) (i) Rate of Exchange/Method of [Give details] calculating Rate of Exchange: (ii) Party if any responsible for [●] calculating the Rate(s) of Interest and Interest Amount(s) (if not the [Agent]): (iii) Provisions applicable where [●] calculation by reference to Rate of Exchange impossible or impracticable: – 58 –(iv) Person at whose option [●] Specified Currency(ies) is/are payable: (v) Day Count Fraction [●] (Condition 5(j)): PROVISIONS RELATING TO REDEMPTION 21. Call Option [Applicable/Not Applicable] (If not applicable delete the remaining sub-paragraphs of this paragraph) (i) Optional Redemption Date(s): [●] (ii) Optional Redemption [●] per Calculation Amount Amount(s) of each Note and method if any of calculation of such amount(s): (iii) If redeemable in part: (a) Minimum Redemption [●] per Calculation Amount Amount: (b) Maximum Redemption [●] per Calculation Amount Amount: (iv) Notice period: [●] 22. Put Option [Applicable/Not Applicable] (If not applicable delete the remaining sub-paragraphs of this paragraph) (i) Optional Redemption Date(s): [●] (ii) Optional Redemption [●] per Calculation Amount Amount(s) of each Note and method if any of calculation of such amount(s): (iii) Notice period: [●] 23. Final Redemption Amount of each [●] per Calculation Amount Note 24. Early Redemption Amount (i) Early Redemption Amount(s) [●] per Calculation Amount payable on redemption for taxation reasons (Condition 6(c)) or an Event of Default (Condition 10 and/or the method of calculating the same (if required or if different from that set out in the Conditions): – 59 –GENERAL PROVISIONS APPLICABLE TO THE NOTES 25. Form of Notes: [Bearer Notes/Registered Notes] [Delete as appropriate] [Temporary Global Note exchangeable for a Permanent Global Note which is exchangeable for Definitive Notes in the limited circumstances specified in the Permanent Global Note] [Temporary Global Note exchangeable for Definitive Notes on [●] days’ notice] [Permanent Global Note exchangeable for Definitive Notes in the limited circumstances specified in the Permanent Global Note] [Permanent Global Note exchangeable for Definitive Notes on [●] days’ notice/at any time] [Permanent Global Certificate exchangeable for Definitive Certificates in the limited circumstances specified in the Permanent Global Certificate] [Permanent Global Certificate exchangeable for Definitive Certificates on [●] days’ notice/at any time](6)(7) 26. Financial Centre(s) (Condition 7)) or [Not Applicable/Give details. Note that this item relates other special provisions relating to to the date and place of payment and not interest period payment dates: end dates to which item 16(ii) 17(iv) and 19(vii) relate] 27. Talons for future Coupons or [Yes/No. If yes give details] Receipts to be attached to Definitive Notes (and dates on which such Talons mature): 28. Details relating to Partly Paid Notes: [Not Applicable/give details] amount of each payment comprising the Issue Price and date on which each payment is to be made and consequences (if any) of failure to pay including any right of the Issuer to forfeit the Notes and interest due on late payment: 29. Details relating to Instalment Notes: [Not Applicable/give details] (i) Instalment Amount(s): [●] (ii) Instalment Date(s): [●] (iii) Minimum Instalment Amount: [●] – 60 –(iv) Maximum Instalment Amount: [●] 30. Redenomination renominalisation [Not Applicable/The provisions annexed to this Pricing and reconventioning provisions: Supplement apply] 31. Consolidation provisions: [Not Applicable/The provisions annexed to this Pricing Supplement apply] 32. Other terms or special conditions: [Not Applicable/give details](7) DISTRIBUTION 33. (i) If syndicated names of [Not Applicable/give names] Managers: (ii) Stabilisation Manager (if any): [Not Applicable/give name] 34. If non-syndicated name of Dealer: [Not Applicable/give name] 35. U.S. Selling Restrictions [Specify the applicable category of U.S. Selling Restrictions/Not Applicable] 36. Prohibition of Sales to EEA Retail [Applicable/Not Applicable] Investors: (If the Notes clearly do not constitute “packaged” products or the Notes do constitute “packaged” products and a key information document will be prepared in the EEA “Not Applicable” should be specified. If the Notes may constitute “packaged” products and no key information document will be prepared in the EEA “Applicable” should be specified.) 37. Prohibition of Sales to UK Retail [Applicable/Not Applicable] Investors: (If the Notes clearly do not constitute “packaged” products or the Notes do constitute “packaged” products and a key information document will be prepared in the UK “Not Applicable” should be specified. If the Notes may constitute “packaged” products and no key information document will be prepared in the UK “Applicable” should be specified.) 38. Singapore Sales to Institutional [Applicable/Not Applicable] Investors and Accredited Investors only 39. Additional selling restrictions: [Not Applicable/give details] – 61 –OPERATIONAL INFORMATION 40. ISIN Code: [●] 41. Common Code: [●] 42. CMU Instrument Number: [●] 43. Legal Entity Identifier of the [300300C1030211000384]/[●] [Bank/Issuer]: 44. Any clearing system(s) other than [Not Applicable/give name(s) and number(s)] Euroclear Clearstream and the CMU and the relevant identification number(s): 45. Delivery: Delivery [against/free of] payment 46. Additional Paying Agents (if any): [●] GENERAL 47. The aggregate principal amount of [Not Applicable/U.S.$[●]] Notes issued has been translated into U.S. dollars at the rate of [●] producing a sum of (for Notes not denominated in U.S. dollars): 48. In the case of Registered Notes [Not Applicable/Luxembourg] specify the location of the office of the Registrar if other than Hong Kong: 49. In the case of Bearer Notes specify [Not Applicable/Hong Kong] the location of the office of the Fiscal Agent if other than London: 50. (i) Date of corporate approval(s) [●] for the issuance of the Notes (ii) Date of any regulatory [●] approval for the issuance of the Notes 51. [Ratings: The Notes to be issued are expected to be rated [●] by [●]] – 62 –52. Hong Kong SFC Code of Conduct (i) Rebates [A rebate of [●] bps is being offered by the [Issuer] to all private banks for orders they place (other than in relation to Notes subscribed by such private banks as principal whereby it is deploying its own balance sheet for onward selling to investors) payable upon closing of this offering based on the principal amount of the Notes distributed by such private banks to investors. Private banks are deemed to be placing an order on a principal basis unless they inform the CMIs otherwise. As a result private banks placing an order on a principal basis (including those deemed as placing an order as principal) will not be entitled to and will not be paid the rebate.]/[Not Applicable] (ii) Contact email addresses of the [Include relevant contact email addresses of the Overall Overall Coordinators where Coordinators where the underlying investor information underlying investor should be sent — OCs to provide]/[Not Applicable] information in relation to omnibus orders should be sent (iii) Marketing and Investor [if different from the programme OC] Targeting Strategy [LISTING APPLICATION This Pricing Supplement comprises the final terms required to list the issue of Notes described herein pursuant to the U.S.$5000000000 Medium Term Note Programme of China CITIC Bank Corporation Limited (中信银行股份有限公司).] [STABILISATION In connection with this issue one or more of the Managers named as Stabilisation Manager (or person(s) acting on behalf of any Stabilisation Manager(s)) in this Pricing Supplement may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However stabilisation may not necessarily occur. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the Notes is made and if begun may cease at any time but it must end no later than the earlier of 30 days after the issue date of the Notes and 60 days after the date of the allotment of the Notes. Any stabilisation action or overallotment must be conducted by the relevant Stabilisation Manager(s) (or person(s) acting on behalf of any Stabilisation Manager) in accordance with all applicable laws and rules.] [MATERIAL ADVERSE CHANGE STATEMENT [Except as disclosed in this document there/There](8) has been no significant change in the financial or trading position of the Issuer or of the Group since [insert date of last audited accounts or interim accounts (if later)] and no material adverse change in the financial position or prospects of the Issuer or of the Group since [insert date of last published annual accounts].] – 63 –RESPONSIBILITY The Issuer accepts responsibility for the information contained in this Pricing Supplement.Signed on behalf of the Issuer: By: Duly authorised Notes: (1) Notes (including Notes denominated in sterling) in respect of which the issue proceeds are to be accepted by the Issuer in the United Kingdom or whose issue otherwise constitutes a contravention of section 19 of the FSMA and which have a maturity of less than one year must have a minimum redemption value of ?100000 (or its equivalent in other currencies).If the specified denomination is expressed to be €100000 or its equivalent and multiples of a lower principal amount (for example €1000) insert the additional wording set out in the Guidance Note published by ICMA in November 2006 (or itsreplacement from time to time) as follows: “€100000 and integral multiples of €1000 in excess thereof up to and including€199000. No notes in definitive form will be issued with a denomination above €199000”. (2) Note that for Renminbi or Hong Kong dollar denominated Fixed Rate Notes where the Interest Payment Dates are subject to modification it will be necessary to use the second option here. (3) Note that for certain Renminbi or Hong Kong dollar denominated Fixed Rate Notes the Interest Payment Dates are subjectto modification and the following words should be added: “provided that if any Interest Payment Date falls on a day whichis not a Business Day the Interest Payment Date will be the next succeeding Business Day unless it would thereby fall in the next calendar month in which event the Interest Payment Date shall be brought forward to the immediately precedingBusiness Day.” (4) For Renminbi or Hong Kong dollar denominated Fixed Rate Notes where the Interest Payment Dates are subject tomodification the following alternative wording is appropriate: “Each Fixed Coupon Amount shall be calculated bymultiplying the product of the Rate of Interest and the Calculation Amount by the Day Count Fraction and rounding the resultant figure to the nearest CNY0.01 CNY0.05 in the case of Renminbi denominated Fixed Rate Notes or to the nearestHK$0.01 HK$0.005 in the case of Hong Kong dollar denominated Fixed Rate Notes being rounded upwards.” (5) Only to be completed for an issue where the Day Count Fraction is Actual/Actual-ICMA. (6) If the Global Note/Certificate is exchangeable for Definitive Notes/Certificates at the option of the holder the Notes shall be tradeable only in amounts of at least the Specified Denomination (or if more than one Specified Denomination the lowest Specified Denomination) provided in paragraph 6 and multiples thereof. (7) Only applicable if permitted by the rules of the relevant clearing system. The limited circumstances in which exchange ispermitted are set out under the section “Summary of Provisions Relating to Notes while Represented by Global Notes orGlobal Certificates — Exchange” in the Offering Circular. (8) If full terms and conditions are to be used please add the following here: “The full text of the Conditions which apply to theNotes [and which will be endorsed on the Notes in definitive form] are set out in [the Annex hereto] which Conditions replace in their entirety those appearing in the Offering Circular for the purposes of these Notes and such Conditions willprevail over any other provision to the contrary”. The first set of bracketed words is to be deleted where there is a Permanent Global Note instead of Notes in definitive form. The full Conditions should be attached to and form part of the Pricing Supplement. (9) If any change is disclosed in the Pricing Supplement it may require approval by the Stock Exchange(s). Consideration should be given as to whether or not such disclosure should be made by means of a supplemental Offering Circular rather than in a Pricing Supplement. (10) Applicable to Renminbi and Hong Kong dollar denominated Fixed Rate Notes. – 64 –TERMS AND CONDITIONS OF THE NOTES The following is the text of the terms and conditions that save for the words in italics and subject to completion and amendment and as supplemented or varied in accordance with the provisions of the relevant Pricing Supplement shall be applicable to the Notes in definitive form (if any) issued in exchange for the Global Note(s) or the Global Certificate representing each Series. Either (i) the full text of these terms and conditions together with the relevant provisions of the Pricing Supplement or (ii) these terms and conditions as so completed amended supplemented or varied (and subject to simplification by the deletion of non-applicable provisions) shall be endorsed on such Bearer Notes or on the Certificates relating to such Registered Notes. All capitalised terms that are not defined in these Conditions will have the meanings given to them in the relevant Pricing Supplement. Those definitions will be endorsed on the definitive Notes or Certificates as the case may be. References in the Conditions to “Notes” are to the Notes of one Series only not to all Notes that may be issued under the Programme.The Notes are part of a Series (as defined below) of Notes issued by China CITIC Bank Corporation Limited (中信银行股份有限公司) (the “Bank”) or the relevant branch of the Bank as specified hereon (the “Issuer”) and are issued pursuant to an amended and restated fiscal agency agreement (as further amended restated or supplemented as at the Issue Date the “Fiscal Agency Agreement”) dated 18 June 2024 which has been entered into in relation to the Notes between the Bank (on behalf of itself and on behalf of its branches) Citicorp International Limited as fiscal agent CMU lodging and paying agent and the other agents named in it and with the benefit of an amended and restated Deed of Covenant (as further amended restated or supplemented as at the Issue Date the “Deed of Covenant”) dated 18 June 2024 executed by the Bank (on behalf of itself and on behalf of its branches) in relation to the Notes. The fiscal agent the CMU lodging and paying agent the other paying agents the registrar the transfer agent(s) andthe calculation agent(s) for the time being (if any) are referred to below respectively as the “FiscalAgent” the “CMU Lodging and Paying Agent” the “Paying Agents” (which expression shall include the Fiscal Agent and the CMU Lodging and Paying Agent) the “Registrar” the “Transfer Agents” (which expression shall include the Registrar) and the “Calculation Agent(s)” (such Fiscal Agent CMU Lodging and Paying Agent Paying Agents Registrar and Transfer Agent(s) being together referred to as the “Agents”). For the purposes of these terms and conditions (the “Conditions”) all references to the Fiscal Agent shall with respect to a Series of Notes to be held in the CMU be deemed to be references to the CMU Lodging and Paying Agent and all such references shall be construed accordingly. Copies of the Fiscal Agency Agreement and the Deed of Covenant are available for inspection during usual business hours at the specified offices of the Paying Agents.The Noteholders (as defined below) the holders of the interest coupons (the “Coupons”) relating to interest bearing Notes in bearer form and where applicable in the case of such Notes talons for further Coupons (the “Talons”) (the “Couponholders”) and the holders of the receipts for the payment of instalments of principal (the “Receipts”) relating to Notes in bearer form of which the principal is payable in instalments are entitled to the benefit of and are deemed to have notice of all of the provisions of the Fiscal Agency Agreement applicable to them.As used in these Conditions “Tranche” means Notes which are identical in all respects. 1. FORM DENOMINATION AND TITLE The Notes are issued in bearer form (“Bearer Notes”) or in registered form (“Registered Notes”) in each case in the Specified Denomination(s) shown hereon.This Note is a Fixed Rate Note a Floating Rate Note a Zero Coupon Note an Index Linked Interest Note an Index Linked Redemption Note (together with an Index Linked Interest Note an “Index Linked Note”) an Instalment Note a Dual Currency Note or a Partly Paid Note a combination of any of the foregoing or any other kind of Note depending upon the Interest Basis and Redemption/Payment Basis shown hereon.– 65 –Bearer Notes are serially numbered and are issued with Coupons (and where appropriate a Talon) attached save in the case of Zero Coupon Notes in which case references to interest (other than in relation to interest due after the Maturity Date) Coupons and Talons in these Conditions are not applicable. Instalment Notes are issued with one or more Receipts attached.Registered Notes are represented by registered certificates (“Certificates”) and save as provided in Condition 2(c) each Certificate shall represent the entire holding of Registered Notes by the same holder.Title to the Bearer Notes and the Receipts Coupons and Talons shall pass by delivery. Title to the Registered Notes shall pass by registration in the register that the Issuer shall procure to be kept by the Registrar in accordance with the provisions of the Fiscal Agency Agreement (the “Register”).Except as ordered by a court of competent jurisdiction or as required by law the holder (as defined below) of any Note Receipt Coupon or Talon shall be deemed to be and may be treated as its absolute owner for all purposes whether or not it is overdue and regardless of any notice of ownership trust or an interest in it any writing on it (or on the Certificate representing it) or its theft or loss (or that of the related Certificate) and no person shall be liable for so treating the holder.In these Conditions “Noteholder” means the bearer of any Bearer Note and the Receipts relating to it or the person in whose name a Registered Note is registered (as the case may be) “holder” (in relation to a Note Receipt Coupon or Talon) means the bearer of any Bearer Note Receipt Coupon or Talon or the person in whose name a Registered Note is registered (as the case may be) and capitalised terms have the meanings given to them hereon the absence of any such meaning indicating that such term is not applicable to the Notes. 2. NO EXCHANGE OF NOTES AND TRANSFERS OF REGISTERED NOTES (a) No Exchange of Notes: Registered Notes may not be exchanged for Bearer Notes. Bearer Notes of one Specified Denomination may not be exchanged for Bearer Notes of another Specified Denomination. Bearer Notes may not be exchanged for Registered Notes.(b) Transfer of Registered Notes: Subject to Condition 2(f) one or more Registered Notes may be transferred upon the surrender (at the specified office of the Registrar or any Transfer Agent) of the Certificate representing such Registered Notes to be transferred together with the form of transfer endorsed on such Certificate (or another form of transfer substantially in the same form and containing the same representations and certifications (if any) unless otherwise agreed by the Issuer) duly completed and executed and any other evidence as the Registrar or Transfer Agent may reasonably require to prove the title of the transferor and the authority of the individuals that have executed the form of transfer. In the case of a transfer of part only of a holding of Registered Notes represented by one Certificate a new Certificate shall be issued to the transferee in respect of the part transferred and a further new Certificate in respect of the balance of the holding not transferred shall be issued to the transferor. All transfers of Notes and entries on the Register will be made subject to the detailed regulations concerning transfer of Notes scheduled to the Fiscal Agency Agreement. The regulations may be changed by the Issuer with the prior written approval of the Registrar and to the extent reasonably expected to be prejudicial to the interests of the Noteholders the Noteholders. A copy of the current regulations will be made available by the Registrar to any Noteholder upon request.(c) Exercise of Options or Partial Redemption in Respect of Registered Notes: In the case of an exercise of an Issuer’s or Noteholders’ option in respect of or a partial redemption of a holding of Registered Notes represented by a single Certificate a new Certificate shall be – 66 –issued to the holder to reflect the exercise of such option or in respect of the balance of the holding not redeemed. New Certificates shall only be issued against surrender of the existing Certificates to a Registrar or any other Transfer Agent. In the case of a transfer of Registered Notes to a person who is already a holder of Registered Notes a new Certificate representing the enlarged holding shall only be issued against surrender of the Certificate representing the existing holding.(d) Delivery of New Certificates: Each new Certificate to be issued pursuant to Conditions 2(b) or 2(c) shall be available for delivery within five business days of receipt of a duly completed form of transfer or Exercise Notice (as defined in Condition 6(e)) and surrender of the Certificate for exchange. Delivery of the new Certificate(s) shall be made at the specified office of the Registrar or any other Transfer Agent (as the case may be) to whom delivery or surrender of such form of transfer Exercise Notice or Certificate shall have been made or at the option of the holder making such delivery or surrender as aforesaid and as specified in the form of transfer Exercise Notice or otherwise in writing be mailed by uninsured post at the risk of the holder entitled to the new Certificate to such address as may be so specified unless such holder requests otherwise and pays in advance to the relevant Agent the costs of such other method of delivery and/or such insurance as it may specify. In this Condition 2(d) “business day” means a day other than a Saturday or Sunday on which banks are open for business in the place of the specified office of the Registrar or the relevant other Transfer Agent (as the case may be).(e) Transfers Free of Charge: Transfers of Notes and Certificates on registration transfer exercise of an option or partial redemption shall be effected without charge by or on behalf of the Issuer the Registrar or the Transfer Agents but upon payment of any tax or other governmental charges that may be imposed in relation to it (or the giving of such indemnity and/or security and/or pre-funding as the Issuer the Registrar or the relevant other Transfer Agent may require) in respect of taxes or charges.(f) Closed Periods: No Noteholder may require the transfer of a Registered Note to be registered (i) during the period of 15 days ending on (and including) the due date for redemption of or payment of any Instalment Amount in respect of that Note (ii) during the period of 15 days ending on (and including) any date on which Notes may be redeemed by the Issuer at its option pursuant to Condition 6 (iii) after any such Note has been put by the relevant Noteholder or (iv) during the period of seven days ending on (and including) any Record Date. 3. STATUS The Notes and the Receipts and the Coupons relating to them constitute direct unconditional unsubordinated and unsecured obligations of the Issuer and shall at all times rank pari passu and without any preference among themselves. The payment obligations of the Issuer under the Notes and the Receipts and the Coupons relating to them shall save for such exceptions as may be provided by applicable legislation at all times rank at least equally with all other unsecured and unsubordinated indebtedness and monetary obligations of the Issuer present and future. 4. COVENANTS (a) Regulatory Undertakings: Each of the Bank and the Issuer undertakes to: (i) to the extent applicable provide or cause to be provided to the NDRC a notification of the requisite information and documents within the time frame prescribed after the relevant Issue Date of the Notes in accordance with Administrative Measures for – 67 –Examination and Registration of Medium- and Long-term Foreign Debt of Enterprises (企业中长期外债审核登记管理办法（国家发展和改革委员会令第56号）) issued by the NDRC and effective as of 10 February 2023 and any implementation rules regulations certificates circulars or notices in connection therewith as issued by the NDRC from time to time; (ii) to the extent applicable submit or cause to be submitted to the PBOC the requisite information and documents within the time frame prescribed in accordance with the Circular of the People’s Bank of China on the Macro-prudence Management of Cross-border Financing in Full Aperture (中国人民银行关于全口径跨境融资宏观审 慎管理有关事宜的通知) issued by the PBOC and which came into effect on 12 January 2017 and any implementation rules as issued by the PBOC from time to time; (iii) to the extent that it is required by the NFRA (formerly known as China Banking and Insurance Regulatory Commission) PBOC and/or SAFE submit or cause to be submitted to the NFRA PBOC and/or SAFE the requisite information and documents within the time frame prescribed; and (iv) comply with all applicable PRC laws and regulations in connection with the Notes.In these Conditions: “Hong Kong” means the Hong Kong Special Administrative Region of the PRC; “NDRC” means the National Development and Reform Commission of the People’s Republic of China; “NFRA” means National Financial Regulatory Administration or its relevant local counterpart; “PBOC” means the People’s Bank of China; “Person” means any individual company corporation firm partnership joint venture undertaking association organisation trust state or agency of a state or other entity whether or not having separate legal personality; “PRC” means the People’s Republic of China which for the purpose of these Conditions shall not include Hong Kong the Macau Special Administrative Region of the PRC or Taiwan); “Rating Agency” means any one of (a) Standard & Poor’s Rating Services and its successors (“S&P”) (b) Moody’s Investors Service Inc. a subsidiary of Moody’s Corporation and its successors (“Moody’s”) (c) Fitch Ratings and its successors (“Fitch”) and (d) if one or more of S&P Moody’s or Fitch shall not make a rating of the Notes publicly available any or other internationally recognised securities rating agency or agencies as the case may be selected by the Issuer which shall be substituted for S&P Moody’s or Fitch or any combination thereof as the case may be rating agency; and “SAFE” means the State Administration of Foreign Exchange of the PRC or its local counterparts.– 68 –5. INTEREST AND OTHER CALCULATIONS (a) Interest on Fixed Rate Notes: Each Fixed Rate Note bears interest on its outstanding nominal amount from and including the Interest Commencement Date at the rate per annum (expressed as a percentage) equal to the Rate of Interest such interest being payable in arrear on each Interest Payment Date. The amount of interest payable shall be determined in accordance with Condition 5(h).(b) Interest on Floating Rate Notes and Index Linked Interest Notes: (i) Interest Payment Dates: Each Floating Rate Note and Index Linked Interest Note bears interest on its outstanding nominal amount from and including the Interest Commencement Date at the rate per annum (expressed as a percentage) equal to the Rate of Interest such interest being payable in arrear on each Interest Payment Date.The amount of interest payable shall be determined in accordance with Condition 5(h). Such Interest Payment Date(s) is/are either shown hereon as Specified Interest Payment Dates or if no Specified Interest Payment Date(s) is/are shown hereon “Interest Payment Date” shall mean each date which falls the number of months or other period shown hereon as the Interest Period after the preceding Interest Payment Date or in the case of the first Interest Payment Date after the Interest Commencement Date.(ii) Business Day Convention: If any date referred to in these Conditions that is specified to be subject to adjustment in accordance with a Business Day Convention would otherwise fall on a day that is not a Business Day then if the Business Day Convention specified is (A) the Floating Rate Business Day Convention such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month in which event (x) such date shall be brought forward to the immediately preceding Business Day and (y) each subsequent such date shall be the last Business Day of the month in which such date would have fallen had it not been subject to adjustment (B) the Following Business Day Convention such date shall be postponed to the next day that is a Business Day (C) the Modified Following Business Day Convention such date shall be postponed to the next day that is a Business Day unless it would thereby fall into the next calendar month in which event such date shall be brought forward to the immediately preceding Business Day or (D) the Preceding Business Day Convention such date shall be brought forward to the immediately preceding Business Day.(iii) Rate of Interest for Floating Rate Notes: The Rate of Interest in respect of Floating Rate Notes for each Interest Accrual Period shall be determined by the Calculation Agent in the manner specified hereon and the provisions below relating to either ISDA Determination or Screen Rate Determination shall apply depending upon which is specified hereon. (A) ISDA Determination for Floating Rate Notes Where ISDA Determination is specified hereon as the manner in which the Rate of Interest is to be determined the Rate of Interest for each Interest Accrual Period shall be determined by the Calculation Agent as a rate equal to the relevant ISDA Rate plus or minus (as indicated hereon) the Margin if any.For the purposes of this sub-paragraph (A) “ISDA Rate” for an Interest Accrual Period means a rate equal to the Floating Rate that would be determined by the Calculation Agent under a Swap Transaction under the terms – 69 –of an agreement incorporating the ISDA Definitions and under which: (1) the Floating Rate Option is as specified hereon; (2) the Designated Maturity is a period specified hereon; and (3) the relevant Reset Date is the first day of that Interest Accrual Period unless otherwise specified hereon.For the purposes of this sub-paragraph (A) “Floating Rate” “CalculationAgent” “Floating Rate Option” “Designated Maturity” “Reset Date” and “Swap Transaction” have the meanings given to those terms in the ISDA Definitions. (B) Screen Rate Determination for Floating Rate Notes (other than Notes where the Reference Rate is specified as SOFR Benchmark) (1) Where Screen Rate Determination is specified hereon as the manner in which the Rate of Interest is to be determined where the Reference Rate is not SOFR Benchmark the Rate of Interest for each Interest Accrual Period will subject as provided below be either: (I) the offered quotation; or (II) the arithmetic mean of the offered quotations (expressed as a percentage rate per annum) for the Reference Rate which appears or appear as the case may be on the Relevant Screen Page as at either 11.00 a.m. (Brussels time in the case of EURIBOR or Hong Kong time in the case of HIBOR) or in the case of CNH HIBOR 11.15 a.m.(Hong Kong time) or if at or around that time it is notified that the fixing will be published at 2.30 p.m. (Hong Kong time) then as of 2.30 p.m. (Hong Kong time) on the Interest Determination Date in question as determined by the Calculation Agent. If five or more of such offered quotations are available on the Relevant Screen Page the highest (or if there is more than one such highest quotation one only of such quotations) and the lowest (or if there is more than one such lowest quotation one only of such quotations) shall be disregarded by the Calculation Agent for the purpose of determining the arithmetic mean of such offered quotations.If the Reference Rate from time to time in respect of Floating Rate Notes is specified hereon as being other than EURIBOR HIBOR or CNH HIBOR the Rate of Interest in respect of such Notes will be determined as provided hereon; (2) If the Relevant Screen Page is not available or if sub-paragraph (B)(1)(I) applies and no such offered quotation appears on the Relevant Screen Page or if sub-paragraph (B)(1)(II) above applies and fewer than three such offered quotations appear on the Relevant Screen Page in each case as at the time specified above subject as provided below the Calculation Agent shall request if the Reference Rate is EURIBOR the principal Euro-zone office of each of the Reference Banks or if the – 70 –Reference Rate is HIBOR or CNH HIBOR the principal Hong Kong office of each of the Reference Banks to provide the Calculation Agent with its offered quotation (expressed as a percentage rate per annum) for the Reference Rate and if the Reference Rate is EURIBOR at approximately 11.00 a.m. (Brussels time) or if the Reference Rate is HIBOR at approximately 11.00 a.m. (Hong Kong time) or in the case of CNH HIBOR at approximately 11.15 a.m. (Hong Kong time) on the Interest Determination Date in question. If two or more of the Reference Banks provide the Calculation Agent with such offered quotations the Rate of Interest for such Interest Accrual Period shall be the arithmetic mean of such offered quotations as determined by the Calculation Agent; and (3) If paragraph (B)(2) above applies and the Calculation Agent determines that fewer than two Reference Banks are providing offered quotations subject as provided below the Rate of Interest shall be the arithmetic mean of the rates per annum (expressed as a percentage) as communicated to (and at the request of) the Calculation Agent by the Reference Banks or any two or more of them at which such banks were offered if the Reference Rate is EURIBOR at approximately 11.00 a.m. (Brussels time) or if the Reference Rate is HIBOR at approximately 11.00 a.m. (Hong Kong time) or in the case of CNH HIBOR at approximately 11.15 a.m. (Hong Kong time) on the relevant Interest Determination Date deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate by leading banks in if the Reference Rate is EURIBOR the Euro-zone inter-bank market or if the Reference Rate is HIBOR or CNH HIBOR the Hong Kong inter-bank market as the case may be or if fewer than two of the Reference Banks provide the Calculation Agent with such offered rates the offered rate for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate or the arithmetic mean of the offered rates for deposits in the Specified Currency for a period equal to that which would have been used for the Reference Rate at which if the Reference Rate is EURIBOR at approximately 11.00 a.m. (Brussels time) or if the Reference Rate is HIBOR at approximately 11.00 a.m. (Hong Kong time) or in the case of CNH HIBOR at approximately 11.15 a.m. (Hong Kong time) on the relevant Interest Determination Date any one or more banks (which bank or banks is or are in the opinion of the Issuer suitable for such purpose) informs the Calculation Agent it is quoting to leading banks in if the Reference Rate is EURIBOR the Euro-zone inter-bank market or if the Reference Rate is HIBOR or CNH HIBOR the Hong Kong inter-bank market as the case may be provided that if the Rate of Interest cannot be determined in accordance with the foregoing provisions of this paragraph the Rate of Interest shall be determined as at the last preceding Interest Determination Date (though substituting where a different Margin or Maximum or Minimum Rate of Interest is to be applied to the relevant Interest Accrual Period from that which applied to the last preceding Interest Accrual Period the Margin or Maximum or Minimum Rate of Interest relating to the relevant Interest Accrual Period in place of the Margin or Maximum or Minimum Rate of Interest relating to that last preceding Interest Accrual Period).– 71 –(C) Screen Rate Determination for Floating Rate Notes where the Reference Rate is specified as being SOFR Benchmark Where Screen Rate Determination is specified hereon as the manner in which the Rate of Interest is to be determined where the Reference Rate is SOFR Benchmark the Rate of Interest for each Interest Accrual Period will subject as provided below be equal to the relevant SOFR Benchmark plus or minus the Margin (if any) in accordance with Condition 5(g) all as determined by the Calculation Agent on the relevant Interest Determination Date.The “SOFR Benchmark” will be determined based on Simple SOFR Average Compounded Daily SOFR or Compounded SOFR Index as follows (subject in each case to Condition 5(b)(v) as further specified hereon): (x) If Simple SOFR Average (“Simple SOFR Average”) is specified hereon as the manner in which the SOFR Benchmark will be determined the SOFR Benchmark for each Interest Accrual Period shall be the arithmetic mean of the SOFR reference rates for each day during the period as calculated by the Calculation Agent and where if applicable and as specified hereon the SOFR reference rate on the SOFR Rate Cut-Off Date shall be used for the days in the period from (and including) the SOFR Rate Cut-Off Date to (but excluding) the Interest Period Date.(y) If Compounded Daily SOFR (“Compounded Daily SOFR”) is specified hereon as the manner in which the SOFR Benchmark will be determined the SOFR Benchmark for each Interest Accrual Period shall be equal to the compounded average of daily SOFR reference rates for each day during the relevant Interest Accrual Period (where SOFR Lag SOFR Payment Delay or SOFR Lockout is specified as applicable hereon to determine Compounded Daily SOFR) or the SOFR Observation Period (where SOFR Observation Shift is specified as applicable hereon to determine Compounded Daily SOFR).Compounded Daily SOFR shall be calculated by the Calculation Agent in accordance with one of the formulas referenced below depending upon which is specified as applicable hereon: (1) SOFR Lag: ( do (1+ SOFR∏ i ?×USBD × ni (? 1 (× 360360 d i=1 with the resulting percentage being rounded if necessary to the nearest one hundred-thousandth of a percentage point with 0.000005 per cent.being rounded upwards (e.g. 9.876541 per cent. (or 0.09876541) being rounded down to 9.87654 per cent. (or 0.0987654) and 9.876545 per cent. (or 0.09876545) being rounded up to 9.87655 per cent. (or 0.0987655)) and where: – 72 –“SOFRi–xUSBD” for any U.S. Government Securities Business Day(i) in the relevant Interest Accrual Period is equal to the SOFR reference rate for the U.S. Government Securities Business Day falling the number of Lookback Days prior to that U.S. Government Securities Business Day(i); “Lookback Days” means such number of U.S. Government Securities Business Days as specified hereon; “d” means the number of calendar days in the relevant Interest Accrual Period; “do” means the number of U.S. Government Securities Business Days in the relevant Interest Accrual Period; “i” means a series of whole numbers ascending from one to do representing each relevant U.S. Government Securities Business Day from (and including) the first U.S. Government Securities Business Dayin the relevant Interest Accrual Period (each a “U.S. GovernmentSecurities Business Day(i)”); and “ni” for any U.S. Government Securities Business Day(i) means the number of calendar days from (and including) such U.S. Government Securities Business Day(i) up to (but excluding) the following U.S.Government Securities Business Day. (2) SOFR Observation Shift: ( do (1+ SOFRi ?× n∏ i (? 1 (× 360360 d i=1 with the resulting percentage being rounded if necessary to the nearest one hundred-thousandth of a percentage point with 0.000005 per cent.being rounded upwards (e.g. 9.876541 per cent. (or 0.09876541) being rounded down to 9.87654 per cent. (or 0.0987654) and 9.876545 per cent. (or 0.09876545) being rounded up to 9.87655 per cent. (or 0.0987655)) and where: “SOFRi” for any U.S. Government Securities Business Day(i) in the relevant SOFR Observation Period is equal to the SOFR reference rate for that U.S. Government Securities Business Day(i); “SOFR Observation Period” means in respect of an Interest Accrual Period the period from (and including) the date falling the number of SOFR Observation Shift Days prior to the first day of such Interest Accrual Period to (but excluding) the date falling the number of SOFR Observation Shift Days prior to the Interest Period Date for such Interest Accrual Period; “SOFR Observation Shift Days” means the number of U.S.Government Securities Business Days as specified hereon; “d” means the number of calendar days in the relevant SOFR Observation Period; – 73 –“do” means the number of U.S. Government Securities Business Days in the relevant SOFR Observation Period; “i” means a series of whole numbers ascending from one to do representing each U.S. Government Securities Business Day from (and including) the first U.S. Government Securities Business Day in therelevant SOFR Observation Period (each a “U.S. GovernmentSecurities Business Day(i)”); and “ni” for any U.S. Government Securities Business Day(i) means the number of calendar days from (and including) such U.S. Government Securities Business Day(i) up to (but excluding) the following U.S.Government Securities Business Day. (3) SOFR Payment Delay: ( do ∏(1+ SOFRi × ni (? 1 (× 360360 d i=1 with the resulting percentage being rounded if necessary to the nearest one hundred-thousandth of a percentage point with 0.000005 per cent.being rounded upwards (e.g. 9.876541 per cent. (or 0.09876541) being rounded down to 9.87654 per cent. (or 0.0987654) and 9.876545 per cent. (or 0.09876545) being rounded up to 9.87655 per cent. (or 0.0987655)) and where: “SOFRi” for any U.S. Government Securities Business Day(i) in the relevant Interest Accrual Period is equal to the SOFR reference rate for that U.S. Government Securities Business Day(i); “Interest Payment Date” shall be the number of Interest Payment Delay Days following each Interest Period Date; provided that the Interest Payment Date with respect to the final Interest Accrual Period will be the Maturity Date or if the Issuer elects to redeem the Notes prior to the Maturity Date the relevant Optional Redemption Date; “Interest Payment Delay Days” means the number of Business Days as specified hereon; “d” means the number of calendar days in the relevant Interest Accrual Period; “do” means the number of U.S. Government Securities Business Days in the relevant Interest Accrual Period; “i” means a series of whole numbers ascending from one to do representing each relevant U.S. Government Securities Business Day from (and including) the first U.S. Government Securities Business Dayin the relevant Interest Accrual Period (each a “U.S. GovernmentSecurities Business Day(i)”); and “ni” for any U.S. Government Securities Business Day(i) means the number of calendar days from (and including) such U.S. Government – 74 –Securities Business Day(i) up to (but excluding) the following U.S.Government Securities Business Day.For the purposes of calculating Compounded Daily SOFR with respect to the final Interest Accrual Period where SOFR Payment Delay is specified hereon the SOFR reference rate for each U.S. Government Securities Business Day in the period from (and including) the SOFR Rate Cut-Off Date to (but excluding) the Maturity Date or the relevant Optional Redemption Date as applicable shall be the SOFR reference rate in respect of such SOFR Rate Cut-Off Date. (4) SOFR Lockout: ( do ∏(1+ SOFRi × ni 360 (? 1 (× 360d i=1 with the resulting percentage being rounded if necessary to the nearest one hundred-thousandth of a percentage point with 0.000005 per cent.being rounded upwards (e.g. 9.876541 per cent. (or 0.09876541) being rounded down to 9.87654 per cent. (or 0.0987654) and 9.876545 per cent. (or 0.09876545) being rounded up to 9.87655 per cent. (or 0.0987655)) and where: “SOFRi” for any U.S. Government Securities Business Day(i) in the relevant Interest Accrual Period is equal to the SOFR reference rate for that U.S. Government Securities Business Day(i) except that the SOFR for any U.S. Government Securities Business Day(i) in respect of the period from (and including) the SOFR Rate Cut-Off Date to (but excluding) the Interest Period Date for such Interest Accrual Period shall be the SOFR reference rate in respect of such SOFR Rate Cut-Off Date; “d” means the number of calendar days in the relevant Interest Accrual Period; “do” means the number of U.S. Government Securities Business Days in the relevant Interest Accrual Period; “i” means a series of whole numbers ascending from one to do representing each relevant U.S. Government Securities Business Day from (and including) the first U.S. Government Securities Business Dayin the relevant Interest Accrual Period (each a “U.S. GovernmentSecurities Business Day(i)”); and “ni” for any U.S. Government Securities Business Day(i) means the number of calendar days from (and including) such U.S. Government Securities Business Day(i) up to (but excluding) the following U.S.Government Securities Business Day.The following defined terms shall have the meanings set out below for purpose of this Condition 5(b)(iii)(C)(x) and Condition 5(b)(iii)(C)(y): “Bloomberg Screen SOFRRATE Page” means the Bloomberg screen designated “SOFRRATE” or any successor page or service; – 75 –“Reuters Page USDSOFR=” means the Reuters page designated “USDSOFR=” or any successor page or service; “SOFR” means in respect of a U.S. Government Securities Business Day the reference rate determined by the Calculation Agent in accordance with the following provision: (i) the Secured Overnight Financing Rate published at the SOFR Determination Time as such reference rate is reported on the Bloomberg Screen SOFRRATE Page; the Secured Overnight Financing Rate published at the SOFR Determination Time as such reference rate is reported on the Reuters Page USDSOFR=; or the Secured Overnight Financing Rate published at the SOFR Determination Time on the SOFR Administrator’s Website; (ii) if the reference rate specified in (i) above does not appear and a SOFR Benchmark Transition Event and its related SOFR Benchmark Replacement Date have not occurred the SOFR reference rate shall be the reference rate published on the SOFR Administrator’s Website for the first preceding U.S. Government Securities Business Day for which SOFR was published on the SOFR Administrator’s Website; or (iii) if the reference rate specified in (i) above does not appear and a SOFR Benchmark Transition Event and its related SOFR Benchmark Replacement Date have occurred the provisions set forth in Condition 5(b)(v) shall apply as specified hereon; “SOFR Rate Cut-Off Date” means the date that is a number of U.S.Government Securities Business Days prior to the end of each Interest Accrual Period the Maturity Date or the relevant Optional Redemption Date as applicable as specified hereon; and “SOFR Determination Time” means approximately 3:00 p.m. (New York City time) on the immediately following the relevant U.S. Government Securities Business Day.(z) If Compounded SOFR Index (“Compounded SOFR Index”) is specified as applicable hereon the SOFR Benchmark for each Interest Accrual Period shall be equal to the compounded average of daily SOFR reference rates for each day during the relevant SOFR Observation Period as calculated by the Calculation Agent as follows: ( SOFR IndexEnd ? 1 × 360SOFR IndexStart ( ( dc ( with the resulting percentage being rounded if necessary to the nearest one hundred-thousandth of a percentage point with 0.000005 per cent. being rounded upwards (e.g. 9.876541 per cent. (or 0.09876541) being rounded down to 9.87654 per cent. (or 0.0987654) and 9.876545 per cent. (or 0.09876545) being rounded up to 9.87655 per cent. (or 0.0987655)) and where: “SOFR Index” means in respect of a U.S. Government Securities Business Day the SOFR Index value as published on the SOFR Administrator’s Website – 76 –at the SOFR Index Determination Time on such U.S. Government Securities Business Day provided that: (a) if the value specified above does not appear and a SOFR Benchmark Transition Event and its related SOFR Benchmark Replacement Date have not occurred the “SOFR Index” shall be calculated on any Interest Determination Date with respect to an Interest Accrual Period in accordance with the Compounded Daily SOFR formula described above in Condition 5(b)(iii)(C)(y)(2) “SOFR Observation Shift” and the term “SOFR Observation Shift Days” shall mean two U.S.Government Securities Business Days; or (b) if the value specified above does not appear and a SOFR Benchmark Transition Event and its related SOFR Benchmark Replacement Date have occurred the provisions set forth in Condition 5(b)(v) shall apply as specified hereon; “SOFR IndexEnd” means in respect of an Interest Accrual Period the SOFR Index value on the date that is the number of U.S. Government Securities Business Days specified hereon prior to the Interest Period Date for such Interest Accrual Period (or in the final Interest Accrual Period the Maturity Date); “SOFR IndexStart” means in respect of an Interest Accrual Period the SOFR Index value on the date that is the number of U.S. Government Securities Business Days specified hereon prior to the first day of such Interest Accrual Period; “SOFR Index Determination Time” means in respect of a U.S. Government Securities Business Day approximately 3:00 p.m. (New York City time) on such U.S. Government Securities Business Day; “SOFR Observation Period” means in respect of an Interest Accrual Period the period from (and including) the date falling the number of SOFR Observation Shift Days prior to the first day of such Interest Accrual Period to (but excluding) the date falling the number of SOFR Observation Shift Days prior to the Interest Period Date for such Interest Accrual Period; “SOFR Observation Shift Days” means the number of U.S. Government Securities Business Days as specified hereon; and “dc” means the number of calendar days in the applicable SOFR Observation Period.If the Notes become due and payable in accordance with Condition 10 the final Interest Determination Date shall notwithstanding any Interest Determination Date specified in the relevant Pricing Supplement be deemed to be the date on which the Notes became due and payable and the Rate of Interest on the Notes shall for so long as the Notes remain outstanding be that determined on such date.– 77 –The following defined terms shall have the meanings set out below for purpose of this Condition 5(b)(iii)(C): “SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York or any successor source; “SOFR Benchmark Replacement Date” means the date of occurrence of a Benchmark Event with respect to the then-current SOFR Benchmark; “SOFR Benchmark Transition Event” means the occurrence of a Benchmark Event with respect to the then-current SOFR Benchmark; and “U.S. Government Securities Business Day” means any day except for a Saturday a Sunday or a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in U.S.government securities.(iv) Benchmark Discontinuation (General) Where this Condition 5(b)(iv) is specified as applicable hereon if the Issuer determines that a Benchmark Event has occurred (or will occur on or prior to the Interest Determination Date relating to the next succeeding Interest Accrual Period) when the Rate of Interest (or any relevant component part thereof) remains to be determined by reference to the Reference Rate then the following provisions shall apply: (A) The Issuer shall use its reasonable endeavours to appoint an Independent Adviser for the determination (with the Issuer’s agreement) of a Successor Rate or alternatively if the Independent Adviser and the Issuer agree that there is no Successor Rate an alternative rate (the “Alternative Benchmark Rate”)and in either case an alternative screen page or source (the “AlternativeRelevant Screen Page”) and the applicable Adjustment Spread and any Benchmark Amendments (in accordance with Condition 5(b)(iv)(F)) all by no later than three (3) Business Days prior to the relevant Interest DeterminationDate relating to the next succeeding Interest Accrual Period (the “InterestDetermination Cut-off Date”) for purposes of determining the Rate of Interest applicable to the Notes for all future Interest Accrual Periods (subject to the subsequent operation of this Condition 5(b)(iv)).In the absence of bad faith or fraud neither the Issuer nor any Independent Adviser shall have any liability whatsoever to the Fiscal Agent the Paying Agents the Noteholders the Receiptholders or the Couponholders for any determination made by it pursuant to this Condition 5(b)(iv); (B) The Alternative Benchmark Rate shall be such alternative benchmark or screen rate as the Independent Adviser and the Issuer acting in good faith agree has replaced the Reference Rate in customary market usage for the purposes of determining floating rates of interest in respect of eurobonds denominated in the Specified Currency or if the Independent Adviser and the Issuer agree that there is no such rate such other rate as the Independent Adviser and the Issuer acting in good faith agree is most comparable to the Reference Rate and the Alternative Relevant Screen Page shall be such page of an information service as displays the Alternative Benchmark Rate; – 78 –(C) If the Issuer is unable to appoint an Independent Adviser or if the Independent Adviser and the Issuer cannot agree upon or cannot select a Successor Rate or an Alternative Benchmark Rate and an Alternative Relevant Screen Page on or prior to the Interest Determination Cut-off Date in accordance with sub-paragraph (A) and (C) above then the Issuer (acting in good faith and in a commercially reasonable manner) may determine which (if any) alternative benchmark or screen rate has replaced the Reference Rate in customary market usage for purposes of determining floating rates of interest in respect of eurobonds denominated in the Specified Currency or if it determines on or prior to the Interest Determination Cut-off Date that there is no such alternative benchmark or screen rate which rate (if any) is most comparable to the Reference Rate and the Alternative Benchmark Rate shall be the rate so determined by the Issuer and the Alternative Relevant Screen Page shall be such page of an information service as displays the Alternative Benchmark Rate; provided however that if this sub-paragraph (C) applies and the Issuer is unable or unwilling to determine an Alternative Benchmark Rate and Alternative Relevant Screen Page prior to the Interest Determination Cut-off Date the Rate of Interest applicable to the next succeeding Interest Accrual Period shall be equal to the Rate of Interest last determined in relation to the Notes in respect of the immediately preceding Interest Accrual Period. If there has not been a first Interest Payment Date the Rate of Interest shall be determined using the Reference Rate applicable to the first Interest Accrual Period. Where a different Margin or Maximum or Minimum Rate of Interest is to be applied to the relevant Interest Accrual Period from that which applied to the last preceding Interest Accrual Period the Margin or Maximum or Minimum Rate of Interest relating to the relevant Interest Accrual Period shall be substituted in place of the Margin or Maximum or Minimum Rate of Interest relating to that last preceding Interest Accrual Period. For the avoidance of doubt this paragraph shall apply to the relevant next succeeding Interest Accrual Period and any subsequent Interest Accrual Periods are subject to the subsequent operation of and to adjustment as provided in this Condition 5(b)(iv); (D) If a Successor Rate or an Alternative Benchmark Rate and an Alternative Relevant Screen Page are determined in accordance with the preceding provisions such Successor Rate or Alternative Benchmark Rate and Alternative Relevant Screen Page (in each case as adjusted by the applicable Adjustment Spread determined as provided in sub-paragraph (E) below) shall subsequently be used in place of the Reference Rate to determine the Rate of Interest (or the relevant component part(s) thereof) for all relevant future payments of interest on the Notes (subject to the subsequent operation of this Condition 5(b)(iv)); (E) If a Successor Rate or an Alternative Benchmark Rate and an Alternative Relevant Screen Page are determined in accordance with the preceding provisions the Issuer following consultation with the Independent Adviser (if appointed) and acting in good faith shall determine (i) the Adjustment Spread to be applied to the Successor Rate or Alternative Benchmark Rate (as applicable) and (ii) the quantum of or a formula or methodology for determining such Adjustment Spread and such Adjustment Spread shall be applied to the Successor Rate or Alternative Benchmark Rate for each – 79 –subsequent determination of the Rate of Interest and Interest Amount(s) (or a component part thereof) by reference to such Successor Rate or Alternative Benchmark Rate; (F) If a Successor Rate or an Alternative Benchmark Rate and (in either case) the applicable Adjustment Spread are determined in accordance with the above provisions the Independent Adviser (with the Issuer’s agreement) or failing which the Issuer may also specify changes to the Day Count Fraction Relevant Screen Page Business Day Convention Business Days Interest Determination Date and/or the definition of Reference Rate applicable to the Notes and the method for determining the fallback rate in relation to the Notes as are necessary to ensure the proper operation (having regard to prevailing market practice if any) of the Successor Rate the Alternative Benchmark Rate and (in either case) the applicable Adjustment Spread (such amendments the “Benchmark Amendments”) which changes shall (subject to the subsequent operation of this Condition 5(b)(iv)) apply to the Notes for all future Interest Accrual Periods without any requirement for the consent or approval of Noteholders and vary these Conditions and/or the Fiscal Agency Agreement to give effect to such Benchmark Amendments with effect from the date specified in such notice.In connection with any such variation in accordance with this Condition 5(b)(iv)(F) the Issuer shall comply with the rules of any stock exchange on which the Notes are for the time being listed or admitted to trading; (G) The Issuer shall promptly following the determination of any Successor Rate or Alternative Benchmark Rate and Alternative Relevant Screen Page and Adjustment Spread give notice thereof and of any Benchmark Amendments pursuant to sub-paragraph (F) above to the Calculation Agent the Fiscal Agent and the Noteholders in accordance with Condition 14 (Notices); and (H) No later than notifying the Fiscal Agent of the same the Issuer shall deliver to the Fiscal Agent a certificate signed by an authorised signatory of the Issuer: (i) confirming (x) that a Benchmark Event has occurred (y) the relevant Successor Rate or as the case may be the relevant Alternative Benchmark Rate and (z) the relevant Adjustment Spread and/or the specific terms of any relevant Benchmark Amendments in each case as determined in accordance with the provisions of this Condition 5(b)(iv); and (ii) certifying that the relevant Benchmark Amendments are necessary to ensure the proper operation (having regard to prevailing market practice if any) of such relevant Successor Rate Alternative Benchmark Rate and (in either case) the applicable Adjustment Spread.The Fiscal Agent shall display such certificate at its offices for inspection by the Noteholders at all reasonable times during normal business hours.The Successor Rate or Alternative Benchmark Rate and (in either case) the applicable Adjustment Spread and the Benchmark Amendments (if any) specified in such certificate will (in the absence of manifest error or bad faith in the determination thereof) be binding on the Issuer the Fiscal Agent the – 80 –Calculation Agent the other Paying Agents the Noteholders the Receiptholders and the Couponholders.(v) Benchmark Discontinuation (SOFR): This Condition 5(b)(v) shall only apply to U.S. dollar-denominated Notes where so specified hereon.The following provisions shall apply if Benchmark Discontinuation (SOFR) is specified as applicable hereon: (i) Benchmark Replacement If the Issuer or its designee determines on or prior to the relevant Reference Time that a Benchmark Event and its related Benchmark Replacement Date have occurred with respect to the then-current Benchmark the Benchmark Replacement will replace the then-current Benchmark for all purposes relating to the Notes in respect of all determinations on such date and for all determinations on all subsequent dates.(ii) Benchmark Replacement Conforming Changes In connection with the implementation of a Benchmark Replacement the Issuer or its designee will have the right to make Benchmark Replacement Conforming Changes from time to time. For the avoidance of doubt any of the Agents shall at the direction and expense of the Issuer effect such consequential amendments to the Fiscal Agency Agreement and these Conditions as may be required to give effect to this Condition 5(b)(v).Noteholders’ or Couponholders’ consent shall not be required in connection with effecting any such changes including the execution of any documents or any steps to be taken by any of the Agents (if required). Further none of the Agents shall be responsible or liable for any determinations decisions or elections made by the Issuer or its designee with respect to any Benchmark Replacement or any other changes and shall be entitled to rely conclusively on any certifications provided to each of them in this regard.(iii) Decisions and Determinations Any determination decision or election that may be made by the Issuer or its designee pursuant to this Condition 5(b)(v) including any determination with respect to a tenor rate or adjustment or of the occurrence or non-occurrence of an event circumstance or date and any decision to take or refrain from taking any action or any selection (A) will be conclusive and binding absent manifest error (B) will be made in the sole discretion of the Issuer or its designee as applicable and (C) notwithstanding anything to the contrary in the documentation relating to the Notes shall become effective without consent from the holders of the Notes or any other party.(iv) The following defined terms shall have the meanings set out below for purpose of this Condition 5(b)(v): “Benchmark” means initially the relevant SOFR Benchmark specified hereon; provided that if the Issuer or its designee determines on or prior to the – 81 –Reference Time that a Benchmark Event and its related Benchmark Replacement Date have occurred with respect to the relevant SOFR Benchmark (including any daily published component used in the calculation thereof) or the then-current Benchmark then “Benchmark” means the applicable Benchmark Replacement; “Benchmark Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark (including any daily published component used in the calculation thereof): (A) a public statement or publication of information by or on behalf of the administrator of the Benchmark (or such component) announcing that such administrator has ceased or will cease to provide the Benchmark (or such component) permanently or indefinitely provided that at the time of such statement or publication there is no successor administrator that will continue to provide the Benchmark (or such component); or (B) a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark (or such component) the central bank for the currency of the Benchmark (or such component) an insolvency official with jurisdiction over the administrator for the Benchmark (or such component) a resolution authority with jurisdiction over the administrator for the Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for the Benchmark which states that the administrator of the Benchmark (or such component) has ceased or will cease to provide the Benchmark (or such component) permanently or indefinitely provided that at the time of such statement or publication there is no successor administrator that will continue to provide the Benchmark (or such component); or (C) a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark announcing that the Benchmark is no longer representative; “Benchmark Replacement” means the first alternative set forth in the order below that can be determined by the Issuer or its designee as of the Benchmark Replacement Date: (A) the sum of: (x) the alternate reference rate that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current Benchmark (including any daily published component used in the calculation thereof); and (y) the Benchmark Replacement Adjustment; (B) the sum of: (x) the ISDA Fallback Rate; and (y) the Benchmark Replacement Adjustment; or – 82 –(C) the sum of: (x) the alternate reference rate that has been selected by the Issuer or its designee as the replacement for the then-current Benchmark (including any daily published component used in the calculation thereof) giving due consideration to any industry- accepted reference rate as a replacement for the then-current Benchmark (including any daily published component used in the calculation thereof) for U.S. dollar-denominated Floating Rate Notes at such time; and (y) the Benchmark Replacement Adjustment; “Benchmark Replacement Adjustment” means the first alternative set forth in the order below that can be determined by the Issuer or its designee as of the Benchmark Replacement Date: (A) the spread adjustment or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero) that has been selected or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement; (B) if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate the ISDA Fallback Adjustment; or (C) the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Issuer or its designee giving due consideration to any industry-accepted spread adjustment or method for calculating or determining such spread adjustment for the replacement of the then-current Benchmark (including any daily published component used in the calculation thereof) with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated Floating Rate Notes at such time; “Benchmark Replacement Conforming Changes” means with respect to any Benchmark Replacement any technical administrative or operational changes (including changes to the timing and frequency of determining rates and making payments of interest rounding of amounts or tenors and other administrative matters) that the Issuer or its designee decides may be appropriate to reflect the adoption of such Benchmark Replacement in a manner substantially consistent with market practice (or if the Issuer or its designee decides that adoption of any portion of such market practice is not administratively feasible or if the Issuer or its designee determines that no market practice for use of the Benchmark Replacement exists in such other manner as the Issuer or its designee determines is reasonably necessary); – 83 –“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark (including any daily published component used in the calculation thereof): (A) in the case of sub-paragraph (A) or (B) of the definition of “BenchmarkEvent” the later of: (x) the date of the public statement or publication of information referenced therein; and (y) the date on which the administrator of the Benchmark permanently or indefinitely ceases to provide the Benchmark (or such component); or (B) in the case of sub-paragraph (C) of the definition of “Benchmark Event” the date of the public statement or publication of information referenced therein.For the avoidance of doubt if the event giving rise to the Benchmark Replacement Date occurs on the same day as but earlier than the Reference Time in respect of any determination the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination; “designee” means a designee as selected and separately appointed by the Issuer in writing; “ISDA Definitions” means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association Inc. or any successor thereto as amended or supplemented from time to time or any successor definitional booklet for interest rate derivatives published from time to time including the 2021 ISDA Interest Rate Derivatives Definitions (as amended or supplemented from time to time); “ISDA Fallback Adjustment” means the spread adjustment (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Benchmark; “ISDA Fallback Rate” means the rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence of an index cessation date with respect to the Benchmark (including any daily published component used in the calculation thereof) for the applicable tenor excluding the applicable ISDA Fallback Adjustment; “Reference Time” with respect to any determination of the Benchmark means (A) if the Benchmark is the SOFR Benchmark the SOFR Determination Time (where Simple SOFR Average or Compounded Daily SOFR is specified as applicable hereon) or SOFR Index Determination Time (where Compounded SOFR Index is specified as applicable hereon) or (B) if the Benchmark is not the SOFR Benchmark the time determined by the Issuer or its designee after giving effect to the Benchmark Replacement Conforming Changes; “Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York or a committee officially endorsed or – 84 –convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto; and “Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.(vi) Rate of Interest for Index Linked Interest Notes: The Rate of Interest in respect of Index Linked Interest Notes for each Interest Accrual Period shall be determined by the Calculation Agent in the manner specified hereon and interest will accrue by reference to an index or formula as specified hereon.(c) Zero Coupon Notes: Where a Note the Interest Basis of which is specified to be Zero Coupon is repayable prior to the Maturity Date and is not paid when due the amount due and payable prior to the Maturity Date shall be the Early Redemption Amount of such Note. As from the Maturity Date the Rate of Interest for any overdue principal of such a Note shall be a rate per annum (expressed as a percentage) equal to the Amortisation Yield (as described in Condition 6(b)(i)).(d) Dual Currency Notes: In the case of Dual Currency Notes if the rate or amount of interest falls to be determined by reference to a Rate of Exchange or a method of calculating Rate of Exchange the rate or amount of interest payable shall be determined by the Calculation Agent in the manner specified hereon.(e) Partly Paid Notes: In the case of Partly Paid Notes (other than Partly Paid Notes which are Zero Coupon Notes) interest will accrue as aforesaid on the paid-up nominal amount of such Notes and otherwise as specified hereon.(f) Accrual of Interest: Interest shall cease to accrue on each Note on the due date for redemption unless upon due presentation payment is improperly withheld or refused in which event interest shall continue to accrue (both before and after judgment) at the Rate of Interest in the manner provided in this Condition 5 to the Relevant Date (as defined in Condition 8).(g) Margin Maximum/Minimum Rates of Interest Instalment Amounts and Redemption Amounts and Rounding: (i) If any Margin is specified hereon (either (x) generally or (y) in relation to one or more Interest Accrual Periods) an adjustment shall be made to all Rates of Interest in the case of (x) or the Rates of Interest for the specified Interest Accrual Periods in the case of (y) calculated in accordance with Condition 5(b) above by adding (if a positive number) or subtracting the absolute value (if a negative number) of such Margin subject always to the next paragraph.(ii) If any Maximum Rate of Interest Minimum Rate of Interest Instalment Amount or Redemption Amount is specified hereon then any Rate of Interest Instalment Amount or Redemption Amount shall be subject to such maximum or minimum as the case may be.(iii) For the purposes of any calculations required pursuant to these Conditions (unless otherwise specified) (x) all percentages resulting from such calculations shall be rounded if necessary to the nearest one hundred-thousandth of a percentage point (with 0.000005 of a percentage point being rounded up) (y) all figures shall be rounded to seven significant figures (provided that if the eighth significant figure is a – 85 –5 or greater the seventh significant figure shall be rounded up) and (z) all currency amounts that fall due and payable shall be rounded to the nearest unit of such currency (with half a unit being rounded up) save in the case of yen which shall be rounded down to the nearest yen. For these purposes “unit” means the lowest amount of such currency that is available as legal tender in the country of such currency.(h) Calculations: The amount of interest payable per Calculation Amount in respect of any Note for any Interest Accrual Period shall be equal to the product of the Rate of Interest the Calculation Amount specified hereon and the Day Count Fraction for such Interest Accrual Period unless an Interest Amount (or a formula for its calculation) is applicable to such Interest Accrual Period in which case the amount of interest payable per Calculation Amount in respect of such Note for such Interest Accrual Period shall equal such Interest Amount (or be calculated in accordance with such formula). Where any Interest Period comprises two or more Interest Accrual Periods the amount of interest payable per Calculation Amount in respect of such Interest Period shall be the sum of the Interest Amounts payable in respect of each of those Interest Accrual Periods. In respect of any other period for which interest is required to be calculated the provisions above shall apply save that the Day Count Fraction shall be for the period for which interest is required to be calculated.In the case of Notes represented by a Global Note or Global Certificate interest shall be calculated in respect of any period by applying the Rate of Interest to the total aggregate outstanding nominal amount of the Notes represented by such Global Note or Global Certificate.(i) Determination and Publication of Rates of Interest Interest Amounts Final Redemption Amounts Early Redemption Amounts Optional Redemption Amounts and Instalment Amounts: The Calculation Agent shall as soon as practicable on such date as the Calculation Agent may be required to calculate any rate or amount obtain any quotation or make any determination or calculation determine such rate and calculate the Interest Amounts for the relevant Interest Accrual Period calculate the Final Redemption Amount Early Redemption Amount Optional Redemption Amount or Instalment Amount obtain such quotation or make such determination or calculation as the case may be and cause the Rate of Interest and the Interest Amounts for each Interest Accrual Period and the relevant Interest Payment Date and if required to be calculated the Final Redemption Amount Early Redemption Amount Optional Redemption Amount or any Instalment Amount to be notified to the Fiscal Agent the Issuer each of the Paying Agents the Noteholders any other Calculation Agent appointed in respect of the Notes that is to make a further calculation upon receipt of such information and if the Notes are listed on a stock exchange and the rules of such exchange or other relevant authority so require such exchange or other relevant authority as soon as possible after their determination but in no event later than (i) the commencement of the relevant Interest Period if determined prior to such time in the case of notification to such exchange of a Rate of Interest and Interest Amount or (ii) in all other cases the fourth Business Day after such determination. Where any Interest Payment Date or Interest Period Date is subject to adjustment pursuant to Condition 5(b)(ii) the Interest Amounts and the Interest Payment Date so published may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) without notice in the event of an extension or shortening of the Interest Period.If the Notes become due and payable under Condition 10 the accrued interest and the Rate of Interest payable in respect of the Notes shall nevertheless continue to be calculated as previously in accordance with this Condition 5 but no publication of the Rate of Interest or the Interest Amount so calculated need be made. The determination of any rate or amount the obtaining of each quotation and the making of each determination or calculation by the Calculation Agent(s) shall (in the absence of manifest error) be final and binding upon all parties and the Noteholders.– 86 –(j) Definitions: In these Conditions unless the context otherwise requires the following defined terms shall have the meanings set out below: “Adjustment Spread” means either a spread (which may be positive negative or zero) or a formula or methodology for calculating a spread which in each case is to be applied to the relevant Successor Rate or the relevant Alternative Benchmark Rate (as applicable) and is the spread formula or methodology which: (i) in the case of a Successor Rate is formally recommended or formally provided as an option for parties to adopt in relation to the replacement of the Reference Rate with the Successor Rate by any Relevant Nominating Body; or (ii) in the case of a Successor Rate for which no such recommendation has been made or option provided or in the case of an Alternative Benchmark Rate is the spread formula or methodology which the Issuer following consultation with the Independent Adviser (if appointed) and acting in good faith determines to be appropriate as a result of the replacement of the Reference Rate with the Successor Rate or Alternative Benchmark Rate (as the case may be).“Benchmark Event” means: (i) the Reference Rate has ceased to be published for a period of at least five Business Days; or (ii) the making of a public statement by the administrator of the Reference Rate that it has ceased or will cease publishing such Reference Rate permanently or indefinitely (in circumstances where no successor administrator has been appointed that will continue publication of such Reference Rate); or (iii) the making of a public statement by the supervisor of the administrator of the Reference Rate that such Reference Rate has been or will be permanently or indefinitely discontinued; or (iv) the making of a public statement by the supervisor of the administrator of the Reference Rate that means that such Reference Rate will be prohibited from being used or that its use will be subject to restrictions or adverse consequences in circumstances where the same shall be applicable to the Notes; or (v) the making of a public statement by the supervisor of the administrator of the Reference Rate that in the view of such supervisor such Reference Rate is no longer representative of its underlying market in circumstances where the same shall be applicable to the Notes; or (vi) it has or will by a specified date within the following six months become unlawful for the Calculation Agent or the Issuer to calculate any payments due to be made to any Noteholder using the Reference Rate (including without limitation under the Benchmarks Regulation (EU) 2016/1011 if applicable) provided that in the case of paragraphs (ii) to (v) above the Benchmark Event shall occur on: (vii) in the case of (ii) above the date of the cessation of the publication of the Reference Rate; – 87 –(viii) in the case of (iii) above the discontinuation of the Reference Rate; (ix) in the case of (iv) above the date on which the Reference Rate is prohibited from use or becomes subject to restrictions or adverse consequences (as applicable); or (x) in the case of (v) above the date on which the Reference Rate is deemed no longer to be representative and not (in any such case) the date of the relevant public statement (unless the date of the relevant public statement coincides with the relevant date in (vii) (viii) (ix) or (x) above as applicable).“Business Day” means: (i) in the case of Notes denominated in a currency other than euro and Renminbi a day (other than a Saturday or Sunday) on which commercial banks and foreign exchange markets settle payments in the principal financial centre for such currency; and/or(ii) in the case of Notes denominated in euro a day on which T2 is operating (a “T2Business Day”); and/or (iii) in the case of Notes denominated in Renminbi a day (other than a Saturday Sunday or public holiday) on which commercial banks in Hong Kong are generally open for business and settlement of Renminbi payments in Hong Kong; and/or (iv) in the case of Notes denominated in a currency and/or one or more Business Centres specified hereon a day (other than a Saturday or a Sunday) on which commercial banks and foreign exchange markets settle payments in such currency in the Business Centre(s) or if no currency is indicated generally in each of the Business Centres.“Calculation Amount” means the amount by reference to which the Interest Amount Final Redemption Amount Early Redemption Amount and Optional Redemption Amount are calculated as specified hereon.“Day Count Fraction” means in respect of the calculation of an amount of interest on any Note for any period of time (from and including the first day of such period to but excluding the last) (whether or not constituting an Interest Period or an Interest Accrual Period the “Calculation Period”): (i) if “Actual/Actual” or “Actual/Actual — ISDA” is specified hereon the actual number of days in the Calculation Period divided by 365 (or if any portion of that Calculation Period falls in a leap year the sum of (A) the actual number of days in that portion of the Calculation Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365); (ii) if “Actual/365 (Fixed)” is specified hereon the actual number of days in the Calculation Period divided by 365; (iii) if “Actual/365 (Sterling)” is specified hereon the actual number of days in the Calculation Period divided by 365 or in the case of an Interest Payment Date falling in a leap year 366; – 88 –(iv) if “Actual/360” is specified hereon the actual number of days in the Calculation Period divided by 360; (v) if “30/360” “360/360” or “Bond Basis” is specified hereon the number of days in the Calculation Period divided by 360 calculated on a formula basis as follows: [360 × (Y2 ? Y1)] + [30 × (M2 ? M1)] + (D ? D )Day Count Fraction = 2 1360 where: “Y1” is the year expressed as a number in which the first day of the Calculation Period falls; “Y2” is the year expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “M1” is the calendar month expressed as a number in which the first day of the Calculation Period falls; “M2” is the calendar month expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “D1” is the first calendar day expressed as a number of the Calculation Period unless such number would be 31 in which case D1 will be 30; and “D2” is the calendar day expressed as a number immediately following the last day included in the Calculation Period unless such number would be 31 and D1 is greater than 29 in which case D2 will be 30.(vi) if “30E/360” or “Eurobond Basis” is specified hereon the number of days in the Calculation Period divided by 360 calculated on a formula basis as follows: [360 × (Y ? Y )] + [30 × (M ? M )] + (D ? D ) Day Count Fraction = 2 1 2 1 2 1360 where: “Y1” is the year expressed as a number in which the first day of the Calculation Period falls; “Y2” is the year expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “M1” is the calendar month expressed as a number in which the first day of the Calculation Period falls; “M2” is the calendar month expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “D1” is the first calendar day expressed as a number of the Calculation Period unless such number would be 31 in which case D1 will be 30; and – 89 –“D2” is the calendar day expressed as a number immediately following the last day included in the Calculation Period unless such number would be 31 in which case D2 will be 30.(vii) if “30E/360 (ISDA)” is specified hereon the number of days in the Calculation Period divided by 360 calculated on a formula basis as follows: [360 × (Y2 ? Y1)] + [30 × (M ? M )] + (D ? D )Day Count Fraction = 2 1 2 1360 where: “Y1” is the year expressed as a number in which the first day of the Calculation Period falls; “Y2” is the year expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “M1” is the calendar month expressed as a number in which the first day of the Calculation Period falls; “M2” is the calendar month expressed as a number in which the day immediately following the last day included in the Calculation Period falls; “D1” is the first calendar day expressed as a number of the Calculation Period unless (i) that day is the last day of February or (ii) such number would be 31 in which case D1 will be 30; and “D2” is the calendar day expressed as a number immediately following the last day included in the Calculation Period unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31 in which case D2 will be 30.(viii) if “Actual/Actual — ICMA” is specified hereon (A) if the Calculation Period is equal to or shorter than the Determination Period during which it falls the number of days in the Calculation Period divided by the product of (1) the number of days in such Determination Period and (2) the number of Determination Periods normally ending in any year; and (B) if the Calculation Period is longer than one Determination Period the sum of: (1) the number of days in such Calculation Period falling in the Determination Period in which it begins divided by the product of (I) the number of days in such Determination Period and (II) the number of Determination Periods normally ending in any year; and (2) the number of days in such Calculation Period falling in the next Determination Period divided by the product of (I) the number of days in such Determination Period and (II) the number of Determination Periods normally ending in any year – 90 –where: “Determination Period” means the period from and including a Determination Date in any year to but excluding the next Determination Date; and “Determination Date” means the date(s) specified as such hereon or if none is so specified the Interest Payment Date(s).“Euro-zone” means the region comprised of member states of the European Union that adopt the single currency in accordance with the Treaty establishing the European Community as amended.“Independent Adviser” means an independent financial institution of international repute or other independent financial adviser of recognised standing with relevant experience in the international capital markets in each case appointed by the Issuer at its own expense.“Interest Accrual Period” means the period beginning on (and including) the Interest Commencement Date and ending on (but excluding) the first Interest Period Date and each successive period beginning on (and including) an Interest Period Date and ending on (but excluding) the next succeeding Interest Period Date.“Interest Amount” means: (i) in respect of an Interest Accrual Period the amount of interest payable per Calculation Amount for that Interest Accrual Period and which in the case of Fixed Rate Notes and unless otherwise specified hereon shall mean the Fixed Coupon Amount or Broken Amount specified hereon as being payable on the Interest Payment Date ending the Interest Period of which such Interest Accrual Period forms part; and (ii) in respect of any other period the amount of interest payable per Calculation Amount for that period.“Interest Commencement Date” means the Issue Date or such other date as may be specified hereon.“Interest Determination Date” means with respect to a Rate of Interest and Interest Accrual Period the date specified as such hereon or if none is so specified (i) the first day of such Interest Accrual Period if the Specified Currency is Sterling Hong Kong dollars or Renminbi other than where the Specified Currency is Renminbi and the Reference Rate is CNH HIBOR or (ii) the day falling two Business Days in London for the Specified Currency prior to the first day of such Interest Accrual Period if the Specified Currency is not Sterling euro Hong Kong dollars Renminbi or (iii) the day falling two T2 Business Days prior to the first day of such Interest Accrual Period if the Specified Currency is euro or (iv) the day falling two Business Days in Hong Kong prior to the first day of such Interest Accrual Period if the Specified Currency is Renminbi and the Reference Rate is CNH HIBOR provided that in this definition “Business Day” shall mean a day (other than a Saturday or Sunday) on which commercial banks and foreign exchange markets settle payments in London or Hong Kong (as the case may be).“Interest Period” means the period beginning on and including the Interest Commencement Date and ending on but excluding the first Interest Payment Date and – 91 –each successive period beginning on and including an Interest Payment Date and ending on but excluding the next succeeding Interest Payment Date unless otherwise specified hereon.“Interest Period Date” means each Interest Payment Date unless otherwise specified hereon.“ISDA Benchmarks Supplement” means the Benchmarks Supplement (as amended and updated as at the date of issue of the first Tranche of the Notes of the relevant Series (as specified hereon)) published by the International Swaps and Derivatives Association Inc.“ISDA Definitions” means the 2006 ISDA Definit ions as amended and supplemented and published by the International Swaps and Derivatives Association Inc. unless otherwise specified hereon and if specified as such hereon as supplemented by the ISDA Benchmarks Supplement.“Rate of Interest” means the rate of interest payable from time to time in respect of the Notes and that is either specified or calculated in accordance with the provisions hereon.“Reference Banks” means in the case of a determination of EURIBOR the principal Euro-zone office of four major banks in the Euro-zone inter-bank market and in the case of a determination of HIBOR the principal Hong Kong office of four major banks in the Hong Kong inter-bank market and in the case of a determination of CNH HIBOR the principal Hong Kong office of four major banks dealing in Renminbi in the Hong Kong inter-bank market in each case selected by the Calculation Agent or as specified hereon.“Reference Rate” means the rate specified as such hereon.“Relevant Nominating Body” means in respect of a benchmark or screen rate (as applicable): (i) the central bank for the currency to which the benchmark or screen rate (as applicable) relates or any central bank or other supervisory authority which is responsible for supervising the administrator of the benchmark or screen rate (as applicable); or (ii) any working group or committee sponsored by chaired or co-chaired by or constituted at the request of (a) the central bank for the currency to which the benchmark or screen rate (as applicable) relates (b) any central bank or other supervisory authority which is responsible for supervising the administrator of the benchmark or screen rate (as applicable) (c) a group of the aforementioned central banks or other supervisory authorities or (d) the Financial Stability Board or any part thereof.“Relevant Screen Page” means such page section caption column or other part of a particular information service as may be specified hereon or such other page section caption column or other part as may replace it on that information service or such other information service in each case as may be nominated by the person providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to the Reference Rate.– 92 –“Specified Currency” means the currency specified as such hereon or if none is specified the currency in which the Notes are denominated.“Successor Rate” means the reference rate that the Independent Advisor or the Issuer (as applicable) determines is a successor to or replacement of the Reference Rate which is formally recommended by any Relevant Nominating Body.“T2” means the Trans-European Automated Real-time Gross Settlement Express Transfer System or any successor or replacement for that system.(k) Calculation Agent: The Issuer shall procure that there shall at all times be one or more Calculation Agents if provision is made for it or them hereon and for so long as any Note is outstanding (as defined in the Fiscal Agency Agreement). Where more than one Calculation Agent is appointed in respect of the Notes references in these Conditions to the Calculation Agent shall be construed as each Calculation Agent performing its respective duties under the Conditions. If the Calculation Agent is unable or unwilling to act as such or if the Calculation Agent fails duly to establish the Rate of Interest for an Interest Accrual Period or to calculate any Interest Amount Instalment Amount Final Redemption Amount Early Redemption Amount or Optional Redemption Amount as the case may be or to comply with any other requirement the Issuer shall appoint a leading bank or financial institution engaged in the interbank market (or if appropriate money swap or over-the-counter index options market) that is most closely connected with the calculation or determination to be made by the Calculation Agent (acting through its principal London office or any other office actively involved in such market) to act as such in its place. The Calculation Agent may not resign its duties without a successor having been appointed as aforesaid. 6. REDEMPTION PURCHASE AND OPTIONS (a) Redemption by Instalments and Final Redemption: (i) Unless previously redeemed purchased and cancelled as provided in this Condition 6 each Note that provides for Instalment Dates and Instalment Amounts shall be partially redeemed on each Instalment Date at the related Instalment Amount specified hereon. The outstanding nominal amount of each such Note shall be reduced by the Instalment Amount (or if such Instalment Amount is calculated by reference to a proportion of the nominal amount of such Note such proportion) for all purposes with effect from the related Instalment Date unless payment of the Instalment Amount is improperly withheld or refused in which case such amount shall remain outstanding until the Relevant Date relating to such Instalment Amount.(ii) Unless previously redeemed purchased and cancelled as provided below each Note shall be finally redeemed on the Maturity Date specified hereon at its Final Redemption Amount (which unless otherwise provided is its nominal amount) or in the case of a Note falling within Condition 6(a)(i) its final Instalment Amount.(b) Early Redemption: (i) Zero Coupon Notes: (A) The Early Redemption Amount payable in respect of any Zero Coupon Note the Early Redemption Amount of which is not linked to an index and/or a formula upon redemption of such Note pursuant to Condition 6(c) Condition 6(d) or Condition 6(e) or upon it becoming due and payable as provided in – 93 –Condition 10 shall be the Amortised Face Amount (calculated as provided below) of such Note unless otherwise specified hereon. (B) Subject to the provisions of sub-paragraph (C) below the Amortised Face Amount of any such Note shall be the scheduled Final Redemption Amount of such Note on the Maturity Date discounted at a rate per annum (expressed as a percentage) equal to the Amortisation Yield (which if none is shown hereon shall be such rate as would produce an Amortised Face Amount equal to the issue price of the Notes if they were discounted back to their issue price on the Issue Date) compounded annually. (C) If the Early Redemption Amount payable in respect of any such Note upon its redemption pursuant to Condition 6(c) Condition 6(d) or Condition 6(e) (as applicable) or upon it becoming due and payable as provided in Condition 10 is not paid when due the Early Redemption Amount due and payable in respect of such Note shall be the Amortised Face Amount of such Note as defined in sub-paragraph (B) above except that such sub-paragraph shall have effect as though the date on which the Note becomes due and payable were the Relevant Date. The calculation of the Amortised Face Amount in accordance with this sub-paragraph shall continue to be made (both before and after judgment) until the Relevant Date unless the Relevant Date falls on or after the Maturity Date in which case the amount due and payable shall be the scheduled Final Redemption Amount of such Note on the Maturity Date together with any interest that may accrue in accordance with Condition 5(c).Where such calculation is to be made for a period of less than one year it shall be made on the basis of the Day Count Fraction shown hereon.(ii) Other Notes: The Early Redemption Amount payable in respect of any Note (other than Notes described in (i) above) upon redemption of such Note pursuant to Condition 6(c) or Condition 6(d) or upon it becoming due and payable as provided in Condition 10 shall be the Final Redemption Amount unless otherwise specified hereon.(c) Redemption for Taxation Reasons: The Notes may be redeemed at the option of the Issuer in whole but not in part on any Interest Payment Date (if this Note is either a Floating Rate Note or an Index Linked Note) or at any time (if this Note is neither a Floating Rate Note nor an Index Linked Note) on giving not less than 30 nor more than 60 days’ notice to the Noteholders (which notice shall be irrevocable) at their Early Redemption Amount (as described in Condition 6(b) above) (together with interest accrued to the date fixed for redemption) if (i) the Issuer has or will become obliged to pay Additional Tax Amounts as provided or referred to in Condition 8 as a result of any change in or amendment to the laws or regulations of the Relevant Jurisdictions (as defined below) or any change in the application or official interpretation of such laws or regulations (including a holding by a court of competent jurisdiction) which change or amendment becomes effective on or after the date on which agreement is reached to issue the first Tranche of the Notes; and (ii) such obligation cannot be avoided by the Issuer taking reasonable measures available to it provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such Additional Tax Amounts were a payment in respect of the Notes then due.– 94 –Prior to the publication of any notice of redemption pursuant to this Condition 6(c) the Issuer shall deliver to the Fiscal Agent: (A) a certificate signed by a director or an authorised signatory of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred; and (B) an opinion of independent legal or tax advisers of recognised standing to the effect that the Issuer has or will become obliged to pay such Additional Tax Amounts as a result of such change or amendment.Upon the expiry of any such notice as is referred to in this Condition 6(c) the Issuer shall be bound to redeem the Notes in accordance with this Condition 6(c).(d) Redemption at the Option of the Issuer: If Call Option is specified hereon the Issuer may on giving not less than 15 nor more than 30 days’ irrevocable notice to the Noteholders (or such other notice period as may be specified hereon) redeem all or if so provided some of the Notes on any Optional Redemption Date. Any such redemption of Notes shall be at their Optional Redemption Amount specified hereon (which may be the Early Redemption Amount (as described in Condition 6(b) above)) together with interest accrued to the date fixed for redemption. Any such redemption or exercise must relate to Notes of a nominal amount at least equal to the Minimum Redemption Amount to be redeemed specified hereon and no greater than the Maximum Redemption Amount to be redeemed specified hereon.All Notes in respect of which any such notice is given shall be redeemed on the date specified in such notice in accordance with this Condition.In the case of a partial redemption the notice to Noteholders shall also contain the certificate numbers of the Bearer Notes or in the case of Registered Notes shall specify the nominal amount of Registered Notes drawn and the holder(s) of such Registered Notes to be redeemed which shall have been drawn in such place and in such manner as may be fair and reasonable in the circumstances taking account of prevailing market practices subject to compliance with any applicable laws and stock exchange or other relevant authority requirements.(e) Redemption at the Option of Noteholders: If Put Option is specified hereon the Issuer shall at the option of the holder of any such Note upon the holder of such Note giving not less than 15 nor more than 30 days’ notice to the Issuer (or such other notice period as may be specified hereon) redeem such Note on the Optional Redemption Date(s) at its Optional Redemption Amount specified hereon (which may be the Early Redemption Amount (as described in Condition 6(b) above)) together with interest accrued to the date fixed for redemption.To exercise such option the holder must deposit (in the case of Bearer Notes) such Note (together with all unmatured Receipts and Coupons and unexchanged Talons) with any Paying Agent or (in the case of Registered Notes) the Certificate representing such Note(s) with the Registrar or any other Transfer Agent at its specified office together with a duly completed option exercise notice (an “Exercise Notice”) in the form obtainable from any Paying Agent the Registrar or any other Transfer Agent (as applicable) within the notice period. No Note or Certificate so deposited and option exercised may be withdrawn (except as provided in the Fiscal Agency Agreement) without the prior consent of the Issuer.(f) No other redemption: The Issuer shall not be entitled to redeem the Notes otherwise than as provided in paragraphs (a) (c) (d) and (e) above.– 95 –(g) Partly Paid Notes: Partly Paid Notes will be redeemed whether at maturity early redemption or otherwise in accordance with the provisions of this Condition 6 and the provisions specified hereon.(h) Purchases: The Issuer the Bank and its Subsidiaries may at any time purchase Notes (provided that all unmatured Receipts and Coupons and unexchanged Talons relating thereto are attached thereto or surrendered therewith) in the open market or otherwise at any price.Such Notes may at the option of the Issuer be held reissued resold or surrendered to the Fiscal Agent for cancellation. The Notes so purchased while held by or on behalf of the Issuer the Bank or any Subsidiary of the Bank shall not entitle the holder to vote at any meetings of the Noteholders and shall not be deemed to be outstanding for the purposes of calculating quorums at meetings of the Noteholders or for the purposes of Condition 11.(i) Cancellation: All Notes purchased by or on behalf of the Issuer the Bank or any of its Subsidiaries may be surrendered for cancellation in the case of Bearer Notes by surrendering each such Note together with all unmatured Receipts and Coupons and all unexchanged Talons to the Fiscal Agent and in the case of Registered Notes by surrendering the Certificate representing such Notes to the Registrar and in each case if so surrendered shall together with all Notes redeemed by the Issuer be cancelled forthwith (together with all unmatured Receipts and Coupons and unexchanged Talons attached thereto or surrendered therewith). Any Notes so surrendered for cancellation may not be reissued or resold and the obligations of the Issuer in respect of any such Notes shall be discharged. 7. PAYMENTS AND TALONS (a) Bearer Notes: Payments of principal and interest in respect of Bearer Notes shall subject as mentioned below be made against presentation and surrender of the relevant Receipts (in the case of payments of Instalment Amounts other than on the due date for redemption and provided that the Receipt is presented for payment together with its relative Note) Notes (in the case of all other payments of principal and in the case of interest as specified in Condition 7(f)(vi)) or Coupons (in the case of interest save as specified in Condition 7(f)(ii)) as the case may be: (i) in the case of Notes denominated in a currency other than Renminbi at the specified office of any Paying Agent outside the United States by a cheque payable in the relevant currency drawn on or at the option of the holder by transfer to an account denominated in such currency with a bank; and (ii) in the case of Notes denominated in Renminbi by transfer to a Renminbi account maintained by or on behalf of the Noteholder with a bank in Hong Kong.In this Condition 7 “bank” means a bank in the principal financial centre for such currency or in the case of euro in a city in which banks have access to the T2 or in the case of Renminbi in Hong Kong.(b) Registered Notes: (i) Payments of principal (which for the purposes of this Condition 7(b) shall include final Instalment Amounts but not other Instalment Amounts) in respect of Registered Notes shall be made against presentation and surrender of the relevant Certificates at the specified office of any of the Transfer Agents or of the Registrar and in the manner provided in Condition 7(b)(iii) below.– 96 –(ii) Interest (which for the purpose of this Condition 7(b) shall include all Instalment Amounts other than final Instalment Amounts) on Registered Notes shall be paid to the person shown on the Register at the close of business on the fifth (in the case of Notes denominated in Renminbi) and fifteenth (in the case of Notes denominated in a currency other than Renminbi) day before the due date for payment thereof (the “Record Date”) and in the manner provided in Condition 7(b)(iii) below.(iii) Payments of principal or interest as the case may be on each Registered Note shall be made: (x) in the case of a currency other than Renminbi in the relevant currency by cheque drawn on a bank and mailed to the holder (or to the first named of joint holders) of such Note at its address appearing in the Register. Upon application by the holder to the specified office of the Registrar or any Transfer Agent before the Record Date such payment of interest may be made by transfer to an account in the relevant currency maintained by the payee with a bank; and (y) in the case of Renminbi by transfer to the registered account of the Noteholder.In this Condition 7(b)(iii) “registered account” means the Renminbi account maintained by or on behalf of the Noteholder with a bank in Hong Kong details of which appear on the Register at the close of business on the fifth business day before the due date for payment.So long as the Notes are represented by the Global Certificate each payment in respect of the Global Certificate will be made to or to the order of the person shown as the holder of the Notes in the Register at the close of business (of the relevant clearing system) on the Clearing System Business Day immediately prior to the due date for such payment where “Clearing System Business Day” means a weekday (Monday to Friday inclusive) except 25 December and 1 January.Payment of interest or principal by the CMU Lodging and Paying Agent to the person for whose account a relevant interest in the Global Certificate is credited as being held by the CMU at the relevant time as notified to the CMU Lodging and Paying Agent by the CMU in a relevant CMU Instrument Position Report (as defined in the relevant CMU rules) or any other relevant notification by the CMU shall discharge the obligations of the Issuer in respect of that payment.(c) Payments in the United States: Notwithstanding the foregoing if any Bearer Notes are denominated in U.S. dollars payments in respect thereof may be made at the specified office of any Paying Agent in New York City in the same manner as aforesaid if (i) the Issuer shall have appointed Paying Agents with specified offices outside the United States with the reasonable expectation that such Paying Agents would be able to make payment of the amounts on the Notes in the manner provided above when due (ii) payment in full of such amounts at all such offices is illegal or effectively precluded by exchange controls or other similar restrictions on payment or receipt of such amounts and (iii) such payment is then permitted by United States law without involving in the opinion of the Issuer any adverse tax consequence to the Issuer.(d) Payments subject to Fiscal Laws: All payments are subject in all cases to any applicable fiscal or other laws regulations and directives in Hong Kong or any other place of payment but without prejudice to the provisions of Condition 8 and any withholding or deduction – 97 –required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 as amended (the “Code”) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code any regulations or agreements thereunder any official interpretations thereof or (without prejudice to the provisions of Condition 8) any law implementing an intergovernmental approach thereto. No commission or expenses shall be charged to the Noteholders or Couponholders in respect of such payments.(e) Appointment of Agents: The Fiscal Agent the CMU Lodging and Paying Agent the Paying Agents the Registrar and the Transfer Agents initially appointed by the Issuer and their respective specified offices are listed below. The Fiscal Agent the CMU Lodging and Paying Agent the Paying Agents the Registrar and the Transfer Agents appointed under the Fiscal Agency Agreement and any Calculation Agent(s) appointed in respect of any Notes act solely as agents of the Issuer and do not assume any obligation or relationship of agency or trust for or with any Noteholder or Couponholder. The Issuer reserves the right at any time to vary or terminate the appointment of the Fiscal Agent the CMU Lodging and Paying Agent any other Paying Agent the Registrar any Transfer Agent or the Calculation Agent(s) and to appoint additional or other Paying Agents or Transfer Agents in each case in accordance with the Fiscal Agency Agreement provided that the Issuer shall at all times maintain (i) a Fiscal Agent (ii) a Registrar in relation to Registered Notes outside the United Kingdom (iii) a Transfer Agent in relation to Registered Notes (iv) a CMU Lodging and Paying Agent in relation to Notes accepted for clearance through the CMU (v) one or more Calculation Agent(s) where the Conditions so require (vi) a Paying Agent in Singapore where the Notes may be presented or surrendered for payment or redemption in the event that the Notes are issued in definitive form for so long as the Notes are listed on the Singapore Exchange Securities Trading Limited or any successor thereto (the “SGX-ST”) and the rules of the SGX-ST so require and (vii) such other agents as may be required by any other stock exchange on which the Notes may be listed.In addition the Issuer shall forthwith appoint a Paying Agent in New York City in respect of any Bearer Notes denominated in U.S. dollars in the circumstances described in Condition 7(c) above. Notice of any such change or any change of any specified office shall promptly be given to the Noteholders.(f) Unmatured Coupons and Receipts and unexchanged Talons: (i) Upon the due date for redemption of Bearer Notes which comprise Fixed Rate Notes (other than Dual Currency Notes or Index Linked Notes) such Notes should be surrendered for payment together with all unmatured Coupons (if any) relating thereto failing which an amount equal to the face value of each missing unmatured Coupon (or in the case of payment not being made in full that proportion of the amount of such missing unmatured Coupon that the sum of principal so paid bears to the total principal due) shall be deducted from the Final Redemption Amount Early Redemption Amount or Optional Redemption Amount as the case may be due for payment. Any amount so deducted shall be paid in the manner mentioned above against surrender of such missing Coupon within a period of 10 years from the Relevant Date for the payment of such principal (whether or not such Coupon has become void pursuant to Condition 9).(ii) Upon the due date for redemption of any Bearer Note comprising a Floating Rate Note Dual Currency Note or Index Linked Note unmatured Coupons relating to such Note (whether or not attached) shall become void and no payment shall be made in respect of them.– 98 –(iii) Upon the due date for redemption of any Bearer Note any unexchanged Talon relating to such Note (whether or not attached) shall become void and no Coupon shall be delivered in respect of such Talon.(iv) Upon the due date for redemption of any Bearer Note that is redeemable in instalments all Receipts relating to such Note having an Instalment Date falling on or after such due date (whether or not attached) shall become void and no payment shall be made in respect of them.(v) Where any Bearer Note that provides that the relevant unmatured Coupons are to become void upon the due date for redemption of those Notes is presented for redemption without all unmatured Coupons and where any Bearer Note is presented for redemption without any unexchanged Talon relating to it redemption shall be made only against the provision of such indemnity as the Issuer may require.(vi) If the due date for redemption of any Note is not a due date for payment of interest interest accrued from the preceding due date for payment of interest or the Interest Commencement Date as the case may be shall only be payable against presentation (and surrender if appropriate) of the relevant Bearer Note or Certificate representing it as the case may be. Interest accrued on a Note that only bears interest after its Maturity Date shall be payable on redemption of such Note against presentation of the relevant Note or Certificate representing it as the case may be.(g) Talons: On or after the Interest Payment Date for the final Coupon forming part of a Coupon sheet issued in respect of any Bearer Note the Talon forming part of such Coupon sheet may be surrendered at the specified office of the Fiscal Agent in exchange for a further Coupon sheet (and if necessary another Talon for a further Coupon sheet) (but excluding any Coupons that may have become void pursuant to Condition 9).(h) Non-Business Days: If any date for payment in respect of any Note Receipt or Coupon is not a business day the holder shall not be entitled to payment until the next following business day nor to any interest or other sum in respect of such postponed payment. In this Condition 7 “business day” means a day (other than a Saturday or a Sunday) on which banks and foreign exchange markets are open for business in Hong Kong and the relevant place of presentation (if presentation and/or surrender of such Note Receipt or Coupon is required) in such jurisdictions as shall be specified as “Financial Centres” hereon and: (i) (in the case of a payment in a currency other than euro or Renminbi) where payment is to be made by transfer to an account maintained with a bank in the relevant currency on which foreign exchange transactions may be carried on in the relevant currency in the principal financial centre of the country of such currency; or (ii) (in the case of a payment in Renminbi) on which commercial banks and foreign exchange markets in Hong Kong are open for business and settlement of Renminbi payments; or (iii) (in the case of a payment in euro) which is a T2 Business Day. 8. TAXATION Subject as provided below all payments of principal and interest by or on behalf of the Issuer in respect of the Notes the Receipts and the Coupons shall be made free and clear of and without withholding or deduction for any taxes duties assessments or governmental charges of whatever – 99 –nature imposed levied collected withheld or assessed by or within a Relevant Jurisdiction unless such withholding or deduction is required by law of any Relevant Jurisdiction.Where such withholding or deduction is made by the Issuer by or within the PRC up to and including the rate applicable on the Issue Date (the “Applicable Rate”) the Issuer will increase the amounts paid by it to the extent required so that the net amount received by Noteholders and Couponholders equals the amounts which would otherwise have been received by them had no such withholding or deduction been required.In the event the Issuer is required to make a deduction or withholding in respect of (i) PRC tax in excess of the Applicable Rate and/or (ii) any tax in a Relevant Jurisdiction other than the PRC the Issuer shall pay such additional amounts (“Additional Tax Amounts”) as shall result in receipt by the Noteholders and Couponholders of such amounts as would have been received by them had no such withholding or deduction been required except that no such Additional Tax Amounts shall be payable with respect to any Note Receipt or Coupon: (a) Other connection: to or to a third party on behalf of a holder who is liable to such taxes duties assessments or governmental charges in respect of such Note Receipt or Coupon by reason of such holder having some connection with the Relevant Jurisdiction other than the mere holding of the Note Receipt or Coupon; or (b) Lawful avoidance of withholding: to or to a third party on behalf of a holder who would not be liable for or subject to such withholding or deduction by making a declaration of identity non-residence or other similar claim for exemption to the relevant tax authority if after having been requested to make such a declaration or claim such holder fails to do so within any applicable period prescribed by such relevant tax authority; or (c) Presentation more than 30 days after the Relevant Date: where the relevant Note or Coupon or Receipt is presented or surrendered for payment more than 30 days after the Relevant Date except to the extent that the holder of it would have been entitled to such additional amounts on presenting it for payment on the thirtieth day.In these Conditions: “Relevant Date” in respect of any Note Receipt or Coupon means whichever is the later of (a) the date on which payment in question first becomes due and (b) if the full amount payable has not been paid on or prior to such due date the date on which the full amount has been paid and notice to that effect has been given to the Noteholders; and “Relevant Jurisdiction” means the PRC and if the Issuer is a branch of the Bank the jurisdiction where that branch is located or any political subdivision or any authority thereof or therein having power to tax or any other jurisdiction or any political subdivision or any authority thereof or therein having power to tax to which the Issuer becomes subject in respect of payments made by it of principal and interest on the Notes.References in these Conditions to (i) “principal” shall be deemed to include any premium payable in respect of the Notes all Instalment Amounts Final Redemption Amounts Early Redemption Amounts Optional Redemption Amounts Amortised Face Amounts and all other amounts in the nature of principal payable pursuant to Condition 6 or any amendment or supplement to it (ii) “interest” shall be deemed to include all Interest Amounts and all other amounts payable pursuant to Condition 5 or any amendment or supplement to it and (iii) “principal” and/or “interest” shall be deemed to include any additional amounts that may be payable under this Condition 8.For the avoidance of doubt the Issuer’s obligation to pay additional amounts in respect of taxes duties assessments and other governmental charges will not apply to (a) any estate inheritance – 100 –gift sales transfer personal property or any similar tax duty assessment or other governmental charge or (b) any tax duty assessment or other governmental charge which is payable otherwise than by deduction or withholding from payments of principal of or interest on the Notes the Receipts or the Coupons; provided that the Issuer shall pay all stamp or other taxes duties assessments or other governmental charges if any which may be imposed by the Relevant Jurisdiction with respect to the Fiscal Agency Agreement or as a consequence of the issuance of the Notes the Receipts or the Coupons. 9. PRESCRIPTION Claims against the Issuer for payment in respect of the Notes Receipts and Coupons (which for this purpose shall not include Talons) shall be prescribed and become void unless made within 10 years (in the case of principal) or five years (in the case of interest) from the appropriate Relevant Date in respect of them. 10. EVENTS OF DEFAULT If any of the following events (each an “Event of Default”) occurs and is continuing any Noteholder may give notice to the Issuer at the specified office of the Fiscal Agent that any Note held by it is and shall immediately become due and payable at the Early Redemption Amount of such Note together with accrued interest (if any) to the date of payment without further formality: (a) Non-Payment: the Issuer fails to pay the principal of or any premium (if any) or interest on any of the Notes when due and in the case of principal where such failure continues for a period of 7 days or in the case of any premium (if any) or interest where such failure continues for a period of 30 days; or (b) Breach of Other Obligations: the Issuer defaults in the performance or observance of any of its other obligations under or in respect of the Notes or the Deed of Covenant and such default is incapable of remedy or if capable of remedy remains unremedied for 45 days after written notice thereof addressed to the Issuer by any Noteholder has been delivered to the Issuer or to the specified office of the Fiscal Agent; or (c) Cross-Default: (i) any Public External Indebtedness of the Bank or any of its Subsidiaries is not paid when due or (as the case may be) within any originally applicable grace period; (ii) any such Public External Indebtedness becomes due and payable prior to its stated maturity otherwise than at the option of the Bank or the relevant Subsidiary (as the case may be) or (provided that no event of default howsoever described has occurred) any person entitled to such Public External Indebtedness; or (iii) the Bank or any of its Subsidiaries fails to pay when due or (as the case may be) within any originally applicable grace period any amount payable by it under any guarantee or indemnity of any Public External Indebtedness provided that the amount of Public External Indebtedness referred to in sub-paragraph (i) and/or sub-paragraph (ii) above and/or the amount payable under any guarantee or indemnity referred to in sub-paragraph (iii) above individually or in the aggregate exceeds U.S.$25000000 (or its equivalent in any other currency or currencies); or (d) Security enforced: a secured party takes possession or a receiver manager or other similar officer is appointed of the whole or a substantial part of the undertaking assets and revenues of the Issuer the Bank or any of its Material Subsidiaries; or – 101 –(e) Insolvency: (i) the Bank or any of its Material Subsidiaries becomes insolvent or is unable to pay its debts as they fall due (ii) an administrator or liquidator is appointed (or application for any such appointment is made) in respect of the Bank or any of its Material Subsidiaries or the whole or a substantial part of the undertaking assets and revenues of the Bank or any of its Material Subsidiaries (iii) the Bank or any of its Material Subsidiaries takes any action for a readjustment or deferment of any of its obligations or makes a general assignment or an arrangement or composition with or for the benefit of its creditors or declares a moratorium in respect of any of its indebtedness or any guarantee or indemnity of any indebtedness given by it or (iv) the Bank or any of its Material Subsidiaries ceases or threatens to cease to carry on all or any substantial part of its business except (x) on terms approved by an Extraordinary Resolution of the Noteholders or (y) in the case of any Material Subsidiary for the purpose of and followed by (A) a solvent winding-up or dissolution (B) a Reorganisation whereby the business undertaking and assets of such Material Subsidiary are transferred to or otherwise vested in the Bank and/or another Subsidiary or (C) a disposal of or by a Material Subsidiary on an arm’s length basis where the assets (whether in cash or otherwise) from such disposal shall be transferred to or otherwise vested in the Bank and/or another Subsidiary; or (f) Winding-up: an order is made or an effective resolution is passed for the winding up liquidation or dissolution of the Bank or any of its Material Subsidiaries except in the case of any Material Subsidiary for the purpose of and followed by (i) a solvent winding-up or dissolution (ii) a Reorganisation whereby the business undertaking and assets of such Material Subsidiary are transferred to or otherwise vested in the Bank and/or another Subsidiary or (iii) a disposal of or by a Material Subsidiary on an arm’s length basis where the assets (whether in cash or otherwise) from such disposal shall be transferred to or otherwise vested in the Bank and/or another Subsidiary; or (g) Analogous Events: any event occurs which that under the laws of any relevant jurisdiction has an analogous effect to any of the events referred to in paragraphs (d) (Security enforced) to (f) (Winding-up) above; or (h) Illegality: it is or will become unlawful for the Issuer or the Bank to perform or comply with any one or more of its obligations under or in respect of any of the Notes the Coupons or the Deed of Covenant.In these Conditions: “Material Subsidiary” means any Subsidiary of the Bank: (A) whose gross revenue (consolidated in the case of a Subsidiary which itself has consolidated Subsidiaries) whose gross assets (consolidated in the case of a Subsidiary which itself has consolidated Subsidiaries) or whose net profit (consolidated in the case of Subsidiary which itself has consolidated Subsidiaries) represent not less than 5 per cent. of the consolidated gross revenue the consolidated gross assets or as the case may be the consolidated net profit of the Bank and its Subsidiaries taken as a whole all as calculated respectively by reference to the latest audited or reviewed financial statements (consolidated or as the case may be unconsolidated) of the Subsidiary and the then latest audited or reviewed consolidated financial statements of the Bank provided that: (1) in the case of a Subsidiary acquired after the end of the financial period to which the then latest audited or reviewed consolidated financial statements of the Bank relate for the purpose of applying each of the foregoing tests the reference to the Bank’s latest audited or reviewed consolidated financial statements shall be deemed to be a – 102 –reference to such audited or reviewed financial statements as if such Subsidiary had been shown therein by reference to its then latest relevant audited or reviewed financial statements adjusted as deemed appropriate by the auditor for the time being after consultation with the Bank; (2) if at any relevant time in relation to the Bank or any Subsidiary no financial statements are prepared and audited its gross revenue gross assets and net profit (consolidated if applicable) shall be determined on the basis of pro forma consolidated financial statements (consolidated if applicable) prepared for this purpose; and (3) if the financial statements of any Subsidiary (not being a Subsidiary referred to in proviso (1) above) are not consolidated with those of the Bank then the determination of whether or not such Subsidiary is a Material Subsidiary shall be based on a pro forma consolidation of its financial statements (consolidated if appropriate) with the consolidated financial statements (determined on the basis of the foregoing) of the Bank; or (B) to which is transferred all or substantially all of the business undertaking and assets of another Subsidiary which immediately prior to such transfer is a Material Subsidiary whereupon (i) in the case of a transfer by a Material Subsidiary the transferor Material Subsidiary shall immediately cease to be a Material Subsidiary and (ii) the transferee Subsidiary shall immediately become a Material Subsidiary provided that on or after the date on which the relevant financial statements for the financial period current at the date of such transfer are published whether such transferor Subsidiary or such transferee Subsidiary is or is not a Material Subsidiary shall be determined pursuant to the provisions of sub-paragraph (A) above.A certificate signed by an authorised signatory of the Issuer that in his/her opinion (making such adjustments (if any) as he/she shall deem appropriate) a Subsidiary is or is not or was or was not at any particular time or during any particular period a Material Subsidiary shall in the absence of manifest error be conclusive and binding on the Issuer and the Noteholders.“Public External Indebtedness” means any indebtedness of the Bank (or for the purposes of Condition 10 any Subsidiary) or any guarantee or indemnity by the Bank of indebtedness for money borrowed which (i) is in the form of or represented by any bond note debenture debenture stock loan stock certificate or other instrument which is or is capable of being listed quoted or traded on any stock exchange or in any securities market (including without limitation any over-the-counter market) outside the PRC (without regard however to whether or not such instruments are sold through public offerings or private placement) and (ii) has an original maturity in excess of 365 days.“Reorganisation” means any reconstruction amalgamation reorganisation merger or consolidation.“Subsidiary” means in relation to any Person (the “first Person”) at any particular time any other Person (the “second Person”): (a) whose affairs and policies the first Person controls or has the power to control whether by ownership of share capital contract the power to appoint or remove members of the governing body of the second Person or otherwise; or (b) whose financial statements are in accordance with applicable law and generally accepted accounting principles consolidated with those of the first Person.– 103 –11. MEETINGS OF NOTEHOLDERS MODIFICATION AND WAIVER (a) Meetings of Noteholders: The Fiscal Agency Agreement contains provisions for convening meetings of Noteholders (including by way of conference call or by use of a videoconference platform) to consider any matter affecting their interests including the sanctioning by Extraordinary Resolution of a modification of any of these Conditions. Such a meeting may be convened by Noteholders holding not less than 10 per cent. in nominal amount of the Notes for the time being outstanding. The quorum for any meeting convened to consider an Extraordinary Resolution shall be two or more persons holding or representing more than 50 per cent. in nominal amount of the Notes for the time being outstanding or at any adjourned meeting two or more persons being or representing Noteholders whatever the nominal amount of the Notes held or represented unless the business of such meeting includes consideration of proposals inter alia (i) to amend the dates of maturity or redemption of the Notes any Instalment Date or any date for payment of interest or Interest Amounts on the Notes (ii) to reduce or cancel the nominal amount of or any Instalment Amount of or any premium payable on redemption of the Notes (iii) to reduce the rate or rates of interest in respect of the Notes or to vary the method or basis of calculating the rate or rates or amount of interest or the basis for calculating any Interest Amount in respect of the Notes (iv) if a Minimum and/or Maximum Rate of Interest Instalment Amount or Redemption Amount is shown hereon to reduce any such Minimum and/or Maximum Rate of Interest Instalment Amount or Redemption Amount (v) to vary any method of or basis for calculating the Final Redemption Amount the Early Redemption Amount or the Optional Redemption Amount including the method of calculating the Amortised Face Amount (vi) to vary the currency or currencies of payment or denomination of the Notes or (vii) to modify the provisions concerning the quorum required at any meeting of Noteholders or the majority required to pass an Extraordinary Resolution in which case the necessary quorum shall be two or more persons holding or representing not less than three-quarters or at any adjourned meeting not less than one-quarter of the nominal amount of the Notes for the time being outstanding. Any Extraordinary Resolution duly passed shall be binding on Noteholders (whether or not they were present at the meeting at which such resolution was passed) and on all Couponholders.The Fiscal Agency Agreement provides that a resolution in writing signed by or on behalf of the Noteholders of not less than 75 per cent. in nominal amount of the Notes outstanding or passed by Electronic Consent (as defined in the Fiscal Agency Agreement) shall for all purposes be as valid and effective as an Extraordinary Resolution passed at a meeting of Noteholders duly convened and held. Such a resolution in writing may be contained in one document or several documents in the same form each signed by or on behalf of one or more Noteholders.These Conditions may be amended modified or varied in relation to any Series of Notes by the terms of the relevant Pricing Supplement in relation to such Series.(b) Modification: Notwithstanding Condition 11(a) above the Notes these Conditions and the Deed of Covenant may be amended without the consent of the Noteholders to correct a manifest error. In addition the parties to the Fiscal Agency Agreement may agree to modify any provision thereof but the Bank shall not agree without the consent of the Noteholders to any such modification unless it is of a formal minor or technical nature it is made to correct a manifest error or to comply with mandatory provisions of the law. Any such modification shall be binding on the Noteholders and such modification shall be notified to the Noteholders by the Bank as soon as practicable thereafter in accordance with Condition 14. – 104 –12. REPLACEMENT OF NOTES CERTIFICATES RECEIPTS COUPONS AND TALONS If a Note Certificate Receipt Coupon or Talon is lost stolen mutilated defaced or destroyed it may be replaced subject to applicable laws regulations and stock exchange or other relevant authority regulations at the specified office of the Fiscal Agent (in the case of Bearer Notes Receipts Coupons or Talons) and the Registrar (in the case of Certificates) or such other Paying Agent or Transfer Agent as the case may be as may from time to time be designated by the Issuer for that purpose and notice of whose designation is given to Noteholders in each case on payment by the claimant of the fees and costs incurred in connection therewith and on such terms as to evidence security and indemnity (which may provide inter alia that if the allegedly lost stolen or destroyed Note Certificate Receipt Coupon or Talon is subsequently presented for payment or as the case may be for exchange for further Coupons there shall be paid to the Issuer on demand the amount payable by the Issuer in respect of such Notes Certificates Receipts Coupons or further Coupons) and otherwise as the Issuer may require. Mutilated or defaced Notes Certificates Receipts Coupons or Talons must be surrendered before replacements will be issued. 13. FURTHER ISSUES The Issuer may from time to time without the consent of the Noteholders or Couponholders create and issue further securities having the same terms and conditions as the Notes (except for the first payment of interest and if applicable the timing for notification to the NDRC PBOC NFRAand/or SAFE and save that for the avoidance of doubt references in these Conditions to “IssueDate” shall be the first issue date of the Notes) and so that the same shall be consolidated and form a single series with such Notes and references in these Conditions to “Notes” shall be construed accordingly. 14. NOTICES Notices to the Noteholders will be (i) (in the case of holders of Registered Notes) sent to them by first class mail (or its equivalent) or (if posted to an overseas address) by airmail at their respective addresses on the Register and be deemed to have been given on the fourth day after the date of mailing or (ii) (in the case of holders of Bearer Notes) published in English in the South China Morning Post and in Chinese in the Hong Kong Economic Journal. If at any time publication in such newspapers is not practicable notices will be valid if published in an English and/or Chinese language newspaper as the case may be with general circulation in Hong Kong. Any such notice will be deemed to have been given on the date of such publication or if published more than once on different dates on the first date on which publication is made.Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the holders of Bearer Notes in accordance with this Condition 14.So long as the Notes are represented by a Global Note or a Global Certificate and such Global Note or Global Certificate is held on behalf of (i) Euroclear or Clearstream or any other clearing system (except as provided in (ii) below) notices to the holders of Notes of that Series may be given by delivery of the relevant notice to that clearing system for communication by it to entitled accountholders in substitution for publication as required by the Conditions or by delivery of the relevant notice to the holder of the Global Note or (ii) the CMU notices to the holders of Notes of that Series may be given by delivery of the relevant notice to the persons shown in a CMU Instrument Position Report issued by the CMU on the second business day preceding the date of despatch of such notice as holding interests in the relevant Global Note or Global Certificate.– 105 –15. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999 No person shall have any right to enforce any term or condition of the Notes under the Contracts (Rights of Third Parties) Act 1999. 16. CURRENCY INDEMNITY Any amount received or recovered in a currency other than the currency in which payment under the relevant Note Coupon or Receipt is due (whether as a result of or of the enforcement of a judgment or order of a court of any jurisdiction in the insolvency winding-up or dissolution of the Issuer or otherwise) by any Noteholder or Couponholder in respect of any sum expressed to be due to it from the Issuer shall only constitute a discharge to the Issuer as the case may be to the extent of the amount in the currency of payment under the relevant Note Coupon or Receipt that the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or if it is not practicable to make that purchase on that date on the first date on which it is practicable to do so). If the amount received or recovered is less than the amount expressed to be due to the recipient under any Note Coupon or Receipt the Issuer shall indemnify it against any loss sustained by it as a result. In any event the Issuer shall indemnify the recipient against the cost of making any such purchase. For the purposes of this Condition 16 it shall be sufficient for the Noteholder or Couponholder as the case may be to demonstrate that it would have suffered a loss had an actual purchase been made. These indemnities constitute a separate and independent obligation from the Issuer’s other obligations shall give rise to a separate and independent cause of action shall apply irrespective of any indulgence granted by any Noteholder or Couponholder and shall continue in full force and effect despite any other judgment order claim or proof for a liquidated amount in respect of any sum due under any Note Coupon or Receipt or any other judgment or order. 17. GOVERNING LAW AND JURISDICTION (a) Governing Law: The Notes the Receipts the Coupons and the Talons and any non-contractual obligations arising out of or in connection with them are governed by and shall be construed in accordance with English law.(b) Jurisdiction: The courts of Hong Kong are to have exclusive jurisdiction to settle any disputes claims differences or controversy that may arise out of in relation to or in connection with any Notes (and the Conditions) Receipts Coupons or Talons including any dispute as to its existence validity interpretation performance breach or termination or the consequences of its nullity and any dispute relating to any non-contractual obligations arising out of or in connection with it (a “Dispute”) and accordingly any legal action or proceedings arising out of or in connection with any Notes (and the Conditions) Receipts Coupons or Talons and any non-contractual obligations arising out of or in connection with them (the “Proceedings”) may be brought in such courts. The Issuer irrevocably submits to the exclusive jurisdiction of the courts of Hong Kong and waives any objection to the Proceedings in such courts on the ground of venue or on the ground that the Proceedings have been brought in an inconvenient forum to settle any Dispute.(c) Service of Process: The Issuer irrevocably agrees to receive service of process at the place of business of the Bank in Hong Kong registered in accordance with the Companies Ordinance (Cap. 622) of Hong Kong at 5/F Manulife Place 348 Kwun Tong Road Kowloon Hong Kong in any Proceedings in Hong Kong. Such service shall be deemed completed on delivery to such address (whether or not actually received by the Bank). If due to any reason the Bank shall cease to have a place of business in Hong Kong the Issuer – 106 –irrevocably agrees to appoint a substitute process agent and shall immediately notify the Noteholders of such appointment. Nothing shall affect the right to serve process in any manner permitted by law.(d) Waiver of Immunity: Each of the Issuer and the Bank further has irrevocably agrees that no immunity (to the extent that it may now or hereafter exist whether on the grounds of sovereignty or otherwise) from any Proceedings or from execution of judgment shall be claimed by or on behalf of it or with respect to its assets any such immunity being irrevocably waived by the Issuer or the Bank and each of the Issuer and the Bank irrevocably consents generally in respect of any such Proceedings to the giving of any relief or the issue of any process in connection with any such Proceedings including without limitation the making enforcement or execution against any property whatsoever of any order or judgment which may be made or given in such Proceedings.– 107 –CAPITALISATION AND INDEBTEDNESS The following table sets forth the capitalisation and indebtedness of the Group as at 31 December 2023.The following table should be read in conjunction with “Summary Financial Information” and the Group’s consolidated financial statements and related notes included elsewhere in this Offering Circular.As at 31 December 2023 Actual (RMB in millions) (U.S.$ in millions)1 Debt securities issued Long-term debt securities issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138311 19481 Subordinated bonds issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77081 10857 Certificates of deposit issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1418 200 Certificates of interbank deposit issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 705273 99335 Convertible corporate bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39794 5605 Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4104 578 Total debt securities issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 965981 136056 Equity Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48967 6897 Other equity instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118060 16628 Capital reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59400 8366 Other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4057 571 Surplus reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60992 8591 General reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105127 14807 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320619 45159 Total equity attributable to equity holders of the Bank . . . . . . . . . . . . . . . . 717222 101019 Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17453 2458 Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 734675 103477 Total Capitalisation2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1700656 239533 Note: 1 U.S. dollar translations are provided for indicative purposes only and are unaudited. These translations were calculated based on exchange rate of RMB7.0999 to U.S.$1.00 on 29 December 2023 as set forth in the H.10 statistical release of the Federal Reserve Board. 2 Total capitalisation comprises total debt securities issued and total equity of the Group. In April 2024 the Bank issued undated capital bonds in the national inter-bank bond market in an principal amount of RMB30 billion with a coupon rate of 2.42 per cent. for the first five years and the coupon rate shall be adjusted every five years. The proceeds from such issuance is intended to be used to replenish the Bank’s additional tier-one capital in accordance with applicable laws and regulatory approvals.Save as disclosed in this Offering Circular there has been no material adverse change in the capitalisation of the Group since 31 December 2023.– 108 –DESCRIPTION OF THE BANK OVERVIEW The Bank was founded in 1987. It is one of the earliest emerging commercial banks established during China’s reform and opening-up and also China’s first commercial bank participating in financing at both domestic and international financial markets. In April 2007 the Bank simultaneously listed its A and H shares at the Shanghai Stock Exchange and Hong Kong Stock Exchange. In 2023 the Bank was ranked 20th among the “Top 500 Global Bank Brands” by The Banker magazine demonstrating the Bank’sleading position among commercial banks in the PRC and ranked 19th on its list of the “Top 1000 WorldBanks” in terms of the amount of tier-one capital.The Bank offers full-range services to corporate institutional inter-bank market and individual customers. For corporate customers institutional customers and inter-bank market customers the Bank offers integrated financial solutions in corporate banking business international business financial market business institutional banking business investment banking business transaction banking business and custody business. For individual customers the Bank provides diversified financial products and services related to wealth management private banking personal credit credit cards pension finance and going abroad finance.Geographically the Bank is incorporated in the PRC where substantially all of its operations are located.As at 31 December 2023 the Bank had 1451 outlets in 153 large and medium-sized cities in China and seven affiliates namely CIFH CNCB Investment CITIC Financial Leasing CITIC Wealth Management CITIC aiBank JSC Altyn Bank and Lin’an CITIC Rural Bank where * CNCBI a subsidiary of CIFH recorded 31 outlets and two business wealth management centres in Hong Kong Macau New York Los Angeles Singapore and the Chinese mainland; * CNCB Investment had three subsidiaries in Hong Kong and the Chinese mainland; * CITIC Wealth Management is the wholly-owned wealth management subsidiary of the Bank; * CITIC aiBank a joint venture cosponsored by the Bank and Baidu is the first independent legal entity practicing direct banking in China; and * JSC Altyn Bank had 7 outlets and 1 private banking centre in Kazakhstan.As at 31 December 2023 the Group had RMB9052.48 billion of total assets RMB5383.75 billion of loans and advances to customers RMB5467.66 billion of deposits from customers and RMB717.22 billion of total equity attributable to equity holders of the Bank.– 109 –CORPORATE STRUCTURE The following diagram sets out the ownership structure between the Bank its controlling shareholder and its de facto controller as at 31 December 2023.CITIC Group 100%100% CITIC Glory Limited CITIC Polaris Limited 25.60%27.52% CITIC Limited 100%100% CITIC Corporation Limited Metal Link Limited 100%100% CITIC Investment (HK) Limited CITIC Financial Holdings 100%1.19% 64.14% Fortune Class Investments Limited 0.02%0.58% The Bank THE BANK’S COMPETITIVE STRENGTHS Relying on the comprehensive resources of CITIC Group in terms of “Finance + Real Economy” the Bank has a vision to become a bank with “Four Features” namely a responsible unique and valuable provider of the best comprehensive financial services with a human touch and one of the world’s first-class banks.Important player in the PRC banking system with strong brand influence.Established in 1987 the Bank is one of the earliest PRC commercial banks to participate in the overseas financial markets contributing to the economic development of the PRC. The Bank’s scale of business and unique status consolidated its significance and importance in the PRC banking system positioning the Bank to play an integral and strategic role in the PRC banking system. As at 31 December 2023 the Group had total assets of approximately RMB9052.48 billion and employed approximately 66891 employees across its network.With the provision of a full range of financial products and high-quality customer service the Bank enjoyed high reputation and extensive influence in both domestic and overseas markets. In 2023 the Bank was ranked 20th among the “Top 500 Global Bank Brands” by The Banker magazine demonstratingthe Bank’s leading position among commercial banks in the PRC and ranked 19th on its list of the “Top 1000 World Banks” in terms of tier-one capital. – 110 –Synergies within the Group and with CITIC Group.Giving into full play the Group’s advantages of “all financial licenses and wide coverage of industries” and following the development principle of “One CITIC One Customer” the Bank delved into the six major areas of coordination namely finance coordination industry and finance coordination think tank coordination cross-section coordination parent company and subsidiary coordination cross-branch cooperation built eight major service scenarios of coordinated services i.e. technology finance green finance inclusive finance pension finance digital finance government finance capital markets and risk resolution and hence providing customers with one-stop customised multi-scenario and full-lifecycle professional services safeguarding the steady development of the real economy.CITIC Group the Bank’s controlling shareholder is a leading state-owned multi-national conglomerate in the PRC engaged in a wide range of financial services including investment banking trust fund management insurance and futures. The Bank as part of CITIC Group frequently co-operates with other entities within CITIC Group through client resources sharing joint marketing efforts and cross-selling of services giving full play to CITIC Group’s unique advantages in “Finance + the Real Economy”.In terms of synergy with other subsidiaries of CITIC Group the Bank cooperates with financial subsidiaries within CITIC Group such as CITIC Securities China Securities CITIC Trust CITIC Prudential Life and CITIC AMC in sectors including bond underwriting wealth management annuity business and asset revitalisation. It also propelled industry and financing synergistic collaboration and strengthened collaboration with non-financial subsidiaries within CITIC Group such as CITIC Pacific Properties CITIC Press Corporation and CITIC Agriculture Limited in areas including advancing the development of new urbanisation developing a great country in terms of culture and ensuring national food security with expanded synergistic service scenarios. It empowered the development of business operation in multiple dimensions launched the Comprehensive Plan on CITIC Synergistic Service for Local Economy together with China International Economic Consultants. Furthermore it cooperated with subsidiaries within CITIC Group to organise a series of events themed on synergistic empowerment and implemented a batch of quality synergy projects thus achieving new results in providing synergistic services for the real economy.Extensive nationwide branch outlet network complemented by a multi-channel digital banking system.The Bank has a nationwide branch network in the PRC. As at 31 December 2023 the Bank had 1451 outlets in 153 large and medium-sized cities in the PRC including 37 tier-one branches which are directly managed by its head office 125 tier-two branches and 1289 sub-branches including 32 community small and micro sub-branches. It maintains a strong presence and extensive network in economically developed areas. Such extensive network enables the Bank to diversify risks and minimise potential adverse influence of regional economic risk on the overall business of the Bank.In terms of overseas outlets in addition to the Bank’s London Branch as at 31 December 2023 CNCBI an affiliate of the Bank had 31 outlets and 2 business wealth management centres in Hong Kong SAR Macau New York City Los Angeles Singapore and the PRC. As at 31 December 2023 JSC Altyn Bank a subsidiary of the Bank had seven outlets and one private banking centre in Kazakhstan.To complement and extend its nationwide branch network the Bank operates a multi-channel electronic banking transaction system. As at 31 December 2023 the Bank had 1529 self-service banks 4482 self-service terminals and 9131 smart teller machines.In recent years the Bank sped up digital transformation and continued to activate new digital banking systems: * retail business digitalisation: the Bank’s retail M+ platform launched supporting tools such as stratified customer management concentrated personal loan management stratified customer – 111 –asset allocation and investment consulting services and settled over RMB1 trillion product transaction via orders thus strongly underpinning comprehensive customer management. The Bank built an advanced enterprise-level marketing centre among peers forming a multilateral and open marketing ecosystem with internal and external collaboration supporting over 160000 activities and reaching over 2 billion person-times;* corporate business digitalisation: the Bank promotes the first self-developed “Tianyuan treasurysystem” in the industry iterated and upgraded the standard version and rolled out the ecosystem version offering customers diversified treasury management solutions that are professional and customised and built a one-stop and intelligent global treasury management system for central enterprises and large state-owned enterprises. It comprehensively improved whole-process online experience of auto finance with a replacement rate of automatic loan granting reaching 85 per cent. reducing risk prewarning manual handling of frontline employees by 60 per cent. The Bankalso took solid steps to propel digital transformation of inclusive finance established “creditfactory” and enhanced the quality and efficiency of product R&D by 8 times. Online products such as “Credit Guarantee” significantly reduced the period of issuing guarantee from 4 days to 10 minutes by using automatic credit verification thus dramatically improving product efficiency and customer experience; and * financial market business digitalisation: the Bank adheres to integrated business management for interbank customers. The new generation of “Interbank+” platform was equipped with three function pillars namely “prime shop” “market-making trading cloud hall” and “intelligent anddigital communication platform”. The platform covered all types of interbank customers and had a total of over 2700 contract customers. The Bank became the first in the industry to realise APP transactions and the accumulative transaction volume exceeded RMB1.4 trillion. It established a cross-market intelligent transaction platform and was the first among peers in realising the automation of centralised transaction thus significantly enhancing the automation and intelligence of quotation trading.Leading position in the corporate banking business among commercial banks in the PRC.The Bank has a leading position in the corporate banking business among commercial banks in the PRC.For the years ended 31 December 2021 2022 and 2023 the Group’s operating income from its corporate banking business was RMB94.06 billion and RMB94.44 billion and RMB91.56 billion respectively accounting for 45.98 per cent. 44.73 per cent. and 44.54 per cent. of its total operating income respectively. The Bank has achieved a steady growth in corporate deposit balances in recent years. For the years ended 31 December 2021 2022 and 2023 the average balance of the Group’s corporate deposit was RMB3714.70 billion RMB3924.77 billion and RMB4051.31 billion respectively. As at 31 December 2023 the Bank had approximately 1157600 corporate customers. Corporate loans have historically been the largest component of the Bank’s loan portfolio; as at 31 December 2023 the Group recorded a total corporate loan balance of RMB2697.15 billion an increase of 6.9 per cent. compared to the balance as at 31 December 2022. The Bank’s well-established customer base reinforces its leading position in corporate banking business among national joint stock commercial banks in the PRC.All-rounded and balanced growth including rapid growth and innovative development in retail banking business.The interplay between retail banking and corporate banking plays a remarkable role in customer acquisition for the Bank. Retail banking is one of the principal business activities of the Bank in the PRC.For the years ended 31 December 2021 2022 and 2023 the Group’s operating income from its retail banking business was RMB82.57 billion RMB84.68 billion and RMB86.43 billion respectively accounting for 40.36 per cent. 40.11 per cent. and 42.04 per cent. of its total operating income respectively.– 112 –Upholding the “people-centric” philosophy the Bank adheres to the customer-orientated and value-orientated approach continuously builds “new retail” with wealth management at its core comprehensively deepens customer relationship to become customers’ first choice of wealth management bank as an expert at “settlement investment financing activities and services” (“five expertise”) with the suitability for “all customers — all products — all channels” as the operation strategy four links of “sector integration bank-wide collaboration intra-Group coordination and external connection” as the development path and two wings of “digitalisation and ecologicalisation” as the capability support. The scales of wealth management asset management and comprehensive financing realised rapid growth in recent three years. In 2023 the retail assets under management (AUM) (including assets measured at fair value)4 exceeded RMB4 trillion and the private banking AUM stood at RMB1 trillion level.The Bank also persists in the innovation of retail banking products and models. For mass customers it provided “accompanying” service through the collaboration of “remote + APP + AI”. For wealthy and VIP customers it established operation system and fully put in place stratified operation. For private banking customers it refined lifecycle service system and continued to improve professional service capability. In addition it further improved differentiated services for key customer groups explored Generation Z young customer management and comprehensively upgraded “Happiness+” aging financial service system. In terms of products it fostered intelligent consulting service capability driven by investment and research as well as leading retail trading settlement capability launched lifecycle wealth management services based on “three phases and four steps” (where three phases refer to Generation Z Middle Age and Sliver Age and four steps refer to balancing the books preventing risks planning pension and long-term investment). It refined all-category product system elevated its overall product allocation capabilities and took innovative ways to utilise balance sheet tools. It enriched and refined its product ecosystem featuring all strategies and all categories for private banking and met high-net-worth customers’ demands for all-category product allocation. For personal loan customers the Bank improved main product functions including mortgage of property and unsecured loan and debuted standardised loan products on online platforms. In terms of channels the Bank improved all-channel collaborated marketing capability and service efficiency and fostered digital management capability for all customers. Focusing on customer experience the Bank gained insight into customer demands through digital approach and provided them with suitable products and services. It launched Mobile Banking 10.0 and Mobile Card Space 10.0 releasing the capacity of online operation and remote channel at a faster pace and upgraded offline outlet service system simultaneously.Vigorous explorations and innovations.As China’s first commercial bank participating in financing at both domestic and international financial markets the Bank is renowned at home and abroad for breaking numerous track records in the modern Chinese financial history. It has the genes of innovation and drives its development through innovation as well. The Bank has carried forward the CITIC style of exploration and innovation and boosted innovation in products and services and gained unique competitive advantages in businesses such as investment banking cross-border business transaction banking auto finance wealth management going abroad finance pension finance credit card and forex market making.In particular the Bank adhered to reform and innovation and accelerated the improvement of core business capabilities such as wealth management asset management and comprehensive financing so as to build strong business capabilities adaptable to the new development pattern. The scales of wealth management asset management and comprehensive financing realised rapid growth in recent three years.In 2023 the retail assets under management (AUM) exceeded RMB4 trillion the private banking AUM stood at RMB1 trillion level and the contribution of retail banking to operating income reached 42.04 per cent. The Bank’s all-round asset management business system was incentivised the scale of wealth 4 including the retail customers’ assets under management of the Bank’s subsidiaries – 113 –management sales stayed in the forefront of the industry and the Bank is well recognised in the market for its value creation capability. The Bank’s bond underwriting business maintains a top position in the industry and the scale of full-year investment in the capital market managed to grow despite the market downturn. The Bank launched the “Tianyuan treasury system” the first self-developed treasury management system in the market and has gained a reputation as the first choice to develop a treasury system. The Bank also achieved an industry-leading position by establishing a cross-market market making centre and the RMB forex market making volume exceeded U.S.$2.6 trillion.The Bank persists in development through science and technology. In the face of digitalisation the Bank proactively implemented the forward-looking strategy of building the Bank’s strength in science and technology and invested unprecedentedly into technological development. In the past three years the Bank’s investment totalled nearly RMB28.0 billion with a compound growth rate of 17 per cent. and its team of technology personnel grew to more than 5600 people maintaining a rapid growth rate. The Bank took the lead in building independent and manageable core business systems in an all-round way and all application servers and database servers of core business systems were replaced with China chips realising a shift from technology-support to technology-driven mode. The Bank followed the trend of the times to build a digital ecosystem comprehensively promoted the development of “Digital CITIC” and established the data infrastructure featuring “one data lake and one database”. Compared with three years ago the Bank’s data storage and computing capacity increased by six folds and it became the only joint stock bank that has won the First Prize of FinTech granted by the PBOC twice in three years.Increasing non-interest income in recent years.The Bank generates non-interest income through fee and commission income trading gains gains from investment securities and hedging gains. A steady flow of non-interest income allows the Bank to diversify its risk and enable it to maintain a relatively stable revenue stream in times of fluctuating interest rates. In recent years the Bank steadily increased its net non-interest income through the diversification of its business. For the years ended 31 December 2021 2022 and 2023 the Group’s net non-interest income was RMB56.66 billion RMB60.46 billion and RMB62.03 billion respectively.Scientific and effective risk management and improved asset quality.In recent years the Bank has comprehensively advanced risk management reform and continuously builds a risk management system featuring “effective risk control and vigorous development promotion”.The Bank promoted the bank-wide risk management to be more specialised intelligent and refined by restructuring the unified credit system establishing a close-loop transmission system of risk appetite advancing the integration of risk management into the reform and other measures. The Bank intensified efforts to control new risks and resolve old ones strenuously promoted risk resolution in key areas and strengthened management of problematic assets. The Bank adheres to targeted governance and made solid progress in the establishment of “five systems” i.e. compliance management system rectification system internal control evaluation system extensive supervision system and money laundering and sanctions risk control system so as to provide a protective shield for high-quality development. It strengthened efforts in the building of the smart risk control system propelled the multi-level application of digital risk control tools and made risk prevention and control more forward-looking and targeted. For more details please refer to “Risk Management”.The asset quality of the Bank has remained overall stable in recent years. As at 31 December 2021 2022 and 2023 the NPL ratio of the Bank was 1.39 per cent. 1.27 per cent. and 1.18 per cent. respectively and the special mention loan ratio of the Bank was 1.75 per cent. 1.63 per cent. and 1.57 per cent.respectively. As at 31 December 2021 2022 and 2023 the liquidity coverage ratio of the Bank was 146.59 per cent. 168.03 per cent. and 167.48 per cent. respectively exceeding the minimum regulatory standard of 100 per cent. for commercial banks required by relevant PRC Banking Regulatory Authority. As at 31 December 2021 2022 and 2023 the net stable funding ratio of the Bank was 106.01 per cent. 107.64 per– 114 –cent. and 108.29 per cent. respectively. For more details please refer to “Risk Management — On-goingCredit Monitoring and Loan Classification”.An experienced management team with a proven track record employing scientific corporate governance and business operations.The senior management team of the Bank has extensive professional experience in the PRC banking industry. All members of the Bank’s management team have in-depth knowledge of banking operations and management the PRC macroeconomic environment and the PRC banking industry. The Bank’s experienced management team has demonstrated a track record of successfully implementing a series of transformation initiatives including the improvement of the Bank’s corporate governance and risk management. The Bank has improved its operations and financial results under the leadership of its management team.The chairperson and executive director of the Bank Mr. Fang Heying has more than 30 years of experience in the Chinese banking industry. Mr. Fang has served as deputy general manager of CITIC Group deputy general manager and member of the executive committee of CITIC Limited deputy general manager of CITIC Corporation Limited since December 2020 and as a Party committee member of CITIC Group since November 2020. Mr. Fang is concurrently a director of CIFH and CNCBI. Mr. Fang served as President of the Bank from March 2019 to April 2023. Prior to that Mr. Fang was president of the Bank’s Suzhou Branch president of the Bank’s Hangzhou Branch and head of the Bank’s financial markets business vice president and chief financial officer of the Bank.The president and executive director of the Bank Mr. Liu Cheng has rich experience in development reform fiscal policy and finance. Mr. Liu is concurrently a director of CIFH CNCBI CNCB Investment and Asian Financial Cooperation Association (“AFCA”). He served as chairman of the board of supervisors of the Bank from April 2018 to November 2021 and executive vice president of the Bank from January 2022 to August 2023.The Bank’s corporate governance and business operation are scientific efficient and effective. The Bank adheres to market-oriented operation and constantly improves its corporate governance and business operation systems and mechanisms. The result is the formation of an organisational structure characterised by efficient management and professional division of duties. According to the principle of separating the front middle and back offices the Bank established a matrix management model with the head office departments as the lines and the branches and sub-branches as the arrays.THE BANK’S STRATEGIES Supporting businesses in the real economy with targeted measures The Bank seeks to uphold its original aspiration of supporting the real economy. Focusing on the five priorities of technology finance green finance inclusive finance pension finance and digital finance the Bank was dedicated to playing its role as a propeller for economic development. The Bank shouldered its responsibilities for serving the real economy and providing loans to key areas including green credit strategic emerging industries medium and long-term manufacturing rural revitalisation and inclusive finance which all maintained a rapid growth outpacing the average growth rate of the Bank’s total loans.Full integration with national development strategies The Bank is fully supportive of and intends to fully align its own business strategies with national development strategies. Based on local geographic and business features the Bank sets different business goals support and management authority to local branches in an effort to support national initiatives. The – 115 –total loans to national strategic key regions such as the Beijing-Tianjin-Hebei region Yangtze River Delta Guangdong-Hong Kong-Macau Greater Bay Area and Chengdu-Chongqing region accounted for nearly 70 per cent. of the Bank’s corporate loans. The Bank proactively disposed local government debt risks helped forestall and defuse risks in key areas supporting the real economy.In addition the Bank conscientiously considers and plans its work in accordance with the national plan of establishing a new development pattern and puts emphasis on five major sectors namely technological finance green finance inclusive finance pension finance and digital finance. For example the Bank spared no effort to serve the strategy of building China’s strength in science and technology and proactively worked out plans for new business patterns of enterprises with specialised sophisticated techniques and unique novel products. The balance of loans of its sci-tech innovation finance as at 31 December 2023 exceeded RMB400 billion showing its full support for the self-independence of national technologies.Going forward the Bank aims to continue to deepen reform and innovation strengthen high-quality financial services strive to realise the organic integration of development quality structure scale speed efficiency and safety and unswervingly follow the path of financial development with Chinese characteristics.Five-pronged leading bank strategy For the purpose of creating a featured and differentiated financial service mode the Group puts forward a “five-pronged leading” bank strategy namely the leading wealth management bank the leading comprehensive financing bank the leading trading settlement bank the leading foreign exchange service bank and the leading digital bank: * leading wealth management bank: through upgrading business systems for all customers products and channels the Bank strives to build three brands of asset management private banking and consumer finance so as to better help customers achieve cross-term asset allocation and smooth returns curve and realise intergenerational wealth transfer; * leading comprehensive financing bank: leveraging CITIC Group’s advantages in industry-finance collaboration and finance-finance cooperation the Bank plans to establish a new comprehensive financial service ecosystem to meet customers’ various financing needs in a faster and professional way; * leading transaction settlement bank: the Bank intends to base itself on transaction settlement the fundamental function of commercial banks and customers’ core needs and aspire to develop into the first-inquired bank first contact point fundamental channel and service centre for customers’ transaction settlement; * leading foreign exchange service bank: earnestly following the national strategy of high-level opening up the Bank strives to establish a comprehensive cross-border financial service systemcovering “China and overseas local and foreign currencies offshore and onshore investmentbanking and commercial banking” and re-establish the strength of global financial services of the Bank; and * leading digital bank: the Bank intends to further bring into play its accumulated scientific and technological strengths and gain more precise customer and industry insights and provide smarter matching products and services and higher-quality services and experience.The Bank believes that these five strategies will create strategic propellers for it to forge overall competitive advantages and will be vivid practices of our adherence to the customer-centred philosophy.– 116 –THE BANK’S KEY MILESTONES AND CORPORATE HISTORY In 1984 Mr Rong Yiren the chairman of CITIC Group at the time requested approval from the PRC government to set up a bank within CITIC Group. In April 1985 the banking department of CITIC Group was formed with the approval from the State Council and the PBOC.On 20 April 1987 the Bank was formally established as a separate legal entity under the name “CITICIndustrial Bank” through restructuring of the banking department of CITIC Group with approval from the State Council and the PBOC to conduct licensed RMB and foreign-currency banking businesses as well as other relevant financial operations.On 11 February 1998 CNCB (Hong Kong) Capital Limited was established under the name “AIM AssetManagement Limited”. Its name changed to Rocks Asia Capital Group Limited on 2 March 2011 and to its current name on 22 September 2015.On 2 August 2005 the Bank changed its name from “CITIC Industrial Bank” to “China CITIC Bank” which reflected its commitment to transform into a bank that focuses on both personal banking and corporate banking businesses. The Bank was established as a joint stock limited company on 31 December 2006 under the name “China CITIC Bank Corporation Limited”. The Bank was simultaneously listed on the Hong Kong Stock Exchange and Shanghai Stock Exchange on 27 April 2007.In May 2012 the Bank established Lin’an CITIC Rural Bank with private backbone enterprises.In November 2014 the Bank established its London representative office.In March 2015 the Bank established CITIC Financial Leasing with a registered capital of RMB4 billion.In December 2016 the Bank co-operated with Baidu Inc. and established CITIC aiBank (originally named CITIC Baixin Bank Corporation Limited) a joint stock limited company the first approved direct bank in the form of an independent legal person in the PRC.In November 2016 the Bank established its Sydney representative office.In November 2017 the Bank and Fujian Baidu Borui Network Technology Co. Ltd. jointly established CITIC aiBank a new type of internet bank and the first direct bank with independent legal person status.The Bank held 65.70 per cent. of the shares in CITIC aiBank.In April 2018 the Bank acquired a majority stake in JSC Altyn Bank and became the first Chinese bank to acquire bank equity in the countries along the “Belt and Road”.In June 2019 the Bank opened the London Branch the first overseas branch directly managed by the head office.In July 2020 CITIC Wealth Management was officially established with a registered capital of RMB5 billion and opened for business. It mainly engages in wealth management-related business such as issuance of public and private wealth management products and wealth management consultation and advisory.In June 2023 the Bank’s Hong Kong Branch was officially granted the license for operation marking a major step towards the Bank’s internationalisation.On 27 March 2024 as approved by the Hong Kong Monetary Authority the Hong Kong Branch of the Bank has been officially established.– 117 –HONOURS AND AWARDS The Bank has achieved numerous awards and recognitions in recent years including: Awards and recognitions Awarding organisation 2023 December First Prize for FinTech Development for the Bank’s Inclusive Finance PBOC Digital Innovation Ecosystem Second Prize of FinTech Development for Bank’s Tianyuan treasury system PBOC Top 10 Participants of the Year Payment and Clearing System User Committee of the PBOC National Advanced Organisation of Internal Audit China Institute of Internal Audit Best Strategic Management Bank of the Year Financial Times Outstanding High-quality Development Listed Company Organising Committee of China Securities Golden Bauhinia Award ESG Pioneer Securities Daily Best Listed Company in Investor Relations Management Securities Market Weekly Top 100 Enterprises in China China Top 100 Listed Companies Forum Excellent Enterprise of Sustainable Development SINA Finance Excellent Enterprise of Corporate Governance Responsibility SINA Finance ESG Investment Practice Award CLS.cn Excellent Case of Financial Support for Key Counties to Receive Assistance China Banking and Insurance in Pursuing Rural Revitalization News Ingenuity Brand people.cn Reputation Brand Enterprise of the Year China Times Top 10 Bank List 2023 List of China New Financial Competitiveness by South Weekly Newspaper November Most Progressive Bank stockstar.com Most Socially Responsible Bank stockstar.com National Excellent Case in Rural Revitalization xinhuanet.com and China Poverty Alleviation Publicity and Education Center Responsible Enterprise of the Year China Newsweek of China News Service Most Socially Responsible Listed Company National Business Daily – 118 –Awards and recognitions Awarding organisation ESG Excellent Practice Case of Listed Company China Association for Public Companies Bank for Auto Financial Services of the Year 21st Century Business Herald TOP 10 Aging Financial Service Provider of the Year YICAI October Benchmark Case Award for Digital Operation Digital Economy Committee of China Information Industry Association September The Bank’s Happiness+ pension finance service system was selected as the China International Fair for practice case of China Service Trade in Services Cross-border Financial Services Platform of the Year jiemian.com August “Excellent” ranking in the rural revitalization assessment PBOC and NFRA Excellent Wealth Management Bank 21st Century Business Herald Bank for Common Prosperity Contribution Tsinghua Financial Review 2023 Ecosystem Brand Certification National Brand Project of Xinhua News Agency Kantar Group and Caijing magazine July Ranked 19th on the list of “Top 1000 World Banks” in terms of tier-one The Banker magazine capital “Market Outlook Award — Fourth Place of Overall Award” and “Market London Stock Exchange GroupOutlook Award — First Prize of Fund Foundation” Excellent Northbound Market Maker Bond Connect Company Limited Excellent Case of Financial Innovation for Rural Revitalization JRJ.comJune Top 100 Model Unit for Excellent Services in Banking Industry” for the China Banking Association Bank’s outlet service Award for Glory for the Bank’s retail intelligent decision-making platform cebnet.com.cn (Digital ChinaDigital and Intelligent Platform — Gold Award of Digital Empowerment” Innovation Contest ACIC for the Bank’s open banking and “Gold Award of Digital Marketing” for 2023) the Bank’s all-channel integrated platform May Best Interactive with Minority Investors Outstanding IR Enterprise and p5w.net “Best New Media Operation Award” April Model Unit in Green Bank Ratings China Banking Association March Best RMB Foreign Exchange Spot Market Maker Best RMB Foreign China Foreign Exchange Trade Exchange ESP Market Maker Excellent Service Enterprise Exchange System Rate Risk Management Member Best Foreign Currency Pair Market Maker and Best Technical Service Support Institution Best Business Innovation Contributor Best Inquiry Market Maker and Best Shanghai Gold Exchange Inquiry Institution February Ranked 20th among the “Top 500 Banking Brands” The Banker magazine of the United Kingdom – 119 –Awards and recognitions Awarding organisation Excellent Comprehensive Business Institution Excellent Institution of Shanghai Commercial Paper Acceptance Business Excellent Institution of Discounting Business Exchange Corporation Ltd.Excellent Institution of Settlement Business Excellent Service Institution of Commercial Paper Information Disclosure and Excellent Institution of Launching New Generation of Bill Trading System January Award for Market Influence — Core Dealer Award for Market Influence — National Interbank Funding Bond Market Dealer Award for Market Influence — Derivatives Market Center Dealer Award for Market Influence — Opening-up Participant Award for Market Innovation — X-Bargain Award for Market Innovation — X-Swap Award for Market Innovation — Derivatives Innovation Award for Market Innovation — Bond Strategy Trading and Award for Market Innovation — Cross-border Investment Innovation Excellent Financial Bond Issuer CCDC Member Business Development China Central Depository & Quality Evaluation — Outstanding Contributor to Collateral Business and Clearing Co. Ltd.CCDC Member Business Development Quality Evaluation — Top 100 Proprietary Settlement Excellence Award for Proprietary Clearing of Standard Bond Forward Shanghai Clearing House 2022 December Excellent Participant in the Digital Supply-Chain Financial Service Platform China National Clearing Center Outstanding Brand Bank of the Year The Economic Observer Most Influential Wealth Management Bank Caijing Best Bank for Auto Financial Services 21st Century Business Herald Cross-border Financial Service Platform of the Year Jiemian.com Award for the Best Transaction Banking Brand Organising Committee of the Annual Conference of China Transaction Banking Best Bank for Cross-border Financial Services Organising Committee of the Annual Conference of China Transaction Banking Innovative Case in Rural Revitalization Financial Research Institute of People’s Daily November Excellent Cases of Corporate ESG Inclusive Finance www.xinhuanet.com and China Enterprise Reform and Development Society Award for Best Wealth Management of the Year www.stockstar.com Commercial Bank of the Year for Empowering High-quality Development www.investor.org.cn with Innovation Retail Bank of the Year China Times October Golden Bull Award for Bank Wealth Management Sales China Securities Journal Most Progressive Bank of the Year and Most Socially Responsible Bank of www.stockstar.com the Year – 120 –Awards and recognitions Awarding organisation September Model Unit in Green Bank Ratings China Banking and Insurance Regulatory Commission and the China Banking Association Excellent Settlement Member Excellent Underwriter Excellent Clearing Shanghai Clearing House Member and Excellence Award for Proprietary Clearing of Standard Bond Forward Best Private Placement Sales Bank www.chnfund.com Annual Wealth Management Award National Business Daily Aging Financial Service Provider of the Year Securities Times Ecosystem Brand Evaluation and its CITIC carbon account and supply chain Caijing’s the 2022 First finance were selected among the benchmark cases of ecosystem brands Ecosystem Brand Summit August National Outstanding Institution for Annual Credit System Data Quality in Credit Reference Center the the Banking Sector People’ Bank of China Excellent Monetary Transaction Institution under the Belt and Road China Foreign Exchange Trade Initiative and Best Foreign Currency Lending Member System July Ranked 19th on the “Top 1000 World Banks” in terms of tier-one capital The Banker magazine of the United Kingdom Second among joint stock banks in regulatory ratings of financial services China Banking and Insurance for micro and small enterprises Regulatory Commission Excellent Case of Digital Internal Audit First National Digital Auditing Conference Award for the Best Regulatory Technology Implementation in Asia-Pacific The Asian Banker and Best API and Open Banking Product Application or Project in China June The Bank’s Open Banking 2.0 project was selected as the Best API and The Asian Banker Open Banking Product Application or Project in China May Award for Interactive Relations with Minority Investors p5w.net The Bank’s audit technology platform was selected as the Excellent Case of China Banking and Insurance Annual Digital Risk Control in Digital Transformation News March Excellent Market Institution Excellent Accepting House Excellent Custody Shanghai Commercial Paper and Settlement Institution Excellent Provider of Bill Payment Services Exchange Corporation Ltd.Excellent Provider of Commercial Paper Information Disclosure Services and Excellent Institution for Bill Business Promotion The Bank’s mobile banking was also selected as the Innovative Mobile Sina Institute for Financial Banking of the Year Studies February Ranked 21st among the “Top 500 Banking Brands” The Banker magazine Annual Comprehensive Award for Centralized Clearing Business — Interbank Market Clearing Outstanding Clearing Member Annual Comprehensive Award for House Co. Ltd.Issuance Registration Custody and Settlement Business — Outstanding Settlement Member Excellence Award for Proprietary Clearing of Annual Standard Bond Forward – 121 –Awards and recognitions Awarding organisation January Award for Market Innovation X-Repo Award for Market Innovation National Interbank Funding X-Bargain Award for Market Innovation X-Swap Award for Market Center Influence — Core Dealer Award for Market Influence — Currency Market Dealer Award for Market Influence — Issuer of Interbank Certificates of Deposit Award for Market Influence — Bond Market Dealer Award for Market Influence — Derivatives Market Dealer Award for Market Influence — Opening-up Participant Excellent Northbound Market Maker Bond Connect Company Limited Participants in Financial Market Innovation of the Cross-border Interbank CIPS CO. Ltd.Payment System THE BANK’S PRINCIPAL BUSINESS ACTIVITIES The Bank’s principal business activities in the PRC include corporate banking retail banking and financial markets. It also carries out other businesses including integrated financial services and internet finance.The following table sets forth the operating income of the Group by business segment for the period indicated.For the year ended 31 December 202120222023 Amount % of total Amount % of total Amount % of total Unit: RMB million Corporate banking business . . . . . . . . . . 94056 46.0 94436 44.7 91557 44.5 Retail banking business . . . . . . . . . . . . . 82567 40.4 84677 40.1 86425 42.1 Financial markets business . . . . . . . . . . 26512 13.0 30312 14.4 25988 12.6 Other business . . . . . . . . . . . . . . . . . . . 1419 0.6 1684 0.8 1600 0.8 Total operating income . . . . . . . . . . . . 204554 100.0 211109 100.0 205570 100.0 Corporate Banking Business The Bank’s corporate banking business strives to implement the decisions and plans of the nation. With high-quality sustainable development as the main task it increased support to the real economy and actively promoted business transformation.As at 31 December 2022 and 2023 the Group had a total corporate loan of RMB2524.02 billion (representing an increase from RMB2336.18 billion as at 31 December 2021) and RMB2697.15 billion (representing an increase from RMB2524.02 billion as at 31 December 2022) respectively. For the years ended 31 December 2022 and 2023 the Bank’s corporate banking business registered a net operating income of RMB89.25 billion (representing a decrease from RMB89.33 billion in 2021) and RMB85.66 billion (representing a decrease from RMB89.25 billion in 2022) respectively accounting for 45.13 per cent. and 44.91 per cent. of the Bank’s net operating income respectively. For the years ended 31 December 2022 and 2023 the net non-interest income from corporate banking totalled RMB13.46 billion (representing an increase from RMB13.04 billion in 2021) and RMB12.83 billion (representing a decrease from RMB13.46 billion in 2022) respectively accounting for 24.41 per cent. and 23.07 per cent. of the Bank’s net non-interest income respectively.– 122 –Customers In recently years the Bank remained true to its mission of serving the real economy maintained the customer-centric approach and promoted stratified and classified customer management. It fully leverages major customers further strengthens cooperation with governments at various levels vigorously advances the building of small and medium-sized customer groups and improved both the quantity and quality of corporate customer groups. The Bank increased the number of corporate customer accounts especially base corporate customers5 and valid customers6. As at 31 December 2023 the Bank had approximately 1157600 corporate customers (representing an increase of approximately 120300 from the number of corporate customers as at 31 December 2022) while the Group had a balance of corporate deposits of RMB3783.03 billion (representing an increase of RMB145.04 billion from the balance as at 31 December 2022).Major Customers The Bank’s Major Customers consist mainly of leading industrial enterprises that serve as pillars of the economy manufacturing champions and high-market-value listed companies. The Bank set up the Major Customer Department to advance the in-depth management of major customers leveraging the synergistic advantages of CITIC Group and providing customised financial solutions. It also established strategic cooperation with a batch of customers in key fields and industries such as new energy high-end equipment manufacturing automobile construction and consumption and provided comprehensive financing wealth management and transaction settlement services for them and their industrial chain partners.As at 31 December 2023 the Bank’s balance of loans to major customers stood at RMB951.11 billion representing an increase of 2.29 per cent. over the balance as at 31 December 2022. For the year ended 31 December 2023 the Bank’s daily average balance of deposits from major customers stood at RMB1555.976 billion an increase of 2.91 per cent. year on year.Government and Institutional Customers In recent years the Bank deepened strategic cooperation with governments at all levels developed integrated financial services for customers in areas such as public finance social security housing education and healthcare and obtained over 700 key government service accounts. It helped practice national strategies and advance high-quality development by providing full-process services for local government bonds that targeted key areas like industrial parks social undertakings infrastructure renovation of old urban residential communities government-subsidized housing projects and transport providing consulting services for more than 2000 local government bond issuance projects and supporting project financing. The Bank built a service system for digital government affairs focused on service scenarios for government affairs and people’s livelihood and accelerated product upgrade and launch with the number of payroll account surpassing 3 million.As at 31 December 2023 the Bank recorded approximately 86000 accounts of government and institutional customers an increase of 12.18 per cent. from the number of accounts as at 31 December 2022. For the year ended 31 December 2023 the Bank had an average daily balance of deposits of RMB1344.21 billion from government and institutional customers. 5 Refers to corporate customers with daily average deposits of RMB100000 and above. 6 Refers to corporate customers with daily average deposits of RMB500000 and above. – 123 –Small and Medium-Sized Customers The Bank focuses on the development of small and medium-sized customer7 groups as the primaryproject. The Bank enriched and improved the four toolboxes of “policies services products andcooperation” and developed a management service system suitable for small and medium-sized customers. Its effort achieved positive results in the services for small and medium-sized customers. In 2023 the Bank won awards including “Escorting Micro Small and Medium-Sized Enterprises” from people.cn.In 2023 the Bank optimised online service channels built a precise marketing platform and established an intelligent operation and management system. It also launched exclusive services and products for small and medium-sized customers such as “Quick Park Loan” “Lucky Number Express” and “CITICBenefit + Wealth Management”. Leveraging the synergy advantages of CITIC Group in terms of “Finance+ Real Economy” the Bank has built a collaborative ecosystem with members of CITIC Group and provides lifecycle comprehensive services for customer groups having new driving force.As at 31 December 2023 the Bank recorded approximately 275900 accounts of small and medium-sized customers an increase of approximately 33000 from the number of accounts as at 31 December 2022.Among them the number of enterprises with specialised sophisticated techniques and unique novel products8 totalled 27144 an increase of 6548 from the number as at 31 December 2022. For the year ended 31 December 2023 the Bank had an average daily balance of deposits of RMB811.61 billion from small and medium-sized customers.Businesses and Products Corporate Deposit Business The Bank offers two principal deposit products to its corporate banking customers demand deposits and time and call deposits. As at 31 December 2021 2022 and 2023 the Group’s balance of corporate deposits was RMB3764.28 billion RMB3807.53 billion and RMB3932.37 billion respectively. The Group achieved steady growth of corporate deposits due to the relatively ample national liquidity and the increase in M2 growth rate in 2023 which provided a favourable external environment for deposit growth as well as the adjustment of the Bank’s organisational structure in corporate finance sector made at the beginning of 2023. It enhanced synergy between customer departments and product departments and kept optimising products and services hence driving the rapid growth of corporate deposits.Loans and Advances to Corporate Customers Corporate loans have historically been the largest component of the Bank’s loan portfolio. As at 31 December 2021 2022 and 2023 the Group’s corporate loans balance totalled RMB2336.18 billion RMB2524.02 billion and RMB2697.15 billion respectively. The Bank’s corporate loans can be classified into short-term loans and medium and long-term loans.The Bank provides discounted bills to its customers as a source of short-term financing. The interest rate the Bank charges for discounted bills varies according to the creditworthiness of each customer. As at 31 December 2021 2022 and 2023 the Group had RMB465.97 billion RMB511.85 billion and RMB517.35 billion respectively of discounted bills outstanding. 7 Refers to corporate customers with daily average deposits between RMB100000 and RMB50 million. 8 The statistical scope is determined according to the latest lists of enterprises with specialized sophisticated techniques and unique novel products at the national and provincial levels and made corresponding regressive calculation of the beginning base figures.– 124 –Investment Banking Business The Bank established its investment banking centre in 2007. With investment banking business as an important pillar underpinning the practice of the strategy of best comprehensive financial services the Bank implemented national strategies further ramped up comprehensive financial support for key areas and weak links of real economy including sci-tech innovation finance green finance strategic emerging industries and manufacturing and served the transformation and development of its corporate business.Upholding the philosophy of “professionalism in empowerment and innovation for efficiency” the Bank vigorously promoted business transformation and innovation and continued to consolidate the market position of its competitive business.In 2023 the Bank actively supported the development of real economy and made great efforts to improve its comprehensive financial service capabilities. The Bank focused on serving the national strategies key regions and major industries and provided targeted and differentiated financial solutions for various sectors and customers. The Bank worked to create integrated financial service platforms for listed and to-be-listed companies and focused on strategic emerging fields like new energies semiconductors new materials biomedicine and advanced manufacturing providing more than RMB120.0 billion of funds through capital market business and establishing in-depth cooperation with 1011 listed companies. The Bank vigorously tapped into key areas like REITs asset securitisation property rights transactions and reconstruction and expansion projects providing over RMB53.0 billion to finance the activation of existing assets.International Business The Bank’s international business consists primarily of services relating to various trade and non-trade transaction of import and export industries such as international letters of credit international remittance export and import collection and settlement letters of guarantee packaged loans and forfeiting services. Centring on the strategic orientation of opening up the financial industry at a higher level the Bank proactively acted upon the policies about the Belt and Road Initiative and the development of free trade zone (port) and served the real economy with financial resources in its international business. The Bank advanced the building of the cross-border treasury service system and formed the innovative service matrix consisting of global cash management and cross-border fund pools and steadily drove forward business development.In 2023 the Bank actively participated in the national forex management reform and joined the pilot programs as one of the first four banks in China. It supported the construction of free trade zones and promoted the implementation of financial reform policies for Hengqin Qianhai and Hainan Free Trade Port. The Bank supported the enterprises under the Belt and Road Initiative and participated in export credit projects with Indonesia Laos Bangladesh and Egypt granting RMB4.52 billion of additional loans during the year ended 31 December 2023. It supported the development of new forms of foreign trade collecting and settling U.S.$17.16 billion foreign exchange for new business platforms related to cross-border e-commerce and market procurement in 2023.Transaction Banking Business The Bank was the first in the PRC to launch its exclusive brand “Transaction+” for transaction banking.Taking transaction banking business as an important pillar for transforming its corporate banking services the Bank strenuously developed transaction banking business and built the “Transaction+2.0” transaction banking ecosystem based on “Chain Ecosystem Finance Ecosystem and e Ecosystem”.Through innovation of its financial service models the Bank provided enterprises with comprehensive digital and intelligent financial services.– 125 –In terms of the “chain ecosystem” the Bank consolidated its system-based advantages with the fund pool at the core fully supported the incoming outgoing and financing of next-generation electronic bills and the flexible split of bills and launched automatic features including bills into the fund pool and the off-pool estimation system for future cash flows greatly improving the intelligence level. It assisted core enterprises with building the supply chain platform integrated supply chain financial service solutions provided customers with integrated financial services characterized by the building of a supply chain platform and built the supply chain ecosystem jointly with core customers. Based on various scenarios the Bank developed new products like Credit E Purchase Order Pool Financing and Credit E Sales Control Model which met the demands of SMEs across supply chains for online financing which significantly improved the convenience of enterprises’ financing and promoted financing across supply chains.In terms of the “finance ecosystem” the Bank launched the “Tianyuan Treasury” service system in the market and held release conferences in 27 cities like Shenzhen Guangzhou Shanghai and Hangzhou and upgraded the “Tianyuan Treasury” management system in 2023. The Bank added four business centres for each of information invoices receivables and payables and automotives functions and set up 16 major business centres that included 106 main feature modules and over 1300 feature points in 2023 furthering its leading advantage in the market. The Bank also improved the comprehensive settlement product system for transaction banking further pushed forward the R&D and upgrade of key products for collection pooling custody and payment businesses leveraged AI technologies to introduce the RPA Xiaotian Robot and launched the “Supervision Assistant” direct connection model UnionPay order payment and other new products consistently improving the online settlement capabilities.In terms of the “e-ecosystem” being customer-oriented the Bank carried out special projects to improve corporate e-banking experience. It aims to improve customer services across channels advance the development of “AI+ manual” customer service systems for online banking mobile banking and online form filling and further improve the quality and efficiency of customer response. The Bank initially built the online channel operation system introduced diverse online channels with online banking at the core realised large-scale and differentiated customer contact in batches and implemented pilot projects at branches in Guangzhou Shenzhen and Shanghai with the new customer login rate and transaction rate improved significantly.As at 31 December 2023 the Bank had approximately 1094400 accounts of customers in transaction banking representing an increase of 13.87 per cent. compared with the number of accounts as at 31 December 2022. For the year ended 31 December 2023 the Bank’s transaction banking business processed 215.24 million transactions with total transaction value of RMB163.41 trillion an increase of 7.50 per cent. and 6.89 per cent. year on year respectively. Auto Finance Business The Bank introduced the auto finance business in 2000 as a forerunner in the market. The Bank supports auto dealers by providing financing solutions that enable them to maintain inventory and offer competitive financing options to the auto buyers. Recognising the growing significance of new energy vehicles the Bank also established extensive partnerships with mainstream new energy vehicle brands providing them with credit support and treasury management services. The Bank also expanded the coverage of the financing business for used cars among auto dealers and dealer groups and provided financing for individual auto dealers in the used car trading market to promote the prosperity of the used car market through the used car finance business. In addition the Bank developed the “pool financing” model for auto finance upgraded the financing products for new cars and launched the corporate account overdraft product for auto finance to help auto dealers activate assets lower financing costs accelerate the flow of funds empower micro small and medium-sized enterprises through financial services and promote auto consumption.As at 31 December 2023 the Bank’s auto finance business recorded 8023 customers up by 15.57 per cent. year on year. For the year ended 31 December 2023 the Bank granted loans of RMB576.68 billion representing a year-on-year growth of 12.70 per cent.– 126 –Asset Custody Business The Bank has placed great importance to the innovation and development of its asset custody business.Upholding the philosophy of “putting customers at the centre making data the cornerstone inspiringdigital intelligence and developing the value-added custody business” in recent years the Bank has been driving the digital transformation of the custody business and working to create a multi-tiered custody service system that features unified management intelligent operation considerate services and innovation for added values through technological empowerment.Following the philosophy of “value-added custody” the Bank enhanced business coordination within the Group. It increased the assets under custody from internal resources and developed the asset management business such as mutual fund pension and cross-border fund custody.As at 31 December 2023 the mutual funds under the Bank’s custody amounted to RMB2.17 trillion up by RMB207.78 billion as compared to the amount as at 31 December 2022. The Bank maintained steady growth in its pension custody business and was also qualified as a custodian of occupational annuities for central and state government agencies public institutions and in 32 provinces autonomous regions and municipalities. For corporate annuities under custody the Bank also ranked second highest among joint-stock commercial banks with corporate annuities under custody totalled RMB159.22 billion as of 31 December 2023. As at 31 December 2023 QDII funds under custody amounted to RMB178.34 billion. In 2023 the Bank reported an increase of RMB22.88 billion as compared to the amount as at 31 December 2022 in the funds entrusted under the Southbound Bond Connect program maintaining its leading position among the three custodian and clearing banks.Wealth Management for Corporate Customers The Bank assists corporate customers in optimising their asset allocation strategies taking into account factors such as liquidity requirements risk tolerance and market conditions. In 2023 the Bank strengthened the synergy within CITIC Group and deepened cooperation with the leading financial subsidiaries of CITIC Group. During the reporting period the Bank launched several region themed products such as “Zhejiang Common Prosperity and Common Innovation” “Chengdu-Chongqing Index” and “Beautiful Jiangsu” all featured asset management products issued jointly with China Securities and CITIC Wealth Management contributing to the development of local economy.As at 31 December 2023 the size of corporate wealth management was RMB181.41 billion in which coordinated agency sales registered RMB34.25 billion. In 2023 the Bank served more than 20000 customers in total showing its competitiveness as a corporate wealth management brand.Inclusive Finance Business The Bank implements national policies and strategies and improved the capability and level of financial services for micro and small-sized enterprises to fully support the development of micro and small-sized enterprises. It fully leveraged the test field mechanism for the innovation of inclusive finance products optimised the intelligent credit factory for product R&D enriched and improved the featured product system of “CITIC Easy Loan”. It refined online service channels launched “Xinzhihui” a customer-oriented mini program and boosted customer service efficiency and experience. It also stepped up the granting of loans such as medium and long-term as well as those for manufacturing sector to meet financial needs. At the same time the Bank developed the annual strategy for risk compliance management improved the risk management system such as review and approval standards the post-lending early warning management and other risk management policies and processes. The Bank also promoted the iterative upgrade of the intelligent risk control platform and continuously improved its risk compliance management capability of key fields such as such as loan payment control capital flow monitoring and anti-money laundering.– 127 –As at the end of 31 December 2021 2022 and 2023 the balance of loans to micro and small-sized enterprises9 was RMB984.06 billion RMB1248.20 billion and RMB1465.26 billion respectively. As at the end of 31 December 2021 2022 and 2023 the balance of inclusive loans to micro and small-sized enterprises10 was RMB366.87 billion RMB445.99 billion and RMB545.08 billion respectively. As at 31 December 2023 the number of customers with outstanding loans was approximately 283600 an increase of approximately 53600 compared to the number as at 31 December 2022. Overall the asset quality was kept at a relatively sound level with the non-performing asset ratio lower than the average of total loans across the Bank.Technology Finance The Bank implements national policies and strategies improved the systems and mechanisms for technology finance and aligned it with the national technological programmes. It focused on supporting key bottleneck technologies and quality small and medium-sized tech enterprises. The Bank took multiple measures to enhance its sci-tech finance business and improve its service quality. Specifically * capability building: the Bank developed the work guidelines for the sci-tech innovation financial centres at the head office and branches pushing the team to shift the focus from project oriented and product-driven development to systemic building and customer management. It sorted credit evaluation standards and risk evaluation logics for tech enterprises and accelerated the establishment of simple clear and effective evaluation standards for sci-tech innovation enterprises; * ecosystem building: the Bank continuously advances breakthroughs in the cooperation with government departments exchanges science parks industrial capital private funds and other institutions signed strategic cooperation agreements with the Ministry of Industry and Information Technology and Shenzhen Stock Exchange inked an agreement on data sharing with the Ministry of Science and Technology and built high-quality customer acquisition channels for sci-tech finance. The Bank categories enterprises with specialised sophisticated techniques and unique novel products companies invested by prominent institutions and listed and to-be-listed companies for refined customer selection and further advanced the precision marketing among and deep management of sci-tech customers; and * product innovation: the Bank launched various tools and products such as the point card-based approval model Listing Relay Loan Tech Talent Loan and Tech Enterprise Personal Loan. It enriched featured service toolkits providing equity financing through CITIC Equity Investment Alliance offering sponsoring and underwriting services in collaboration with the brokerage institutions under CITIC Group and delivering and delivering tax and legal consulting services jointly with external agencies so as to provide all-round financial service for sci-tech enterprises.As at 31 December 2023 the Bank’s balance of loans in sci-tech finance stood at RMB415.68 billion an increase of 20.50 per cent. from the balance as at 31 December 2022. It served 27144 enterprises with specialized sophisticated techniques and unique novel products up by 6548 from the end of prior year. 9 Refers to loans to small-sized enterprises loans to micro-sized enterprises and business loans to self-employed individuals and owners of micro and small-sized enterprises. 10 Refer to the loans for small enterprises micro enterprises individual businesses and micro and small business owners with the total single-account credit amount of RMB10 million or below.– 128 –Retail Banking Business The Bank’s retail banking business provides customers with comprehensive “financial and non-financial” services including wealth management private banking personal loans personal deposits credit cards and payroll services. The Bank aims to be an expert at five expertise (being expertise in settlement investment financing activities and services) by closely following market development trends and adhering to the operation logic of retail banking sharpening its digital insight into customers enlarging the customer base and strengthening customer relations.For the years ended 31 December 2022 and 2023 the Group’s net operating income from its retail banking business registered net operating income was RMB82.36 billion (representing an increase from RMB80.18 billion in 2021) and RMB83.56 billion (representing an increase from RMB82.36 billion in 2022) respectively accounting for 41.64 per cent. and 43.81 per cent. of the Bank’s net operating income respectively. For the years ended 31 December 2022 and 2023 the Bank’s net non-interest income from its retail banking business recorded RMB23.34 billion (representing an increase from RMB22.37 billion in 2021) and RMB23.65 billion (representing an increase from RMB23.34 billion in 2022) respectively accounting for 42.33 per cent. and 42.51 per cent. of the Bank’s net non-interest income respectively.Customers The Bank implemented stratified management of retail customers to realise value improvement from ordinary basic customers wealthy customers VIP customers to private banking customers relying on all-channel advantages with professional capabilities in stratified services. As at 31 December 2023 the Bank recorded 137 million accounts of retail customers a growth of 7.47 per cent. over the number of accounts as at 31 December 2022. More specifically: * ordinary basic customers: the Bank leverages digital means to improve services for mass customers providing efficient and highly accessible customer services through online channels such as mobile banking remote assistant and AI outbound calls; * wealthy and VIP customers: the Bank made advances in the data-driven refined customer management centring marketing around its “five expertise” and in the integrated online and offline services. As at 31 December 2023 the number of the Bank’s wealthy and VIP customers reached approximately 4287400 an increase of 7.88 per cent. compared with the number of accounts as at 31 December 2022; and * private banking customers: the Bank upholds the customer-oriented approach and continuously upgrades its capability of providing and allocating assets and enriches the scenarios of customer acquisition across the ecosystem improving the professionalism of its service team. As a result its private banking brand gathered momentum of development with the professional capability and the operating efficiency of its private banking team enhanced. As at 31 December 2023 the number of private banking customers reached approximately 74000 an increase of 10.64 per cent. over the number of accounts as at 31 December 2022. For the year ended 31 December 2023 the monthly average daily balance of AUM of the private banking customers reached RMB1031.27 billion up by 8.37 per cent. year on year; – 129 –In terms of grouped management of customers the Bank provides professional distinctive differentiated comprehensive financial and non-financial services to key customer groups such as pension customers going abroad customers and Generation Z customers. More specifically:* pension customers: the Bank provides lifecycle elderly care planning services advocating “ahealthy balance sheet” for young people “a scientific pension account book” for middle-aged people and “a happy later life” for senior people. Meanwhile the Bank further enriched elderly care planning services. For the year ended 31 December 2023 it upgraded the “Happiness+” elderly care account book into the 2.0 version enabled display of all assets for elderly care and estimation of funds available after retirement and created a one-stop elderly care planning platform for senior customers. The Bank launched the “Elderly Care Map” to facilitate the search of information about nearby elderly care institutions medical institutions senior colleges and partner merchants. The Bank strengthened services for senior customers and in collaboration with China Research Center on Aging compiled and released the Investigation Report on the Protection of Senior Financial Consumers’ Rights the first of its kind in China;* going abroad finance customers: the Bank upholds the philosophy of “lifecycle accompanyingservice”. It pools quality resources for scenarios across the ecosystem and expanded the boundary of going abroad finance services delivering customers with professional distinctive differentiated all-round and one-stop service solutions. As at 31 December 2023 the number of the Bank’s going abroad customers reached approximately 11048200 an increase of 14.99 per cent. compared with the number of accounts as at 31 December 2022; and * Generation Z customers: in active response to the national strategy on youth work for the new era the Bank deepened research on the financial services for young people and further improved the financial and non-financial service systems for young customers. For the year ended 31 December 2023 the “Yanka” products were developed to cater for youth demand for consumption acquiredapproximately 1914000 customers up by 68.10 per cent. year on year; the “52-Week MoneySaving Program” was launched to meet youth demand for wealth management and to help young people to save money easily. To ease the tension on cash flows for young workers the Bank launched the “i Card” product providing young professionals with exclusive credit policies and youth-oriented services including fitness workplace courses and audio and video platform membership. As at 31 December 2023 the Bank served more than 32.00 million young customers.Businesses and Products Wealth Management Business In active response to external changes the Bank adhering to the customer-oriented and value-oriented approach closely aligned with customer demands strengthened customer relationships provided customers with desirable experience and returns and raised its profile as a caring bank.In terms of retail wealth management the Bank accelerated the transformation towards net asset value (NAV) business strengthened the investment research-driven approach and professional capability building expanded the partnership with leading institutions and provided customers with desired products. As at 31 December 2023 the balance of retail wealth management products increased by 6.11 per cent. over the balance as at 31 December 2022 to RMB1.26 trillion of which the products of other wealth management companies the Bank sold as an agent amounted to more than RMB200 billion up by 67.86 per cent. over the balance as at 31 December 2022. – 130 –In terms of agency fund sale the Bank seized opportunities when market valuation was relatively lowoptimised the structure of customer asset allocation and pressed ahead with the deployment of “GoldenSeed” equity funds. For the year ended 31 December 2023 the Bank launched 21 customised “GoldenSeed” equity funds with the funds raised totalling more than RMB10 billion and several products leading among similar products during the same period in terms of the IPO size. The efficiency of online fund operation was substantially improved and the Bank fully upgraded the scenarios of fund channels in mobile banking APP to optimise customer experience. In 2023 the number of users accessing pages related to fund channels increased by 45.79 per cent. compared to 2022.In terms of agency insurance the Bank remains committed to customer orientation. In response to the regulatory requirements on “returning to the founding mission” the Bank stuck to value-oriented transformation and continuously optimises its business structure. For the year ended 31 December 2023 the sales of products providing long-term protection represented 50.73 per cent. of the total.In terms of deposit products the Bank places importance on deposit products across electronic channels including mobile banking personal online banking to boost customer experience. The Bank also provides a range of deposit product options based on customer contact scenarios such as payroll elderly care and going abroad as well as differentiated demands. Moreover the Bank enhanced comprehensive services for payment and settlement scenarios accelerated the building of consumer payment scenarios advanced the upgrade of product features targeting payroll fees payment and performance guarantee scenarios and accumulated settlement deposits. As at 31 December 2023 personal deposits across the Bank recorded RMB1304.96 billion an increase of RMB145.679 billion compared with the number as at 31 December 2022. Personal Loan Business Adhering to the concept of “Value Personal Loan” and the role of personal loans as the “ballast stone” of the Bank’s asset business the Bank promotes the development of three key products namely personal housing loans personal business loans and personal unsecured loans in an balanced manner.In terms of personal housing loans the Bank implements national policies on real estate regulation and places emphasis on better support of people’s needs for essential and improvement-oriented housing and promotes the building of a new model for real estate development. As at 31 December 2023 the balance of personal housing mortgage loans of the Bank reached RMB971.17 billion an increase of RMB27.08 billion from the balance as at 31 December 2022.In terms of personal business loans the Bank promotes inclusive financing and improved accessibility and convenience of its services. During 2023 the balance of personal inclusive loans increased.In terms of personal consumer loans upholding the development principles of “independently developedscenarios risk control and products” the Bank remains focused on acquiring quality customers for consumer loans. It strengthened the management of existing customers and tapped further into consumption finance scenarios such as automobile and house purchase. The Bank takes proactive and prudent marketing strategy giving full play to the role of financing in driving consumption and contributes to the recovery of consumer demand.As at 31 December 2023 the balance of personal loans (excluding credit cards) of the Bank was RMB1710.90 billion an increase of RMB157.36 billion over the end of the balance as at 31 December 2022. – 131 –Credit Card Business The Bank’s credit card centre was established in December 2007. The Bank’s credit card business employs customer acquisition system that combines sub-centres branches and online channels. It also adopts ecosystem-wide operation. The Bank collaborates with leading platforms on ecosystem business to enrich its co-branded products and has issued co-branded card with leading enterprises such as Meituan and Metro and established a distinctive merchant ecosystem centring on public consumption scenarios like restaurants stores and supermarkets and gas stations covering more than 180000 stores nationwide and driving RMB885.47 billion in consumption of merchants focused on people’s livelihood in 2023. The Bank also attaches importance on cross-border consumption scenarios and launched campaigns like “Global Consumption Season” and “Cash Rebate for Overseas Transactions”.As at 31 December 2023 the Bank issued cumulatively 115.52 million credit cards and recorded RMB520.69 billion balance of credit card loans. For the year ended 31 December 2023 the Bank’s credit card transaction volume stood at approximately RMB2716.00 billion a decrease of 2.73 per cent. year on year.Private Banking Business Based on the institutional building of private banking with focuses on customers products teams services and digitalisation the Bank strives to boost the professional operation of private banking in an all-round way. The Bank has built three teams for private banking (private banking customer managers investment advisors and product managers) and has established the expert team of “CITIC Advisory”. In recent years the Bank sped up the establishment of private banking centres with 17 centres newly approved in 2023 and 89 centres approved in total achieving full coverage of private banking services in key regions and cities across the country.Driven by the four links of “sector integration bank-wide collaboration intra-Group coordination andexternal connection” the Bank focuses on target customer group management and continuouslyimproves the customer acquisition system based on diverse scenarios. The Bank launched “CloudEnterprise Club” in 2021 to provide comprehensive personalized and scarce “individual + family +enterprise” financial and non-financial integrated service solutions together with subsidiaries of CITIC Group relying on the synergy of CITIC Group. In 2022 the Bank launched “Youth Travel” a service system for children education of its going-aboard finance business strengthening the corporate-private banking linkage brand. In addition the Bank recognises the coordination between debit and credit cards as a key means of linking private banking and credit card high end service system and realised two-way conversion and integrated management of customers. “Cross-Border Linkage” introduced the mechanism of connecting onshore and offshore services aiming to create new engine for acquiring private banking customers.In terms of services the Bank built the integrated service system on “five expertise” at both domestic and overseas institutions to cover the diverse demands of high-net-worth customers including investment settlement and credit integrated and upgraded the “Yaozuan Companion Plan” a stratified service brand deepened the lifecycle management of private banking customers and upgraded the strategy for managing private banking customers further improving the stability and comprehensive contribution of existing customers.In terms of products available to customers led by its investment research team the Bank delivers lifecycle services for the selection and sales of products from a closed-loop perspective that covers the macro market major asset categories strategies and products. It provides quantitative multi-strategy and derivative products to meet the demands of customers with different risk appetite for asset allocation. The Bank’s featured single products earned wide market recognition with the size exceeding RMB85.0 billion as at 31 December 2023. The Bank’s family trust business launched the trust business model of – 132 –multi-assets including equity and stocks suitable for entrepreneur customers with the size totalling RMB66.5 billion as at 31 December 2023.Moreover the Bank constantly makes improvement on the digital transformation of private banking and saw initial results from technical empowerment. In 2023 it completed the building of an information platform cluster that covers all areas and processes of the private banking business. The Bank unveiled mobile banking 10.0 “Private Banking Premium” version providing private banking customers with online experience leading the industry. It also launched the system for quantitative evaluation of standardised products sold via private banking on an agency basis for the quantitative selection of premium products in the whole market. Meanwhile the Bank used big data model to explore ways to establish a customised stratified and classified service system covering asset allocation and non-financial services building the all-channel marketing system of private banking business.Ageing Finance Business The Bank is one of the first commercial banks in China to launch exclusive services for senior customers and a strategic partner of China National Committee on Ageing.The Bank places great emphasis on its pension finance service system. The Bank’s pension finance service system supported by “six supports” namely “one account one account book one set of productsone set of services one team and one platform” such that each customer can have a personal pension fund account that can be used in multiple channels and scenarios an account book that is clear manageable and well invested a set of comprehensive and high-quality pension finance products a set of elderly care services covering wealth management health privileges education heritage and entertainment a team of certified and excellent “pension finance planners” and a forward-looking and specialised pension finance office platform launched by CITIC Financial Holdings.Based on insights into the era of longevity and population aging the Bank pioneered the four-step financeplanning method of “balance of income and expenses risk prevention elderly care planning and assetappreciation” upgraded its asset allocation methodologies and adopted them in customer managers’ workflow. Meanwhile the Bank innovated “a healthy balance sheet” which aims to guide young people to balance income and expenditure and to save the “first bucket of gold” for elderly care through the mobile banking app released the service of “a reasonable elderly care account book” the first in the industry to achieve total assets management and one-stop elderly care planning and launched the “Happiness + Club” functions to create “a happy life for the elderly in twilight years”.As at 31 December 2023 the Bank had approximately 927100 personal pension accounts up by 206.48 per cent. compared to the number of accounts as at 31 December 2022 and a total of approximately 3097800 users of elderly care account books. Payroll Service Business Starting from the needs of enterprises and employees the Bank integrates its competitive resources in corporate and retail banking businesses and created one-stop payroll service solutions for enterprises. For enterprises it provides “Easy Salary” an open payroll service platform with advanced employee management applications such as “Intelligent Payslips” and “One-Click Tax Declaration” and developed an essential toolkit for the digital transformation of the human resources and finance departments in enterprises. For the year ended 31 December 2023 it provided payroll services for approximately 27600 more enterprises. Targeting individuals the Bank launched “CITIC Salary Card” a special payroll card product as well as benefits and wealth management products exclusive to customers of payroll services.– 133 –Digital Finance Upholding the philosophy of “benefiting the public through intelligence” the Bank is committed to the development path of “AI + finance” and focuses on the upgrade of the retail business towards data ecosystem personalisation and intelligence realising effective services for all customers.In terms of data the Bank built three core platforms i.e. label factory business opportunity system and behaviour analysis platform and gained deep insight into customers relying on big data and AI technologies. In 2023 the Bank accumulated more than 3000 labels triggered an average of 10 million business opportunities on a daily basis and connected to over 140 thousand behaviour points effectively supporting customers in accessing proper products and services at proper time and via proper channels.In terms of the ecosystem the Bank persisted to building the ecosystem by combining “Going Global” and “Bringing in” initiatives and worked to create an industry-leading platform characterised by coordinated operation across all channels. As at 31 December 2023 it brought in 31 external financial institutions and more than 1.84 million followed fans. Based on the open platform “Xing Fu Hao” the Bank in collaboration with key financial institutions provided long-term interactive investment education activities to users raised users’ understanding of financial knowledge and established an investment education and service system. The Bank launched a brand-new lending channel and pooled differentiated credit products based on customer demand to build a high-quality consumer finance ecosystem that covers all customers products and channels and delivers one-stop extreme user experience. In 2023 the Bank granted loans totalling RMB170.513 billion through the lending channel including RMB164.00 billion in CITIC Instant Loan RMB2.40 billion in credit card instalment loans.In terms of personalisation the Bank established the intelligent marketing and automated operation capacity facing over 100 million customers to meet their personalised demands for financial services. In 2023 2296 strategies were deployed across channels providing diversified contents and services including fine matched products activities information and caring services.In terms of intelligence in 2023 the Bank launched the digital wealth adviser service which covered wealth management and fund businesses and provided customers and frontline wealth managers with intelligent advisory services across the process of wealth investment. Since its launch the wealth adviser had completed approximately 890000 advisory interactions with the overall satisfaction rate exceeding 95 per cent. The Bank realised intelligent distribution of information providing customers with targeted wealth information services. Moreover it upgraded the intelligent recommendation feature which has been applied to all sections of mobile banking and aims to create brand-new personalized online experience based on customer demands.Financial Markets Business The Bank’s financial markets business includes interbank business and other financial markets business.The Bank’s financial market segment has been responding to the complicated and dynamic economic and financial situation at home and abroad by following closely the national policies and carrying out its duty of supporting the real economy with financial services. It stayed committed to five directions i.e.“deepening integration improving capability ensuring risk control enlarging the scale and boostingprofitability” improved its structural capability and expanded systematic advantages through building a business system that integrates sales service investment and transaction and risk control research (“S-T-R”) to serve more customers and create greater value.For the years ended 31 December 2022 and 2023 the Bank’s financial market business recorded a net operating income of RMB25.38 billion (representing an increase from RMB20.99 billion in 2021) and RMB21.67 billion (representing a decrease from RMB25.38 billion in 2022) respectively accounting for 12.83 per cent. and 11.36 per cent. of the Bank’s net operating income respectively. For the same period – 134 –the Bank’s non-interest net income from financial market business recorded RMB18.46 billion (representing an increase from RMB13.15 billion in 2021) and RMB18.85 billion (representing an increase from RMB18.46 billion in 2022) respectively accounting for 33.48 per cent. and 33.89 per cent.of the Bank’s net non-interest income respectively.Customers Based on the “S-T-R” model the Bank tapped into the blue ocean of institutional customers. Centring on five major areas of urban and rural commercial banking securities funds elements and insurance the Bank developed business models featuring combined operation chain marketing and cross traffic diversion to constantly boost the operating efficiency in different industries. Comprehensively leveraging digital operation tools such as CITIC “Interbank+” peer CRM and MPP the Bank forgeddifferentiated competitive advantages in key industries and regions through the “going to the countrysideand primary-level institutions” initiative. As at 31 December 2023 the “Interbank+” platform recorded 2840 accounts an increase of 175 accounts from the number as at 31 December 2022. The daily average balance of interbank deposits for the year ended 31 December 2023 was RMB784.80 billion.Businesses and Products Financial Interbank Business The Bank has continued to expand the scope of its business cooperation with other banks and financial institutions after achieving full coverage of mainstream financial institutions.As at 31 December 2021 2022 and 2023 the Bank’s balance of financial interbank assets (including deposits and placements with loans to banks and non-bank financial institutions taking into account accrued interest and allowance for impairment losses) amounted to RMB251.77 billion RMB297.00 billion and RMB318.82 billion respectively. As at 31 December 2021 2022 and 2023 the Bank’s balance of financial interbank liabilities (including deposits and placements from banks and non-bank financial institutions taking into account accrued interest) amounted to RMB1253.09 billion RMB1214.52 billion and RMB1014.21 billion respectively.The Bank’s bill discounting business has been targeting inclusive green and strategic emerging industries as well as manufacturing and key sectors of real economy channelling low-cost funds to the real economy. For the year ended 31 December 2023 the volume of bill discounting business reaching RMB1547.13 billion serving 16777 accounts of corporate customers of which 11687 or 69.66 per cent. were micro and small enterprises and bill rediscounting recorded a daily average balance of RMB73.21 billion representing a year-on-year increase of 29.40 per cent. For the year ended 31 December 2022 the volume of bill discounting business reached RMB1397.25 billion serving 14331 corporate banking customers of which 9634 or 67.22 per cent. were micro and small enterprises and bill rediscounting recorded a daily average balance of RMB56.576 billion representing a year-on-year increase of 39.78 per cent. As at 31 December 2022 and 2023 the balance of the Bank’s bill assets amounted to RMB512.13 billion (representing an increase from RMB466.24 billion as at 31 December 2021) and RMB516.79 billion (representing an increase from RMB512.13 billion as at 31 December 2022) respectively. The Bank launched the CITIC “Interbank+” platform online in the first half of 2017. It is a one-stop interbank financial service platform that integrates traditional finance and the internet. Following the operating philosophy of “One CITIC One Customer” the Bank integrated resources in cooperation with the financial subsidiaries of CITIC Group to further develop the CITIC “Interbank+” platform. Focusing on the demand of financial institutions for wealth management market making transactions andintelligent services the Bank deployed the financial market businesses featuring “floor +over-the-counter” trading and “domestic + overseas” operations and developed three major features i.e.– 135 –“Premium Product Store” “Cloud-based Interbank Market Trading Hall” and “Intelligent and DigitalCommunication Platform”. Centring on renewal and upgrade customer experience and first-line customer services the Bank completed fast upgrade of features and gradually formed three value chains respectively of wealth management asset management and comprehensive financing. The “Interbank+” platform recorded an online business volume of RMB1.82 trillion for the year ended 31 December 2023 up by RMB0.75 trillion year on year.Forex Business The Bank’s forex business played a crucial role in serving the real economy. As a market maker and the lead bank of the expert group for interbank forex trading regulation the Bank actively contributed to the high-quality development of the forex market and assisted enterprises in managing exchange rate risk.For example the Bank stepped up market publicity and training and guided customers to establish the exchange rate risk neutrality concept and provided support to customers on exchange risk management.The Bank enriched its hedge product system both online and offline provided professional and comprehensive butler-like forex services to customers and assisted enterprises particularly micro small and medium-sized enterprises to improve the overall capability of managing exchange rate risk.For the years ended 31 December 2022 and 2023 the Bank’s market making volume recorded U.S.$2.25 trillion (representing an increase from U.S.$2.12 trillion in 2021) and U.S.$2.61 trillion (representing an increase from U.S.$2.25 trillion in 2022) respectively staying ahead in the market.Bond Business The Bank’s bond business provided customers with integrated financing services and actively carried out bond investment transactions with proprietary funds. As an underwriting agent of government bonds the Bank effectively fulfilled its responsibility in the underwriting investment and trading of government bonds leading the market in the proportion of government bonds underwritten for the years ended 31 December 2022 and 2023. The Bank stepped up investment in local government bonds helped local governments mitigate debt risk giving full play to the role of serving the real economy.In terms of bond investment centring on its capital-light strategic transition the Bank continuously optimises the asset structure strengthens refined management and achieved notable results in seizing cross-market investment opportunities tapping relative values and flexibly arranging exposures and steadily advanced the returns on bond investment.The Bank also actively fulfils its responsibilities as a core market maker in the interbank bond market carries out bilateral and requested market marking quotations and actively offers the market pricing benchmark and liquidity support ranking among the No. 1 market makers by several indicators. In 2023 the Bank became one of the first market makers under the Northbound Bond Connect programme the first bond basket market makers the first interest rate option market makers and the first market makers for NCD standard interest rate swap with both market influence and brand image constantly improved.As for the market making business the Bank actively implemented the interconnectivity mechanism in the bond market and made greater efforts to facilitate services for overseas institutional investors staying ahead in the market in terms of the Bond Connect and bond settlement agency businesses and continuously contributing to the high-quality opening-up of the bond market.Monetary Market Business The Bank’s monetary market business conducts bond repurchase in both local and foreign currencies interbank lending and interbank certificates of deposit issue to enrich financing channels for small and medium-sized commercial banks non-banking financial institutions as well as other trading entities so as – 136 –to help them to meet their short-term financing needs. For the years ended 31 December 2022 and 2023 the Bank recorded a trading volume of RMB28.14 trillion (representing an increase from RMB24.86 trillion in 2021) and RMB28.08 trillion (representing a slight decrease from RMB28.14 trillion in 2022) in the Renminbi money market. For the same period the amount of RMB interbank certificates of deposit issued reached RMB762.63 billion (representing a decrease from RMB873.89 billion in 2021) and RMB977.27 billion (representing an increase from RMB762.63 billion in 2022) respectively. In 2023 the trading volume in the foreign currency money market totalled U.S.$307.77 billion accumulatively up by 20.22 per cent. year on year and the issuance of interbank certificates of deposit in foreign currencies amounted to U.S.$900 million up by 100.00 per cent. year on year.Precious Metal Business The Bank’s precious metal business provides customers with professional leasing value reservation and warehouse receipt transaction services aiming to meet the demands of all qualified enterprises across the precious metal industry chain. The Bank regularly conducts in-depth analysis of market trends closely follows policy and regulatory orientations and adopts diversified trading strategies. In 2022 the Bank was qualified as one of the first gold market makers on the international board of Shanghai Gold Exchange. In 2023 the Bank achieved leading position among the first gold inquiry market makers by market making size at Shanghai Gold Exchange.Asset Management BusinessThe Bank’s asset management business is the key link and role in the value chain of its “wealthmanagement — asset management — comprehensive financing”. Based on the advantage in financial license asset organisation and investment management of CITIC Wealth Management the Bank improved synergy within the Group and between parent and subsidiaries to develop a well-rounded asset management business with strong core competitiveness full product range broad customer base and leading overall strength.The Bank’s asset management business followed a “customer-centric” operation philosophy. With “prudence” as the brand core the Bank established a “6+2” product system consisting of currency currency+ fixed income fixed income+ hybrid and equity as well as project and shareholding to satisfy the diverse investment needs of its customers. The Bank also actively explored scenario-based businesses such as pension finance wealth inheritance and discretionary entrustment to build a full lifecycle wealth management service system. On the investment and research end it continued to enhance coordination sorted out investment decision-making mechanisms improved management on investment and research system and further boosted wealth management business performance.On the sales end it increased efforts to strengthen the building of a direct-sales system featuring “onlinemarketing + offline promotion” and “institution + individual” as well as the building of “12+3+N” agency-sales channels to further improve the sales channel ecosystem. As at 31 December 2023 the number of wealth management customers of the Bank exceeded ten million to reach approximately 14064900 cumulatively an increase of 51.55 per cent. from the number as at 31 December 2022. The Bank carried out agency sales business for wealth management products with a total of 127 cooperative agents cumulatively.Giving priority to the quality and efficiency of the real economy the Bank fully leverages its strength of asset allocation platform and supported high-quality development of the real economy through its financial resources placing focuses on FinTech green economy pension finance and inclusive wealth management: * FinTech: the Bank focuses on promoting the positive interaction among technologies industries and finance and increased support to technical innovation sectors such as new energy new materials new generation of IT and biomedicine; – 137 –* green economy: the Bank actively develops green economy and made active progress centring on green and sustainable ideas. Focusing on sectors including energy saving and carbon reduction environmental protection clean energy ecological protection restoration and utilisation and green upgrading of infrastructure it continues to seize green investment opportunities supported by policies; * pension finance: the Bank participated in the building of the pension insurance system with Chinese characteristics reinforced related business guarantee mechanism and built a one-stop comprehensive elderly care service system to ensure customers’ access to elderly care; * inclusive wealth management: the Bank upholds an operation philosophy of prudent investment stable style steady income and reliable consumer protection and extends sales to customers in county town and village level. At the same time it innovated the new model of “charity + finance” issued “Caring for Children” charity wealth management products and expanded the effective approach of promoting common prosperity through financial services.The Bank adheres to a technology-driven approach in its asset management business and strengthened the integration of data business and technology at the top level. It deepened agile development practices enhanced technological independence and made continuous efforts in promoting independent design and building of its four core systems of asset management TA risk control and direct sales. In 2023 it completed more than 460 business demands connected data linkage in all areas such as products sales assets accounting and investment and research and continued to advance IT innovation-based transformation of core systems in accordance with stated goals.As at 31 December 2023 the Bank’s size of wealth management products (including entrusted wealth management) amounted to RMB1728.41 billion an increase of RMB151.33 billion as compared to the size as at 31 December 2022. The increment of wealth management product ranked among the top in national wealth management institutions. Its product performance and market position were well recognised by the market.DISTRIBUTION CHANNELS As at 31 December 2023 the Bank had 1451 outlets in 153 cities in the PRC a London Branch and a Hong Kong Branch. In addition the Bank is continuously promoting the use of online banking channels such as Internet banking and mobile banking. The Bank is able to provide its customers with efficient banking services through its extensive network of physical outlets and online channels.The table below sets out the Bank’s balance of deposits from customers by geographical region as at 31 December 2023.Region Balance Proportion RMB million % of total Head Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2669 0.1 Bohai Rim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1439550 26.3 Yangtze River Delta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1472237 27.0 Pearl River Delta and West Strait . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 859897 15.7 Central China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 729490 13.3 Western China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 548939 10.0 Northeastern China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115673 2.1 Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299202 5.5 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5467657 100.0 – 138 –Physical Outlets As at 31 December 2023 the Bank had 1451 outlets in 153 medium-sized and large cities in the Chinese mainland including 37 tier-one branches (directly managed by its head office) 125 tier-two branches and 1289 sub-branches (including 32 community/micro and small sub-branches) plus 1529 self-service banks (including onsite and offsite self-service banks) 4482 self-service terminals and 9131 smart teller machines.In terms of the layout of overseas outlets the Bank set up a London Branch a Hong Kong Branch and a Sydney Representative Office. As at 31 December 2023 CNCBI an affiliate of the Bank had 31 outlets and 2 business wealth management centres in Hong Kong Macau New York Los Angeles Singapore and the Chinese mainland. CNCBI had 3 subsidiaries in Hong Kong and the Chinese mainland. JSC Altyn Bank had 7 outlets and 1 private banking centre in Kazakhstan.The Bank’s London Branch upon approval of the Prudential Regulation Authority and the Financial Conduct Authority of the UK opened for business on 21 June 2019. The Bank’s London Branch is the Bank’s first overseas branch directly managed by the head office and is mainly engaged in bilateral and syndicated lending trade finance and cross-border M&A finance foreign exchange trading money market transactions derivative transactions offshore RMB trading bond issuance and repurchase as well cross-border RMB payment settlement services. In response to the fluctuations in the macroeconomy the Bank’s London Branch actively sought market opportunities and stayed active in the money market and forex market. For the year ended 31 December 2023 it recorded a trading volume of U.S.$46.50 billion in total (including bonds foreign exchange interest rate swaps money market borrowing and issuance of interbank certificates of deposit). The Bank’s London Branch achieved an operating income of U.S.$20.67 million U.S.$39.90 million and U.S.$28.15 million for the years ended 31 December 2021 2022 and 2023 respectively. On 8 June 2023 the Bank’s Hong Kong Branch was granted the license for operation by the Hong Kong Monetary Authority. On 27 March 2024 as approved by the Hong Kong Monetary Authority the Hong Kong Branch of the Bank has been officially established.Retail Online Channels The Bank has placed significant emphasis on developing robust retail online channels to meet the needs of its retail customers. Through its internet and mobile banking applications the Bank offers personalised and exclusive user experience to its retail customers.China CITIC Bank APP In 2023 the Bank launched China CITIC Bank APP 10.0 with the home pages of five channels i.e.“Home Wealth Borrow Membership My” and core basic scenarios drastically revised and fully upgraded customer experience through more accessible and intelligent services of higher quality.Centering its value premise it developed two major tools for asset allocation including the “healthybalance sheet” and “Happiness + pension account book” as well as the AI-enabled digital wealth management advisor that is professional and available 7*24 helped users enjoy specialized wealth management advisory services online expanded wealth management services delivered low-threshold highly accessible and caring wealth management services and thereby realised inclusive finance. For the year ended 31 December 2023 China CITIC Bank APP recorded 16.27 million online monthly active accounts up by 5.44 per cent. year on year; the total number of customers granted loans through the Lending Channel reached 1736.1 thousand and the loans granted totalled RMB170.513 billion.– 139 –Credit Card Mobile Card Space APP In 2023 the Bank upgraded Mobile Card Space APP 10.0. Oriented by “core card services” the Bank refined user service scenarios of the APP expanded the consumption ecosystem and built an intelligent platform that integrates finance and life comprehensively improving its caring service. As at 31 December 2023 the Mobile Card Space APP recorded 19.88 million online monthly active accounts.Remote Customer Service The Bank boosted the capacity of its digital and remote customer services operation. It established anenterprise-level platform that integrates inbound and outbound calls refined and strengthened the “IronTriangle” model for the remote management of the wealth of wealthy customers and unlocked the capacity of remote services through professional operation. As a result the overall customer contact volume grew significantly. For the year ended 31 December 2023 the Bank’s outbound call service covered 16.75 million customers up by 56.88 per cent. year on year.Enterprise WeChat Account The Bank worked to build its enterprise WeChat Account into an interpersonal service channel with a human touch. For the year ended 31 December 2023 the number of its enterprise WeChat Account followers exceeded 10 million to 11.67 million and the customer satisfaction was above 95 per cent.Open Banking The Bank advanced the development of open banking and the scenario-based ecosystem. Through standardised modular and light docking solutions (including but not limited to API SDK H5 and WeChat Mini Program) it embedded financial/non-financial services into third-party cooperation scenarios and introduced third-party services to promote the rapid output of retail banking inclusive finance corporate banking and other characteristic products and services and the efficient introduction of external resources from cooperative platforms. In 2023 the Bank jointly developed more than 17000 scenarios such as account wealth payment and bill payment with industries through standardized product components serving more than 55.88 million person-times and recording more than RMB511.3 billion in cumulative transactions. It cooperated with partners to further develop an open wealth ecosystem and introduced several fund companies wealth management subsidiaries and insurance companies to the open wealth platform “Xing Fu Hao” which provided full-process intelligent wealth management and companion service to more than 508 million person-times.Corporate Online Channels In 2023 the Bank’s corporate online channel remained focused on customers further built the capacity of infrastructures for the full journey including contract signing customer use and aftersales services refined the online contract signing process for products launched the Ukey-free validation and login mode and supported domestic UnionTech UOS and Mac operating systems. It stepped up the innovation of products that integrate business finance and tax such as CITIC E Card e-CNY Business Travel Platform Invoice Express and products related to corporate customer benefits and comprehensively improved the integrated financial services that are open connected refined and intelligent across corporate online channels. As at 31 December 2023 the Bank recorded 1.09 million customers across corporate online channels up by 13.87 per cent. over 31 December 2022 and covering 93.79 per cent. of the total. For the year ended 31 December 2023 215 million transactions involving RMB163.41 trillion were enabled through corporate online channels up by 7.50 per cent. and 6.89 per cent. respectively year on year.– 140 –Subsidiaries and Joint Ventures Set out below are the Bank’s main subsidiaries and other joint ventures which the Bank is engaged in: * CIFH is a wholly-owned subsidiary of the Bank. Its main business scope includes commercial banking and non-banking financial services and serves as the Bank’s main platform for conducting overseas business. CIFH conducts its commercial banking business mainly via its holding subsidiary CNCBI (in which CIFH holds a 75 per cent. equity interest) and conducts its non-banking financial business primarily via CIAM (in which CIFH holds a 46 per cent. equity interest): * CNCBI is a full-service commercial bank that offers a broad spectrum of financial services to customers across the region. Leveraging its strengths and capabilities CNCBI has helped the Bank to enhance its global network service quality and income diversification. In 2023 CNCBI aligned itself with the CITIC ecosystem pursued value creation and asset-light development and developed signature products and services such as syndicated loans Chinese USD bonds offshore RMB trading and bancassurance constantly expanding its customer base and improving its service capacity.* CIAM is a cross-border asset management company and is mainly engaged in private equity investment and asset management.* CNCB Investment is a wholly-owned subsidiary of the Bank. Its main business scope includes lending investment (mainly debt securities investment fund investment stock investment and long-term equity investment) overseas licensed investment banking business and domestic equity investment fund management.* CITIC Financial Leasing is a wholly-owned subsidiary of the Bank. Its business scope covers financial leasing transfer and receipt of financial lease assets investment in fixed-income securities and resales and handling of leased properties.* CITIC aiBank is 65.70 per cent. owned by the Bank. It is an innovative internet bank jointly established by the Bank and Fujian Baidu Borui Network Technology Co. Ltd.* Lin’an CITIC Rural Bank is 51 per cent. owned by the Bank. It mainly engages in general commercial banking business.* JSC Altyn Bank is 50.1 per cent. owned by the Bank. It mainly engages in banking business in Kazakhstan.* CITIC Wealth Management is a wholly-owned subsidiary of the Bank. It mainly engages in the issuance of wealth management products investment and management of investor assets under custody financial advisory and consulting services.RISK MANAGEMENT The Bank resolutely implemented the decisions and plans of the CPC Central Committee combined serving the real economy with grasping business opportunities and realised high-quality development inserving the economic and social transformation and development. It solidly promoted “the combinationof Five Policies” focused on key industries and areas of national strategy conducted specialised industry research improved supporting mechanisms and optimised the credit structure. It continued to improve the comprehensive risk management system effectively transmitted prudential risk preference and constantly advanced the risk compliance culture. It improved unified credit management system and – 141 –strengthened regional and customer concentration control. It promoted the implementation of integrated credit approval management and inspection improved the building of a full-time approver system and strengthened post-lending and risk mitigation management to improve the quality and efficiency of risk control throughout the process. The Bank exercised strict control over the quality of all assets took solid steps to manage near maturity credit in key areas and monitored key accounts by level and category and classified assets strictly. It pushed forward risk projects defusing and increased efforts in cash recovery stabilising quality while seeking economic benefits from troubled assets. It strengthened the building of professional risk management teams and improved the risk management capabilities of the Bank.The following chart sets out the Bank’s risk management structure: Board of directors Board of supervisors Audit and Related Party Risk Management Committee Transactions Control Committee Board of directors Board of supervisors President and Risk and Internal Control Committee the President’s Office Credit Risk Management Committee Senior Management Credit Risk Warning Committee Non-performing Assets Vice President of the Bank Vice Presidents of the Bank Disposal Committee in charge of risk management Audit Compliance Operation Department Department: Management General Office: Risk Management compliance/ Department: reputational risk Department money-laundering/ credit risk Credit Law and Asset comprehensive/ sanctions risk (loan granting) Execution Preservation credit/market/ Department: Department: operational/ Asset and Liability Regional credit risk credit/legal risk Information Technology concentration/ Department: strategy risk/ audit centersManagement Department: country risk liquidity risk/ information technology interest rate risk in the risk banking book Head office Board of Branch directors of President subsidiaries Branches Branch risk Other and director branch leaders Senior subsidiaries management of subsidiaries Risk Credit Law and Asset Relevant branch Management Execution Preservation departments Department Department Department Risk Management Department of subsidiaries – 142 –Credit Risk Management Credit risk refers to the risk of a bank incurring losses in its business due to the failure of its borrowers or transaction counterparties to fulfil the obligations specified in relevant agreements or contracts. The Bank’s credit risk mainly comes from various credit businesses including but not limited to loans guarantee acceptance loan commitments and other on-and off-balance sheet credit businesses bond investment of banking book derivatives trading and security financing structured finance and other businesses. Under the overall objective of maintaining stable asset quality and increasing the proportion of high-quality customers and guided by the principle of serving the real economy and preventing risks the Bank continuously optimised its credit structure enhanced comprehensive financial service capabilities strengthened the whole-process credit management prevented systemic risks and kept credit risks within a tolerable range.During the year ended 31 December 2023 in order to actively adapt to market developments and changes in the policy environment the Bank took various measures to improve the capability quality and effectiveness of post-lending management thereby realising continuous value creation. Actively advancing the post-lending management system development the Bank implemented strict post-lending management and solidly promoted the optimisation and upgrading of post-lending management organisation policy process technology and culture. It organised and carried out stratified and classified risk monitoring strengthened risk investigation in key areas dynamically optimised early warning strategies and rules and effectively enhanced early warning management targeting group customers.Market Risk Management Market risk refers to the risk of on- and off-balance sheet businesses of a bank incurring losses due to unfavourable changes in market prices (including interest rate exchange rate stock price and commodity price). The main market risk confronting the Bank includes interest rate risk and exchange rate risk. The Bank has established a market risk management policy system covering market risk identification measurement monitoring control and reporting. By closely monitoring market risks strictly implementing risk limit management timely conducting risk measurement and reporting and other market risk control measures the Bank has controlled its market risk within a reasonable and acceptable range. The target of market risk management of the Bank is to control market risk within the reasonable range and maximize risk-adjusted returns based on its risk appetite.The Bank optimised the market risk management policy system consolidated the data foundation of the market risk measurement system and made sufficient preparations for the implementation of the standards approaches for market risk under the new rules on capital management. It actively responded to market volatilities in interest rates and foreign exchange etc. continued to conduct risk investigation and monitoring and effectively prevented and responded to market risks. It optimised the tiered management of market risk limits hence strongly supporting business development based on controllable risks.Interest Rate Risk Management Interest rate risk in the trading book The Bank established a complete risk limit system for the interest rate risk in the trading book set limits such as value at risk interest rate sensitivity and market value loss according to features of different products and regularly assessed the interest rate risk in the trading book through stress testing and other tools so as to control the interest rate risk in the trading book within its risk preference.The Bank’s interest rate risk in the trading book is mainly affected by changes in yields of the domestic bond market. During the year ended 31 December 2023 the domestic bond market yields overall went downwards amid fluctuations. The Bank closely tracked market changes strengthened market research – 143 –and judgment effectively carried out risk monitoring and warning and prudently controlled the interest rate risk exposure in the trading book.Interest rate risk in the banking book Interest rate risk in the banking book is defined as the risk of loss in the overall earnings and economic value of the banking book arising from adverse movements in interest rate maturity structure and other factors. It consists of gap risk benchmark risk and option risk. The Bank manages its interest rate risk in the banking book with the overall objective of observing its prudent risk preference principle and ensuring that overall exposures are controllable and within the Bank’s risk tolerance range. Relying on effective comprehensive risk management the Bank established a sound management system for interest rate risk in the banking book including a multi-level risk management structure risk management strategies and processes risk identification measurement monitoring control and mitigation systems internal control and audit policies information management systems risk reporting and information disclosure mechanism etc.The Bank closely follows changes in monetary policies and fiscal policies strengthens the analysis and prediction of the trend of market interest rate and the simulation and analysis of customer behaviour changes and takes forward-looking measures for proper response.Exchange Rate Risk Management Exchange rate risk refers to the risk of on- and off-balance sheet businesses of a bank incurring losses due to unfavourable changes in exchange rates. The Bank mainly measures the magnitude of exchange rate risk through foreign exchange exposure analysis. Its foreign exchange exposure mainly comes from the foreign exchange position formed through foreign exchange transactions and from foreign currency capital and foreign currency profits. The Bank manages exchange rate risk by reasonably matching Renminbi and foreign currency denominated assets with liabilities denominated in the same currencies and by making appropriate use of derivative financial instruments. For foreign exchange exposures of bank-wide assets and liabilities as well as foreign exchange exposures formed in foreign exchange settlement and sale foreign exchange trading and other transactions the Bank sets exposure limits to control its exchange rate risk at an acceptable level.The exchange rate risk of the Bank was mainly subject to impact of changes in the Renminbi exchange rate against the U.S. dollar. In 2023 the Bank continuously improved the measurement and management of foreign exchange exposures formulated and improved the exchange rate risk management rules strictly controlled the foreign exchange risk exposures of relevant businesses and intensified routine risk monitoring forewarning and reporting controlling the exchange rate risk within the acceptable range.Liquidity Risk Management Liquidity risk refers to the risk that a bank is unable to obtain adequate capital in a timely manner and at reasonable cost to repay matured debts perform other payment obligations or meet other capital needs for normal business. The Bank’s liquidity risk management aims to effectively identify measure monitor and control the liquidity risk by establishing a sound system for liquidity risk management and ensure that the liquidity demand can be met at a reasonable cost in a timely manner.The Bank has set up a robust governance structure for liquidity risk management which clearly lays out the division of duties among the board of directors the board of supervisors and the senior management and subordinate specialized committees and the relevant management departments of the Bank and explicitly defines the strategies policies and procedures on liquidity risk management. The board of directors assumes the ultimate responsibility for liquidity risk management of the Bank and shall review and approve the liquidity risk appetite liquidity risk management strategy important policies and – 144 –procedures etc. The board of supervisors is responsible for supervising and evaluating the performance of the board of directors and the senior management in liquidity risk management and reporting to the general meeting of shareholders. The senior management members take charge of specific management of liquidity risk keep abreast of major changes in liquidity risk and regularly report to the board of directors. The Asset and Liability Committee of the head office shall perform part of responsibilities of the senior management under the latter’s authorisation. As the leading department for liquidity risk management of the Bank the Asset and Liability Department of the head office is responsible for formulating policies and procedures for liquidity risk management measuring monitoring and analysing liquidity risk and other specific management work. The Audit Department of the head office is responsible for auditing supervising and evaluating the Bank’s liquidity risk management.The Bank has put in place a unified liquidity risk management framework. The head office is responsible for formulating liquidity risk management policies and strategies of the Group and its legal-person institutions and for managing liquidity risk at the legal-person institution level in a centralized manner.All domestic and overseas affiliates of the Group are responsible for developing and implementing their own strategies and procedures for liquidity risk management pursuant to the requirements of competent regulators and within the Group’s master policy framework on liquidity risk management.During the year ended 31 December 2023 in the face of the complex economic environment the central bank adopted a prudent and targeted monetary policy paid attention to cross-cycle and counter-cyclical adjustment and cut the reserve requirement ratio (RRR) twice to maintain reasonably ample liquidity. It cut the policy rate twice and drove down market interest rate. It gave full play to the role of structural instruments of monetary policy and increased financial support to key areas and weak links. The liquidity of the money market was reasonable and abundant while the interest rate of the money market generally fluctuated around the policy rate.The Bank constantly enhanced liquidity risk management and has increased the foresight and proactiveness of liquidity management and kept optimising the coordinated management of assets and liabilities. Adhering to stabilising and increasing deposits it stepped up efforts in improving the total amount and structure of fund sources and utilisation and maintained a dynamic balance between liquidity and efficiency. It also enhanced liquidity risk measurement and monitoring kept practicing liquidity risk limit management and continuously worked to make liquidity risk meet regulatory requirements. Moreover the Bank strengthened management of premium liquid asset and continued to promote the pledge projects for credit assets rated by the central bank. It reinforced proactive management of liabilities and maintained a reasonable and proactive liability structure so as to ensure the smooth channels and diversified sources of financing. In addition the Bank continued to promote the issuance of financial bonds to replenish and stabilise the sources of liabilities. It paid attention to emergency liquidity management and carried out emergency drills regularly. It also properly conducted daily liquidity management strengthened market analysis and forecast and made forward-looking fund arrangements to improve the efficiency of fund utilisation while ensuring liquidity safety of the Bank.During the year ended 31 December 2023 the Bank reasonably set stress scenarios and conducted liquidity risk stress tests on a quarterly basis comprehensively taking into account major factors and external environmental factors that may trigger liquidity risk. Under the mild medium and severe scenarios the Bank’s minimum survival periods all exceeded the 30-day limit specified by the regulator.Liability Quality Management Liability quality management refers to the management activities of banks with respect to the source structure and cost of liabilities to ensure the safety liquidity and profitability of their operations in line with their business strategies risk appetite and overall business characteristics. The Bank’s liability quality management system is commensurate with the size and complexity of its liabilities and its organisational structure consists of a decision-making level and an executive level. Specifically the decision-making level includes the board of directors who bears ultimate responsibility for the liability – 145 –quality management and the senior management who implements the liability quality management while the executive level refers to relevant departments of the head office and branches. Focusing on the Six Elements the Bank specified the goals and process of liability quality management and built a corresponding limit and indicator system covering key regulatory indicators of liability quality management.The Bank continued to strengthen the monitoring analysis and management of the size and structure of liabilities adhered to the control of liability costs focused on improving the balanced development of volume price quality and customers and created long-term competitive advantages in liability costs.Operational Risk Management Operational risk refers to the risk of losses resulting from deficient internal procedures employees and information technology systems and external incidents. It includes legal risk but excludes strategic risk and reputational risk. The target of operational risk management of the Bank is to enhance its risk control capability and reduce operational risk losses promote process optimisation and improve service efficiency ensure business continuity and continuous operation and reduce capital consumption and improve return to shareholders.The Bank continuously strengthens its operational risk control and intensifies the daily management of operational risk. It enhances the risk inspection in business links prone to operational risks carried out operational risk and control assessment of main business processes and optimised the key risk indicator system. It also established a long-effect loss data collection mechanism strengthened loss data clue investigation and historical loss data governance and collected loss data in a more comprehensive and accurate manner. It strengthened the operational risk system building of consolidated subsidiaries and implemented new standardised approaches for the operational risk capital measurement. It upgraded functions of its operational risk management system. Moreover it made further endeavours to establish a robust risk management system for its outsourcing business re-examined and revised the outsourcing catalogue strengthened the daily management and risk assessment of outsourcing affairs and organised outsourcing audits and comprehensive re-inspection and investigation thus effectively standardising the risk management of cooperation with third parties. It also re-examined its business continuity management system strengthened the identification of important businesses improved emergency plans enhanced plan drills arranged disaster recovery resources strengthened natural disaster management continued to improve emergency response capabilities and conducted assessment of information technology risks.Information Technology Risk Management Information technology risk refers to the operational legal and reputational risks caused by natural disasters human factors technical loopholes and management defects in the application of information technology by commercial banks. Information technology risk management is incorporated into the Bank’s comprehensive risk management system and is an important part of comprehensive riskmanagement. With the core concept of “adhering to the bottom line strengthening awareness focusingon execution proactive management and creating value” the Bank is committed to creating an information technology risk culture system covering “all employees all aspects and full process”.The Bank continuously improves the information technology risk management policy system strengthened the identification assessment measurement monitoring and control of information technology risk promoted the safe sustainable and stable operation of information systems and continuously improved the application level of information technology thus enhancing its core competitiveness and sustainability.– 146 –Reputational Risk Management Reputational risk mainly refers to the risk that damages the Bank’s brand value adversely affects its normal operation and even affects market and social stability due to negative opinion of the Bank by stakeholders the public and the media resulted from the Bank’s behaviors employees’ behaviors or external events.During the year ended 31 December 2023 adhering to the basic principles of “forward-lookingmatching full coverage and effectiveness” in reputational risk management the Bank strengthened ex ante assessment identification of potential risks and source management of reputational risk regularly inspected reputational risk management and potential risks properly prepared contingency plans forestalled and defused risks. In the process of reputational risk disposal the Bank made quick and coordinated responses handled reputational events efficiently actively responded to media and public concerns and repaired damaged reputation and social image in a timely manner. The Bank continued to strengthen the normalisation of reputational risk management carried out multi-level and differentiated reputational risk training and drills and strengthened the capabilities of functional departments and branches for prevention and control of reputational risk. The Bank accumulated reputational capital strengthened brand building and focused on promoting its brand image.Country Risk Management Country risk refers to the risk of losses to the business or assets of the Bank in a country or region or other losses of the Bank caused by the inability or refusal of the debtor in the country or region to repay the Bank’s debts due to economic political and social changes and events in that country or region.The Bank formulated sound country risk management policies and procedures so as to effectively identify measure monitor and control country risk. It identified and measured country risk in cross- border credit extension investment and off-balance sheet businesses conducted regular country risk assessment and ratings in countries (regions) where business has been conducted or planned to be conducted set appropriate country risk limits and regularly monitored and rationally controlled country risk exposures. During the year ended 31 December 2023 the Bank revised and improved country risk management rules refined the country risk rating methods continuously assessed and monitored country risk reviewed and adjusted country risk ratings and limits in a timely manner carried out stress tests on country risk and controlled country risk at an acceptable level.Compliance Risk Management Compliance risk refers to the risk of legal sanctions regulatory penalties significant financial losses or reputational losses due to not complying with laws regulations and guidelines. Compliance risk management is a core risk management activity of the Bank with the board of directors being the decision-making body for significant compliance matters and ultimately responsible for the compliance of operating activities of the Bank.With the goal of “risk prevention as foundation and equal importance attached to compliance” the Bank continuously improves the compliance risk governance mechanism and management process. It fully implemented regulatory policies completed the internalisation of new regulatory rules such as new rules on capital management in a timely manner compiled the 10 issues of the Compliance Policy Express and effectively strengthened policy transmission. The Bank intensified efforts in identification and assessment of and response to compliance risk of new products new businesses as well as major projects and supported business innovations within the framework of compliance. It launched an intensive campaign to implement regulatory policies and address frequently-occurring risks in key areas and further consolidated the basis of compliant operation. The board of directors regularly deliberated the internal control compliance report guiding and advancing the development of risk compliance culture.– 147 –Anti-Money Laundering (“AML”) The Bank deeply practiced the “risk-based” AML management philosophy continuously strengthened the AML internal control management and money laundering risk management and comprehensively enhanced AML management in accordance with the Law of the People’s Republic of China on Anti- Money Laundering the Measures for the Administration of Anti-Money Laundering and Counter Terrorist Financing by Banking Financial Institutions and the Guidelines for Risk Management Regarding Money Laundering and Terrorist Financing in Corporate Financial Institutions (Trial) as well as other laws and regulations regarding AML.The board of directors the board of supervisors and the senior management earnestly performed the Bank’s legal person AML responsibilities adhered to the guidance of Party building adopted an appropriate political perspective made overall plans on AML work and continued to promote transitionto risk-oriented management. Under the comprehensive risk management system the Bank set up “threelines of defense” for joint prevention and control so that the head office branches and sub-branches perform respective duties for AML jointly advance the rectification of problems at the root and enhance targeted and precise management.The Bank actively implemented AML laws regulations and regulatory policy requirements from the top down kept optimising the AML internal control rules and revised and issued the Rules for the AMLWork Leading Group of the head office. The Bank continued to conduct AML review of “policiesproducts and systems” and took pre-emptive actions to guard against AML risks. It optimised the AML authorisation management mechanism strengthened AML supervisory management of its subsidiaries and carried out special AML screening in three key areas to block loopholes. The Bank comprehensively implemented the integrated operating model for rating due diligence and management of retail customers and further promoted the work for reducing the burden and increasing the efficiency of AML.It continued to optimise suspicious transaction monitoring models and established a system for monitoring abnormalities. In 2023 the Bank upgraded and optimised 337 functions of 12 categories in the AML information system and reconstructed the monitoring base of the AML list. The Bank strengthened AML training for directors supervisors senior management members and employees at all levels for over 1200 times and organised 2 AML compliance campaigns on regulatory hotspots to fulfil its AML obligations as a commercial bank.Capital Management The Group has established a comprehensive capital management system covering capital planning capital allocation capital evaluation capital monitoring and capital analysis and management. During the year ended 31 December 2023 in light of changes in both internal and external situations the Group continued to uphold the “capital light asset light and cost light” development strategy. The Bank also actively promoted asset turnover and continuously optimised its asset structure. At the same time guided by the concepts of “light development” and “value creation” and adhering to the framework of “limitmanagement of regulatory capital” and “evaluation of economic capital” the Bank optimised the capital allocation model on all fronts guided operating institutions to reasonably arrange asset structure under capital constraints and thus improved the Group’s capital adequacy ratio.In 2023 as required by the Provisional Capital Management Regulations promulgated by the former CBRC in June 2012 the Group recorded the following capital adequacy profile: a capital adequacy ratio of 12.93 per cent. a decrease of 0.25 per cent. from the end of the previous year; a 10.75 per cent. tier-one capital adequacy ratio 0.12 percentage points higher than the end of the previous year; and 8.99 per cent.core tier-one capital adequacy ratio up by 0.25 per cent. from 2022 all meeting regulatory requirements.Internal Audit The Bank established an independent and vertical system for internal audit with the internal audit departments carrying out work under direct leadership of the board of directors responsible and – 148 –reporting to the board of directors. The board of directors is responsible for the independence and effectiveness of internal audit and provides necessary protection for internal audit to be carried out independently and objectively. The Bank’s internal audit departments consist of the head office’s Audit Department and eight regional audit centres under its direct management which perform the duty of audit and supervision and are independent from business operation risk management and internal control and compliance.The Bank steadily promoted audits focusing on quality technology talent and reform accelerated the digital transformation of its audit function and actively promoted continuous auditing. Through auditing it coordinated the disclosure of problems and supervised the rectification work. The Bank continued to consolidate the foundation of audit management strengthened the cultivation of a specialised audit talent carried out research-based audits guided audit practice with research findings and continuously improved the audit value quality and efficiency.In accordance with the principle of risk orientation the Bank took the initiative to adapt to changes in the external business environment and the needs of internal risk management. It continued to strengthen the supervision over key institutions key areas and key posts and focused on the implementation of national policies and regulatory attention corporate governance and strategy implementation and internal control compliance of key links. It further strengthened the overall management of projects rationally and dynamically allocated resources and promoted the “joint prevention and control” of the three lines of defense. The Bank carried out special audits on corporate credit granting real estate financing non-performing asset disposal implementation of the expected credit loss approaches the implementation of the new capital accord consumer protection and information technology and paid timely attention to risk changes amid complex operating environment through continuous audits hence promoting the high-quality and sustainable development across the Bank.INTERNAL CONTROL Focusing on key business areas the Bank strengthened the governance of key links and processes and searched deeply to repair internal control problems and hence consolidated the foundation for internal control management across the Bank.The Bank improved the internal control management mechanism. It formulated the implementation plan for strengthening internal control management coordinated the compilation of the directory of internal control management risk points of key businesses and continued to build a multi-level internal control management system with clear responsibilities effective control and powerful supervision. It further promoted policy governance organised the whole bank to find source problems of policies revised and improved the rules and regulations of the head office and optimised the functions of relevant systems thereby improving the effectiveness of policies. The Bank carried out regular policy re-inspection to continuously improve the practical efficient and concise policy system. It standardised the management of authorisation and the exercise of powers. In line with the overall requirements i.e. varying authorisation with persons places quality and customers the Bank exercised refined management over the contents of authorisation scope of authority and requirements on the exercise of authority continuously supervised and inspected the delegation of authority and implementation of authorisation across the Bank. It completed special evaluations such as inclusive e-loan and unified credit granting of parent and subsidiary companies and clarified the control requirements and responsibilities of key nodes.The Bank strengthened case prevention and behaviour system management. At the top level it formulated several measures to strengthen employee behaviour management and prevent case risks guidance on behaviour management of outsourcing personnel guidelines on inspection of important fields of tier-2 branches and other measures and requirements to strengthen bank-wide management and clarified the supervision and management responsibilities and supervision focus of business risk audit discipline inspection and other departments. The Bank convened case risk prevention and control work conferences – 149 –consolidated the management responsibilities of institutions at all levels and promoted the establishment of a behaviour risk monitoring mechanism around key businesses thereby integrating the management of employee behaviour and case prevention.The Bank deepened the building of compliance culture. It followed the requirements imposed by the Group for the “Year for Compliance Culture Cultivation” and planned for the annual “complianceseason” activities with the theme of “senior management taking the lead management as driving forceemployees as basis”. It clarified 16 tasks of senior management taking the lead actions across business lines in-depth investigation and special campaigns focused on the implementation of regulatorypolicies governance of repeated problems and other fields to carry out the “Four Investigation and FourGovernance” program thus further strengthening the compliance responsibility of officials and employees at all levels. It carried out publicity and education activities such as case warning compliance lectures and “compliance face to face” organised more than 59000 employees to complete the annual compliance exam and conducted multi-level compliance training thereby comprehensively enhancing the employees’ awareness of compliance operation and risk prevention and control and strengthening the concept of compliance operation.ENVIRONMENTAL SOCIAL AND GOVERNANCE (ESG) The Bank attaches great importance to the mutual sustainable development along with all stakeholders. It fully integrates the sustainable development concept into its strategy and culture continuously improves the sustainable development management system and is committed to becoming a green bank humanistic bank caring bank honest bank value bank and brand bank.The Bank constantly improved the ESG management capabilities strengthened policy system building gave full play to the role of the board of directors in strategic leading and formulated the Measures for Environmental Social and Governance (ESG) Management of China CITIC Bank and the Work Plan for ESG Management of China CITIC Bank focusing on key areas like green finance green operation consumer right protection public welfare care for employees and compliant operation specifying the ESG objectives and measures over the next three years and systematically advancing the management of key ESG issues. The Bank established and improved the ESG management system further refined the organisational structure for ESG management across the Bank identified the persons in charge of ESG management at the head office branches and subsidiaries and formed a bank-wide ESG management work group consisting of more than 150 members coordinating and facilitating the ESG efforts across the Bank. The Bank pushed forward work related to the “carbon peaking and carbon neutrality” sorted historical environmental data and started to develop the “carbon peaking and carbon neutrality” goals and roadmap in the light of the reality of the Bank.The Bank actively holds dialogues and exchanges with both domestic and foreign institutions in terms of social and environmental responsibilities vigorously advanced the exchanges and cooperation with various sides carefully learned from advanced ESG management concepts and beneficial practices and continuously improved its sustainability capabilities.INFORMATION TECHNOLOGY Adhering to a comprehensive technology-driven strategy the Bank understood the importance of enhancing and upgrading its technological capabilities and focused on advancing digital transformation in its operation. The Bank continued to improve data capabilities and strengthened IT innovation to unleash the potential of data and digital infrastructure.During the year ended 31 December 2023 the Bank invested RMB12.15 billion in information technology an increase of 38.90 per cent. compared to 2022 accounting for 5.90 per cent. of operating income. As of 31 December 2023 the Group has 5626 technology personnel up by 9.93 per cent.compared with the end of 2022 accounting for 8.41 per cent. of total personnel.– 150 –COMPETITION As at the date of this Offering Circular the Bank competes principally with large-scale commercial banks national joint stock commercial banks key urban commercial banks and foreign-invested banks in the PRC. In addition the Bank may face competition for funds from other forms of investment alternatives as the PRC capital markets continue to develop.EMPLOYEES As at 31 December 2023 the Group had a total of 66891 employees.LEGAL AND REGULATORY PROCEEDINGS The Group has been involved in several litigation and arbitration cases in its ordinary and usual course of business. Most of these litigations and arbitrations were initiated by the Group to enforce loan recovery and there were also litigations and arbitrations resulting from disputes with customers. As at 31 December 2023 there were 134 outstanding litigation and arbitration cases (regardless of the disputed amounts) involved in the Group’s ordinary and usual course of business where the Group acted as defendant/respondent relating to an aggregate disputed amount of RMB1.17 billion.The Group is of the view that the litigations and arbitrations will not have significant adverse impacts on either its financial conditions or results of operations.As at the date of the Offering Circular the Bank is not involved in any litigation arbitration or administrative proceedings whether pending or threatened which are or might have a material adverse effect on the financial conditions or results of operations of the Bank or which are otherwise material in the context of the issuance of the Notes.RECENT DEVELOPMENTS Quarterly Financial Information as at and for the Three Months Ended 31 March 2024 On 29 April 2024 the Group announced its unaudited financial results as at and for the three months ended 31 March 2024 (the “First Quarterly Report”). The Group also reported additional financial and operating indicators. The unaudited consolidated quarterly interim financial information as at and for the three months ended 31 March 2023 and 2024 set forth in the First Quarterly Report has not been audited or reviewed by the Bank’s auditors. Consequently such consolidated quarterly interim financial information and the First Quarterly Report should not be relied upon by investors to provide the same quality of information associated with information that has been subject to an audit or review.– 151 –The following table sets forth for the periods indicated the Group’s unaudited consolidated statement of profit or loss and other comprehensive income.For the Period of Three Months Ended 31 March 20232024 (Unaudited) (Unaudited) (RMB in millions) Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79090 78731 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (42464) (43771) Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36626 34960 Fee and commission income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9462 9389 Fee and commission expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (916) (1013) Net fee and commission income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8546 8376 Net trading gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1692 1606 Net gain from investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4100 8433 Net hedging income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 1 Other net operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288 193 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51252 53569 Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14739) (15061) Net Operating profit before impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . 36513 38508 Credit impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14109) (16819) Impairment losses on other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (91) (26) Share of profit of associates and joint ventures . . . . . . . . . . . . . . . . . . . . . . . . 198 251 Profit before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22511 21914 Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3066) (2523) Profit for the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19445 19391 Profit attributable to: Equity holders of the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19144 19191 Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301 200 Other comprehensive income net of tax i. Items that will not be reclassified to profit or loss (net of tax): – Fair value changes on financial investments designated at fair value through other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . (30) 15 ii. Items that may be reclassified subsequently to profit or loss (net of tax): – Other comprehensive income transferable to profit or loss under equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 17 – Fair value changes on financial assets at fair value through other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1360 3301 – Credit impairment allowance on financial assets at fair value through other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (70) 12 – Exchange difference on translation of financial statements denominated in foreign currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (677) 952 – Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) – Other comprehensive income net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . 597 4297 Total comprehensive income for the period . . . . . . . . . . . . . . . . . . . . . . . . . 20042 23688 Total comprehensive income attribute to: Equity holders of the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19755 23489 Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287 199 Earnings per share attributable to the ordinary shareholders of the Bank. . .Basic earnings per share (RMB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.39 0.39 Diluted earnings per share (RMB) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.35 0.38 – 152 –The following table sets forth as at the dates indicated the Group’s unaudited consolidated statement of financial position.As at 31 December As at 31 March 20232024 (Audited) (Unaudited) (RMB in millions) Assets Cash and balances with central banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416442 379719 Deposits with banks and non-bank financial institutions . . . . . . . . . . . . . . . . . 81075 86753 Precious metals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11674 8036 Placements with and loans to banks and non-bank financial institutions . . . . . . . 237742 280307 Derivative financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44675 45963 Financial assets held under resale agreements . . . . . . . . . . . . . . . . . . . . . . . . 104773 76641 Loans and advances to customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5383750 5466525 Financial Investments – At fair value through profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613824 569478 – At amortised cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1085598 1055155 – At fair value through other comprehensive income . . . . . . . . . . . . . . . . . . 888677 872649 – Designated at fair value through other comprehensive income . . . . . . . . . . 4807 4808 Investments in associates and joint ventures . . . . . . . . . . . . . . . . . . . . . . . . . . 6945 7218 Investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 528 537 Property plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38309 38577 Right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10643 10607 Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4595 3997 Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 926 942 Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52480 51158 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65021 111241 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9052484 9070311 Liabilities Borrowings from central banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273226 277453 Deposits from banks and non-bank financial institutions . . . . . . . . . . . . . . . . . 927887 906930 Placements from banks and non-bank financial institutions . . . . . . . . . . . . . . . 86327 76367 Financial liabilities at fair value through profit or loss . . . . . . . . . . . . . . . . . . . 1588 1261 Derivative financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41850 42722 Financial assets sold under repurchase agreements . . . . . . . . . . . . . . . . . . . . . 463018 214065 Deposits from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5467657 5488529 Accrued staff costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22420 17645 Taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3843 4636 Debt securities issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 965981 1189387 Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10245 10318 Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10846 10674 Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42920 45641 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8317809 8285630 Equity Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48967 53293 Other equity instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118060 115992 Capital reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59400 83530 Other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4057 8355 Surplus reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60992 60992 General reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105127 105196 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320619 339741 Total equity attributable to equity holders of the Bank . . . . . . . . . . . . . . . . 717222 767099 Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17453 17582 Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 734675 784681 Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9052484 9070311 – 153 –The following table sets forth for the periods indicated the Group’s unaudited consolidated statement of cash flows.For the Period of Three Months Ended 31 March 20232024 Unaudited Unaudited (RMB in millions) Operating activities Profit before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22511 21914 Adjustments for: – Revaluation gain on investments derivatives and investment properties . . . . . (2170) (1973) – Investment gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1928) (5707) – Net losses/(gains) on disposal of property plant and equipment intangible assets and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4) (17) – Unrealised foreign exchange (gains)/losses . . . . . . . . . . . . . . . . . . . . . . . . . 758 (1044) – Credit impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14109 16819 – Impairment losses on other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 26 – Depreciation and amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1112 1324 – Interest expense on debt securities issued . . . . . . . . . . . . . . . . . . . . . . . . . . 6198 6899 – Depreciation of right-of-use assets and interest expense on lease liabilities . . . 915 883 – Income tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4989) (3248) Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36603 35876 Changes in operating assets and liabilities: Decrease/(Increase) in balances with central banks . . . . . . . . . . . . . . . . . . . . . (3575) 30319 Decrease in deposits with banks and non-bank financial institutions . . . . . . . . . 1082 14161 Increase in placements with and loans to banks and non-bank financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7773) (55671) Decrease/(Increase) in financial assets held for trading . . . . . . . . . . . . . . . . . . (60167) 25775 Decrease/(Increase) in financial assets held under resale agreements . . . . . . . . . (54378) 28332 Increase in loans and advances to customers . . . . . . . . . . . . . . . . . . . . . . . . . (204668) (91560) Increase/(Decrease) in borrowings from central banks . . . . . . . . . . . . . . . . . . . 33832 3918 Decrease in deposits from banks and non-bank financial institutions . . . . . . . . . (7905) (20641) (Decrease)/Increase in placements from banks and non-bank financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13082 (10872) (Decrease)/Increase in financial liabilities at fair value through profit or loss . . . 1480 (345) Increase in financial assets sold under repurchase agreements . . . . . . . . . . . . . (76444) (249248) Increase in deposits from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342778 11750 Increase in other operating assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11112) (48728) Decrease in other operating liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15568) (6205) Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (49336) (369015) Net cash flows from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . (12733) (333139) Investing activities Proceeds from disposal and redemption of investments . . . . . . . . . . . . . . . . . . 640202 875269 Proceeds from disposal of property plant and equipment land use rights and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 20 Cash received from equity investment income . . . . . . . . . . . . . . . . . . . . . . . . 136 146 Payments on acquisition of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (549346) (854688) Payments on acquisition of property plant and equipment land use rights and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1221) (1795) Net cash flows from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89793 18942 – 154 –For the Period of Three Months Ended 31 March 20232024 Unaudited Unaudited (RMB in millions) Financing activities Cash received from debt securities issued . . . . . . . . . . . . . . . . . . . . . . . . . . . 206904 531114 Cash paid for redemption of other equity instruments . . . . . . . . . . . . . . . . . . . (274734) (279165) Interest paid on debt securities issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5912) (6584) Cash paid for dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (67) (70) Cash paid in connection with other financing activities . . . . . . . . . . . . . . . . . . (806) (774) Net cash flows from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . (74615) 244521 Net (decrease)/increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . 2445 (69676) Cash and cash equivalents as at 1 January . . . . . . . . . . . . . . . . . . . . . . . . . . . 307871 249002 Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . (996) 2333 Cash and cash equivalents as at 31 March . . . . . . . . . . . . . . . . . . . . . . . . . 309320 181659 Cash flows from operating activities include: Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81332 78320 Interest paid not including interest paid on debt securities issued . . . . . . . . . . . (39650) (35468) Analysis of capital adequacy ratios as at 31 March 2024 As at 31 March 2024 the Group recorded a core tier-one capital adequacy ratio of 9.69 per cent. a tier-one capital adequacy ratio of 11.44 per cent. and a capital adequacy ratio of 13.61 per cent. The Bank recorded a core tier-one capital adequacy ratio of 9.34 per cent. a tier-one capital adequacy ratio of 11.19 per cent. and a capital adequacy ratio of 13.46 per cent.– 155 –DIRECTORS SUPERVISORS AND SENIOR MANAGEMENT DIRECTORS The following table sets out certain information relating to the Bank’s directors as at the date of this Offering Circular.Name Position Term of appointment Executive Directors Fang Heying . . . . . . . . . . . . . . . . . . . Chairman executive director September 2018 – June 2024 Liu Cheng . . . . . . . . . . . . . . . . . . . . . Executive director president March 2022 – June 2024 Non-executive Directors Cao Guoqiang . . . . . . . . . . . . . . . . . . Non-executive director September 2018 – June 2024 Huang Fang . . . . . . . . . . . . . . . . . . . . Non-executive director November 2016 – June 2024 Wang Yankang . . . . . . . . . . . . . . . . . . Non-executive director April 2021 – June 2024 Independent Non-executive Directors Liu Tsz Bun Bennett . . . . . . . . . . . . . Independent non-executive director June 2022 – June 2024 Zhou Bowen . . . . . . . . . . . . . . . . . . . Independent non-executive director August 2023 – June 2024 Wang Huacheng . . . . . . . . . . . . . . . . . Independent non-executive director October 2023 – June 2024 Song Fangxiu . . . . . . . . . . . . . . . . . . Independent non-executive director October 2023 – June 2024 Executive Directors Mr. Fang Heying (方合英) is the secretary of the Party committee Chairman and executive director of the Bank. Mr. Fang has served as deputy general manager of CITIC Group deputy general manager and member of the executive committee of CITIC Limited and deputy general manager of CITIC Corporation Limited since December 2020 and as a Party committee member of CITIC Group since November 2020.Mr. Fang is concurrently a director of CIFH and CNCBI. Mr. Fang served as President of the Bank from March 2019 to April 2023. Prior to that Mr. Fang was president of the Bank’s Suzhou Branch president of the Bank’s Hangzhou Branch and head of the Bank’s financial markets business vice president and chief financial officer of the Bank. Before that he was a teacher at Zhejiang Banking School assistant general manager of the credit department of the experimental urban credit cooperative of Zhejiang Banking School. Mr. Fang has more than 30 years of experience in the Chinese banking industry. He graduated from Hunan College of Finance and Economics (currently Hunan University) and attained with a master’s degree in business administration for senior management member from Peking University. He is a senior economist.Mr. Liu Cheng (刘成) is the deputy secretary of the Party Committee executive director and president of the Bank. Mr. Liu is concurrently a director of CIFH CNCBI CNCB Investment and AFCA. He served as chairman of the board of supervisors of the Bank from April 2018 to November 2021 and executive vice president of the Bank from January 2022 to August 2023. He used to be a teacher at the Finance Department of the Central College of Finance and Economics (now Central University of Finance and Economics) and had been working in the National Development and Reform Commission and the General Office of the State Council. Mr. Liu has rich experience in development reform fiscal policy and finance. He graduated from the Finance Department of the Central College of Finance and Economics and the School of Finance of Renmin University of China. He obtained a bachelor’s degree a master’s degree and a doctoral degree in economics and is a research fellow.Non-executive Directors Mr. Cao Guoqiang (曹国强) is a non-executive director of the Bank. Mr. Cao has served as director of CITIC Financial Holdings since March 2022 and general manager (in charge of finance) of CITIC Financial Holdings since May 2023. Mr. Cao used to be a deputy chief staff member and deputy section chief of the planning and treasury division of the PBOC Shaanxi branch; assistant general manager deputy general manager and general manager of the planning and treasury department at the head office – 156 –of China Merchants Bank (CMB); general manager of the Budget and Finance Department of the head office assistant president vice president and chairman of the board of supervisors of the Bank; general manager of the Finance Department of CITIC Group; and chief financial officer of CITIC Limited. Mr.Cao has over 30 years’ experience in the Chinese banking industry. He graduated from Hunan College of Finance and Economics (currently Hunan University) with a bachelor’s degree in monetary banking and obtained his master’s degree in monetary banking from Shaanxi College of Finance and Economics (currently Xi’an Jiaotong University). He is a senior economist.Ms. Huang Fang (黄芳) is a non-executive director of the Bank. Ms. Huang has served as a director of Zhejiang Xinhu Group Co. Ltd. since August 2013 and vice president of Zhejiang Xinhu Group Co.Ltd. since July 2011. Previously Ms. Huang worked at Agricultural Bank of China (ABC) where she successively served as deputy general manager of the international business department at the Zhejiang Provincial Branch business department deputy general manager (presiding) of Hangzhou Baojiao sub-branch deputy general manager of the corporate banking unit at the Zhejiang Provincial Branch business department deputy general manager (presiding) and general manager of the personal finance unit at the Zhejiang Provincial Branch business department; and was vice president and chief financial officer of Xinhu Holdings Limited a director of Xinhu Zhongbao Co. Ltd. and chief financial officer of Zhejiang Xinhu Group Co. Ltd. Ms. Huang graduated from Zhejiang University with a bachelor’s degree in law. She is an intermediate economist.Mr. Wang Yankang (王彦康) is a non-executive director of the Bank. Mr. Wang has served as chief of State-owned Assets Management Division of the Financial Management and Supervision Department (Audit Department) of the State Tobacco Monopoly Administration since August 2016. Previously he worked at the Financial Management and Supervision Department (Audit Department) of the State Tobacco Monopoly Administration where he successively served as cadre deputy chief staff member and chief staff member of the Audit Division; deputy chief of the First Audit Division; deputy chief of the State-owned Assets Management Division; and consultant and deputy chief of the State-owned Assets Management Division. He was once temporarily appointed as the deputy county chief of Yunxi County Hubei Province. Prior to that Mr. Wang worked at the Finance Department of Tsinghua University and was assigned by the National Audit Office to the Audit Bureau of the State Tobacco Monopoly Administration. Mr. Wang graduated from Renmin University of China with a bachelor’s degree in accounting and obtained a master’s degree in accounting from Beijing Technology and Business University. He is a senior accountant.Independent Non-executive Directors Mr. Liu Tsz Bun Bennett (廖子彬) is an independent non-executive director of the Bank. Mr. Liu is now an honorary consultant of the Hong Kong Business Accountants Association and an independent director of Shenzhen WeBank Co. Ltd. Ping An Insurance (Group) Company of China Ltd. and China Vanke Co. Ltd. He used to be an accounting consulting expert of the Ministry of Finance of China and a Hong Kong member of the 14th session of Tianjin Municipal Committee of the Chinese People’s Political Consultative Conference. Mr. Liu had served as a managing partner of audit of KPMG Huazhen LLP China a managing partner of audit of KPMG Asia Pacific a chairman of KPMG China and a senior advisor of KPMG Hong Kong. Mr. Liu graduated from the London School of Economics and Political Science with a bachelor’s degree in economics. He has the chartered accountant qualification in England and Wales as well as the Hong Kong Institute of Certified Public Accountants senior fellowship.Mr. Zhou Bowen (周伯文) is an independent non-executive director of the Bank. Mr. Zhou is an IEEE Fellow/CAAI Fellow and has been a long-tenured professor at the Department of Electronic Engineering and a professor of Huiyan Symposium of Tsinghua University since May 2022. Previously he was the President of the Basic Research Institute of Artificial Intelligence at IBM’s headquarters in New York USA Chief Scientist of IBM Watson and IBM Distinguished Engineer from March 2003 to September 2017; vice president and Senior vice president of JD.com Inc. Chairman of Technology Committee of – 157 –JD.com Inc. President of JD Cloud & AI and President of JD AI Research Institute from September 2017 to November 2021; Director of Kingdee International Software Group Co. Ltd. from March 2020 to December 2021; and he founded Beijing Xianyuan Technology Co. Ltd. in December 2021. Graduated from the University of Colorado with a doctorate degree in electronic and computer engineering Mr.Zhou has been engaged in AI basic theory and cutting-edge technology research for more than 20 years.He has long-time academic research experience in the new generation of information technology represented by artificial intelligence and accumulated an abundance of hands-on experience in the field of Internet.Mr. Wang Huacheng (王化成) is an independent non-executive director of the Bank. He currently serves as a professor and supervisor of PhD students in the Department of Finance of Renmin Business School.He is one of the first batch of outstanding scholars (Post-A professor) appointed by Renmin University of China a state-level famous teacher the deputy director of the China National MPAcc Education Steering Committee Vice Chairman of Accounting Society of China Vice Chairman of Cost Research Society of China and an independent director of Tsinghua Tongfang Co. Ltd. Wanhua Chemical Group Co. Ltd.and Beijing Capital International Airport Company Limited. The positions he previously held include Deputy Director of Accounting Department and Deputy Dean of the Business School at Renmin University of China as well as an independent director of many companies such as Huatai Securities Co.Ltd. E Fund Management Co. Ltd. China Railway Construction Corporation Limited BOE Technology Group Co. Ltd. Hua Xia Bank Co. Ltd. China Great Wall Securities Co. Ltd. etc. Graduated from Renmin University of China with a doctorate degree in management (majoring in accounting) Mr. Wang has abundant research achievements and extensive experience in fiscal accounting and financial fields.Ms. Song Fangxiu (宋芳秀) is an independent non-executive director of the Bank. She is currently deputy secretary of the Party Committee of the School of Economics professor and doctoral supervisor at the Department of Finance and director of the China Center for Financial and Investment Research Peking University. Ms. Song has been teaching at the School of Economics Peking University since 2003. She once worked as lecturer associate professor Party Committee member of the School of Economics deputy director of the Department of Finance and assistant to the dean of the School of Economics. From 2006 to 2007 Ms. Song was a visiting scholar at the University of Minnesota. Ms. Song graduated from the Department of Finance of the School of Economics Peking University with a doctoral degree. Her research focuses on monetary theories and policies international finance and asset pricing.She once published more than 50 academic papers on key journals of economics books such as Asset Allocation Mechanisms and Interest Rate Liberalization in China’s Transition Economy and Comparison of Currency Internationalization Between China and the United States and a number of translations. She hosted three provincial or ministerial level research subjects in the National Social Science Fund Project and the Beijing Philosophy and Social Science Project and participated in a number of national and provincial level research subjects.SUPERVISORS The following table sets out certain information relating to the Bank’s supervisors as at the date of this Offering Circular.Name Position Term of appointment Wei Guobin . . . . . . . . . . . . . . . . . . . . External supervisor May 2020 – June 2024 Sun Qixiang . . . . . . . . . . . . . . . . . . . External supervisor June 2021 – June 2024 Liu Guoling . . . . . . . . . . . . . . . . . . . External supervisor June 2021 – June 2024 Li Rong . . . . . . . . . . . . . . . . . . . . . . Shareholder representative supervisor January 2021 – June 2024 Cheng Pusheng . . . . . . . . . . . . . . . . . Employee representative supervisor March 2022 – June 2024 Zeng Yufang . . . . . . . . . . . . . . . . . . . Employee representative supervisor September 2017 – June 2024 – 158 –Mr. Wei Guobin (魏国斌) is an external supervisor of the Bank. Mr. Wei is concurrently an external supervisor of Bank of Hengshui Co. Ltd. He served as a board director of BOC Hong Kong Investment Co. Ltd. and chairman of the board of supervisors of Zhongyi Shanyuan (Beijing) Technology Co. Ltd.Prior to that he worked at Bank of China Limited and served successively as assistant president and vice president of Hebei Branch president of Shanxi Branch general manager of the Personal Banking Department of the head office and president of Hunan Branch. Mr. Wei graduated from Hebei Banking School with a degree in finance and he is a senior economist.Ms. Sun Qixiang (孙祁祥) is an external supervisor of the Bank. Ms. Sun is now a professor and Ph.D tutor of School of Economics Peking University. Ms. Sun also holds many other prestigious titles which include the C.V. Starr Professor the chief expert of the projects sponsored by the National Social Science Fund of China and the expert receiving Special Government Allowances from the State Council. Ms. Sun concurrently serves as member of the U.S.-based International Insurance Society (IIS) Board and independent director of China Taiping Insurance Group Ltd. Previously she was a dean of the School of Economics of Peking University chairperson of the Asia-Pacific Risk and Insurance Association visiting professor at Harvard University and independent director of AVIC Industry-Finance Holdings Co. Ltd.Bank of China Investment Management Co. Ltd. and China Development Bank Securities Co. Ltd. Ms.Sun graduated from the School of Economics of Peking University with a doctorate degree in economics.Mr. Liu Guoling (刘国岭) is an external supervisor of the Bank. Mr. Liu used to work at Agricultural Bank of China (ABC). The positions Mr. Liu ever held at ABC include deputy general manager of the Credit Management Department at the head office vice president of ABC Guangxi Branch deputy general manager of the Sannong Credit Department at the head office deputy general manager of the Credit Management Department at the head office and head of the Specialized Inspection Team at the head office. Mr. Liu graduated from Renmin University of China with a bachelor’s degree of economics majoring in statistics and he is a senior economist.Ms. Li Rong (李蓉) is the shareholder representative supervisor of the Bank. Ms. Li is currently the general manager of the Compliance Department of the Bank. Previously she served as general manager of Retail Banking Department assistant president and vice president of the Bank’s Chongqing Branch and general manager of the Interbank Business Department of the Bank. Prior to that Ms. Li worked at the Chongqing Branch of China Merchants Bank Co. Ltd. serving successively as deputy director of the General Office general manager of the Personal Banking Department general manager of the Business Department general manager of the Retail Banking Department etc. Ms. Li graduated from Chongqing University with a master’s degree of business administration. She is a senior economist.Mr. Cheng Pusheng (程普升) is an employee representative supervisor of the Bank. Mr. Cheng is now the general manager of the Audit Department of the Bank. Previously Mr. Cheng was assistant general manager and deputy general manager of the Budget and Finance Department general manager of the Centralized Purchasing Center general manager of the Audit Department and employee representative supervisor of the Bank president of Taiyuan Branch of the Bank. Mr. Cheng graduated from Shaanxi University of Finance and Economics (now Xi’an Jiaotong University) with a master’s degree in economics and is a senior economist.Ms. Zeng Yufang (曾玉芳) is an employee representative supervisor of the Bank. Ms. Zeng serves as vice president of the Bank’s Guangzhou Branch. Earlier she was deputy general manager and general manager of the accounting department of the Bank’s Shenzhen Branch and assistant president and vice president of the branch. Prior to that she was assistant chief of the finance and accounting division of State Development Bank Shenzhen Branch. Ms. Zeng graduated from East-West University of the U.S.with a master’s degree in business administration.– 159 –SENIOR MANAGEMENT The following table sets out certain information relating to the Bank’s senior management as at the date of this Offering Circular.Name Position Term of appointment Liu Cheng . . . . . . . . . . . . . . . . . . . . . Executive director and president Since January 2022 Hu Gang . . . . . . . . . . . . . . . . . . . . . . Vice president and chief risk officer Since May 2017 Xie Zhibin . . . . . . . . . . . . . . . . . . . . Vice president Since June 2019 Xiao Huan . . . . . . . . . . . . . . . . . . . . Secretary of the Committee of Since December 2019 Disciplinary Inspection Lü Tiangui . . . . . . . . . . . . . . . . . . . . Vice president Since August 2018 Lu Jingen . . . . . . . . . . . . . . . . . . . . . Business director Since August 2018 Zhang Qing . . . . . . . . . . . . . . . . . . . . Board secretary and company secretary Since July 2019 Mr. Liu Cheng (刘成) — Please refer to “Directors” for more details.Mr. Hu Gang (胡罡) is a Party Committee member vice president and chief risk officer of the Bank. Mr.Hu concurrently serves as a director of CNCBI. He used to be deputy head of the preparatory team for the establishment of the Bank’s Changsha Branch Party committee member and vice president of Changsha Branch; Party committee member vice president secretary of Party committee and president of the Banks Chongqing Branch; secretary of Party committee and president of the Bank’s Shanghai Branch; chief risk officer and head of the wholesale business of the Bank. Prior to that he successively worked for the Political Department of Hunan Provincial Procuratorate and served as deputy section chief at the Personnel Department of Hunan Provincial Party Committee Office assistant general manager and general manager of Beihaixiang Properties Development Company vice chairman of the company’s affiliated Hongdu Enterprise Company (both affiliated to Hunan Zhongli Industrial Group Co. Ltd.) and chairman of Changsha Xiangcai Urban Credit Cooperative in Hunan Province. Mr. Hu graduated from Hunan University with a doctoral degree in economics. He has over 20 years of experience in the Chinese banking industry and is a senior economist.Mr. Xie Zhibin (谢志斌) is a Party Committee member and vice president of the Bank. Previously he was a Party Committee member and assistant general manager of China Export Credit Insurance Corporation (during which he temporarily worked as a standing member of the Party Committee and Deputy Mayor of Hohhot City in Inner Mongolia Autonomous Region) and Party Committee member and secretary of the Committee for Disciplinary Inspection of China Everbright Group Co. Ltd. Prior to that Mr. Xie served as assistant general manager deputy general manager and general manager of the human resources department (assistant director deputy director and director of the organisation department under the Party Committee) of China Export Credit Insurance Corporation Party committee secretary of the company’s Shenzhen branch and person in charge Party committee secretary and general manager of the company’s Hebei provincial branch. Mr. Xie graduated from Renmin University of China with a doctorate degree in economics. He is a senior economist.Mr. Xiao Huan (肖欢) is a Party Committee member and the secretary of the Committee for Disciplinary Inspection of the Bank. Mr. Xiao once worked at CITIC Group and served as head of the Organisation Division of the Organisation Department (Human Resources and Education Department) of the Party Committee of CITIC Group; deputy chief and chief of the Organisation Division and assistant director of the Party Affairs Department of CITIC Group; deputy secretary of the Committee for Disciplinary Inspection and general manager of Department for Disciplinary Inspection and Supervision of the Bank; director of the Party Affairs Department and executive deputy secretary of Party committee directly under CITIC Group. Prior to that he was a teacher at the Moral Education Office of PLA Medical College and an officer at the Political Department of Beijing Military Medical College. Mr. Xiao graduated from PLA Nanjing Institute of Political Sciences with a bachelor’s degree in law.– 160 –Mr. Lü Tiangui (吕天贵) is a Party Committee member and vice president of the Bank. Mr. Lu also serves as the chairman of CITIC aiBank and a board director of JSC Altyn Bank and concurrently acts as a board director of China UnionPay Co. Ltd. Previously Mr. Lu served as president of the Credit Card Center general manager of the Retail Banking Department and Private Banking Department and business director of the Bank. Earlier he was deputy chief officer of the risk management division at Jilin Branch of Bank of China Limited. Mr. Lu has 30 years’ practicing experience in the Chinese banking industry. Mr. Lu graduated from Sichuan University with a master’s degree in business administration. He holds qualifications such as senior accountant Certificated Internal Auditor (CIA) and PRC Certified Public Accountant (CPA).Mr. Lu Jingen (陆金根) is a business director of the Bank. Mr. Lu previously served as the deputy chief of the corporate credit division president of the Olympic Village sub-branch president of the CITIC International Building sub-branch and Party committee member and assistant general manager of the Business Department of the head office of the Bank (currently Beijing Branch); assistant general manager (presiding) of the corporate banking department of the Bank the secretary of Party committee and president of Kunming Branch Changsha Branch and Nanjing Branch of the Bank and general manager of the Corporate Banking Department (Rural Revitalization Department) of the Bank. Mr. Lu has near 30 years’ experience in the Chinese banking industry. He received his master’s degree in economics from Renmin University of China EMBA degree from Peking University and doctorate degree in management from Central South University. He is a senior economist.Ms. Zhang Qing (张青) is board secretary and company secretary of the Bank. Ms. Zhang concurrently serves as the general manager of the Risk Management Department of the Bank. Prior to that Ms. Zhang served as assistant general manager deputy general manager (presiding) and general manager of the Credit Management and Approval Department of the Bank’s Xi’an branch Party committee member assistant president and vice president of the branch general manager of the Credit Management Department of the Bank head of the Organising Department of the Party Committee and general manager of the Human Resources Management Department of the Bank and a board director of CITIC Financial Leasing and CNCB Investment. Prior to that she worked at the Shaanxi branch of Industrial and Commercial Bank of China successively working on the accounting planning credit management in the sub-branch and project review in the branch. She has 30 years’ professional experience in the Chinese banking industry. She graduated from Shaanxi Institute of Mechanical Engineering (now Xi’an University of Technology) with a master’s degree in engineering. Ms. Zhang is a senior economist.– 161 –BOOK-ENTRY CLEARANCE SYSTEMS The information set out below is subject to any change in or reinterpretation of the rules regulations and procedures of Euroclear Clearstream or CMU (together the “Clearing Systems”) currently in effect.The information in this section concerning the Clearing Systems has been obtained from sources that the relevant Issuer and the Bank believes to be reliable but none of the Issuers the Bank or any Dealer takes any responsibility for the accuracy thereof. Investors wishing to use the facilities of any of the Clearing Systems are advised to confirm the continued applicability of the rules regulations and procedures of the relevant Clearing System. None the Issuers the Bank or any other party to the Fiscal Agency Agreement will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Notes held through the facilities of any Clearing System or for maintaining supervising or reviewing any records relating to or payments made on account of such beneficial ownership interests.BOOK-ENTRY SYSTEMS Euroclear and Clearstream Euroclear and Clearstream each holds securities for its customers and facilitates the clearance and settlement of securities transactions by electronic book-entry transfer between their respective account holders. Euroclear and Clearstream provide various services including safekeeping administration clearance and settlement of internationally traded securities and securities lending and borrowing.Euroclear and Clearstream also deal with domestic securities markets in several countries through established depositary and custodial relationships. Euroclear and Clearstream have established an electronic bridge between their two systems across which their respective participants may settle trades with each other.Euroclear and Clearstream customers are world-wide financial institutions including underwriters securities brokers and dealers banks trust companies and clearing corporations. Indirect access to Euroclear and Clearstream is available to other institutions that clear through or maintain a custodial relationship with an account holder of either system.CMU The CMU is a central depositary service provided by the Central Moneymarkets Unit of the HKMA for the safe custody and electronic trading between the members of this service (“CMU Members”) of Exchange Fund Bills and Notes Clearing and Settlement Service securities and capital markets instruments (together “CMU Instruments”) which are specified in the CMU Reference Manual as capable of being held within the CMU.The CMU is only available to CMU Instruments issued by a CMU Member or by a person for whom a CMU Member acts as agent for the purposes of lodging instruments issued by such persons. Membership of the CMU is open to all financial institutions regulated by the HKMA Securities and Futures Commission Insurance Authority or Mandatory Provident Fund Schemes Authority. For further details on the full range of the CMU’s custodial services please refer to the CMU Reference Manual.The CMU has an income distribution service which is a service offered by the CMU to facilitate the distribution of interest coupon or “redemption proceeds” (collectively the “income proceeds”) by CMU Members who are paying agents to the legal title holders of CMU Instruments via the CMU system.Furthermore the CMU has a corporate action platform which allows an issuer (or its agent) to make an announcement/notification of a corporate action and noteholders to submit the relevant certification. For further details please refer to the CMU Reference Manual.An investor holding an interest through an account with either Euroclear or Clearstream in any Notes held in the CMU will hold that interest through the respective accounts which Euroclear and Clearstream each have with the CMU.– 162 –TRANSFERS OF NOTES REPRESENTED BY REGISTERED GLOBAL NOTES Transfers of any interests in Notes represented by a Registered Global Note within Euroclear Clearstream and the CMU will be effected in accordance with the customary rules and operating procedures of the relevant Clearing System. Euroclear Clearstream and the CMU have each published rules and operating procedures designed to facilitate transfers of beneficial interests in Registered Global Notes among accountholders of Euroclear Clearstream and the CMU. However they are under no obligation to perform or continue to perform such procedures and such procedures may be discontinued or changed at any time. None of the Issuers the Bank the Paying Agents the Registrar and the Dealers will be responsible for any performance by Euroclear Clearstream or the CMU or their respective accountholders of their respective obligations under the rules and procedures governing their operations and none of them will have any liability for any aspect of the records relating to or payments made on account of beneficial interests in the Notes represented by Registered Global Notes or for maintaining supervising or reviewing any records relating to such beneficial interests.– 163 –REGULATION AND SUPERVISION IN THE PRC The banking industry is heavily regulated in the PRC with the relevant PRC Banking Regulatory Authority and PBOC acting as the principal regulatory authorities. The relevant PRC Banking Regulatory Authority is primarily responsible for supervising and regulating banking institutions and the PBOC as the central bank of the PRC is primarily responsible for formulating and implementing monetary policies. The applicable laws and regulations governing activities in the PRC’s banking industry consist principally of the Law of PRC on the People’s Bank of China (the “PRC PBOC Law”) the PRC Commercial Banking Law (中华人民共和国商业银行法) the Law of PRC on Regulation of and Supervision over the Banking Industry (中华人民共和国银行业监督管理法) and the rules and regulations promulgated thereunder.PBOC As the central bank of the PRC the PBOC is responsible for formulating and implementing monetary policies and maintaining the stability of the PRC financial markets.According to the PBOC Banking Law and relevant provisions the PBOC shall perform the following functions and responsibilities: (1) to promulgate and carry out the orders and regulations related to its functions and responsibilities; (2) to formulate and implement monetary policies in accordance with law; (3) to issue Renminbi (RMB) and control its circulation; (4) to supervise and administer the interbank lending market and the interbank bond market; (5) to exercise control of foreign exchange and supervise and administer the interbank foreign exchange market; (6) to supervise and administer the gold market; (7) to hold administer and manage the state foreign exchange reserve and gold reserve; (8) to manage the state treasury; (9) to maintain the normal operation of the system for making payments and settling accounts; (10) to guide and make plans for the fight against money laundering in the financial industry and to be responsible for monitoring the use of the funds earmarked for the fight against money laundering; (11) to be responsible for statistics investigation analysis and forecasting concerning the financial industry; (12) to engage in relevant international financial operations in its capacity as the central bank of the state; and (13) other functions and responsibilities prescribed by the State Council.Former CBIRC Functions and Powers Established by merging the former CBRC and China Insurance Regulatory Commission and prior to the establishment of NFRA the CBIRC was an institution directly under the State Council and was the principal regulatory authority for financial institutions of the banking industry in the PRC responsible for the supervision and regulation of banking institutions operating in the PRC including commercial banks urban credit cooperatives rural credit cooperatives and other financial institutions taking deposits from the public policy banks and certain non-banking financial institutions. The former CBIRC was also responsible for the supervision and regulation of the entities established by the abovementioned financial institutions outside the PRC and the overseas operations of the above-mentioned banking and non-banking financial institutions.Examination and Supervision The former CBIRC through its headquarters in Beijing and its local offices throughout the PRC monitors the operations of banks and their branches and sub-branches through on-site examinations and off-site surveillance.– 164 –If a banking institution is not in compliance with the relevant banking regulations the former CBIRC is authorised to require it to rectify and impose punitive measures against it including imposing fines ordering the suspension of certain business activities withholding the approval for engaging in new businesses imposing restrictions on dividends distributions in other forms and transfer of assets demanding the transfer of equity interest held by controlling shareholders or limiting the exercise of such shareholders’ rights demanding the change of directors or senior management personnel or limiting their rights and withholding the approval for the opening of new branches and sub-branches. If the case is particularly serious or the banking institution fails to make correction within the prescribed period of time the former CBIRC may order suspension of business or revocation of its operation license. When there is or is likely to be a credit crisis within a banking institution which may materially impact the legitimate interests of depositors and other customers the former CBIRC may take over or procure the restructuring of such banking institution.NFRA China’s national legislature approved a plan on 7 March 2023 on reforming the institutions of the State Council. The State Council announced that it would abolish the former CBIRC and move its functions powers and responsibilities to a national financial regulator namely the National Financial Regulatory Administration. Certain functions of the PBOC and the CSRC will be transferred to the NFRA as well.On 18 May 2023 the NFRA was officially established which opens a new chapter on financial regulation in China. The NFRA directly under the State Council is formed on the basis of the former CBIRC in charge of regulating the financial industry except the securities sector. Apart from taking over the commission’s responsibility of supervising banking and insurance institutions the NFRA would also supervise financial holding companies and other financial conglomerates which is now a duty of the People’s Bank of China. Therefore the NFRA has inherited almost all the functions of the former CBIRC and such reform of state institutions has no substantial impact on the Bank’s business and operations or the banking industry in the PRC.OTHER REGULATORY AUTHORITIES In addition to the NFRA and PBOC commercial banks in the PRC are also subject to the supervision and regulation by other regulatory authorities including but not limited to the MOF NDRC and SAFE.REGULATIONS REGARDING CAPITAL ADEQUACY In March 2004 the relevant PRC Banking Regulatory Authority implemented the Capital Adequacy Measures applicable to all commercial banks in the PRC. The Capital Adequacy Measures provided for a phase-in period whereby all domestic banks must have met minimum capital adequacy ratios by 1 January 2007. On 3 July 2007 the relevant PRC Banking Regulatory Authority amended the Capital Adequacy Measures issued in March 2004 to set forth new and more stringent capital adequacy guidelines which must be complied with from 3 July 2007.– 165 –In June 2012 the relevant PRC Banking Regulatory Authority issued the Provisional Capital Management Regulations regulating capital adequacy ratios (“CAR”) of PRC commercial banks which abolish the Capital Adequacy Measures amended on 3 July 2007. The Provisional Capital Management Regulations which are intended to reflect the Basel III regulatory capital requirements set out minimum CAR requirements for commercial banks and provide detailed guidelines on the calculation of “capital” and “risk-weighted assets”. The overall CAR requirements are 11.5 per cent. for domestic systematically important commercial banks and 10.5 per cent. for other commercial banks. On 26 October 2023 the relevant PRC Banking Regulatory Authority promulgated the Capital Management Regulations (商业银 行资本管理办法) which came into effect on 1 January 2024 and replaced the Provisional Capital Management Regulations. According to the Capital Management Regulations commercial banks in the PRC are required to have a CAR of not less than 8 per cent. Tier 1 CAR of not less than 6 per cent. and Core Tier 1 CAR of not less than 5 per cent. The CARs are calculated in accordance with the Capital Management Regulations as follows: (Total Capital ? deductions from corresponding capital instruments) Capital Adequacy Ratio = × 100%(Risk ? weighted Assets) (Tier 1 Capital ? deductions from corresponding capital instruments) Tier 1 Capital Adequacy Ratio = × 100%(Risk ? weighted Assets) (Core Tier 1 Capital ? deductions from corresponding capital instruments) Core Tier 1 Capital Adequacy Ratio = × 100%(Risk ? weighted Assets) Further details regarding the basic principles of such calculations can be obtained at the official website of the NFRA.The contents of this website do not form a part of this Offering Circular.On 29 November 2012 the CBIRC released the Guiding Opinions of the China Banking Regulatory Commission on Commercial Banks’ Innovation on Capital Instruments (中国银监会关于商业银行资本 工具创新的指导意见) and an amendment on 22 November 2019 (关于商业银行资本工具创新的指导意见（修订）) (together the “Innovation on Capital Instruments Guiding Opinions”) allowing and encouraging commercial banks to develop capital instruments (including tier 2 capital instruments) that comply with the Provisional Capital Management Regulations. Pursuant to the Innovation on Capital Instruments Guiding Opinions Additional Tier 1 Capital instruments and Tier 2 Capital instruments issued by a commercial bank after 1 January 2013 must contain a provision that requires such instruments to be either written off or converted into common stock upon the occurrence of a triggering event. A triggering event for Additional Tier 1 Capital instruments occurs when the Core Tier 1 Capital Adequacy Ratio of the commercial bank falls to 5.125 per cent. or below. A triggering event for tier 2 capital instruments occurs upon the earlier of: (i) a decision of write-off or share conversion without which the commercial bank would become non-viable as determined by the CBIRC; or (ii) a decision to make a public sector injection of capital or equivalent support without which the commercial bank would have become non-viable as determined by relevant authorities. Following the amendment on 22 November 2019 the Innovation on Capital Instruments Guiding Opinions’ further require that: (i) when the same triggering event occurs the Additional Tier 1 Capital instrument shall be written down or converted into shares in full amount before the write-down or share conversion of the Tier 2 Capital instrument is launched; and (ii) when the same triggering event occurs each capital instrument of the same tier shall be written down or converted into shares at the same time in proportion to the percentage for which the instrument accounts of the total amount of the capital instruments of that tier. The amended Innovation on Capital Instruments Guiding Opinions further demand that both kinds of triggering events stated above shall be set concurrently for Additional Tier-1 Capital instruments to be issued after the amendment if classified in accounting as liabilities.– 166 –On 19 July 2019 China Banking and Insurance Regulatory Commission CSRC promulgated Guiding Opinions of the China Banking and Insurance Regulatory Commission and the China Securities Regulatory Commission on the Issuance of Preferred Shares by Commercial Banks to Supplement Tier 1 Capital (中国银保监会、中国证监会关于商业银行发行优先股补充一级资本的指导意见 ) the commercial banks issuing preference shares shall comply with relevant regulations promulgated by the State Council and CSRC and the requirements of capital instruments released by the relevant PRC Banking Regulatory Authority and the Core Tier 1 Capital Adequacy Ratio shall comply with the prudential regulation principles formulated by the relevant PRC Banking Regulatory Authority. The commercial banks issuing preference shares to supplement tier 1 capital shall comply with the criteria of the Additional Tier 1 Capital instruments under the Provisional Capital Management Regulations and the Guiding Opinions and shall not issue the preference shares with put provisions.On 18 January 2018 the relevant PRC Banking Regulatory Authority the PBOC the CSRC and the State Administration of Foreign Exchange jointly released the Opinions on Further Supporting Commercial Banks’ Innovation on Capital Instruments (中国银监会、中国人民银行、中国证监会、中国保监会、 国家外汇管理局关于进一步支持商业银行资本工具创新的意见) further supporting the beneficial exploration of commercial banks for innovating capital instruments expanding the channels for issuance of capital instruments increasing capital instrument types creating favourable conditions for commercial banks to issue capital bonds without fixed terms Tier-2 capital bonds to be converted into shares capital bonds containing regular share conversion clauses bonds with total loss-absorbing capacity and other capital instruments and improving the approval of issuance of capital instruments.– 167 –PRC CURRENCY CONTROLS REMITTANCE OF RENMINBI INTO AND OUTSIDE THE PRC The Renminbi is not a freely convertible currency. The remittance of Renminbi into and outside the PRC is subject to controls imposed under PRC law.Current Account Items Under PRC foreign exchange control regulations current account item payments include payments for imports and exports of goods and services payments of income and current transfers into and outside the PRC.Prior to July 2009 all current account items were required to be settled in foreign currencies. On July 2009 the PRC government promulgated Measures for the Administration of the Pilot Program ofRenminbi Settlement of Cross-Border Trades (跨境贸易人民币结算试点管理办法) (the “Pilot ProgramMeasures”) and its implementation rules pursuant to which designated and eligible enterprises are allowed to settle their cross-border trade transactions in Renminbi. Since July 2009 subject to the Pilot Program Measures and its implementation rules the PRC has commenced a scheme pursuant to which Renminbi may be used for settlement of cross-border trade between approved pilot enterprises in five designated cities in the PRC including Shanghai Guangzhou Dongguan Shenzhen and Zhuhai and enterprises in designated offshore jurisdictions including Hong Kong and Macau. On 17 June 2010 the PRC government promulgated the Circular on Issues concerning the Expansion of the Scope of the Pilot Program of Renminbi Settlement of Cross-Border Trades (关于扩大跨境贸易人民币结算试点有关问题 的通知) pursuant to which (i) the list of designated pilot districts was expanded to cover 20 provinces including Beijing Shanghai Tianjin Chongqing Guangdong Jiangsu Zhejiang Liaoning Shandong and Sichuan and (ii) the restriction on designated offshore districts was lifted. Accordingly any enterprises in the designated pilot districts and offshore enterprises are entitled to use Renminbi to settle any current account items between them (except in the case of payments for exports of goods from the PRC such Renminbi remittance may only be effected by approved pilot enterprises in 16 provinces within the designated pilot districts in the PRC). On 27 July 2011 the PRC government promulgated the Circular on the Expansion of the Regions of Renminbi Settlement of Cross-Border Trades (关于扩大跨境 贸易人民币结算地区的通知) pursuant to which the list of designated pilot districts was expanded to the whole country. On 3 February 2012 the PRC government promulgated the Circular on the Relevant Issues Pertaining to Administration over Enterprises Engaging in RMB Settlement of Export of Goods (关于出口货物贸易人民币结算企业管理有关问题的通知) pursuant to which any enterprises in China which are qualified to engage in import and export trade are allowed to settle their goods export trade in Renminbi.On 1 November 2014 the PBOC introduced a cash pooling arrangement for qualified multinational enterprise group companies under which a multinational enterprise group can process cross-border Renminbi payments and receipts for current account items on a collective basis for eligible member companies in the group. On 5 September 2015 the PBOC promulgated the Circular on Further Facilitating the Cross-Border Bi-directional Renminbi Cash Pooling Business by MultinationalEnterprise Groups (关于进一步便利跨国企业集团开展跨境双向人民币资金池业务的通知) (the “2015PBOC Circular”) which among others have lowered the eligibility requirements for multinational enterprise groups and increased the cap for net cash inflow. The 2015 PBOC Circular also provides that enterprises within a pilot free trade zone in the PRC such as the China (Shanghai) Pilot Free Trade Zone may establish an additional cash pool in the local scheme in such pilot free trade zone but each onshore company within the group may only elect to participate in one cash pool.Accordingly offshore enterprises are entitled to use Renminbi to settle imports of goods and services and other current account items. Renminbi remittance for exports of goods from the PRC may only be – 168 –effected by (a) enterprises with the foreign trading right and incorporated in a province which has already submitted a list of key enterprises subject to supervision (the “Supervision List”) (for the avoidance of doubt that PRC enterprise does not necessarily need to be included in the Supervision List) or (b) enterprises that have been approved as a pilot enterprise for using Renminbi for exports before the PBOC and five other PRC authorities have reviewed and approved the Supervision List submitted by relevant province.On 10 April 2020 the SAFE issued Notice of the SAFE on Optimizing Foreign Exchange Administration to Support the Development of Foreign-related Business (国家外汇管理局关于优化外汇管理支持涉外 业务发展的通知（汇发[2020]8号）) which cancelling the registration of special refund of remittance simplify the administration of registration of some businesses under the capital account and relaxing the purchase of foreign exchange with export background for repayments of domestic foreign exchange loans.On 4 December 2023 the SAFE issued the Notice on Further Deepening the Reform to Facilitate Cross-border Trade and Investment (国家外汇管理局关于进一步深化改革促进跨境贸易投资便利化的通知（汇发[2023]28号）) which partly revised the Notice by the State Administration of Foreign Exchange of Further Facilitating Cross-border Trade and Investment (国家外汇管理局关于进一步促进 跨境贸易投资便利化的通知（汇发[2019]28号）).On 3 April 2024 the SAFE issued the Notice on Further Optimizing the Management of Trade andForeign Exchange Service (国家外汇管理局关于进一步优化贸易外汇业务管理的通知（汇发[2024]11号）) which will be implemented on 1 June 2024. The requirement for each branch of the SAFE toapprove the registration of the “Directory of Enterprises dealing with Foreign Exchange Receipts andExpenditures of Trade” shall be abolished and the directory registration shall be handled directly by domestic banks.On 5 July 2013 the PBOC promulgated the Circular on Policies related to Simplifying and Improving Cross-border Renminbi Business Procedures (关于简化跨境人民币业务流程和完善有关政策的通知) (银 发[2013]168号) which in particular simplifies the procedures for cross-border Renminbi trade settlement under current account items. For example PRC banks may conduct settlement for the PRC enterprises (excluding those on the Supervision List) upon the PRC enterprises presenting the payment instruction. PRC banks may also allow the PRC enterprises to make/receive payments under current account items prior to the relevant PRC bank’s verification of underlying transactions (noting that verification of underlying transactions is usually a precondition for cross-border remittance).On 23 October 2019 the SAFE promulgated the Notice by the State Administration of Foreign Exchangeof Simplifying Foreign Exchange Accounts (国家外汇管理局关于精简外汇帐户的通知（汇发[2019]29号）) which became effective on 1 February 2020. SAFE has decided to review and integrate certain foreign exchange accounts and further reduce the types of accounts in order to further intensify the reform of foreign exchange administration simplifying the relevant business operating procedures and facilitate true and compliant foreign exchange transactions by banks enterprises and other market participants for example “current accounts — foreign currency cash account” and “current accounts —foreign exchange account under current accounts of overseas institutions” are included in “currentaccounts — foreign exchange settlement account”.On the same day the SAFE issued the Notice by the State Administration of Foreign Exchange of Further Facilitating Cross-border Trade and Investment (国家外汇管理局关于进一步促进跨境贸易投资便利化 的通知（汇发[2019]28号）) based on which for the revenue obtained by an enterprise from trade in goods the enterprise may on its own decide whether to open a to-be-inspected account for export revenue (“to-be-inspected account”). If an enterprise has not opened a to-be-inspected account the examined revenue from trade in goods by the bank in accordance with the existing provisions may be directly deposited into the foreign exchange account under current accounts or used for foreign exchange settlement.– 169 –On 29 April 2019 the SAFE issued Administrative Measures for the Foreign Exchange Service of Payment Institutions (支付机构外汇业务管理办法) which facilitates domestic institutions and individuals to carry out e-commerce trade through the internet standardizes the cross-border foreign exchange payment services provided by payment institutions and prevents the risk of cross-border capital flows through the internet channel.The foregoing measures and circulars will be subject to interpretation and application by the relevant PRC authorities. Local authorities may adopt different practices in applying the Pilot Program Measures and impose conditions for settlement of current account items.Capital Account Items Under PRC foreign exchange control regulations capital account items include cross-border transfers of capital direct investments securities investments derivative products and loans. Capital account payments are generally subject to approval of and/or registration or filling with the relevant PRC authorities.Capital account items are generally required to be made in foreign currencies. For instance foreign investors (including any Hong Kong investors) are generally required to make any capital contribution to foreign invested enterprises in a foreign currency in accordance with the terms set out in the relevant joint venture contracts and/or articles of association as approved by the relevant authorities. Foreign invested enterprises or any other relevant PRC parties are also generally required to make capital account item payments including proceeds from liquidation transfer of shares reduction of capital and principal repayment under foreign debt to foreign investors in a foreign currency. That said the relevant PRC authorities may approve a foreign entity to make a capital contribution or shareholder’s loan to a foreign invested enterprise with Renminbi lawfully obtained by it outside the PRC and for the foreign invested enterprise to service interest and principal repayment to its foreign investor outside the PRC in Renminbi on a trial basis. The foreign invested enterprise may also be required to complete registration and verification process with the relevant PRC authorities before such Renminbi remittances.On 7 April 2011 the SAFE issued the Notice on Relevant Issues regarding Streamlining the Business Operation of Cross-border RMB Capital Account Items (国家外汇管理局综合司关于规范跨境人民币资 本项目业务操作有关问题的通知) which clarifies that the borrowing by an onshore entity (including a financial institution) of Renminbi loans from an offshore creditor shall in principle follow the current regulations on borrowing foreign debts and the provision by an onshore entity (including a financial institution) of external guarantees in Renminbi shall in principle follow the current regulations on the provision of external guarantees in foreign currencies.On 3 December 2013 the MOFCOM promulgated the Circular on Issues in relation to Cross-borderRenminbi Foreign Direct Investment (关于跨境人民币直接投资有关问题的公告) (the “MOFCOMRMB FDI Circular”) which became effective on 1 January 2014. Pursuant to the MOFCOM RMB FDI Circular the proceeds from foreign direct investment in Renminbi may not be used towards investment in securities financial derivatives or entrustment loans in the PRC except for investment in PRC domestic listed companies under the PRC strategic investment regime with the approval of the MOFCOM pursuant to the Administrative Measures for Strategic Investment by Foreign Investors in Listed Companies (外国 投资者对上市公司战略投资管理办法).On 3 June 2011 the PBOC promulgated the Circular on Clarifying Issues concerning Cross-borderRenminbi Settlement (中国人民银行关于明确跨境人民币业务相关问题的通知) (the “2011 PBOCCircular”). The 2011 PBOC Circular provides instructions to local PBOC authorities on procedures for the approval of settlement activities for non-financial Renminbi foreign direct investment into the PRC.The 2011 PBOC Circular applies to all non-financial Renminbi foreign direct investment into the PRC and includes investment by way of establishing a new enterprise acquiring an onshore enterprise – 170 –transferring the shares increasing the registered capital of an existing enterprise or providing loan facilities in Renminbi. The domestic settlement banks of foreign investors or foreign invested enterprises in the PRC are required to submit written applications to the relevant local PBOC authorities which include inter alia requisite approval letters issued by the relevant MOFCOM authorities.On 13 October 2011 the PBOC issued the Measures on Administration of the RMB Settlement in relationto Foreign Direct Investment (外商直接投资人民币结算业务管理办法) (the “PBOC RMB FDIMeasures”) and amended it on 29 May 2015 to commence the PBOC’s detailed RMB FDI administration system which covers almost all aspects of RMB FDI including capital injection payment of purchase price in the acquisition of PRC domestic enterprises repatriation of dividends and distribution as well as RMB denominated cross-border loans. Under the PBOC RMB FDI Measures special approval for RMB FDI and shareholder loans from the PBOC which was previously required by the 2011 PBOC Circular is no longer necessary. On 14 June 2012 the PBOC further issued the implementing rules for the PBOC RMB FDI Measures.On 19 November 2012 the SAFE promulgated the Circular on Further Improving and Adjusting the Foreign Exchange Administration Policies on Direct Investment (国家外汇管理局关于进一步改进和调 整直接投资外汇管理政策的通知) (the “SAFE Circular on DI”) which became effective on 17 December 2012 and was amended on 4 May 2015 10 October 2018 and 30 December 2019. According to the SAFE Circular on DI the SAFE removes or adjusts certain administrative licensing items with regard to foreign exchange administration over direct investments to promote investment including but not limited to the abrogation of SAFE approval for opening of and payment into foreign exchange accounts under direct investment accounts the abrogation of SAFE approval for reinvestment with legal income generated within China of foreign investors the simplification of the administration of foreign exchange reinvestments by foreign investment companies and the abrogation of SAFE approval for purchase and external payment of foreign exchange under direct investment accounts.On 5 July 2013 the PBOC promulgated the Notice on Simplifying the Procedures of Cross-border Renminbi Business and Improving Relevant Policies (关于简化跨境人民币业务流程和完善有关政策的 通知) (the “2013 PBOC Circular”) which simplifies the operating procedures on current account cross-border Renminbi settlement provision of Renminbi outbound loans and Renminbi cross-border security in favour of offshore entities by onshore non-financial institutions and further published policies with respect to bank card related cross-border Renminbi clearing and issuance of offshore Renminbi bonds by onshore non-financial institutions. The 2013 PBOC Circular intends to improve the efficiency of cross-border Renminbi settlement and facilitate the use of cross-border Renminbi settlement by banks and enterprises.On 30 March 2015 SAFE promulgated the Notices of Reformation on Administration of Settlement of Capital Foreign Exchange of Foreign-invested Enterprises (关于改革外商投资企业外汇资本金结汇管理 方式的通知（汇发[2015]19号）) which became effective on 1 June 2015. In order to further deepen the reform of the foreign exchange administration system better satisfy and facilitate the needs of foreign-invested enterprises for business and capital operation the SAFE has decided to reform the management approach regarding the settlement of the foreign exchange capital of foreign-invested enterprises nationwide on the basis of summarising the pilot experience of certain regions in the early days. The key points of this notice set out as the following: * the foreign exchange capital of foreign-invested enterprises shall be subject to the discretional foreign exchange settlement; * the capital in Renminbi obtained by foreign-invested enterprises from the discretionary settlement of foreign exchange capital shall be managed under the account pending for foreign exchange settlement payment; * the use of capital by foreign-invested enterprises shall follow the principles of authenticity and self-use within the business scope of enterprises; – 171 –* facilitating foreign-invested enterprises in carrying out domestic equity investment with the capital obtained from foreign exchange settlement; * further standardising the administration of payment by the capital obtained by foreign exchange settlement; * administration of the settlement and use of the capital in other foreign exchange accounts under direct investment; and * further strengthening the ex-post regulation as well as investigation on and punishment against violations by the foreign exchange bureaus.Previously Renminbi may only be converted for capital account expenses once the prior approval of the SAFE had been obtained. However according to the Circular of the SAFE on Further Simplifying and Improving the Foreign Exchange Administration Policies of Foreign Direct Investment (国家外汇管理局 关于进一步简化和改进直接投资外汇管理政策的通知（汇发[2015]13号）) issued on 28 February 2015 the SAFE authorised some qualified local banks in the PRC to carry out foreign exchange procedures in relation to inbound and outbound investment from 1 June 2015.On 26 January 2017 the SAFE issued the Notice on Further Promoting the Reform of Foreign Exchange Administration and Improving the Examination of Authenticity and Compliance (国家外汇管理局关于 进一步推进外汇管理改革完善真实合规性审核政策的通知（汇发[2017]3号）) to further advance the reform of foreign exchange administration such as: * settlement of domestic foreign exchange loans are allowed for export trade in goods. A domestic institution shall repay loans with the foreign exchange funds received from export trade in goods rather than in principle purchased foreign exchange; * a debtor may directly or indirectly repatriate the funds under guarantee and use them domestically by among others granting loans and making equity investment domestically. Where a bank performs its guarantee obligation under overseas loans with domestic guarantee relevant foreign exchange settlement and sale shall be managed as the bank’s own foreign exchange settlement and sale; * the deposits absorbed by a domestic bank through its principal international foreign exchange account and allowed to be used domestically are no more than 100 per cent. of the average daily deposit balance in the previous six months as opposed to the former 50 per cent.; and the funds used domestically are not included in the bank’s outstanding short-term external debt quota; * allowing foreign exchange settlement in the domestic foreign exchange accounts of overseas institutions within pilot free trade zones: Where funds are repatriated and used domestically after settlement a domestic bank shall under the relevant provisions on cross-border transactions handle such funds by examining the valid commercial documents and vouchers of domestic institutions and domestic individuals; and * where a domestic institution grants overseas loans the total of the balance of overseas loans granted in domestic currency and the balance of overseas loans granted in foreign currency shall not exceed 30 per cent. of owner’s equity in the audited financial statements of the previous year.– 172 –Since September 2015 qualified multinational enterprise groups can extend Renminbi-denominated loans to or borrow Renminbi-denominated loans from eligible offshore member entities within the same group by leveraging the cash pooling arrangements. The Renminbi funds will be placed in a special deposit account and may not be used to invest in stocks financial derivatives or non-self-use real estate assets or purchase wealth management products or extend loans to enterprises outside the group.The securities markets specifically the Renminbi Qualified Foreign Institutional Investor (“RQFII”) regime and the China Interbank Bond Market (“CIBM”) have been further liberalised for foreign investors. PBOC has relaxed the quota control for RQFII initiated a bond market mutual access scheme between mainland and Hong Kong to allow eligible investors to invest in CIBM and has also expanded the list of foreign investors eligible to directly invest in CIBM removed quota restriction and granted more flexibility for the settlement agents to provide the relevant institutions with more trading facilities (for example in relation to derivatives for hedging foreign exchange risk).Interbank foreign exchange market is also opening-up. In 2018 the China Foreign Exchange Trade System further relaxed qualifications application materials and the procedures for foreign participating banks (which needs to have a relatively large scale of Renminbi purchase and sale business and international influence) to access the inter-bank foreign exchange market.On 23 October 2019 the SAFE promulgated Notice by the State Administration of Foreign Exchange of Simplifying Foreign Exchange Accounts (国家外汇管理局关于精简外汇帐户的通知（汇发[2019]29号）) which became effective on 1 February 2020 according to which several measures were taken to intensify for example “capital accounts — special account for domestic reinvestment” is included in “capital accounts — foreign exchange capital account”.On the same day the SAFE issued Notice by the State Administration of Foreign Exchange of Further Facilitating Cross-border Trade and Investment (国家外汇管理局关于进一步促进跨境贸易投资便利化的通知（汇发[2019]28号）) in order to further promote the reform of “simplification of administrativeprocedures and decentralisation of powers combination of decentralisation and appropriate control andoptimisation of services”. It cancelled restrictions on the use of funds in domestic asset realisation accounts for foreign exchange settlement and restrictions on the number of opened foreign exchange accounts under capital accounts.On 3 April 2024 the SAFE issued the Notice on Promulgation of the Guidelines on Foreign ExchangeBusinesses under Capital Accounts (Edition 2024) (国家外汇管理局关于印发《资本项目外汇业务指引(2024年版）》的通知（汇发[2024]12号）) in order to further optimise the workflow for handling of capital account transactions.The foregoing circulars notices and measures will be subject to interpretation and application by the relevant PRC authorities. There is no assurance that approval of such remittances borrowing or provision of external guarantee in Renminbi will continue to be granted or will not be revoked in the future. Further since the remittance of Renminbi by way of investment or loans are now categorised as capital account items such remittances are subject to the specific requirements or restrictions set out in the relevant SAFE rules.– 173 –TAXATION The statements herein regarding taxation are based on the laws in force as at the date of this document and are subject to any changes in law occurring after such date which changes could be made on a retroactive basis. The following summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase own or dispose of the Notes and does not purport to deal with the tax consequences applicable to all categories of investors some of which (such as dealers or certain professional investors) may be subject to special rules. Investors should consult their own tax advisers regarding the tax consequences of an investment in the Notes.PRC The following summary describes the principal PRC tax consequences of ownership of the Notes by beneficial owners who or which are not residents of mainland China for PRC tax purposes. These beneficial owners are referred to as “non-PRC Noteholders” or “non-resident Noteholders” in this section. In considering whether to invest in the Notes potential purchasers should consult their individual tax advisors with regard to the application of PRC tax laws to their particular situations as well as any tax consequences arising under the laws of any other tax jurisdiction.Pursuant to the Enterprise Income Tax Law effective on 1 January 2008 and amended on 24 February 2017 and 29 December 2018 and the PRC Individual Income Tax Law as amended on 30 June 2011 and 31 August 2018 and their implementation regulations an income tax is imposed on payment of interest by way of withholding in respect of debt securities issued by PRC enterprises to non-resident Noteholders including non-resident enterprises and non-resident individuals.On 23 March 2016 the Ministry of Finance and the State Administration of Taxation (“SAT”) issued the Circular of Full Implementation of Business Tax to VAT Reform (关于全面推开营业税改征增值税试点 的通知) (Caishui [2016] No. 36 “Circular 36”) which confirms that business tax was replaced by VAT from 1 May 2016. Since then the income derived from the provision of financial services which attracted business tax will be entirely replaced by and subject to VAT.According to Circular 36 the entities and individuals providing services within China shall be subject to VAT. The services are treated as being provided within China where either the service provider or the service recipient is located in China but where the services are sold by offshore entities or individuals to onshore entities or individuals and such services purely take place outside the PRC they should not be deemed as services sold within the territory of China. The services subject to VAT include the provision of financial services such as the provision of loans. It is further clarified under Circular 36 that the “loans” refers to the activity of lending capital for another’s use and receiving the interest income thereon. Based on the definition of “loans” under Circular 36 the issuance of Notes is likely to be treated as the holders of the Notes providing loans to the Issuer.(I) In the event that the Issuer is the Bank’s head office (the “Bank Head Office”) In the event that the Issuer is the Bank Head Office the Bank Head Office will be subject to withholding PRC income tax on the payment of interest of the Notes to non-resident Noteholders.The current rates of such income tax are 20 per cent. (for non-resident individuals) and 10 per cent.(for non-resident enterprises) of the gross amount of the interest in each case unless a lower rate is available under an applicable tax treaty. For example the tax so charged on interests paid on the Notes to non-resident Noteholders who or which are residents of Hong Kong (including enterprise holders and individual holders) as defined under the arrangement between the mainland China and Hong Kong for purpose of the avoidance of double taxation will be 7 per cent. of the gross amount of the interest pursuant to such arrangement. Further given that the Bank Head Office is located in the PRC the holders of the Notes would be regarded as providing the financial services within – 174 –China and consequently the holders of the Notes shall be subject to VAT at the rate of 6 per cent.when receiving the interest payments under the Notes. Given that the Bank Head Office pays interest income to Noteholders who are located outside of the PRC the Bank Head Office acting as the obligatory withholder in accordance with applicable law shall withhold VAT from the payment of interest income to Noteholders who are located outside of the PRC. The Bank Head Office has agreed to pay additional amounts to holders of the Notes so that holders of the Noteswould receive the full amount of the scheduled payment as further set out in the “Terms andConditions of the Notes”.Under the Enterprise Income Tax Law and its implementation rules any gains realised on the transfer of the Notes by holders who are deemed as non-resident enterprises may be subject to PRC enterprise income tax if such gains are regarded as income derived from sources within the PRC.There remains uncertainty as to whether the gains realised on the transfer of the Notes would be treated as incomes derived from sources within the PRC and be subject to PRC enterprise income tax. If such gains are subject to PRC income tax the 10 per cent. enterprise income tax rate and 20 per cent. individual income tax rate will apply respectively unless there is an applicable tax treaty or arrangement that reduces or exempts such income tax. The taxable income will be the balance of the total income obtained from the transfer of the Notes minus all costs and expenses that are permitted under PRC tax laws to be deducted from the income. According to an arrangement between the PRC and Hong Kong for avoidance of double taxation Noteholders who are Hong Kong residents including both enterprise holders and individual holders will be exempted from PRC income tax on capital gains derived from a sale or exchange of the Notes.(II) In the event that the Issuer is an overseas branch of the Bank In the event that the Issuer is an overseas branch of the Bank the Issuer is not obliged to withhold PRC income tax at the rate up to 10 per cent. (for non-resident enterprises) or 20 per cent. (for non-resident individuals) on the payments of interest made by it to non-resident Noteholders provided that the payments are made outside of the territory of PRC. However this is subject to the interpretation by the PRC tax authorities. If the PRC tax authorities take an interpretation that the interest on the Notes payable by the Issuer is treated as income sourced from the PRC a withholding tax may be imposed on such interest and the Issuer will pay additional amounts to holders of the Notes so that holders of the Notes would receive the full amount of the scheduled payment as further set out in the “Terms and Conditions of the Notes”.In the case of issuance of Notes by an overseas branch of the Bank Circular 36 will not apply if the provision of loans by individuals or entities located outside the PRC takes place outside the PRC.Neither the overseas branch of the Bank nor the holders of the Notes are located in the PRC and if the provision of loans takes place outside the PRC then no VAT is payable on interest payments under the Notes. This is however subject to the interpretation of Circular 36 by the relevant authority.If the Bank Head Office shall perform the obligation of paying interest of the Notes in the event and only when the overseas Branch Issuer fails to perform its obligations of paying the interest of the Notes the Bank Head Office will be obliged to withhold PRC income tax at a rate of 10 per cent. (for non-resident enterprises) or 20 per cent. (for non-resident individuals) (unless a lower rate is available under an applicable tax treaty) and PRC VAT tax at the rate of 6 per cent. of the interest component of the amount payable by the Bank Head Office to the Noteholders if the PRC tax authority views such component as an interest income arising within the territory of the PRC.Non-resident Noteholders will not be subject to the PRC tax on any capital gains derived from a sale or exchange of Notes consummated outside the PRC between non-resident Noteholders except however if such capital gains are determined as income sourced in China accordingly such – 175 –capital gains would be subject to the rate of 10 per cent. (for non-resident enterprises) or 20 per cent. (for non-resident individuals) of PRC withholding tax unless there is a lower tax rate applicable. According to an arrangement between the mainland China and Hong Kong for the avoidance of double taxation Noteholders who are Hong Kong residents including both enterprise holders and individual holders will be exempted from PRC income tax on capital gains derived from a sale or exchange of the Notes. There is uncertainty as to whether gains realised on the transfer of the Notes by individual holders who are not PRC citizens or residents will be treated as income sourced within the PRC which as a result will be subject to PRC individual income tax.Where a holder of the Notes who is an entity or individual located outside of the PRC resells the Notes to an entity or individual located outside of the PRC and derives any gain since neither the service provider nor the service recipient is located in the PRC theoretically VAT prescribed under Circular 36 does not apply and the overseas Branch Issuer does not have the obligation to withhold the VAT or the local levies. However there is uncertainty as to the applicability of VAT if either the seller or buyer of Notes is located inside the PRC.The above statements on VAT may be subject to further change upon the issuance of further clarification rules and/or different interpretation by the competent tax authority. There is uncertainty as to the application of Circular 36.Pursuant to the EIT Law and the VAT reform detailed above the overseas Branch Issuer shall withhold EIT (should such tax apply) from the payments of interest in respect of the Notes for any non-PRC Noteholder and the overseas Branch Issuer shall withhold VAT (should such tax apply) from the payments of interest in respect of the Notes for any Noteholders located outside of the PRC. However in the event that the Issuer is required to make such a deduction or withholding (whether by way of EIT or VAT otherwise) the Issuer has agreed to pay such additional amounts as will result in receipt by the Noteholders of such amounts after such withholding or deduction as would have been received by them had no such withholding or deduction been required. For more information see “Terms and Conditions of the Notes — Condition 8 (Taxation)”.No PRC stamp duty will be chargeable upon the issue or transfer (for so long as the register of Noteholders is maintained outside the PRC) of a Note.HONG KONG Withholding Tax No withholding tax is payable in Hong Kong in respect of payments of principal or interest on the Notes or in respect of any capital gains arising from the sale of the Notes.Profits Tax Hong Kong profits tax is chargeable on every person carrying on a trade profession or business in Hong Kong in respect of profits arising in or derived from Hong Kong from such trade profession or business (excluding profits arising from the sale of capital assets).Interest on the Notes may be deemed to be profits arising in or derived from Hong Kong from a trade profession or business carried on in Hong Kong in the following circumstances: (i) interest on the Notes is derived from Hong Kong and is received by or accrues to a corporation carrying on a trade profession or business in Hong Kong; or (ii) interest on the Notes is derived from Hong Kong and is received by or accrues to a person other than a corporation carrying on a trade profession or business in Hong Kong and is in respect of the funds of that trade profession or business; or – 176 –(iii) interest on the Notes is received by or accrues to a financial institution (as defined in the Inland Revenue Ordinance (Cap. 112) of Hong Kong (the “IRO”)) and arises through or from the carrying on by the financial institution of its business in Hong Kong; or (iv) interest on the Notes is received by or accrues to a corporation other than a financial institution and arises through or from the carrying on in Hong Kong by the corporation of its intra-group financing business (within the meaning of section 16(3) of the IRO).Where the Hong Kong branch of the Bank is the Issuer pursuant to the Exemption from Profits Tax (Interest Income) Order interest income accruing to a person other than a financial institution on deposits (denominated in any currency and whether or not the deposit is evidenced by a certificate of deposit) placed with inter alia an authorised institution in Hong Kong (within the meaning of section 2 of the Banking Ordinance (Cap. 155) of Hong Kong) is exempt from the payment of Hong Kong profits tax. This exemption does not apply however to deposits that are used to secure or guarantee money borrowed in certain circumstances. Provided no prospectus involving the issue of the Notes is registered under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong the issue of the Notes by such Issuer is expected to constitute a deposit to which the above exemption from payment will apply.Sums received by or accrued to a financial institution by way of gains or profits arising through or from the carrying on by the financial institution of its business in Hong Kong from the sale disposal and redemption of Notes will be subject to Hong Kong profits tax. Sums received by or accrued to a corporation other than a financial institution by way of gains or profits arising through or from the carrying on in Hong Kong by the corporation of its intra-group financing business (within the meaning of section 16(3) of the IRO) from the sale disposal or other redemption of Notes will be subject to Hong Kong profits tax.Sums derived from the sale disposal or redemption of Notes will be subject to Hong Kong profits tax where received by or accrued to a person other than a financial institution who carries on a trade profession or business in Hong Kong and the sum has a Hong Kong source unless otherwise exempted.The source of such sums will generally be determined by having regard to the manner in which the Notes are acquired and disposed of.In addition the Inland Revenue (Amendment) (Taxation on Specified Foreign-sourced Income) Ordinance 2022 of Hong Kong (the “Amendment Ordinance”) came into effect on 1 January 2023.Under the Amendment Ordinance certain foreign-sourced interest on the Notes accrued to an MNE entity (as defined in the Amendment Ordinance) carrying on a trade profession or business in Hong Kong is regarded as arising in or derived from Hong Kong and subject to Hong Kong profits tax when it is received in Hong Kong. The Amendment Ordinance also provides for relief against double taxation in respect of certain foreign-sourced income and transitional matters.In certain circumstances Hong Kong profits tax exemptions (such as concessionary tax rates) may be available. Investors are advised to consult their own tax advisors to ascertain the applicability of any exemptions to their individual position.Stamp Duty Stamp duty will not be payable on the issue of Bearer Notes by the relevant Issuer provided that either: (i) such Bearer Notes are denominated in a currency other than the currency of Hong Kong and are not repayable in any circumstances in the currency of Hong Kong; or – 177 –(ii) such Bearer Notes constitute loan capital (as defined in the Stamp Duty Ordinance (Cap. 117) of Hong Kong (the “SDO”)).If stamp duty is payable it is payable by the relevant Issuer on the issue of Bearer Notes at a rate of 3 per cent. of the market value of the Bearer Notes at the time of issue. No stamp duty will be payable on any subsequent transfer of Bearer Notes.No stamp duty is payable on the issue of Registered Notes. Stamp duty may be payable on any transfer of Registered Notes if the relevant transfer is required to be registered in Hong Kong. Stamp duty will however not be payable on any transfer of Registered Notes provided that either: (i) such Registered Notes are denominated in a currency other than the currency of Hong Kong and are not repayable in any circumstances in the currency of Hong Kong; or (ii) such Registered Notes constitute loan capital (as defined in the SDO).With effect from 17 November 2023 if stamp duty is payable in respect of the transfer of Registered Notes it will be payable at the rate of 0.2 per cent. (of which 0.1 per cent. is payable by the seller and 0.1 per cent. is payable by the purchaser) normally by reference to the consideration or its value whichever is higher. In addition stamp duty is payable at the fixed rate of HK$5 on each instrument of transfer executed in relation to any transfer of the Registered Notes if the relevant transfer is required to be registered in Hong Kong.UNITED STATES FATCA TAX PROVISIONS Pursuant to certain provisions of the U.S. Internal Revenue Code of 1986 as amended commonly known as FATCA a “foreign financial institution” may be required to withhold on certain payments it makes (“foreign passthru payments”) to persons that fail to meet certain certification reporting or related requirements. The relevant Issuer may be a foreign financial institution for these purposes. A number of jurisdictions (including the PRC) have entered into or have agreed in substance to intergovernmental agreements with the United States to implement FATCA (“IGAs”) which modify the way in which FATCA applies in their jurisdictions. Under the provisions of IGAs as currently in effect a foreign financial institution in an IGA jurisdiction would generally not be required to withhold under FATCA or an IGA from payments that it makes. Certain aspects of the application of the FATCA provisions and IGAs to instruments such as the Notes including whether withholding would ever be required pursuant to FATCA or an IGA with respect to payments on instruments such as Notes are uncertain and may be subject to change. Even if withholding would be required pursuant to FATCA or an IGA with respect to payments on instruments such as Notes proposed regulations have been issued that provide that such withholding would not apply prior to the date that is two years after the date on which final regulations defining foreign passthru payments are published in the U.S. Federal Register and Notes characterised as debt (or which are not otherwise characterised as equity and have a fixed term) for U.S. federal tax purposes that are issued on or prior to the date that is six months after the date on which final regulations defining foreign passthru payments are published generally would be grandfathered for purposes of FATCA withholding unless materially modified after such date. However if additional Notes (as described under “Terms and Conditions of the Notes — Further Issues”) that are not distinguishable from previously issued Notes are issued after the expiration of the grandfathering period and are subject to withholding under FATCA then withholding agents may treat all Notes including the Notes offered prior to the expiration of the grandfathering period as subject to withholding under FATCA.Holders should consult their own tax advisers regarding how these rules may apply to their investment in Notes.– 178 –SUBSCRIPTION AND SALE DEALER AGREEMENT Subject to the terms and on the conditions contained in the amended and restated dealer agreement dated 18 June 2024 (such dealer agreement as modified and/or supplemented and/or restated from time to time the “Dealer Agreement”) made between the Bank the Arranger and the permanent Dealers the Notes will be offered on a continuous basis by the relevant Issuer to the permanent Dealers. The Notes may be resold at prevailing market prices or at prices related thereto at the time of such resale as determined by the relevant Dealer. The Notes may also be sold by the relevant Issuer through the Dealers acting as agents of the relevant Issuer. The Dealer Agreement also provides for Notes to be issued in syndicated Tranches that are severally underwritten by two or more Dealers.The relevant Issuer will pay each relevant Dealer a commission as agreed between them in respect of Notes subscribed by it. The relevant Issuer will reimburse the Arranger for certain of their expenses incurred in connection with the establishment of the Programme and the Dealers for certain of their activities in connection with the Programme. The commissions in respect of an issue of Notes on a syndicated basis will be stated in the relevant subscription agreement.The relevant Issuer will indemnify the Dealers against certain liabilities in connection with the offer and sale of the Notes. The Dealer Agreement entitles the Dealers to terminate any agreement that they make to subscribe Notes in certain circumstances prior to payment for such Notes being made to the relevant Issuer.In connection with the issue of any Tranche of Notes the Dealer or Dealers (if any) named as the Stabilisation Manager(s) (or person(s) acting on behalf of any Stabilisation Manager(s)) in the applicable Pricing Supplement may to the extent permitted by applicable laws and directives over-allot Notes or effect transactions with a view to supporting the price of the Notes of the Series at a level higher than that which might otherwise prevail for a limited period after the Issue Date of the relevant Tranche of Notes but in so doing the Stabilisation Manager(s) or any person acting on behalf of the Stabilisation Manager(s) shall act as principal and not as agent of the relevant Issuer. However there is no obligation of such Stabilisation Manager(s) to do this. Any loss or profit sustained as a consequence of any such overallotment or stabilisation shall be for the account of the relevant Dealer.The Arranger the Dealers and their respective affiliates are full service financial institutions engaged in various activities which may include securities trading commercial and investment banking financial advisory investment management principal investment hedging financing and brokerage activities (“Banking Services or Transactions”). The Arranger the Dealers or any of their respective affiliates may have from time to time performed and may in the future perform various Banking Services or Transactions with or for the relevant Issuer and/or its affiliates for which they have received or will receive fees and expenses and may from time to time engage in transactions with and perform services for the relevant Issuer and/or its affiliates in the ordinary course of the relevant Issuer’s or their business.In addition certain of the Arranger and Dealers namely China CITIC Bank International Limited is a subsidiary of the Bank. The net proceeds from each issue of the Notes may be on-lent by the relevant Issuer to the Bank and/or any of its subsidiaries.In the ordinary course of their various business activities the Arranger the Dealers and their respective affiliates make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the relevant Issuer or the Bank including the Notes and could adversely affect the trading price and liquidity of the relevant Notes. The Arranger the Dealers and their affiliates may make investment – 179 –recommendations and/or publish or express independent research views (positive or negative) in respect of the Notes or other financial instruments of the relevant Issuer or the Bank and may recommend to their clients that they acquire long and/or short positions in the Notes or other financial instruments of the relevant Issuer or the Bank.In connection with each Tranche of Notes issued under the Programme the Dealers or certain of their affiliates or affiliates of the relevant Issuer may purchase Notes and be allocated Notes for asset management and/or proprietary purposes but not with a view to distribution. Further the Dealers and/or their respective affiliates or affiliates of the relevant Issuer may act as investors and place orders receive allocations and purchase and trade Notes for their own account (without a view to distributing such Notes) and such orders and/or allocations and/or trades of the Notes may be material. Such entities may hold or sell such Notes or purchase further Notes for their own account in the secondary market or deal in any other securities of the relevant Issuer and therefore they may offer or sell the Notes or other securities otherwise than in connection with the offering. Accordingly references herein to the Notes being “offered” should be read as including any offering of the Notes to the relevant Issuer the Bank the Arranger the Dealers and/or their respective affiliates or affiliates of the relevant Issuer as investors for their own account. Such entities are not expected to disclose such transactions or the extent of any such investment otherwise than in accordance with any legal or regulatory obligation to do so. If such transactions occur the trading price and liquidity of such Notes may be impacted.Furthermore it is possible that a significant proportion of a Series of the Notes may be initially allocated to and subsequently held by a limited number of investors. If this is the case the trading price and liquidity of trading in such Notes may be constrained. The Issuers the Bank and the Dealers are under no obligation to disclose the extent of the distribution of the Notes amongst individual investors otherwise than in accordance with any applicable legal or regulatory requirements.UNITED STATES Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that: (a) The Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United States (or in certain circumstances to or for the account or benefit of U.S. persons) except pursuant to an exemption from or a transaction not subject to the registration requirements of the Securities Act.(b) Bearer Notes are subject to U.S. tax law requirements and may not be offered sold or delivered within the United States or its possessions or to a United States person except in certain transactions permitted by U.S. tax regulations. Bearer Notes will be issued in accordance with the provisions of U.S. Treasury Regulation or section 1.163 — 5(c)(2)(i)(D) unless the relevant Pricing Supplement specifies that Notes will be issued in accordance with the provision of U.S.Treasury Regulation or section 1.163 — 5(c)(2)(i)(C). The applicable Pricing Supplement will identify whether TEFRA C rules or TEFRA D rules apply or whether TEFRA is not applicable.(c) In connection with any Notes which are offered or sold outside the United States in reliance on exemption from the registration requirements of the Securities Act provided under Category 1 of Regulation S (“Category 1 of Regulation S Notes”) each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that it will not offer or sell any Notes constituting part of its allotment in the United States except in accordance with Rule 903 of Regulation S under the Securities Act and that accordingly neither it its affiliates nor any persons acting on its or their behalf have engaged or will engage in any directed selling efforts with respect to the Notes. In addition until 40 days after the commencement of the offering of any identifiable tranche of such Notes an offer or sale of Notes – 180 –within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act.(d) In connection with any Notes which are offered or sold outside the United States in reliance on an exemption from the registration requirements of the Securities Act provided under Category 2 of Regulation S (“Category 2 of Regulation S Notes”) each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that it will offer sell or deliver such Category 2 of Regulation S Notes (i) as part of their distribution at any time or (ii) otherwise until 40 days after the completion of the distribution as determined and certified by the relevant Dealer or in the case of an issue of Notes on a syndicated basis the relevant lead manager of all Notes of the Tranche of which such Category 2 of Regulation S Notes are a part only in accordance with Rule 903 of Regulation S under the Securities Act. Each Dealer has further agreed and each further Dealer appointed under the Programme will be required to agree that it will send to each dealer to which it sells any Category 2 of Regulation S Notes during the distribution compliance period a confirmation or other notice setting forth the restrictions on offers and sales of the Category 2 of Regulation S Notes within the United States or to or for the account or benefit of U.S. persons.(e) Until 40 days after the commencement of the offering of any Series of Notes an offer or sale of such Notes within the United States by any dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with an available exemption from registration under the Securities Act.PROHIBITION OF SALES TO UK RETAIL INVESTORSUnless the Pricing Supplement in respect of any Notes specifies the “Prohibition of Sales to UK RetailInvestors” as “Not Applicable” each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that it has not offered sold or otherwise made available and will not offer sell or otherwise make available any Notes which are the subject of the offering contemplated by this Offering Circular as completed by the Pricing Supplement in relation thereto to any retail investor in the UK. For the purposes of this provision: (i) the expression “retail investor” means a person who is one (or more) of the following: (a) a retail client as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the EUWA; or (b) a customer within the meaning of the provisions of the FSMA and any rules or regulations made under the FSMA to implement the Insurance Distribution Directive where that customer would not qualify as a professional client as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA; or (c) not a qualified investor as defined in Article 2 of the UK Prospects Regulation and (ii) the expression an “offer” includes the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes.PUBLIC OFFER SELLING RESTRICTIONS UNDER THE UK PROSPECTUS REGULATIONIf the Pricing Supplement in respect of any Notes specifies the “Prohibition of Sales to UK RetailInvestors” as “Not Applicable” each Dealer has represented and agreed and each further Dealer – 181 –appointed under the Programme will be required to represent and agree that it has not made and will not make an offer of Notes which are the subject of the offering contemplated by this Offering Circular as completed by the Pricing Supplement in relation thereto to the public in the UK except that it may make an offer of such Notes to the public in the UK: (i) if the Pricing Supplement in relation to the Notes specifies that an offer of those Notes may be made other than pursuant to Section 86 of the FSMA (a “Public Offer”) following the date of publication of a prospectus in relation to such Notes which has been approved by the Financial Conduct Authority provided that any such prospectus has subsequently been completed by the Pricing Supplement contemplating such Public Offer in the period beginning and ending on the dates specified in such prospectus or Pricing Supplement as applicable and the relevant Issuer has consented in writing to its use for the purpose of that Public Offer; (ii) at any time to any legal entity which is a qualified investor as defined in Article 2 of the UK Prospectus Regulation; (iii) at any time to fewer than 150 natural or legal persons (other than qualified investors as defined in Article 2 of the UK Prospectus Regulation) in the UK subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the relevant Issuer for any such offer; or (iv) at any time in any other circumstances falling within Section 86 of the FSMA provided that no such offer of Notes referred to in (ii) to (iv) shall require the relevant Issuer or any Dealer to publish a prospectus pursuant to Section 85 of the FSMA or supplement a prospectus pursuant to Article 23 of the UK Prospectus Regulation.For the purposes of this provision the expression “an offer of Notes to the public” in relation to any Notes means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes and the expression “UK Prospectus Regulation” means the Prospectus Regulation as it forms part of domestic law by virtue of the EUWA.SELLING RESTRICTIONS ADDRESSING ADDITIONAL UNITED KINGDOM SECURITIES LAWS Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that except as permitted by the relevant subscription agreement: (a) in relation to any Notes which have a maturity of less than one year (i) it is a person whose ordinary activities involve it in acquiring holding managing or disposing of investments (as principal or agent) for the purposes of its business and (ii) it has not offered or sold and will not offer or sell any Notes other than to persons whose ordinary activities involve them in acquiring holding managing or disposing of investments (as principal or as agent) for the purposes of their businesses or who it is reasonable to expect will acquire hold manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Notes would otherwise constitute a contravention of Section 19 of the FSMA by the relevant Issuer; (b) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of any Notes in circumstances in which Section 21(1) of the FSMA does not apply to the relevant Issuer; and (c) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to any Notes in from or otherwise involving the United Kingdom.– 182 –PROHIBITION OF SALES TO EEA RETAIL INVESTORSUnless the Pricing Supplement in respect of any Notes specifies “Prohibition of Sales to EEA RetailInvestors” as “Not Applicable” each Dealer has represented warranted and agreed and each further Dealer appointed under the Programme will be required to represent warrant and agree that it has not offered sold or otherwise made available and will not offer sell or otherwise make available any Notes which are the subject of the offering contemplated by this Offering Circular as completed by the Pricing Supplement in relation thereto to any retail investor in the European Economic Area. For the purposes of this provision: (a) the expression “retail investor” means a person who is one (or more) of the following: (i) a retail client as defined in point (11) of Article 4(1) of MiFID II; or (ii) a customer within the meaning of the Insurance Distribution Directive where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor as defined in the Prospectus Regulation; and (b) the expression an “offer” includes the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes.PUBLIC OFFER SELLING RESTRICTION UNDER THE PROSPECTUS DIRECTIVE If the Pricing Supplement in respect of any Notes specifies “Prohibition of Sales to EEA Retail Investors” as “Not Applicable” in relation to each Member State of the European Economic Area each Dealer has represented warranted and agreed and each further Dealer appointed under the Programme will be required to represent warrant and agree that it has not made and will not make an offer of Notes which are the subject of the offering contemplated by this Offering Circular as completed by the Pricing Supplement in relation thereto to the public in that Member State except that it may make an offer of such Notes to the public in that Member State: (a) Approved prospectus: if the Pricing Supplement in relation to the Notes specifies that an offer of those Notes may be made other than pursuant to Article 1(4) of the Prospectus Regulation in that Member State (a “Non-exempt Offer”) following the date of publication of a prospectus in relation to such Notes which has been approved by the competent authority in that Member State or where appropriate approved in another Member State and notified to the competent authority in that Member State provided that any such prospectus has subsequently been completed by the Pricing Supplement contemplating such Non-exempt Offer in accordance with the Prospectus Regulation in the period beginning and ending on the dates specified in such prospectus or Pricing Supplement as applicable and the relevant Issuer has consented in writing to its use for the purpose of that Non-exempt Offer; (b) Qualified investors: at any time to any legal entity which is a qualified investor as defined in the Prospectus Regulation; (c) Fewer than 150 offerees: at any time to fewer than 150 natural or legal persons (other than qualified investors as defined in the Prospectus Regulation) subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by the relevant Issuer for any such offer; or (d) Other exempt offers: at any time in any other circumstances falling within Article 1(4) of the Prospectus Regulation – 183 –provided that no such offer of Notes referred to in (b) to (d) above shall require the relevant Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.For the purposes of this provision the expression an “offer of Notes to the public” in relation to any Notes in any Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe for the Notes and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129. SINGAPOREIf the Pricing Supplement in respect of any Notes specifies “Singapore Sales to Institutional Investors andAccredited Investors only” as “Applicable” each Dealer has acknowledged and each further Dealer appointed under the Programme will be required to acknowledge that this Offering Circular has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly each Dealer has represented and agreed that and each further Dealer appointed under the Programme will be required to represent and agree that it has not offered or sold any Notes or caused the Notes to be made the subject of an invitation for subscription or purchase and will not offer or sell any Notes or cause the Notes to be made the subject of an invitation for subscription or purchase and has not circulated or distributed nor will it circulate or distribute this Offering Circular or any other document or material in connection with the offer or sale or invitation for subscription or purchase of the Notes whether directly or indirectly to any person in Singapore other than (i) to an institutional investor (as defined in Section 4A of SFA) pursuant to Section 274 of the SFA or (ii) to an accredited investor (as defined in Section 4A of the SFA) pursuant to and in accordance with the conditions specified in Section 275 of the SFA.If the Pricing Supplement in respect of any Notes specifies “Singapore Sales to Institutional Investors andAccredited Investors only” as “Not Applicable” each Dealer has acknowledged and each further Dealer appointed under the Programme will be required to acknowledge that this Offering Circular has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that it has not offered or sold any Notes or caused the Notes to be made the subject of an invitation for subscription or purchase and will not offer or sell any Notes or cause the Notes to be made the subject of an invitation for subscription or purchase and has not circulated or distributed nor will it circulate or distribute this Offering Circular or any other document or material in connection with the offer or sale or invitation for subscription or purchase of the Notes whether directly or indirectly to any person in Singapore other than (i) to an institutional investor (as defined in Section 4A of SFA) pursuant to Section 274 of the SFA (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA or any person pursuant to Section 275(1A) of the SFA and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to and in accordance with the conditions of any other applicable provision of the SFA.JAPAN The Notes have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of 1948 as amended) (the “FIEA”). Accordingly each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that it has not directly or indirectly offered or sold and will not offer or sell any Notes in Japan or to or for the benefit of any resident of Japan (as defined under Item 5 Paragraph 1 Article 6 of the Foreign Exchange and Foreign Trade Act (Act No. 228 of 1949 as amended)) or to others for re-offering or re-sale directly or indirectly in Japan or to or for the benefit of a resident of Japan except pursuant to an exemption from the registration requirements of and otherwise in compliance with the FIEA and any other applicable laws regulations and ministerial guidelines of Japan.– 184 –HONG KONG Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that: (a) it has not offered or sold and will not offer or sell in Hong Kong by means of any document any Notes (except for Notes which are a “structured product” as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong (the “SFO”)) other than (i) to “professional investors” as defined in the SFO and any rules made under that Ordinance or (ii) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance; and (b) it has not issued or had in its possession for the purposes of issue and will not issue or have in its possession for the purposes of issue whether in Hong Kong or elsewhere any advertisement invitation or document relating to the Notes which is directed at or the contents of which are likely to be accessed or read by the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Notes which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the SFO and any rules made under that Ordinance.NOTICE TO CAPITAL MARKET INTERMEDIARIES AND PROSPECTIVE INVESTORS PURSUANT TO PARAGRAPH 21 OF THE HONG KONG SFC CODE OF CONDUCT — IMPORTANT NOTICE TO CMIS (INCLUDING PRIVATE BANKS) This notice to CMIs (including private banks) is a summary of certain obligations the SFC Code imposes on CMIs which require the attention and cooperation of other CMIs (including private banks). Certain CMIs may also be acting as OCs for the relevant CMI Offering and are subject to additional requirements under the SFC Code. The application of these obligations will depend on the role(s) undertaken by the relevant Dealer(s) in respect of each CMI Offering.Prospective investors who are the directors employees or major shareholders of the relevant Issuer a CMI or its group companies would be considered under the SFC Code as having an Association with the relevant Issuer the CMI or the relevant group company. CMIs should specifically disclose whether their investor clients have any Association when submitting orders for the relevant Notes. In addition private banks should take all reasonable steps to identify whether their investor clients may have any Associations with the relevant Issuer or any CMI (including its group companies) and inform the relevant Dealers accordingly.CMIs are informed that unless otherwise notified the marketing and investor targeting strategy for the relevant CMI Offering may include institutional investors sovereign wealth funds pension funds hedge funds family offices and high net worth individuals in each case subject to the selling restrictions and any MiFID II product governance language or any UK MiFIR product governance language set out elsewhere in this Offering Circular and/or the applicable Pricing Supplement.CMIs should ensure that orders placed are bona fide are not inflated and do not constitute duplicated orders (i.e. two or more corresponding or identical orders placed via two or more CMIs). CMIs should enquire with their investor clients regarding any orders which appear unusual or irregular. CMIs should disclose the identities of all investors when submitting orders for the relevant Notes (except for omnibus orders where underlying investor information may need to be provided to any OCs when submitting orders). Failure to provide underlying investor information for omnibus orders where required to do so may result in that order being rejected. CMIs should not place “X-orders” into the order book.CMIs should segregate and clearly identify their own proprietary orders (and those of their group companies including private banks as the case may be) in the order book and book messages.– 185 –CMIs (including private banks) should not offer any rebates to prospective investors or pass on any rebates provided by the relevant Issuer. In addition CMIs (including private banks) should not enter into arrangements which may result in prospective investors paying different prices for the relevant Notes.CMIs are informed that a private bank rebate may be payable as stated above and in the applicable Pricing Supplement or otherwise notified to prospective investors.The SFC Code requires that a CMI disclose complete and accurate information in a timely manner on the status of the order book and other relevant information it receives to targeted investors for them to make an informed decision. In order to do this those Dealers in control of the order book should consider disclosing order book updates to all CMIs.When placing an order for the relevant Notes private banks should disclose at the same time if such order is placed other than on a “principal” basis (whereby it is deploying its own balance sheet for onward selling to investors). Private banks who do not provide such disclosure are hereby deemed to be placing their order on such a “principal” basis. Otherwise such order may be considered to be an omnibus order pursuant to the SFC Code. Private banks should be aware that placing an order on a “principal” basis may require the relevant affiliated Dealer(s) (if any) to categorise it as a proprietary order and apply the “proprietary orders” requirements of the SFC Code to such order and will result in that private bank not being entitled to and not being paid any rebate.In relation to omnibus orders when submitting such orders CMIs (including private banks) that are subject to the SFC Code should disclose underlying investor information in respect of each order constituting the relevant omnibus order (failure to provide such information may result in that order being rejected). Underlying investor information in relation to omnibus orders should consist of: * The name of each underlying investor; * A unique identification number for each investor; * Whether an underlying investor has any “Associations” (as used in the SFC Code); * Whether any underlying investor order is a “Proprietary Order” (as used in the SFC Code); * Whether any underlying investor order is a duplicate order.Underlying investor information in relation to omnibus order should be sent to the Dealers named in the relevant Pricing Supplement.To the extent information being disclosed by CMIs and investors is personal and/or confidential in nature CMIs (including private banks) agree and warrant: (A) to take appropriate steps to safeguard the transmission of such information to any OCs; and (B) that they have obtained the necessary consents from the underlying investors to disclose such information to any OCs. By submitting an order and providing such information to any OCs each CMI (including private banks) further warrants that they and the underlying investors have understood and consented to the collection disclosure use and transfer of such information by any OCs and/or any other third parties as may be required by the SFC Code including to the relevant Issuer relevant regulators and/or any other third parties as may be required by the SFC Code for the purpose of complying with the SFC Code during the bookbuilding process for the relevant CMI Offering. CMIs that receive such underlying investor information are reminded that such information should be used only for submitting orders in the relevant CMI Offering. The relevant Dealers may be asked to demonstrate compliance with their obligations under the SFC Code and may request other CMIs (including private banks) to provide evidence showing compliance with the obligations above (in particular that the necessary consents have been obtained). In such event other CMIs (including private banks) are required to provide the relevant Dealers with such evidence within the timeline requested.– 186 –PEOPLE’S REPUBLIC OF CHINA Each Dealer has represented and agreed and each further Dealer appointed under the Programme will be required to represent and agree that the Notes are not being offered or sold and may not be offered or sold directly or indirectly in the People’s Republic of China (for such purposes not including the Hong Kong Special Administrative Region and Macau Special Administrative Region of the People’s Republic of China or Taiwan) except as permitted by the securities laws of the People’s Republic of China.GENERAL Each Dealer has agreed and each further Dealers appointed under the Programme will be required to agree that it will (to the best of its knowledge and belief) comply with all applicable securities laws and regulations in force in any jurisdiction in which it purchases offers sells or delivers Notes or possesses or distributes this Offering Circular and will obtain any consent approval or permission required by it for the purchase offer sale or delivery by it of Notes under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such purchases offers sales or deliveries and none of the Issuers and any other Dealer shall have any responsibility therefor.None of the Issuers and any of the Dealers represents that Notes may at any time lawfully be sold in compliance with any applicable registration or other requirements in any jurisdiction that would permit a public offering of any of the Notes or pursuant to any exemption available thereunder or assumes any responsibility for facilitating any such sale.With regard to each Tranche the relevant Dealer will be required to comply with any additional restrictions agreed between the relevant Issuer and the relevant Dealer and set out in the applicable Pricing Supplement.– 187 –GENERAL INFORMATION AUTHORISATION 1. The issue of the Notes has been duly authorised pursuant to the resolutions of the Bank’s board of directors dated 24 December 2021 and the resolutions of the Bank’s shareholder dated 20 January 2022. LISTING 2. Application has been made to the Hong Kong Stock Exchange for the listing of the Programme by way of debt issues to Professional Investors only during the 12 month period from the date of this Offering Circular. Separate application will be made for the listing of Notes issued under the Programme on the Hong Kong Stock Exchange. The issue price of listed Notes on the Hong Kong Stock Exchange will be expressed as a percentage of their nominal amount. It is expected that dealings will if permission is granted to deal in and for the listing of such Notes commence on or about the date of listing of the relevant Notes.NDRC APPROVAL 3. Where applicable for a relevant Tranche of Notes the Notes will be issued in accordance with either (i) the pre-issuance examination and registration with the NDRC to obtain the Certificate of Examination and Registration of Foreign Debts Borrowed by Enterprises (企业借用外债审核登记 证明) prior to the issuance of the Notes under the Programme pursuant to the NDRC Administrative Measures or (ii) the then applicable annual foreign debt quota granted by the NDRC to the Bank for any issuance of the Notes pursuant to the NDRC Administrative Measures. 4. In the case of (i) the Bank will make a pre-issuance registration with the NDRC followed by post-issuance filings with the NDRC within the prescribed time following of the Notes. In the case of (ii) the Bank will be able to rely on such annual foreign debt quota granted by the NDRC and is not required to make any pre-issuance registration for issuance of the Notes within the annual foreign debt quota with the NDRC. However the Bank will be required to make post-issuance filings with the NDRC within the prescribed time following issuance of the Notes.CLEARING SYSTEMS 5. The Notes to be issued under the Programme have been accepted for clearance through Euroclear and Clearstream. The appropriate Common Code and ISIN for each Tranche of Notes allocated by Euroclear and Clearstream will be specified in the applicable Pricing Supplement. The Issuer may also apply to have Notes accepted for clearance through the CMU. The relevant CMU instrument number will be specified in the applicable Pricing Supplement. If the Notes will be cleared through an additional or alternative clearing system the appropriate information will be specified in the relevant Pricing Supplement.LEGAL ENTITY IDENTIFIER 6. The legal entity identifier of the Bank is 300300C1030211000384. NO SIGNIFICANT CHANGE 7. Save as disclosed in this Offering Circular there has been no significant change in the financial or trading position of the Bank or of the Group since 31 December 2023 and there has been no material adverse change in the financial position or prospects of the Bank or of the Group since 31 December 2023.– 188 –LITIGATION 8. Save as disclosed in this Offering Circular neither the Issuer nor any member of the Group is involved in any legal or arbitration proceedings (including any proceedings which are pending or threatened of which the Issuer is aware) which may have or have had in the 12 months preceding the date of this document a significant effect on the financial position of the Issuer or the Group.INDEPENDENT AUDITOR 9. The independent auditor of the Bank is KPMG Certified Public Accountants Hong Kong. 10. The audited consolidated financial statements of the Bank as at and for the years ended 31 December 2022 which are included elsewhere in this Offering Circular have been audited by PricewaterhouseCoopers the then independent auditor of the Bank in accordance with HKSAs as stated in its reports included in this Offering Circular. 11. The audited consolidated financial statements of the Bank as at and for the years ended 31 December 2023 which are included elsewhere in this Offering Circular have been audited by KPMG the current independent auditor of the Bank in accordance with HKSAs as stated in its reports included in this Offering Circular.DOCUMENTS 12. So long as Notes are capable of being issued under the Programme copies of the following documents will when published be available from the registered office of the relevant Issuer and from the specified office of the Fiscal Agent for the time being at 40/F Champion Tower 3 Garden Road Central Hong Kong: (a) the constitutional documents of the Bank; (b) the audited consolidated financial statements of the Group in respect of the years ended 31 December 2022 and 2023 (in each case together with the auditor’s report in connection therewith). The Bank currently prepares audited consolidated accounts on an annual basis; (c) the most recent annual audited consolidated financial statements of the Group and the most recently published unaudited consolidated interim financial statements of the Group (if any); (d) the Fiscal Agency Agreement the Deed of Covenant and the forms of the Global Notes the Notes in definitive form the Receipts the Coupons and the Talons; (e) a copy of this Offering Circular together with any supplement to this Offering Circular and any other documents incorporated herein or therein; and (f) any future offering circulars prospectuses information memoranda and supplements including Pricing Supplements (save that a Pricing Supplement relating to an unlisted Note will only be available for inspection by a holder of such Note and such holder must produce evidence satisfactory to the relevant Issuer and the Paying Agent as to its holding of Notes and identity) to this Offering Circular and any other documents incorporated herein or therein by reference.– 189 –INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page FOR THE YEAR ENDED 31 DECEMBER 2022(1) Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2 Consolidated Statement of Profit or Loss and Other Comprehensive Income . . . . . . . . . . . . . . F-9 Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-11 Consolidated Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-13 Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-14 Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-16 FOR THE YEAR ENDED 31 DECEMBER 2023(1) Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-150 Consolidated Annual Statement of Profit or Loss and Other Comprehensive Income . . . . . . . . F-157 Consolidated Annual Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-159 Consolidated Annual Statement of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-161 Consolidated Annual Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-162 Notes to the Consolidated Annual Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-164 FOR THE FIRST QUARTER OF 2024 ENDED 31 MARCH 2024 Unaudited Consolidated Statement of Profit or Loss and Other Comprehensive Income . . . . . . F-285 Unaudited Consolidated Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-287 Unaudited Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-290 Note: (1) The independent auditor’s reports on the Group’s consolidated financial statements for the years ended 31 December 2022 and 2023 set out herein are reproduced from the Group’s annual reports for the years ended 31 December 2022 and 2023 respectively. Page references referred to in the abovenamed reports refer to pages set out in such annual reports. These independent auditor’s reports and the consolidated financial statements have not been specifically prepared for inclusion in this Offering Circular.– F-1 –Chapter 9 Independent Auditor’s Report For the year ended 31 December 2022 (Prepared under International Financial Reporting Standards) To the Shareholders of China CITIC Bank Corporation Limited (incorporated in the People’s Republic of China with limited liability) (This auditor’s report is published in English and Chinese. In the event of any inconsistency between the two versions the Chinese version shall prevail.) Opinion What we have audited The consolidated financial statements of China CITIC Bank Corporation Limited (the “Bank”) and its subsidiaries (the “Group”) which are set out on pages 188 to 328 comprise: * the consolidated statement of financial position as at 31 December 2022; * the consolidated statement of profit or loss and other comprehensive income for the year then ended; * the consolidated statement of changes in equity for the year then ended; * the consolidated statement of cash flows for the year then ended; and * the notes to the consolidated financial statements which include significant accounting policies and other explanatory information.Our opinion In our opinion the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2022 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRSs”) and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.Basis for Opinion We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.IndependenceWe are independent of the Group in accordance with the HKICPA’s Code of Ethics for Professional Accountants (“theCode”) and we have fulfilled our other ethical responsibilities in accordance with the Code.Key Audit Matters Key audit matters are those matters that in our professional judgment were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters.Key audit matters identified in our audit are summarised as follows: * Measurement of expected credit losses for loans and advances to customers and financial investments * Consolidation of structured entities – Non-principal guaranteed wealth management products 2022 Annual Report 181 – F-2 –Chapter 9 Independent Auditor’s Report For the year ended 31 December 2022 (Prepared under International Financial Reporting Standards) Key Audit Matter How our audit addressed the Key Audit Matter Measurement of expected credit losses for loans and advances to customers and financial investments Refer to Note 4 (c) Note 5 (i) Note 22 and Note 23 to We understood and evaluated management’s internal the consolidated financial statements. controls and assessment process for the measurement of ECL for loans and advances to customers and financial As at 31 December 2022 gross loans and advances investments and assessed the inherent risk of material to customers and accrued interest included for the misstatement by considering the degree of estimation purpose of expected credit loss assessment as presented uncertainty and level of other inherent risk factors such as in the Group’s consolidated balance sheet amounted the complexity of estimation models used the subjectivity to RMB5166071 million for which management of significant management judgements and assumptions recognized an impairment allowance of RMB131614 and susceptibility to management bias.million; total financial investments and accrued interest included for the purpose of expected credit loss assessment We assessed and tested the design and the operating amounted to RMB1968713 million for which effectiveness of the internal controls relating to the management recognized an impairment allowance of measurement of ECL for loans and advances to customers RMB31283 million. and financial investments primarily including: The balances of loss allowances for the loans and * Governance over ECL models including the advances to customers and financial investments represent selection approval and application of modelling management’s best estimates at the balance sheet date methodology; and the internal controls relating to of expected credit losses (“ECL”) under International the on-going monitoring and optimization of the Financial Reporting Standard 9: Financial Instruments. models; * Internal controls relating to significant management judgments and assumptions including the assessment and approval of portfolio segmentation model selections parameters estimation identification of significant increase in credit risk defaults or credit-impaired loans forward-looking measurement and management overlay adjustments; * Internal controls over the accuracy and completeness of key inputs used by the models; * Internal controls relating to estimated future cash flows and calculations of present values of such cash flows for corporate loans and advances and financial investments in stage 3; * Internal controls over the information systems for ECL measurement; * Evaluation and approval of the measurement result of ECL for loans and advances to customers and financial investments. 182 China CITIC Bank Corporation Limited – F-3 –Chapter 9 Independent Auditor’s Report For the year ended 31 December 2022 (Prepared under International Financial Reporting Standards) Key Audit Matter How our audit addressed the Key Audit Matter Measurement of expected credit losses for loans and advances to customers and financial investments (continued) Management assesses whether the credit risk of loans We involved our credit risk experts in evaluating the and advances to customers and financial investments model methodologies significant judgements and have increased significantly since their initial recognition assumptions data and key parameters used in the ECL and applies an impairment model to calculate their ECL. measurement for loans and advances to customers and For stages 1 and 2 financial assets management assesses financial investments. The substantive audit procedures impairment allowance using risk parameter model that we performed primarily included: incorporates key parameters including probability of default loss given default exposure at default and * According to the risk characteristics of assets we discount rates. For stages 3 financial assets management evaluated the segmentation of business operations.assesses impairment allowance using both risk parameter We assessed the appropriateness of the modelling model and discounted cash flows model. methodologies adopted for ECL measurement by comparing with the industry practice. We also The models of ECL involves significant management examined the coding for model measurement on a judgments and assumptions primarily including: sample basis to tested whether or not the models reflect the modelling methodologies documented (1) Segmentation of business operations sharing by the management. similar credit risk characteristics selection of appropriate models and determination of relevant * We have examined the accuracy of data inputs key measurement parameters; for the ECL models covering: (i) examination of supporting information on a sample basis including (2) Criteria for determining whether or not there was contractual information such as maturity dates a significant increase in credit risk or a default or and other financial and non-financial information impairment loss was incurred; such as the borrower’s historical and reporting date information which have been agreed with the underlying data used to generate probability of default and internal credit ratings; (ii) assessment of the reasonableness of the loss given default using historical data and benchmarking against industry practices; and (iii) examination of borrowing contracts and assessment of the reasonableness of exposure at default and discounting rates. 2022 Annual Report 183 – F-4 –Chapter 9 Independent Auditor’s Report For the year ended 31 December 2022 (Prepared under International Financial Reporting Standards) Key Audit Matter How our audit addressed the Key Audit Matter Measurement of expected credit losses for loans and advances to customers and financial investments (continued) (3) Economic indicators for forward-looking * We selected samples in consideration of the financial measurement and the application of economic information and non-financial information of scenarios and weightings; the borrowers relevant external evidence and other factors to assess the appropriateness of (4) Management overlay adjustments due to significant management’s identification of significant increase uncertain factors not covered in the models; in credit risk defaults and credit-impaired loans. (5) The estimated future cash flows for corporate loans * For forward-looking measurements we assessed and advances and financial investments in stage 3. management’s selection of economic indicators and their analysis of correlation with the performance The amount of impairment of the loans and advances to of the credit risk portfolios by using statistical customers and financial investments is significant and the techniques. We further tested the reasonableness measurement has a high degree of estimation uncertainty. of the prediction of economic indicators by For measuring ECL the management adopted complex comparing with available external expert estimates.models employed numerous parameters and data inputs In addition we performed sensitivity analysis of and applied significant management judgments and economic scenarios and weightings.assumptions and involved significant inherent risk. In view of these reasons we identified this as a key audit * In addition based on considering the significant matter. uncertain factors we evaluated the rationality of management overlay adjustments and examined the accuracy of the relevant mathematical calculations.* For corporate loans and advances and financial investments in stage 3 we examined on a sample basis forecasted future cash flows prepared by the Group based on financial information of borrowers and guarantors latest collateral valuations other available information and possible future factors together with discount rates in supporting the computation of loss allowance.* We checked and evaluated the financial statement disclosures in relation to the measurement of ECL for loans and advances to customers and financial investments.Based on our procedures performed we considered that the models significant judgements and assumptions as well as relevant data and parameters used by management in measuring ECL for loans and advances to customers and financial investments were supported by the available evidence. 184 China CITIC Bank Corporation Limited – F-5 –Chapter 9 Independent Auditor’s Report For the year ended 31 December 2022 (Prepared under International Financial Reporting Standards) Key Audit Matter How our audit addressed the Key Audit Matter Consolidation of Structured Entities – Non-principal Guaranteed Wealth Management Products Refer to Note 4 (a) Note 5 (v) and Note 59 to the We evaluated and tested the design and operating consolidated financial statements. effectiveness of management’s relevant internal controls over the consolidation of structured entities As at 31 December 2022 all of non-principal guaranteed for non-principal guaranteed WMPs. These controls wealth management products (“WMPs”) issued and primarily included management’s review and approval managed by the Group are structured entities that are of the contractual terms the results in variable return not included in the scope of consolidation. calculations and the consolidation assessment conclusions for these structured entities.Management’s decision on whether or not to consolidate structured entities was based on an assessment of the We selected samples of structured entities for non- Group’s power its variable returns from its involvement principal guaranteed WMPs and performed substantive with the structured entities and the ability to exercise procedures as following: its power to influence the variable returns from these structured entities. * assessed the Group’s contractual rights and obligations in light of the transaction structures We have identified this as a key audit matter due to the and evaluated the Group’s power over the material balance of structured entities and significant structured entities; judgements were involved in assessing the Group’s control over the structured entities. * performed independent analysis and tests on the variable returns from the structured entities including but not limited to commission income and asset management fees earned gain from investments retention of residual income and if any liquidity and other support provided to the structured entities; * assessed whether the Group acted as a principal or an agent through analysis of the scope of the Group decision-making authority its remuneration entitlement other interests the Group held and the rights held by other parties.* examined and evaluated the financial statement disclosures relating to the consolidation of structured entities.Based on the procedures performed above we considered that management’s judgements on the consolidation of structured entities were supportable by the evidence obtained and procedures performed. 2022 Annual Report 185 – F-6 –Chapter 9 Independent Auditor’s Report For the year ended 31 December 2022 (Prepared under International Financial Reporting Standards) Other Information The directors of the Bank are responsible for the other information. The other information comprises all of the information included in the annual report other than the consolidated financial statements and our auditor’s report thereon.Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.In connection with our audit of the consolidated financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.Responsibilities of Directors and Those Charged with Governance for the Consolidated Financial Statements The directors of the Bank are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRSs and the disclosure requirements of the Hong Kong Companies Ordinance and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement whether due to fraud or error.In preparing the consolidated financial statements the directors are responsible for assessing the Group’s ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations or have no realistic alternative but to do so.Those charged with governance are responsible for overseeing the Group’s financial reporting process.Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor’s report that includes our opinion. We report our opinion solely to you as a body and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.As part of an audit in accordance with HKSAs we exercise professional judgment and maintain professional scepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the consolidated financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.* Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. 186 China CITIC Bank Corporation Limited – F-7 –Chapter 9 Independent Auditor’s Report For the year ended 31 December 2022 (Prepared under International Financial Reporting Standards) * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.* Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or if such disclosures are inadequate to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However future events or conditions may cause the Group to cease to continue as a going concern.* Evaluate the overall presentation structure and content of the consolidated financial statements including the disclosures and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.* Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction supervision and performance of the group audit. We remain solely responsible for our audit opinion.We communicate with the those charged with governance regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.We also provide the those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable actions taken to eliminate threats or safeguards applied.From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.The engagement partner on the audit resulting in this independent auditor’s report is Yip Siu Foon Linda.PricewaterhouseCoopers Certified Public Accountants Hong Kong23 March 2023 2022 Annual Report 187 – F-8 –Chapter 9 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) Year ended 31 December Notes 2022 2021 Interest income 313609 306165 Interest expense (162962) (158269) Net interest income 6 150647 147896 Fee and commission income 41051 40604 Fee and commission expense (3959) (4734) Net fee and commission income 7 37092 35870 Net trading gain 8 4881 5168 Net gain from investment securities 9 17771 14874 Net hedging loss 10 – – Other operating income 718 746 Operating income 211109 204554 Operating expenses 11 (66838) (62224) Operating profit before impairment 144271 142330 Credit impairment losses 12 (71359) (77005) Impairment losses on other assets 13 (45) (43) Revaluation gains/(losses) on investment properties (74) 23 Share of profit/(loss) gain of associates and joint ventures 623 212 Profit before tax 73416 65517 Income tax expense 14 (10466) (9140) Profit for the year 62950 56377 Net profit attributable to: Equity holders of the Bank 62103 55641 Non-controlling interests 847 736 188 China CITIC Bank Corporation Limited – F-9 –Chapter 9 Consolidated Statement of Profit or Loss and Other Comprehensive Income (Continued) For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) Year ended 31 December Notes 2022 2021 Profit for the year 62950 56377 Other comprehensive income net of tax: 15 (i) Items that will not be reclassified to profit or loss (net of tax): — Fair value changes on financial investments designated at fair value through other comprehensive income 237 30 — Changes in defined benefit plan liabilities – (1) (ii) Items that may be reclassified subsequently to profit or loss (net of tax): — Other comprehensive income transferable to profit or loss under equity method (28) (12) — Fair value changes on financial assets at fair value through other comprehensive income (8191) 2394 — Impairment allowance on financial assets at fair value through other comprehensive income 145 32 — Exchange difference on translation of financial statements 4132 (1081) — Others 4 133 Other comprehensive income net of tax 15 (3701) 1495 Total comprehensive income for the year 59249 57872 Total comprehensive income attribute to: Equity holders of the Bank 58681 57176 Non-controlling interests 568 696 Earnings per share attributable to the ordinary shareholders of the Bank Basic earnings per share (RMB) 16 1.17 1.08 Diluted earnings per share (RMB) 16 1.06 0.98 The accompanying notes form an integral part of these consolidated financial statements. 2022 Annual Report 189 – F-10 –Chapter 9 Consolidated Statement of Financial Position As at 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 31 December 31 December Notes 2022 2021 Assets Cash and balances with central banks 17 477381 435383 Deposits with banks and non-bank financial institutions 18 78834 107856 Precious metals 5985 9645 Placements with and loans to banks and non-bank financial institutions 19 218164 143918 Derivative financial assets 20 44383 22721 Financial assets held under resale agreements 21 13730 91437 Loans and advances to customers 22 5038967 4748076 Financial investments 23 — at fair value through profit or loss 557594 495810 — at amortised cost 1135452 1170229 — at fair value through other comprehensive income 804695 651857 — designated at fair value through other comprehensive income 5128 4745 Investments in associates and joint ventures 24 6341 5753 Investment properties 26 516 547 Property plant and equipment 27 34430 34184 Right-of-use assets 28 10824 10638 Intangible assets 3715 2925 Goodwill 29 903 833 Deferred tax assets 30 55011 46905 Other assets 31 55490 59422 Total assets 8547543 8042884 Liabilities Borrowings from central banks 119422 189198 Deposits from banks and non-bank financial institutions 33 1143776 1174763 Placements from banks and non-bank financial institutions 34 70741 78331 Financial liabilities at fair value through profit or loss 1546 1164 Derivative financial liabilities 20 44265 22907 Financial assets sold under repurchase agreements 35 256194 98339 Deposits from customers 36 5157864 4789969 Accrued staff costs 37 21905 19253 Taxes payable 38 8487 10753 Debt securities issued 39 975206 958203 Lease liabilities 10272 9816 Provisions 40 9736 11927 Deferred tax liabilities 30 3 8 Other liabilities 41 42296 35627 Total liabilities 7861713 7400258 190 China CITIC Bank Corporation Limited – F-11 –Chapter 9 Consolidated Statement of Financial Position (Continued) As at 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 31 December 31 December Notes 2022 2021 Equity Share capital 42 48935 48935 Other equity instruments 43 118076 118076 Capital reserve 44 59216 59216 Other comprehensive income 45 (1621) 1644 Surplus reserve 46 54727 48937 General reserve 47 100580 95490 Retained earnings 48 285505 254005 Total equity attributable to equity holders of the Bank 665418 626303 Non-controlling interests 49 20412 16323 Total equity 685830 642626 Total liabilities and equity 8547543 8042884 The accompanying notes form an integral part of these consolidated financial statements.Approved and recognized for issue by the board of directors on 23 March 2023.Zhu Hexin Fang Heying Chairman Vice Chairman Non-Executive Director Executive Director President Wang kang Xue Fengqing Company stamp Vice President Manager of the Finance and Accounting Chief Financial officer Department 2022 Annual Report 191 – F-12 –Chapter 9 Consolidated Statement of Changes in Equity For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) Equity attributable to equity holders of the Bank Non-controlling interests Other Ordinary Other equity Other Equity Capital comprehensive Surplus General Retained equity instruments Notes Share capital instruments reserve income reserve reserve earnings holders holders Total equity As at 1 January 2022 48935 118076 59216 1644 48937 95490 254005 9121 7202 642626 (i) Net profit – – – – – – 62103 384 463 62950 (ii) Other comprehensive income 15 – – – (3422) – – – (279) – (3701) Total comprehensive income – – – (3422) – – 62103 105 463 59249 (iii) Investor capital —Insurance of perpetual bonds 43(ii) – – – – – – – – 3990 3990 (iv) Profit appropriations —Appropriations to surplus reserve 46 – – – – 5790 – (5790) – – – —Appropriations to general reserve 47 – – – – – 5090 (5090) – – – —Dividend distribution to ordinary shareholders of the Bank 48 – – – – – – (14778) – – (14778) —Dividend distribution to non-controlling interests – – – – – – – (6) – (6) —Dividend distribution to preference shareholders 48 – – – – – – (1428) – – (1428) —Interest paid to holders of perpetual bonds 48/49 – – – – – – (3360) – (463) (3823) (v) Transfers within the owners’ equity —Other comprehensive income transferred to retained earnings – – – 157 – – (157) – – – As at 31 December 2022 48935 118076 59216 (1621) 54727 100580 285505 9220 11192 685830 Equity attributable to equity holders of the Bank Non-controlling interests Other Ordinary Other equity Other Equity Capital comprehensive Surplus General Retained equity instruments Notes Share capital instruments reserve income reserve reserve earnings holders holders Total equity As at 1 January 2021 48935 78083 59216 109 43786 90819 223625 8798 6667 560038 (i) Net profit – – – – – – 55641 369 367 56377 (ii) Other comprehensive income 15 – – – 1535 – – – (40) – 1495 Total comprehensive income – – – 1535 – – 55641 329 367 57872 (iii) Investor capital —Insurance of perpetual bonds 43(ii) – 39993 – – – – – – 3859 43852 —Redemption of perpetual bonds – – – – – – – – (3324) (3324) (iv) Profit appropriations —Appropriations to surplus reserve 46 – – – – 5151 – (5151) – – – —Appropriations to general reserve 47 – – – – – 4671 (4671) – – – —Dividend distribution to ordinary shareholders of the Bank 48 – – – – – – (12429) – – (12429) —Dividend distribution to non-controlling interests – – – – – – – (6) – (6) —Dividend distribution to preference shareholders 48 – – – – – – (1330) – – (1330) —Interest paid to holders of perpetual bonds 48/49 – – – – – – (1680) – (367) (2047) As at 31 December 2021 48935 118076 59216 1644 48937 95490 254005 9121 7202 642626 The accompanying notes form an integral part of these consolidated financial statements. 192 China CITIC Bank Corporation Limited – F-13 –Chapter 9 Consolidated Statement of Cash Flows For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) Year ended 31 December 20222021 Operating activities Profit before tax 73416 65517 Adjustments for: — revaluation (gain)/loss on investments derivatives and investment properties (964) (455) — investment gain (14287) (14113) — net gain on disposal of property plant and equipment intangible assets and other assets 32 (26) — unrealised foreign exchange loss/(gain) 52 (835) — credit impairment losses 71359 77005 — impairment losses on other assets 45 43 — depreciation and amortisation 4110 3457 — interest expense on debt securities issued 27082 26962 — dividend income from equity investment (102) (35) — depreciation of right-of-use assets and interest expense on lease liabilities 3731 3696 — income tax paid (18043) (12880) Subtotal 146431 148336 Changes in operating assets and liabilities: (Increase)/decrease in balances with central banks (3363) 7878 (Increase)/decrease in deposits with banks and non-bank financial institutions 8921 (3832) Increase in placements with and loans to banks and non-bank financial institutions (85386) (20787) (Increase)/decrease in investments in financial assets held for trading purposes 2550 (8469) Decrease in financial assets held under resale agreements 77922 19642 Increase in loans and advances to customers (347961) (432361) Decrease in borrowings from central banks (69087) (35315) Increase/(decrease) in deposits from banks and non-bank financial institutions (30317) 9758 Increase/(decrease) in placements from banks and non-bank financial institutions (8820) 20966 Decrease in financial liabilities at fair value through profit or loss (680) (7386) Increase in financial assets sold under repurchase agreements 157583 23303 Increase in deposits from customers 340067 216620 Increase in other operating assets (17411) (28945) Increase in other operating liabilities 24617 15198 Subtotal 48635 (223730) Net cash flows from operating activities 195066 (75394) 2022 Annual Report 193 – F-14 –Chapter 9 Consolidated Statement of Cash Flows (Continued) For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) Year ended 31 December Notes 2022 2021 Investing activities Proceeds from disposal and redemption of investments 2580725 3045391 Proceeds from disposal of property plant and equipment land use rights and other assets 127 168 Cash received from equity investment income 507 438 Payments on acquisition of investments (2690472) (3248304) Payments on acquisition of property plant and equipment land use rights and other assets (6799) (4481) Cash received from disposal of associates 24 39 – Net cash flows used in investing activities (115873) (206788) Financing activities Cash received from debt securities issued 39 850086 903846 Cash received from other equity instruments issued 43 3990 43852 Cash paid for redemption of other equity instruments – (3324) Cash paid for redemption of debt securities issued (836677) (678912) Cash paid for interest on debt securities issued (26513) (26252) Cash paid for dividends (20035) (15812) Cash paid in connection with other financing activities (3390) (3480) Net cash flows from financing activities (32539) 219918 Net increase/(decrease) in cash and cash equivalents 46654 (62264) Cash and cash equivalents as at 1 January 252818 319566 Effect of exchange rate changes on cash and cash equivalents 8399 (4484) Cash and cash equivalents as at 31 December 50 307871 252818 Cash flows from operating activities include: Interest received 320205 323057 Interest paid (131295) (119881) The accompanying notes form an integral part of these consolidated financial statements. 194 China CITIC Bank Corporation Limited – F-15 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 1 Corporate information China CITIC Bank Corporation Limited (the “Bank” or “CNCB”) is a joint stock company incorporated in the People’s Republic of China (the “PRC” or “Mainland China”) on 31 December 2006. Headquartered in Beijing the Bank’s registered office is located at 6-30F and 32-42F No.10 Guanghua Road Chaoyang District Beijing China.The Bank listed its A shares and H shares on Shanghai Stock Exchange and the Main Board of The Stock Exchange of Hong Kong Limited respectively on 27 April 2007.The Bank operates under financial services certificate No. B0006H111000001 issued by the China Banking Insurance Regulatory Commission (the “CBIRC” originally named China Banking Regulatory Commission) and unified social credit code No. 91110000101690725E issued by the State Administration of Industry and Commerce of the PRC.The principal activities of the Bank and its subsidiaries (collectively the “Group”) are the provision of corporate and personal banking services conducting treasury business the provision of asset management finance leasing and other non-banking financial services.As at 31 December 2022 the Group mainly operates in Mainland China with branches covering 31 provinces autonomous regions and municipalities and overseas. In addition the Bank’s subsidiaries have operations in Mainland China the Hong Kong Special Administrative Region of PRC (“Hong Kong”) the Macau Special Administrative Region of the PRC (“Macau”) and other overseas countries and regions.For the purpose of these consolidated financial statements Mainland China refers to the PRC excluding Hong Kong Macau and Taiwan. Overseas refers to countries and regions other than Mainland China.The consolidated financial statements were approved by the Board of Directors of the Bank on 23 March 2023. 2 Basis of preparation These consolidated financial statements have been prepared on a going concern basis. The consolidated financial statements for the year ended 31 December 2022 comprise the Bank and its subsidiaries associates and joint ventures.(a) Accounting year The accounting year of the Group is from 1 January to 31 December.(b) Functional currency and presentation currency The functional currency of the Bank is Renminbi (“RMB”). The functional currencies of overseas subsidiaries are determined in accordance with the primary economic environment in which they operate and are translated into Renminbi for the preparation of the consolidated financial statements according to Note 4 (b)(ii). The consolidated financial statements of the Group are presented in Renminbi and unless otherwise stated expressed in millions of Renminbi. 2022 Annual Report 195 – F-16 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 3 Principal accounting policies These consolidated financial statements have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”) and the disclosure requirements of the Hong Kong Companies Ordinance (Cap. 622). These consolidated financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.These consolidated financial statements have been prepared under the historical cost convention as modified by financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss and at fair value through other comprehensive income and investment properties which are carried at fair value.The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates.It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.(a) Standards and amendments effective in 2022 relevant to and adopted by the Group On 1 January 2022 the Group has adopted the following IFRSs and amendments issued by the International Accounting Standards Board (“IASB”) which were mandatorily effective: IFRS 3 Amendments Business Combinations IAS 16 Amendments Property Plant and Equipment: Proceeds before Intended Use IAS 37 Amendments Onerous Contracts – Cost of Fulfilling a Contract Annual Improvements to IFRSs 2018-2020 Minor Amendments to IFRS 1 IFRS 9 IAS 41 and IFRS Cycle (issued in May 2020) 16 Minor amendments were made to IFRS 3 Business Combinations to update the references to the Conceptual Framework for Financial Reporting and add an exception for the recognition of liabilities and contingent liabilities within the scope of IAS 37 Provisions Contingent Liabilities and Contingent Assets and Interpretation 21 Levies. The amendments also confirm that contingent assets should not be recognised at the acquisition date.IAS 16 Amendments prohibit entities from deducting from the cost of an item of property plant and equipment any proceeds received from selling items produced while the entity is preparing the asset for its intended use.It also clarifies that when ‘testing whether the asset is functioning properly’ an entity assesses the technical and physical performance of the asset. The assessment of functioning properly is not an assessment of the financial performance of an asset such as assessing whether the asset has achieved the level of operating margin initially anticipated by management. Entities must disclose separately the amounts of proceeds and costs relating to items produced that are not an output of the entity’s ordinary activities.IAS 37 Amendments specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making. The amendments apply a “directly related cost approach”. Costs that relate directly to a contract to provide goods or services include both incremental costs and an allocation of costs directly related to contract activities. Before recognising a separate provision for an onerous contract the entity recognises any impairment loss that has occurred on assets used in fulfilling the contract. General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract. 196 China CITIC Bank Corporation Limited – F-17 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 3 Principal accounting policies (continued) (a) Standards and amendments effective in 2022 relevant to and adopted by the Group (continued) Annual Improvements to IFRSs 2018-2020 Cycle were issued in May 2020 including an amendment to IFRS 9 Financial Instruments as well as an amendment to IFRS 16 Leases. The amendment to IFRS 9 clarifies fees that an entity includes when assessing whether the terms of a new or modified financial liability are substantially different from the terms of the original financial liability by conducting the “10 per cent” test for derecognition of financial liabilities. These fees include only those paid or received between the borrower and the lender including fees paid or received by either the borrower or lender on the other’s behalf. The amendment to IFRS 16 Leases removes the illustration of payments from the lessor relating to leasehold improvements in an illustrative example so as to remove potential confusion regarding the treatment of lease incentives when applying IFRS 16.The adoption of the above standards and amendments does not have any material impact on the operating results financial position and comprehensive income of the Group for the year ended 31 December 2022.(b) Standards and amendments relevant to the Group that are not yet effective in the current year period and have not been adopted before their effective dates by the Group Effective for annual periods beginning on or after IAS 1 and IFRS Practice Statement 2 Disclosure of Accounting Policies 1 January 2023 Amendments IAS 8 Amendments Definition of Accounting Estimates 1 January 2023 IAS 12 Amendments Deferred Tax related to Assets and 1 January 2023 Liabilities arising from a Single Transaction IFRS 17 Insurance Contracts 1 January 2023 IFRS 16 Amendments Lease Liability in a Sale and 1 January 2024 Leaseback IFRS 10 and IAS 28 Amendments Sale or Contribution of Assets Effective date has between an Investor and its been deferred Associate or Joint Venture indefinitely IAS 1 and IFRS Practice Statement 2 Amendments provide guidance to help entities apply materiality judgements to accounting policy disclosures. The amendments replace the requirement for entities to disclose their “significant” accounting policies with a requirement to disclose their “material” accounting policies. The amendments add guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures.IAS 8 Amendments clarify how companies should distinguish changes in accounting policies from changes in accounting estimates. It introduces a new definition of “accounting estimates”. The amendments are designed to clarify distinction between changes in accounting estimates and changes in accounting policies and correction of errors.IAS 12 Amendments require companies to recognise deferred tax on transactions that on initial recognition give rise to equal amounts of taxable and deductible temporary differences. They will typically apply to transactions such as leases of lessees and decommissioning obligations and will require the recognition of additional deferred tax assets and liabilities. The amendments should be applied to transactions that occur on or after the beginning of the earliest comparative period presented. 2022 Annual Report 197 – F-18 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 3 Principal accounting policies (continued) (b) Standards and amendments relevant to the Group that are not yet effective in the current year period and have not been adopted before their effective dates by the Group (continued) IFRS 17 Insurance Contracts established principles for the recognition measurement presentation and disclosure of insurance contracts. The amendments confirm the following: IFRS 17 requires that insurance contracts subject to similar risks and managed together shall be included in one portfolio and each portfolio is further divided into groups of contracts mainly based on factors including profitability of each contract. Investment components are no longer included in insurance revenue or insurance service expenses. Under IFRS 17 estimated future profits for a group of insurance contracts are recognized as the contractual service margin within insurance contract liabilities. IFRS 17 requires the discount rates used in the measurement of insurance contract liabilities shall be consistent with observable current market prices.IFRS 16 Amendments introduce a new accounting model for variable payments and will require seller-lessees to reassess and potentially restate sale-and-leaseback transactions entered into since 2019. The amendments confirm the following: On initial recognition the seller-lessee includes variable lease payments when it measures a lease liability arising from a sale-and-leaseback transaction. After initial recognition the seller-lessee applies the general requirements for subsequent accounting of the lease liability such that it recognises no gain or loss relating to the right of use it retains.IFRS 10 and IAS 28 Amendments clarify the accounting treatment for sales or contribution of assets between an investor and its associates or joint ventures. The amendments require a full recognition of a gain or loss when the sale or contribution between an investor and its associate or joint venture constitutes a business. For a transaction involving assets that do not constitute a business a gain or loss resulting from the transaction is recognised in the investor’s profit or loss only to the extent of the unrelated investor’s interest in that associate or joint venture.The adoption of the above standards and amendments is expected not to have material impact on the consolidated financial statements of the Group. 4 Summary of significant accounting policies (a) Consolidated financial statements (i) Business combinations involving enterprises under common control A business combination involving enterprises under common control is a business combination in which all of the combining enterprises are ultimately controlled by the same party or parties both before and after the business combination and that control is not transitory. The assets and liabilities assumed are measured based on their carrying amounts in the financial statements of the acquiree at the combination date. The difference between the carrying amount of the net assets acquired and the consideration paid for the combination (or the total face value of shares issued) is adjusted against share premium in the capital reserve with any excess adjusted against retained earnings. The issuance costs of equity or debt securities as a part of the consideration for the acquisition are included in the carrying amounts of these equity or debt securities upon initial recognition. Other acquisition-related costs are expensed when incurred. The combination date is the date on which one combining enterprise obtains control of other combining enterprises. 198 China CITIC Bank Corporation Limited – F-19 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (a) Consolidated financial statements (continued) (ii) Business combinations not involving entities under common control A business combination involving entities not under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties before the business combination. Where (i) the aggregate of the acquisition date fair value of assets transferred (including the acquirer’s previously held equity interest in the acquiree) liabilities incurred or assumed and equity securities issued by the acquirer in exchange for control of the acquiree exceeds (ii) the acquirer’s interest in the acquisition date fair value of the acquiree’s identifiable net assets the difference is recognized as goodwill (Note 4 (k)). If (i) is less than (ii) the difference is recognized in the consolidated statement of profit or loss for the current period. The issuance costs of equity or debt securities as a part of the consideration for the acquisition are included in the carrying amounts of these equity or debt securities upon initial recognition. Other acquisition-related costs are expensed as incurred. Any difference between the fair value and the carrying amount of the assets transferred as consideration is recognized in the consolidated statement of profit or loss. The acquiree’s identifiable asset liabilities and contingent liabilities if the recognition criteria are met are recognized by the Group at their acquisition date fair value. The acquisition date is the date on which the acquirer obtains control of the acquiree.For a business combination not involving enterprises under common control and achieved in stages the Group remeasures its previously-held equity interest in the acquiree to its fair value at the acquisition date. The difference between the fair value and the carrying amount is recognized as investment income for the current period; the amount recognized in other comprehensive income relating to the previously- held equity interest in the acquire will be reclassified to profit or loss.(iii) Consolidated financial statements The scope of consolidated financial statements is based on control and the consolidated financial statements comprise the Bank and its subsidiaries as well as structured entities controlled by the Group. The Group controls an entity when it is exposed or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. When assessing whether the Bank has power only substantive rights (held by the Bank and other parties) are considered. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.Non-controlling interest is presented separately in the consolidated statement of financial position within owners’ equity. Profit or loss and total comprehensive income attributable to non-controlling equity holders are presented separately in the consolidated statement of profit or loss and other comprehensive income.When the amount of loss for the current period attributable to the non-controlling interest of a subsidiary exceeds the non-controlling interest’s portion of the opening balance of equity holders’ equity of the subsidiary the excess is allocated against the non-controlling interests.When the accounting period or accounting policies of a subsidiary are different from those of the Bank the Bank makes necessary adjustments to the financial statements of the subsidiary based on the Bank’s own accounting period or accounting policies. Intra-group balances transactions and cash flows and any recognized profits arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealised losses resulting from intra-group transactions are eliminated only limited to the extent that this is no evidence of impairment. 2022 Annual Report 199 – F-20 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (a) Consolidated financial statements (continued) (iii) Consolidated financial statements (continued) Where a subsidiary was acquired during the reporting period through a business combination involving enterprises under common control the financial statements of the subsidiary are included in the consolidated financial statements as if the combination had occurred at the date the ultimate controlling party first obtained control. Therefore the opening balances and the comparative figures of the consolidated financial statements are restated.Where a subsidiary was acquired during the reporting period through a business combination not involving enterprises under common control the identifiable assets and liabilities of the acquired subsidiaries are included in the scope of consolidation from the date that control commences based on the fair value of those identifiable assets and liabilities at the acquisition date.The difference between the costs of long-term investments newly acquired by the Bank by acquiring minority interests and the fair value of the Bank’s share of the net identifiable assets of its subsidiaries calculated based on the increased shareholding and the difference between the proceeds the Bank obtained from partial disposal of its equity investments in its subsidiaries without ceasing control over the subsidiaries and its share of the net assets of the subsidiaries that corresponds to the disposed long- term equity investments shall both be recognized as adjustments to reduce the capital reserve (share premium) of the consolidated statement of financial position and if the capital reserve (share premium) is not sufficient to cover the reductions the excess is charged to the retained earnings.When the Group loses control of a subsidiary due to the disposal of a portion of an equity investment the Group derecognized assets liabilities non-controlling interests and other related items in equity holders’ equity in relation to that subsidiary. The remaining equity investment is remeasured at its fair value at the date when control is lost. Any gains or losses therefore incurred are recognized as investment income for the current period when the control is lost.If there is a difference between the accounting entity of the Group and the accounting entity of the Bank or a subsidiary on measuring the same transaction the transaction will be adjusted from the perspective of the Group.(b) Foreign currency translations (i) Translation of foreign currency transactions When the Group receives capital in foreign currencies from investors the capital is translated to Renminbi at the spot exchange rate at the date of the receipt. Other foreign currency transactions are on initial recognition translated into Renminbi by applying the spot exchange rates at the dates of the transaction.Monetary items denominated in foreign currencies are translated to Renminbi at the spot exchange rate at the reporting date. The resulting exchange differences are recognized in the consolidated statement of profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated to Renminbi using the exchange rate at the transaction date. Non-monetary items that are measured at fair value in a foreign currency are translated using the foreign exchange rate at the date the fair value is determined. The differences arising from the translation of financial assets at fair value through other comprehensive income is recognized in other comprehensive income. Changes in the fair value of monetary assets denominated in foreign currency classified as financial assets at fair value through other comprehensive income are analysed between translation differences resulting from changes in the amortised cost of the monetary assets and other changes in the carrying amount. Translation differences related to changes in the amortised cost are recognized in the consolidated statement of profit or loss and other changes in the carrying amount are recognized in other comprehensive income. The translation differences resulting from other monetary assets and liabilities are recognized in the consolidated statement of profit or loss. 200 China CITIC Bank Corporation Limited – F-21 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (b) Foreign currency translations (continued) (ii) Translation of financial statements denominated in foreign currency Financial statements denominated in foreign currency are translated into Renminbi for the preparation of consolidated financial statements. The assets and liabilities in the financial statements denominated in foreign currency are translated into Renminbi at the spot exchange rates prevailing at the reporting date. The equity items except for “retained earnings” are translated to Renminbi at the spot exchange rates at the dates on which such items arose. Income and expenses are translated at exchange rates at the date of the transactions or a rate that approximates the exchange rates of the date of the transaction.The resulting exchange differences are recognized in other comprehensive income.Upon disposal of a foreign operation the cumulative amount of the translation differences recognized in equity holders’ equity which relates to that foreign operation is transferred to profit or loss in the period in which the disposal occurs.The effect of exchange rate changes on cash and cash equivalents held or due in a foreign currency are reported in the statement of cash flows.(c) Financial instruments Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument. Regular way purchases and sales of financial assets are recognized on trade-date the date on which the Group commits to purchase or sell the asset.(i) Initial recognition and classification of financial instruments Financial assets Financial assets are classified on the basis of the Group’s business model for managing the financial asset and the contractual cash flow characteristics of the financial assets: * Fair value through profit or loss (“FVPL”); * Fair value through other comprehensive income (“FVOCI”); or * Amortised cost The business model adopted by the Group for managing its financial assets refers to how the Group manages its financial assets in order to generate cash flows. The business model determines whether the cash flows from the financial assets managed by the Group come from the collection of contractual cash flows sale of financial assets or a combination of the two methods. In determining the business model for a group of financial assets the Group considers various factors including: past experience in collecting cash flows from this group of assets; how to assess the performance of this group of asset and report it to key management personnel; how to assess and manage risks are; and how to compensate people responsible for managing these assets among others.The contractual cash flow characteristics of financial assets refer to contractual terms as agreed in the financial instrument contracts that reflect the economic characteristics of the financial assets i. e. the contractual cash flows arising at a specified date from the financial assets at amortised cost or FVOCI are solely payments of principal and interest on the principal amount outstanding. Of which the principal is the fair value of the financial asset at initial recognition and the amount of the principal may change over the life of the financial asset if e. g. there are repayments of principal; and the interest includes consideration for the time value of money and credit risk other basic lending risks and costs associated with holding the financial asset for a particular period of time. 2022 Annual Report 201 – F-22 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (c) Financial instruments (continued) (i) Initial recognition and classification of financial instruments (continued) Financial assets (continued) Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.The classification requirements for debt instruments and equity instruments are described below: Debt Instruments Debt instruments are those instruments that meet the definition of a financial liability from the issuer’s perspective. Classification and subsequent measurement of debt instruments depend on: i) the Group’s business model for managing the asset; and ii) the cash flow characteristics of the asset.Based on these factors the Group classifies its debt instruments into one of the following three measurement categories: * Amortised cost: Assets that are held for collection of contractual cashflows where those cash flows represent solely payments of principal and interest (“SPPI”) and that are not designated at FVPL are measured at amortised cost.* Fair value through other comprehensive income: Financial assets that are held for collection of contractual cash flows and for selling the assets where the assets’ cash flows represent solely payments of principal and interest and that are not designated at FVPL are measured at FVOCI.* Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL.The Group may also irrevocably designate financial assets at fair value through profit or loss if doing so significantly reduces or eliminates a mismatch created by assets and liabilities being measured on different bases.Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting the liabilities. A financial instrument is an equity instrument if and only if both conditions i) and ii) below are met: i) The financial instrument includes no contractual obligation to deliver cash or another financial asset to another entity or to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavorable to the Group; and ii) If the financial instrument will or may be settled in the Group’s own equity instruments it is a non-derivative instrument that includes no contractual obligations for the Group to deliver a variable number of its own equity instruments; or a derivative that will be settled only by the Group exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments.Equity investments of the Group are measured at FVPL except where the Group’s management has elected at initial recognition to irrevocably designate an equity investment at FVOCI. The Group’s policy is to designate equity investments as FVOCI when those investments are held for purposes other than trading. After designation the fair value change is recognized in the other comprehensive income and it is not allowed to subsequently reclassify to profit or loss (including upon disposal). Impairment loss and reversal of impairment is not presented separately in the financial statements and is included in the fair value change. Dividend income as the return from investments is recognized by the Group when the right to receive is formed. 202 China CITIC Bank Corporation Limited – F-23 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (c) Financial instruments (continued) (i) Initial recognition and classification of financial instruments (continued) Financial liabilities The Group’s financial liabilities are classified into financial liabilities at FVPL and other financial liabilities carried at amortised cost on initial recognition. Financial liabilities at FVPL is applied to derivatives financial liabilities held for trading and financial liabilities designated as such at initial recognition.The Group may at initial recognition irrevocably designate a financial liability as measured at fair value through profit or loss when doing so results in more relevant information because either: i) it eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or ii) a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis in accordance with a documented risk management or investment strategy and information about the Group is provided internally on that basis to the Group’s key management personnel.(ii) Measurement of financial assets Initial measurement At initial recognition the Group measures a financial asset or financial liability at its fair value. For a financial asset or financial liability at fair value through profit or loss transaction costs are directly recognized in profit or loss. For other financial asset or liability transaction costs are recognized in the initial measurement.Subsequent measurement Subsequent measurement of financial assets depends on the categories: Financial assets and financial liabilities measured at amortised cost The amortised cost is the amount at which the financial asset is measured at initial recognition: i) minus the principal; ii) plus or minus the cumulative recognized using the effective interest method of any difference between that initial amount and maturity amount; iii) for financial assets adjusted for any loss allowance.The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset to the gross carrying amount of a financial asset (i. e. its amortised cost before any impairment allowance). The calculation does not consider expected credit losses (‘ECL’) and includes transaction costs premiums or discounts and fees and points paid or received that are integral to the effective interest rate. For purchased or originated credit-impaired (‘POCI’) financial assets – assets that are credit-impaired at initial recognition – the Group calculates the credit-adjusted effective interest rate which is calculated based on the amortised cost of the financial asset instead of this gross carrying amount and incorporates the impact of ECL in estimated future cash flows. 2022 Annual Report 203 – F-24 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (c) Financial instruments (continued) (ii) Measurement of financial assets (continued) Financial assets and financial liabilities measured at amortised cost (continued) Interest income is calculated by applying the effective interest rate to the carrying amount of a financial asset except for: i) a POCI financial asset whose interest income is calculated since initial recognition by applying the credit-adjusted effective interest rate to its amortised cost; and ii) a financial asset that is not a POCI financial asset but has subsequently become credit-impaired whose interest income is calculated by applying the effective interest rate to its amortised cost. If in a subsequent period the financial asset improves its quality so that it is no longer credit-impaired and the improvement in credit quality can be related objectively to a certain event occurring after the application of the above-mentioned rule then the interest income can again be calculated by applying the effective interest rate to its gross carrying amount. Interest income from these financial assets is included in ‘interest income’ using the effective interest rate method.For floating-rate financial assets and floating-rate financial liabilities periodic re-estimation of cash flows to reflect the movements in the market rates of interest alters the effective interest rate. If a floating- rate financial asset or a floating rate financial liability is recognized initially at an amount equal to the principal receivable or payable on maturity re-estimating the future interest payments normally has no significant effect on the carrying amount of the asset or the liability.If the Group revises its estimates of payments or receipts the difference between the gross carrying amount of the financial asset or amortised cost of a financial liability calculated from revised estimated contractual cash flows and the present value of the estimated future contractual cash flows that are discounted at the financial instrument’s original effective interest rate should be recognized in profit or loss.Financial assets at fair value through other comprehensive income Debt instruments Movements in the carrying amount are taken through other comprehensive income except for the recognition of impairment gains or losses interest income and foreign exchange gains and losses on the instrument’s amortised cost which are recognized in profit or loss.When the financial assets is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss and recognized in ‘Net investment income’. Interest income from these financial assets is included in ‘Interest income’ using the effective interest rate method.Equity instruments Where an investment in an equity investment not held for trading is designated as a financial asset measured at fair value through other comprehensive income the fair value changes of the financial asset is derecognized in the other comprehensive income. When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from other comprehensive income to retained earnings. The dividends on the investment are recognized in profit or loss only when the Group’s right to receive payment of the dividends is established. 204 China CITIC Bank Corporation Limited – F-25 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (c) Financial instruments (continued) (ii) Measurement of financial assets (continued) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are stated at fair value and a gain or loss on the financial assets that is measured at fair value should be recognized in profit or loss.Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss are measured at fair value with all gains or losses recognized in the profit or loss of the current period except for financial liabilities designated as at fair value through profit or loss where gains or losses on the financial liabilities are treated as follows: * changes in fair value of such financial liabilities due to changes in the Group’s own credit risk are recognized in other comprehensive income; and * other changes in fair value of such financial liabilities are recognized in profit or loss of the current period.(iii) Impairment of financial assets The Group assesses on a forward-looking basis the ECL associated with its debt instrument assets carried at amortised cost and FVOCI and with exposure arising from loan commitments financial guarantee contracts and lease receivables.ECL is the weighted average of credit losses with the respective risks of a default occurring as the weights.Credit loss is the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive i. e. all cash shortfalls discounted at the original effective interest rate (or credit-adjusted effective interest rate for POCI financial assets).The Group measures ECL of a financial instrument in a way that reflects: * an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes; * the time value of money; and * reasonable and supportable information that is available without undue cost or effort at the reporting date about past events current conditions and forecasts of future economic conditions.Detailed information about ECL is set out in note 55 (a).The Group applies the impairment requirements for the recognition and measurement of a loss allowance for debt instruments that are measured at fair value through other comprehensive income. The loss allowance is recognised in other comprehensive income and the impairment loss is recognized in profit or loss and it should not reduce the carrying amount of the financial asset in the consolidated statement of financial position.If the Group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period but determines at the current reporting date that the credit risk on the financial instruments has increased significantly since initial recognition is no longer met the Group measures the loss allowance at an amount equal to 12-month ECL at the current reporting date and the amount of ECL reversal is recognized in profit or loss. 2022 Annual Report 205 – F-26 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (c) Financial instruments (continued) (iii) Impairment of financial assets (continued) At the reporting date the Group only recognized the cumulative changes in lifetime ECL since initial recognition as a loss allowance for POCI financial assets. At each reporting date the Group recognized in profit or loss the amount of the changes in lifetime ECL as an impairment gain or loss.(iv) Modification of loans The Group sometimes renegotiates or otherwise modifies the contractual cash flows of loans to customers.When this happens the Group assesses whether or not the new terms are substantially different to the original terms. The Group does this by considering among others the following factors: * If the borrower is in financial difficulty whether the modification merely reduces the contractual cash flows to amounts the borrower is expected to be able to pay.* Whether any substantial new terms are introduced such as a profit share/equity-based return that substantially affects the risk profile of the loan.* Significant extension of the loan term when the borrower is not in financial difficulty.* Significant change in the interest rate.* Change in the currency the loan is denominated in.* Insertion of collateral other security or credit enhancements that significantly affect the credit risk associated with the loan.If the terms are substantially different the Group derecognizes the original financial asset and recognizes a ‘new’ asset at fair value and recalculates a new effective interest rate for the asset. The date of renegotiation is consequently considered to be the date of initial recognition for impairment calculation purposes including for the purpose of determining whether a significant increase in credit risk has occurred. However the Group also assesses whether the new financial asset recognized is deemed to be credit-impaired at initial recognition especially in circumstances where the renegotiation was driven by the debtor being unable to make the originally agreed payments. Differences in the carrying amount are also recognized in profit or loss as a gain or loss on derecognition.If the terms are not substantially different the renegotiation or modification does not result in derecognition and the Group recalculates the gross carrying amount based on the revised cash flows of the financial asset and recognizes a modification gain or loss in profit or loss. The new gross carrying amount is recalculated by discounting the modified cash flows at the original effective interest rate (or credit-adjusted effective interest rate for POCI financial assets).(v) Derivatives and hedges Derivatives are initially recognized at fair value on the date on which the derivative contract is entered into and are subsequently remeasured at fair value. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative. 206 China CITIC Bank Corporation Limited – F-27 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (c) Financial instruments (continued) (v) Derivatives and hedges (continued) Certain derivatives are embedded in hybrid contracts such as the conversion option in a convertible bond. If the hybrid contract contains a host that is a financial asset then the Group assesses the entire contract as described in the financial assets section above for classification and measurement purposes.Otherwise the embedded derivatives are treated as separate derivatives when: * Their economic characteristics and risks are not closely related to those of the host contract; * A separate instrument with the same terms would meet the definition of a derivative; and * The hybrid contract is not measured at fair value through profit or loss.These embedded derivatives are separately accounted for at fair value with changes in fair value recognized in the statement of profit or loss unless the Group chooses to designate the hybrid contracts at fair value through profit or loss.The method of recognizing the resulting fair value gain or loss depends on whether the derivative is designated and qualifies as a hedging instrument and if so the nature of the item being hedged. The Group designates certain derivatives as hedges of the fair value of recognized assets or liabilities or firm commitments for fair value hedges.The Group documents at the inception of the hedge the relationship between hedged items and hedging instruments as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment both at hedge inception and on an ongoing basis of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values of hedged items.Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the statement of profit or loss together with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.If the hedge no longer meets the criteria for hedge accounting the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity and recorded as net interest income.(vi) Derecognition of financial assets Financial assets The Group derecognizes a financial asset only when (1) the contractual rights to the cash flows from the asset expire or (2) when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity or (3) when it transfers the financial asset and gives up the control of the transferred assets though the Group neither transfers nor retains substantially all the risks and rewards of ownership. 2022 Annual Report 207 – F-28 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (c) Financial instruments (continued) (vi) Derecognition of financial assets (continued) Financial assets (continued) Where a transfer of a financial asset in its entirety meets the criteria for de-recognition the difference between the two amounts below is recognized in the consolidated statement of profit and loss: – the carrying amount of the financial asset transferred; – the sum of the consideration received from the transfer and the cumulative gain or loss that has been recognized directly in equity.If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset the Group continues to recognize the asset to the extent of its continuing involvement and recognized an associated liability.Financial liabilities Financial liabilities are derecognized when the related obligation is discharged is cancelled or expires.An agreement between the Group and an existing lender to exchange the original financial liability with a new financial liability with substantially different terms or a substantial modification of the terms of an existing financial liability is accounted for as an extinguishment of the original financial liability and recognition of a new financial liability.The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in the consolidated statement of profit and loss.(vii) Securitization As part of its operations the Group securitizes financial assets generally through the sale of these assets to structured entities which issue securities to investors. Upon sale of financial assets that qualify for de-recognition the relevant financial assets are de-recognized in their entirety and a new financial asset or liability is recognized regarding the interest in the unconsolidated recognized vehicles that the Group acquired. Upon sale of financial assets that do not qualify for de-recognition the relevant financial assets are not derecognized and the consideration paid by third parties are recorded as a financial liability.Upon sale of financial assets that are partially qualified for de-recognition where the Group has not retained control it recognized these financial assets and recognized separately as assets or liabilities any rights and obligations created or retained in the transfer. Otherwise the Group continues to recognize these financial assets to the extent of its continuing involvement in the financial assets.(viii) Sales of assets on condition of repurchase De-recognition of financial assets sold on condition of repurchase is determined by the economic substance of the transaction. If a financial asset is sold under an agreement to repurchase the same or substantially the same asset at a fixed price or at the sale price plus a reasonable return the Group will not derecognize the asset. If a financial asset is sold together with an option to repurchase the financial asset at its fair value at the time of repurchase (in case of transferor sells such financial asset) the Group will derecognize the financial asset. 208 China CITIC Bank Corporation Limited – F-29 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (c) Financial instruments (continued) (ix) Presentation of financial assets and financial liabilities Financial assets and financial liabilities are presented separately in the consolidated statement of financial position and are not offset. However financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position only if the Group has a legally enforceable right to set off the recognized amounts and the transactions are intended to be settled on a net basis or by recognizing the asset and settling the liability simultaneously.(x) Financial assets held under resale and financial assets sold under repurchase agreements Financial assets held under resale agreements are transactions which the Group acquires financial assets which will be resold at a predetermined price in the future date under resale agreements. Financial assets sold under repurchase agreements are transactions which the Group sells financial assets which will be repurchased at a predetermined price in the future date under repurchase agreements.Cash advanced or received is recognized as amounts held under resale and repurchase agreements on the consolidated statement of financial position. Assets held under resale agreements are recorded in memorandum accounts as off-balance sheet items. Assets sold under repurchase agreements continue to be recognized in the consolidated statement of financial position.The difference between the resale and repurchase consideration and that between the purchase and sale consideration should be expired over the period of the respective transaction using the effective interest method and are included in interest expense and interest income respectively.(xi) Equity instruments The consideration received from the issuance of equity instruments net of transaction costs is recognized in equity. Consideration and transaction costs paid by the Bank for repurchasing self-issued equity instruments are deducted from equity holders’ equity.(d) Precious metals Precious metals comprise gold and other precious metals. Precious metals that are not related to the Group’s precious metals trading activities are initially measured at acquisition cost and subsequently measured at the lower of cost and net realizable value. Precious metals acquired by the Group for trading purposes and precious metals leasing are initially measured at fair value and subsequent changes in fair value are recorded in the consolidated statement of profit or loss.(e) Interests in subsidiaries In the Bank’s consolidated statement of financial position interests in subsidiaries are accounted for using the cost less impairment losses (see Note 4 (m)). Cost includes direct attributable costs of investment. Dividends declared by subsidiaries are recognized in investment income.Determination of investment cost For long-term equity investments acquired through a business combination: involving enterprises under common control the investment cost shall be the absorbing party’s share of the carrying amount of owners’ equity of the party being absorbed at the combination date; for long-term equity investment acquired through a business combination involving enterprises not under common control the investment cost shall be the combination cost. 2022 Annual Report 209 – F-30 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (e) Interests in subsidiaries (continued) Determination of investment cost (continued) For long-term equity investments acquired not through a business combination: for long-term equity investment acquired by payment in cash the initial investment cost shall be the purchase price actually paid; for long-term equity investments acquired by issuing equity securities the initial investment cost shall be the fair value of the equity securities issued.(f) Interests in associates and joint ventures An associate is an entity over which the Group has significant influence. A joint venture is an arrangement whereby the Group and other parties contractually agree to share control of the arrangement and have rights to the net assets of the arrangement.When acquiring associates and joint ventures the Group recognizes as initial investment cost in the principle which: for the investments obtained by making payment in cash the Group recognizes the purchase cost which is actually paid as initial investment costs; for the investments obtained by equity securities the Group recognizes the fair value of the equity securities issued as initial investment cost.An investment in an associate or a joint venture is accounted for using the equity method unless the investment is classified as held for sale.The Group adopts the following accounting treatments when using the equity method: – Where the initial investment cost of an associate or joint venture exceeds the Group’s interest in the fair value of the investee’s identifiable net assets at the date of acquisition the investment is initially recognized at the initial investment cost. Where the initial investment cost is less than the Group’s interest in the fair value of the investee’s identifiable net assets at the date of acquisition the investment is initially recognized at the investor’s share of the fair value of the investee’s identifiable net assets and the difference is charged to profit or loss.– After the acquisition of the investment the Group recognizes its share of the investee’s profit or loss and other comprehensive income as investment income or losses and other comprehensive income respectively and adjusts the carrying amount of the investment accordingly. Once the investee declares any cash dividends or profit distributions the carrying amount of the investment is reduced by that amount attributable to the Group. Changes in the Group’s share of the investee’s owners’ equity other than those arising from the investee’s profit or loss other comprehensive income or profit distribution is recognized in the Group’s equity and the carrying amount of the investment is adjusted accordingly.– The Group recognizes its share of investee’s profits or losses other comprehensive income and other changes in equity holders’ equity after making appropriate adjustments to align the accounting policies or accounting periods with those of the Group based on the fair value of the investee’s identifiable net assets at the date of acquisition. Unrealised profits and losses resulting from transactions between the Group and its associates or joint ventures are eliminated to the extent of the Group’s interests in the associates or joint ventures. When an entity in the Group transacts with the Group’s associate profits and losses resulting from the transaction are recognized in the Group’s consolidated financial statements only to the extent of the interest in the associate that are not related to the Group. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. 210 China CITIC Bank Corporation Limited – F-31 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (f) Interests in associates and joint ventures (continued) – The Group discontinues recognition of its share of net losses of investees after the carrying amount of investment in the associates and joint ventures and any long-term interest that in substance forms part of the Group’s net interest in the associates and joint ventures are reduced to zero except to the extent that the Group has an obligation to assume additional losses. Additional loss is recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of that associate. Where profits are subsequently made by the associates and joint ventures the Group resumes the recognition of its share of those profits only after its share of the profits equals the share of losses not recognized.Significant influence is the power to participate in the financial and operating policy decisions of an investee but does not have control or joint control over those policies.The Group makes provisions for impairment of interests in associates and joint ventures in accordance with the principles described in Note 4 (m).(g) Property plant and equipment Property plant and equipment is asset held by the Group for the conduct of business and is expected to be used for more than one year. Construction-in-progress an item of property represents property under construction and is transferred to property when ready for its intended use.(i) Cost Property plant and equipment is stated at cost upon initial recognition. Costs of a purchased property plant and equipment comprise purchase price related taxes and any directly attributable expenditures for bringing the asset to working condition for its intended use. Costs of the self-constructed property plant and equipment comprise construction materials direct labor costs and those expenditures necessarily incurred for bringing the asset to working condition for its intended use.Subsequent to initial recognition property plant and equipment is stated at cost less accumulated depreciation and impairment losses.Where an item of property plant and equipment comprises major components having different useful lives they are accounted for as separate items of property plant and equipment.(ii) Subsequent costs The Group recognized in the carrying amount of an item of property plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognized in the consolidated statement of profit or loss as an expense when incurred.(iii) Depreciation Depreciation is calculated to write off the cost less residual value if applicable of property plant and equipment and is charged to profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property plant and equipment. 2022 Annual Report 211 – F-32 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (g) Property plant and equipment (continued) (iii) Depreciation (continued) The estimated useful lives are as follows: Estimated useful Estimated lives residual value Depreciation rate Buildings 30 – 35 years 5% 2.71% – 3.17% Computer equipment and others 3 – 10 years 5% 9.50% – 31.67% No depreciation is provided in respect of construction in progress.The residual value and useful lives of assets are reviewed and adjusted if appropriate as of each reporting date.(iv) Impairment Impairment losses on property plant and equipment are accounted for in accordance with the accounting policies as set out in Note 4 (m).(v) Disposal and retirement Gains or losses arising from the disposal or retirement of property plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the consolidated statement of profit or loss on the date of disposal or retirement.(h) Lease A lease is a contract under which the lessor conveys to the lessee the right to use an asset for a period of time in exchange for consideration.The Group as the lessee The Group recognises the right-of-use assets on the commencement date of the lease term and recognises the lease liability at the present value of the lease payments that have not been paid yet. Each lease payment is allocated between the liability and interest expense. The interest expense is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The lease payments include fixed payments and payments to be made in the event that it is reasonably determined that the purchase option will be exercised or the lease option is terminated. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined the lessee’s incremental borrowing rate is used.The Group’s right-of-use assets include leased buildings land use right equipment vehicles and others. The right- of-use assets are initially measured at cost which includes the initial measurement of the lease liability the lease payments paid on or before the lease commencement date and the initial direct costs less any lease incentives received. If the Group can reasonably expect to obtain the ownership of the leased asset at the expiration of the lease term it is depreciated over the remaining useful life of the leased asset on a straight-line basis; if it is not possible to reasonably determine whether the ownership of the leased asset can be obtained at the expiration of the lease term it is depreciated over the shorter period of the lease term and the remaining useful life of the leased assets on a straight-line basis. When the recoverable amount is lower than the carrying amount of an right-of-use asset the Group writes down the carrying amount to the recoverable amount. 212 China CITIC Bank Corporation Limited – F-33 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (h) Lease (continued) The Group as the lessee (continued) For short-term leases with a lease term of no more than 12 months and leases of assets with low values when new the Group chooses not to recognise the right-of-use assets and lease liabilities. Instead it recognises in each period the relevant rental payments in profit or loss or relevant asset costs on a straight-line basis over the lease term.Land use rights are amortised on a straight-line basis over the respective periods of grant. When the costs attributable to the land use rights cannot be reliably measured and separated from that of the building at inception the costs are included in the cost of buildings and recorded in property plant and equipment.Impairment loss on land use rights is accounted for in accordance with the accounting policies as set out in Note 4 (m).The Group as the lessor A lease is classified as either a finance lease or an operating lease. A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of a leased asset to the lessee irrespective of whether the legal title to the asset is eventually transferred. An operating lease is a lease other than a finance lease.(i) Finance leases Where the Group is a lessor under finance leases an amount representing the sum of the minimum lease receipts and unguaranteed residual value net of initial direct costs all discounted at the implicit lease rate (the “net lease investment”) is included in “loans and advances to customers” on consolidated statement of financial position as a finance lease receivable. At the commencement of the lease term the Group recognises the aggregate of the minimum lease receipts determined at the inception of a lease and the initial direct costs as finance lease receivable. The difference between the net lease investment andthe aggregate of their present value is recognised as unearned finance income which is included in “loansand advances to customers” as well. Unrecognised finance income under finance leases is amortised using the effective interest rate method over the lease term. Hire purchase contracts having the characteristics of finance leases are accounted for in the same manner as finance leases.Impairment losses are accounted in accordance with the accounting policies as set out in Note 4 (c)(iii).(ii) Operating leases Where the Group leases out assets under operating leases the assets are included in the consolidated statement of financial position according to their nature and where applicable are depreciated in accordance with the Group’s depreciation policies as set out in Note 4 (g) except where the asset is classified as an investment property. Impairment losses are accounted in accordance with the accounting policies as set out in Note 4 (m). Revenue arising from operating leases is recognised in accordance with the Group’s revenue recognition policies as set out in Note 4 (t)(iv).(i) Intangible assets Intangible assets are initially recognized at cost. The cost less estimated net residual values (if any) of the intangible assets is amortised on a straight-line basis over their useful lives and charged to profit or loss.Impaired intangible assets are amortised net of accumulated impairment losses.Impairment loss on intangible assets is accounted for in accordance with the accounting policies as set out in Note 4 (m). Impaired intangible assets are amortised net of accumulated impairment losses.Intangible assets which are not yet available for use should be estimated at least at each financial year- end even if there was no indication that the assets were impaired. 2022 Annual Report 213 – F-34 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (j) Investment properties Investment properties are land and/or buildings which are owned and/or held under a leasehold interest to earn rental income and/or for capital appreciation.The Group’s investment properties are accounted for using the fair value model for subsequent measurement when either of the following conditions is met: – There is an active property market in the location in which the investment property is situated; – The Group can obtain the market price and other relevant information regarding the same type of or similar properties from the property market so as to reasonably estimate the fair value of the investment property.Investment properties are stated at fair value in the consolidated statement of financial position. Any gain or loss arising from a change in fair value or from the retirement or disposal of an investment property is recognized in the consolidated statement of profit or loss.When there is a change in use of properties from owner-occupation to earn rentals or for capital appreciation the investment property transferring from property plant and equipment or intangible assets is measured at fair value on the date of transfer. On the transferred date of property plant and equipment or intangible assets if the fair value of investment property is lower than the carrying amount of property the difference is recognized in profit or loss otherwise in the comprehensive income.When an investment property is sold transferred retired or damaged the Group recognized the amount of any proceeds on disposal net of the carrying amount and related expenses in the consolidated statement of profit and loss.(k) Goodwill Goodwill represents the excess of the cost of a business combination over the Group’s interest in the fair value of the acquiree’s identifiable net assets. Goodwill is not amortised. Goodwill arising from a business combination is allocated to each cash-generating unit (“CGU”) or a group of CGUs that is expected to benefit from the synergies of the combination. The Group performs impairment test on goodwill annually.Any excess of the Group’s interest in the net fair value of the acquiree’s identifiable net assets over the cost of a business combination is recognized immediately in the consolidated statement of profit or loss.On disposal of the related CGU or a group of CGUs any attributable amount of the purchased goodwill net of allowance for impairment losses if any is included in the calculation of the profit or loss on disposal.Impairment loss on goodwill is accounted in accordance with the accounting policies as set out in Note 4 (m). 214 China CITIC Bank Corporation Limited – F-35 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (l) Repossessed assets In the recovery of impaired loans and advances the Group may take possession of assets held as collateral through court proceedings or voluntary delivery of possession by the borrowers. Where it is intended to achieve an orderly realization of the impaired assets and the Group is no longer seeking repayment from the borrower repossessed assets are reported in “other assets”.When the Group seizes assets to compensate for the losses of loans and advances and interest receivables the repossessed assets are initially recognized at fair value and any taxes that are directly attributable to the assets and other expenses incurred for collecting the repossessed assets.When the fair value less costs to sell is lower than a repossessed asset’s carrying amount an impairment loss is recognized in the consolidated statement of profit or loss. Repossessed assets are recognized at the carrying value net of allowance for impairment losses.The repossessed assets are disposed after acquisition and cannot be used without authorisation. The repossessed assets that are transferred to own use are treated as newly purchased property plant and equipment.Any gain or loss arising from the disposal of the repossessed assets is included in the consolidated statement of profit or loss in the period in which the item is disposed.(m) Allowance for impairment of non-financial assets (i) Impairment of non-financial assets other than goodwill At the end of each reporting period the Group assesses whether there is any indication that a non- financial asset other than goodwill such as investments in associates and joint ventures property plant and equipment investment properties intangible assets and other assets may be impaired. If any indication exists that an asset may be impaired the Group estimates the recoverable amount of the asset.The recoverable amount of an asset is the higher of its fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. The Group considers all relevant factors in estimating the present value of future cash flows such as the expected future cash flows the useful life and the discount rate.If the recoverable amount of an asset is less than its carrying amount the carrying amount of the asset is reduced to its recoverable amount. That reduction is recognized as an impairment loss in the consolidated statement of profit or loss.(ii) Impairment of goodwill For the purpose of impairment testing goodwill acquired in a business combination is allocated to the CGU or the group of CGUs that is expected to benefit from the synergies of the combination.A CGU is the smallest identifiable group of assets that generates cash inflows that is largely independent of the cash flows from other assets or groups of assets. 2022 Annual Report 215 – F-36 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (m) Allowance for impairment of non-financial assets (continued) (ii) Impairment of goodwill (continued) The CGU or the group of CGUs to which goodwill has been allocated is tested for impairment by the Group annually or whenever there is an indication that the CGU or the group of CGUs are impaired by comparing the carrying amount of the CGU or the group of CGUs including the goodwill with the recoverable amount of the CGU or the group of CGUs. The recoverable amount of the CGU or the group of CGUs are the estimated future cash flows which are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU or the group of CGUs with allocated goodwill.At the time of impairment testing of a CGU or a group of the CGUs to which goodwill has been allocated there may be an indication of an impairment of an asset within the CGU containing the goodwill. In such circumstances the Group tests the asset for impairment first and recognized any impairment loss for that asset before testing for impairment on the CGU or group of the CGUs containing the goodwill.Similarly there may be an indication of an impairment of a CGU within a group of the CGUs containing the goodwill. In such circumstances the Group tests the CGU for impairment first and recognized any impairment loss for that CGU before testing for impairment the group of CGUs to which the goodwill is allocated.For a CGU or a group of CGUs the amount of impairment loss firstly reduces the carrying amount of any goodwill allocated to the CGU or the group of CGUs and then reduces the carrying amount of other assets (other than goodwill) within the CGU or the group of CGUs pro rata on the basis of the carrying amount of each asset. The carrying amount of an asset should not be reduced below the highest of its fair value less costs of disposal (if measurable); its value in use (if determinable) and zero.An impairment loss in respect of goodwill is not reversed.(n) Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique (Note 57).(o) Employee benefits (i) Employee salaries During the accounting period when an employee has rendered service to the Group the Group recognizes the undiscounted amount of short-term employee benefits as a liability and as an expense unless another IFRS requires or permits the inclusion of the benefits in the cost of an asset. Short-term employee benefits include wages bonuses labor union expenses and employee education expenses social insurance such as medical insurance work-related injury insurance and maternity insurance as well as housing provident funds which are all calculated based on the regulated benchmark and ratio. 216 China CITIC Bank Corporation Limited – F-37 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (o) Employee benefits (continued) (ii) Post-employment benefits: Defined contribution plans Pursuant to the relevant laws and regulations in the PRC the Group participates in a defined contribution basic pension insurance in the social insurance system established and managed by government organisations.The Group makes contributions to basic pension insurance plans based on the applicable benchmarks and rates stipulated by the government. Basic pension contributions are charged to profit or loss when the related services are rendered by the employees.In addition to the statutory provision plan the Bank’s employees have joined its annuity scheme (the “scheme”) which was established by the CITIC Group Corporation (“CITIC Group”) in accordance with policies regarding the state-owned enterprise annuity policy. The Bank has made annuity contributions in proportion to its employees’ gross salaries which are expensed in the consolidated statement of profit or loss when the contributions are made.The Group operates a defined contribution provident fund and a Mandatory Provident Fund scheme for Hong Kong staff. Contributions are charged to profit or loss as and when the contribution fall due.(iii) Post-employment benefits: Defined benefit plans The defined benefit plans of the Group are supplementary retirement benefits provided to the domestic employees.The Group adopts the projected unit credit actuarial cost method using unbiased and mutually compatible actuarial assumptions to estimate the demographic and financial variables to measure the obligation associated in the defined benefits plan. The discounted present value of the defined benefit obligation is recognized as the liabilities of the defined benefit plans.The Group recognizes the obligation of defined benefit plans in the accounting period in which the employees render the related services. Past-service costs are recognized immediately in the consolidated statement of profit or loss. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the consolidated statement of profit or loss. Re-measurement arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise.(p) Government grants Government grants are transfers of monetary assets or non-monetary assets from the government to the Group at no consideration except for any capital contribution from the government as an investor in the Group. Special funds such as investment grants allocated by the government if clearly defined in official documents as part of “capital reserve” are dealt with as capital contributions and not regarded as government grants.Government grants are recognized when there is reasonable assurance that the grants will be received and that the Group will comply with the conditions attaching to the grants. Government grants are measured at the amount received or will be received when recognized as monetary assets. Government grants are measured at fair value when recognized as non-monetary assets. 2022 Annual Report 217 – F-38 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (p) Government grants (continued) The grants related to assets are government grants whose primary condition is that an entity qualifying for them should purchase construct or otherwise acquire long-term assets. The grants related to income are government grants other than those related to assets. A government grant related to an asset is recognized initially as deferred income and amortised to profit or loss on a straight-line basis over the useful life of the asset. A grant that compensates the Group for expenses to be incurred in the subsequent periods is recognized initially as deferred income and recognized in the consolidated statement of profit or loss in the same periods in which the expenses are recognized. A grant that compensates the Group for expenses incurred is recognized in the consolidated statement of profit or loss immediately. The Group uses the same statement method for similar government grants.For the policy loans with favourable interest rates the Group records the loans at the actual amounts and calculates the interests by loan principals and the favourable interest rates. The interest subsidies directly received from government are recorded as a reduction of interest expenses.(q) Financial guarantee contracts and loan commitments A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument.Financial guarantees are initially recognized at fair value on the date the guarantee was given. Subsequent to initial recognition the Group’s liabilities under such guarantees are measured at the higher of the initial amount less amortisation of guarantee fees and the best estimate of the expected credit loss provision required to settle the guarantee. Any increase in the liability relating to guarantees is taken to the consolidated statement of profit and loss.The impairment allowance of loan commitments provided by the Group is measured by ECL. The Group has not provided any commitment to provide loans at a below-market interest rate or that can be settled net in cash or by delivering or issuing another financial instrument.For loan commitments and financial guarantee contracts the loss allowance is recognized as a provision. However for contracts that include both a loan and an undrawn commitment and the Group cannot separately identify the ECL on the undrawn commitment component from those on the loan component the ECL on the undrawn commitment are recognized together with the loss allowance for the loan. To the extent that the combined ECL exceed the gross carrying amount of the loan the ECL are recognized as a provision.(r) Provisions and contingent liabilities A provision is recognized in the consolidated statement of financial position when the Group has a present legal or constructive obligation arising as a result of a past event it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Factors pertaining to a contingency such as the risks uncertainties and time value of money are taken into account as a whole in reaching the best estimate. Where the effect of the time value of money is material the best estimate is determined by discounting the related future cash outflows. The Group recognizes the loss allowance of financial guarantee contracts measured by ECL as a provision. 218 China CITIC Bank Corporation Limited – F-39 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (r) Provisions and contingent liabilities (continued) A contingent liability is (a) a possible obligation that arises from past events and whose existence can only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or (b) a present obligation that arises from past events and it is not probable that an outflow of economic benefits is required to settle the obligation; or the amount of the obligation cannot be measured reliably. Such liability is disclosed as contingent liabilities under Note 51.(s) Fiduciary activities The Group acts in a fiduciary capacity as a custodian trustee or an agent for customers. Assets held by the Group and the related undertakings to return such assets to customers are excluded from the consolidated financial statements as the risks and rewards of the assets reside with the customers.Entrusted lending is the business where the Group enters into entrusted loan agreements with customers whereby the customers provide funding (the “entrusted funds”) to the Group and the Group grants loans to third parties (the “entrusted loans”) at the instruction of the customers. As the Group does not assume the risks and rewards of the entrusted loans and the corresponding entrusted funds entrusted loans and funds are recorded as off- balance sheet items at their principal amounts and no impairment assessments are made for these entrusted loans.(t) Income recognition Revenue is the gross inflow of economic benefit arising in the course of the Group’s ordinary activities when those inflows result in increases in equity other than increases relating to contributions from owners. Revenue is recognized when the controls of related products or services is obtained and satisfy the other conditions for different type of revenues as below.(i) Interest income Interest income of financial assets is calculated using the effective interest method and included in the profit and loss.The accounting policies about interest income of financial assets measured at amortised cost refer to note 4 (c)(ii).(ii) Fee and commission income Fee and commission income is recognized when the Group fulfills its performance obligation either over time or at a point in time when a customer obtains control of the service. Origination or commitment fees received by the Group which result in the creation or acquisition of a financial asset are deferred and recognized as an adjustment to the effective interest rate. If the commitment expires without the Group making a loan or anticipating will not the fee is recognized as revenue on expiry.(iii) Dividend income Dividend income is recognized in the consolidated statement of profit or loss on the date when the Group’s right to receive payment is established. 2022 Annual Report 219 – F-40 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (t) Income recognition (continued) (iv) Rental income from operating lease Rental income received under operating leases is recognized as other operating income in equal instalments over the periods covered by the lease term except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives granted are recognized in the consolidated statement of profit or loss as an integral part of the aggregate net lease payments receivable.(v) Finance income from finance lease and hire purchase contract Finance income implicit in finance lease and hire purchase payments is recognized as interest income over the period of the leases so as to produce an approximately constant periodic rate of return on the outstanding net investment in the leases for each accounting period.(u) Income tax Current tax and deferred tax are recognized in the consolidated statement of profit or loss except to the extent that they relate to a business combination or items recognized directly in equity (including other comprehensive income).Current income tax is the expected tax payables on the taxable income for the year using tax rates enacted or substantially enacted at the reporting date and any adjustment to tax payables in respect of previous periods.Deferred tax is provided for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences also arise from unused tax losses and unused tax credits. Deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the asset can be recognized.Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries associates and joint arrangements except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognized on deductible temporary differences arising from investments in subsidiaries associates and joint ventures arrangements only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be recognized.At the reporting date deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is recognized or the liability is settled according to the requirements of tax laws. The Group also considers the probability of realization and the settlement of deferred tax assets and deferred tax liabilities in the calculation.Current tax assets are offset against current tax liabilities and deferred tax assets against deferred tax liabilities if the Group has the legally enforceable right to set off current tax assets against current tax liabilities and meet the additional conditions that deferred tax assets and liabilities relate to income taxes levied by the same authority on the same taxable entity. 220 China CITIC Bank Corporation Limited – F-41 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (v) Cash equivalents Cash equivalents are short-term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value with original maturity of three months or less at acquisition.(w) Profit distribution Proposed dividends for ordinary shares which are declared and approved after the end of each reporting period are not recognized as a liability in the consolidated statement of financial position and are instead disclosed as a subsequent event after the end of each reporting period in the notes to the consolidated financial statements.Dividends payable are recognized as liabilities in the period in which they are approved.As authorized by the shareholders’ annual general meeting the Board of Directors has the sole discretion to declare and distribute dividends on preference shares. Preference shares dividend distribution is recognized as a liability in the consolidated financial statements in the period in which the dividends are approved.(x) Related parties If the Group has the power directly or indirectly to control jointly control or exercise significant influence over another party or vice versa or where the Group and one or more parties are subject to common control jointly control from another party they are considered to be related parties. Related parties may be individuals or enterprises.(y) Operating segments An operating segment is a component of the Group that satisfies all of the following conditions: (1) the component is able to earn revenues and incur expenses from its ordinary activities; (2) whose operating results are regularly reviewed by the Group’s management to make decisions about resources to be allocated to the segment and to assess its performance and (3) for which the information on financial position operating results and cash flows is available to the Group. If two or more operating segments have similar economic characteristics and satisfy certain conditions they are aggregated into one single operating segment.Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s chief operating decision-maker for the purposes of allocating resources and assessing performance. The Group considers the business from different perspectives including products and services and geographic areas. The operating segments that meet the specified criteria have been aggregated and the operating segments that meet quantitative thresholds have been reported separately.Inter-segment revenues are measured on the basis of actual transaction price for such transactions for segment reporting and segment accounting policies are consistent with those for the consolidated financial statements. 5 Critical accounting estimates and judgements Preparation of the consolidated financial statements requires management to make judgments estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities income and expenses. The estimates and associated assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.The estimates and associated key assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. 2022 Annual Report 221 – F-42 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 5 Critical accounting estimates and judgements (continued) (i) Measurement of the expected credit loss allowance The measurement of the expected credit loss allowance for financial assets of debt instruments and off balance sheet credit assets measured at amortised cost and FVOCI is an area that requires the use of complex models and significant assumptions about future economic conditions and credit recognition (e. g. the likelihood of customers defaulting and the resulting losses). Explanation of the inputs assumptions and estimation techniques used in measuring ECL is further detailed in note 55 (a).A number of significant judgements are also required in applying the accounting requirements for measuring ECL such as: * Segmentation of portfolio sharing similar credit risk characteristics for the purposes of measuring ECL; * Choosing appropriate models and assumptions for the measurement of ECL; * Criteria for determining whether or not there was a significant increase in credit risk or a default or impairment loss was incurred; * Economic indicators for forward-looking measurement and the application of economic scenarios and weightings; * Management overlay for asset portfolios whose non-linear risk characteristics cannot be adequately reflected through impairment models; and * Discounted cash flows model is applicable to assets related to corporate client in stage 3.Detailed information about the judgements and estimates made by the Group in the above areas is set out in note 55 (a).(ii) Classification of financial assets The critical judgments the Group has in determining the classification of financial assets include analysis of business models and characteristics of contractual cash flows.The Group determines the business model for managing financial assets at the level of financial asset portfolio.The factors considered include evaluation and reporting of financial asset performance to key management personnel risks affecting the performance of financial assets and their management methods and related business management personnel. The way to get paid etc.When assessing whether the contractual cash flow of financial assets is consistent with the basic lending arrangement the Group has the following main judgments: whether the principal may be subject to change in the duration or amount of money due to prepayments during the duration; whether interests is only included currency time value credit risk other basic borrowing risks and considerations for costs and profits; whether the amount paid in advance reflect only the outstanding principal and interest on the outstanding principal as well as reasonable compensation for early termination of the contract. 222 China CITIC Bank Corporation Limited – F-43 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 5 Critical accounting estimates and judgements (continued) (iii) Fair value of financial instruments For financial instruments without active market the Group determines fair values using valuation techniques which include discounted cash flow models as well as other types of valuation models. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates credit spreads and foreign currency exchange rates. Where discounted cash flow techniques are used estimated cash flows are based on management’s best estimates and the discount rate used is a market rate at the end of each reporting period applicable for an instrument with similar terms and conditions. Where other pricing models are used inputs are based on observable market data at the end of each reporting period. However where market data are not available management needs to make estimates on such unobservable market inputs based on assumptions. Changes in assumptions about these factors could affect the estimated fair value of financial instruments.(iv) De-recognition of financial assets In its normal course of business the Group transfers financial assets through various types of transactions including regular way sales and transfers securitization financial assets sold under repurchase agreements and etc. the Group applies significant judgement in assessing whether it has transferred these financial assets which qualify for a full or partial de-recognition.Where the Group enters into structured transactions by which it transferred financial asset to structured entities the Group analyses whether the substance of the relationship between the Group and these structured entities indicates that it controls these structured entities to determine whether the Group needs to consolidate these structured entities. This will determine whether the following de-recognition analysis should be conducted at the consolidated level or at the entity level from which the financial assets was transferred.The Group analyses the contractual rights and obligations in connection with such transfers to determine whether the de-recognition criteria are met based on the following considerations: – whether it has transferred the rights to receive contractual cash flows from the financial assets or the transfer qualified for the “pass through” of those cash flows to independent third parties; – the extent to which the associated risks and rewards of ownership of the financial assets are transferred by using appropriate models. Significant judgment is applied in the Group’s assessment with regard to the parameters and assumptions applied in the models estimated cash flows before and after the transfers the discount rates used based on current market interest rates variability factors considered and the allocation of weightings in different scenarios; – where the Group neither retains nor transfers substantially all of the risks and rewards associated with their ownership the Group analyses whether the Group has relinquished its controls over these financial assets and if the Group has continuing involvement in these transferred financial assets.(v) Consolidation of structured entities The Group makes significant judgment to assess whether or not to consolidate structured entities. When performing this assessment the Group: – assesses its contractual rights and obligations in light of the transaction structures and evaluates the Group’s power over the structured entities; – performs independent analyses and tests on the variable returns from the structured entities including but not limited to commission income and asset management fees earned retention of residual income and if any liquidity and other support provided to the structured entities; and 2022 Annual Report 223 – F-44 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 5 Critical accounting estimates and judgements (continued) (v) Consolidation of structured entities (continued) – assesses its ability to exercise its power to influence the variable returns assessed whether the Group acts as a principal or an agent through analysis of the scope of the Group’s decision-making authority remuneration entitled other interests the Group holds and the rights held by other parties.(vi) Income taxes Determining income tax provisions involves judgement on the future tax treatment of certain transactions. There are certain transactions and activities for which the ultimate tax determination is uncertain during the ordinary course of business. The Group carefully evaluates the tax implications of transactions and tax provisions are set up accordingly. The tax treatment of such transactions is reconsidered periodically to take into account all changes in tax legislations. Deferred tax assets are recognized for temporary deductible differences. As those deferred tax assets can only be recognized to the extent that it is probable that future taxable profits will be available against which the unused tax credits can be recognized management’s judgement is required to assess the probability of future taxable profits. Management’s assessment is constantly reviewed and additional deferred tax assets are recognized if it becomes probable that future taxable profits will allow the deferred tax assets to be recovered. 6 Net interest income Year ended 31 December 20222021 Interest income arising from (Note (i)): Deposits with central banks 6100 6073 Deposits with banks and non-bank financial institutions 1569 2040 Placements with and loans to banks and non-bank financial institutions 6378 4475 Financial assets held under resale agreements 1092 1267 Loans and advances to customers — corporate loans 119218 115866 — personal loans 120438 116770 Financial investments — at amortised cost 40207 39483 — at fair value through other comprehensive income 18580 20188 Others 27 3 Subtotal 313609 306165 Interest expense arising from: Borrowings from central banks (4974) (6804) Deposits from banks and non-bank financial institutions (23818) (27755) Placements from banks and non-bank financial institutions (1686) (2276) Financial assets sold under repurchase agreements (1935) (1631) Deposits from customers (102997) (92388) Debt securities issued (27082) (26962) Lease liabilities (442) (448) Others (28) (5) Subtotal (162962) (158269) Net interest income 150647 147896 Note: (i) Interest income from impaired financial assets is RMB462 million for the year ended 31 December 2022 (2021: RMB507 million). 224 China CITIC Bank Corporation Limited – F-45 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 7 Net fee and commission income Year ended 31 December 20222021 Fee and commission income: Bank card fees 16480 16474 Commission for custodian business and other fiduciary 11269 10226 Agency fees and commission (Note (i)) 5692 6497 Guarantee and advisory fees 5357 5384 Settlement and clearance fees 2143 1926 Others 110 97 Total 41051 40604 Fee and commission expense (3959) (4734) Net fee and commission income 37092 35870 Note: (i) Agency fees and commission represent fees earned for sale of bonds investment funds and insurance products and provision of entrusted lending activities. 8 Net trading gain Year ended 31 December 20222021 Debt securities and certificates of interbank deposit 2022 2909 Foreign currencies (1909) 1095 Derivatives and related exposures 4768 1164 Total 4881 5168 9 Net gain from investment securities Year ended 31 December 20222021 Financial investments — at fair value through profit or loss 12728 12933 — at amortised cost 360 63 — at fair value through other comprehensive income (278) (110) — I nvestments in financial assets designated at fair value through other comprehensive income 41 33 Revaluation gain on transfer out of equity at disposal 2846 979 Net gain from bills rediscounting 1197 693 Proceeds from the resale of forfaiting 836 294 Others 41 (11) Total 17771 14874 2022 Annual Report 225 – F-46 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 10 Net hedging loss For the year ended 31 December 2022 net loss of fair value hedge is RMB174483 (2021: Nil). 11 Operating expenses Year ended 31 December 20222021 Staff costs — salaries and bonuses 28102 25299 — welfare expenses 1352 1373 — social insurance 2027 1813 — housing fund 1758 1570 — labor union expenses and employee education expenses 888 808 — post-employment benefits – defined contribution plans 3579 3171 — post-employment benefits – defined benefit plans 1 1 — other benefits 375 368 Subtotal 38082 34403 Property and equipment related expenses — depreciation of right-of-use assets 3289 3248 — depreciation of property plant and equipment 2558 2302 — rent and property management expenses 991 1069 — maintenance 1072 1182 — amortisation expenses 1552 1155 — electronic equipment operating expenses 422 441 — others 444 446 Subtotal 10328 9843 Tax and surcharges 2122 2203 Other general operating and administrative expenses (Note (i)) 16306 15775 Total 66838 62224 Note: (i) Included in other general operating and administrative expenses were audit fees of RMB19 million for the year ended 31 December 2022 (2021: RMB18 million) and non-audit fees of RMB7 million for the year ended 31 December 2022 (2021: RMB3 million). 226 China CITIC Bank Corporation Limited – F-47 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 11 Operating expenses (continued) (a) Individuals with highest emoluments For the year ended 31 December 2022 of the 5 individuals with the highest emoluments in the Group there was no director (2021: Nil) and no supervisor (2021: Nil). The aggregate of the emoluments before individual income tax in respect of the five (2021: five) highest paid individuals of the Group were as follows: Year ended 31 December 20222021 RMB’000 RMB’000 Basic salaries housing allowances other allowances and benefits in kind 20683 18734 Discretionary bonuses 19058 21026 Contribution to pension scheme 979 799 Total 40720 40559 The emoluments before individual income tax of the five individuals of the Group with the highest emoluments are within the following bands: Year ended 31 December 20222021 RMB5000001 – RMB10000000 4 4 RMB10000001 – RMB15000000 1 1 No inducement fee and compensation for loss of office was paid to the five highest paid individuals for the year ended 31 December 2022 (2021: Nil). 12 Credit impairment losses 31 December 31 December 20222021 Deposits with banks and non-bank financial institutions (48) 16 Placements with and loans to banks and non-bank financial institutions 50 (7) Financial assets held under resale agreements (47) (9) Interest receivables 5378 3616 Loans and advances to customers 55786 50228 Financial investments — at amortised cost 1542 18917 — at fair value through other comprehensive income 269 (165) Other receivables (158) (314) Off-balance sheet items 8587 4723 Total 71359 77005 2022 Annual Report 227 – F-48 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 13 Impairment losses on other assets 31 December 31 December 20222021 Other assets-repossessed assets 45 43 14 Income tax (a) Recognized in the consolidated statement of profit or loss and other comprehensive income Year ended 31 December Notes 2022 2021 Current tax — Mainland China 16032 14785 — Hong Kong 57 314 — Overseas 32 43 Deferred tax 30 (5655) (6002) Total 10466 9140 Mainland China and Hong Kong income tax have been provided at the rate of 25% and 16.5% respectively.Overseas tax has been provided at the rate of taxation prevailing in the regions in which the Group operates.(b) Reconciliation between income tax expense and accounting profit Year ended 31 December 20222021 Profit before tax 73416 65517 Income tax calculated at PRC statutory tax rate 18354 16379 Effect of different tax rates in other regions (213) (272) Tax effect of non-deductible expenses (Note (i)) 3456 2481 Tax effect of non-taxable income — interest income arising from PRC government bonds and local government bonds (7121) (6658) — dividend income from investment funds (2680) (2218) — others (1330) (572) Income tax 10466 9140 Note: (i) It mainly includes the non-deductible expenses that the Bank assesses and confirms on an item by item basis and the tax impact of business entertainment expenses and labor insurance expenses that exceed the tax deductible limits. 228 China CITIC Bank Corporation Limited – F-49 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 15 Other comprehensive income net of tax Year ended 31 December 20222021 Items that will not be reclassified subsequently to profit or loss Changes in defined benefit plan liabilities — net changes during the year before tax – (1) Fair value changes on financial asset designated at fair value through other comprehensive income net of tax — net changes in fair value recognized during the year before tax 345 7 — income tax (108) 23 Subtotal 237 29 Items that may be reclassified subsequently to profit or loss Other comprehensive income transferable to profit or loss under equity method — net changes during the year (28) (12) Fair value changes on financial assets at fair value through other comprehensive income net of tax (Note (i)) — net changes during the year before tax (7530) 4375 — net amount transferred to profit or loss (2862) (966) — income tax 2201 (1015) Credit impairment allowance on financial assets at fair value through other comprehensive income (Note (ii)) — net changes during the year 167 (53) — income tax (22) 85 Others — net changes during the year 4 133 Exchange differences on translation of financial statements 4132 (1081) Subtotal (3938) 1466 Other comprehensive income net of tax (3701) 1495 Note: (i) Fair value changes on financial assets at fair value through other comprehensive income include those of financial assets (Note 23 (a)) and loans and advances to customers (Note 22 (a)) at fair value through other comprehensive income.(ii) Credit impairment allowance include financial assets (Note 23 (a)) and loans and advances to customers (Note 22 (b)) at fair value through other comprehensive income. 16 Earnings per share Earnings per share information for the years ended 31 December 2022 and 2021 is computed by dividing the profit for the year attributable to ordinary shareholders of the Bank by the weighted average number of shares in issue during the year. 2022 Annual Report 229 – F-50 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 16 Earnings per share (continued) The Bank issued non-cumulative preference shares in 2016 under the terms and conditions as detailed in Note 43 (i).The Bank declared and paid cash dividends of RMB1428 million of non-cumulative preference shares for the year of 2022 (2021: 1330 million). The Bank issued RMB40 billion write-down undated capital bonds (the “Bonds”) in 2019 with terms and conditions disclosed in detail in Note 43 (ii) under perpetual bonds. The Bank declared and paid RMB3360 million in interests on the perpetual bonds in 2022.The conversion feature of preference shares is considered to fall within contingently issuable ordinary shares. The triggering events of conversion did not occur as at 31 December 2022 therefore the conversion feature of preference shares has no effect on the basic and diluted earnings per share calculation.The diluted earnings per share is calculated on the assumption that the RMB40 billion A-share convertible corporate bonds publicly issued by the Bank on 4 March 2019 are deemed to have all been converted to ordinary shares upon issuance and by dividing after adjustments for the interest expenses of the convertible corporate bonds for the period the net profit of the year attributable to ordinary shareholders of the Bank by the adjusted weighted average number of ordinary shares outstanding during the year.Year ended 31 December 20222021 Profit for the year attributable to equity holders of the Bank 62103 55641 Less: E quity attributable to holders of other equity instruments of the Bank 4788 3010 Profit for the year attributable to ordinary shareholders of the Bank 57315 52631 Weighted average number of shares (in million shares) 48935 48935 Basic earnings per share (in RMB) 1.17 1.08 Diluted earnings per share (in RMB) 1.06 0.98 17 Cash and balances with central banks 31 December 31 December Notes 2022 2021 Cash 5532 5694 Balances with central banks — statutory deposit reserve funds (i) 365362 361237 — surplus deposit reserve funds (ii) 104315 65571 — fiscal deposits (iii) 298 2711 — foreign exchange reserve (iv) 1693 – Accrued interest 181 170 Total 477381 435383 230 China CITIC Bank Corporation Limited – F-51 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 17 Cash and balances with central banks (continued) Notes: (i) The Group places statutory deposit reserve funds with the People’s Bank of China (“PBOC”) and overseas central banks where it has operations. The statutory deposit reserve funds are not available for use in the Group’s daily business.As at 31 December 2022 the statutory deposit reserve funds placed with the PBOC was calculated at 7.5% (as at 31 December 2021: 8%) of eligible Renminbi deposits for domestic branches of the Bank and at 6% (as at 31 December 2021: 8%) of eligible Renminbi deposits from overseas financial institutions. The Bank was also required to deposit an amount equivalent to 6% (as at 31 December 2021: 9%) of its foreign currency deposits from domestic branch customers as statutory deposit reserve funds.As at 31 December 2022 the statutory deposit reserve rates applicable to Zhejiang Lin’an CITIC Rural Bank Corporation Limited in mainland China a subsidiary of the Group was at 5% (as at 31 December 2021: 5%).The amounts of statutory deposit reserve funds placed with the central banks of overseas countries and regions are determined by the respective jurisdictions.The statutory deposit reserve funds are interest bearing except for the foreign currency reserve funds deposits placed with the PBOC.(ii) The surplus deposit reserve funds are maintained with the PBOC for the purposes of clearing.(iii) Fiscal deposits placed with the PBOC are not available for use in the Group’s daily operations and are non-interest bearing.(iv) The foreign exchange reserve is maintained with the PBOC in accordance with the related notice issued by the PBOC. The reserve is provided as of 20% of customer-driven foreign exchange forward transactions volume on a monthly basis. Such foreign exchange reserve is non-interest bearing and will be repayable in 12 months according to the Notice. 18 Deposits with banks and non-bank financial institutions (a) Analysed by types and locations of counterparties 31 December 31 December Note 2022 2021 In Mainland China — banks 49930 72083 — non-bank financial institutions 6734 4700 Subtotal 56664 76783 Outside Mainland China — banks 18836 22878 — non-bank financial institutions 2995 7472 Subtotal 21831 30350 Accrued interest 437 868 Gross balance 78932 108001 Less: Allowances for impairment losses 32 (98) (145) Net balance 78834 107856 2022 Annual Report 231 – F-52 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 18 Deposits with banks and non-bank financial institutions (continued) (b) Analysed by remaining maturity 31 December 31 December Note 2022 2021 Demand deposits (Note (i)) 36373 54376 Time deposits with remaining maturity — within one month 4883 17929 — between one month and one year 37239 34828 Subtotal 78495 107133 Accrued interest 437 868 Gross balance 78932 108001 Less: Allowances for impairment losses 32 (98) (145) Net balance 78834 107856 Note: (i) As at 31 December 2022 within the demand deposits there were pledged deposits of RMB555 million (as at 31 December 2021: RMB536 million). These deposits were mainly maintenance margins with a regulatory body. 19 Placements with and loans to banks and non-bank financial institutions (a) Analysed by types and locations of counterparties 31 December 31 December Note 2022 2021 In Mainland China — banks (Note (i)) 15215 18093 — non-bank financial institutions 160739 93170 Subtotal 175954 111263 Outside Mainland China — banks 41302 31975 Subtotal 41302 31975 Accrued interest 1048 769 Gross balance 218304 144007 Less: Allowances for impairment losses 32 (140) (89) Net balance 218164 143918 Note: (i) The leased gold between Banks is included in the Placements with and loans to banks and non-bank financial institutions measured at fair value through profit or loss. As at 31 December 2022 the carrying amount of leased gold was RMB8739 million (as at 31 December 2021: RMB4596 million). 232 China CITIC Bank Corporation Limited – F-53 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 19 Placements with and loans to banks and non-bank financial institutions (continued) (b) Analysed by remaining maturity 31 December 31 December Note 2022 2021 Within one month 43800 55633 Between one month and one year 131706 79905 Over one year 41750 7700 Accrued interest 1048 769 Gross balance 218304 144007 Less: Allowances for impairment losses 32 (140) (89) Net balance 218164 143918 20 Derivatives Derivatives include forward swap option and credit transactions undertaken by the Group in foreign exchange precious metals interest rate and credit derivatives related to trading asset and liability management and customer initiated transactions. The Group through the operations of its branch network acts as an intermediary for a wide range of customers for structuring deals to offer risk management solutions to match individual customer needs. These positions are actively managed through hedging transactions with external parties to ensure the Group’s net exposures are within acceptable risk levels. The Group also uses these derivatives for proprietary trading purposes and to manage its own asset and liability and structural positions. Derivatives except for those which are designated as hedging instruments are held for trading. Derivatives classified as held for trading are for trading and customer initiated transactions purpose and those for risk management purposes but do not meet the criteria for hedge accounting.The contractual/notional amounts of derivatives provide a basis for comparison with fair values of derivatives recognized on the consolidated statement of financial position but do not necessarily indicate the amounts of future cash flows involved or the current fair values of the derivatives and therefore do not indicate the Group’s exposure to credit or market risks. 31 December 2022 31 December 2021 Nominal Nominal amount Assets Liabilities amount Assets Liabilities Hedging instruments — interest rate derivatives 600 9 – – – – Non-Hedging instruments — interest rate derivatives 3083202 14950 14887 2630541 8643 8539 — currency derivatives 2506299 29173 28780 1936863 13930 14217 — precious metal derivatives 35523 250 598 17043 148 151 — credit derivatives 30 1 – – – – Total 5625654 44383 44265 4584447 22721 22907 (a) Nominal amount analysed by remaining maturity 31 December 31 December 20222021 Within three months 2257129 2067349 Between three months and one year 1910625 1376726 Between one year and five years 1425950 1109269 Over five years 31950 31103 Total 5625654 4584447 2022 Annual Report 233 – F-54 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 20 Derivatives (continued) (b) Credit risk weighted amounts The credit risk weighted amount has been computed in accordance with the Regulation Governing Capital of Commercial Banks (Provisional) promulgated by the CBIRC in 2012 and depends on the status of the counterparties and the maturity characteristics of the instruments including those customer-driven back-to-back transactions. As at 31 December 2022 the total amount of credit risk weighted amount for counterparty was RMB24579 million (as at 31 December 2021: RMB22204 million). 21 Financial assets held under resale agreements (a) Analysed by types and locations of counterparties 31 December 31 December Note 2022 2021 In Mainland China — banks 11100 64515 — non-bank financial institutions 848 26217 Subtotal 11948 90732 Outside Mainland China — banks 149 677 — non-bank financial institutions 1628 63 Subtotal 1777 740 Accrued interest 5 12 Gross balance 13730 91484 Less: Allowance for impairment losses 32 – (47) Net balance 13730 91437 (b) Analysed by types of collateral As at 31 December 2022 and 31 December 2021 the Group’s types of collateral for financial assets held under resale agreements are all bonds.(c) Analysed by remaining maturity 31 December 31 December Note 2022 2021 Within one month 13403 91472 Between one month and one year 322 – Accrued interest 5 12 Gross balance 13730 91484 Less: Allowances for impairment losses 32 – (47) Net balance 13730 91437 234 China CITIC Bank Corporation Limited – F-55 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 22 Loans and advances to customers (a) Analysed by nature 31 December 31 December Notes 2022 2021 Loans and advances to customers at amortised cost Corporate loans and advances — loans 2418718 2250726 — discounted bills 3704 4523 — finance lease receivables 46566 46854 Subtotal 2468988 2302103 Personal loans and advances — residential mortgages 975807 973390 — credit cards 511101 528261 — business loans 378819 312584 — personal consumption 250813 239589 — finance lease receivables 370 – Subtotal 2116910 2053824 Accrued interest 17180 13064 Gross balance 4603078 4368991 Less: Allowances for impairment losses on loans 32 — principal (130573) (120722) — interest (412) (235) Loans and advances to customers at amortised cost net 4472093 4248034 Loans and advances to customers at fair value through other comprehensive income — loans 54851 38599 — discounted bills 508142 461443 Carrying amount of loans and advances at fair value through other comprehensive income 562993 500042 — fa ir value changes through other comprehensive income (547) 756 Loans and advances to customers at fair value through profit or loss — loans 3881 – Total 5038967 4748076 Allowances for impairment losses on loans and advances to customers at fair value through other comprehensive income 32 (629) (749) 2022 Annual Report 235 – F-56 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 22 Loans and advances to customers (continued) (b) Analysed by assessment method of allowance for impairment losses 31 December 2022 Stage 1 Stage 2 Stage 3 Total Note(i) Gross loans and advances to customers at amortised costs 4422344 88606 74948 4585898 Accrued interest 14342 2125 713 17180 Less: A llowance for impairment losses (60204) (22497) (48284) (130985) Carrying amount of loans and advances to customers measured at amortised cost 4376482 68234 27377 4472093 Carrying amount of loans and advances to customers at fair value through other comprehensive income 562118 720 155 562993 Total 4938600 68954 27532 5035086 Allowance for impairment losses on loans and advances to customers at fair value through other comprehensive income (523) (27) (79) (629) 31 December 2021 Stage 1 Stage 2 Stage 3 Total Note(i) Gross loans and advances to customers at amortised costs 4198067 83030 74830 4355927 Accrued interest 11602 1241 221 13064 Less: A llowance for impairment losses (50663) (21657) (48637) (120957) Carrying amount of loans and advances to customers measured at amortised cost 4159006 62614 26414 4248034 Carrying amount of loans and advances to customers at fair value through other comprehensive income 498989 775 278 500042 Total 4657995 63389 26692 4748076 Allowance for impairment losses on loans and advances to customers at fair value through other comprehensive income (552) (29) (168) (749) 236 China CITIC Bank Corporation Limited – F-57 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 22 Loans and advances to customers (continued) (b) Analysed by assessment method of allowance for impairment losses (continued) Notes: (i) Stage 3 loans are loans and advances to customers that have experienced credit impairment. 31 December 31 December 20222021 Secured portion 43044 51803 Unsecured portion 32059 23305 Gross balance 75103 75108 Allowance for stage 3 impairment losses (48363) (48805) As at 31 December 2022 the maximum exposure covered by pledge and collateral held of secured portion is RMB42470 million (as at 31 December 2021: RMB50886 million).The fair value of collateral was estimated by management based on the latest revaluation including available external valuation if any adjusted by taking into account the current realization experience as well as market situation.(c) Overdue loans analysed by overdue period 31 December 2022 Overdue Overdue Overdue Overdue between three between one within three months and year and over three months one year three years years Total Unsecured loans 17083 9242 1695 280 28300 Guaranteed loans 1800 1926 2215 1990 7931 Loans with pledged assets — l oans secured by collateral 12302 11924 7091 2337 33654 — pledged loans 2751 6601 2189 763 12304 Total 33936 29693 13190 5370 82189 2022 Annual Report 237 – F-58 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 22 Loans and advances to customers (continued) (c) Overdue loans analysed by overdue period (continued) 31 December 2021 Overdue Overdue Overdue Overdue between three between one within three months and year and three over three months one year years years Total Unsecured loans 18654 10318 896 287 30155 Guaranteed loans 1993 1897 2093 228 6211 Loans with pledged assets — lo ans secured by collateral 15285 9434 14324 992 40035 — pledged loans 7230 5501 1121 120 13972 Total 43162 27150 18434 1627 90373 Overdue loans represent loans of which the principal or interest are overdue one day or more.(d) Finance lease receivables Finance lease receivables are attributable to the Group’s subsidiaries CITIC Financial Leasing Limited (“CFLL”) and CITIC International Finance Holdings Limited (“CIFH”) include net investment in machines and equipment leased to customers under finance lease and hire purchase contracts which have the characteristics of finance leases. The remaining period of these contracts range from 1 to 25 years. The total finance lease receivables under finance lease and hire purchase contracts and their present values are as follows: 31 December 31 December 20222021 Within one year (including one year) 14247 10369 One year to two years (including two years) 10568 12606 Two years to three years (including three years) 7503 8153 Over three years 14618 15726 Gross balance 46936 46854 Less: Allowance for impairment losses — stage 1 (960) (859) — stage 2 (499) (498) — stage 3 (419) (728) Net balance 45058 44769 238 China CITIC Bank Corporation Limited – F-59 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 23 Financial investments (a) Analysed by types 31 December 31 December Note 2022 2021 Financial assets at fair value through profit or loss Investment funds 431958 397407 Debt securities 80690 58584 Certificates of deposit 35543 30776 Equity instruments 7887 7432 Wealth management products and others through structured entities 1516 1611 Net balance 557594 495810 Financial assets at amortised cost Debt securities 887763 901375 Trust investment plans 222819 234770 Investment management products managed by securities companies 39628 50413 Certificates of deposit and interbank certificates of deposit 3424 – Subtotal 1153634 1186558 Accrued interest 10384 10398 Less: Allowance for impairment losses 32 (28566) (26727) — principles (28528) (26624) — accrued interests (38) (103) Net balance 1135452 1170229 Financial assets at fair value through other comprehensive income (Note (i)) Debt securities 777438 642570 Certificates of deposit 21501 4306 Designated investment products managed by securities companies – 24 Subtotal 798939 646900 Accrued interest 5756 4957 Net balance 804695 651857 Allowances for impairment losses on financial investments at fair value through other comprehensive income 32 (2717) (2387) Financial assets designated at fair value through other comprehensive income (Note (i)) 5128 4745 Total 2502869 2322641 2022 Annual Report 239 – F-60 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 23 Financial investments (continued) (a) Analysed by types (continued) Notes: (i) Financial investments at fair value through other comprehensive income 31 December 2022 Equity Debt Note instruments instruments Total Costs/Amortised cost 5783 804867 810650 Accumulated fair value change in other comprehensive income (655) (5928) (6583) Fair value 5128 798939 804067 Allowance for impairment losses 32 (2717) (2717) 31 December 2021 Equity Debt Note instruments instruments Total Costs/Amortised cost 5914 643679 649593 Accumulated fair value change in other comprehensive income (1169) 3221 2052 Fair value 4745 646900 651645 Allowance for impairment losses 32 (2387) (2387) (b) Analysed by location of counterparties 31 December 31 December Note 2022 2021 In Mainland China — governments 1097552 899116 — policy banks 88726 136084 — banks and non-bank financial institutions 1097864 1114160 — corporates 99992 87190 Subtotal 2384134 2236550 Outside Mainland China — governments 57946 32712 — banks and non-bank financial institutions 32736 32643 — corporates 39171 30420 — public entities 1308 1688 Subtotal 131161 97463 Accrued interest 16140 15355 Total 2531435 2349368 Less: I mpairment allowance for financial assets at amortised cost 32 (28566) (26727) Net balance 2502869 2322641 Listed in Hong Kong 50959 50012 Listed outside Hong Kong 2074660 1947182 Unlisted 377250 325447 Total 2502869 2322641 Bonds traded in China’s inter-bank bond market are listed outside Hong Kong. 240 China CITIC Bank Corporation Limited – F-61 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 23 Financial investments (continued) (c) Analysed by assessment method of allowance for impairment losses 31 December 2022 Notes Stage 1 Stage 2 Stage 3 Total Financial assets at amortised costs 1094231 4958 54445 1153634 Accrued interest 10227 138 19 10384 Less: Al lowance for impairment losses 32 (2483) (1387) (24696) (28566) Net balance 1101975 3709 29768 1135452 Financial assets at fair value through other comprehensive income 797850 136 953 798939 Accrued interest 5733 – 23 5756 Net balance 803583 136 976 804695 Total carrying amount of financial assets affected by credit risk 1905558 3845 30744 1940147 Allowance for impairment losses of other debt instruments included in other comprehensive income (1416) (98) (1203) (2717) 31 December 2021 Notes Stage 1 Stage 2 Stage 3 Total Financial assets at amortised costs 1119765 15529 51264 1186558 Accrued interest 10045 331 22 10398 Less: Al lowance for impairment losses 32 (4221) (4076) (18430) (26727) Net balance 1125589 11784 32856 1170229 Financial assets at fair value through other comprehensive income 646145 334 421 646900 Accrued interest 4922 14 21 4957 Net balance 651067 348 442 651857 Total carrying amount of financial assets affected by credit risk 1776656 12132 33298 1822086 Allowance for impairment losses of other debt instruments included in other comprehensive income (976) (158) (1253) (2387) 2022 Annual Report 241 – F-62 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 24 Investments in associates and joint ventures 31 December 31 December Note 2022 2021 Investments in joint ventures (a) 5811 5220 Investments in associates (b) 530 533 Total 6341 5753 (a) Investment in joint ventures The details of the joint ventures as at 31 December 2022 were as follows: Form of Effective business Place of percentage Principal Nominal value of Name of company structure incorporation of shares activities issued shares CITIC aiBank Corporation Corporation Beijing 65.7% Financial RMB5.634 billionLimited (“CITIC servicesaiBank”)(Note (i)) JSC Altyn Bank Corporation Kazakhstan 50.1% Financial KZT 7.05 billion Corporation Limited. services (“JSC Altyn Bank”) (Note (ii)) Notes: (i) According to the Articles of Association of CITIC aiBank major activities of CITIC aiBank must be decided after the unanimous consent of the Bank and Fujian Baidu Borui Network Technology Co. Ltd.(ii) According to the Articles of Association of JSC Altyn Bank decisions regarding all major activities of JSC Altyn Bank shall be subject to the joint approval of the Bank and the other shareholder the JSC Halyk Bank of Kazakhstan.Financial statements of the joint ventures are as follow: As at or for the year ended 31 December 2022 Total Total Total Operating Net Name of Enterprise assets liabilities net assets income income CITIC aiBank 96922 89487 7435 3968 656 JSC Altyn Bank 14621 13204 1417 684 359 Year ended 31 December 2021 Total Total Total Operating Net Name of Enterprise assets liabilities net assets income income CITIC aiBank 79406 72601 6805 2998 263 JSC Altyn Bank 9420 8331 1089 440 250 242 China CITIC Bank Corporation Limited – F-63 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 24 Investments in associates and joint ventures (continued) (a) Investment in joint ventures (continued) Movement of the Group’s interests in the joint venture: Year ended 31 Year ended 31 20222021 Initial investment cost 5256 5256 As at 1 January 5220 5044 Other changes in equity (20) (14) Dividends received – (100) Share of net profit of the joint ventures for the year 611 294 Exchange difference – (4) As at 31 December 5811 5220 (b) Investment in associates The Group holds its investment in associates through subsidiaries and details of the associates as at 31 December 2022 was as follows: Effective percentage of shares Form of and voting business Place of right held by Principal Nominal value Name of company structure incorporation the Group activities of issued shares CITIC International Assets Corporation Hong Kong 46% Investment HKD2218 Management Limited holding million (“CIAM”) and assets management Binhai (Tianjin) Financial Corporation Tianjin 20% Services and RMB500 Assets Exchange Company investment million Limited (“BFAE”) Financial statements of the associates are as follow: As at or for the year ended 31 December 2022 Total Total Total Operating Net (loss)/ Name of Enterprise assets liabilities net assets income income CIAM 916 59 857 (12) (6) BFAE 563 38 525 189 70 Year ended 31 December 2021 Total Total Total Operating Net (loss)/ Name of Enterprise assets liabilities net assets income income CIAM 1037 142 895 71 (179) BFAE 637 183 454 335 39 2022 Annual Report 243 – F-64 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 24 Investments in associates and joint ventures (continued) (b) Investment in associates (continued) Movement of the Group’s interests in associates: Year ended 31 Year ended 31 December 2022 December 2021 Initial investment cost 1129 1168 As at 1 January 533 630 Changes in investment in associates (39) – Share of net loss of associates for the year 12 (82) Other changes in equity (8) 1 Exchange difference 32 (16) As at 31 December 530 533 25 Investment in subsidiaries 31 December 31 December Notes 2022 2021 Investment in subsidiaries — C ITIC international financial holdings limited (“CIFH”) (i) 16570 16570— C NCB (Hong Kong) Investment Limited (“CNCBInvestment”) (ii) 1577 1577 — Z hejiang Lin’an CITIC Rural Bank Corporation Limited (“Lin’an Rural Bank”) (iii) 102 102 — CITIC financial leasing CO. LTD (“CFLL”) (iv) 4000 4000— C ITIC Wealth Management CO. LTD (“CITICWealth”) (v) 5000 5000 Total 27249 27249 Major subsidiaries of the Bank as at 31 December 2022 are as follows: % of % of ownership ownership held by Particulars of the directly subsidiaries The Group’s Principal place Place of issued and paid Principal held by the of the effective Name of entity of business incorporation up capital activities Bank Bank interest CIFH (Note (i)) Hong Kong Hong Kong HKD 7503 Commercial 100% – 100% million banking and other services CNCB Investment Hong Kong Hong Kong HKD 1889 Investment 99.05% 0.71% 99.76% (Note (ii)) million and lending services Lin’an Rural Bank Hangzhou Hangzhou RMB 200 Commercial 51% – 51% (Note (iii)) Zhejiang Zhejiang million banking Province Province CFLL (Note (iv)) Tianjin Tianjin RMB 4000 Financial lease 100% – 100% million operations CITIC Wealth (Note (v)) Shanghai Shanghai RMB 5000 Wealth 100% – 100% million management 244 China CITIC Bank Corporation Limited – F-65 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 25 Investment in subsidiaries (continued) Notes: (i) CIFH is an investment holding company registered and headquartered in Hong Kong. Its business scope through its subsidiaries covers commercial banking and other financial services. The Bank holds 100% shareholding in CIFH. CIFH holds 75% shareholding in CITIC Bank International Limited (“CBI”).(ii) CNCB (Hong Kong) Investment Limited (CNCB Investment) founded in Hong Kong in 1984 formerly China Investment and Finance Limited incorporated and operating in Hong Kong holds a money lending licence issued by the Hong Kong Monetary Authority and also the No.146 and 9 licenses from Hong Kong Securities Regulatory Commission through its wholly-owned subsidiary CNCB (Hong Kong) Capital Limited. The business scope of CNCB Investment includes investment banking capital market investment lending and other related services. The Bank directly holds 99.05% of the equity shares and voting rights in CNCB Investment and CITIC International Financial Holding Limited (CIFH) holds the remaining 0.71% of the equity interests; thus the Bank effectively holds 99.76% of the equity interest in CNCB Investment.(iii) Lin’an Rural Bank was founded in Zhejiang Province of Mainland China in 2011 with a registered capital of RMB200 million. Its principal activities are commercial banking and related businesses. The Bank holds 51% of Lin’an Rural Bank’s equity and voting rights.(iv) The Bank established CFLL in 2015 with a registered capital of RMB4 billion. Its principal business activity is financial leasing. The Bank holds 100% of its equity and voting rights.(v) CITIC Wealth was established in 2020 with a registered capital of RMB5 billion. Its principal business operation is wealth management. The Bank holds 100% of its equity and voting rights. 26 Investment properties 31 December 31 December 20222021 Fair value as at 1 January 547 386 Change in fair value (74) 23 Transfers in – 153 Exchange difference 43 (15) Fair value as at 31 December 516 547 Investment properties of the Group are buildings held by subsidiaries and mainly located in Hong Kong and leased to third parties through operating leases. There are active real estate markets where the investment properties are located and the Group is able to obtain market price and related information of similar properties and therefore makes estimation about the fair value of the investment properties as at 31 December 2022.All investment properties of the Group were revalued at 31 December 2022 by an independent firm of surveyors on an open market value basis. The fair value is in line with the definition of “IFRS 13 – Fair value measurement”. The revaluation surplus has been recognized in the profit or loss for the current year.The investment properties of the Group are categorised in the Level 3 fair value hierarchy. 2022 Annual Report 245 – F-66 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 27 Property plant and equipment Computer Construction in equipment and Buildings progress others Total Cost or deemed cost: As at 1 January 2022 33639 2546 14117 50302 Additions 322 384 2193 2899 Disposals (61) – (1873) (1934) Exchange differences 39 – 75 114 As at 31 December 2022 33939 2930 14512 51381 Accumulated depreciation: As at 1 January 2022 (7306) – (8812) (16118) Depreciation charges (1043) – (1515) (2558) Disposals 36 – 1778 1814 Exchange differences (23) – (66) (89) As at 31 December 2022 (8336) – (8615) (16951) Net carrying value: As at 1 January 2022 26333 2546 5305 34184 As at 31 December 2022 (Note (i)) 25603 2930 5897 34430 Computer Construction in equipment and Buildings progress others Total Cost or deemed cost: As at 1 January 2021 33547 2178 12890 48615 Additions 270 368 2178 2816 Transfer out in current year (154) – – (154) Disposals (9) – (923) (932) Exchange differences (15) – (28) (43) As at 31 December 2021 33639 2546 14117 50302 Accumulated depreciation: As at 1 January 2021 (6318) – (8429) (14747) Depreciation charges (1019) – (1283) (2302) Transfer out in current year 16 – – 16 Disposals 6 – 877 883 Exchange differences 9 – 23 32 As at 31 December 2021 (7306) – (8812) (16118) Net carrying value: As at 1 January 2021 27229 2178 4461 33868 As at 31 December 2021 (Note (i)) 26333 2546 5305 34184 Notes: (i) As at 31 December 2022 the registration transfer process of certain buildings acquired has not been completed and the net book value of such buildings was approximately RMB11058 million (as at 31 December 2021: RMB11396 million). The Group believes the incomplete registration procedures do not affect the rights of the Group as the legal successor to these buildings. 246 China CITIC Bank Corporation Limited – F-67 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 28 Right-of-use assets Land use Vehicles and Buildings rights Equipment others Total Cost or deemed cost: As at 1 January 2022 17145 1221 92 53 18511 Additions 3533 – 2 8 3543 Disposals (1514) – (11) (3) (1528) Exchange differences 72 – – – 72 As at 31 December 2022 19236 1221 83 58 20598 Accumulated depreciation: As at 1 January 2022 (7464) (328) (57) (24) (7873) Depreciation (3229) (30) (19) (11) (3289) Disposals 1409 (1) 8 3 1419 Exchange differences (31) – – – (31) As at 31 December 2022 (9315) (359) (68) (32) (9774) Net carrying value: As at 1 January 2022 9681 893 35 29 10638 As at 31 December 2022 9921 862 15 26 10824 Vehicles and Buildings Land use rights Equipment others Total Cost or deemed cost: As at 1 January 2021 16146 1221 113 53 17533 Additions 2567 – 4 4 2575 Disposals (1426) – (25) (4) (1455) Exchange differences (142) – – – (142) As at 31 December 2021 17145 1221 92 53 18511 Accumulated depreciation: As at 1 January 2021 (5606) (298) (57) (16) (5977) Depreciation (3181) (30) (25) (12) (3248) Disposals 1207 – 25 4 1236 Exchange differences 116 – – – 116 As at 31 December 2021 (7464) (328) (57) (24) (7873) Net carrying value: As at 1 January 2021 10540 923 56 37 11556 As at 31 December 2021 9681 893 35 29 10638 (i) As at 31 December 2022 the balance of the Group’s lease liabilities amounted to RMB10272 million (as at 31 December 2021: RMB9816 million) including RMB5701 million (as at 31 December 2021: RMB5153 million) of lease liabilities that will mature within a year.(ii) As at 31 December 2022 lease payments relating to lease contracts signed but to be executed amounted to RMB68 million (as at 31 December 2021: RMB167 million).(iii) For the year ended 31 December 2022 the lease expense of short-term leases with a lease term of no more than 12 months and leases of assets with low values amounted to RMB167 million (as at 31 December 2021: RMB189 million). 2022 Annual Report 247 – F-68 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 29 Goodwill 31 December 31 December 20222021 As at 1 January 833 860 Exchange difference 70 (27) As at 31 December 903 833 Based on the result of impairment test no impairment losses on goodwill were recognized as at 31 December 2022 (as at 31 December 2021: Nil). 30 Deferred tax assets/(liabilities) 31 December 31 December 20222021 Deferred tax assets 55011 46905 Deferred tax liabilities (3) (8) Net 55008 46897 (a) Analysed by nature and jurisdiction 31 December 2022 31 December 2021 Deductible/ Deductible/ (taxable) Deferred (taxable) Deferred temporary tax assets/ temporary tax assets/ differences (liabilities) differences (liabilities) Deferred tax assets — a llowance for impairment losses 203539 50766 180860 45076 — fair value adjustments 64 16 (7505) (1882) — em ployee retirement benefits and salaries payable 11685 2924 10206 2552 — others 5095 1305 4497 1159 Subtotal 220383 55011 188058 46905 Deferred tax liabilities — fair value adjustments (5) (1) (48) (8) — others (14) (2) – – Subtotal (19) (3) (48) (8) Net 220364 55008 188010 46897 (b) Offsetting of deferred tax assets and deferred tax liabilities As at 31 December 2022 the deferred tax assets/liabilities offset by the Group were RMB641 million (31 December 2021: RMB2260 million). 248 China CITIC Bank Corporation Limited – F-69 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 30 Deferred tax assets/(liabilities) (continued) (c) Movement of deferred tax Employee retirement Allowance for benefits and impairment Fair value accrued staff Total losses adjustments cost Others deferred tax As at 1 January 2022 45076 (1890) 2552 1159 46897 Recognized in profit or loss 5661 (528) 405 117 5655 Recognized in other comprehensive income 8 2407 (33) 33 2415 Exchange differences 21 26 – (6) 41 As at 31 December 2022 50766 15 2924 1303 55008 As at 1 January 2021 39870 (1114) 2579 567 41902 Recognized in profit or loss 5214 214 (27) 601 6002 Recognized in other comprehensive income – (992) – (9) (1001) Exchange differences (8) 2 – – (6) As at 31 December 2021 45076 (1890) 2552 1159 46897 31 Other assets 31 December 31 December Notes 2022 2021 Advanced payments and settlement accounts 11286 24169 Assets with continuing involvement 11114 10878 Fee and commission receivables 9861 7454 Precious metal leasing 5101 3114 Interest receivables (i) 4488 5167 Prepayments for properties and equipment 2125 988 Repossessed assets (ii) 1478 1330 Leasehold improvements 801 767 Prepaid rent 12 7 Others (iii) 9224 5548 Total 55490 59422 Notes: (i) Interest receivable Interest receivable represents interest on financial instruments due and receivable but not yet received as at the balance sheet date and is stated net of corresponding impairment allowances. The impairment allowances on the Group’s interest receivable is RMB5415 million (as at 31 December 2021: RMB3628 million). 2022 Annual Report 249 – F-70 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 31 Other assets (continued) Notes (continued): (ii) Repossessed assets 31 December 31 December Notes 2022 2021 Premises 2722 2611 Others 6 5 Gross balance 2728 2616 Less: Allowance for impairment losses 32 (1250) (1286) Net balance 1478 1330 As at 31 December 2022 the Group intended to dispose all of the repossessed assets and had no plan to transfer the repossessed assets for own use (as at 31 December 2021: None).(iii) Others Others include other receivables other prepayments prepaid legal costs for lawyers etc. 32 Movements of allowance for impairment losses Year ended 31 December 2022 (Reversal)/ As at 1 charge for Write-offs / As at 31 Notes January the year transfer out Others December Notes (i) Allowance for credit impairment losses Deposits with bank and non- bank financial institutions 18 145 (48) – 1 98 Placements with and loans to banks and non-bank financial institutions 19 89 50 – 1 140 Financial assets held under resale agreements 21 47 (47) – – – Loans and advances to customers 22 121471 55786 (57791) 11736 131202 Financial investments 23 –at amortised cost 26624 1542 (1530) 1892 28528 –at fair value through other comprehensive income 2387 269 (28) 89 2717 Other financial assets and accrued interest 5134 5220 (4352) 1347 7349 Off balance sheet credit assets 40 11428 8587 (11112) 54 8957 Total 167325 71359 (74813) 15120 178991 Allowance for impairment losses on other assets Other assets – repossessed assets 31(ii) 1286 45 (119) 38 1250 Total 1286 45 (119) 38 1250 250 China CITIC Bank Corporation Limited – F-71 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 32 Movements of allowance for impairment losses (continued) Year ended 31 December 2021 Charge/ As at 1 (reversal) for Write-offs / As at 31 Notes January the year transfer out Others December Notes (i) Allowance for credit impairment losses Deposits with bank and non- bank financial institutions 18 130 16 – (1) 145 Placements with and loans to banks and non-bank financial institutions 19 97 (7) – (1) 89 Financial assets held under resale agreements 21 56 (9) – – 47 Loans and advances to customers 22 126100 50228 (64161) 9304 121471 Financial investments 23 –at amortised cost 13737 18917 (6971) 941 26624 –at fair value through other comprehensive income 2651 (165) (71) (28) 2387 Other financial assets and accrued interest 4980 3302 (4034) 886 5134 Off balance sheet credit assets 40 6725 4723 – (20) 11428 Total 154476 77005 (75237) 11081 167325 Allowance for impairment losses on other assets Other assets – repossessed assets 31(ii) 1323 43 (92) 12 1286 Total 1323 43 (92) 12 1286 The impairment losses of accrued interest of the financial instruments in this table and its changes are included in“Other financial assets and accrued interest".Note: (i) Others include recovery of loans written off and effect of exchange differences during the year. 2022 Annual Report 251 – F-72 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 33 Deposits from banks and non-bank financial institutions Analysed by types and locations of counterparties 31 December 31 December 20222021 In Mainland China — banks 310409 279849 — non-bank financial institutions 822110 885347 Subtotal 1132519 1165196 Outside Mainland China — banks 7085 4610 — non-bank financial institutions 70 19 Subtotal 7155 4629 Accrued interest 4102 4938 Total 1143776 1174763 34 Placements from banks and non-bank financial institutions Analysed by types and locations of counterparties 31 December 31 December 20222021 In Mainland China — banks 51186 44375 — non-bank financial institutions – 8360 Subtotal 51186 52735 Outside Mainland China — banks 18684 25316 — non-bank financial institutions 709 40 Subtotal 19393 25356 Accrued interest 162 240 Total 70741 78331 252 China CITIC Bank Corporation Limited – F-73 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 35 Financial assets sold under repurchase agreements (a) Analysed by type and location of counterparties 31 December 31 December 20222021 In Mainland China — PBOC 217858 67372 — banks 33779 30243 Subtotal 251637 97615 Outside Mainland China — banks 4427 719 — Non-banks 55 – Subtotal 4482 719 Accrued interest 75 5 Total 256194 98339 (b) Analysed by type of collateral 31 December 31 December 20222021 Debt securities 186765 44143 Discounted bills 69354 54191 Accrued interest 75 5 Total 256194 98339 The Group did not derecognize financial assets used as collateral in connection with financial assets sold under repurchase agreements. As at 31 December 2022 no legal title of the collateral has been transferred to counterparties. The above information of collateral is included in the Note 52. 36 Deposits from customers Analysed by nature: 31 December 31 December 20222021 Demand deposits — corporate customers 1937135 1963640 — personal customers 349013 310054 Subtotal 2286148 2273694 Time and call deposits — corporate customers 1855977 1789956 — personal customers 942803 662255 Subtotal 2798780 2452211 Outward remittance and remittance payables 14420 10679 Accrued interest 58516 53385 Total 5157864 4789969 2022 Annual Report 253 – F-74 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 36 Deposits from customers (continued) Guarantee deposits included in above deposits: 31 December 31 December 20222021 Bank acceptances 348926 247946 Guarantees 17091 14063 Letters of credit 25132 19615 Others 55709 81308 Total 446858 362932 37 Accrued staff costs Year ended 31 December 2022 Additions Payments As at 1 during the during the As at 31 Notes January year year December Salaries and bonuses 18248 28102 (25707) 20643 Social insurance 9 2027 (2021) 15 Welfare expenses 4 1352 (1352) 4 Housing fund 7 1758 (1755) 10 Labor union expenses and employee education expenses 750 888 (650) 988 Housing allowance 54 – – 54 Post-employment benefits — defined contribution plans (a) 19 3579 (3580) 18 Post-employment benefits — defined benefit plans (b) 18 1 (1) 18 Other benefits 144 375 (364) 155 Total (c) 19253 38082 (35430) 21905 Year ended 31 December 2021 Additions Payments As at 31 Notes As at 1 January during the year during the year December Salaries and bonuses 19436 25299 (26487) 18248 Social insurance 48 1813 (1852) 9 Welfare expenses 4 1373 (1373) 4 Housing fund 8 1570 (1571) 7 Labor union expenses and employee education expenses 568 808 (626) 750 Housing allowance 54 – – 54 Post-employment benefits — defined contribution plans (a) 43 3171 (3195) 19 Post-employment benefits — defined benefit plans (b) 18 1 (1) 18 Other benefits 154 368 (378) 144 Total (c) 20333 34403 (35483) 19253 254 China CITIC Bank Corporation Limited – F-75 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 37 Accrued staff costs (continued) Notes: (a) Post-employment benefits – defined contribution plans Post-employment benefits defined contribution plans include contributions to statutory retirement plan. Pursuant to the relevant laws and regulations in the PRC governing labor and social security the Group joins statutory retirement plan for the employees as set out by city and provincial governments.The Group is required to make contributions based on defined ratios of the salaries bonuses and certain allowance of the employees to the statutory retirement plan under the administration of the government.In addition to the above statutory retirement plan the Bank’s qualified employees have joined a defined contribution retirement scheme (the “Scheme”) which was established by the Group and managed by the CITIC Group. For the year ended 31 December 2022 the Bank has made annuity contributions at 7% (31 December 2021: 7%) of its employee’s gross wages. For the year ended 31 December 2022 the Bank made annuity contribution amounting to RMB1544 million (year ended 31 December 2021: RMB1395 million).The Group operates a defined contribution provident fund and a Mandatory Provident Fund scheme for Hong Kong staff. Contributions are charged to profit or loss when the contribution fall due.(b) Post-employment benefits – defined benefit plans The Group offers supplementary retirement benefits for certain of its qualified employees in Mainland China. Retired employees are eligible to join this supplementary retirement plan. The amount that is recognized as at reporting date presents the discounted value of future obligation.The present value of the Group’s supplementary retirement plan obligations on the date of balance sheet is calculated through projected unit credit method and computed by a qualified professional actuary firm Towers Watson Consulting (Shenzhen) Ltd. Beijing Branch.The primary assumptions used by the actuary are as follows 31 December 31 December 20222021 Discount rate 2.75% 3.00% Annual withdrawal rate 5.00% 5.00% Normal retirement age Male: 60 years old Female: 55 years old Annual increase rate of social average wage and salary for current active employees 5.00% 5.00% Mortality rate Determined by the China Life Insurance Mortality Table In 2021 and 2022 the change amount of supplementary retirement benefits scheme liabilities incurred by the actuarial assumptions variations illustrated above was immaterial.Except for the aforementioned contributions the Group has no other material obligation for payment of retirement benefits.(c) The salaries bonuses allowances and subsidies retirement benefits and other social insurance payable to employees are paid in accordance with relevant laws and regulations within time limit stipulated by the Group. 2022 Annual Report 255 – F-76 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 38 Taxes payable 31 December 31 December 20222021 Income tax 4415 5830 VAT and surcharges 4060 4913 Others 12 10 Total 8487 10753 39 Debt securities issued 31 December 31 December Notes 2022 2021 Long-term debt securities issued (a) 116344 61125 Subordinated bonds issued: — by the Bank (b) 89987 109974 — by CBI (c) 3444 3174 Certificates of deposit issued (d) 1035 1211 Certificates of interbank deposit issued (e) 720431 739857 Convertible corporate bonds (f) 39977 39497 Accrued interest 3988 3365 Total 975206 958203 (a) Long-term debt securities issued by the Group as at 31 December: 3131 December December 20222021 Annual Nominal Nominal Bond Type Issue Date Maturity Date Interest Rate Value Value RMB RMB Floating rate bond 14 December 2017 15 December 2022 Three-month – 3504 Libor +1% Fixed rate bond 14 December 2017 15 December 2022 3.125% – 1593 Fixed rate bond 18 March 2020 18 March 2023 2.750% 30000 30000 Fixed rate bond 2 February 2021 2 February 2024 0.875% 1381 1274 Fixed rate bond 2 February 2021 2 February 2026 1.250% 2417 2230 Fixed rate bond 10 June 2021 10 June 2024 3.190% 20000 20000 Fixed rate bond 17 November 17 November 1.750% 3453 3185 20212024 Fixed rate bond 28 April 2022 28 April 2025 2.800% 30000 – Fixed rate bond 5 August 2022 5 August 2025 2.500% 30000 – Fixed rate bond 20 December 2022 17 November 1.750% 1865 – 2024 Total nominal 119116 61786 value Less: Unamortised (24) (24) issuance cost Less: offset (2748) (637) Carrying value 116344 61125 256 China CITIC Bank Corporation Limited – F-77 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 39 Debt securities issued (continued) (b) The carrying value of the Bank’s subordinated bonds issued as at 31 December: 31 December 31 December Notes 2022 2021 Subordinated fixed rate bonds maturing: — in June 2027 (i) – 19989 — in September 2028 (ii) 29993 29995 — in October 2028 (iii) 20000 19997 — in August 2030 (iv) 39994 39993 Total 89987 109974 Notes: (i) The Bank issued fixed-rate subordinated bonds on 21 June 2012 with a coupon rate of 5.15% per annum. The Bank has redeemed the bonds on 21 June 2022.(ii) The Bank issued fixed-rate subordinated bonds on 13 September 2018 with a coupon rate of 4.96% per annum. The Bank has the option to redeem the bonds on 13 September 2023. If the Bank does not exercise this option the coupon rate will remain 4.96% per annum for the next five years.(iii) The Bank issued fixed-rate subordinated bonds on 22 October 2018 with a coupon rate of 4.80% per annum. The Bank has the option to redeem the bonds on 22 October 2023. If the Bank does not exercise this option the coupon rate will remain 4.80% per annum for the next five years.(iv) The Bank issued fixed-rate subordinated bonds on 14 August 2020 with a coupon rate of 3.87% per annum. The Bank has the option to redeem the bonds on 14 August 2025. If the Bank does not exercise this option the coupon rate will remain 3.87% per annum for the next five years.(c) The carrying value of CBI’s subordinated bonds issued as at 31 December: 31 December 31 December Notes 2022 2021 Subordinated fixed rate notes maturing: — in February 2029 (i) 3444 3174 Notes: (i) CBI issued USD500 million subordinated notes at a coupon rate of 4.625% per annum on 28 February 2019. CBI has an option to redeem these notes on each coupon payment date on and after 28 February 2024. If CBI does not exercise the redemption option the coupon rate per annum will be the 5-year US treasury bond rate on 28 February 2024 plus 2.25%. The notes are listed on the Hong Kong Stock Exchange.(d) These certificates of deposit were issued by CBI with interest rate ranging from 2.76% to 5.37% per annum.(e) As at 31 December 2022 the Bank had issued certain certificates of interbank deposits totaling RMB720431 million (as at 31 December 2021: RMB739857 million) with yield ranging from 1.65% to 2.68% (as at 31 December 2021: 2.60% to 3.18%) per annum. The original expiry terms range from one month to one year. 2022 Annual Report 257 – F-78 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 39 Debt securities issued (continued) (f) As approved by the relevant regulatory authorities in China the Bank made a public offering of RMB40 billion A-share convertible corporate bonds on 4 March 2019. The convertible corporate bonds have a term of six years from 4 March 2019 to 3 March 2025 at coupon rates of 0.3% for the first year0.8% for the second year1.5% for the third year2.3% for the fourth year3.2% for the fifth year and 4.0% for the sixth year. The conversion of these convertible corporate bonds begins on the first trading day (11 September 2019) after six months upon the completion date of the offering (8 March 2019) until the maturity date (3 March 2025).In accordance with formulas set out in the prospectus of the convertible corporate bonds the initial conversion price of the convertible corporate bonds is RMB7.45 per share and the price of the convertible corporate bonds will be adjusted to reflect the dilutive impact of cash dividends and increase in paid-in capital under specified circumstances. On 28 July 2022 the conversion price of the convertible corporate bonds has been adjusted to RMB6.43 per share. During the conversion period (from 4 March 2019 to 3 March 2025) if the closing price of the Bank’s A-shares is lower than 80% of the current conversion price for at least 15 trading days in any 30 consecutive trading days the Board of Directors of the Bank has the right to propose to lower the conversion price and submit the proposal to the shareholders’ meeting for deliberation.These convertible corporate bonds are subject to conditional redemptions. During their conversion period if the closing prices of the Bank’s A-shares are no less than 130% (inclusive) of the current conversion price for at least 15 trading days in 30 consecutive trading days the Bank has the right to redeem all or part of the outstanding convertible corporate bonds at their par value plus the current accrued interest upon approval of the relevant regulatory authorities (if required). In addition when the total amount of the outstanding convertible corporate bonds is less than RMB30 million the Bank has the right to redeem all outstanding convertible corporate bonds at their par value plus the current accrued interest.As at 31 December 2022 convertible corporate bonds of RMB335000 was converted to 47084 A-shares.Liability Equity Total Issued nominal value of convertible corporate bonds 36859 3141 40000 Direct issuance expenses (74) (6) (80) Balance at the issuance date 36785 3135 39920 Amortisation 3192 – 3192 Amount of bonds converted – – – Ending balance 39977 3135 43112 40 Provisions 31 December 31 December 20222021 Allowance for impairment losses on off-balance sheet items 8957 11428 Litigation provisions 779 499 Total 9736 11927 The movement of off-balance sheet allowance for impairment losses is included in the Note 32. 258 China CITIC Bank Corporation Limited – F-79 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 41 Other liabilities 31 December 31 December 20222021 Continuing involvement liability 11114 10878 Settlement and clearing accounts 13134 5342 Advances and deferred expenses 4391 5087 Payment and collection accounts 4500 4349 Leasing deposits 521 880 Accrued expenses 841 688 Others 7795 8403 Total 42296 35627 42 Share capital 31 December 2022 and 31 December 2021 Number of shares (millions) Nominal Value Ordinary shares Registered issued and fully paid: A-Share 34053 34053 H-Share 14882 14882 Total 48935 48935 31 December 31 December Note 2022 2021 As at 1 January 48935 48935 Convertible bond settlement (i) – – As at 31 December 48935 48935 Note: (i) In 2022 convertible corporate bonds of RMB8000 was converted to 1188 A-shares (In 2021 convertible corporate bonds of RMB27000 was converted to 3900 A-shares). 43 Other equity instruments 31 December 31 December 20222021 Preference shares (Note (i)) 34955 34955 Perpetual bonds (Note (ii)) 79986 79986 Equity of convertible corporate bonds (Note 39 (f)) 3135 3135 Total 118076 118076 2022 Annual Report 259 – F-80 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 43 Other equity instruments (continued) (i) Preference shares Issued Issued Financial number of nominal instruments Issued price shares (RMB value (RMB Maturity in issue Dividend rate (RMB) millions) millions) Date Conversions Preference 3.80% for the first five 100 350 35000 No maturity No shares years will be re-priced date conversion every five years thereafter during the year 35000 million preference shares of RMB100 each were issued in October 2016 with a dividend rate of 3.80% per annum for the first five years from issuance to no more than 200 qualified investors pursuant to the approval by the ordinary shareholders’ meeting and relevant regulatory authorities.The carrying amount of preference shares net of direct issuance expenses was RMB34955 million. All the proceeds received is used to replenish Other Tier-One capital in order to increase the Bank’s Tier-One capital adequacy ratio (Note 56). Dividends are non-cumulative and where payable are paid annually. Dividend rate will be re-priced every five years thereafter with reference to the five-year PRC treasury bonds yield plus a fixed premium of 1.30%.As authorised by the ordinary shareholders’ Annual General Meeting the Board of Directors has the sole discretion to declare and distribute dividends on the preference shares. The Bank shall not distribute any dividends to its ordinary shareholders before it declares such dividends to preference shareholders for the relevant period. The distribution of preference shares dividend is at the Bank’s discretion and is non-cumulative. Preference shareholders are not entitled to participate in the distribution of retained profits except for the dividends stated above.The Bank has redemption option when specified conditions as stipulated in the offering documents of preference shares are met subject to regulatory approval whereas preference shareholders have no right to require the Bank to redeem the preference shares.Upon occurrence of the triggering events as stipulated in paragraph 2 (3) of the Guidance of the China Banking Regulatory Commission on Commercial Banks’ Innovation on Capital Instruments (CBRC No.56 [2012]) and subject to regulatory approval preference shares shall be mandatorily converted into ordinary A shares of the Bank at the conversion price of RMB7.07 per share partially or entirely. The conversion price of the preference shares will be adjusted where certain events occur including bonus issues rights issue capitalisation of reserves and new issuances of ordinary shares below market price subject to terms and formulae provided for in the offering documents to maintain the relative interests between preference shareholders and ordinary shareholders.These preference shares are classified as equity instruments and presented as equity in the consolidated statement of financial position; and are qualified as Additional Tier-One Capital Instruments in accordance with the CBIRC requirements. 260 China CITIC Bank Corporation Limited – F-81 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 43 Other equity instruments (continued) (ii) Non fixed-term bonds The Bank issued RMB40 billion write-down non fixed-term bonds (the “Bonds”) in the domestic interbank bond market on 11 December 2019. On 26 April 2021 the Bank issued RMB40 billion write-down non fixed-term bonds (the “Bonds”) in the domestic interbank bond market. The denomination of these Bonds is RMB100 each and the annual coupon rate of the Bonds for the first 5 years is 4.20% resetting every 5 years.The duration of these Bonds is the same as the continuing operation of the Bank. Subject to the satisfaction of the redemption conditions and having obtained the prior approval of the CBIRC the Bank may redeem the Bonds in whole or in part on each distribution payment date 5 years after the issuance date of the Bonds. Upon the occurrence of a trigger event for write-downs with the consent of the CBIRC and without the consent of the bondholders the Bank has the right to write down all or part of the above Bonds issued and existing at that time in accordance with the total par value. The claims of the holders of the Bonds will be subordinated to the claims of depositors general creditors and subordinated creditors; and shall rank in priority to the claims of shareholders and will rank pari passu with the claims under any other additional tier 1 capital instruments of the Bank that rank pari passu with the Bonds.The Bonds are paid by non-cumulative interest. The Bank shall have the right to cancel distributions on the Bonds in whole or in part and such cancellation shall not constitute a default. The Bank may at its discretion utilize the proceeds from the cancelled distribution to meet other obligations of maturing debts. But the Bank shall not distribute profits to ordinary shareholders until the resumption of full interest payment.These perpetual bonds are classified as equity instruments and presented as equity in the consolidated statement of financial position; and are qualified as Additional Tier-One Capital Instruments in accordance with the CBIRC requirements.Interests attributable to equity instruments’ holder: 31 December 31 December 20222021 20222021 Total equity attributable to equity holders of the parent company 665418 626303 Equity attributable to ordinary equity holders of the parent company 547342 508227 Equity attributable to other equity instruments holders of the parent company 118076 118076 — Profit for the period/distribution for the period 4788 3010 Total equity attributable to non-controlling interests 20412 16323 Equity attributable to non-controlling interests of ordinary shares 9220 9121 Equity attributable to non-controlling interests of other equity instruments 11192 7202 For the year ended 31 December 2022 the Bank paid dividend of RMB1428 million to the preference shareholders (for the year ended 31 December 2021: RMB1330 million) and paid interest of RMB3360 million to the holders of non fixed-term bonds (for the year ended 31 December 2021: RMB1680 million). 2022 Annual Report 261 – F-82 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 44 Capital reserves 31 December 31 December 20222021 Share premium 58896 58896 Other reserves 320 320 Total 59216 59216 45 Other comprehensive income Other comprehensive income comprises items that will not be reclassified subsequently to profit or loss such as net changes on the measurement of defined benefit plans (Note 37) and fair value changes on financial investments designated at fair value through other comprehensive income and items that may be reclassified subsequently to profit or loss such as fair value changes on financial assets at fair value through other comprehensive income credit impairment allowance on financial assets at fair value through other comprehensive income and exchange differences on translation. 46 Surplus reserve Year ended Year ended 31 December 31 December 20222021 As at 1 January 48937 43786 Appropriations 5790 5151 As at 31 December 54727 48937 Under the relevant PRC Laws the Bank and the Bank’s subsidiaries in Mainland China are required to appropriate 10% of its profit for the year as determined under regulations issued by the regulatory bodies of the PRC to the statutory surplus reserve until the reserve balance reaches 50% of the registered capital. After making the appropriation to the statutory surplus reserve the Bank may also appropriate its profit for the year to the discretionary surplus reserve upon approval by ordinary shareholders at the Annual General Meeting. The Bank makes its appropriation on an annual basis.Subject to the approval of ordinary shareholders statutory surplus reserves may be used for replenishing accumulated losses if any and may be converted into share capital provided that the balance of statutory surplus reserve after such capitalisation is not less than 25% of the registered capital before the process. 47 General reserve Year ended Year ended 31 December 31 December 20222021 As at 1 January 95490 90819 Appropriations 5090 4671 As at 31 December 100580 95490 Pursuant to relevant Ministry of Finance (“MOF”) notices the Bank and the Group’s banking subsidiaries in Mainland China are required to set aside a general reserve to cover potential losses against their assets. The Bank and the Group make its appropriation on an annual basis.CITIC Wealth shall draw operational risk reserves on a monthly basis according to the Administrative Measures for Financial Subsidiaries of Commercial Banks. CNCBI Macau shall draw down its regulatory reserves on a monthly basis according to the requirements of the Monetary Authority of Macau. During the year ended 31 December 2022 a total of RMB2560 million of corresponding risk provisions was drawn. 262 China CITIC Bank Corporation Limited – F-83 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 48 Profit appropriations and retained earnings (a) Profit appropriations and distributions other than dividends declared during the year Year ended Year ended 31 December 31 December Notes 2022 2021 Appropriations to — surplus reserve 46 5790 5151 — general reserve 47 5090 4671 As at 31 December 10880 9822 The Bank appropriated RMB5790 million to statutory surplus reserve fund for the year of 2022 and appropriated RMB2476 million to general reserve. The Group’s subsidiary Lin’an rural bank made appropriations to general reserve in accordance with relevant regulatory requirements.(b) In accordance with the resolution approved in the Annual General Meeting of the Bank on 23 June 2022 a total amount of approximately RMB14778 million (RMB3.02 per 10 shares) were distributed in the form of cash dividend to the ordinary shareholders on 28 July 2022.(c) On 23 March 2023 the Board of Directors proposed a cash dividend of RMB3.29 per 10 shares in respect of the year 2022. Subject to the approval of the ordinary shareholders at the Annual General Meeting approximately RMB16100 million will be payable to those on the register of ordinary shareholders as at the relevant record date. This proposal is a non-adjusting event after the reporting period and has not been recognized as liability as at 31 December 2022.(d) On 11 December 2019 the Bank issued RMB40 billion write-down undated capital bonds in the domestic interbank bond market. The Bank paid RMB1680 million in interest at a coupon rate of 4.20% to investors of perpetual bonds on 12 December 2022; On 26 April 2021 the Bank issued RMB40 billion write-down undated capital bonds in the domestic interbank bond market. The Bank paid RMB1680 million in interest at a coupon rate of 4.20% to investors of perpetual bonds on 26 April 2022.(e) In accordance with the resolution approved in the Board of Directors Meeting of the Bank on 25 August 2022 a total amount of approximately RMB1428 million (calculated by the Bank using the agreed dividend rate of 4.08% with RMB4.08 per share) were distributed in the form of cash dividend to the preference shareholders on 26 October 2022.(f) As at 31 December 2022 the retained earnings included the statutory surplus reserves of certain subsidiaries of RMB846 million (as at 31 December 2021: RMB563 million) of which RMB283 million (as at 31 December 2021: RMB212 million) was the appropriation made by the subsidiaries for the year ended 31 December 2022. Such statutory surplus reserves in the retained earnings cannot be distributed. 2022 Annual Report 263 – F-84 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 49 Non-controlling interests Non-controlling interests included ordinary shareholders held by non-controlling interest in subsidiaries and other equity instrument holders’ interests. As at 31 December 2022 other equity instrument holders’ interest amounted to RMB11192 million (31 December 2021: RMB7202 million) representing other equity instruments issued by CBI on 6 November 201829 July 2021 and 22 April 2022 an entity ultimately controlled by the Group. Such instruments are perpetual non-cumulative subordinated additional Tier- One capital securities (the “Capital Securities”).Financial instruments in Payment issue Issue Date Nominal Value First Call Date Coupon Rate Frequency Capital 6 November USD500 6 November 7.10% per annum for the first Semi-annually Securities 2018 millions 2023 five years after issuance and re-priced every five years to a rate equivalent to the five-year US Treasury rate plus 4.151% per annum Capital 29 July 2021 USD600 29 July 2026 3.25% per annum for the first Semi-annually Securities millions five years after issuance and re-priced every five years to a rate equivalent to the five-year US Treasury rate plus2.53% per annum Capital 22 April 2022 USD600 22 April 2027 4.80% per annum for the first Semi-annually Securities millions five years after issuance and re-priced every five years to a rate equivalent to the five-year US Treasury rate plus2.104% per annum CBI may at its sole discretion elect to cancel any payment of coupon in whole or in part or redeem Capital Securities in whole on the first call date and any subsequent coupon distribution date where the holders of these Capital Securities have no right to require CBI to redeem. These Capital Securities listed above are classified as other equity instruments.A distribution payment of RMB463 million was paid to the holders of the Capital Securities mentioned above during the year ended 31 December 2022 (the year ended 31 December 2021: RMB367 million). 264 China CITIC Bank Corporation Limited – F-85 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 50 Notes to consolidated statement of cash flows Cash and cash equivalents 31 December 31 December 20222021 Cash 5532 5694 Cash equivalents — S urplus deposit reserve funds 104315 65571 — D eposits with banks and non-bank financial institutions due within three months when acquired 36024 58293 — P lacements with and loans to banks and non-bank financial institutions due within three months when acquired 36219 48098 — Investment securities due within three months when acquired 125781 75162 Subtotal 302339 247124 Total 307871 252818 51 Commitments and contingent liabilities (a) Credit commitments The Group’s credit commitments take the form of loan commitments credit card commitments financial guarantees letters of credit and bank acceptances.Loan commitments and credit card commitments represent the undrawn amount of approved loans with signed contracts and credit card limits. Financial guarantees and letters of credit represent guarantees provided by the Group to guarantee the performance of customers to third parties. Bank acceptances comprise undertakings by the Group to pay bills of exchange drawn on customers. The Group expects the majority of acceptances to be settled simultaneously with the reimbursement from the customers.The contractual amounts of credit commitments by categories are set out below. The amounts disclosed in respect of loan commitments and credit card commitments assume that amounts are fully drawn down. The amounts of guarantees letters of credit and acceptances represent the maximum potential loss that would be recognized at the reporting date if counterparties failed to perform as contracted. 31 December 31 December 20222021 Contractual amount Loan commitments — with an original maturity within one year 16319 13725 — with an original maturity of one year or above 41642 39748 Subtotal 57961 53473 Bank acceptances 795833 669736 Credit card commitments 704268 708741 Letters of guarantee issued 186617 128866 Letters of credit issued 270837 214958 Total 2015516 1775774 2022 Annual Report 265 – F-86 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 51 Commitments and contingent liabilities (continued) (b) Credit commitments analysed by credit risk weighted amount 31 December 31 December 20222021 Credit risk weighted amount of credit commitments 541153 471734 The credit risk weighted amount refers to the amount as computed in accordance with the rules set out by the CBIRC and depends on the status of counterparties and the maturity characteristics. The risk weighting used range from 0% to 150%.(c) Capital commitments (i) The Group had the following authorised capital commitments in respect of property plant and equipment at the reporting date: 31 December 31 December 20222021 For the purchase of property and equipment Contracted for 2011 1541 (d) Outstanding contingencies including litigation and disputes The Group has assessed and has made provisions for any probable outflow of economic benefits in relation to commitments and contingent liabilities at the reporting date in accordance with its accounting policies including litigation and disputes.As at 31 December 2022 the Group was involved in certain potential and pending litigation as defendant with gross claims of RMB577 million (as at 31 December 2021: RMB1026 million). Such contingencies including litigation and disputes are not expected to have material impact on the financial position and operations of the Bank.(e) Bonds redemption obligations As an underwriting agent of PRC treasury bonds the Group has the responsibility to buy back those bonds sold by it should the holders decide to early redeem the bonds held. The redemption price for the bonds at any time before their maturity dates is based on the nominal value plus any interest unpaid and accrued up to the redemption date. Accrued interest payables to the bond holders are calculated in accordance with relevant rules of the MOF and the PBOC. The redemption price may be different from the fair value of similar instruments traded at the redemption date.The redemption obligations below represent the nominal value of treasury bonds underwritten and sold by the Group but not yet matured at the reporting date: 31 December 31 December 20222021 Redemption commitment for PRC treasury bonds 2904 3249 266 China CITIC Bank Corporation Limited – F-87 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 51 Commitments and contingent liabilities (continued) (e) Bonds redemption obligations (continued) The original maturities of these bonds vary from one to five years. Management of the Group expects the amount of redemption before maturity dates of these bonds will not be material. The MOF will not provide funding for the early redemption of these bonds on a back-to-back basis but will settle the principal and interest upon maturity.(f) Underwriting obligations As at 31 December 2022 the Group did not have unfulfilled commitment in respect of securities underwriting business (as at 31December 2021: Nil). 52 Collateral (a) Assets pledged The carrying amount of financial assets pledged as collateral in the Group’s ordinary course of businesses including repurchase agreements and borrowings from central banks are disclosed as below: 31 December 31 December 20222021 Debt securities 368653 341978 Discounted bills 69593 54401 Others 269 178 Total 438515 396557 As at 31 December 2022 and 31 December 2021 the Group’s liabilities related to the above collateral were due within 12 months from the effective dates of these agreements and title of these collateral was not transferred to counterparties.In addition as at 31 December 2022 the Group pledged deposits with banks and other financial institutions with carrying amount totalling RMB542 million (as at 31 December 2021: RMB527 million) as collateral for derivative transactions and guarantee funds to exchanges. Title of these pledged assets was not transferred to counterparties.(b) Collateral accepted The Group received debt securities as collateral for financial assets held under resale agreements as set out in Note 21. Under the terms of these agreements the Group could not resell or re-pledge certain parts of these collateral unless in the event of default by the counterparties. As at 31 December 2022 the Group held no collateral that can be resold or re-pledged by the Group (as at 31 December 2021: Nil). During the year ended 31 December 2022 the Group did not resell or re-pledge any of these collateral (year ended 31 December 2021: Nil). 2022 Annual Report 267 – F-88 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 53 Transactions on behalf of customers (a) Entrusted lending business The Group provides entrusted lending business services to corporations and individuals as well as entrusted provident housing fund mortgage business services. All entrusted loans are made under the instruction or at the direction of these corporations individuals or provident housing fund centre and are funded by entrusted funds from them.For entrusted assets and liabilities and entrusted provident housing fund mortgage business the Group does not expose to credit risk in relation to these transactions but acts as an agent to hold and manage these assets and liabilities at the instruction of the entrusting parties and receives fee income for the services provided.Entrusted assets are not assets of the Group and are not recognized on the consolidated statement of financial position. Income received and receivable for providing these services is included in the consolidated statement of profit or loss as fee income.At the reporting date the entrusted assets and liabilities were as follows: 31 December 31 December 20222021 Entrusted loans 305416 306515 Entrusted funds 305417 306516 (b) Wealth management services As at 31 December 2022 the amount of total assets invested by these non-principal guaranteed wealth management products issued by the Group was disclosed in Note 59 (b).The funds raised by non-principal guaranteed wealth management products from investors are invested in various investments including debt securities and money market instruments credit assets and other debt instruments equity instruments etc. Credit risk liquidity risk and interest rate risk associated with these products are borne by the customers. The Group only earns commission which represents the charges on customers in relation to the provision of custodian sale and management services. Income is recognized in the consolidated statement of profit or loss as commission income. The Group has entered into placements transactions at market interest rates with the wealth management products vehicles (Note 59 (b)).As at 31 December 2022 the total investment of non-principal guaranteed wealth management products managed by the Group that was not included in the Group’s consolidated financial statements was disclosed in Note 59 (b). 268 China CITIC Bank Corporation Limited – F-89 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 54 Segment reporting Measurement of segment assets and liabilities and segment income and expenses are based on the Group’s accounting policies.Internal charges and transfer pricing of transactions between segments are determined for management purpose and have been reflected in the performance of each segment. Net interest income and expenses arising from internal charges and transfer pricing adjustments are referred to as “Internal net interest income/expenses”. Interest income and expenses earned from third parties are referred to as “External net interest income/expenses”.Segment income expense assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Segment assets and liabilities do not include deferred tax assets and liabilities. Segment income expenses assets and liabilities are determined before intra-group balances and intra-group transactions are eliminated as part of the consolidation process. Segment capital expenditure is the total costs incurred during the year to acquire assets (including both tangible assets and intangible assets) whose estimated useful lives are over one year.(a) Business segments The Group has the following main business segments for management purpose: Corporate banking This segment represents the provision of a range of financial products and services to corporations government agencies and non-financial institutions as well as conducts investment banking businesses and international businesses. The products and services include corporate loans deposit taking activities agency services remittance and settlement services and guarantee services.Personal banking This segment represents the provision of a range of financial products and services to individual customers.The products and services comprise loans deposit services securities agency services remittance and settlement services and guarantee services.Treasury business This segment conducts capital markets operations inter-bank operations which specifically includes inter- bank money market transactions repurchase transactions and investments and trading in debt instruments.Furthermore treasury business segment also carries out derivatives and forex trading both for the Group and for customers. 2022 Annual Report 269 – F-90 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 54 Segment reporting (continued) (a) Business segments (continued) Others and unallocated Others comprise components of the Group that are not attributable to any of the above segments along with certain assets liabilities income or expenses of the Head Office that could not be allocated on a reasonable basis. This segment also manages the Group’s liquidity position.Year ended 31 December 2022 Corporate Personal Treasury Others and Banking Banking Operations Unallocated Total External net interest income/(expense) 41133 102227 37443 (30156) 150647 Internal net interest income/(expense) 39377 (41619) (29454) 31696 – Net interest income 80510 60608 7989 1540 150647 Net fee and commission income 10813 22787 3120 372 37092 Other net income (Note (i)) 3113 1282 19203 (228) 23370 Operating income 94436 84677 30312 1684 211109 Operating expenses — d epreciation and amortisation (2091) (1376) (2124) (1729) (7320) — others (24688) (30486) (3543) (801) (59518) Credit impairment losses (34550) (35435) (1323) (51) (71359) Impairment (losses)/gains on other assets (79) – – 34 (45) Revaluation gains on investment properties – – – (74) (74) Share of profit of associates and joint ventures – – 14 609 623 Profit before tax 33028 17380 23336 (328) 73416 Income tax (10466) Profit for the year 62950 Capital expenditures 1544 995 1645 1137 5321 270 China CITIC Bank Corporation Limited – F-91 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 54 Segment reporting (continued) (a) Business segments (continued) Others and unallocated (continued) Year ended 31 December 2022 Corporate Personal Treasury Others and Banking Banking Operations Unallocated Total Segment assets 2933628 2207675 2713020 631868 8486191 Interest in associates and joint ventures – – 135 6206 6341 Deferred tax assets 55011 Total asset 8547543 Segment liabilities 3881053 1357988 1065610 1557059 7861710 Deferred tax liabilities 3 Total liabilities 7861713 Off-balance sheet credit commitments 1311248 704268 – – 2015516 Year ended 31 December 2021 Corporate Personal Treasury Others and Banking Banking Operations Unallocated Total External net interest income/(expense) 45356 104787 33535 (35782) 147896 Internal net interest income/(expense) 35072 (45504) (24824) 35256 – Net interest income 80428 59283 8711 (526) 147896 Net fee and commission income 11717 22789 1513 (149) 35870 Other net income (Note (i)) 1911 495 16288 2094 20788 Operating income 94056 82567 26512 1419 204554 Operating expenses — d epreciation and amortisation (2059) (1671) (1816) (1159) (6705) — others (22901) (28136) (2480) (2002) (55519) Credit impairment losses (44026) (30056) (2786) (137) (77005) Impairment (losses)/gains on other assets (55) – – 12 (43) Revaluation gains on investment properties – – – 23 23 Share of profit of associates and joint ventures – – 12 200 212 Profit before tax 25015 22704 19442 (1644) 65517 Income tax (9140) Profit for the year 56377 Capital expenditures 1261 1064 1087 578 3990 2022 Annual Report 271 – F-92 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 54 Segment reporting (continued) (a) Business segments (continued) Others and unallocated (continued) Year ended 31 December 2021 Corporate Personal Treasury Others and Banking Banking Operations Unallocated Total Segment assets 2725565 2124792 2357324 782545 7990226 Interest in associates and joint ventures – – 121 5632 5753 Deferred tax assets 46905 Total asset 8042884 Segment liabilities 3847443 1025781 1032526 1494500 7400250 Deferred tax liabilities 8 Total liabilities 7400258 Off-balance sheet credit commitments 1067033 708741 – – 1775774 Note: (i) Other net income consists of net trading gain net gain from investment securities net hedging gain and other operating income.(b) Geographical segments The Group operates principally in Mainland China with branches located in 31 provinces autonomous regions and municipalities. The Bank’s principal subsidiaries CNCB Investment and CIFH are registered and operating in Hong Kong. The other subsidiaries Lin’an Rural Bank CITIC Wealth and CFLL are registered and operating in Mainland China.In presenting information by geographical segments operating income is allocated based on the location of the branches that generated the revenue. Segment assets and capital expenditure are allocated based on the geographical location of the underlying assets.Geographical segments as defined for management reporting purposes are as follows: – “Yangtze River Delta” refers to the following areas where Tier-One branches of the Group are located: Shanghai Nanjing Suzhou Hangzhou and Ningbo as well as Lin’an Rural Bank and CITIC Wealth; – “Pearl River Delta and West Strait” refers to the following areas where Tier-One branches of the Group are located: Guangzhou Shenzhen Dongguan Fuzhou Xiamen and Haikou; – “Bohai Rim” refers to the following areas where Tier-One branches of the Group are located: Beijing Tianjin Dalian Qingdao Shijiazhuang Jinan and CFLL; – “Central” region refers to the following areas where Tier-One branches of the Group are located: Hefei Zhengzhou Wuhan Changsha Taiyuan and Nanchang; 272 China CITIC Bank Corporation Limited – F-93 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 54 Segment reporting (continued) (b) Geographical segments (continued) – “Western” region refers to the following areas where Tier-One branches of the Group are located: Chengdu Chongqing Xi’an Kunming Nanning Hohhot Urumqi Guiyang Lanzhou Xining Yinchuan and Lhasa; – “North-eastern” region refers to the following areas where Tier-One branches of the Group is located: Shenyang Changchun and Harbin; – “Head Office” refers to the headquarters of the Bank and the Credit Card Center; and – “Overseas” includes all the operations of London branch CNCB Investment CIFH and its subsidiaries.Year ended 31 December 2022 Pearl River Yangtze River Delta and Delta West Strait Bohai Rim Central Western Northeastern Head Office Overseas Elimination Total External net interest income 34446 19339 (78) 22603 19931 2167 45993 6246 – 150647 Internal net interest income/(expense) (4641) (4477) 20783 (5504) (7672) (245) 1714 42 – – Net interest income 29805 14862 20705 17099 12259 1922 47707 6288 – 150647 Net fee and commission income 5812 1737 3298 1640 1119 178 22028 1280 – 37092 Other net income (Note (i)) 1858 577 879 475 239 51 18603 688 – 23370 Operating income 37475 17176 24882 19214 13617 2151 88338 8256 – 211109 Operating expense — d epreciation and amortisation (947) (786) (899) (654) (733) (202) (2486) (613) – (7320) — others (10190) (6365) (8089) (5614) (5650) (1128) (19184) (3298) – (59518) Credit impairment losses (10905) (4966) (5942) (3987) (4140) (495) (39214) (1710) – (71359) Impairment (losses)/gains on other assets – – 1 (12) (68) – – 34 – (45) Revaluation gains on investment properties – – – – – – – (74) – (74) Share of profit/(loss) of associates and joint ventures – – – – – – 611 12 – 623 Profit before tax 15433 5059 9953 8947 3026 326 28065 2607 – 73416 Income tax (10466) Profit for the year 62950 Capital expenditures 570 246 152 225 219 43 3626 240 – 5321 2022 Annual Report 273 – F-94 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 54 Segment reporting (continued) (b) Geographical segments (continued) 31 December 2022 Pearl River Yangtze River Delta and Delta West Strait Bohai Rim Central Western Northeastern Head Office Overseas Elimination Total Segment assets 1883859 989734 1853384 830699 671733 120001 3386176 452313 (1701708) 8486191 Interest in associates and joint ventures – – – – – – 5811 530 – 6341 Deferred tax assets 55011 Total assets 8547543 Segment liabilities 1650156 777003 1440598 759105 610456 111866 3827767 392380 (1707621) 7861710 Deferred tax liabilities 3 Total liabilities 7861713 Off-balance sheet credit commitments 357706 252497 223088 270915 163125 19830 694944 33411 – 2015516 Year ended 31 December 2021 Pearl River Yangtze River Delta and Delta West Strait Bohai Rim Central Western Northeastern Head Office Overseas Elimination Total External net interest income 26454 16292 (2712) 20612 19019 2673 60293 5265 – 147896 Internal net interest income/(expense) 3442 549 23944 (3743) (6040) (474) (17500) (178) – – Net interest income 29896 16841 21232 16869 12979 2199 42793 5087 – 147896 Net fee and commission income 3921 2274 4005 1750 1319 251 20755 1595 – 35870 Other net income (Note (i)) 1176 387 556 (920) 802 55 17142 1590 – 20788 Operating income 34993 19502 25793 17699 15100 2505 80690 8272 – 204554 Operating expense — d epreciation and amortisation (997) (747) (884) (636) (740) (205) (1927) (569) – (6705) — others (10045) (5995) (8136) (5722) (5164) (1218) (16298) (2941) – (55519) Credit impairment losses (15256) (9752) (7444) (7090) (820) (1124) (33782) (1737) – (77005) Impairment (losses)/gains on other assets (44) – (4) (3) (4) – – 12 – (43) Revaluation gains on investment properties – – – – – – – 23 – 23 Share of profit/(loss) of associates and joint ventures – – – – – – 307 (95) – 212 Profit before tax 8651 3008 9325 4248 8372 (42) 28990 2965 – 65517 Income tax (9140) Profit for the year 56377 Capital expenditure 263 171 186 267 261 50 2571 221 – 3990 274 China CITIC Bank Corporation Limited – F-95 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 54 Segment reporting (continued) (b) Geographical segments (continued) 31 December 2021 Pearl River Yangtze River Delta and Delta West Strait Bohai Rim Central Western Northeastern Head Office Overseas Elimination Total Segment assets 1786736 936397 1827646 773844 645367 117419 3306611 379810 (1783604) 7990226 Interest in associates and joint ventures – – – – – – 5220 533 – 5753 Deferred tax assets 46905 Total assets 8042884 Segment liabilities 1608600 841308 1659295 720486 574805 110552 3322858 318701 (1756355) 7400250 Deferred tax liabilities 8 Total liabilities 7400258 Off-balance sheet credit commitments 305914 194418 177211 232769 113579 21679 700673 29531 – 1775774 Note: (i) Other net income consists of net trading gain net gain from investment securities net hedging gain and other operating income. 55 Financial risk management This section presents information about the Group’s exposure to and its management and control of risks in particular the primary risks associated with its use of financial instruments: – Credit risk Credit risk represents the potential loss that may arise from the failure of a customer or counterparty to meet its contractual obligations or commitments to the Group.– Market risk Market risk arises from unfavorable changes in market prices (interest rate exchange rate stock price or commodity price) that lead to a loss of on-balance sheet or off- balance sheet business in the Group.– Liquidity risk Liquidity risk arises when the Group in meeting the demand of liabilities due and other payment obligations as well as the needs of business expansion is unable to sufficiently timely or cost-effectively acquire funds.– Operational risk Operational risk arises from inappropriate or problematic internal procedures personnel IT systems or external events such risk includes legal risk but excluding strategic risk and reputational risk.The Group has established policies and procedures to identify and analyse these risks to set appropriate risk limits and controls and to constantly monitor the risks and limits by means of reliable and up-to-date management information systems. The Group regularly modifies and enhances its risk management policies and systems to reflect changes in markets products and best practice risk management processes. Internal auditors also perform regular audits to ensure compliance with relevant policies and procedures. 2022 Annual Report 275 – F-96 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (a) Credit risk Credit risk management Credit risk refers to the risk of loss caused by default of debtor or counterparty. Credit risk also occurs when the Group makes unauthorized or inappropriate loans and advances to customers financial commitments or investments. The credit risk exposures of the Group mainly arise from the Group’s loans and advances to customers bonds interbank business receivables lease receivables other debt investments and other on-balance sheet assets and also off-balance sheet items such as credit commitments.The Group has standardized management on the entire credit business process including loan application and its investigation approval and granting of loan and monitoring of non-performing loans. Through strictly standardized credit business process strengthening the whole process management of pre-lending investigation credit rating and credit granting examination and approval loan review and post-lending monitoring improving risk mitigating impact of collateral accelerating the collection and disposal of non-performing loans and promoting the upgrading and transformation of credit management system the credit risk management of the Group has been comprehensively improved.The Group writes off financial asset when it cannot reasonably expect to recover all or part of the asset. Signs indicating that the recoverable amount cannot be reasonably expected to recover include: (1) the enforcement has been terminated and (2) the Group’s recovery method is to confiscate and dispose of the collateral but the expected value of the collateral cannot cover the entire principal and interest.In addition to the credit risk caused by credit assets the Group manages the credit risk for treasury businesses through prudently selecting peers and other financial institutions with comparable credit levels as counterparties balancing credit risk with returns on investment comprehensively considering internal and external credit rating information granting credit hierarchy and using credit management system to review and adjust credit commitments on a timely basis etc. In addition the Group provides off-balance sheet commitment and guarantee businesses to customers so it is possible for the Group to make payment on behalf of the customer in case of customer’s default and bear risks similar to the loan. Therefore the Group applies similar risk control procedures and policies to such business to reduce the credit risk.Measurement of expected credit losses (“ECL”) The Group adopts the “expected credit loss model” on its debt instruments which are classified as financial assets measured at amortised cost and at fair value through other comprehensive income and off-balance sheet credit assets in accordance with the provisions of IFRS 9.For financial assets that are included in the measurement of expected credit losses the Group evaluates whether the credit risks of related financial assets have increased significantly since the initial recognition. The impairment model is used to measure their allowances for impairment losses respectively to recognize expected credit losses and their movements: Stage 1: Financial assets with no significant increase in credit risk since initial recognition will be classified as “Stage 1” and the Group continuously monitors their credit risk. The loss allowance of financial assets in Stage 1 is measured based on the expected credit losses in the next 12 months which represent the proportion of the lifetime expected credit losses that may arise from possible default events in the next 12 months. 276 China CITIC Bank Corporation Limited – F-97 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) Stage 2: If there is a significant increase in credit risk from initial recognition the Group transfers the related financial assets to Stage 2 but does not consider them as credit-impaired. The expected credit losses of financial assets in Stage 2 are measured based on the lifetime expected credit losses.Stage 3: If a financial asset has shown signs of credit impairment from initial recognition it will be moved to Stage 3. The expected credit losses of financial assets in Stage 3 are measured based on the lifetime expected credit losses.Purchased or originated credit-impaired financial assets refers to financial assets that are credit-impaired at initial recognition. Allowance for impairment losses on these assets are the lifetime expected credit losses.The Group measures the ECLs of financial assets through testing models including the risk parameters model and discounted cash flows model. The risk parameters model method is applicable to the financial assets in Stages 1 and 2. Both the risk parameter model and discounted cash flows model are applicable to the Stage 3 financial assets.The discounted cash flow model is used to calculate the impairment allowance for an asset based on the regular forecasts of the future cash flows of the asset. At each measurement date the Group makes forecasts of the future cash inflows of the asset in different periods and in different scenarios applies probability weightings to obtain the weighted averages of the future cash flows applies appropriate discount rates to the weighted averages and adds these discounted weighted averages to obtain the present value of the future cash inflows.The risk parameter model has two main components: 1) the assessment methods under the Internal Rating-Based (IRB) approach for key parameters such as probability of default (PD) and loss given default (LGD); and 2) the forward-looking adjustment model for multi-scenario forecasts based on the key parameters. The expected credit losses of financial assets are assessed individually by measuring PDs LGDs and forward-looking adjustments.The key judgments involved and assumptions adopted by the Group in assessing expected credit losses are as follows: (1) Grouping of risks According to the nature of the businesses the Group mainly divides its financial assets into three major categories i. e. corporate assets personal loans and credit card assets according to the asset categories and further divides them into risk groups in light of their credit risk characteristics including the industries in which the customers operate product type and staging assessments. (2) Significant increase in credit risk On each balance sheet date the Group evaluates whether the credit risk of the relevant financial instruments has increased significantly since the initial recognition. When one or more quantitative or qualitative thresholds are triggered the credit risk of financial instruments would be considered as having increased significantly.By setting quantitative and qualitative criteria the Group determines whether the credit risk of financial instruments has increased significantly since initial recognition. The criteria mainly include days past due the absolute level and relative level of default probability changes changes in credit risk classification and other circumstances indicating significant changes in credit risk. 2022 Annual Report 277 – F-98 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) (2) Significant increase in credit risk (continued) In accordance with the policies of the central government and regulatory authorities and in light of its credit management needs the Group makes prudential assessments of the repayment ability of the borrowers who apply for loan extensions. To eligible borrowers the Group provides a number of relief options including deferred repayment of interest and adjustment of repayment schedules and at the same time the Group makes individual and collective assessments to assess whether there has been a significant increase in the credit risk of these borrowers. (3) Definition of credit-impaired assets When credit impairment occurred the Group defines that the financial asset is in default. In general a financial asset that is overdue for more than 90 days is considered to be in default.When one or more events that significant adversely affect the expected future cash flow of a financial asset occurs the financial asset becomes a credit-impaired financial asset. Evidence of credit-impaired financial assets includes the following observable information: * The issuer or borrower is in significant financial difficulties; * The borrower is in breach of financial covenant (s) such as default or overdue in repayment of interests or principal etc.* The creditor gives the debtor concession that would not be offered otherwise considering for economic or contractual reasons relating to the debtor’s financial difficulties; * It is becoming probably that the borrower will enter bankruptcy or other debt restructuring; * An active market for that financial asset has disappeared because of financial difficulties from issuer or borrower; * Financial assets are purchased or originated at a deep discount that reflects the incurred credit losses. (4) Inputs for measurement of expected credit losses The expected credit loss is measured on either a 12-month or lifetime basis depending on whether a significant increase in credit risk has occurred or whether an asset is considered to be credit-impaired.Related definitions are as follows: * The probability of default (“PD”) represents the likelihood of a borrower defaulting on its financial obligations either over the next 12 months or over the remaining lifetime of the obligation.* Loss given default (“LGD”) represents the Group’s expectation of the extent of loss on a defaulted exposure. LGD varies by type of counterparty type and seniority of claim and availability of collateral or other credit support. LGD is expressed as a percentage loss per unit of exposure at the time of default and is calculated on a 12-month or lifetime basis.* Exposure at default (“EAD”) is based on the amounts that the Group expects to be owned at the time of default over the next 12 months or over the remaining lifetime of the obligation. 278 China CITIC Bank Corporation Limited – F-99 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) (4) Inputs for measurement of expected credit losses (continued) The Group regularly monitors and reviews the assumptions related to the calculation of ECL including the PDs for various maturities and the changes in the values of collateral over time.The Group classifies exposures with similar risk characteristics into groups and collectively estimates their risk parameters including PDs LGDs and EADs. In 2022 based on data accumulation the Group optimized and updated the relevant models and parameters. The Group has obtained sufficient information to ensure its statistical reliability. The Group makes allowances for its expected credit losses based on on-going assessment of and follow-up on changes in its customers and their financial assets on an individual basis. (5) Forward-looking information The assessment of significant increases in credit risk and the calculation of expected credit losses both involve forward-looking information. Based on historical analysis the Group has identified the key economic variables impacting expected credit losses for various risk groups.These economic variables have different impacts on the probabilities of default and the losses given default of different risk groups. The Group makes forecasts on these economic indicators at least semi-annually.In this process the Group also resorts to expert judgment and applies expert judgment to determine the impact of these economic variables on the probabilities of default and the losses given default.In addition to the neutral economic scenario the Group determines the possible scenarios and their weightings by a combination of statistical analysis and expert judgment. The Group measures expected credit losses as either a probability weighted 12 months expected credit losses (Stage 1) or a probability weight lifetime expected credit losses (Stage 2 and Stage 3). These probability-weighted expected credit losses are determined by running each scenario through the relevant expected credit losses model and multiplying it by the appropriate scenario weighting.Macroeconomic scenario and weighting information The Group has performed historical analysis and identified the key economic variables impacting credit risk and ECL for each portfolio. Based on comprehensive considerations of internal and external data expert forecasts and the best estimate of future outcomes the Group makes regular forecasts of the macro indicators in three macro-economic scenarios i. e. the positive neutral and negative scenarios to determine the coefficients for forward-looking adjustments. Neutral is defined as the most likely to happen in the future as compared to other scenarios. Positive scenario and negative scenario represent the likely scenario that is better off or worse off as compared to the neutral scenario.The Group reassessed and updated the key economic indicators affecting ECLs and their estimates during the reporting period based on the latest historical data. The economic indicators currently applied in the neutral scenario including consumer price index narrow money supply and per capita disposable income of urban residents etc. are basically consistent with the forecasts of research institutions. 2022 Annual Report 279 – F-100 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) (5) Forward-looking information (continued) Macroeconomic scenario and weighting information (continued) In 2022 the Group considered different macroeconomic scenarios and the key macroeconomic assumptions used in estimating ECL are set out below: Variables Range Consumer Price Index 1.50%~3.00% Narrow Money Supply (M1) 0.00%~12.20% Per capita Disposable Income of Urban Residents 5.40%~7.00% Currently the weighting of neutral scenario is equal to the sum of the weightings of other scenarios.Following this assessment the Group measures ECL as a weighted average probability of ECL in the next 12-month under the three scenarios for Stage 1 financial instruments; and a weighted average probability of lifetime ECL for Stage 2 and 3 financial instruments.Considering the portfolios that cannot be modeled by regression such as those with extremely low default rate or without appropriate internal rating data the Group mainly adopts the expected loss ratio of similar portfolios with established regression models in order to expand the coverage of the existing ECL model. (6) Sensitivity information and management overlay Changes to the inputs and forward-looking information used in ECL measurement will affect the assessment of significant increase in credit risk and the measurement of expected credit losses.As at 31 December 2022 assuming a 10% increase in the weighting of the optimistic scenario and a 10% decrease in the weighting of the neutral scenario the Group’s credit impairment losses would be reduced by no more than 5% of the current credit impairment losses; assuming a 10% increase in the weighting of the optimistic scenario and a 10% decrease in the weighting of the neutral scenario the Group’s credit impairment losses would increase by no more than 5% of the current credit impairment losses.As at 31 December 2022 assuming an overall increase or decrease of 5% in the macroeconomic factors the change to the impairment loss allowances for the main credit assets of the Group and the Bank would not exceed 10% of the current impairment loss allowances.For risks in specific areas and the impacts of deferred principal and interest repayment and other policies that have not been reflected in the model the Group also considered and applied management overlays to increase the impairment provisions to further boost its risk mitigation capacity and the subsequent increase in the impairment loss allowances did not exceed 5% of the current impairment loss allowances.Allowance for impairment losses of performing loans and advances to customers consists of ECLs for Stage 1 and Stage 2 assets which represent 12 months ECL and lifetime ECL respectively. Loans and advances to customers in Stage 1 transfer to Stage 2 when there is a significant increase in credit risk.The following table presents the estimated impact if the ECLs of all performing loans and advances to customers are measured based on 12 months ECL assuming all other risk factors remain the same. 31 December 31 December 20222021 Performing loans and advances to customers Allowance of impairment losses assuming loans in stage 2 transfer to stage 1 78523 69220 Impact of stage transfers 4316 3446 Current allowance for impairment losses 82839 72666 280 China CITIC Bank Corporation Limited – F-101 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (a) Credit risk (continued) (i) Maximum credit risk exposure The maximum exposure to credit risk at the reporting date without taking into consideration of any collateral held or other credit enhancement is represented by the net balance of each type of financial assets in the consolidated statement of financial position after deducting any allowance for impairment losses. A summary of the maximum exposure is as follows: 31 December 2022 Not Stage 1 Stage 2 Stage 3 applicable Total Balances with central banks 471849 – – – 471849 Deposits with bank and non- bank financial institutions 78834 – – – 78834 Placements with and loans to banks and non-bank financial institutions 209425 – – 8739 218164 Derivative financial assets – – – 44383 44383 Financial assets held under resale agreements 13730 – – – 13730 Loans and advances to customers 4938600 68954 27532 3881 5038967 Financial investments — a t fair value through profit or loss – – – 557594 557594 — a t amortised cost 1101975 3709 29768 – 1135452 — at fair value through other comprehensive income 803583 136 976 – 804695 — d esignated at fair value through other comprehensive income – – – 5128 5128 Other financial assets 11513 4484 1303 – 17300 Subtotal 7629509 77283 59579 619725 8386096 Credit commitments 2014016 1245 255 – 2015516 Maximum credit risk exposure 9643525 78528 59834 619725 10401612 2022 Annual Report 281 – F-102 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (a) Credit risk (continued) (i) Maximum credit risk exposure (continued) 31 December 2021 Not Stage 1 Stage 2 Stage 3 applicable Total Balances with central banks 429689 – – – 429689 Deposits with bank and non- bank financial institutions 107856 – – – 107856 Placements with and loans to banks and non-bank financial institutions 139322 – – 4596 143918 Derivative financial assets – – – 22721 22721 Financial assets held under resale agreements 91437 – – – 91437 Loans and advances to customers 4657995 63389 26692 – 4748076 Financial investments — at fair value through profit or loss – – – 495810 495810 — a t amortised cost 1125589 11784 32856 – 1170229 — a t fair value through other comprehensive income 651067 348 442 – 651857 — d esignated at fair value through other comprehensive income – – – 4745 4745 Other financial assets 7410 5166 936 – 13512 Subtotal 7210365 80687 60926 527872 7879850 Credit commitments 1774949 587 238 – 1775774 Maximum credit risk exposure 8985314 81274 61164 527872 9655624 According to the quality of assets the Group classified the credit rating of the financial assets as risk level 1 risk level 2 risk level 3 and default. “Risk level 1” refers to customers who have competitive advantages among local peers with good foundations outstanding operation results strong operational and financial strength and/or good corporate governance structure. “Risk level 2” refers to customers who are in the middle tier among local peers with fair foundations fair operation results fair operational and financial strength and/or fair corporate governance structure. “Risk level 3” refers to customers who are in the lower-tier among local peers with weak foundations poor operation results poor operational and financial strength and/or deficiency in corporate governance structure. The definition of “Default” is same as the definition of credit-impaired. The credit rating is used for internal risk management. 282 China CITIC Bank Corporation Limited – F-103 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (a) Credit risk (continued) (i) Maximum credit risk exposure (continued) The following table provides an analysis of loans and advances to customers and financial investments that are included in the ECL assessment according to the credit risk level. The book value of the following financial assets is the Group’s maximum exposure to credit risk for these assets. 31 December 2022 Allowance for impairment Risk level 1 Risk level 2 Risk level 3 Default Subtotal losses Net balance Loans and advances to customers (Note (i)) Stage 1 3893401 992389 113014 – 4998804 (60204) 4938600 Stage 2 1398 18111 71942 – 91451 (22497) 68954 Stage 3 – – – 75816 75816 (48284) 27532 Financial investments at amortised cost Stage 1 745762 356012 2684 – 1104458 (2483) 1101975 Stage 2 – – 5096 – 5096 (1387) 3709 Stage 3 (Note (ii)) – – – 54464 54464 (24696) 29768 Financial investments at fair value through other comprehensive income Stage 1 412730 390853 – – 803583 (1416) 803583 Stage 2 – 136 – – 136 (98) 136 Stage 3 – – – 976 976 (1203) 976 Maximum credit risk exposure 5053291 1757501 192736 131256 7134784 (162268) 6975233 31 December 2021 Allowance for impairment Risk level 1 Risk level 2 Risk level 3 Default Subtotal losses Net balance Loans and advances to customers (Note (i)) Stage 1 3724604 897755 86299 – 4708658 (50663) 4657995 Stage 2 1220 16044 67782 – 85046 (21657) 63389 Stage 3 – – – 75329 75329 (48637) 26692 Financial investments at amortised cost Stage 1 810282 313915 5613 – 1129810 (4221) 1125589 Stage 2 3225 2554 10081 – 15860 (4076) 11784 Stage 3 (Note (ii)) – 810 676 49800 51286 (18430) 32856 Financial investments at fair value through other comprehensive income Stage 1 353764 297303 – – 651067 (976) 651067 Stage 2 – 189 159 – 348 (158) 348 Stage 3 – 431 – 11 442 (1253) 442 Maximum credit risk exposure 4893095 1529001 170610 125140 6717846 (150071) 6570162 2022 Annual Report 283 – F-104 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (a) Credit risk (continued) (i) Maximum credit risk exposure (continued) Note: (i) Loans and advances to customers include loans and advances to customers measured at fair value through other comprehensive income and its corresponding impairment are not included in the “Allowance for impairment losses” as shown in the table.(ii) Claims in Stage 3 mainly represent investment management products and trust investment plans (Note 55 (a)(viii)).(ii) Measurement of expected credit losses The following table shows the movement in carrying value of loans and advances to customers in current reporting period: 31 December 2022 Stage 1 Stage 2 Stage 3 As at 1 January 2022 4708658 85046 75329 Movements Net transfers out from Stage 1 (109279) – – Net transfers into Stage 2 – 28507 – Net transfers into Stage 3 – – 80772 Net transactions during the year (Note (i)) 380470 (23863) (23508) Write-off – – (57791) Others (Note (ii)) 18955 1761 1014 As at 31 December 2022 4998804 91451 75816 31 December 2021 Stage 1 Stage 2 Stage 3 As at 1 January 2021 4296618 103565 78592 Movements Net transfers out from Stage 1 (74178) – – Net transfers into Stage 2 – 862 – Net transfers into Stage 3 – – 73316 Net transactions during the year (Note (i)) 489006 (17357) (13132) Write-off – – (64161) Others (Note (ii)) (2788) (2024) 714 As at 31 December 2021 4708658 85046 75329 284 China CITIC Bank Corporation Limited – F-105 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (a) Credit risk (continued) (ii) Measurement of expected credit losses (continued) The following table shows the movement in carrying value of financial investment in current reporting period: 31 December 2022 Stage 1 Stage 2 Stage 3 As at 1 January 2022 1780877 16208 51728 Movements Net transfers out from Stage 1 (3525) – – Net transfers out from Stage 2 – (7376) – Net transfers into Stage 3 – – 10901 Net transactions during the year (Note (i)) 121588 (3412) (5634) Write-off – – (1558) Others (Note (ii)) 9101 (188) 3 As at 31 December 2022 1908041 5232 55440 31 December 2021 Stage 1 Stage 2 Stage 3 As at 1 January 2021 1664435 4450 28425 Movements Net transfers out from Stage 1 (21955) – – Net transfers into Stage 2 – 13928 – Net transfers into Stage 3 – – 8027 Net transactions during the year (Note (i)) 142085 (2109) 22305 Write-off – – (7042) Others (Note (ii)) (3688) (61) 13 As at 31 December 2021 1780877 16208 51728 Notes: (i) Net transactions during the year mainly include changes in carrying amount due to purchase origination or derecognition (excluding write-offs).(ii) Others include changes in accrued interest and effect of exchange differences during the year. 2022 Annual Report 285 – F-106 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (a) Credit risk (continued) (ii) Measurement of expected credit losses (continued) The following table shows the movement in allowance for impairment of loans and advances to customers in current reporting period: 31 December 2022 Stage 1 Stage 2 Stage 3 As at 1 January 2022 51215 21686 48805 Movements (Note (i)) Net transfers out from Stage 1 (2776) – – Net transfers into Stage 2 – 3011 – Net transfers into Stage 3 – – 33661 Net transactions during the year (Note (ii)) 5338 (4560) (14373) Changes in parameters for the year (Note (iii)) 7408 498 27579 Write-off – – (57791) Others (Note (iv)) (458) 1889 10482 As at 31 December 2022 60727 22524 48363 31 December 2021 Stage 1 Stage 2 Stage 3 As at 1 January 2021 43734 29527 52990 Movements (Note (i)) Net transfers out from Stage 1 (925) – – Net transfers out from Stage 2 – (4157) – Net transfers into Stage 3 – – 45597 Net transactions during the year (Note (ii)) 7492 (5892) (10568) Changes in parameters for the year (Note (iii)) 583 2330 15768 Write-off – – (64161) Others (Note (iv)) 331 (122) 9179 As at 31 December 2021 51215 21686 48805 286 China CITIC Bank Corporation Limited – F-107 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (a) Credit risk (continued) (ii) Measurement of expected credit losses (continued) The following table shows the movement in allowance for impairment of financial investment in current reporting period: 31 December 2022 Stage 1 Stage 2 Stage 3 As at 1 January 2022 5197 4234 19683 Movements (Note (i)) Net transfers out from Stage 1 (209) – – Net transfers out from Stage 2 – (2184) – Net transfers into Stage 3 – – 6436 Net transactions during the year (Note (ii)) 160 (630) (2313) Changes in parameters for the year (Note (iii)) (1200) 56 1695 Write-off – – (1558) Others (Note (iv)) (49) 9 1956 As at 31 December 2022 3899 1485 25899 31 December 2021 Stage 1 Stage 2 Stage 3 As at 1 January 2021 4881 501 11039 Movements (Note (i)) Net transfers out from Stage 1 (764) – – Net transfers into Stage 2 – 3669 – Net transfers into Stage 3 – – 2516 Net transactions during the year (Note (ii)) 293 119 15092 Changes in parameters for the year (Note (iii)) (201) (55) (1917) Write-off – – (7042) Others (Note (iv)) 988 – (5) As at 31 December 2021 5197 4234 19683 Notes: (i) Movements in allowance for impairment during the year mainly include the impact of stage changes on the measurement of ECLs.(ii) Net transactions during the year mainly include changes in allowance for impairment due to financial assets purchased newly originated or derecognized (excluding write-offs).(iii) Changes in parameters mainly include changes in risk exposures and the impacts on ECLs due to changes in PDs and LGDs following regular updates on modelling parameters rather than stages movements.(iv) Others include recovery of loans written off changes of impairment losses of accrued interest and effect of exchange differences. 2022 Annual Report 287 – F-108 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (a) Credit risk (continued) (iii) Loans and advances to customers analysed by industry sector 31 December 2022 31 December 2021 Loans and Loans and advances advances Gross secured by Gross secured by balance % collateral balance % collateral Corporate loans — re ntal and business services 491301 9.5 193562 456182 9.4 190503 — manufacturing 419507 8.1 171117 356129 7.3 157536 — w ater environment and public utility management 413399 8.0 129983 381182 7.8 139983 — real estate 277173 5.4 229939 284801 5.7 250846 — wholesale and retail 177612 3.4 95000 163489 3.4 96194 — tr ansportation storage and postal services 149891 2.9 79475 144053 3.0 82216 — construction 103335 2.0 54426 105633 2.2 61730 — pr oduction and supply of electric power gas and water 89609 1.7 41650 84351 1.7 44461 — p ublic management and social organisations 8409 0.2 1930 7898 0.2 3284 — others 393780 7.6 117284 352461 7.2 118173 Subtotal 2524016 48.8 1114366 2336179 47.9 1144926 Personal loans 2116910 41.0 1423097 2053824 42.2 1366920 Discounted bills 511846 9.9 – 465966 9.6 – Accrued interest 17180 0.3 – 13064 0.3 – Total 5169952 100.0 2537463 4869033 100.0 2511846 (iv) Loans and advances to customers analysed by geographical sector 31 December 2022 31 December 2021 Loans and Loans and advances advances Gross secured by Gross secured by balance % collateral balance % collateral Bohai Rim (including Head Office) 1400562 27.2 442754 1325105 27.2 437932 Yangtze River Delta 1381673 26.7 721324 1256155 25.8 701187 Pearl River Delta and West Strait 731224 14.1 498620 733840 15.1 527719 Central 730240 14.1 390082 672083 13.8 370042 Western 598729 11.6 330962 573221 11.8 325598 Northeastern 87630 1.7 57244 92254 1.9 61529 Outside Mainland China 222714 4.3 96477 203311 4.1 87839 Accrued interest 17180 0.3 – 13064 0.3 – Total 5169952 100.0 2537463 4869033 100.0 2511846 288 China CITIC Bank Corporation Limited – F-109 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (a) Credit risk (continued) (v) Loans and advances to customers analysed by type of security 31 December 31 December 20222021 Unsecured loans 1384754 1292209 Guaranteed loans 718709 585948 Secured loans 2537463 2511846 — loans secured by collateral 2018796 1963710 — pledged loans 518667 548136 Subtotal 4640926 4390003 Discounted bills 511846 465966 Accrued interest 17180 13064 Total 5169952 4869033 (vi) Rescheduled loans and advances to customers 31 December 2022 31 December 2021 % of total loans % of total loans Gross balance and advances Gross balance and advances Rescheduled loans and advances: 12511 0.24% 16182 0.33% — re scheduled loans and advances overdue more than 3 months 5695 0.11% 5795 0.12% Rescheduled loans and advances are those loans and advances to customers which have been restructured or renegotiated because of deterioration in the financial position of the borrowers or of the inability of the borrower to meet the original repayment schedule and for which the revised repayment terms are a concession that the Group would not otherwise consider. As at 31 December 2022 the Group’s concession given under renegotiation with borrowers or court rulings as a result of deterioration in financial position of borrowers is not significant. 2022 Annual Report 289 – F-110 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (a) Credit risk (continued) (vii) Debt securities analysed by credit rating The Group adopts a credit rating approach to manage credit risk of its debt instruments portfolio. The ratings are obtained from major rating agencies where the debt instruments are issued. The carrying amounts of debt instruments investments analysed by rating as at the end of the reporting period are as follows: 31 December 2022 Unrated AAA AA A Below A Total (Note (i)) Debt securities issued by: — governments 884388 236364 40794 3965 – 1165511 — policy banks 81966 – – 7661 – 89627 — public entities – – 1308 – – 1308 — b anks and non-bank financial institutions 77584 337801 6270 17645 4257 443557 — corporates 25519 43702 25746 10576 11376 116919 Investment management products managed by securities companies 31593 – – – – 31593 Trust investment plans 207865 – – – – 207865 Total 1308915 617867 74118 39847 15633 2056380 31 December 2021 Unrated AAA AA A Below A Total (Note (i)) Debt securities issued by: — governments 711168 200214 22602 6308 10 940302 — policy banks 130839 – – 7046 – 137885 — public entities – – 1690 1 – 1691 — b anks and non-bank financial institutions 76984 351851 5525 23478 6535 464373 — corporates 59823 14722 9310 12329 7306 103490 Investment management products managed by securities companies 42884 – – – – 42884 Trust investment plans 220821 – – – – 220821 Total 1242519 566787 39127 49162 13851 1911446 Note: (i) Unrated debt securities held by the Group are primarily bonds issued by the Chinese government policy banks banks non-bank financial institutions investment management products managed by securities companies and trust investment plans. 290 China CITIC Bank Corporation Limited – F-111 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (a) Credit risk (continued) (viii) Investment management products managed by securities companies and trust investment plans analysed by type of underlying assets 31 December 31 December 20222021 Investment management products managed by securities companies and trust investment plans — credit assets 262447 285183 — rediscounted bills – 24 Total 262447 285207 The Group puts investment management products managed by securities companies and trust investment plans into comprehensive credit management system to manage its credit risk exposure in a holistic manner. The type of security of credit assets includes guarantee secured by collateral and pledge.(b) Market risk Market risk refers to risks that may cause a loss of on-balance sheet and off-balance sheet businesses for the Group due to the adverse movement of market prices including interest rates foreign exchange rates stock prices and commodity prices. The Group has established a market risk management system that formulates procedures to identify measure supervision and control market risks. This system aims to limit market risk to an acceptable level through examining and approving new products and limit management.Management of the Group is responsible for approving market risk management policies establishing appropriate organizational structure and information systems to effectively identify measure monitor and control market risks and ensuring adequate resources to reinforce the market risk management. The Risk Management Department is responsible for independently managing and controlling market risks of the Group including developing market risk management policies and authorization limits providing independent report of market risk to identify measure and monitor the Group’s market risk. Business departments are responsible for the day-to-day management of market risks including effectively identifying measuring controlling market risk factors associated with the relevant operations so as to ensure the dynamic balance between business development and risk undertaking.The Group uses sensitivity analysis foreign exchange exposure and interest rate re-pricing gap analysis as the primary instruments to monitor market risk.Interest rate risk and currency risk are the major market risks that the Group is exposed to.Interest rate risk The Group’s interest rate exposures mainly arise from the mismatching of assets and liabilities’ re-pricing dates as well as the effect of interest rate volatility on trading positions.The Group primarily uses gap analysis to assess and monitor its re-pricing risk and adjust the ratio of floating and fixed rate exposures the loan re-pricing cycle as well as optimization of the term structure of its deposits accordingly. 2022 Annual Report 291 – F-112 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (b) Market risk (continued) Interest rate risk (continued) The Group implements various methods such as duration analysis sensitivity analysis stress testing and scenario simulation to measure manage and report the interest rate risk on a regular basis.The following tables summarise the average interest rates and the next re-pricing dates or contractual maturity date whichever is earlier for the assets and liabilities as at the end of each reporting date. 31 December 2022 Between Average Non- Less than three Between interest rate interest three months and one and More than (Note (i)) Total bearing months one year five years five years Assets Cash and balances with central banks 1.50% 477381 7705 469676 – – – Deposits with banks and non- bank financial institutions 1.75% 78834 3090 39442 36302 – – Placements with and loans to banks and non-bank financial institutions 2.49% 218164 1048 67007 108371 41738 – Financial assets held under resale agreements 1.45% 13730 5 13725 – – – Loans and advances to customers (Note (ii)) 4.81% 5038967 17331 2665381 1596021 733001 27233 Financial investments — a t fair value through profit or loss 557594 435561 70773 28234 8464 14562 — at amortised cost 3.55% 1135452 – 87626 259083 556979 231764 — at fair value through other comprehensive income 2.66% 804695 478 146837 122169 382895 152316 — de signated at fair value through other comprehensive income 5128 5128 – – – – Others 217598 217598 – – – – Total assets 8547543 687944 3560467 2150180 1723077 425875 292 China CITIC Bank Corporation Limited – F-113 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (b) Market risk (continued) Interest rate risk (continued) 31 December 2022 Between Average Non- Less than three Between interest rate interest three months and one and More than (Note (i)) Total bearing months one year five years five years Liabilities Borrowing from central banks 2.94% 119422 – 20917 98505 – – Deposits from banks and non- bank financial institutions 2.09% 1143776 4908 814885 323983 – – Placements from banks and non-bank financial institutions 2.41% 70741 162 49080 19992 1507 – Financial liabilities at fair value through profit or loss 1546 2 4 13 125 1402 Financial assets sold under repurchase agreements 2.00% 256194 75 247237 8882 – – Deposits from customers 2.06% 5157864 82696 3493074 781501 800591 2 Debt securities issued 2.80% 975206 3968 264606 486864 129781 89987 Lease liabilities 4.51% 10272 3066 170 251 2827 3958 Others 126692 126692 – – – – Total liabilities 7861713 221569 4889973 1719991 934831 95349 Interest rate gap 685830 466375 (1329506) 430189 788246 330526 2022 Annual Report 293 – F-114 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (b) Market risk (continued) Interest rate risk (continued) 31 December 2021 Between Average Less than three Between interest rate Non-interest three months and one and five More than (Note (i)) Total bearing months one year years five years Assets Cash and balances with central banks 1.49% 435383 8572 426811 – – – Deposits with banks and non- bank financial institutions 1.94% 107856 2791 75277 29788 – – Placements with and loans to banks and non-bank financial institutions 1.90% 143918 769 71334 64116 7699 – Financial assets held under resale agreements 1.96% 91437 12 91425 – – – Loans and advances to customers (Note (ii)) 4.99% 4748076 13280 2663724 1844362 217090 9620 Financial investments — a t fair value through profit or loss 495810 410613 33403 40773 6638 4383 — at amortised cost 3.71% 1170229 – 75128 222424 604747 267930 — a t fair value through other comprehensive income 3.11% 651857 406 107031 127233 281829 135358 — d esignated at fair value through other comprehensive income 4745 4745 – – – – Others 193573 193573 – – – – Total assets 8042884 634761 3544133 2328696 1118003 417291 294 China CITIC Bank Corporation Limited – F-115 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (b) Market risk (continued) Interest rate risk (continued) 31 December 2021 Between Average Less than three Between interest rate Non-interest three months and one and five More than (Note (i)) Total bearing months one year years five years Liabilities Borrowing from central banks 3.00% 189198 – 12080 177118 – – Deposits from banks and non- bank financial institutions 2.45% 1174763 5631 830100 339032 – – Placements from banks and non-bank financial institutions 2.39% 78331 240 29115 36848 11670 458 Financial liabilities at fair value through profit or loss 1164 536 5 17 173 433 Financial assets sold under repurchase agreements 2.17% 98339 5 48829 49505 – – Deposits from customers 2.00% 4789969 79161 3311239 747458 652075 36 Debt securities issued 3.16% 958203 3360 182746 557874 104249 109974 Lease liabilities 4.46% 9816 3695 404 1077 3611 1029 Others 100475 100475 – – – – Total liabilities 7400258 193103 4414518 1908929 771778 111930 Interest rate gap 642626 441658 (870385) 419767 346225 305361 Notes: (i) Average interest rate represents the ratio of interest income/expense to average interest bearing assets/liabilities during the year.(ii) For loans and advances to customers the “Less than three months” category includes overdue amounts (net of allowance for impairment losses) of RMB34823 million as at 31 December 2022 (as at 31 December 2021: RMB40153 million) 2022 Annual Report 295 – F-116 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (b) Market risk (continued) Interest rate risk (continued) The Group uses sensitivity analysis to measure the potential effect of changes in interest rates on the Group’s net interest income. The following table sets forth the results of the Group’s interest rate sensitivity analysis as at 31 December 2022 and 31 December 2021. 31 December 2022 31 December 2021 Other Other Net interest comprehensive Net interest comprehensive income income income income +100 basis points (10068) (6517) (5556) (5765) –100 basis points 10068 6517 5556 5765 This sensitivity analysis is based on a static interest rate risk profile of the Group’s non-derivative assets and liabilities and certain assumptions as discussed below. The analysis measures only the impact of changes in interest rates within one year showing how annualized interest income would have been affected by repricing of the Group’s non-derivative assets and liabilities within the one-year period. The analysis is based on the following assumptions: (i) all assets and liabilities that reprice or mature within the three months bracket and the beyond three months but within one year bracket both are repriced or mature at the beginning of the respective periods (ii) it does not reflect the potential impact of unparalleled yield curve movements and (iii) there are no other changes to the portfolio all positions will be retained and rolled over upon maturity. The analysis does not take into account the effect of risk management measures taken by management. Due to the assumptions adopted actual changes in the Group’s net interest income and other comprehensive income resulted from increases or decreases in interest rates may differ from the results of this sensitivity analysis.Currency risk Currency risk arises from the potential change of exchange rates that cause a loss to the on-balance sheet and off-balance sheet business of the Group. The Group measures its currency risk with foreign currency exposures and manages its currency risk by spot and forward foreign exchange transactions and matching its foreign currency denominated assets with corresponding liabilities in the same currency as well as using derivative financial instruments mainly foreign exchange swaps to manage its exposure. 296 China CITIC Bank Corporation Limited – F-117 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (b) Market risk (continued) Currency risk (continued) The exposures at the reporting date were as follows: 31 December 2022 RMB USD HKD Others Total (RMB (RMB (RMB equivalent) equivalent) equivalent) Assets Cash and balances with central banks 460550 15991 653 187 477381 Deposits with banks and non- bank financial institutions 53989 15928 4453 4464 78834 Placements with and loans to banks and non-bank financial institutions 172752 34443 9020 1949 218164 Financial assets held under resale agreements 11950 1780 – – 13730 Loans and advances to customers 4732459 160506 118379 27623 5038967 Financial investments — a t fair value through profit or loss 535552 17131 4911 – 557594 — at amortised cost 1122942 8356 – 4154 1135452 — a t fair value through other comprehensive income 671715 94174 25881 12925 804695 — de signated at fair value through other comprehensive income 4719 148 261 – 5128 Others 201395 9833 5735 635 217598 Total assets 7968023 358290 169293 51937 8547543 Liabilities Borrowings from central banks 119422 – – – 119422 Deposits from banks and non- bank financial institutions 1132064 10660 198 854 1143776 Placements from banks and non-bank financial institutions 48566 20397 1336 442 70741 Financial liabilities at fair value through profit or loss 99 1446 1 – 1546 Financial assets sold under repurchase agreements 251685 4509 – – 256194 Deposits from customers 4721203 252574 159353 24734 5157864 Debt securities issued 959984 15085 137 – 975206 Lease liabilities 9395 754 1 122 10272 Others 120517 3449 2438 288 126692 Total liabilities 7362935 308874 163464 26440 7861713 Net on-balance sheet position 605088 49416 5829 25497 685830 Credit commitments 1912368 87219 6125 9804 2015516 Derivatives (Note (i)) 37956 (55048) 32009 (26305) (11388) 2022 Annual Report 297 – F-118 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (b) Market risk (continued) Currency risk (continued) 31 December 2021 RMB USD HKD Others Total (RMB equivalent) (RMB equivalent) (RMB equivalent) Assets Cash and balances with central banks 382871 51510 804 198 435383 Deposits with banks and non- bank financial institutions 70143 23915 11180 2618 107856 Placements with and loans to banks and non-bank financial institutions 100185 28129 12172 3432 143918 Financial assets held under resale agreements 90698 739 – – 91437 Loans and advances to customers 4446030 163882 114163 24001 4748076 Financial investments — at fair value through profit or loss 482979 10065 2715 51 495810 — at amortised cost 1165064 903 – 4262 1170229 — a t fair value through other comprehensive income 553366 70127 18369 9995 651857 — d esignated at fair value through other comprehensive income 4371 188 186 – 4745 Others 185921 1405 3795 2452 193573 Total assets 7481628 350863 163384 47009 8042884 Liabilities Borrowings from central banks 189198 – – – 189198 Deposits from banks and non- bank financial institutions 1164797 8726 888 352 1174763 Placements from banks and non-bank financial institutions 48645 26434 2113 1139 78331 Financial liabilities at fair value through profit or loss 531 632 1 – 1164 Financial assets sold under repurchase agreements 97620 719 – – 98339 Deposits from customers 4383814 232064 151483 22608 4789969 Debt securities issued 938154 20049 – – 958203 Lease liabilities 9265 8 398 145 9816 Others 95541 2383 2278 273 100475 Total liabilities 6927565 291015 157161 24517 7400258 Net on-balance sheet position 554063 59848 6223 22492 642626 Credit commitments 1667967 90203 6718 10886 1775774 Derivatives (Note (i)) 21592 (43585) 27912 (5001) 918 298 China CITIC Bank Corporation Limited – F-119 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (b) Market risk (continued) Currency risk (continued) Note: (i) Derivatives represent the net notional amount of currency derivatives including undelivered foreign exchange spot foreign exchange forward foreign exchange swap and currency option.The Group uses sensitivity analysis to measure the potential effect of changes in foreign currency exchange rates on the Group’s profit or loss and other comprehensive income. The following table sets forth as at 31 December 2022 and 31 December 2021 the results of the Group’s foreign exchange rate sensitivity analysis. 31 December 2022 31 December 2021 Other Other Profit before comprehensive comprehensive tax income Profit before tax income 5% appreciation 1613 (43) 3390 4 5% depreciation (1613) 43 (3390) (4) This sensitivity analysis is based on a static foreign exchange exposure profile of assets and liabilities and certain assumptions as follows: (i) the foreign exchange sensitivity is the gain and loss realised as a result of 500 basis point fluctuation in the foreign currency exchange rates against RMB at the reporting date; (ii) the exchange rates against RMB for all foreign currencies change in the same direction simultaneously and does not take into account the correlation effect of changes in different foreign currencies; and (iii) the foreign exchange exposures calculated include both spot foreign exchange exposures foreign exchange derivative instruments and; all positions will be retained and rolled over upon maturity. The analysis does not take into account the effect of risk management measures taken by management. Due to the assumptions adopted actual changes in the Group’s profit and other comprehensive income resulting from increases or decreases in foreign exchange rates may differ from the results of this sensitivity analysis. Precious metal is included in foreign currency for the purpose of this sensitivity analysis.(c) Liquidity risk Liquidity risk arises when the Group in meeting the demand of liabilities due and other payment obligations as well as the needs of business expansion is unable to sufficiently timely or cost-effectively acquire funds. The Group’s liquidity risk arises mainly from the mismatch of assets to liabilities and customers may concentrate their withdrawals.The Group has implemented overall liquidity risk management on the entity level. The headquarters has the responsibility for developing the entire Group’s liquidity risk policies strategies and implements centralised management of liquidity risk on the entity level. The domestic and foreign affiliates develop their own liquidity policies and procedures within the Group’s liquidity strategy management framework based on the requirements of relevant regulatory bodies.The Group manages liquidity risk by setting various indicators and operational limits according to the overall position of the Group’s assets and liabilities with referencing to market condition. The Group holds assets with high liquidity to meet unexpected and material demand for payments in the ordinary course of business. 2022 Annual Report 299 – F-120 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (c) Liquidity risk (continued) The tools that the Group uses to measure and monitor liquidity risk mainly include: – Liquidity gap analysis; – Liquidity indicators (including but not limited to regulated and internal managed indicators such as liquidity coverage ratio net stable funding ratio loan-to-deposit ratio liquidity ratio liquidity gap rate excess reserves rate) monitoring; – Scenario analysis; – Stress testing.On this basis the Group establishes regular reporting mechanisms for liquidity risk to report the latest situation of liquidity risk to the senior management on a timely basis.Analysis of the remaining contractual maturity of assets and liabilities: 31 December 2022 Between three Between Repayable Within 3 months and one and More than on demand months one year five years five years Undated Total (Note (i)) Assets Cash and balances with central banks 110572 – 1693 – – 365116 477381 Deposits with banks and non- bank financial institutions 38772 3496 36566 – – – 78834 Placements with and loans to banks and non-bank financial institutions – 67838 108588 41738 – – 218164 Financial assets held under resale agreements – 13730 – – – – 13730 Loans and advances to customers (Note (ii)) 20458 855226 1238912 1139067 1736343 48961 5038967 Financial investments — at fair value through profit or loss – 71505 28237 8481 5377 443994 557594 — at amortised cost – 67441 255615 552436 229916 30044 1135452 — at fair value through other comprehensive income – 140796 123462 387261 149933 3243 804695 — d esignated at fair value through other comprehensive income – – – – – 5128 5128 Others 40857 30382 12437 68494 2167 63261 217598 Total assets 210659 1250414 1805510 2197477 2123736 959747 8547543 300 China CITIC Bank Corporation Limited – F-121 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (c) Liquidity risk (continued) Analysis of the remaining contractual maturity of assets and liabilities: (continued) 31 December 2022 Between three Between Repayable Within 3 months and one and More than on demand months one year five years five years Undated Total (Note (i)) Liabilities Borrowings from central banks – 20917 98505 – – – 119422 Deposits from banks and non- bank financial institutions 582376 235726 325674 – – – 1143776 Placements from banks and non-bank financial institutions – 46226 24052 463 – – 70741 Financial liabilities at fair value through profit or loss – 4 14 126 1402 – 1546 Financial assets sold under repurchase agreements – 247312 8882 – – – 256194 Deposits from customers 2385973 1188967 782255 800667 2 – 5157864 Debt securities issued – 265317 482743 135930 91216 – 975206 Lease liabilities 3006 718 1977 3527 1015 29 10272 Others 50723 20801 16205 25769 2321 10873 126692 Total liabilities 3022078 2025988 1740307 966482 95956 10902 7861713 (Short)/Long position (2811419) (775574) 65203 1230995 2027780 948845 685830 2022 Annual Report 301 – F-122 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (c) Liquidity risk (continued) Analysis of the remaining contractual maturity of assets and liabilities: (continued) 31 December 2021 Between three Between Repayable Within 3 months and one and five More than on demand months one year years five years Undated Total (Note (i)) Assets Cash and balances with central banks 71923 – – – – 363460 435383 Deposits with banks and non- bank financial institutions 54374 23341 30141 – – – 107856 Placements with and loans to banks and non-bank financial institutions – 72103 64116 7699 – – 143918 Financial assets held under resale agreements – 91437 – – – – 91437 Loans and advances to customers (Note (ii)) 11426 997671 992765 904343 1780784 61087 4748076 Financial investments — at fair value through profit or loss – 32650 43014 9115 4462 406569 495810 — at amortised cost – 56286 221575 592111 265848 34409 1170229 — a t fair value through other comprehensive income – 97555 132045 286462 135362 433 651857 — d esignated at fair value through other comprehensive income – – – – – 4745 4745 Others 66020 9705 5786 52585 116 59361 193573 Total assets 203743 1380748 1489442 1852315 2186572 930064 8042884 302 China CITIC Bank Corporation Limited – F-123 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (c) Liquidity risk (continued) Analysis of the remaining contractual maturity of assets and liabilities: (continued) 31 December 2021 Between three Between Repayable Within 3 months and one and five More than on demand months one year years five years Undated Total (Note (i)) Liabilities Borrowings from central banks – 12104 177094 – – – 189198 Deposits from banks and non- bank financial institutions 744501 87620 342642 – – – 1174763 Placements from banks and non-bank financial institutions – 37300 38409 2622 – – 78331 Financial liabilities at fair value through profit or loss 25 5 17 681 436 – 1164 Financial assets sold under repurchase agreements – 48834 49505 – – – 98339 Deposits from customers 2366158 1024143 747650 651977 41 – 4789969 Debt securities issued – 182746 557880 105827 111750 – 958203 Lease liabilities 3655 408 1090 3635 1028 – 9816 Others 50740 7347 8310 18579 1071 14428 100475 Total liabilities 3165079 1400507 1922597 783321 114326 14428 7400258 (Short)/Long position (2961336) (19759) (433155) 1068994 2072246 915636 642626 2022 Annual Report 303 – F-124 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (c) Liquidity risk (continued) The tables below present the cash flows of the Group of financial assets and financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flow: 31 December 2022 Between three Between Repayable Within 3 months and one and More than on demand months one year five years five years Undated Total (Note (i)) Non-derivative cash flow Assets Cash and balances with central banks 110573 1501 6534 – – 365115 483723 Deposits with banks and non- bank financial institutions 38772 3750 37373 – – – 79895 Placements with and loans to banks and non-bank financial institutions – 68416 110718 44012 – – 223146 Financial assets held under resale agreements – 13732 – – – – 13732 Loans and advances to customers (Notes (ii)) 20458 897769 1343254 1458349 2194769 54499 5969098 Financial investments — a t fair value through profit or loss – 74613 29072 9932 5799 444029 563445 — at amortised cost – 75708 284176 630543 273623 31416 1295466 — a t fair value through other comprehensive income – 144503 137130 430875 170692 3273 886473 — d esignated at fair value through other comprehensive income – – – – – 5128 5128 Others 40857 30382 12437 68494 2167 63261 217598 Total assets 210660 1310374 1960694 2642205 2647050 966721 9737704 304 China CITIC Bank Corporation Limited – F-125 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (c) Liquidity risk (continued) The tables below present the cash flows of the Group of financial assets and financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flow: (continued) 31 December 2022 Between Within three Between Repayable three months and one and More than on demand months one year five years five years Undated Total (Note (i)) Liabilities Borrowings from central banks – 21495 101118 – – – 122613 Deposits from banks and non- bank financial institutions 582376 240606 338448 – – – 1161430 Placements from banks and non-bank financial institutions – 46249 24052 463 – – 70764 Financial liabilities at fair value through profit or loss – 4 14 126 1402 – 1546 Financial assets sold under repurchase agreements – 247730 9060 – – – 256790 Deposits from customers 2385973 1209399 823601 880908 2 – 5299883 Debt securities issued – 271693 498663 156939 98308 – 1025603 Lease liabilities 3006 721 2028 3932 1232 29 10948 Others 50723 20801 16205 25769 2321 10873 126692 Total liabilities 3022078 2058698 1813189 1068137 103265 10902 8076269 (Short)/long position (2811418) (748324) 147505 1574068 2543785 955819 1661435 Derivative cash flow Derivative financial instrument settled on a net basis – 30 11 472 992 – 1505 Derivative financial instruments settled on a gross basis – 10299 (19510) 4712 (4) – (4503) — cash inflow – 1243343 865045 241355 1139 – 2350882 — cash outflow – (1233044) (884555) (236643) (1143) – (2355385) 2022 Annual Report 305 – F-126 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (c) Liquidity risk (continued) The tables below present the cash flows of the Group of financial assets and financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flow: (continued) 31 December 2021 Between three Between Repayable Within 3 months and one and five More than on demand months one year years five years Undated Total (Note (i)) Non-derivative cash flow Assets Cash and balances with central banks 71923 1286 4148 – – 363460 440817 Deposits with banks and non- bank financial institutions 54374 23957 31010 – – – 109341 Placements with and loans to banks and non-bank financial institutions – 72123 64129 7699 – – 143951 Financial assets held under resale agreements – 91468 – – – – 91468 Loans and advances to customers (Notes (ii)) 11426 1040780 1097625 1228371 2309717 66897 5754816 Financial investments — at fair value through profit or loss – 33112 44400 10454 7009 406593 501568 — at amortised cost – 65128 252269 675564 323042 37911 1353914 — a t fair value through other comprehensive income – 102219 149224 320419 157797 457 730116 — de signated at fair value through other comprehensive income – – – – – 4745 4745 Others 66020 9705 5786 52585 116 59361 193573 Total assets 203743 1439778 1648591 2295092 2797681 939424 9324309 306 China CITIC Bank Corporation Limited – F-127 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (c) Liquidity risk (continued) The tables below present the cash flows of the Group of financial assets and financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flow: (continued) 31 December 2021 Between Within three Between Repayable three months and one and five More than on demand months one year years five years Undated Total (Note (i)) Liabilities Borrowings from central banks – 12418 182385 – – – 194803 Deposits from banks and non- bank financial institutions 744501 94273 342642 – – – 1181416 Placements from banks and non-bank financial institutions – 37318 38445 2664 – – 78427 Financial liabilities at fair value through profit or loss 25 12 31 740 488 – 1296 Financial assets sold under repurchase agreements – 49186 49692 – – – 98878 Deposits from customers 2366157 1042032 795124 720211 43 – 4923567 Debt securities issued – 190216 579224 130177 123868 – 1023485 Lease liabilities 3655 409 1106 3981 1367 – 10518 Others 50740 7347 8310 18579 1071 14428 100475 Total liabilities 3165078 1433211 1996959 876352 126837 14428 7612865 (Short)/Long position (2961335) 6567 (348368) 1418740 2670844 924996 1711444 Derivative cash flow Derivative financial instrument settled on a net basis – – 67 (237) (17) – (187) Derivative financial instruments settled on a gross basis – (583) 4411 288 (32) – 4084 — cash inflow – 1156059 594172 106179 1258 – 1857668 — cash outflow – (1156642) (589761) (105891) (1290) – (1853584) Credit Commitments include bank acceptances credit card commitments guarantees loan commitments and letters of credit. The tables below summarise the amounts of credit commitments by remaining contractual maturity. 2022 Annual Report 307 – F-128 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (c) Liquidity risk (continued) 31 December 2022 Less than 1 year 1-5 years Over 5 years Total Bank acceptances 795833 – – 795833 Credit card commitments 704268 – – 704268 Guarantees 119249 65802 1566 186617 Loan commitments 16728 18428 22805 57961 Letters of credit 269893 944 – 270837 Total 1905971 85174 24371 2015516 31 December 2021 Less than 1 year 1-5 years Over 5 years Total Bank acceptances 669711 20 5 669736 Credit card commitments 702361 6007 373 708741 Guarantees 80216 47379 1271 128866 Loan commitments 4096 18677 30700 53473 Letters of credit 213911 1047 – 214958 Total 1670295 73130 32349 1775774 Notes: (i) For cash and balances with central banks the undated period amount represented statutory deposit reserve funds and fiscal deposits maintained with the PBOC. For loans and advances to customers and investments the undated period amount represented the balances being credit-impaired or overdue for more than one month. Equity investments were also reported under undated period.(ii) The balances of loans and advances to customers which were overdue within one month but not impaired are included in repayable on demand.(d) Operational risk Operational risk refers to the risk of loss arising from inappropriate or problematic internal procedures personnel IT systems or external events including legal risk but excluding strategic risk and reputational risk.The Group manages operational risk through a control-based environment by establishing a sound mechanism of operational risk management in order to identify assess monitor control mitigate and report operational risks. The framework covers all business functions ranging from finance credit accounting settlement savings treasury intermediary business computer applications and management special assets resolution and legal affairs. Key controls include: – by establishing a matrix authorisation management system of the whole group carrying out the annual unified authorisation work and strictly restricting the institutions and personnel at all levels to carry out business activities within the scope of authority granted the management requirements of prohibiting the overstepping of authority to engage in business activities were further clarified at the institutional level; 308 China CITIC Bank Corporation Limited – F-129 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 55 Financial risk management (continued) (d) Operational risk (continued) – through consistent legal responsibility framework taking strict disciplinary actions against non-compliance in order to ensure accountability; – promoting the culture establishments of operational risk management; strength training and performance appraisal management in raising risk management awareness; – strengthening cash and account management in accordance with the relevant policies and procedures intensifying the monitoring of suspicious transactions. Ensure our staff are well-equipped with the necessary knowledge and basic skills on anti-money laundering through continuous training; – disaster backup systems and recovery plans covering all the important activities in order to minimize any unforeseen interruption. Insurance cover is arranged to mitigate potential losses associated with certain disruptive events.In addition to the above the Group improves its operational risk management information systems on an ongoing basis to efficiently identify evaluate monitor control and report its level of operational risk. The Group’s management information system has the functionalities of recording and capturing lost data and events of operational risk to further support operational risk control and self-assessment as well as monitoring of key risk indicators. 56 Capital Adequacy Ratio Capital adequacy ratio reflects the Group’s operational and risk management capability and it is the core of capital management. The Group considers its strategic development plans business expansion plans and risk variables in conducting its scenario analysis stress testing and other measures to forecast plan and manage capital adequacy ratio.The Group’s capital management objectives are to meet the legal and regulatory requirements and to prudently determine the capital adequacy ratio under realistic exposures with reference to the capital adequacy ratio levels of leading global banks and the Group’s operating situations.From 1 January 2013 the Group commenced the computation of its capital adequacy ratios in accordance with the Regulation Governing Capital of Commercial Banks (Provisional) and other relevant regulations promulgated by the CBIRC in the year of 2012. According to the requirements for credit risk the capital requirement was measured using the weighting method. The market risk was measured by adopting the standardised approach and the operational risk was measured by using the basic indicator approach. From 1 January 2019 on the Group calculates the default risk assets of the counterparties of derivatives in accordance with the Regulations on Measuring the Risk Assets of the Counterparties of Derivative Instruments promulgated by the CBIRC in 2018. The requirements pursuant to these regulations may have certain differences comparing to those applicable in Hong Kong and other jurisdictions. The Group’s management monitors the Group’s and the Bank’s capital adequacy regularly based on regulations issued by the CBIRC. The required information is filed with the CBIRC by the Group and the Bank quarterly. 2022 Annual Report 309 – F-130 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 56 Capital Adequacy Ratio (continued) The Group’s ratios calculated based on the relevant requirements promulgated by the CBIRC are listed as below. 31 December 31 December 20222021 20222021 Core Tier-One capital adequacy ratio 8.74% 8.85% Tier-One capital adequacy ratio 10.63% 10.88% Capital adequacy ratio 13.18% 13.53% Components of capital base Core Tier-One capital: Share capital 48935 48935 Capital reserve 59172 59177 Other comprehensive income and qualified portion of other equity instruments 1505 4639 Surplus reserve 48932 43783 General reserve 98103 90889 Retained earnings 293956 263936 Qualified portion of non-controlling interests 7992 6588 Total core Tier-One capital 558595 517947 Core Tier-One capital deductions: Goodwill (net of related deferred tax liability) (903) (833) Other intangible assets other than land use right (net of related deferred tax liability) (3831) (3036) Core Tier-One Capital investments made in financial institutions over which the Group has control but are outside the regulatory consolidation scope – – Other deductible amounts of net deferred tax assets depending on Bank’s future earnings (1998) – Net core Tier-One capital 551863 514078 Other Tier-One capital (Note (i)) 119614 117961 Tier-One capital 671477 632039 Tier-Two capital: Qualified portion of Tier-Two capital instruments issued and share premium 89987 94372 Surplus allowance for loan impairment 68481 58107 Qualified portion of non-controlling interests 2142 1292 Net capital base 832087 785811 Total risk-weighted assets 6315506 5809523 Note: (i) As at 31 December 2022 and 31 December 2021 the Group’s other Tier-One capital included preference shares are RMB34955 million (2021: RMB34955 million) perpetual bonds issued by the Bank (Note 43) are RMB79986 million (2021: RMB79986 million) and non-controlling interests (Note 49) are RMB4673 million (2021: RMB3020 million). 310 China CITIC Bank Corporation Limited – F-131 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 57 Fair value Fair value estimates are generally subjective in nature and are made as of a specific point in time based on the characteristics of the financial instruments and relevant market information. The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments: Level 1: Q uoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date. This level includes listed equity instruments and debt instruments on exchanges and exchange-traded derivatives.Level 2: Inputs other than quoted prices included within Level 1 are observable for assets or liabilities either directly or indirectly. A majority of the debt securities classified as level 2 are Renminbi bonds. The fair values of these bonds are determined based on the valuation results provided by China Central Depository & Clearing Corporate Limited. This level also includes partial bills rediscounting and forfeiting in loans and advances part of the investment management products managed by securities companies and trust investment plans as well as a majority of over-the-counter derivative contracts. Foreign exchange forward and swaps Interest rate swap and foreign exchange options use discount cash flow evaluation method and the valuation model of which includes Forward Pricing Model Swap Model and Option Pricing Model. Bills rediscounting forfeiting investment management products managed by securities companies and trust investment plans use discount cash flow evaluation method to estimate fair value. Input parameters are sourced from the open market such as Bloomberg and Reuters.Level 3: Inputs for assets or liabilities are based on unobservable parameters. This level includes equity instruments and debt instruments with one or more than one significant unobservable parameter. Management determines the fair value through inquiring from counterparties or using the valuation techniques. The model incorporates unobservable parameters such as discount rate and market price volatilities.The fair value of the Group’s financial assets and financial liabilities are determined as follows: – If traded in active markets fair values of financial assets and financial liabilities with standard terms and conditions are determined with reference to quoted market bid prices and ask prices respectively; – If not traded in active markets fair values of financial assets and financial liabilities are determined in accordance with generally accepted pricing models or discounted cash flow analysis using prices from observable current market transactions for similar instruments. If there were no available observable current market transactions prices for similar instruments quoted prices from counterparty are used for the valuation and management performs analysis on these prices. Discounted cash flow analysis using the applicable yield curve for the duration of the instruments is used for derivatives other than options and option pricing models are used for option derivatives.The Group has established an independent valuation process for financial assets and financial liabilities. The Financial Market Department the Financial Institution Department and the Investment Bank Department are responsible for the valuation of financial assets and financial liabilities. The Risk Management Department performs an independent review of the valuation methodologies inputs assumptions and valuation results. The Operations Department records the accounting for these items according to the result generated from the valuation process and accounting policies.The Finance and Accounting Department prepares the disclosure of the financial assets and financial liabilities based on the independently reviewed valuation. 2022 Annual Report 311 – F-132 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 57 Fair value (continued) The Group’s valuation policies and procedures for different types of financial instruments are approved by the Risk Management Committee. Any change to the valuation policies or the related procedures must be reported to the Risk Management Committee for approval before they are implemented.For the year ended 31 December 2022 there was no significant change in the valuation techniques or inputs used to determine fair value measurements.(a) Financial assets and financial liabilities not measured at fair value Financial assets and liabilities not carried at fair value of the Group include cash and balances with central banks deposits with banks and non-bank financial institutions placements with and loans to banks and non- bank financial institutions financial assets held under resale agreements loans and advances to customers at amortised cost financial investments at amortised cost borrowings from central banks deposits from banks and non-bank financial institutions placements from banks and non-bank financial institutions financial assets sold under repurchase agreements deposits from customers and debt securities issued.Except for the items shown in the tables below the maturity dates of aforesaid financial assets and liabilities are within a year or are mainly floating interest rates as a result their carrying amounts are approximately equal to their fair value.Carrying values Fair values 31 December 31 December 31 December 31 December 2022202120222021 Financial assets: Financial investment — at amortised cost 1135452 1170229 1141092 1177877 Financial liabilities: Debt securities issued — c ertificates of deposit (not for trading purpose) issued 1047 1212 1047 1212 — debt securities issued 118255 62163 114609 60184 — subordinated bonds issued 94714 114974 95813 117956 — ce rtificates of interbank deposit issued 720446 739857 704197 729923 — c onvertible corporate bonds 40744 39997 44688 43158 312 China CITIC Bank Corporation Limited – F-133 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 57 Fair value (continued) (a) Financial assets and financial liabilities not measured at fair value (continued) Fair value of financial assets and liabilities above at fair value hierarchy is as follows: 31 December 2022 Level 1 Level 2 Level 3 Total Financial assets: Financial investment — at amortised cost 7248 886459 247385 1141092 Financial liabilities: Debt securities issued — c ertificates of deposit (not for trading purpose) issued – – 1047 1047 — debt securities issued 11163 103446 – 114609 — subordinated bonds issued 3462 92351 – 95813 — c ertificates of interbank deposit issued – 704197 – 704197 — c onvertible corporate bonds – – 44688 44688 31 December 2021 Level 1 Level 2 Level 3 Total Financial assets: Financial investment — at amortised cost 5189 902704 269984 1177877 Financial liabilities: Debt securities issued — c ertificates of deposit (not for trading purpose) issued – – 1212 1212 — debt securities issued 8965 51219 – 60184 — subordinated bonds issued – 117956 – 117956 — c ertificates of interbank deposit issued – 729923 – 729923 — c onvertible corporate bonds – – 43158 43158 2022 Annual Report 313 – F-134 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 57 Fair value (continued) (b) Financial assets and financial liabilities measured at fair value Level 1 Level 2 Level 3 Total As at 31 December 2022 Recurring fair value measurements Assets Loans and advances to customers at fair value through other comprehensive income — loans – 54851 – 54851 — discounted bills – 508142 – 508142 Loans and advances to customers at fair value through profit or loss — loans – – 3881 3881 Financial investments at fair value through profit or loss — investment funds 141302 262741 27915 431958 — debt securities 17670 58067 4953 80690 — certificates of deposit – 35543 – 35543 — w ealth management products 1058 303 155 1516 — equity instruments 2562 – 5325 7887 Financial investments at fair value through other comprehensive income — debt securities 118342 658690 406 777438 — certificates of deposit 15135 6366 – 21501 — i nvestments management products managed by securities companies – – – – Financial investments designated at fair value through other comprehensive income — equity instruments 292 – 4836 5128 Derivative financial assets — interest rate derivatives 28 14931 – 14959 — currency derivatives 105 29068 – 29173 — precious metals derivatives – 250 – 250 — credit derivatives – 1 – 1 Total financial assets measured at fair value 296494 1628953 47471 1972918 Liabilities Financial liabilities at fair value through profit or loss — s hort position in debt securities 406 106 – 512 — structured products – – 1034 1034 Derivative financial liabilities — interest rate derivatives 58 14829 – 14887 — currency derivatives 310 28470 – 28780 — precious metals derivatives – 598 – 598 Total financial liabilities measured at fair value 774 44003 1034 45811 314 China CITIC Bank Corporation Limited – F-135 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 57 Fair value (continued) (b) Financial assets and financial liabilities measured at fair value (continued) Level 1 Level 2 Level 3 Total As at 31 December 2021 Recurring fair value measurements Assets Loans and advances to customers at fair value through other comprehensive income — loans – 38599 – 38599 — discounted bills – 461443 – 461443 Financial investments at fair value through profit or loss — investment funds 134725 256473 6209 397407 — debt securities 2943 46532 9109 58584 — certificates of deposit – 30776 – 30776 — wealth management products 1458 – 153 1611 — equity instruments 1709 – 5723 7432 Financial investments at fair value through other comprehensive income — debt securities 87146 555011 413 642570 — certificates of deposit 602 3704 – 4306 — i nvestments management products managed by securities companies – 24 – 24 Financial investments designated at fair value through other comprehensive income — equity instruments 253 – 4492 4745 Derivative financial assets — interest rate derivatives – 8643 – 8643 — currency derivatives 89 13841 – 13930 — precious metals derivatives – 148 – 148 Total financial assets measured at fair value 228925 1415194 26099 1670218 Liabilities Financial liabilities at fair value through profit or loss — sh ort position in debt securities 633 506 – 1139 — structured products – – 25 25 Derivative financial liabilities — interest rate derivatives 3 8536 – 8539 — currency derivatives 20 14197 – 14217 — precious metals derivatives – 151 – 151 Total financial liabilities measured at fair value 656 23390 25 24071 2022 Annual Report 315 – F-136 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 57 Fair value (continued) (b) Financial assets and financial liabilities measured at fair value (continued) Notes: (i) During the year there were no significant transfers amongst Level 1 Level 2 and Level 3 of the fair value hierarchy.(ii) The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in the Level 3 fair value hierarchy: Assets Liabilities Financial assets Financial assets at designated at fair Financial assets at fair fair value through value through other Financial liabilities value through profit other comprehensive comprehensive Loans and advances at fair value through or loss income income to customers Total profit or loss Total As at 1 January 2022 21194 413 4492 – 26099 (25) (25) Total gains or losses — in profit or loss (869) – 459 – (410) – – — in comprehensive income – 3 (78) – (75) – – Purchases 27386 135 497 3881 31899 (1034) (1034) Settlements (10194) (155) (544) – (10893) 25 25 Transfer in/out – 10 – – 10 – – Exchange effect 831 – 10 – 841 – – As at 31 December 2022 38348 406 4836 3881 47471 (1034) (1034) Assets Liabilities Financial assets Financial assets at designated at fair Financial assets at fair fair value through value through other Financial liabilities value through profit other comprehensive comprehensive Loans and advances to at fair value through or loss income income customers Total profit or loss Total As at 1 January 2021 33059 4422 3272 – 40753 (4360) (4360) Total gains or losses — in profit or loss (621) (415) 1070 – 34 – – — in comprehensive income – (22) (67) – (89) – – Purchases 11353 157 419 – 11929 – – Settlements (22484) (3748) (198) – (26430) 4335 4335 Transfer in/out 155 19 – – 174 – – Exchange effect (268) – (4) – (272) – – As at 31 December 2021 21194 413 4492 – 26099 (25) (25) For unlisted equity investments fund investments bond investments structured products the Group determines the fair value through counterparties’ quotations and valuation techniques etc. Valuation techniques include discounted cash flow analysis and the market comparison approach etc. The fair value measurement of these financial instruments may involve important unobservable inputs such as credit spread and liquidity discount etc. The fair value of the financial instruments classified under level 3 is not significantly influenced by the reasonable changes in these unobservable inputs. 316 China CITIC Bank Corporation Limited – F-137 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 58 Related parties (a) Relationship of related parties (i) The Group is controlled by CITIC Corporation Limited (incorporated in mainland China) which owns 65.37% of the Bank’s shares. The ultimate parent of the Group is CITIC Group (incorporated in mainland China).(ii) Related parties of the Group include subsidiaries joint ventures and associates of CITIC Corporation Limited and CITIC Group. The Bank entered into banking transactions with its subsidiaries at arm’s length in the ordinary course of business. These transactions are eliminated on consolidation.China National Tobacco Corporation (“CNTC”) and Xinhu Zhongbao Co. Ltd. each has appointed a non- executive director on the Board of Directors of the Bank which can exert significant influence on the Bank and thus constitute related parties of the Bank.(b) Related party transactions The Group entered into transactions with related parties in the ordinary course of its banking businesses including lending assets transfer (i. e. issuance of asset-backed securities in the form of public placement) wealth management investment deposit settlement and clearing off-balance sheet transactions and purchase sale and leases of property. These banking transactions were conducted under normal commercial terms and conditions and priced at the relevant market rates prevailing at the time of each transaction.The major related party transaction between the Group and related parties are submitted in turn to the board of directors for deliberation and the relevant announcements have been posted on the websites of the Shanghai Stock Exchange the Hong Kong Stock Exchange and the Bank.In addition transactions during the relevant year and the corresponding balances outstanding at the reporting dates are as follows: Year ended 31 December 2022 Ultimate holding company and Other major Associates and affiliates equity holders joint ventures Note (i) Profit and loss Interest income 3171 1318 997 Fee and commission income and other operating income 258 122 4 Interest expense (2081) (3240) (30) Net trading loss (477) 73 – Other service fees (2870) (979) (2) 2022 Annual Report 317 – F-138 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 58 Related parties (continued) (b) Related party transactions (continued) Year ended 31 December 2021 Ultimate holding company and Other major Associates and affiliates equity holders joint ventures Note (i) Profit and loss Interest income 791 671 785 Fee and commission income and other operating income 567 107 3 Interest expense (2039) (2952) (35) Net trading loss (68) 43 – Other service fees (2734) (12) (1) 31 December 2022 Ultimate holding company and Other major Associates and affiliates equity holders joint ventures Note (i) Assets Gross loans and advances to customers 35316 19032 – Less: a llowance for impairment losses on loans and advances (1074) (302) – Loans and advances to customers (net) 34242 18730 – Deposits with banks and non-bank financial institutions 1 – 33712 Placements with and loans to banks and non- bank financial institutions 25810 – – Derivative financial assets 505 – – Investment in financial assets — at fair value through profit or loss 4428 – – — at amortised cost 16573 4065 – — at fair value through other comprehensive income 4153 1688 – — d esignated at fair value through other comprehensive income 450 – – Investments in associates and joint ventures – – 6302 Other assets 825 2 – Liabilities Deposits from banks and non-bank financial institutions 55167 492 663 Placements from banks and non-bank financial institutions – – – Derivative financial liabilities 591 – – Deposits from customers 45849 84698 230 Debt securities issued 350 – – Lease liability 72 2 – Other liabilities 324 – – Off-balance sheet items Guarantees and letters of credit 3499 4789 – Acceptances 3177 114 – Nominal amount of derivatives 193962 – – 318 China CITIC Bank Corporation Limited – F-139 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 58 Related parties (continued) (b) Related party transactions (continued) 31 December 2021 Ultimate holding company and Other major Associates and affiliates equity holders joint ventures Note (i) Assets Gross loans and advances to customers 40297 14731 – Less: a llowance for impairment losses on loans and advances (893) (296) – Loans and advances to customers (net) 39404 14435 – Deposits with banks and non-bank financial institutions – – 31911 Placements with and loans to banks and non- bank financial institutions 36089 – – Derivative financial assets 934 – – Investment in financial assets — at fair value through profit or loss 1506 – – — at amortised cost 971 50 – — at fair value through other comprehensive income 3340 250 – — d esignated at fair value through other comprehensive income – – – Investments in associates and joint ventures – – 5753 Other assets 2128 2 – Liabilities Deposits from banks and non-bank financial institutions 51721 447 3130 Placements from banks and non-bank financial institutions – – – Derivative financial liabilities 609 – – Deposits from customers 61980 129672 328 Employee benefits payable – – – Lease liability 64 4 – Other liabilities 102 6 – Off-balance sheet items Guarantees and letters of credit 2628 730 – Acceptances 2827 206 – Nominal amount of derivatives 151647 1230 – Note: (i) Other major equity holders include CNTC and Xinhu Zhongbao Co. Ltd. 2022 Annual Report 319 – F-140 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 58 Related parties (continued) (c) Key management personnel and their close family members and related companies Key management personnel are those persons who have the authority and responsibility for planning directing and controlling the activities of the Group directly or indirectly including directors supervisors and executive officers.The Group entered into banking transactions with key management personnel and their close family members and those companies controlled or jointly controlled by them in the normal course of business. Other than those disclosed below there was no material transactions and balances between the Group and these individuals their close family members or those companies controlled or jointly controlled by them.The aggregate amount of relevant loans outstanding as at 31 December 2022 to directors supervisors and executive officers amounted to RMB0.69 million (as at 31 December 2021: RMB0.99 million).The aggregated compensations for directors supervisors and executive officers of the Bank as at 31 December 2022 amounted to RMB29.42 million (as at 31 December 2021: RMB25.65 million). (d) Supplementary defined contribution plan The Group has established a supplementary defined contribution plan for its qualified employees which is administered by CITIC Group (Note 37 (a)).(e) Transactions with state-owned entities in the PRC The Group operates in an economic regime currently predominated by entities directly or indirectly owned by the PRC government through its government authorities agencies affiliations and other organisations (collectively referred to as “state-owned entities”).Transactions with state-owned entities including CNTC’s indirect subsidiaries include but are not limited to the following: – lending and deposit taking; – taking and placing of inter-bank balances; – derivative transactions; – entrusted lending and other custody services; – insurance and securities agency and other intermediary services; – sale purchase underwriting and redemption of bonds issued by state-owned entities; – purchase sale and leases of property and other assets; and – rendering and receiving of utilities and other services.These transactions are conducted in the ordinary course of the Group’s banking business on terms similar to those that would have been entered into with non-state-owned entities. The Group has also established its pricing strategy and approval processes for major products and services such as loans deposits and commission income.The pricing strategy and approval processes do not depend on whether the customers are state-owned entities or not. The Directors are of opinion that none of these transactions are material related party transactions that require separate disclosure. 320 China CITIC Bank Corporation Limited – F-141 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 59 Structured entities (a) Unconsolidated structured entities sponsored and managed by third parties The Group invests in unconsolidated structured entities which are sponsored and managed by other entities for investment return and records trading gains or losses and interest income therefrom. These unconsolidated structured entities primarily include wealth management products trust investment plans investment management products investment funds and asset-backed securities.The following table sets out an analysis of the carrying amounts of interests held by the Group as at 31 December 2022 in the structured entities sponsored by third party institutions as well as an analysis of the line items in the consolidated statement of financial position under which relevant assets are recognized: 31 December 2022 Maximum loss Carrying amount exposure Financial Financial investments investments at fair value at fair value Financial through other through profit investments at Comprehensive or loss amortised cost income Total Wealth management product of other banks 1516 – – 1516 1516 Investment management products managed by securities companies – 39628 – 39628 39628 Trust management plans – 222819 – 222819 222819 Asset-backed securities 1335 252525 44697 298557 298557 Investment funds 431958 – – 431958 431958 Total 434809 514972 44697 994478 994478 31 December 2021 Maximum loss Carrying amount exposure Financial Financial investments investments at fair value at fair value Financial through other through profit investments at Comprehensive or loss amortised cost income Total Wealth management product of other banks 1586 – – 1586 1586 Investment management products managed by securities companies – 50413 24 50437 50437 Trust management plans – 234770 – 234770 234770 Asset-backed securities 4955 261418 94086 360459 360459 Investment funds 397407 – – 397407 397407 Total 403948 546601 94110 1044659 1044659 2022 Annual Report 321 – F-142 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 59 Structured entities (continued) (a) Unconsolidated structured entities sponsored and managed by third parties (continued) The maximum exposures to risk in the above wealth management products trust investment plans investment management products investment funds and asset-backed securities managed by securities companies and trust investment funds are the carrying value of the assets held by the Group at the reporting date. The maximum exposures to risk in the asset-backed securities are the amortised cost or fair value of the assets held by the Group at the reporting date in accordance with the line items under which these assets are presented in the consolidated statement of financial position.(b) Unconsolidated structured entities sponsored and managed by the Group Unconsolidated structured entities sponsored and managed by the Group mainly include non-principal guaranteed wealth management products. The wealth management products invest in a range of primarily fixed-rate assets most typically money market instruments debt securities and loan assets. As the manager of these wealth management products the Group invests on behalf of its customers in assets as described in the investment plan related to each wealth management product and receives fee and commission income.As at 31 December 2022 the scale of non-principal protected wealth management products managed by the Group that were not included in the Group’s consolidated financial statements was RMB1577077 million (31 December 2021: RMB1403275 million).During the year ended 31 December 2022 the Group’s interest in these wealth management products included fee and commission income of RMB8523 million (2021: RMB7485 million); interest income of RMB72 million (2021: RMB917 million) and interest expense of RMB0 (2021: RMB568 million).During the year ended 31 December 2022 there was no placements and financial assets held under resale agreements from the Group with these wealth management sponsored by the Group (31 December 2021: RMB20000 million; maximum exposure in 2021: RMB59450 million).In order to achieve a smooth transition and steady development of the wealth management business in 2022in accordance with the requirements of the “Guiding Opinions on Regulating the Asset Management Businessof Financial Institutions” the Group continues to promote net-value-based reporting of its asset management products and dispose of existing portfolios.On 31 December2022 assets of these wealth management products amounting to RMB233528 million (31 December 2021: RMB190428 million) were invested in investments in which certain subsidiaries and associates of the CITIC Group acted as trustees. 60 Transfers of financial assets The Group entered into transactions which involved securitisation transactions and transfers of non-performing financial assets.These transactions were entered into in the normal course of business by which recognized financial assets were transferred to third parties or structured entities. Transfers of assets may give rise to full or partial derecognition of the financial assets concerned. On the other hand where transferred assets do not qualify for derecognition as the Group has retained substantially all the risks and rewards of these assets the Group continues to recognize the transferred assets. 322 China CITIC Bank Corporation Limited – F-143 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 60 Transfers of financial assets (continued) Details of the financial assets sold under repurchase agreements are set forth in Note 35. Details of securitisation transactions and non-performing financial assets transfer transactions conducted by the Group for the year ended 31 December 2022 totalling RMB34212 million (year ended 31 December 2021: RMB54188 million) are set forth below.Securitisation transactions The Group enters into securitisation transactions by which it transfers loans to structured entities which issue asset- backed securities to investors. The Group assessed among other factors whether or not to derecognize the transferred assets by evaluating the extent to which it retains the risks and rewards of the assets and whether it has relinquished its controls over these assets based on the criteria as detailed in Note 4 (c) and Note 5 (iv).In 2022 the original book value of financial assets transferred by the Group through asset securitization transactions was RMB14994 million (2021: RMB47607 million) which met the conditions for complete derecognition (2021: RMB37807 million for the original book value of credit asset transfer and RMB3470 million for the recognition of continued assets and liabilities).Transfer of loans and other financial assets In 2022 the Group transferred loans and other financial assets by other means with the original book value of RMB19218 million (2021: RMB6581 million) including RMB5628 million of non-performing loans and RMB13590 million of non-performing structured investments. The Group assesses the transfer of risks and rewards through notes 4 (c) and 5 (iv) and believes that the above financial assets meet the conditions for complete derecognition. In 2022 the original book value of the Group’s transfer of non-performing assets to related parties is RMB14119 million and the transaction price is RMB2926 million. Relevant businesses are conducted under normal commercial conditions and the transaction is concluded at the current market price at the time of each transaction. 61 Offsetting financial assets and financial liabilities Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.As at 31 December 2022 the amount of the financial assets and financial liabilities subject to enforceable master netting arrangements or similar agreements are not material to the Group. 2022 Annual Report 323 – F-144 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 62 Statements of financial position and changes in equity of the Bank Statement of financial position 31 December 31 December 20222021 Assets Cash and balances with central banks 472441 430496 Deposits with banks and non-bank financial institutions 63712 80828 Precious metals 5985 9645 Placements with and loans to banks and non-bank financial institutions 190693 136693 Derivative financial assets 22347 15826 Financial assets held under resale agreements 11295 89469 Loans and advances to customers 4760238 4492419 Financial investments 2394927 2230652 — at fair value through profit or loss 553863 489457 — at amortised cost 1137654 1171414 — at fair value through other comprehensive income 699157 565879 — designated at fair value through other comprehensive income 4253 3902 Investments in subsidiaries and joint ventures 33060 32469 Property plant and equipment 33870 33660 Right-of-use assets 9956 10077 Intangible assets 3206 2398 Deferred tax assets 53088 45600 Other assets 48242 55895 Total assets 8103060 7666127 Liabilities Borrowings from central banks 119334 189042 Deposits from banks and non-bank financial institutions 1146264 1174317 Placements from banks and non-bank financial institutions 19374 31811 Financial liabilities at fair value through profit or loss 290 506 Derivative financial liabilities 22792 16237 Financial assets sold under repurchase agreements 251685 97620 Deposits from customers 4854059 4521331 Accrued staff costs 20680 18069 Taxes payable 7420 9546 Debt securities issued 968086 951213 Lease liability 9363 9228 Provisions 9618 11805 Other liabilities 35797 29016 Total liabilities 7464762 7059741 Equity Share capital 48935 48935 Preference shares 118076 118076 Capital reserve 61598 61598 Other comprehensive income (1736) 4524 Surplus reserve 54727 48937 General reserve 96906 94430 Retained earnings 259792 229886 Total equity 638298 606386 Total liabilities and equity 8103060 7666127 324 China CITIC Bank Corporation Limited – F-145 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 62 Statements of financial position and changes in equity of the Bank (continued) Statement of changes in equity Other Preference comprehensive Surplus General Retained Share capital shares Capital reserve income reserve reserve earnings Total equity As at 1 January 2022 48935 118076 61598 4524 48937 94430 229886 606386 (i) Net profit – – – – – – 57895 57895 (ii) Other comprehensive income – – – (6417) – – – (6417) Total comprehensive income – – – (6417) – – 57895 51478 (iii) Profit appropriations — Appropriations to surplus reserve – – – – 5790 – (5790) – — Appropriations to general reserve – – – – – 2476 (2476) – — D ividend distribution to ordinary shareholders of the bank – – – – – – (14778) (14778) — D ividend distribution to preference shareholders – – – – – – (1428) (1428) — In terest paid to holders of perpetual bonds – – – – – – (3360) (3360) (iv) Transfers within the owners’ equity — Ot her comprehensive income transferred to retained earnings – – – 157 – – (157) – As at 31 December 2022 48935 118076 61598 (1736) 54727 96906 259792 638298 Other Preference comprehensive Retained Share capital shares Capital reserve income Surplus reserve General reserve earnings Total equity As at 1 January 2021 48935 78083 61598 1577 43786 89856 203536 527371 (i) Net profit – – – – – – 51514 51514 (ii) Other comprehensive income – – – 2947 – – – 2947 Total comprehensive income – – – 2947 – – 51514 54461 (iii) Investor capital — Insurance of perpetual bonds – 39993 – – – – – 39993 (iv) Profit appropriations — Appropriations to surplus reserve – – – – 5151 – (5151) – — Appropriations to general reserve – – – – – 4574 (4574) – — Di vidend distribution to ordinary shareholders of the bank – – – – – – (12429) (12429) — D ividend distribution to preference shareholders – – – – – – (1330) (1330) — Int erest paid to holders of perpetual bonds – – – – – – (1680) (1680) As at 31 December 2021 48935 118076 61598 4524 48937 94430 229886 606386 2022 Annual Report 325 – F-146 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 63 Benefits and interests of directors and supervisors (a) Directors and supervisors’ emoluments For the year ended 31 December 2022 Emoluments paid or receivable in respect of services as director or supervisor of the Group Emoluments paid or receivable in respect of Employer’s director or supervisor’s contribution Remunerations paid or other services in Allowances to retirement receivable in respect connection with the Discretionary Housing and benefits benefit of accepting office as management of the Name Fees Salary bonuses allowance in kind scheme director and supervisor affairs of the Group Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Executive directors Fang Heying Note (i) – – – – – – – – – Liu Cheng – 1620 120 – 43 244 – – 2027 Guo Danghuai – 1512 133 – 43 244 – – 1932 Non-executive directors Zhu Hexin Note (i) – – – – – – – – – Cao Guoqiang Note (i) – – – – – – – – – Huang Fang Note (i) – – – – – – – – – Wang Yankang Note (i) – – – – – – – – – Independent non-executive directors He Cao 300 – – – – – – – 300 Chen Lihua 280 – – – – – – – 280 Qian Jun 310 – – – – – – – 310 Liu Tsz Bun Bennett 150 – – – – – – – 150 Emoluments paid or receivable in respect of services as director or supervisor of the Group Emoluments paid or receivable in respect of Employer’s director or supervisor’s contribution Remunerations paid or other services in Allowances to retirement receivable in respect connection with the Discretionary Housing and benefits benefit of accepting office as management of the Name Fees Salary bonuses allowance in kind scheme director and supervisor affairs of the Group Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Supervisors Li Rong – 390 847 – 43 244 – – 1524 Cheng Pusheng – 380 843 – 43 243 – – 1509 Chen Panwu – 375 822 – 43 244 – – 1484 Zeng Yufang – 340 580 – 51 219 – – 1190 Wei Guobin 260 – – – – – – – 260 Sun Qi Xiang 260 – – – – – – – 260 Liu Guoling 260 – – – – – – – 260 Former Directors and Supervisors resigned in 2022 Li Gang (Note (ii)) – 400 698 – 43 247 – – 1388 326 China CITIC Bank Corporation Limited – F-147 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 63 Benefits and interests of directors and supervisors (continued) (a) Directors and supervisors’ emoluments (continued) For the year ended 31 December 2021 Emoluments paid or receivable in respect of services as director or supervisor of the Group Emoluments paid or receivable in respect of director or supervisor’s Employer’s Remunerations paid other services in Allowances contribution or receivable in respect connection with the Discretionary Housing and benefits to retirement of accepting office as management of the Name Fees Salary bonuses allowance in kind benefit scheme director and supervisor affairs of the Group Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Executive directors Fang Heying Note (i) – – – – – – – – – Guo Danghuai – 1590 – – 40 172 – – 1802 Non-executive directors Zhu Hexin Note (i) – – – – – – – – – Cao Guoqiang Note (i) – – – – – – – – – Huang Fang Note (i) – – – – – – – – – Wang Yankang Note (i) – – – – – – – – – Independent non-executive directors He Cao 271 – – – – – – – 271 Chen Lihua 271 – – – – – – – 271 Qian Jun 310 – – – – – – – 310 Emoluments paid or receivable in respect of services as director or supervisor of the Group Emoluments paid or receivable in respect of director or supervisor’s Employer’s Remunerations paid other services in Allowances contribution or receivable in respect connection with the Discretionary Housing and benefits to retirement of accepting office as management of the Name Fees Salary bonuses allowance in kind benefit scheme director and supervisor affairs of the Group Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Supervisors Li Rong – 390 836 – 40 172 – – 1438 Li Gang – 400 826 – 40 172 – – 1438 Chen Panwu – 450 1096 – 40 172 – – 1758 Zeng Yufang – 340 620 – 48 197 – – 1205 Wei Guobin 260 – – – – – – – 260 Sun Qi Xiang 135 – – – – – – – 135 Liu Guoling 135 – – – – – – – 135 Former Directors and Supervisors resigned in 2021 Li Qingping – – – – – – – – – Wan Liming – – – – – – – – – Yin Liji 282 – – – – – – – 282 Liu Cheng – 1680 – – 40 172 – – 1892 Jia Xiangsen 125 – – – – – – – 125 Zheng Wei 125 – – – – – – – 125 2022 Annual Report 327 – F-148 –Chapter 9 Notes to the Consolidated Financial Statements For the year ended 31 December 2022 (Amounts in millions of Renminbi unless otherwise stated) 63 Benefits and interests of directors and supervisors (continued) (a) Directors and supervisors’ emoluments (continued) Notes: (i) Mr. Zhu Hexin Mr. Fang Heying Mr. Cao Guoqiang Ms. Huang Fang and Mr. Wang Yankang did not receive any emoluments from the Bank in 2022. Three of the five directors are appointed by CITIC Limited and CITIC Group (“Parent Companies”). Their emoluments were paid by the Parent Companies in 2022. The other two directors are appointed respectively by Xinhu Zhongbao Co. Ltd. and CNTC. Their emolument allocations are not disclosed due to the difficulty to apportion the services provided by the directors to the Bank.(ii) Mr. Li Gang resigned in March 2022.(b) Other benefits and interests No direct or indirect retirement benefits and termination benefits were paid to directors as at 31 December 2022 (as at December 2021: Nil). For the year ended 31 December 2022 and 31 December 2021 the balance of loans and advances from the Group to Directors Supervisors or certain controlled body corporates and connected entities of the Directors or Supervisors was not significant.No significant transactions arrangements and contracts in relation to the Group’s business to which the Company was a party and in which a director of the Company had a material interest whether directly or indirectly subsisted at the end of the year or at any time during the year 2022 (2021: Nil). 64 Events after the reporting period In March 2023 CNCB Investment repurchased and cancelled its 0.95% equity held by CBI. Since the completion day of the transaction CNCB Investment has become a wholly-owned subsidiary of the Bank. 65 Comparative data Certain comparative data has been restated to conform to the presentation of the current year. 328 China CITIC Bank Corporation Limited – F-149 –Chapter 9 Independent Auditor’s Report For the year ended 31 December 2023 To the Board of Directors of China CITIC Bank Corporation Limited (Incorporated in the People’s Republic of China with limited liability) Opinion We have audited the consolidated financial statements of China CITIC Bank Corporation Limited (the “Bank”) and its subsidiaries (the “Group”) set out on pages 196 to 323 which comprise the consolidated statement of financial position as at 31 December 2023 the consolidated statement of profit or loss and other comprehensive income the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended and notes to the consolidated financial statements including significant accounting policy information.In our opinion the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2023 and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board (the “IASB”) and have been properly prepared in compliance with the disclosure requirements of Hong Kong Companies Ordinance.Basis for Opinion We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the HKICPA’s Code of Ethics for Professional Accountants (the “Code”) together with any ethical requirements that are relevant to our audit of the consolidated financial statements in the People’s Republic of China and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.Key Audit Matters Key audit matters are those matters that in our professional judgement were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and in forming our opinion thereon and we do not provide a separate opinion on these matters. 2023 Annual Report 189 – F-150 –Chapter 9 Independent Auditor’s Report For the year ended 31 December 2023 Measurement of expected credit losses for loans and advances to customers and financial assets at amortised costs See Note 4(c) Note 5(i) Note 21 and Note 22 to the consolidated financial statements.The Key Audit Matter How the matter was addressed in our audit As at 31 December 2023 the gross balance of loans and Our audit procedures to assess ECL for loans and advances advances to customers and accrued interest included for the to customers and financial assets at amortised costs purpose of expected credit loss assessment in the Group’s included the following: consolidated statement of financial position amounted to RMB5512734 million for which management recognized * With the assistance of KPMG’s IT audit an impairment allowance of RMB135198 million; the specialists understanding and assessing the design gross balance of financial assets at amortised costs and implementation and operating effectiveness of accrued interest included for the purpose of expected key internal controls of financial reporting over credit loss assessment amounted to RMB1111903 the approval recording and monitoring of loans million for which management recognized an impairment and advances to customers and financial assets at allowance of RMB26305million. amortised costs the credit risk staging process and the measurement of ECL for loans and advances to The Group uses an expected credit loss (“ECL”) model customers and financial assets at amortised costs.to measure the loss allowance for loans and advances to customers and financial assets at amortised costs * With the assistance of KPMG’s financial risk in accordance with International Financial Reporting specialists assessing the appropriateness of the ECL Standard 9 Financial instruments. model in determining the loss allowance of loans and advances to customers and financial assets at The determination of ECL allowance of loans and amortised costs and the appropriateness of the key advances to customers and financial assets at amortised parameters and assumptions in the model which costs is subject to the application of a number of key included credit risk staging probability of default parameters and assumptions including the credit loss given default exposure at default adjustments risk staging probability of default loss given default for forward-looking information and other exposures at default and discount rate adjustments adjustments and assessing the appropriateness of for forward-looking information and other adjustment related key management judgement.factors. Extensive management judgment is involved in the selection of those parameters and the application of * Assessing the completeness and accuracy of key the assumptions. data used in the ECL model. We compared the total balance of the loans and advances to customers and financial assets at amortised costs used by management to assess the ECL allowance with the general ledger to check the completeness of the data. We also selected samples to compare information of individual loan and advance to customers and financial assets at amortised costs with the underlying agreements and other related documentation. In addition we checked the accuracy of key external data used by management by comparing them with public sources.* For key parameters used in the ECL model which were derived from system generated internal data assessing the accuracy of input data by comparing the input data with original documents on a sample basis. In addition we involved KPMG’s IT audit specialists to assess the accuracy of the loans and advances’ overdue information on a sample basis. 190 China CITIC Bank Corporation Limited – F-151 –Chapter 9 Independent Auditor’s Report For the year ended 31 December 2023 Measurement of expected credit losses for loans and advances to customers and financial investments (continued) See Note 4(c) Note 5(i) Note 21 and Note 22 to the consolidated financial statements.The Key Audit Matter How the matter was addressed in our audit The amount of impairment of the loans and advances * Evaluating the reasonableness of management’s to customers and financial assets at amortised costs is assessment on whether the credit risk of the significant and the measurement has a high degree of loans and advances customers and financial assets estimation uncertainty. The measurement of ECL applied at amortised costs have or have not increased significant management judgments and assumptions and significantly since initial recognition and whether involved significant inherent risk. In view of these reasons the loans and advances to customers and financial we identified this as a key audit matter. assets at amortised costs are credit-impaired by selecting risk-based samples. We analyzed the portfolio by industry sector to select samples in industries more vulnerable to the current economic situation with reference to other borrowers with potential credit risk. For selected samples we checked loans and advances to customers and financial assets at amortised costs overdue information making enquiries of the credit managers about the borrowers’ business operations checking borrowers’ financial information and researching market information about borrowers’ businesses to check the credit risk status of the borrower and the reasonableness of credit risk stage.* For corporate loans and advances and financial assets at amortised costs that are credit-impaired we selected samples to evaluate the forecasted future cash flows prepared by the Group based on financial information of borrowers and guarantors collateral valuations other available information and possible future factors together with discount rates in supporting the computation of loss allowance.* Based on our procedures performed we selected samples and assessed the accuracy of calculation for loans and advances to customers and financial assets at amortised costs’ credit losses by using the ECL model.* Performing retrospective review of ECL model components and significant assumptions to assess whether the results indicate possible management bias on loss estimation.* Assessing the reasonableness of the disclosures in the financial statements in relation to ECL for loans and advances to customers and financial assets at amortised costs against prevailing accounting standards. 2023 Annual Report 191 – F-152 –Chapter 9 Independent Auditor’s Report For the year ended 31 December 2023 Consolidation of Structured Entities – Non-principal Guaranteed Wealth Management Products See Note 4(a) Note 5(v) and Note 58 to the consolidated financial statements.The Key Audit Matter How the matter was addressed in our audit As at 31 December 2023 all of non-principal guaranteed Our audit procedures related to consolidation of wealth management products (“WMPs”) issued and structured entities for non-principal guaranteed WMPs managed by the Group are structured entities that are included the following: not included in the scope of consolidation.* understanding and assessing the design In determining whether the Group retains any partial implementation and operating effectiveness of interests in a structured entity for non-principal guaranteed key internal controls of financial reporting over WMPs or should consolidate it management is required measurement of interests in and consolidation of to consider the power it possesses its exposure to variable structured entities for non-principal guaranteed returns and its ability to use its power to affect returns. WMPs.These factors are not purely quantitative and need to be considered collectively in the overall substance of the * selecting samples of structured entities for non- transactions. principal guaranteed WMPs and performing the following procedures: We have identified this as a key audit matter due to the material balance and significant management judgements – inspecting the related contracts internal were involved in assessing the consolidation of the establishment documents and information structured entities for non-principal guaranteed WMPs. disclosed to the investors to understand the purpose of the establishment of the structured entity for non-principal guaranteed WMPs and the involvement the Group has with the structured entity for non-principal guaranteed WMPs and to assess management’s judgement over whether the Group can exercise power over the structured entity for non-principal guaranteed WMPs; – performed independent analysis and tests on the variable returns from the structured entities for non-principal guaranteed WMPs including but not limited to commission income and asset management fees earned gain from investments retention of residual income and if any liquidity and other support provided to the structured entities for non-principal guaranteed WMPs to assess management’s judgement as to the exposure or rights to variable returns from the Group’s involvement in such an entity; 192 China CITIC Bank Corporation Limited – F-153 –Chapter 9 Independent Auditor’s Report For the year ended 31 December 2023 Consolidation of Structured Entities – Non-principal Guaranteed Wealth Management Products (continued) See Note 4(a) Note 5(v) and Note 58 to the consolidated financial statements.Key Audit Matter How our audit addressed the Key Audit Matter – inspecting management’s analysis of the structured entity for non-principal guaranteed WMPs including qualitative analysis and the calculation of the magnitude and variability associated with the Group’s economic interests in the structured entity for non-principal guaranteed WMPs to assess management’s judgement over the Group’s ability to affect its variable returns from the structured entity for non-principal guaranteed WMPs; – assessing management’s judgement over whether the structured entity for non- principal guaranteed WMPs should be consolidated or not.* assessing the reasonableness of the disclosures in the financial statements in relation to the measurement of interests in and consolidation of structured entities for non-principal guaranteed WMPs against prevailing accounting standards. 2023 Annual Report 193 – F-154 –Chapter 9 Independent Auditor’s Report For the year ended 31 December 2023 Information other than the consolidated financial statements and auditor’s report thereon The directors are responsible for the other information. The other information comprises all the information included in the annual report other than the consolidated financial statements and our auditor’s report thereon.Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.In connection with our audit of the consolidated financial statements our responsibility is to read the other information and in doing so consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatement of this other information we are required to report that fact. We have nothing to report in this regard.Responsibilities of the directors for the consolidated financial statements The directors are responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRSs issued by the IASB and the disclosure requirements of the Hong Kong Companies Ordinance and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement whether due to fraud or error.In preparing the consolidated financial statements the directors are responsible for assessing the Group’s ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations or have no realistic alternative but to do so.The directors are assisted by the Audit Committee in discharging their responsibilities for overseeing the Group’s financial reporting process.Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor’s report that includes our opinion. This report is made solely to you as a body and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.As part of an audit in accordance with HKSAs we exercise professional judgement and maintain professional scepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the consolidated financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.* Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. 194 China CITIC Bank Corporation Limited – F-155 –Chapter 9 Independent Auditor’s Report For the year ended 31 December 2023 * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.* Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or if such disclosures are inadequate to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However future events or conditions may cause the Group to cease to continue as a going concern.* Evaluate the overall presentation structure and content of the consolidated financial statements including the disclosures and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.* Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction supervision and performance of the group audit. We remain solely responsible for our audit opinion.We communicate with the Audit Committee regarding among other matters the planned scope and timing of the audit and significant audit findings including any significant deficiencies in internal control that we identify during our audit.We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable actions taken to eliminate threats or safeguards applied.From the matters communicated with the Audit Committee we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.The engagement partner on the audit resulting in this independent auditors’ report is Wong Yuen Shan.Certified Public Accountants 8th Floor Prince’s Building 10 Chater Road Central Hong Kong 21 March 2024 2023 Annual Report 195 – F-156 –Chapter 9 Consolidated Annual Statement of Profit or Loss and Other Comprehensive Income For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) Years ended 31 December Notes 2023 2022 Interest income 317692 313609 Interest expense (174153) (162962) Net interest income 6 143539 150647 Fee and commission income 36999 41051 Fee and commission expense (4616) (3959) Net fee and commission income 7 32383 37092 Net trading gain 8 7138 4881 Net gain from investment securities 9 21103 17771 Other operating income 1407 718 Operating income 205570 211109 Operating expenses 10 (69214) (66838) Operating profit before impairment 136356 144271 Credit impairment losses 11 (61926) (71359) Impairment losses on other assets 12 (278) (45) Revaluation losses on investment properties (1) (74) Share of profit of associates and joint ventures 736 623 Profit before tax 74887 73416 Income tax expense 13 (6825) (10466) Profit for the year 68062 62950 Net profit attributable to: Equity holders of the Bank 67016 62103 Non-controlling interests 1046 847 196 China CITIC Bank Corporation Limited – F-157 –Chapter 9 Consolidated Annual Statement of Profit or Loss and Other Comprehensive Income (Continued) For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) Years ended 31 December Notes 2023 2022 Profit for the year 68062 62950 Other comprehensive income net of tax Items that will not be reclassified to profit or loss (net of tax): — Fair value changes on financial investments designated at fair value through other comprehensive income (144) 237 Items that may be reclassified subsequently to profit or loss (net of tax): — Other comprehensive income transferable to profit or loss under equity method 39 (28) — Fair value changes on financial assets at fair value through other comprehensive income 4989 (8191) — Impairment allowance on financial assets at fair value through other comprehensive income (512) 145 — Exchange difference on translation of financial statements 1198 4132 — Others 5 4 Other comprehensive income net of tax 14 5575 (3701) Total comprehensive income for the year 73637 59249 Total comprehensive income attribute to: Equity holders of the Bank 72508 58681 Non-controlling interests 1129 568 Earnings per share attributable to the ordinary shareholders of the Bank Basic earnings per share (RMB) 15 1.27 1.17 Diluted earnings per share (RMB) 15 1.14 1.06 The accompanying notes form an integral part of these consolidated annual financial statements. 2023 Annual Report 197 – F-158 –Chapter 9 Consolidated Annual Statement of Financial Position As at 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 31 December 31 December Notes 2023 2022 Assets Cash and balances with central banks 16 416442 477381 Deposits with banks and non-bank financial institutions 17 81075 78834 Precious metals 11674 5985 Placements with and loans to banks and non-bank financial institutions 18 237742 218164 Derivative financial assets 19 44675 44383 Financial assets held under resale agreements 20 104773 13730 Loans and advances to customers 21 5383750 5038967 Financial investments 22 — at fair value through profit or loss 613824 557594 — at amortised cost 1085598 1135452 — at fair value through other comprehensive income 888677 804695 — designated at fair value through other comprehensive income 4807 5128 Investments in associates and joint ventures 23 6945 6341 Investment properties 25 528 516 Property plant and equipment 26 38309 34430 Right-of-use assets 27 10643 10824 Intangible assets 4595 3715 Goodwill 28 926 903 Deferred tax assets 29 52480 55011 Other assets 30 65021 55490 Total assets 9052484 8547543 Liabilities Borrowings from central banks 273226 119422 Deposits from banks and non-bank financial institutions 32 927887 1143776 Placements from banks and non-bank financial institutions 33 86327 70741 Financial liabilities at fair value through profit or loss 1588 1546 Derivative financial liabilities 19 41850 44265 Financial assets sold under repurchase agreements 34 463018 256194 Deposits from customers 35 5467657 5157864 Accrued staff costs 36 22420 21905 Taxes payable 37 3843 8487 Debt securities issued 38 965981 975206 Lease liabilities 27 10245 10272 Provisions 39 10846 9736 Deferred tax liabilities 29 1 3 Other liabilities 40 42920 42296 Total liabilities 8317809 7861713 198 China CITIC Bank Corporation Limited – F-159 –Chapter 9 Consolidated Annual Statement of Financial Position (Continued) As at 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 31 December 31 December Notes 2023 2022 Equity Share capital 41 48967 48935 Other equity instruments 42 118060 118076 Capital reserve 43 59400 59216 Other comprehensive income 44 4057 (1621) Surplus reserve 45 60992 54727 General reserve 46 105127 100580 Retained earnings 47 320619 285505 Total equity attributable to equity holders of the Bank 717222 665418 Non-controlling interests 48 17453 20412 Total equity 734675 685830 Total liabilities and equity 9052484 8547543 The accompanying notes form an integral part of these consolidated annual financial statements.Approved and recognized for issue by the board of directors on 21 March 2024.Fang Heying Liu Cheng Chairman Executive Director Executive Director President Wang Kang Xue Fengqing Company stamp Vice President Head of the Finance and Chief Financial Officer Accounting Department 2023 Annual Report 199 – F-160 –Chapter 9 Consolidated Annual Statement of Changes in Equity For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) Equity attributable to equity holders of the Bank Non-controlling interests Other Ordinary Other equity Other equity Capital comprehensive Surplus General Retained shareholders instruments Notes Share capital instruments reserve income reserve reserve earnings in subsidiaries holders Total equity As at 1 January 2023 48935 118076 59216 (1621) 54727 100580 285505 9220 11192 685830 (i) Net profit – – – – – – 67016 458 588 68062 (ii) Other comprehensive income 14 – – – 5492 – – – 83 – 5575 Total comprehensive income – – – 5492 – – 67016 541 588 73637 (iii) Investor capital — Conversion of convertible corporate bonds to equity 32 (16) 192 – – – – – – 208 — Reduction of capital by other equity instruments holders – – (4) – – – – – (3502) (3506) — Reduction of capital by Non-controlling interests – – – – – – – (2) – (2) (iv) Profit appropriations — Appropriations to surplus reserve 46 – – – – 6265 – (6265) – – – — Appropriations to general reserve 47 – – – – – 4547 (4547) – – – — Dividend distribution to ordinary shareholders of the Bank – – – – – – (16110) – – (16110) — Dividend distribution to non-controlling interests 47/48 – – – – – – – (6) – (6) — Dividend distribution to preference shareholders – – – – – – (1428) – – (1428) — Interest paid to holders of perpetual bonds – – – – – – (3360) – (588) (3948) (v) Transfers within the owners’ equity — Other comprehensive income transferred to retained earnings – – – 186 – – (186) – – – — Reduction of capital by Non-controlling interests – – (4) – – – (6) 10 – – As at 31 December 2023 48967 118060 59400 4057 60992 105127 320619 9763 7690 734675 Equity attributable to equity holders of the Bank Non-controlling interests Other Ordinary Other equity Other equity Capital comprehensive Surplus General Retained shareholders instruments Notes Share capital instruments reserve income reserve reserve earnings in subsidiaries holders Total equity As at 1 January 2022 48935 118076 59216 1644 48937 95490 254005 9121 7202 642626 (i) Net profit – – – – – – 62103 384 463 62950 (ii) Other comprehensive income – – – (3422) – – – (279) – (3701) Total comprehensive income – – – (3422) – – 62103 105 463 59249 (iii) Investor capital — Issuance of perpetual bonds – – – – – – – – 3990 3990 (iv) Profit appropriations — Appropriations to surplus reserve 45 – – – – 5790 – (5790) – – – — Appropriations to general reserve 46 – – – – – 5090 (5090) – – – — Dividend distribution to ordinary shareholders of the Bank – – – – – – (14778) – – (14778) — Dividend distribution to non-controlling interests – – – – – – – (6) – (6) — Dividend distribution to preference shareholders – – – – – – (1428) – – (1428) — Interest paid to holders of perpetual bonds – – – – – – (3360) – (463) (3823) (v) Transfers within the owners’ equity — Other comprehensive income transferred to retained earnings – – – 157 – – (157) – – – As at 31 December 2022 48935 118076 59216 (1621) 54727 100580 285505 9220 11192 685830 The accompanying notes form an integral part of these consolidated annual financial statements. 200 China CITIC Bank Corporation Limited – F-161 –Chapter 9 Consolidated Annual Statement of Cash Flows For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) Years ended 31 December 20232022 Operating activities Profit before tax 74887 73416 Adjustments for: — revaluation gains on investments derivatives and investment properties (521) (964) — investment gains (19843) (14287) — net gain on disposal of property plant and equipment intangible assets and other assets (9) 32 — unrealised foreign exchange (gains)/losses (3013) 52 — credit impairment losses 61926 71359 — impairment losses on other assets 278 45 — depreciation and amortisation 4868 4110 — interest expense on debt securities issued 24996 27082 — dividend income from equity investment (169) (102) — depreciation of right-of-use assets and interest expense on lease liabilities 3710 3731 — income tax paid (13523) (18043) Subtotal 133587 146431 Changes in operating assets and liabilities: Decrease/(Increase) in balances with central banks 8361 (3363) Decrease in deposits with banks and non-bank financial institutions 1760 8921 Decrease/(Increase) in placements with and loans to banks and non-bank financial institutions 6115 (85386) (Increase)/Decrease in financial assets held under resale agreements (90988) 77922 Increase in loans and advances to customers (380326) (347961) (Increase)/Decrease at fair value through the profit or loss in financial assets (79755) 2550 Increase/(Decrease) in borrowings from central banks 152670 (69087) Decrease in deposits from banks and non-bank financial institutions (215881) (30317) Increase/(Decrease) in placements from banks and non-bank financial institutions 17387 (8820) Increase/(Decrease) in financial liabilities at fair value through profit or loss 5 (680) Increase in financial assets sold under repurchase agreements 206389 157583 Increase in deposits from customers 286207 340067 Increase in other operating assets (46723) (17411) (Decrease)/Increase in other operating liabilities 274 24617 Subtotal (134505) 48635 Net cash flows (used in)/from operating activities (918) 195066 2023 Annual Report 201 – F-162 –Chapter 9 Consolidated Annual Statement of Cash Flows (Continued) For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) Years ended 31 December Notes 2023 2022 Investing activities Proceeds from disposal and redemption of investments 2768331 2580725 Proceeds from disposal of property plant and equipment land use rights and other assets 83 127 Cash received from equity investment income 653 507 Cash received from disposal of associates 70 39 Payments on acquisition of investments (2753726) (2690472) Payments on acquisition of property plant and equipment land use rights and other assets (13524) (6799) Net cash flows from/(used in) investing activities 1887 (115873) Financing activities Cash received from issuing other equity instruments – 3990 Cash received from debt securities issued 1096139 850086 Cash paid for redemption of other equity instruments (3516) – Cash paid for redemption of debt securities issued (1106000) (836677) Interest paid on debt securities issued (24724) (26513) Cash paid for dividends (21492) (20035) Cash paid in connection with other financing activities (3509) (3390) Net cash flows used in financing activities (63102) (32539) Net decrease in cash and cash equivalents (62133) 46654 Cash and cash equivalents as at 1 January 307871 252818 Effect of exchange rate changes on cash and cash equivalents 3264 8399 Cash and cash equivalents as at 31 December 49 249002 307871 Cash flows from operating activities include: Interest received 318778 320205 Interest paid (136150) (131295) The accompanying notes form an integral part of these consolidated annual financial statements. 202 China CITIC Bank Corporation Limited – F-163 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 1 Corporate information China CITIC Bank Corporation Limited (the “Bank” or “CNCB”) is a joint stock company incorporated in the People’s Republic of China (the “PRC” or “Mainland China”) on 31 December 2006. Headquartered in Beijing the Bank’s registered office is located at 6-30F and 32-42F No.10 Guanghua Road Chaoyang District Beijing China. The Bank listed its A shares and H shares on the Shanghai Stock Exchange and the Main Board of The Stock Exchange of Hong Kong Limited respectively on 27 April 2007.The Bank operates under financial services certificate No. B0006H111000001 issued by the National Financial Regulatory Administration (the former “China Banking and Insurance Regulatory Commission”the former “CBIRC”) and unified social credit code No. 91110000101690725E issued by the State Administration of Industry and Commerce of the PRC.The principal activities of the Bank and its subsidiaries (collectively the “Group”) are the provision of corporate and personal banking services conducting treasury business the provision of asset management financial leasing and other non-banking financial services.As at 31 December 2023 the Group mainly operates in Mainland China with branches covering 31 provinces autonomous regions and municipalities and overseas. In addition the Bank’s subsidiaries have operations in Mainland China the Hong Kong Special Administrative Region of PRC (“Hong Kong”) the Macau Special Administrative Region of the PRC (“Macau”) and other overseas countries and regions.For the purpose of these consolidated annual financial statements Mainland China refers to the PRC excluding Hong Kong Macau and Taiwan. Overseas refers to countries and regions other than Mainland China.The consolidated annual financial statements were approved by the Board of Directors of the Bank on 21 March 2024. 2 Basis of preparation These consolidated financial statements have been prepared on a going concern basis. The consolidated financial statements for the year ended 31 December 2023 comprise the Bank and its subsidiaries associates and joint ventures.(a) Accounting year The accounting year of the Group is from 1 January to 31 December.(b) Functional currency and presentation currency The functional currency of the Bank is Renminbi (“RMB”). The functional currencies of overseas subsidiaries are determined in accordance with the primary economic environment in which they operate and are translated into Renminbi for the preparation of the consolidated financial statements according to Note 4 (b)(ii). The consolidated financial statements of the Group are presented in Renminbi and unless otherwise stated expressed in millions of Renminbi. 2023 Annual Report 203 – F-164 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 3 Principal accounting policies These consolidated financial statements have been prepared in accordance with all applicable International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”) and the disclosure requirements of the Hong Kong Companies Ordinance. These consolidated financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.These consolidated financial statements have been prepared under the historical cost convention as modified by financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss and at fair value through other comprehensive income and investment properties which are carried at fair value.The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates.It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.(a) Standards and amendments effective in 2023 relevant to and adopted by the Group In the current reporting period the Group has adopted the following International Financial Reporting Standards (“IFRSs”) and amendments issued by the International Accounting Standards Board (“IASB”) that are mandatorily effective for the current reporting period.* IFRS 17 Insurance contracts * Amendments to IAS 8 Accounting policies changes in accounting estimates and errors: Definition of accounting estimates * Amendments to IAS 1 Presentation of financial statements and IFRS Practice Statement 2 Making materiality judgements: Disclosure of accounting policies * Amendments to IAS 12 Income taxes: Deferred tax related to assets and liabilities arising from a single transaction * Amendments to IAS 12 Income taxes: International tax reform – Pillar Two model rules The adoption of these standards and amendments do not have significant impacts on the consolidated financial statements of the Group. The Group has not applied any new standard or interpretation that is not yet effective for the current accounting period.(b) Standards and amendments relevant to the Group that are not yet effective and have not been adopted before their effective dates in 2023 Effective date New accounting standards or amendments 1 January 2024 Non-current Liabilities with Covenants-Amendments to IAS 1 and Classification of Liabilities as Current or Non-current- Amendments to IAS 1 1 January 2024 Lease Liability in a Sale and Leaseback-Amendments to IFRS 16 1 January 2024 Supplier Finance Arrangements-Amendments to IAS 7 and IFRS 7 1 January 2025 Lack of Exchangeability-Amendments to IAS 21 Available for optional adoption/ Sale or Contribution of Assets between an Investor and its Associate effective date deferred indefinitely or Joint Venture(Amendments to IFRS 10 and IAS 28) 204 China CITIC Bank Corporation Limited – F-165 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (a) Consolidated financial statements (i) Business combinations involving enterprises under common control A business combination involving enterprises under common control is a business combination in which all of the combining enterprises are ultimately controlled by the same party or parties both before and after the business combination and that control is not transitory. The assets and liabilities assumed are measured based on their carrying amounts in the financial statements of the acquiree at the combination date. The difference between the carrying amount of the net assets acquired and the consideration paid for the combination (or the total face value of shares issued) is adjusted against share premium in the capital reserve with any excess adjusted against retained earnings. The issuance costs of equity or debt securities as a part of the consideration for the acquisition are included in the carrying amounts of these equity or debt securities upon initial recognition. Other acquisition-related costs are expensed when incurred. The combination date is the date on which one combining enterprise obtains control of other combining enterprises.(ii) Business combinations not involving entities under common control A business combination involving entities not under common control is a business combination in which all of the combining entities are not ultimately controlled by the same party or parties before the business combination. Where (i) the aggregate of the acquisition date fair value of assets transferred (including the acquirer’s previously held equity interest in the acquiree) liabilities incurred or assumed and equity securities issued by the acquirer in exchange for control of the acquiree exceeds (ii) the acquirer’s interest in the acquisition date fair value of the acquiree’s identifiable net assets the difference is recognized as goodwill (Note 4 (k)). If (i) is less than (ii) the difference is recognized in the consolidated statement of profit or loss for the current period. The issuance costs of equity or debt securities as a part of the consideration for the acquisition are included in the carrying amounts of these equity or debt securities upon initial recognition. Other acquisition-related costs are expensed as incurred. Any difference between the fair value and the carrying amount of the assets transferred as consideration is recognized in the consolidated statement of profit or loss. The acquiree’s identifiable asset liabilities and contingent liabilities if the recognition criteria are met are recognized by the Group at their acquisition date fair value. The acquisition date is the date on which the acquirer obtains control of the acquiree.For a business combination not involving enterprises under common control and achieved in stages the Group remeasures its previously-held equity interest in the acquiree to its fair value at the acquisition date. The difference between the fair value and the carrying amount is recognized as investment income for the current period; the amount recognized in other comprehensive income relating to the previously- held equity interest in the acquire will be reclassified to profit or loss.(iii) Consolidated financial statements The scope of consolidated financial statements is based on control and the consolidated financial statements comprise the Bank and its subsidiaries as well as structured entities controlled by the Group. The Group controls an entity when it is exposed or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. When assessing whether the Bank has power only substantive rights (held by the Bank and other parties) are considered. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.Non-controlling interest is presented separately in the consolidated statement of financial position within owners’ equity. Profit or loss and total comprehensive income attributable to non-controlling equity holders are presented separately in the consolidated statement of profit or loss and other comprehensive income.When the amount of loss for the current period attributable to the non-controlling interest of a subsidiary exceeds the non-controlling interest’s portion of the opening balance of equity holders’ equity of the subsidiary the excess is allocated against the non-controlling interests. 2023 Annual Report 205 – F-166 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (a) Consolidated financial statements (continued) (iii) Consolidated financial statements (continued) When the accounting period or accounting policies of a subsidiary are different from those of the Bank the Bank makes necessary adjustments to the financial statements of the subsidiary based on the Bank’s own accounting period or accounting policies. Intra-group balances transactions and cash flows and any recognized profits arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealised losses resulting from intra-group transactions are eliminated only limited to the extent that this is no evidence of impairment.Where a subsidiary was acquired during the reporting period through a business combination involving enterprises under common control the financial statements of the subsidiary are included in the consolidated financial statements as if the combination had occurred at the date the ultimate controlling party first obtained control. Therefore the opening balances and the comparative figures of the consolidated financial statements are restated.Where a subsidiary was acquired during the reporting period through a business combination not involving enterprises under common control the identifiable assets and liabilities of the acquired subsidiaries are included in the scope of consolidation from the date that control commences based on the fair value of those identifiable assets and liabilities at the acquisition date.The difference between the costs of long-term investments newly acquired by the Bank by acquiring minority interests and the fair value of the Bank’s share of the net identifiable assets of its subsidiaries calculated based on the increased shareholding and the difference between the proceeds the Bank obtained from partial disposal of its equity investments in its subsidiaries without ceasing control over the subsidiaries and its share of the net assets of the subsidiaries that corresponds to the disposed longterm equity investments shall both be recognized as adjustments to reduce the capital reserve (share premium) of the consolidated statement of financial position and if the capital reserve (share premium) is not sufficient to cover the reductions the excess is charged to the retained earnings.When the Group loses control of a subsidiary due to the disposal of a portion of an equity investment the Group derecognized assets liabilities non-controlling interests and other related items in equity holders’ equity in relation to that subsidiary. The remaining equity investment is remeasured at its fair value at the date when control is lost. Any gains or losses therefore incurred are recognized as investment income for the current period when the control is lost.If there is a difference between the accounting entity of the Group and the accounting entity of the Bank or a subsidiary on measuring the same transaction the transaction will be adjusted from the perspective of the Group. 206 China CITIC Bank Corporation Limited – F-167 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (b) Foreign currency translations (i) Translation of foreign currency transactions When the Group receives capital in foreign currencies from investors the capital is translated to Renminbi at the spot exchange rate at the date of the receipt. Other foreign currency transactions are on initial recognition translated into Renminbi by applying the spot exchange rates at the dates of the transaction.Monetary items denominated in foreign currencies are translated to Renminbi at the spot exchange rate at the reporting date. The resulting exchange differences are recognized in the consolidated statement of profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated to Renminbi using the exchange rate at the transaction date. Non-monetary items that are measured at fair value in a foreign currency are translated using the foreign exchange rate at the date the fair value is determined. The differences arising from the translation of financial assets at fair value through other comprehensive income is recognized in other comprehensive income. Changes in the fair value of monetary assets denominated in foreign currency classified as financial assets at fair value through other comprehensive income are analysed between translation differences resulting from changes in the amortised cost of the monetary assets and other changes in the carrying amount. Translation differences related to changes in the amortised cost are recognized in the consolidated statement of profit or loss and other changes in the carrying amount are recognized in other comprehensive income. The translation differences resulting from other monetary assets and liabilities are recognized in the consolidated statement of profit or loss.(ii) Translation of financial statements denominated in foreign currency Financial statements denominated in foreign currency are translated into Renminbi for the preparation of consolidated financial statements. The assets and liabilities in the financial statements denominated in foreign currency are translated into Renminbi at the spot exchange rates prevailing at the reporting date. The equity items except for “retained earnings” are translated to Renminbi at the spot exchange rates at the dates on which such items arose. Income and expenses are translated at exchange rates at the date of the transactions or a rate that approximates the exchange rates of the date of the transaction.The resulting exchange differences are recognized in other comprehensive income.Upon disposal of a foreign operation the cumulative amount of the translation differences recognized in equity holders’ equity which relates to that foreign operation is transferred to profit or loss in the period in which the disposal occurs.The effect of exchange rate changes on cash and cash equivalents held or due in a foreign currency are reported in the statement of cash flows. 2023 Annual Report 207 – F-168 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (c) Financial instruments Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instrument. Regular way purchases and sales of financial assets are recognized on trade-date the date on which the Group commits to purchase or sell the asset.(i) Initial recognition and classification of financial instruments Financial assets Financial assets are classified on the basis of the Group’s business model for managing the financial asset and the contractual cash flow characteristics of the financial assets: * Fair value through profit or loss (“FVPL”); * Fair value through other comprehensive income (“FVOCI”); or * Amortised cost The business model adopted by the Group for managing its financial assets refers to how the Group manages its financial assets in order to generate cash flows. The business model determines whether the cash flows from the financial assets managed by the Group come from the collection of contractual cash flows sale of financial assets or a combination of the two methods. In determining the business model for a group of financial assets the Group considers various factors including: past experience in collecting cash flows from this group of assets; how to assess the performance of this group of asset and report it to key management personnel; how to assess and manage risks are; and how to compensate people responsible for managing these assets among others.The contractual cash flow characteristics of financial assets refer to contractual terms as agreed in the financial instrument contracts that reflect the economic characteristics of the financial assets i. e. the contractual cash flows arising at a specified date from the financial assets at amortised cost or FVOCI are solely payments of principal and interest on the principal amount outstanding. Of which the principal is the fair value of the financial asset at initial recognition and the amount of the principal may change over the life of the financial asset if e. g. there are repayments of principal; and the interest includes consideration for the time value of money and credit risk other basic lending risks and costs associated with holding the financial asset for a particular period of time.Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest.The classification requirements for debt instruments and equity instruments are described below: 208 China CITIC Bank Corporation Limited – F-169 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (c) Financial instruments (continued) (i) Initial recognition and classification of financial instruments (continued) Debt Instruments Debt instruments are those instruments that meet the definition of a financial liability from the issuer’s perspective. Classification and subsequent measurement of debt instruments depend on: i) the Group’s business model for managing the asset; and ii) the cash flow characteristics of the asset.Based on these factors the Group classifies its debt instruments into one of the following three measurement categories: * Amortised cost: Assets that are held for collection of contractual cashflows where those cash flows represent solely payments of principal and interest (“SPPI”) and that are not designated at FVPL are measured at amortised cost.* Fair value through other comprehensive income: Financial assets that are held for collection of contractual cash flows and for selling the assets where the assets’ cash flows represent solely payments of principal and interest and that are not designated at FVPL are measured at FVOCI.* Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. The Group may also irrevocably designate financial assets at fair value through profit or loss if doing so significantly reduces or eliminates a mismatch created by assets and liabilities being measured on different bases.Equity instruments An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting the liabilities. A financial instrument is an equity instrument if and only if both conditions i) and ii) below are met: i) The financial instrument includes no contractual obligation to deliver cash or another financial asset to another entity or to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavorable to the Group; and ii) If the financial instrument will or may be settled in the Group’s own equity instruments it is a non-derivative instrument that includes no contractual obligations for the Group to deliver a variable number of its own equity instruments; or a derivative that will be settled only by the Group exchanging a fixed amount of cash or another financial asset for a fixed number of its own equity instruments.Equity investments of the Group are measured at FVPL except where the Group’s management has elected at initial recognition to irrevocably designate an equity investment at FVOCI. The Group’s policy is to designate equity investments as FVOCI when those investments are held for purposes other than trading. After designation the fair value change is recognized in the other comprehensive income and it is not allowed to subsequently reclassify to profit or loss (including upon disposal). Impairment loss and reversal of impairment is not presented separately in the financial statements and is included in the fair value change. Dividend income as the return from investments is recognized by the Group when the right to receive is formed. 2023 Annual Report 209 – F-170 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (c) Financial instruments (continued) (i) Initial recognition and classification of financial instruments (continued) Financial liabilities The Group’s financial liabilities are classified into financial liabilities at FVPL and other financial liabilities carried at amortised cost on initial recognition. Financial liabilities at FVPL is applied to derivatives financial liabilities held for trading and financial liabilities designated as such at initial recognition.The Group may at initial recognition irrevocably designate a financial liability as measured at fair value through profit or loss when doing so results in more relevant information because either: i) it eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or ii) a group of financial liabilities or financial assets and financial liabilities is managed and its performance is evaluated on a fair value basis in accordance with a documented risk management or investment strategy and information about the Group is provided internally on that basis to the Group’s key management personnel.(ii) Measurement of financial assets Initial measurement At initial recognition the Group measures a financial asset or financial liability at its fair value. For a financial asset or financial liability at fair value through profit or loss transaction costs are directly recognized in profit or loss. For other financial asset or liability transaction costs are recognized in the initial measurement.Subsequent measurement Subsequent measurement of financial instruments depends on the categories: Financial assets and financial liabilities measured at amortised cost The amortised cost is the amount at which the financial asset is measured at initial recognition: i) minus the principal; ii) plus or minus the cumulative recognized using the effective interest method of any difference between that initial amount and maturity amount; iii) for financial assets adjusted for any loss allowance.The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial asset or financial liability to the gross carrying amount of a financial asset (i.e. its amortised cost before any impairment allowance) or to the amortised cost of a financial liability. The calculation does not consider expected credit losses (‘ECL’) and includes transaction costs premiums or discounts and fees and points paid or received that are integral to the effective interest rate. For purchased or originated credit-impaired (‘POCI’) financial assets – assets that are credit-impaired at initial recognition – the Group calculates the credit-adjusted effective interest rate which is calculated based on the amortised cost of the financial asset instead of this gross carrying amount and incorporates the impact of ECL in estimated future cash flows. 210 China CITIC Bank Corporation Limited – F-171 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (c) Financial instruments (continued) (ii) Measurement of financial assets (continued) Financial assets and financial liabilities measured at amortised cost (continued) Interest income is calculated by applying the effective interest rate to the carrying amount of a financial asset except for: i) a POCI financial asset whose interest income is calculated since initial recognition by applying the credit-adjusted effective interest rate to its amortised cost; and ii) a financial asset that is not a POCI financial asset but has subsequently become credit-impaired whose interest income is calculated by applying the effective interest rate to its amortised cost. If in a subsequent period the financial asset improves its quality so that it is no longer credit-impaired and the improvement in credit quality can be related objectively to a certain event occurring after the application of the above-mentioned rule then the interest income can again be calculated by applying the effective interest rate to its gross carrying amount. Interest income from these financial assets is included in ‘interest income’ using the effective interest rate method.For floating-rate financial assets and floating-rate financial liabilities periodic re-estimation of cash flows to reflect the movements in the market rates of interest alters the effective interest rate. If a floating rate financial asset or a floating rate financial liability is recognized initially at an amount equal to the principal receivable or payable on maturity re-estimating the future interest payments normally has no significant effect on the carrying amount of the asset or the liability.If the Group revises its estimates of payments or receipts the difference between the gross carrying amount of the financial asset or amortised cost of a financial liability calculated from revised estimated contractual cash flows and the present value of the estimated future contractual cash flows that are discounted at the financial instrument’s original effective interest rate should be recognized in profit or loss.Financial assets at fair value through other comprehensive income Debt instruments Movements in the carrying amount are taken through other comprehensive income except for the recognition of impairment gains or losses interest income and foreign exchange gains and losses on the instrument’s amortised cost which are recognized in profit or loss.When the financial assets is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from equity to profit or loss and recognized in ‘Net investment income’. Interest income from these financial assets is included in ‘Interest income’ using the effective interest rate method.Equity instruments Where an investment in an equity investment not held for trading is designated as a financial asset measured at fair value through other comprehensive income the fair value changes of the financial asset is derecognized in the other comprehensive income. When the financial asset is derecognized the cumulative gain or loss previously recognized in other comprehensive income is reclassified from other comprehensive income to retained earnings. The dividends on the investment are recognized in profit or loss only when the Group’s right to receive payment of the dividends is established. 2023 Annual Report 211 – F-172 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (c) Financial instruments (continued) (ii) Measurement of financial assets (continued) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are stated at fair value and a gain or loss on the financial assets that is measured at fair value should be recognized in profit or loss.Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss are measured at fair value with all gains or losses recognized in the profit or loss of the current period except for financial liabilities designated as at fair value through profit or loss where gains or losses on the financial liabilities are treated as follows: * changes in fair value of such financial liabilities due to changes in the Group’s own credit risk are recognized in other comprehensive income; and * other changes in fair value of such financial liabilities are recognized in profit or loss of the current period.(iii) Impairment of financial assets The Group assesses on a forward-looking basis the ECL associated with its debt instrument assets carried at amortised cost and FVOCI and with exposure arising from loan commitments financial guarantee contracts and lease receivables.ECL is the weighted average of credit losses with the respective risks of a default occurring as the weights.Credit loss is the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive i. e. all cash shortfalls discounted at the original effective interest rate (or credit-adjusted effective interest rate for POCI financial assets).The Group measures ECL of a financial instrument in a way that reflects: * an unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes; * the time value of money; and reasonable and supportable information that is available without undue cost or effort at the * reporting date about past events current conditions and forecasts of future economic conditions.Detailed information about ECL is set out in note 54 (a).The Group applies the impairment requirements for the recognition and measurement of a loss allowance for debt instruments that are measured at fair value through other comprehensive income. The loss allowance is recognised in other comprehensive income and the impairment loss is recognized in profit or loss and it should not reduce the carrying amount of the financial asset in the consolidated statement of financial position.If the Group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period but determines at the current reporting date that the credit risk on the financial instruments has increased significantly since initial recognition is no longer met the Group measures the loss allowance at an amount equal to 12-month ECL at the current reporting date and the amount of ECL reversal is recognized in profit or loss.At the reporting date the Group only recognized the cumulative changes in lifetime ECL since initial recognition as a loss allowance for POCI financial assets. At each reporting date the Group recognized in profit or loss the amount of the changes in lifetime ECL as an impairment gain or loss. 212 China CITIC Bank Corporation Limited – F-173 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (c) Financial instruments (continued) (iv) Modification of loans The Group sometimes renegotiates or otherwise modifies the contractual cash flows of loans to customers.When this happens the Group assesses whether or not the new terms are substantially different to the original terms. The Group does this by considering among others the following factors: * If the borrower is in financial difficulty whether the modification merely reduces the contractual cash flows to amounts the borrower is expected to be able to pay.* Whether any substantial new terms are introduced such as a profit share/equity-based return that substantially affects the risk profile of the loan.* Significant extension of the loan term when the borrower is not in financial difficulty.* Significant change in the interest rate.* Change in the currency the loan is denominated in.* Insertion of collateral other security or credit enhancements that significantly affect the credit risk associated with the loan.If the terms are substantially different the Group derecognizes the original financial asset and recognizes a ‘new’ asset at fair value and recalculates a new effective interest rate for the asset. The date of renegotiation is consequently considered to be the date of initial recognition for impairment calculation purposes including for the purpose of determining whether a significant increase in credit risk has occurred. However the Group also assesses whether the new financial asset recognized is deemed to be credit-impaired at initial recognition especially in circumstances where the renegotiation was driven by the debtor being unable to make the originally agreed payments. Differences in the carrying amount are also recognized in profit or loss as a gain or loss on derecognition.If the terms are not substantially different the renegotiation or modification does not result in derecognition and the Group recalculates the gross carrying amount based on the revised cash flows of the financial asset and recognizes a modification gain or loss in profit or loss. The new gross carrying amount is recalculated by discounting the modified cash flows at the original effective interest rate (or credit-adjusted effective interest rate for POCI financial assets).(v) Derivatives and hedges Derivatives are initially recognized at fair value on the date on which the derivative contract is entered into and are subsequently remeasured at fair value. All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative.Certain derivatives are embedded in hybrid contracts such as the conversion option in a convertible bond. If the hybrid contract contains a host that is a financial asset then the Group assesses the entire contract as described in the financial assets section above for classification and measurement purposes.Otherwise the embedded derivatives are treated as separate derivatives when: * Their economic characteristics and risks are not closely related to those of the host contract; * A separate instrument with the same terms would meet the definition of a derivative; and * The hybrid contract is not measured at fair value through profit or loss. 2023 Annual Report 213 – F-174 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (c) Financial instruments (continued) (v) Derivatives and hedges (continued) These embedded derivatives are separately accounted for at fair value with changes in fair value recognized in the statement of profit or loss unless the Group chooses to designate the hybrid contracts at fair value through profit or loss.The method of recognizing the resulting fair value gain or loss depends on whether the derivative is designated and qualifies as a hedging instrument and if so the nature of the item being hedged. The Group designates certain derivatives as hedges of the fair value of recognized assets or liabilities or firm commitments for fair value hedges.The Group documents at the inception of the hedge the relationship between hedged items and hedging instruments as well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment both at hedge inception and on an ongoing basis of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values of hedged items.Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the statement of profit or loss together with changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.If the hedge no longer meets the criteria for hedge accounting the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity and recorded as net interest income.(vi) Derecognition of financial assets Financial assets The Group derecognizes a financial asset only when (1) the contractual rights to the cash flows from the asset expire or (2) when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity or (3) when it transfers the financial asset and gives up the control of the transferred assets though the Group neither transfers nor retains substantially all the risks and rewards of ownership.Where a transfer of a financial asset in its entirety meets the criteria for de-recognition the difference between the two amounts below is recognized in the consolidated statement of profit and loss: – the carrying amount of the financial asset transferred; – the sum of the consideration received from the transfer and the cumulative gain or loss that has been recognized directly in equity.If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset the Group continues to recognize the asset to the extent of its continuing involvement and recognized an associated liability.Financial liabilities Financial liabilities are derecognized when the related obligation is discharged is cancelled or expires.An agreement between the Group and an existing lender to exchange the original financial liability with a new financial liability with substantially different terms or a substantial modification of the terms of an existing financial liability is accounted for as an extinguishment of the original financial liability and recognition of a new financial liability. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in the consolidated statement of profit and loss. 214 China CITIC Bank Corporation Limited – F-175 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (c) Financial instruments (continued) (vii) Securitization As part of its operations the Group securitizes financial assets generally through the sale of these assets to structured entities which issue securities to investors. Upon sale of financial assets that qualify for de-recognition the relevant financial assets are de-recognized in their entirety and a new financial asset or liability is recognized regarding the interest in the unconsolidated recognized vehicles that the Group acquired. Upon sale of financial assets that do not qualify for de-recognition the relevant financial assets are not derecognized and the consideration paid by third parties are recorded as a financial liability. Upon sale of financial assets that are partially qualified for de-recognition where the Group has not retained control it derecognized these financial assets and recognized separately as assets or liabilities any rights and obligations created or retained in the transfer. Otherwise the Group continues to recognize these financial assets to the extent of its continuing involvement in the financial assets.(viii) Sales of assets on condition of repurchase De-recognition of financial assets sold on condition of repurchase is determined by the economic substance of the transaction. If a financial asset is sold under an agreement to repurchase the same or substantially the same asset at a fixed price or at the sale price plus a reasonable return the Group will not derecognize the asset. If a financial asset is sold together with an option to repurchase the financial asset at its fair value at the time of repurchase (in case of transferor sells such financial asset) the Group will derecognize the financial asset.(ix) Presentation of financial assets and financial liabilities Financial assets and financial liabilities are presented separately in the consolidated statement of financial position and are not offset. However financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position only if the Group has a legally enforceable right to set off the recognized amounts and the transactions are intended to be settled on a net basis or by recognizing the asset and settling the liability simultaneously.(x) Financial assets held under resale and financial assets sold under repurchase agreements Financial assets held under resale agreements are transactions which the Group acquires financial assets which will be resold at a predetermined price in the future date under resale agreements. Financial assets sold under repurchase agreements are transactions which the Group sells financial assets which will be repurchased at a predetermined price in the future date under repurchase agreements.Cash advanced or received is recognized as amounts held under resale and repurchase agreements on the consolidated statement of financial position. Assets held under resale agreements are recorded in memorandum accounts as off-balance sheet items. Assets sold under repurchase agreements continue to be recognized in the consolidated statement of financial position.The difference between the resale and repurchase consideration and that between the purchase and sale consideration should be expired over the period of the respective transaction using the effective interest method and are included in interest expense and interest income respectively.(xi) Equity instruments The consideration received from the issuance of equity instruments net of transaction costs is recognized in equity. Consideration and transaction costs paid by the Bank for repurchasing self-issued equity instruments are deducted from equity holders’ equity. 2023 Annual Report 215 – F-176 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (d) Precious metals Precious metals comprise gold and other precious metals. Precious metals that are not related to the Group’s precious metals trading activities are initially measured at acquisition cost and subsequently measured at the lower of cost and net realizable value. Precious metals acquired by the Group for trading purposes and precious metals leasing are initially measured at fair value and subsequent changes in fair value are recorded in the consolidated statement of profit or loss.(e) Interests in subsidiaries In the Bank’s consolidated statement of financial position interests in subsidiaries are accounted for using the cost less impairment losses (see Note 4 (m)). Cost includes direct attributable costs of investment. Dividends declared by subsidiaries are recognized in investment income.Determination of investment cost For long-term equity investments acquired through a business combination: involving enterprises under common control the investment cost shall be the absorbing party’s share of the carrying amount of owners’ equity of the party being absorbed at the combination date; for long-term equity investment acquired through a business combination involving enterprises not under common control the investment cost shall be the combination cost.For long-term equity investments acquired not through a business combination: for long-term equity investment acquired by payment in cash the initial investment cost shall be the purchase price actually paid; for long-term equity investments acquired by issuing equity securities the initial investment cost shall be the fair value of the equity securities issued.(f) Interests in associates and joint ventures An associate is an entity over which the Group has significant influence. A joint venture is an arrangement whereby the Group and other parties contractually agree to share control of the arrangement and have rights to the net assets of the arrangement.When acquiring associates and joint ventures the Group recognizes as initial investment cost in the principle which: for the investments obtained by making payment in cash the Group recognizes the purchase cost which is actually paid as initial investment costs; for the investments obtained by equity securities the Group recognizes the fair value of the equity securities issued as initial investment cost.An investment in an associate or a joint venture is accounted for using the equity method unless the investment is classified as held for sale.The Group adopts the following accounting treatments when using the equity method: – Where the initial investment cost of an associate or joint venture exceeds the Group’s interest in the fair value of the investee’s identifiable net assets at the date of acquisition the investment is initially recognized at the initial investment cost. Where the initial investment cost is less than the Group’s interest in the fair value of the investee’s identifiable net assets at the date of acquisition the investment is initially recognized at the investor’s share of the fair value of the investee’s identifiable net assets and the difference is charged to profit or loss.– After the acquisition of the investment the Group recognizes its share of the investee’s profit or loss and other comprehensive income as investment income or losses and other comprehensive income respectively and adjusts the carrying amount of the investment accordingly. Once the investee declares any cash dividends or profit distributions the carrying amount of the investment is reduced by that amount attributable to the Group. Changes in the Group’s share of the investee’s owners’ equity other than those arising from the investee’s profit or loss other comprehensive income or profit distribution is recognized in the Group’s equity and the carrying amount of the investment is adjusted accordingly. 216 China CITIC Bank Corporation Limited – F-177 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (f) Interests in associates and joint ventures (continued) – The Group recognizes its share of investee’s profits or losses other comprehensive income and other changes in equity holders’ equity after making appropriate adjustments to align the accounting policies or accounting periods with those of the Group based on the fair value of the investee’s identifiable net assets at the date of acquisition. Unrealised profits and losses resulting from transactions between the Group and its associates or joint ventures are eliminated to the extent of the Group’s interests in the associates or joint ventures. When an entity in the Group transacts with the Group’s associate profits and losses resulting from the transaction are recognized in the Group’s consolidated financial statements only to the extent of the interest in the associate that are not related to the Group. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.– The Group discontinues recognition of its share of net losses of investees after the carrying amount of investment in the associates and joint ventures and any long-term interest that in substance forms part of the Group’s net interest in the associates and joint ventures are reduced to zero except to the extent that the Group has an obligation to assume additional losses. Additional loss is recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of that associate. Where profits are subsequently made by the associates and joint ventures the Group resumes the recognition of its share of those profits only after its share of the profits equals the share of losses not recognized.Significant influence is the power to participate in the financial and operating policy decisions of an investee but does not have control or joint control over those policies.The Group makes provisions for impairment of interests in associates and joint ventures in accordance with the principles described in Note 4 (m).(g) Property plant and equipment Property plant and equipment is asset held by the Group for the conduct of business and is expected to be used for more than one year. Construction-in-progress an item of property represents property under construction and is transferred to property when ready for its intended use.(i) Cost Property plant and equipment is stated at cost upon initial recognition. Costs of a purchased property plant and equipment comprise purchase price related taxes and any directly attributable expenditures for bringing the asset to working condition for its intended use. Costs of the self-constructed property plant and equipment comprise construction materials direct labor costs and those expenditures necessarily incurred for bringing the asset to working condition for its intended use.Subsequent to initial recognition property plant and equipment is stated at cost less accumulated depreciation and impairment losses.Where an item of property plant and equipment comprises major components having different useful lives they are accounted for as separate items of property plant and equipment.(ii) Subsequent costs The Group recognized in the carrying amount of an item of property plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognized in the consolidated statement of profit or loss as an expense when incurred. 2023 Annual Report 217 – F-178 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (g) Property plant and equipment (continued) (iii) Depreciation Depreciation is calculated to write off the cost less residual value if applicable of property plant and equipment and is charged to profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property plant and equipment.The estimated useful lives are as follows: Estimated Estimated useful lives residual value Depreciation rate Buildings 30-35 years 0%~5% 2.71%-3.17% Computer equipment and others 3-10 years 0%~5% 9.50%-31.67% No depreciation is provided in respect of construction in progress.The residual value and useful lives of assets are reviewed and adjusted if appropriate as of each reporting date.(iv) Impairment Impairment losses on property plant and equipment are accounted for in accordance with the accounting policies as set out in Note 4 (m).(v) Disposal and retirement Gains or losses arising from the disposal or retirement of property plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the consolidated statement of profit or loss on the date of disposal or retirement.(h) Lease A lease is a contract under which the lessor conveys to the lessee the right to use an asset for a period of time in exchange for consideration.The Group as the lessee The Group recognises the right-of-use assets on the commencement date of the lease term and recognises the lease liability at the present value of the lease payments that have not been paid yet. Each lease payment is allocated between the liability and interest expense. The interest expense is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The lease payments include fixed payments and payments to be made in the event that it is reasonably determined that the purchase option will be exercised or the lease option is terminated. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined the lessee’s incremental borrowing rate is used.The Group’s right-of-use assets include leased buildings land use right equipment vehicles and others. The right of- use assets are initially measured at cost which includes the initial measurement of the lease liability the lease payments paid on or before the lease commencement date and the initial direct costs less any lease incentives received. If the Group can reasonably expect to obtain the ownership of the leased asset at the expiration of the lease term it is depreciated over the remaining useful life of the leased asset on a straight-line basis; if it is not possible to reasonably determine whether the ownership of the leased asset can be obtained at the expiration of the lease term it is depreciated over the shorter period of the lease term and the remaining useful life of the leased assets on a straight-line basis. When the recoverable amount is lower than the carrying amount of an right-of-use asset the Group writes down the carrying amount to the recoverable amount. 218 China CITIC Bank Corporation Limited – F-179 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (h) Lease (continued) The Group as the lessee (continued) For short-term leases with a lease term of no more than 12 months and leases of assets with low values when new the Group chooses not to recognise the right-of-use assets and lease liabilities. Instead it recognises in each period the relevant rental payments in profit or loss or relevant asset costs on a straight-line basis over the lease term.Land use rights are amortised on a straight-line basis over the respective periods of grant. When the costs attributable to the land use rights cannot be reliably measured and separated from that of the building at inception the costs are included in the cost of buildings and recorded in property plant and equipment.Impairment loss on land use rights is accounted for in accordance with the accounting policies as set out in Note 4 (m).The Group as the lessor A lease is classified as either a finance lease or an operating lease. A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of a leased asset to the lessee irrespective of whether the legal title to the asset is eventually transferred. An operating lease is a lease other than a finance lease.(i) Finance leases Where the Group is a lessor under finance leases an amount representing the sum of the minimum lease receipts and unguaranteed residual value net of initial direct costs all discounted at the implicit lease rate (the “net lease investment”) is included in “loans and advances to customers” on consolidated statement of financial position as a finance lease receivable. At the commencement of the lease term the Group recognises the aggregate of the minimum lease receipts determined at the inception of a lease and the initial direct costs as finance lease receivable. The difference between the net lease investment andthe aggregate of their present value is recognised as unearned finance income which is included in “loansand advances to customers” as well. Unrecognised finance income under finance leases is amortised using the effective interest rate method over the lease term. Hire purchase contracts having the characteristics of finance leases are accounted for in the same manner as finance leases.Impairment losses are accounted in accordance with the accounting policies as set out in Note 4 (c)(iii).(ii) Operating leases Where the Group leases out assets under operating leases the assets are included in the consolidated statement of financial position according to their nature and where applicable are depreciated in accordance with the Group’s depreciation policies as set out in Note 4 (g) except where the asset is classified as an investment property. Impairment losses are accounted in accordance with the accounting policies as set out in Note 4 (m). Revenue arising from operating leases is recognised in accordance with the Group’s revenue recognition policies as set out in Note 4 (t)(iv).(iii) Intangible assets Intangible assets are initially recognized at cost. The cost less estimated net residual values (if any) of the intangible assets is amortised on a straight-line basis over their useful lives and charged to profit or loss.Impaired intangible assets are amortised net of accumulated impairment losses.Impairment loss on intangible assets is accounted for in accordance with the accounting policies as set out in Note 4 (m). Impaired intangible assets are amortised net of accumulated impairment losses.Intangible assets which are not yet available for use should be estimated at least at each financial yearend even if there was no indication that the assets were impaired. 2023 Annual Report 219 – F-180 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (j) Investment properties Investment properties are land and/or buildings which are owned and/or held under a leasehold interest to earn rental income and/or for capital appreciation.The Group’s investment properties are accounted for using the fair value model for subsequent measurement when either of the following conditions is met: – There is an active property market in the location in which the investment property is situated; – The Group can obtain the market price and other relevant information regarding the same type of or similar properties from the property market so as to reasonably estimate the fair value of the investment property.Investment properties are stated at fair value in the consolidated statement of financial position. Any gain or loss arising from a change in fair value or from the retirement or disposal of an investment property is recognized in the consolidated statement of profit or loss.When there is a change in use of properties from owner-occupation to earn rentals or for capital appreciation the investment property transferring from property plant and equipment or intangible assets is measured at fair value on the date of transfer. On the transferred date of property plant and equipment or intangible assets if the fair value of investment property is lower than the carrying amount of property the difference is recognized in profit or loss otherwise in the other comprehensive income.When an investment property is sold transferred retired or damaged the Group recognized the amount of any proceeds on disposal net of the carrying amount and related expenses in the consolidated statement of profit and loss.(k) Goodwill Goodwill represents the excess of the cost of a business combination over the Group’s interest in the fair value of the acquiree’s identifiable net assets. Goodwill is not amortised. Goodwill arising from a business combination is allocated to each cash-generating unit (“CGU”) or a group of CGUs that is expected to benefit from the synergies of the combination. The Group performs impairment test on goodwill annually.Any excess of the Group’s interest in the net fair value of the acquiree’s identifiable net assets over the cost of a business combination is recognized immediately in the consolidated statement of profit or loss.On disposal of the related CGU or a group of CGUs any attributable amount of the purchased goodwill net of allowance for impairment losses if any is included in the calculation of the profit or loss on disposal.Impairment loss on goodwill is accounted in accordance with the accounting policies as set out in Note 4 (m).(l) Repossessed assets In the recovery of impaired loans and advances the Group may take possession of assets held as collateral through court proceedings or voluntary delivery of possession by the borrowers. Where it is intended to achieve an orderly realization of the impaired assets and the Group is no longer seeking repayment from the borrower repossessed assets are reported in “other assets”.When the Group seizes assets to compensate for the losses of loans and advances and interest receivables the repossessed assets are initially recognized at fair value and any taxes that are directly attributable to the assets and other expenses incurred for collecting the repossessed assets.When the fair value less costs to sell is lower than a repossessed asset’s carrying amount an impairment loss is recognized in the consolidated statement of profit or loss. Repossessed assets are recognized at the carrying value net of allowance for impairment losses. 220 China CITIC Bank Corporation Limited – F-181 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (l) Repossessed assets (continued) The repossessed assets are disposed after acquisition and cannot be used without authorisation. The repossessed assets that are transferred to own use are treated as newly purchased property plant and equipment.Any gain or loss arising from the disposal of the repossessed assets is included in the consolidated statement of profit or loss in the period in which the item is disposed.(m) Allowance for impairment of non-financial assets (i) Impairment of non-financial assets other than goodwill At the end of each reporting period the Group assesses whether there is any indication that a nonfinancial asset other than goodwill such as investments in associates and joint ventures property plant and equipment investment properties intangible assets and other assets may be impaired. If any indication exists that an asset may be impaired the Group estimates the recoverable amount of the asset.The recoverable amount of an asset is the higher of its fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. The Group considers all relevant factors in estimating the present value of future cash flows such as the expected future cash flows the useful life and the discount rate.If the recoverable amount of an asset is less than its carrying amount the carrying amount of the asset is reduced to its recoverable amount. That reduction is recognized as an impairment loss in the consolidated statement of profit or loss.(ii) Impairment of goodwill For the purpose of impairment testing goodwill acquired in a business combination is allocated to the CGU or the group of CGUs that is expected to benefit from the synergies of the combination.A CGU is the smallest identifiable group of assets that generates cash inflows that is largely independent of the cash flows from other assets or groups of assets.The CGU or the group of CGUs to which goodwill has been allocated is tested for impairment by the Group annually or whenever there is an indication that the CGU or the group of CGUs are impaired by comparing the carrying amount of the CGU or the group of CGUs including the goodwill with the recoverable amount of the CGU or the group of CGUs. The recoverable amount of the CGU or the group of CGUs are the estimated future cash flows which are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU or the group of CGUs with allocated goodwill.At the time of impairment testing of a CGU or a group of the CGUs to which goodwill has been allocated there may be an indication of an impairment of an asset within the CGU containing the goodwill. In such circumstances the Group tests the asset for impairment first and recognized any impairment loss for that asset before testing for impairment on the CGU or group of the CGUs containing the goodwill.Similarly there may be an indication of an impairment of a CGU within a group of the CGUs containing the goodwill. In such circumstances the Group tests the CGU for impairment first and recognized any impairment loss for that CGU before testing for impairment the group of CGUs to which the goodwill is allocated.For a CGU or a group of CGUs the amount of impairment loss firstly reduces the carrying amount of any goodwill allocated to the CGU or the group of CGUs and then reduces the carrying amount of other assets (other than goodwill) within the CGU or the group of CGUs pro rata on the basis of the carrying amount of each asset. The carrying amount of an asset should not be reduced below the highest of its fair value less costs of disposal (if measurable); its value in use (if determinable) and zero.An impairment loss in respect of goodwill is not reversed. 2023 Annual Report 221 – F-182 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (n) Fair value measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique (Note 56).(o) Employee benefits (i) Employee salaries During the accounting period when an employee has rendered service to the Group the Group recognizes the undiscounted amount of short-term employee benefits as a liability and as an expense unless another IFRS requires or permits the inclusion of the benefits in the cost of an asset. Short-term employee benefits include wages bonuses labor union expenses and employee education expenses social insurance such as medical insurance work-related injury insurance and maternity insurance as well as housing provident funds which are all calculated based on the regulated benchmark and ratio.(ii) Post-employment benefits: Defined contribution plans Pursuant to the relevant laws and regulations in the PRC the Group participates in a defined contribution basic pension insurance in the social insurance system established and managed by government organisations.The Group makes contributions to basic pension insurance plans based on the applicable benchmarks and rates stipulated by the government. Basic pension contributions are charged to profit or loss when the related services are rendered by the employees.In addition to the statutory provision plan the Bank’s employees have joined its annuity scheme(the”scheme”) which was established by the CITIC Group Corporation (“CITIC Group”) in accordance with policies regarding the state-owned enterprise annuity policy. The Bank has made annuity contributions in proportion to its employees’ gross salaries which are expensed in the consolidated statement of profit or loss when the contributions are made.The Group operates a defined contribution provident fund and a Mandatory Provident Fund scheme for Hong Kong staff. Contributions are charged to profit or loss as and when the contribution fall due.(iii) Post-employment benefits: Defined benefit plans The defined benefit plans of the Group are supplementary retirement benefits provided to the domestic employees.The Group adopts the projected unit credit actuarial cost method using unbiased and mutually compatible actuarial assumptions to estimate the demographic and financial variables to measure the obligation associated in the defined benefits plan. The discounted present value of the defined benefit obligation is recognized as the liabilities of the defined benefit plans.The Group recognizes the obligation of defined benefit plans in the accounting period in which the employees render the related services. Past-service costs are recognized immediately in the consolidated statement of profit or loss. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the consolidated statement of profit or loss. Re-measurement arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. 222 China CITIC Bank Corporation Limited – F-183 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (p) Government grants Government grants are transfers of monetary assets or non-monetary assets from the government to the Group at no consideration except for any capital contribution from the government as an investor in the Group. Special funds such as investment grants allocated by the government if clearly defined in official documents as part of “capital reserve” are dealt with as capital contributions and not regarded as government grants.Government grants are recognized when there is reasonable assurance that the grants will be received and that the Group will comply with the conditions attaching to the grants. Government grants are measured at the amount received or will be received when recognized as monetary assets. Government grants are measured at fair value when recognized as non-monetary assets.The grants related to assets are government grants whose primary condition is that an entity qualifying for them should purchase construct or otherwise acquire long-term assets. The grants related to income are government grants other than those related to assets. A government grant related to an asset is recognized initially as deferred income and amortised to profit or loss on a straight-line basis over the useful life of the asset. A grant that compensates the Group for expenses to be incurred in the subsequent periods is recognized initially as deferred income and recognized in the consolidated statement of profit or loss in the same periods in which the expenses are recognized. A grant that compensates the Group for expenses incurred is recognized in the consolidated statement of profit or loss immediately. The Group uses the same statement method for similar government grants.For the policy loans with favourable interest rates the Group records the loans at the actual amounts and calculates the interests by loan principals and the favourable interest rates. The interest subsidies directly received from government are recorded as a reduction of interest expenses.(q) Financial guarantee contracts and loan commitments A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the terms of a debt instrument.Financial guarantees are initially recognized at fair value on the date the guarantee was given. Subsequent to initial recognition the Group’s liabilities under such guarantees are measured at the higher of the initial amount less amortisation of guarantee fees and the best estimate of the expected credit loss provision required to settle the guarantee. Any increase in the liability relating to guarantees is taken to the consolidated statement of profit and loss.The impairment allowance of loan commitments provided by the Group is measured by ECL. The Group has not provided any commitment to provide loans at a below-market interest rate or that can be settled net in cash or by delivering or issuing another financial instrument.For loan commitments and financial guarantee contracts the loss allowance is recognized as a provision. However for contracts that include both a loan and an undrawn commitment and the Group cannot separately identify the ECL on the undrawn commitment component from those on the loan component the ECL on the undrawn commitment are recognized together with the loss allowance for the loan. To the extent that the combined ECL exceed the gross carrying amount of the loan the ECL are recognized as a provision. 2023 Annual Report 223 – F-184 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (r) Provisions and contingent liabilities A provision is recognized in the consolidated statement of financial position when the Group has a present legal or constructive obligation arising as a result of a past event it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made. A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Factors pertaining to a contingency such as the risks uncertainties and time value of money are taken into account as a whole in reaching the best estimate. Where the effect of the time value of money is material the best estimate is determined by discounting the related future cash outflows. The Group recognizes the loss allowance of financial guarantee contracts measured by ECL as a provision.A contingent liability is (a) a possible obligation that arises from past events and whose existence can only be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or (b) a present obligation that arises from past events and it is not probable that an outflow of economic benefits is required to settle the obligation; or the amount of the obligation cannot be measured reliably. Such liability is disclosed as contingent liabilities under Note 50.(s) Fiduciary activities The Group acts in a fiduciary capacity as a custodian trustee or an agent for customers. Assets held by the Group and the related undertakings to return such assets to customers are excluded from the consolidated financial statements as the risks and rewards of the assets reside with the customers.Entrusted lending is the business where the Group enters into entrusted loan agreements with customers whereby the customers provide funding (the “entrusted funds”) to the Group and the Group grants loans to third parties (the “entrusted loans”) at the instruction of the customers. As the Group does not assume the risks and rewards of the entrusted loans and the corresponding entrusted funds entrusted loans and funds are recorded as off balance sheet items at their principal amounts and no impairment assessments are made for these entrusted loans.(t) Income recognition Revenue is the gross inflow of economic benefit arising in the course of the Group’s ordinary activities when those inflows result in increases in equity other than increases relating to contributions from owners. Revenue is recognized when the controls of related products or services is obtained and satisfy the other conditions for different type of revenues as below.(i) Interest income Interest income of financial assets is calculated using the effective interest method and included in the profit and loss.The accounting policies about interest income of financial assets measured at amortised cost refer to note 4 (c)(ii).(ii) Fee and commission income Fee and commission income is recognized when the Group fulfills its performance obligation either over time or at a point in time when a customer obtains control of the service. Origination or commitment fees received by the Group which result in the creation or acquisition of a financial asset are deferred and recognized as an adjustment to the effective interest rate. If the commitment expires without the Group making a loan or anticipating will not the fee is recognized as revenue on expiry.(iii) Dividend income Dividend income is recognized in the consolidated statement of profit or loss on the date when the Group’s right to receive payment is established. 224 China CITIC Bank Corporation Limited – F-185 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (t) Income recognition (continued) (iv) Rental income from operating lease Rental income received under operating leases is recognized as other operating income in equal instalments over the periods covered by the lease term except where an alternative basis is more representative of the pattern of benefits to be derived from the leased asset. Lease incentives granted are recognized in the consolidated statement of profit or loss as an integral part of the aggregate net lease payments receivable.(v) Finance income from finance lease and hire purchase contract Finance income implicit in finance lease and hire purchase payments is recognized as interest income over the period of the leases so as to produce an approximately constant periodic rate of return on the outstanding net investment in the leases for each accounting period.(u) Income tax Current tax and deferred tax are recognized in the consolidated statement of profit or loss except to the extent that they relate to a business combination or items recognized directly in equity (including other comprehensive income).Current income tax is the expected tax payables on the taxable income for the year using tax rates enacted or substantially enacted at the reporting date and any adjustment to tax payables in respect of previous periods.Deferred tax is provided for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Temporary differences also arise from unused tax losses and unused tax credits. Deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the asset can be recognized.Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries associates and joint arrangements except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognized on deductible temporary differences arising from investments in subsidiaries associates and joint ventures arrangements only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be recognized.At the reporting date deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is recognized or the liability is settled according to the requirements of tax laws. The Group also considers the probability of realization and the settlement of deferred tax assets and deferred tax liabilities in the calculation.Current tax assets are offset against current tax liabilities and deferred tax assets against deferred tax liabilities if the Group has the legally enforceable right to set off current tax assets against current tax liabilities and meet the additional conditions that deferred tax assets and liabilities relate to income taxes levied by the same authority on the same taxable entity.(v) Cash equivalents Cash equivalents are short-term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value with original maturity of three months or less at acquisition. 2023 Annual Report 225 – F-186 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 4 Summary of significant accounting policies (continued) (w) Profit distribution Proposed dividends for ordinary shares which are declared and approved after the end of each reporting period are not recognized as a liability in the consolidated statement of financial position and are instead disclosed as a subsequent event after the end of each reporting period in the notes to the consolidated financial statements.Dividends payable are recognized as liabilities in the period in which they are approved.As authorized by the shareholders’ annual general meeting the Board of Directors has the sole discretion to declare and distribute dividends on preference shares. Preference shares dividend distribution is recognized as a liability in the consolidated financial statements in the period in which the dividends are approved.(x) Related parties If the Group has the power directly or indirectly to control jointly control or exercise significant influence over another party or vice versa or where the Group and one or more parties are subject to common control jointly control from another party they are considered to be related parties. Related parties may be individuals or enterprises.(y) Operating segments An operating segment is a component of the Group that satisfies all of the following conditions: (1) the component is able to earn revenues and incur expenses from its ordinary activities; (2) whose operating results are regularly reviewed by the Group’s management to make decisions about resources to be allocated to the segment and to assess its performance and (3) for which the information on financial position operating results and cash flows is available to the Group. If two or more operating segments have similar economic characteristics and satisfy certain conditions they are aggregated into one single operating segment.Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s chief operating decision-maker for the purposes of allocating resources and assessing performance. The Group considers the business from different perspectives including products and services and geographic areas. The operating segments that meet the specified criteria have been aggregated and the operating segments that meet quantitative thresholds have been reported separately.Inter-segment revenues are measured on the basis of actual transaction price for such transactions for segment reporting and segment accounting policies are consistent with those for the consolidated financial statements. 5 Critical accounting estimates and judgements Preparation of the consolidated financial statements requires management to make judgments estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities income and expenses. The estimates and associated assumptions are based on historical experience and other factors that are believed to be reasonable under the circumstances the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.The estimates and associated key assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.(i) Measurement of the expected credit loss allowance The measurement of the expected credit loss allowance for financial assets of debt instruments and off balance sheet credit assets measured at amortised cost and FVOCI is an area that requires the use of complex models and significant assumptions about future economic conditions and credit recognition (e. g. the likelihood of ustomers defaulting and the resulting losses). Explanation of the inputs assumptions and estimation techniques used in measuring ECL is further detailed in note 54 (a). 226 China CITIC Bank Corporation Limited – F-187 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 5 Critical accounting estimates and judgements (continued) (i) Measurement of the expected credit loss allowance (continued) A number of significant judgements are also required in applying the accounting equirements for measuring ECL such as: * Segmentation of portfolio sharing similar credit risk characteristics for the purposes of measuring ECL; * Choosing appropriate models and assumptions for the measurement of ECL; * Criteria for determining whether or not there was a significant increase in credit risk or a default or impairment loss was incurred; * Economic indicators for forward-looking measurement and the application of economic scenarios and weightings; * Management overlay for asset portfolios whose non-linear risk characteristics cannot be adequately reflected through impairment models; and * Discounted cash flows model is applicable to assets related to corporate client in stage 3.Detailed information about the judgements and estimates made by the Group in the above areas is set out in note 54 (a).(ii) Classification of financial assets The critical judgments the Group has in determining the classification of financial assets include analysis of business models and characteristics of contractual cash flows.The Group determines the business model for managing financial assets at the level of financial asset portfolio.The factors considered include evaluation and reporting of financial asset performance to key management personnel risks affecting the performance of financial assets and their management methods and related business management personnel. The way to get paid etc.When assessing whether the contractual cash flow of financial assets is consistent with the basic lending arrangement the Group has the following main judgments: whether the principal may be subject to change in the duration or amount of money due to prepayments during the duration; whether interests is only included currency time value credit risk other basic borrowing risks and considerations for costs and profits; whether the amount paid in advance reflect only the outstanding principal and interest on the outstanding principal as well as reasonable compensation for early termination of the contract.(iii) Fair value of financial instruments For financial instruments without active market the Group determines fair values using valuation techniques which include discounted cash flow models as well as other types of valuation models. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates credit spreads and foreign currency exchange rates. Where discounted cash flow techniques are used estimated cash flows are based on management’s best estimates and the discount rate used is a market rate at the end of each reporting period applicable for an instrument with similar terms and conditions. Where other pricing models are used inputs are based on observable market data at the end of each reporting period. However where market data are not available management needs to make estimates on such unobservable market inputs based on assumptions. Changes in assumptions about these factors could affect the estimated fair value of financial instruments. 2023 Annual Report 227 – F-188 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 5 Critical accounting estimates and judgements (continued) (iv) De-recognition of financial assets In its normal course of business the Group transfers financial assets through various types of transactions including regular way sales and transfers securitization financial assets sold under repurchase agreements and etc. the Group applies significant judgement in assessing whether it has transferred these financial assets which qualify for a full or partial de-recognition.Where the Group enters into structured transactions by which it transferred financial asset to structured entities the Group analyses whether the substance of the relationship between the Group and these structured entities indicates that it controls these structured entities to determine whether the Group needs to consolidate these structured entities. This will determine whether the following de-recognition analysis should be conducted at the consolidated level or at the entity level from which the financial assets was transferred.The Group analyses the contractual rights and obligations in connection with such transfers to determine whether the de-recognition criteria are met based on the following considerations: – whether it has transferred the rights to receive contractual cash flows from the financial assets or the transfer qualified for the “pass through” of those cash flows to independent third parties; – the extent to which the associated risks and rewards of ownership of the financial assets are transferred by using appropriate models. Significant judgment is applied in the Group’s assessment with regard to the parameters and assumptions applied in the models estimated cash flows before and after the transfers the discount rates used based on current market interest rates variability factors considered and the allocation of weightings in different scenarios; – where the Group neither retains nor transfers substantially all of the risks and rewards associated with their ownership the Group analyses whether the Group has relinquished its controls over these financial assets and if the Group has continuing involvement in these transferred financial assets.(v) Consolidation of structured entities The Group makes significant judgment to assess whether or not to consolidate structured entities. When performing this assessment the Group: – assesses its contractual rights and obligations in light of the transaction structures and evaluates the Group’s power over the structured entities; – performs independent analyses and tests on the variable returns from the structured entities including but not limited to commission income and asset management fees earned retention of residual income and if any liquidity and other support provided to the structured entities; and; – assesses its ability to exercise its power to influence the variable returns assessed whether the Group acts as a principal or an agent through analysis of the scope of the Group’s decision-making authority remuneration entitled other interests the Group holds and the rights held by other parties.(vi) Income taxes Determining income tax provisions involves judgement on the future tax treatment of certain transactions. There are certain transactions and activities for which the ultimate tax determination is uncertain during the ordinary course of business. The Group carefully evaluates the tax implications of transactions and tax provisions are set up accordingly. The tax treatment of such transactions is reconsidered periodically to take into account all changes in tax legislations. Deferred tax assets are recognized for temporary deductible differences. As those deferred tax assets can only be recognized to the extent that it is probable that future taxable profits will be available against which the unused tax credits can be recognized management’s judgement is required to assess the probability of future taxable profits. Management’s assessment is constantly reviewed and additional deferred tax assets are recognized if it becomes probable that future taxable profits will allow the deferred tax assets to be recovered. 228 China CITIC Bank Corporation Limited – F-189 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 6 Net interest income Years ended 31 December 20232022 Interest income arising from (Note (i)): Deposits with central banks 6445 6100 Deposits with banks and non-bank financial institutions 1756 1569 Placements with and loans to banks and non-bank financial institutions 8125 6378 Financial assets held under resale agreements 1029 1092 Loans and advances to customers — corporate loans 126650 119218 — personal loans 116749 120438 Financial investments — at amortised cost 36759 40207 — at fair value through other comprehensive income 20117 18580 Others 62 27 Subtotal 317692 313609 Interest expense arising from: Borrowings from central banks (4281) (4974) Deposits from banks and non-bank financial institutions (22479) (23818) Placements from banks and non-bank financial institutions (2366) (1686) Financial assets sold under repurchase agreements (3762) (1935) Deposits from customers (115734) (102997) Debt securities issued (24996) (27082) Lease liabilities (454) (442) Others (81) (28) Subtotal (174153) (162962) Net interest income 143539 150647 Note: (i) Interest income includes interest income accrued on credit-impaired financial assets of RMB715 million for the year ended 31 December 2023 (2022: RMB462 million). 7 Net fee and commission income Years ended 31 December 20232022 Fee and commission income: Bank card fees 16800 16480 Commission for custodian business and other fiduciary 6303 11269 Agency fees and commission (Note (i)) 5855 5692 Guarantee and advisory fees 5216 5357 Settlement and clearance fees 2261 2143 Others 564 110 Total 36999 41051 Fee and commission expense (4616) (3959) Net fee and commission income 32383 37092 Note: (i) Agency fees and commission represent fees earned from selling bonds investment funds and insurance products and provision of entrusted lending activities. 2023 Annual Report 229 – F-190 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 8 Net trading gain Years ended 31 December 20232022 Debt securities and certificates of interbank deposit 4110 2022 Foreign currencies 4046 (1909) Derivatives and related exposures (1018) 4768 Total 7138 4881 9 Net gain from investment securities Years ended 31 December 20232022 Financial investments — at fair value through profit or loss 14794 12728 — at amortised cost 3806 360 — at fair value through other comprehensive income (130) (278) — Investments in financial assets designated at fair value through other comprehensive income 14 41 Revaluation gain on transfer out of equity at disposal 763 2846 Net gain from bills rediscounting 916 1197 Proceeds from the resale of forfaiting 549 836 Others 391 41 Total 21103 17771 10 Operating expenses Years ended 31 December 20232022 Staff costs — salaries and bonuses 28100 28102 — welfare expenses 1318 1352 — social insurance 1565 2027 — housing fund 1982 1758 — labor union expenses and employee education expenses 786 888 — post-employment benefits – defined contribution plans 3990 3579 — post-employment benefits – defined benefit plans – 1 — other benefits 342 375 Subtotal 38083 38082 Property and equipment related expenses — depreciation of right-of-use assets 3256 3289 — depreciation of property plant and equipment 2915 2558 — rent and property management expenses 1107 991 — maintenance 1334 1072 — amortisation expenses 1953 1552 — electronic equipment operating expenses 520 422 — others 490 444 Subtotal 11575 10328 Tax and surcharges 2185 2122 Other general operating and administrative expenses 17371 16306 Total 69214 66838 Notes: (i) Included in other general operating and administrative expenses were audit fees of RMB16 million for the year ended 31 December 2023 (2022: RMB19 million) and non-audit fees of RMB3 million for the year ended 31 December 2023 (2022: RMB7 million). 230 China CITIC Bank Corporation Limited – F-191 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 10 Operating expenses (continued) (a) Individuals with highest emoluments For the year ended 31 December 2023 of the X individuals with the highest emoluments in the Group there was no director (2022: Nil) and no supervisor (2022: Nil). The aggregate of the emoluments before individual income tax in respect of the five (2022: five) highest paid individuals of the Group were as follows: Years ended 31 December 20232022 RMB’000 RMB’000 Basic salaries housing allowances other allowances and benefits in kind 21163 20683 Discretionary bonuses 21856 19058 Contribution to pension scheme 1217 979 Total 44236 40720 The emoluments before individual income tax of the five individuals of the Group with the highest emoluments are within the following bands: Years ended 31 December 20232022 RMB5000001 – RMB10000000 5 4 RMB10000001 – RMB15000000 – 1 No inducement fee and compensation for loss of office was paid to the five highest paid individuals for the year ended 31 December 2023 (2022: Nil). 11 Credit impairment losses Years ended 31 December 20232022 Credit impairment losses Impairment reversal of deposits with banks and non-bank financial institutions (43) (48) Impairment losses of placements with and loans to banks and non-bank financial institutions 1 50 Impairment losses/(reversals) of financial assets held under resale agreements 99 (47) Impairment losses of loans and advances to customers 49840 55786 Impairment losses of financial investments — at amortised cost 2282 1542 — at fair value through other comprehensive income 223 269 Impairment losses of other financial assets and accrued interest 7970 5220 Impairment losses of off-balance sheet items 1554 8587 Total 61926 71359 12 Impairment losses on other assets Years ended 31 December 20232022 Impairment losses of other assets-repossessed assets 278 45 2023 Annual Report 231 – F-192 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 13 Income tax (a) Recognized in the consolidated annual statement of profit and loss and other comprehensive income Years ended 31 December Note 2023 2022 Current tax — Mainland China 5493 16032 — Hong Kong 182 57 — Overseas 161 32 Deferred tax 29(c) 989 (5655) Income tax 6825 10466 Mainland China and Hong Kong income tax have been provided at the rate of 25% and 16.5% respectively.Overseas tax has been provided at the rates of taxation prevailing in the regions in which the Group operates respectively.(b) Reconciliation between income tax expense and accounting profit Years ended 31 December 20232022 Profit before tax 74887 73416 Income tax calculated at PRC statutory tax rate 18722 18354 Effect of different tax rates in other regions (226) (213) Tax effect of non-deductible expenses 1424 3456 Tax effect of non-taxable income — interest income arising from PRC government bonds and local government bonds (7767) (7121) — dividend income from investment funds (3900) (2680) — others (1428) (1330) Income tax 6825 10466 232 China CITIC Bank Corporation Limited – F-193 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 14 Other comprehensive income net of tax Years ended 31 December 20232022 Items that will not be reclassified subsequently to profit or loss Changes in defined benefit plan liabilities — net changes during the year before tax – – Fair value changes on financial asset designated at fair value through other comprehensive income net of tax — net changes during the year before tax (128) 345 — income tax (16) (108) Subtotal (144) 237 Items that may be reclassified subsequently to profit or loss Other comprehensive income transferable to profit or loss under equity method — net changes during the year 39 (28) Fair value changes on financial assets at fair value through other comprehensive income net of tax (Note (i)) — net changes during the year before tax 7051 (7530) — net amount transferred to profit or loss (734) (2862) — Income tax (1328) 2201 Credit impairment allowance on financial assets at fair value through other comprehensive income (Note (ii)) — net changes during the year (674) 167 — Income tax 162 (22) Others — net changes during the year before tax 5 4 Exchange differences on translation of financial statements 1198 4132 Subtotal 5719 (3938) Other comprehensive income net of tax 5575 (3701) Notes: (i) Fair value changes on financial assets at fair value through other comprehensive income include those of financial investments and loans and advances to customers at fair value through other comprehensive income.(ii) Credit impairment allowance include financial investments and loans and advances to customers at fair value through other comprehensive income. 15 Earnings per share Earnings per share information for the years ended 31 December 2023 and 2022 is computed by dividing the profit for the year attributable to ordinary shareholders of the Bank by the weighted average number of shares in issue during the year.The Bank issued non-cumulative preference shares in 2016 under the terms and conditions as detailed in Note 42 (i).The Bank declared and paid cash dividends of RMB1428 million of non-cumulative preference shares for the year of 2022 (2022: 1428 million). The Bank issued RMB40 billion write-down undated capital bonds (the “Bonds”) in 2019 and the Bank issued RMB40 billion write-down undated capital bonds (the “Bonds”) in 2021 with terms and conditions disclosed in detail in Note 42(ii) under perpetual Bonds. The Bank declared and paid RMB3360 million in interests on the perpetual bonds in 2023. 2023 Annual Report 233 – F-194 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 15 Earnings per share (continued) The conversion feature of preference shares is considered to fall within contingently issuable ordinary shares. The triggering events of conversion did not occur as at 31 December 2023 therefore the conversion feature of preference shares has no effect on the basic and diluted earnings per share calculation.The diluted earnings per share are calculated on the assumption that all the Bank’s convertible corporate bonds had been converted into ordinary shares at the beginning of the year by dividing the net profit for the year attributable to ordinary shareholders of the Bank after adjustments for the interest expenses of convertible corporate bonds for the year by the adjusted weighted average number of outstanding ordinary shares for the year.Years ended 31 December 20232022 Profit for the year attributable to equity holders of the Bank 67016 62103 Less: Equity attributable to holders of other equity instruments of the Bank 4788 4788 Profit for the year attributable to ordinary shareholders of the Bank 62228 57315 Weighted average number of shares (in million shares) 48954 48935 Basic earnings per share (in RMB) 1.27 1.17 Diluted earnings per share (in RMB) 1.14 1.06 16 Cash and balances with central banks 31 December 31 December Notes 2023 2022 Cash 4467 5532 Balances with central banks — statutory deposit reserve funds (i) 356042 365362 — surplus deposit reserve funds (ii) 52473 104315 — fiscal deposits (iii) 356 298 — foreign exchange reserve (iv) 2926 1693 Accrued interest 178 181 Total 416442 477381 Notes: (i) The Group places statutory deposit reserve funds with the People’s Bank of China (“PBOC”) and overseas central banks where it has operations. The statutory deposit reserve funds are not available for use in the Group’s daily business.As at 31 December 2023 the statutory deposit reserve funds placed with the PBOC was calculated at 7% (31 December 2022: 7.5%) of eligible Renminbi deposits for domestic branches of the Bank and at 7% (31 December 2022: 7.5%) of eligible Renminbi deposits from overseas financial institutions. The Bank was also required to deposit an amount equivalent to 4% (31 December 2022: 6%) of its foreign currency deposits from domestic branch customers as statutory deposit reserve funds.The statutory RMB deposit reserve rates applicable to Zhejiang Lin’an CITIC Rural Bank Corporation Limited (“Lin’an Rural Bank”) a subsidiary of the Group was at 5% (31 December 2022: 5%).The amounts of statutory deposit reserves funds placed with the central banks of overseas countries are determined by respective jurisdictions. The statutory deposit reserve funds are interest bearing except for the foreign currency reserve funds deposits placed with the PBOC.(ii) The surplus deposit reserve funds are maintained with the PBOC for the purposes of clearing (iii) Fiscal deposits placed with the PBOC are not available for use in the Group’s daily operations and are non-interest bearing (except for regulations provided by the local People’s Bank).(iv) The foreign exchange reserve is maintained with the PBOC in accordance with the related notice issued by the PBOC. The reserve is provided as of 20% of customer-driven foreign exchange forward transactions volume on a monthly basis. Such foreign exchange reserve is non-interest bearing and will be repayable in 12 months according to the Notice. 234 China CITIC Bank Corporation Limited – F-195 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 17 Deposits with banks and non-bank financial institutions (a) Analysed by types and locations of counterparties 31 December 31 December Note 2023 2022 In Mainland China — banks 52508 49930 — non-bank financial institutions 6946 6734 Subtotal 59454 56664 Outside Mainland China — banks 20390 18836 — non-bank financial institutions 839 2995 Subtotal 21229 21831 Accrued interest 448 437 Gross balance 81131 78932 Less: Allowances for impairment losses 31 (56) (98) Net balance 81075 78834 (b) Analysed by remaining maturity 31 December 31 December Note 2023 2022 Demand deposits (Note (i)) 42383 36373 Time deposits with remaining maturity — within one month 3800 4883 — between one month and one year 34500 37239 Subtotal 80683 78495 Accrued interest 448 437 Gross balance 81131 78932 Less: Allowances for impairment losses 31 (56) (98) Net balance 81075 78834 Note: (i) As at 31 December 2023 within the demand deposits there were pledged deposits of RMB9.11 million (as at 31 December 2022: RMB555 million). These deposits were mainly maintenance margins with a regulatory body. 2023 Annual Report 235 – F-196 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 18 Placements with and loans to banks and non-bank financial institutions (a) Analysed by types and locations of counterparties 31 December 31 December Note 2023 2022 In Mainland China — banks (Note (i)) 23450 15215 — non-bank financial institutions 148150 160739 Subtotal 171600 175954 Outside Mainland China — banks 64997 41302 Subtotal 64997 41302 Accrued interest 1288 1048 Gross balance 237885 218304 Less: Allowances for impairment losses 31 (143) (140) Net balance 237742 218164 Note: (i) The leased gold between Banks is included in the Placements with and loans to banks and non-bank financial institutions measured at fair value through profit or loss. As at 31 December 2023 the carrying amount of leased gold was RMB7320 million (as at 31 December 2022: RMB8739 million) (b) Analysed by remaining maturity 31 December 31 December Note 2023 2022 Within one month 70820 43800 Between one month and one year 164277 131706 Over one year 1500 41750 Accrued interest 1288 1048 Gross balance 237885 218304 Less: Allowances for impairment losses 31 (143) (140) Net balance 237742 218164 236 China CITIC Bank Corporation Limited – F-197 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 19 Derivatives Derivatives include forward swap and option transactions undertaken by the Group in foreign exchange interest rate and precious metals derivatives related to trading asset and liability management and customer-initiated transactions.The Group through the operations of its branch network acts as an intermediary for a wide range of customers for structuring deals to offer risk management solutions to match individual customer needs. These positions are actively managed through hedging transactions with external parties to ensure the Group’s net exposures are within acceptable risk levels. The Group also uses these derivatives for proprietary trading purposes and to manage its own asset and liability and structural positions. Derivatives are held for trading. Derivatives classified as held for trading are for trading and customer-initiated transactions purpose and those for risk management purposes do not meet the criteria for hedge accounting.The contractual/notional amounts of derivatives provide a basis for comparison with fair values of derivatives recognized on the consolidated statement of financial position but do not necessarily indicate the amounts of future cash flows involved or the current fair values of the derivatives and therefore do not indicate the Group’s exposure to credit or market risks. 31 December 2023 31 December 2022 Nominal Nominal amount Assets Liabilities amount Assets Liabilities Hedging instruments — interest rate derivatives 716 23 – 600 9 – Non-Hedging instruments — interest rate derivatives 3632633 14633 14360 3083202 14950 14887 — currency derivatives 3071039 29872 26748 2506299 29173 28780 — precious metal derivatives 34448 147 742 35523 250 598 — credit derivatives – – – 30 1 – Total 6738836 44675 41850 5625654 44383 44265 (a) Nominal amount analysed by remaining maturity 31 December 31 December 20232022 Within three months 2606918 2257129 Between three months and one year 2594719 1910625 Between one year and five years 1500503 1425950 Over five years 36696 31950 Total 6738836 5625654 (b) Credit risk weighted amountsThe credit risk weighted amount has been computed in accordance with “Regulation Governing Capital ofCommercial Banks (provisional)” promulgated by the former CBIRC in the year of 2012 and depends on the status of the counterparties and the maturity characteristics of the instruments including those customer- driven back-to-back transactions. As at 31 December 2023 the total amount of credit risk weighted amount for counterparty was RMB28225 million (31 December 2022: RMB24579 million). 2023 Annual Report 237 – F-198 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 20 Financial assets held under resale agreements (a) Analysed by types and locations of counterparties 31 December 31 December Note 2023 2022 In Mainland China — banks 51038 11100 — non-bank financial institutions 51124 848 Subtotal 102162 11948 Outside Mainland China — banks 2197 149 — non-bank financial institutions 478 1628 Subtotal 2675 1777 Accrued interest 35 5 Gross balance 104872 13730 Less: Allowance for impairment losses 31 (99) – Net balance 104773 13730 (b) Analysed by types of collateral 31 December 31 December Note 2023 2022 Debt securities 103338 13725 Discounted bills 1499 – Subtotal 104837 13725 Accrued interest 35 5 Gross balance 104872 13730 Less: Allowance for impairment losses 31 (99) – Net balance 104773 13730 (c) Analysed by remaining maturity 31 December 31 December Note 2023 2022 Within one month 103887 13403 Between one month and one year 950 322 Accrued interest 35 5 Gross balance 104872 13730 Less: Allowance for impairment losses 31 (99) – Net balance 104773 13730 238 China CITIC Bank Corporation Limited – F-199 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 21 Loans and advances to customers (a) Analysed by nature 31 December 31 December Note 2023 2022 Loans and advances to customers at amortised cost Corporate loans and advances — loans 2586610 2418718 — discounted bills 1684 3704 — finance lease receivables 46819 46566 Subtotal 2635113 2468988 Personal loans and advances — residential mortgages 1003321 975807 — credit cards 521260 511101 — business loans 459113 378819 — personal consumption 298561 250813 — finance lease receivables 1591 370 Subtotal 2283846 2116910 Accrued interest 19948 17180 Gross balance 4938907 4603078 Less: Allowances impairment losses on loans 31 — principal (133861) (130573) — interest (681) (412) Loans and advances to customers at amortised cost net 4804365 4472093 Loans and advances to customers at fair value through other comprehensive income — loans 58163 54851 — discounted bills 515664 508142 Carrying amount of loans and advances at fair value through other comprehensive income 573827 562993 — fair value changes through other comprehensive income (98) (547) Loans and advances to customers at fair value through profit or loss — loans 5558 3881 Total 5383750 5038967 Allowances for impairment losses on loans and advances to customers at fair value through other comprehensive income 31 (656) (629) 2023 Annual Report 239 – F-200 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 21 Loans and advances to customers (continued) (b) Analysed by assessment method of allowance for impairment losses 31 December 2023 Stage one Stage two Stage three Total (Note (i)) Gross loans and advances to customers at amortised costs 4755900 96023 67036 4918959 Accrued interest 19039 411 498 19948 Less: Allowance for impairment losses (62976) (27105) (44461) (134542) Carrying amount of loans and advances to customers measured at amortised cost 4711963 69329 23073 4804365 Carrying amount of loans and advances to customers at fair value through other comprehensive income 573370 345 112 573827 Total 5285333 69674 23185 5378192 Allowance for impairment losses on loans and advances to customers at fair value through other comprehensive income (586) – (70) (656) 31 December 2022 Stage one Stage two Stage three Total (Note (i)) Gross loans and advances to customers at amortised costs 4422344 88606 74948 4585898 Accrued interest 14342 2125 713 17180 Less: Allowance for impairment losses (60204) (22497) (48284) (130985) Carrying amount of loans and advances to customers measured at amortised cost 4376482 68234 27377 4472093 Carrying amount of loans and advances to customers at fair value through other comprehensive income 562118 720 155 562993 Total 4938600 68954 27532 5035086 Allowance for impairment losses on loans and advances to customers at fair value through other comprehensive income (523) (27) (79) (629) 240 China CITIC Bank Corporation Limited – F-201 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 21 Loans and advances to customers (continued) (b) Analysed by assessment method of allowance for impairment losses (continued) Note: (i) Stage 3 loans are loans and advances to customers that have incurred credit impairment. 31 December 2023 31 December 2022 Secured portion 33606 43044 Unsecured portion 33542 32059 Gross balance 67148 75103 Allowance for impairment losses (44531) (48363) As at 31 December 2023 the maximum exposure covered by pledge and collateral held on secured portion is RMB33438 million (as at 31 December 2022: RMB42470 million).The fair value of collateral was estimated by management based on the latest revaluation including available external valuation if any adjusted by taking into account the current realisation experience as well as market situation.(c) Overdue loans analysed by overdue period 31 December 2023 Overdue Overdue Overdue between three between one within three months and year and Overdue over months one year three years three years Total Unsecured loans 19859 11806 2089 246 34000 Guaranteed loans 1544 4243 2600 1018 9405 Loans with pledged assets — loans secured by collateral 15564 11757 10249 1054 38624 — pledged loans 3789 1084 2387 137 7397 Total 40756 28890 17325 2455 89426 31 December 2022 Overdue Overdue Overdue between three between one within three months and year and three Overdue over months one year years three years Total Unsecured loans 17083 9242 1695 280 28300 Guaranteed loans 1800 1926 2215 1990 7931 Loans with pledged assets — loans secured by collateral 12302 11924 7091 2337 33654 — pledged loans 2751 6601 2189 763 12304 Total 33936 29693 13190 5370 82189 Overdue loans represent loans of which the principal or interest are overdue one day or more. 2023 Annual Report 241 – F-202 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 21 Loans and advances to customers (continued) (d) Finance lease receivables Finance lease receivables are attributable to the Group’s subsidiaries CITIC Financial Leasing Limited (“CFLL”) and CITIC International Finance Holdings Limited (“CIFH”) include net investment in machines and equipment leased to customers under finance lease and hire purchase contracts which have the characteristics of finance leases. The remaining period of these contracts range from 1 to 25 years. The total finance lease receivables under finance lease and hire purchase contracts and their present values are as follows: 31 December 31 December 20232022 Within one year (including one year) 15008 14247 One year to two years (including two years) 12638 10568 Two years to three years (including three years) 6647 7503 Over three years 14117 14618 Gross balance 48410 46936 Less: Allowance for impairment losses — stage one (798) (960) — stage two (691) (499) — stage three (365) (419) Net balance 46556 45058 22 Financial investments (a) Analysed by types 31 December 31 December Note 2023 2022 Financial assets at fair value through profit or loss Investment funds 421154 431958 Debt securities 106501 80690 Certificates of deposit 75790 35543 Equity instruments 6334 7887 Wealth management products 4045 1516 Net balance 613824 557594 Financial assets at amortised cost Debt securities 870087 887763 Trust investment plans 204840 222819 Investment management products managed by securities companies 22908 39628 Certificates of deposit and interbank certificates of deposit 1064 3424 Subtotal 1098899 1153634 Accrued interest 13004 10384 Less: Allowance for impairment losses 31 (26305) (28566) — principles (26239) (28528) — accrued interest (66) (38) Net balance 1085598 1135452 242 China CITIC Bank Corporation Limited – F-203 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 22 Financial investments (continued) (a) Analysed by types (continued) 31 December 31 December Note 2023 2022 Financial assets at fair value through other comprehensive income (Note (i)) Debt securities 877424 777438 Certificates of deposit 4922 21501 Subtotal 882346 798939 Accrued interest 6331 5756 Net balance 888677 804695 Allowances for impairment losses on financial investments at fair value through other comprehensive income 31 (1968) (2717) Financial assets designated at fair value through other comprehensive income (Note (i)) 4807 5128 Total 2592906 2502869 Notes: (i) Financial investments at fair value through other comprehensive income: 31 December 2023 Debt securities Note Equity instruments instruments Total Costs/Amortised cost 5421 882343 887764 Accumulated fair value change in other comprehensive income (614) 3 (611) Fair value 4807 882346 887153 Allowance for impairment losses 31 (1968) (1968) 31 December 2022 Debt securities Note Equity instruments instruments Total Costs/Amortised cost 5783 804867 810650 Accumulated fair value change in other comprehensive income (655) (5928) (6583) Fair value 5128 798939 804067 Allowance for impairment losses 31 (2717) (2717) 2023 Annual Report 243 – F-204 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 22 Financial investments (continued) (b) Analysed by location of counterparties 31 December 31 December Note 2023 2022 In Chinese Mainland — governments 1379382 1097552 — policy banks 52960 88726 — banks and non-bank financial institutions 906935 1097864 — corporates 90512 99992 Subtotal 2429789 2384134 Outside Chinese Mainland — governments 80515 57946 — banks and non-bank financial institutions 41467 32736 — corporates 44182 39171 — public entities 3923 1308 Subtotal 170087 131161 Accrued interest 19335 16140 Total 2619211 2531435 Less: Impairment allowance for financial assets at amortised cost 31 (26305) (28566) Net balance 2592906 2502869 Listed in Hong Kong 43247 50959 Listed outside Hong Kong 2210432 2074660 Unlisted 339227 377250 Total 2592906 2502869 Bonds traded in China’s inter-bank bond market are listed outside Hong Kong. 244 China CITIC Bank Corporation Limited – F-205 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 22 Financial investments (continued) (c) Analysed by assessment method of allowance for impairment losses 31 December 2023 Stage one Stage two Stage three Total Financial assets at amortised costs 1046006 5447 47446 1098899 Accrued interest 12455 488 61 13004 Less: Allowance for impairment losses (2676) (1361) (22268) (26305) Net balance 1055785 4574 25239 1085598 Financial assets at fair value through other comprehensive income 880873 503 970 882346 Accrued interest 6292 – 39 6331 Net balance 887165 503 1009 888677 Total carrying amount of financial assets affected by credit risk 1942950 5077 26248 1974275 Allowance for impairment losses of other debt instruments included in other comprehensive income (1289) (219) (460) (1968) 31 December 2022 Stage one Stage two Stage three Total Financial assets at amortised costs 1094231 4958 54445 1153634 Accrued interest 10227 138 19 10384 Less: Allowance for impairment losses (2483) (1387) (24696) (28566) Net balance 1101975 3709 29768 1135452 Financial assets at fair value through other comprehensive income 797850 136 953 798939 Accrued interest 5733 – 23 5756 Net balance 803583 136 976 804695 Total carrying amount of financial assets affected by credit risk 1905558 3845 30744 1940147 Allowance for impairment losses of other debt instruments included in other comprehensive income (1416) (98) (1203) (2717) 23 Investments in associates and joint ventures 31 December 31 December Note 2023 2022 Investments in joint ventures (a) 6572 5811 Investments in associates (b) 373 530 Total 6945 6341 2023 Annual Report 245 – F-206 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 23 Investments in associates and joint ventures (continued) (a) Investment in joint ventures The details of the joint ventures as at 31 December 2023 were as follows: Form of Effective business Place of percentage Principal Nominal value of Name of company structure incorporation of shares activities issued shares CITIC aiBank Corporation Corporation Beijing 65.7% Financial RMB5.634 Limited (“CITIC aiBank”) services billion (Note (i)) JSC Altyn Bank (Note (ii)) Corporation Kazakhstan 50.1% Financial KZT7.05 billion services Notes: (i) According to the articles of association of CITIC aiBank major activities of CITIC aiBank must be decided after the unanimous consent of the Bank and Fujian Baidu Borui Network Technology Co. Ltd..(ii) According to the Articles of Association of JSC Altyn Bank decisions regarding all major activities of JSC Altyn Bank shall be subject to the joint approval of the Bank and the other shareholder the JSC Halyk Bank of Kazakhstan.Financial statements of the joint ventures are as follow: As at or for the year ended 2023 Total Total net Operating Name of Company Total assets liabilities assets income Net gain CITIC aiBank 112511 104177 8334 4534 855 JSC Altyn Bank 13849 12010 1839 900 519 As at or for the year ended 2022 Total Total net Operating Name of Company Total assets liabilities assets income Net gain CITIC aiBank 96922 89487 7435 3968 656 JSC Altyn Bank 14621 13204 1417 684 359 Movement of the Group’s interests in the joint ventures: Year ended Year ended 31 December 31 December 20232022 Initial investment cost 5265 5265 As at 1 January 5811 5220 Dividend received (110) – Other changes in equity 40 (20) Share of net gain/(loss) of the joint ventures for the year 827 611 Exchange difference 4 – As at 31 December 6572 5811 246 China CITIC Bank Corporation Limited – F-207 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 23 Investments in associates and joint ventures (continued) (b) Investment in associates The Group holds its investment in associates through subsidiaries and details of the associates as at 31 December 2023 was as follows: Effective percentage of shares and voting right Form of business Place of held by the Principal Nominal value of Name of Company structure incorporation Group activities issued shares CITIC International Assets Corporation Hong Kong 46% Investment HKD2218 Management Limited holding million (“CIAM”) and assets management Tianjin Leasing Assets Trading Corporation Tianjin 20% Services and RMB500 millionCenter Co Ltd (“Tianjin investmentLeasing Asset TradingCenter”) (Note (i)) Note: (i) According to the announcement of Tianjin Local Financial Regulatory Commission Binhai (Tianjin) Financial Assets Exchange Company Limited changed its name to Tianjin Leasing Asset Trading Center and the industrial registration was completed on 6 April 2022.Financial statements of the associates are as follow: As at or for the year ended 2023 Total Total net Operating Name of Company Total assets liabilities assets income Net gain CIAM 633 46 587 (68) (161) Tianjin Leasing Asset Trading Center 552 34 518 45 (10) As at or for the year ended 2022 Total Total net Operating Net (loss)/ Name of Company Total assets liabilities assets income income CIAM 916 59 857 (12) (6) Tianjin Leasing Asset Trading Center 563 38 525 189 70 Movement of the Group’s interests in associates: Year ended Year ended 31 December 31 December 20232022 Initial investment cost 1058 1129 As at 1 January 530 533 Changes in investment in associates (71) (39) Share of net loss of associates for the year (91) 12 Other changes in equity (1) (8) Exchange difference 6 32 As at 31 December 373 530 2023 Annual Report 247 – F-208 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 24 Investments in subsidiaries 31 December 31 December Notes 2023 2022 Investment in subsidiaries — CIFH (i) 16570 16570 — CNCB (Hong Kong) Investment Limited (“CNCB Investment”) (ii) 1577 1577 — Lin’an Rural Bank (iii) 102 102 — CFLL (iv) 4000 4000 — CITIC Wealth Management CO. LTD.(“CITIC Wealth”) (v) 5000 5000 Total 27249 27249 Major subsidiaries of the Group as at 31 December 2023 are as follows: % of ownership Particulars of the directly The Group’s Principal place Place of issued and paid up held by the effective Name of company of business incorporation capital Principal activities Bank interest CIFH (Note (i)) Hong Kong Hong Kong HKD7503 million Commercial banking and 100% 100% other financial services CNCB Investment (Note (ii)) Hong Kong Hong Kong HKD1871 million Investment and lending 100% 100% services Lin’an Rural Bank Hangzhou Hangzhou RMB200 million Commercial banking 51% 51% (Note (iii)) Zhejiang Zhejiang Province Province CFLL (Note (iv)) Tianjin Tianjin RMB4000 million Financial lease operations 100% 100% CITIC Wealth (Note (v)) Shanghai Shanghai RMB5000 million Wealth management 100% 100% Notes: (i) CIFH is an investment holding company registered and headquartered in Hong Kong. Its business scope through its subsidiaries covers commercial banking and other financial services. The Bank holds 100% shareholding in CIFH. CIFH holds 75% shareholding in CITIC Bank International Limited (“CBI”).(ii) CNCB (Hong Kong) Investment Limited (CNCB Investment) founded in Hong Kong in 1984 formerly China Investment and Finance Limited incorporated and operating in Hong Kong holds a money lending licence issued by the Hong Kong Monetary Authority; and also the No.1 4 6 and 9 licenses from Hong Kong Securities Regulatory Commission through its wholly owned subsidiary CNCB (Hong Kong) Capital Limited. The business scope of CNCB Investment includes investment banking capital market investment lending and other related services. In March 2023 CNCB Investment repurchased and cancelled its 0.95% equity held by CBI. Since the completion date of the transaction The Bank holds 100% of its shares and voting rights.(iii) Lin’an Rural Bank was founded in Zhejiang Province of Mainland China in 2011 with a registered capital of RMB200 million. Its principal activities are commercial banking and related businesses. The Bank holds 51% of Lin’an Rural Bank’s shares and voting rights.(iv) The Bank established CFLL in 2015 with a registered capital of RMB4 billion. Its principal business activity is financial leasing. The Bank holds 100% of its shares and voting rights.(v) CITIC Wealth was established in 2020 with a registered capital of RMB5 billion. Its principal business operation is wealth management. The Bank holds 100% of its shares and voting rights. 248 China CITIC Bank Corporation Limited – F-209 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 25 Investment properties Year ended Year ended 31 December 31 December 20232022 Fair value as at 1 January 516 547 Change in fair value (1) (74) Exchange difference 13 43 Fair value as at 31 December 528 516 Investment properties of the Group are buildings held by subsidiaries and mainly located in Hong Kong and leased to third parties through operating leases. There are active real estate markets where the investment properties are located and the Group is able to obtain market price and related information of similar properties and therefore makes estimation about the fair value of the investment properties as at 31 December 2023.All investment properties of the Group were revalued at 31 December 2023 by an independent firm of surveyors on an open market value basis. The fair value is in line with the definition of “IFRS13 – Fair value measurement”. The revaluation surplus has been recognized in the profit or loss for the current year.The investment properties of the Group are categorised into Level 3. 26 Property plant and equipment Computer Construction equipment Buildings in progress and others Total Cost or deemed cost: As at 1 January 2023 33939 2930 14512 51381 Additions 87 217 6576 6880 Disposals (3) – (606) (609) Exchange differences 13 – 23 36 As at 31 December 2023 34036 3147 20505 57688 Accumulated depreciation: As at 1 January 2023 (8336) – (8615) (16951) Depreciation charges (1056) – (1859) (2915) Disposals 2 – 512 514 Exchange differences (8) – (19) (27) As at 31 December 2023 (9398) – (9981) (19379) Net carrying value: As at 1 January 2023 25603 2930 5897 34430 As at 31 December 2023 (Note (i)) 24638 3147 10524 38309 2023 Annual Report 249 – F-210 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 26 Property plant and equipment (continued) Computer Construction equipment Buildings in progress and others Total Cost or deemed cost: As at 1 January 2022 33639 2546 14117 50302 Additions 322 384 2193 2899 Disposals (61) – (1873) (1934) Exchange differences 39 – 75 114 As at 31 December 2022 33939 2930 14512 51381 Accumulated depreciation: As at 1 January 2022 (7306) – (8812) (16118) Depreciation charges (1043) – (1515) (2558) Disposals 36 – 1778 1814 Exchange differences (23) – (66) (89) As at 31 December 2022 (8336) – (8615) (16951) Net carrying value: As at 1 January 2022 26333 2546 5305 34184 As at 31 December 2022 (Note (i)) 25603 2930 5897 34430 Note: (i) As at 31 December 2023 the registration of certain buildings acquired has not been completed and the net book value of such buildings was approximately RMB10735 million (as at 31 December 2022: RMB11058 million). The Group believes the incomplete registration does not affect the rights of the Group as the legal successor to these buildings. 27 Right-of-use assets Land Vehicles Buildings use right Equipment and others Total Cost or deemed cost: As at 1 January 2023 19236 1221 83 58 20598 Additions 3088 2 21 3111 Disposals (2232) (13) (6) (2251) Exchange differences 40 – – 40 As at 31 December 2023 20132 1221 72 73 21498 Accumulated depreciation: As at 1 January 2023 (9315) (359) (68) (32) (9774) Accrual (3200) (30) (13) (13) (3256) Disposals 2181 11 5 2197 Exchange differences (22) – – (22) As at 31 December 2023 (10356) (389) (70) (40) (10855) Net carrying value: As at 1 January 2023 9921 862 15 26 10824 As at 31 December 2023 9776 832 2 33 10643 250 China CITIC Bank Corporation Limited – F-211 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 27 Right-of-use assets (continued) Land Vehicles Buildings use right Equipment and others Total Cost or deemed cost: As at 1 January 2022 17145 1221 92 53 18511 Additions 3533 – 2 8 3543 Disposals (1514) – (11) (3) (1528) Exchange differences 72 – – – 72 As at 31 December 2022 19236 1221 83 58 20598 Accumulated depreciation: As at 1 January 2022 (7464) (328) (57) (24) (7873) Accrual (3229) (30) (19) (11) (3289) Disposals 1409 (1) 8 3 1419 Exchange differences (31) – – – (31) As at 31 December 2022 (9315) (359) (68) (32) (9774) Net carrying value: As at 1 January 2022 9681 893 35 29 10638 As at 31 December 2022 9921 862 15 26 10824 As at 31 December 2023 the balance of the Group’s lease liabilities amounted to RMB10245million (31 December 2022: RMB10272 million) including RMB2944million of lease liabilities that will mature within a year (31 December 2022: RMB5701 million). As at 31 December 2023 lease payments relating to lease contracts signed but to be executed amounted to RMB27 million (31 December 2022: RMB68 million).For the year ended 31 December 2023 the lease expense of short-term leases with a lease term of no more than 12 months and leases of assets with low values amounted to RMB209 million (for the year ended 31 December 2022: RMB167 million). 28 Goodwill Year ended Year ended 31 December 31 December 20232022 As at 1 January 903 833 Exchange difference 23 70 As at 31 December 926 903 Based on the result of impairment test no impairment losses on goodwill were recognized as at 31 December 2023 (31 December 2022: Nil). 2023 Annual Report 251 – F-212 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 29 Deferred tax assets/(liabilities) 31 December 31 December 20232022 Deferred tax assets 52480 55011 Deferred tax liabilities (1) (3) Net 52479 55008 (a) Analysed by nature and jurisdiction 31 December 2023 31 December 2022 Deductible/ Deductible/ (taxable) Deferred tax (taxable) Deferred tax temporary assets/ temporary assets/ differences (liabilities) differences (liabilities) Deferred tax assets — allowance for impairment losses 198150 49423 203539 50766 — fair value adjustments (9859) (2539) 64 16 — employee retirement benefits and salaries payable 17576 4394 11685 2924 — others 4665 1202 5095 1305 Subtotal 210532 52480 220383 55011 Deferred tax liabilities — fair value adjustments (5) (1) (5) (1) — others (2) – (14) (2) Subtotal (7) (1) (19) (3) Total 210525 52479 220364 55008 (b) Offsetting of deferred tax assets and deferred tax liabilities As at 31 December 2023 the deferred tax assets/liabilities offset by the Group were RMB5442 million (31 December 2022: RMB3131 million).(c) Movement of deferred tax Employee Allowance retirement for benefits and impairment Fair value accrued staff Total losses adjustments cost Others deferred tax As at 1 January 2023 50766 15 2924 1303 55008 Recognized in profit or loss (1350) (1010) 1470 (99) (989) Recognized in other comprehensive income – (1551) – – (1551) Exchange differences 7 6 – (2) 11 As at 31 December 2023 49423 (2540) 4394 1202 52479 As at 1 January 2022 45076 (1890) 2552 1159 46897 Recognized in profit or loss 5661 (528) 405 117 5655 Recognized in other comprehensive income 8 2407 (33) 33 2415 Exchange differences 21 26 – (6) 41 As at 31 December 2022 50766 15 2924 1303 55008 252 China CITIC Bank Corporation Limited – F-213 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 30 Other assets 31 December 31 December Notes 2023 2022 Advanced payments and settlement accounts 12794 11286 Fee and commission receivables 6478 9861 Assets with continuing involvement 11654 11114 Precious metal leasing 8525 5101 Interest receivables (i) 5899 4488 Repossessed assets (ii) 1231 1478 Prepayments for properties and equipment 3820 2125 Leasehold improvements 938 801 Prepaid rent 19 12 Others (iii) 13663 9224 Total 65021 55490 Notes: (i) Interest receivable Interest receivable represents interest on financial instruments due and receivable but not yet received as at the balance sheet date and is stated net of corresponding impairment allowances. The impairment allowance on the Group’s interest receivable is RMB6633 million (as at 31 December 2022: RMB5415 million).(ii) Repossessed assets 31 December 2023 31 December 2022 Premises 2367 2722 Others 2 6 Gross balance 2369 2728 Less: Allowance for impairment losses (1138) (1250) Net balance 1231 1478 As at 31 December 2023 the Group intended to dispose all the repossessed assets and had no plan to transfer the repossessed assets for own use (as at 31 December 2022: Nil). (iii) Others Others include other receivables prepaid income tax deferred expense etc. 2023 Annual Report 253 – F-214 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 31 Movements of allowance for impairment losses Year ended 31 December 2023 Charge/ As at (Reversal) Write-offs/ As at 31 Notes 1 January for the year transfer out Others December Notes (i) Allowance for credit impairment losses Deposits with bank and non-bank financial institutions 17 98 (43) – 1 56 Placements with and loans to banks and non-bank financial institutions 18 140 1 – 2 143 Financial assets held under resale agreements 20 – 99 – – 99 Loans and advances to customers 21 131202 49840 (60054) 13529 134517 Financial investments — at amortised cost 22 28528 2282 (4620) 49 26239 — at fair value through other comprehensive income 22 2717 223 (1009) 37 1968 Other financial assets and accrued interest 7349 7970 (5076) 826 11069 Off balance sheet credit assets 39 8957 1554 – 9 10520 Subtotal 178991 61926 (70759) 14453 184611 Allowance for impairment losses on other assets Other assets – repossessed assets 1250 278 (395) 5 1138 Subtotal 1250 278 (395) 5 1138 Year ended 31 December 2022 (Reversal)/ As at charge for Write-offs/ As at 31 Notes 1 January the year transfer out Others December Notes (i) Allowance for credit impairment losses Deposits with bank and non-bank financial institutions 17 145 (48) – 1 98 Placements with and loans to banks and non-bank financial institutions 18 89 50 – 1 140 Financial assets held under resale agreements 20 47 (47) – – – Loans and advances to customers 21 121471 55786 (57791) 11736 131202 Financial investments — at amortised cost 22 26624 1542 (1530) 1892 28528 — at fair value through other comprehensive income 22 2387 269 (28) 89 2717 Other financial assets and accrued interest 5134 5220 (4352) 1347 7349 Off balance sheet credit assets 39 11428 8587 (11112) 54 8957 Subtotal 167325 71359 (74813) 15120 178991 Allowance for impairment losses on other assets Other assets – repossessed assets 1286 45 (119) 38 1250 Subtotal 1286 45 (119) 38 1250 254 China CITIC Bank Corporation Limited – F-215 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 31 Movements of allowance for impairment losses (continued) The impairment losses of accrued interest of the financial instruments in this table and its changes are included in “Other financial assets and accrued interest”.Notes: (i) Others include recovery of loans written off and effect of exchange differences during the year. 32 Deposits from banks and non-bank financial institutions Analysed by types and locations of counterparties 31 December 31 December 20232022 In Mainland China — banks 265621 310409 — non-bank financial institutions 648556 822110 Subtotal 914177 1132519 Outside Mainland China — banks 9692 7085 — non-bank financial institutions 260 70 Subtotal 9952 7155 Accrued interest 3758 4102 Total 927887 1143776 33 Placements from banks and non-bank financial institutions Analysed by types and locations of counterparties 31 December 31 December 20232022 In Mainland China — banks 64848 51186 Subtotal 64848 51186 Outside Mainland China — banks 21264 18684 — non-bank financial institutions 50 709 Subtotal 21314 19393 Accrued interest 165 162 Total 86327 70741 2023 Annual Report 255 – F-216 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 34 Financial assets sold under repurchase agreements (a) Analysed by type and location of counterparties 31 December 31 December 20232022 In Mainland China — PBOC 391152 217858 — Banks 51190 33779 Subtotal 442342 251637 Outside Mainland China — Banks 19790 4427 — Non-bank financial institutions 693 55 Subtotal 20483 4482 Accrued interest 193 75 Total 463018 256194 (b) Analysed by type of collateral 31 December 31 December 20232022 Debt securities 369613 186765 Discounted bills 93212 69354 Accrued interest 193 75 Total 463018 256194 The Group did not derecognize financial assets transferred as collateral in connection with financial assets sold under repurchase agreements. As at 31 December 2023 no legal title of the collateral has been transferred to counterparties. The above information of collateral is included in the Note 51. 35 Deposits from customers Analysed by nature 31 December 31 December 20232022 Demand deposits — corporate customers 2168251 1937135 — personal customers 340432 349013 Subtotal 2508683 2286148 Time and call deposits — corporate customers 1745094 1855977 — personal customers 1125384 942803 Subtotal 2870478 2798780 Outward remittance and remittance payables 19022 14420 Accrued interest 69474 58516 Total 5467657 5157864 256 China CITIC Bank Corporation Limited – F-217 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 35 Deposits from customers (continued) Guarantee deposits included in above deposits: 31 December 31 December 20232022 Bank acceptances 407634 348926 Guarantees 21005 17091 Letters of credit 23736 25132 Others 38651 55709 Total 491026 446858 36 Accrued staff costs Year ended 31 December 2023 Additions Reductions As at during the during the As at Notes 1 January year year 31 December Salaries and bonuses 20643 28100 (27505) 21238 Social insurance 15 1565 (1570) 10 Welfare expenses 4 1318 (1319) 3 Housing fund 10 1982 (1985) 7 Labor union expenses and employee education expenses 988 786 (822) 952 Post-employment benefits — defined contribution plans (a) 18 3990 (3990) 18 Post-employment benefits — defined benefit plans (b) 18 – (1) 17 Other benefits 209 342 (376) 175 Total 21905 38083 (37568) 22420 Year ended 31 December 2022 Additions Reductions As at during the during the As at Notes 1 January year year 31 December Salaries and bonuses 18248 28102 (25707) 20643 Social insurance 9 2027 (2021) 15 Welfare expenses 4 1352 (1352) 4 Housing fund 7 1758 (1755) 10 labor union expenses and employee education expenses 750 888 (650) 988 Post-employment benefits — defined contribution plans (a) 19 3579 (3580) 18 Post-employment benefits — defined benefit plans (b) 18 1 (1) 18 Other benefits 198 375 (364) 209 Total 19253 38082 (35430) 21905 2023 Annual Report 257 – F-218 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 36 Accrued staff costs (continued) (a) Post-employment benefits – defined contribution plans Post-employment benefits defined contribution plans include contributions to statutory retirement plan. Pursuant to the relevant laws and regulations in the PRC governing labor and social security the Group has joined statutory retirement plan for the employees as set out by city and provincial governments.The Group is required to make contributions based on defined ratios of the salaries bonuses and certain allowance of the employees to the statutory retirement plan under the administration of the government.In addition to the above statutory retirement plan the Bank’s qualified employees have joined a defined contribution retirement scheme (the “Scheme”) which was established by the Group and managed by CITIC Group. For year ended 31 December 2023 the Bank has made annuity contributions at 7% (31 December 2022: 7%) of its employees’ gross wages. For year ended 31 December 2023 the Bank made annuity contribution amounted to RMB1690 million (year ended 31 December 2022: RMB1544 million).The Group operates a defined contribution provident fund and a Mandatory Provident Fund scheme for Hong Kong staff. Contributions are charged to profit or loss when the contribution fall due.(b) Post-employment benefits – defined benefit plans The Group offers supplementary retirement benefits for certain of its qualified employees in Mainland China. Retired employees are eligible to join this supplementary retirement plan. The amount that is recognized as at reporting date presents the discounted value of future obligation.The present value of the Group’s supplementary retirement plan obligations on the date of balance sheet is calculated through projected unit credit method and computed by a qualified professional actuary firm Towers Watson Consulting (Shenzhen) Ltd. Beijing Branch.The primary assumptions used by the actuary are as follows 31 December 31 December 20232022 Discount rate 2.50% 2.75% Annual withdrawal rate 5.00% 5.00% Normal retirement age Male: 60 years old Female: 55 years old Annual increase rate of social average wage and salary for current active employees 5.00% 5.00% Mortality rate Determined by the China Life Insurance Mortality Table In 2022 and 2023 the change amount of supplementary retirement benefits scheme liabilities incurred by the actuarial assumptions variations illustrated above was immaterial.Except for the aforementioned contributions the Group has no other material obligation for payment of retirement benefits.(c) The salaries bonuses allowances and subsidies retirement benefits and other social insurance payable to employees are paid in accordance with relevant laws and regulations within time limit stipulated by the Group. 258 China CITIC Bank Corporation Limited – F-219 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 37 Taxes payable 31 December 31 December 20232022 Income tax 368 4415 VAT and surcharges 3448 4060 Others 27 12 Total 3843 8487 38 Debt securities issued 31 December 31 December Notes 2023 2022 Long-term debt securities issued (a) 138311 116344 Subordinated bonds issued: — by the Bank (b) 69995 89987 — by CBI (c) 7086 3444 Certificates of deposit issued (d) 1418 1035 Certificates of interbank deposit issued (e) 705273 720431 Convertible corporate bonds (f) 39794 39977 Accrued interest 4104 3988 Total 965981 975206 (a) Long-term debt securities issued by the Group as at 31 December 2023: 31 December 31 December 20232022 Annual Interest Nominal Nominal Bond Type Issue Date Maturity Date Rate Value Value RMB RMB Fixed rate bond 18 March 2020 18 March 2023 2.750% – 30000 Fixed rate bond 10 June 2021 10 June 2024 3.190% 20000 20000 Fixed rate bond 2 February 2021 2 February 2024 0.875% 1418 1381 Fixed rate bond 2 February 2021 2 February 2026 1.250% 2482 2417 Fixed rate bond 17 November 2021 17 November 2024 1.750% 3546 3453 Fixed rate bond 28 April 2022 28 April 2025 2.800% 30000 30000 Fixed rate bond 5 August 2022 5 August 2025 2.500% 30000 30000 Fixed rate bond 13 April 2023 13 April 2026 2.770% 30000 – Fixed rate bond 27 March 2023 27 March 2026 2.790% 10000 – Fixed rate bond 16 May 2023 16 May 2026 2.680% 10000 – Fixed rate bond 26 April 2023 26 April 2024 3.900% 1800 – Total nominal value 139246 117251 Less: Unamortised (20) (24) issuance cost Less: offset (915) (883) Carrying value 138311 116344 2023 Annual Report 259 – F-220 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 38 Debt securities issued (continued) (b) The carrying value of the Bank’s subordinated bonds issued: 31 December 31 December Notes 2023 2022 Subordinated fixed rate bonds maturing: — in September 2028 (i) – 29993 — in October 2028 (ii) – 20000 — in August 2030 (iii) 39995 39994 — in December 2033 (iv) 21500 – — in December 2038 (v) 8500 – Total 69995 89987 Notes: (i) The Bank issued fixed-rate subordinated bonds on 13 September 2018 with a coupon rate of 4.96% per annum. The Bank redeemed the bonds on 13 September 2023.(ii) The Bank issued fixed-rate subordinated bonds on 22 October 2018 with a coupon rate of 4.80% per annum. The Bank redeemed the bonds on 22 October 2023.(iii) The Bank issued fixed-rate subordinated bonds on 14 August 2020 with a coupon rate of 3.87% per annum. The Bank has the option to redeem the bonds on 14 August 2025. If the Bank does not exercise this option the coupon rate will remain 3.87% per annum for the next five years.(iv) The Bank issued fixed-rate subordinated bonds on 19 December 2023 with a coupon rate of 3.19% per annum. The Bank has the option to redeem the bonds on 19 December 2028. If the Bank does not exercise this option the coupon rate will remain 3.19% per annum for the next five years.(v) The Bank issued fixed-rate subordinated bonds on 19 December 2023 with a coupon rate of 3.25% per annum. The Bank has the option to redeem the bonds on 19 December 2033. If the Bank does not exercise this option the coupon rate will remain 3.25% per annum for the next five years.(c) The carrying value of CBI’s subordinated bonds issued: 31 December 31 December Notes 2023 2022 Subordinated fixed rate notes maturing: — in February 2029 (i) 3543 3444 — in December 2033 (ii) 3543 – Total 7086 3444 Notes: (i) CBI issued USD500 million subordinated notes at a coupon rate of 4.625% per annum on 28 February 2019. CBI has an option to redeem these notes on each coupon payment date on and after 28 February 2024. If CBI does not exercise the redemption option the coupon rate per annum will be the 5-year US treasury bond rate on 28 February 2024 plus 2.25%. The notes are listed on the Hong Kong Stock Exchange.(ii) CBI issued USD500 million subordinated notes at a coupon rate of 6.00% per annum on 5 December 2023. CBI has an option to redeem these notes on each coupon payment date on and after 5 December 2028. If CBI does not exercise the redemption option the coupon rate per annum will be the 5-year US treasury bond rate on 5 December 2028 plus 1.65%. The notes are listed on the Hong Kong Stock Exchange. 260 China CITIC Bank Corporation Limited – F-221 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 38 Debt securities issued (continued) (d) These certificates of deposit were issued by CBI with interest rate ranging from 5.85% to 5.90% per annum.(e) As at 31 December 2023 the Bank’s outstanding large transferable certificates of interbank deposits amounted to RMB705273 million (31 December 2022: RMB720431 million) with reference yields ranging from 2.16% to 2.75% per annum (31 December 2022: 1.65% to 2.68%). Their original expiry terms range from one months to one year.(f) As approved by the relevant regulatory authorities in China the Bank made a public offering of RMB40 billion A-shares convertible corporate bonds on 4 March 2019. The convertible corporate bonds have a term of six years from 4 March 2019 to 3 March 2025 at coupon rates of 0.3% for the first year 0.8% for the second year 1.5% for the third year 2.3% for the fourth year 3.2% for the fifth year and 4.0% for the sixth year.The conversion of these convertible corporate bonds begins on the first trading day (11 September 2019) after six months upon the completion date of the offering until the maturity date (3 March 2025).In accordance with formulas set out in the prospectus of the convertible corporate bonds the initial conversion price of the convertible corporate bonds is RMB7.45 per share and the price of the convertible corporate bonds will be adjusted to reflect the dilutive impact of cash dividends and increase in paid-in capital under specified circumstances. On 20 July 2023 the conversion price of the convertible corporate bonds has been adjusted to RMB6.10 per share. During the conversion period (from 4 March 2019 to 3 March 2025) if the closing price of the Bank’s A shares is lower than 80% of the current conversion price for at least 15 trading days in any 30 consecutive trading days the Board of Directors of the Bank has the right to propose to lower the conversion price and submit the proposal to the shareholders’ meeting for deliberation.These convertible corporate bonds are subject to conditional redemptions. During their conversion period if the closing prices of the Bank’s A-shares are no less than 130% (inclusive) of the current conversion price for at least 15 trading days in 30 consecutive trading days the Bank has the right to redeem all or part of the outstanding convertible corporate bonds at their par value plus the current accrued interest upon approval of the relevant regulatory authorities (if required). In addition when the total amount of the outstanding convertible corporate bonds is less than RMB30 million the Bank has the right to redeem all outstanding convertible corporate bonds at their par value plus the current accrued interest.As at 31 December 2023 convertible corporate bonds of RMB206236 million were converted to 32068891 A shares.Note Liability Equity Total Issued nominal value of convertible corporate bonds 36859 3141 40000 Direct issuance expenses (74) (6) (80) Balance at the issuance date 36785 3135 39920 Accumulated amortisation as at 1 January 2023 3192 – 3192 Accumulated conversion amount as at 1 January 2023 – – – Balance as at 1 January 2023 39977 3135 43112 Amortisation during this year 23 – 23 Conversion amount during this year (206) (16) (222) Balance as at 31 December 2023 39794 3119 42913 2023 Annual Report 261 – F-222 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 39 Provisions 31 December 31 December 20232022 Allowance for impairment losses on off balance sheet items 10520 8957 Litigation provisions 326 779 Total 10846 9736 The movement of off-balance sheet allowance for impairment losses is included in the Note 31.Movement of provisions: Year ended Year ended 31 December 31 December 20232022 As at 1 January 779 499 Accruals 8 280 Payment (461) – As at 31 December 326 779 40 Other liabilities 31 December 31 December 20232022 Settlement and clearing accounts 12795 13134 Continuing involvement liabilities 11654 11114 Advances and deferred expenses 3839 4391 Payment and collection accounts 4702 4500 Leasing deposits 514 521 Accrued expenses 329 841 Others 9087 7795 Total 42920 42296 41 Share capital 31 December 2023 and 2022 Number of shares (millions) Nominal Value Ordinary shares Registered issued and fully paid: A-Share 34085 34053 H-Share 14882 14882 Total 48967 48935 Year ended Year ended 31 December 31 December Note 2023 2022 As at 1 January 48935 48935 Convertible bond settlement (i) 32 – As at 31 December 48967 48935 Note: (i) For the year ended 31 December 2023 convertible corporate bonds of RMB205904000 were converted to 32022297 A-shares (In 2022 convertible corporate bonds of RMB8000 were converted to 1188 A-shares). 262 China CITIC Bank Corporation Limited – F-223 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 42 Other equity instruments 31 December 31 December 20232022 Preference shares (Note (i)) 34955 34955 Perpetual bonds (Note (ii)) 79986 79986 Equity of convertible corporate bonds (Note 38(f)) 3119 3135 Total 118060 118076 (i) Preference shares Issued Issued Financial number of nominal instruments Issued price shares (RMB value (RMB Maturity in issue Dividend rate (RMB) millions) millions) Date Conversions Preference 3.80% per annum for the first 100 350 35000 No maturity No shares five years after issuance and date conversion re-priced every five years during the year 35000 million preference shares of RMB100 each were issued in October 2016 with a dividend rate of 3.80% per annum for the first five years from issuance to no more than 200 qualified investors pursuant to the approval by its ordinary shareholders’ meeting and relevant regulatory authorities.The carrying amount of preference shares net of direct issuance expenses was RMB34955 million. All the proceeds received is used to replenish Other Tier-One capital in order to increase the Bank’s Tier-One capital adequacy ratio (Note 55). Dividends are non-cumulative and where payable are paid annually. Dividend rate will be re-priced every five years thereafter with reference to the five-year PRC treasury bonds yield plus a fixed premium of 1.30%.As authorised by the ordinary shareholders’ Annual General Meeting the Board of Directors has the sole discretion to declare and distribute dividends on preference shares. The Bank shall not distribute any dividends to its ordinary shareholders before it declares such dividends to preference shareholders for the relevant period. The distribution of preference shares dividend is at the Bank’s discretion and is non-cumulative. Preference shareholders are not entitled to participate in the distribution of retained profits except for the dividends stated above.The Bank has redemption option when specified conditions as stipulated in the offering documents of preference shares are met subject to regulatory approval whereas preference shareholders have no right to require the Bank to redeem the preference shares.Upon occurrence of the triggering events as stipulated in paragraph 2(3) of the Guidance of the China Banking Regulatory Commission on Commercial Banks’ Innovation on Capital Instruments (CBRC No.56 [2012]) and subject to regulatory approval preference shares shall be mandatorily converted into ordinary A shares of the Bank at the conversion price of RMB7.07 per share partially or entirely. The conversion price of the preference shares will be adjusted where certain events occur including bonus issues rights issue capitalisation of reserves and new issuances of ordinary shares below market price subject to terms and formulae provided for in the offering documents to maintain the relative interests between preference shareholders and ordinary shareholders.These preference shares are classified as equity instruments and presented as equity in the consolidated annual statement of financial position; and are qualified as Additional Tier-One capital Instruments in accordance with the former CBIRC requirements. 2023 Annual Report 263 – F-224 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 42 Other equity instruments (continued) (ii) Perpetual bonds The Bank issued RMB40 billion write-down undated capital bonds (the “Bonds”) in the domestic interbank bond market on 11 December 2019. On 26 April 2021 the Bank issued RMB40 billion write-down undated capital bonds (the “Bonds”) in the domestic interbank bond market. The denomination of these Bonds is RMB100 each and the annual coupon rate of the Bonds for the first 5 years is 4.20% resetting every 5 years.The duration of these Bonds is the same as the continuing operation of the Bank. Subject to the satisfaction of the redemption conditions and having obtained the prior approval of the former CBIRC the Bank may redeem the Bonds in whole or in part on each distribution payment date 5 years after the issuance date of the Bonds. Upon the occurrence of a trigger event for write-downs with the consent of the former CBIRC and without the consent of the bondholders the Bank has the right to write down all or part of the above Bonds issued and existing at that time in accordance with the total par value. The claims of the holders of the Bonds will be subordinated to the claims of depositors general creditors and subordinated creditors; and shall rank in priority to the claims of shareholders and will rank pari passu with the claims under any other additional tier 1 capital instruments of the Bank that rank pari passu with the Bonds. The Bonds are paid by non-cumulative interest. The Bank shall have the right to cancel distributions on the Bonds in whole or in part and such cancellation shall not constitute a default. The Bank may at its discretion utilize the proceeds from the cancelled distribution to meet other obligations of maturing debts. But the Bank shall not distribute profits to ordinary shareholders until the resumption of full interest payment.These perpetual bonds are classified as equity instruments and presented as equity in the consolidated statement of financial position; and are qualified as Additional Tier-One Capital Instruments in accordance with the former CBIRC requirements.Interests attributable to equity instruments’ holder: 31 December 31 December 20232022 Total equity attributable to equity holders of the Bank 717222 665418 Equity attributable to ordinary equity holders of the Bank 599162 547342 Equity attributable to other equity instruments holders of the Bank 118060 118076 — Dividend distribution for the year 4788 4788 Total equity attributable to non-controlling interests 17453 20412 Equity attribute to non-controlling interests of ordinary shares 9763 9220 Equity attributable to non-controlling interests of other equity instruments 7690 11192 During the year ended 31 December 2023 RMB1428 million was paid to preference shareholders (2022: RMB1428 million) RMB3360 million was paid to holders of perpetual bonds (2022: RMB3360 million). 264 China CITIC Bank Corporation Limited – F-225 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 43 Capital reserves 31 December 31 December 20232022 Share premium 59083 58896 Other reserves 317 320 Total 59400 59216 44 Other comprehensive income Other comprehensive income comprises items that will not be reclassified subsequently to profit or loss such as net changes on the measurement of defined benefit plans (Note 36) and fair value changes on financial investments designated at fair value through other comprehensive income and items that may be reclassified subsequently to profit or loss such as fair value changes on financial assets at fair value through other comprehensive income credit impairment allowance on financial assets at fair value through other comprehensive income and exchange differences on translation. 45 Surplus reserve Year ended Year ended 31 December 31 December 20232022 As at 1 January 54727 48937 Appropriations 6265 5790 As at 31 December 60992 54727 Under the relevant PRC Laws the Bank and the Bank’s subsidiaries in Mainland China are required to appropriate 10% of its profit for the year as determined under regulations issued by the regulatory bodies of the PRC to the statutory surplus reserve until the reserve balance reaches 50% of the registered capital. After making the appropriation to the statutory surplus reserve the Bank may also appropriate its profit for the year to the discretionary surplus reserve upon approval by ordinary shareholders at the Annual General Meeting. The Bank makes its appropriation on an annual basis.Subject to the approval of ordinary shareholders statutory surplus reserves may be used for replenishing accumulated losses if any and may be converted into share capital provided that the balance of statutory surplus reserve after such capitalisation is not less than 25% of the registered capital before the process. 46 General reserve Year ended Year ended 31 December 31 December 20232022 As at 1 January 100580 95490 Appropriations 4547 5090 As at 31 December 105127 100580 Pursuant to relevant Ministry of Finance (“MOF”) notices the Bank and the Group’s banking subsidiaries in Mainland China are required to set aside a general reserve to cover potential losses against their assets. The Bank and the Group make its appropriation on an annual basis.CITIC Wealth shall draw operational risk reserves on a monthly basis according to the Administrative Measures for Financial Subsidiaries of Commercial Banks. CNCBI Macau shall draw down its regulatory reserves on a monthly basis according to the requirements of the Monetary Authority of Macau China CITIC Bank International shall draw operational risk reserves according to the requirements of the Administrative Measures for Financial Subsidiaries of General reserve. During the year ended 31 December 2023 a total of RMB3152 million of corresponding risk provisions was drawn. 2023 Annual Report 265 – F-226 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 47 Profit appropriations and retained earnings (a) Profit appropriations and distributions other than dividends declared during the year Year ended Year ended 31 December 31 December Note 2023 2022 Appropriations to — surplus reserve 45 6265 5790 — general reserve 46 4547 5090 As at 31 December 10812 10880 The Bank appropriated RMB6265 million to statutory surplus reserve fund for the year of 2023 and appropriated RMB4234 million to general reserve. The Group’s subsidiary Lin’an rural bank made appropriations to general reserve in accordance with relevant regulatory requirements.(b) In accordance with the resolution approved in the Annual General Meeting of the Bank on 21 June 2023 a total amount of approximately RMB16110 million (RMB3.29 per 10 shares) were distributed in the form of cash dividend to the ordinary shareholders on 20 July 2023.(c) On 21 March 2024 the Board of Directors proposed a cash dividend of RMB3.56 per 10 shares in respect of the year 2023. Subject to the approval of the ordinary shareholders at the Annual General Meeting approximately RMB17432 million will be payable to those on the register of ordinary shareholders as at the relevant record date. This proposal is a non-adjusting event after the reporting period and has not been recognized as liability as at 31 December 2023.(d) On 26 April 2021 the Bank issued RMB40 billion write-down undated capital bonds in the domestic interbank bond market. The Bank paid RMB1680 million in interest at a coupon rate of 4.20% to investors of perpetual bonds on 26 April 2023.(e) In accordance with the resolution approved in the Board of Directors Meeting of the Bank on 25 August 2023 a total amount of approximately RMB1428million (calculated by the Bank using the agreed dividend rate of 4.08% with RMB4.08 per share) were distributed in the form of cash dividend to the preference shareholders on 26 October 2023.(f) As at 31 December 2023 the retained earnings included the statutory surplus reserves of certain subsidiaries of RMB1167 million (31 December 2022: RMB846 million). Such statutory surplus reserves cannot be distributed. 266 China CITIC Bank Corporation Limited – F-227 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 48 Non-controlling interests As at 31 December 2023 non-controlling interests included ordinary shares held by non-controlling interest in subsidiaries and other equity instrument holders’ interests. Other equity instrument holders’ interest amounted to RMB7690 million (31 December 2022: RMB11192 million) representing other equity instruments issued by CBI on 29 July 2021 and 22 April 2022 an entity ultimately controlled by the Group. Such instruments are perpetual non-cumulative subordinated additional Tier-One capital securities (the “Capital Securities”).Financial instruments Payment in issue Issue Date Nominal Value First Call Date Coupon Rate Frequency Capital 29 July 2021 USD600 million 29 July 2026 3.25% per annum for the first Semi-annually Securities five years after issuance and re-priced every five years to a rate equivalent to the five-year US Treasury rate plus 2.53% per annum Capital 22 April 2022 USD600 million 22 April 2027 4.80% per annum for the first Semi-annually Securities five years after issuance and re-priced every five years to a rate equivalent to the five-year US Treasury rate plus 2.104% per annum CBI may at its sole discretion elect to cancel any payment of coupon in whole or in part or redeem Capital Securities in whole on the first call date and any subsequent coupon distribution date where the holders of these Capital Securities have no right to require CBI to redeem. These Capital Securities listed above are classified as other equity instruments.A distribution of RMB588 million was paid to the holders of the Capital Securities mentioned above during the year ended 31 December 2023 (During the year ended 31 December 2022: RMB463 million). 49 Notes to consolidated annual statement of cash flows Cash and cash equivalents Year ended 31 December 20232022 Cash 4467 5532 Cash equivalents — Surplus deposit reserve funds 52473 104315 — Deposits with banks and non-bank financial institutions due within three months when acquired 41673 36024 — Placements with and loans to banks and non-bank financial institutions due within three months when acquired 59707 36219 — Investment securities due within three months when acquired 90682 125781 Subtotal 244535 302339 Total 249002 307871 2023 Annual Report 267 – F-228 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 50 Commitments and contingent liabilities (a) Credit commitments The Group’s credit commitments take the form of loan commitments credit card commitments financial guarantees letters of credit and acceptances.Loan commitments and credit card commitments represent the undrawn amount of approved loans with signed contracts and credit card limits. Financial guarantees and letters of credit represent guarantees provided by the Group to guarantee the performance of customers to third parties. Bank acceptances comprise undertakings by the Group to pay bills of exchange drawn on customers. The Group expects the majority acceptances to be settled simultaneously with the reimbursement from the customers.The contractual amounts of credit commitments by categories are set out below. The amounts disclosed in respect of loan commitments and credit card commitments assume that amounts are fully drawn down. The amounts of guarantees letters of credit and acceptances represent the maximum potential loss that would be recognized at the reporting date if counterparties failed to perform as contracted. 31 December 31 December 20232022 Contractual amount Loan commitments — with an original maturity within one year 13995 16319 — with an original maturity of one year or above 32773 41642 Subtotal 46768 57961 Bank acceptances 867523 795833 Credit card commitments 779947 704268 Letters of guarantee issued 237359 186617 Letters of credit issued 256351 270837 Total 2187948 2015516 (b) Credit commitments analysed by credit risk weighted amount 31 December 31 December 20232022 Credit risk weighted amount of credit commitments 602231 541153 The credit risk weighted amount refers to the amount as computed in accordance with the rules set out by the former CBIRC and depends on the status of counterparties and the maturity characteristics. The risk weighting used range from 0% to 150%.(c) Capital commitments (i) The Group had the following authorised capital commitments in respect of property plant and equipment at the reporting date: 31 December 31 December 20232022 For the purchase of property and equipment — contracted for 1521 2011 268 China CITIC Bank Corporation Limited – F-229 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 50 Commitments and contingent liabilities (continued) (d) Outstanding contingencies including litigation and disputes The Group has assessed and has made provisions for any probable outflow of economic benefits in relation to commitments and contingent liabilities at the reporting date in accordance with its accounting policies including litigation and disputes.As at 31 December 2023 the Group was involved in certain pending litigation as defendant with gross claims of RMB1166 million (as at 31 December 2022: RMB577 million). Such contingencies including litigation and disputes are not expected to have material impact on the financial position and operations of the Bank (Note 39).(e) Bonds redemption obligations As an underwriting agent of PRC treasury bonds the Group has the responsibility to buy back those bonds sold by it should the holders decide to early redeem the bonds held. The redemption price for the bonds at any time before their maturity dates is based on the nominal value plus any interest unpaid and accrued up to the redemption date. Accrued interest payables to the bond holders are calculated in accordance with relevant rules of the MOF and the PBOC. The redemption price may be different from the fair value of similar instruments traded at the redemption date.The redemption obligations below represent the nominal value of treasury bonds underwritten and sold by the Group but not yet matured at the reporting date: 31 December 31 December 20232022 Redemption commitment for PRC treasury bonds 2735 2904 The original maturities of these bonds vary from one to five years. Management of the Group expects the amount of redemption before maturity dates of these bonds will not be material. The MOF will not provide funding for the early redemption of these bonds on a back-to-back basis but will settle the principal and interest upon maturity.(f) Underwriting obligations As at 31 December 2023 and 2022 the Group did not have unfulfilled commitment in respect of securities underwriting business. 51 Collateral (a) Assets pledged (i) The carrying amount of financial assets pledged as collateral in the Group’s ordinary course of businesses including repurchase agreements and borrowings from central banks are disclosed as below: 31 December 31 December 20232022 Debt securities 744648 368653 Discounted bills 93454 69593 Others – 269 Total 838102 438515 As at 31 December 2023 and 2022 the Group’s liabilities related to the above collateral were due within 12 months from the effective dates of these agreements and title of these collateral was not transferred to counterparties. 2023 Annual Report 269 – F-230 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 51 Collateral (continued) (a) Assets pledged (continued) (ii) In addition as at 31 December 2023 the Group pledged deposits with banks and other financial institutions with carrying amount totalling RMB911 million (31 December 2022: RMB542 million) as collateral for derivative transactions and guarantee funds to exchanges. Title of these pledged assets was not transferred to counterparties.(b) Collateral accepted The Group received debt securities and bills as collateral for financial assets held under resale agreements as set out in Note 20. Under the terms of these agreements the Group could not resell or re-pledge certain parts of these collateral unless in the event of default by the counterparties. As at 31 December 2023 the Group held no collateral that can be resold or re-pledged (31 December 2022: Nil). During the year ended 31 December 2023 the Group did not resell or re-pledge any of these collateral (year ended 31 December 2022: Nil). 52 Transactions on behalf of customers (a) Entrusted lending business The Group provides entrusted lending business services to corporations and individuals as well as entrusted provident housing fund mortgage business services. All entrusted loans are made under the instruction or at the direction of these corporations individuals or provident housing fund centre and are funded by entrusted funds from them.For entrusted assets and liabilities and entrusted provident housing fund mortgage business the Group does not expose to credit risk in relation to these transactions but acts as an agent to hold and manage these assets and liabilities at the instruction of the entrusting parties and receives fee income for the services provided.Entrusted assets are not assets of the Group and are not recognized on the consolidated statement of financial position. Income received and receivable for providing these services is included in the consolidated statement of profit or loss as fee income.At the reporting date the entrusted assets and liabilities were as follows: 31 December 31 December 20232022 Entrusted loans 425026 305416 Entrusted funds 425028 305417 (b) Wealth management services As at 31 December 2023 the amount of total assets invested by these non-principal guaranteed wealth management products issued by the Group was disclosed in Note 58(b).The funds raised by non-principal guaranteed wealth management products from investors are invested in various investments including debt securities and money market instruments credit assets and other debt instruments equity instruments etc. Credit risk crisk and interest rate risk associated with these products are borne by the customers. The Group only earns commission which represents the charges on customers in relation to the provision of custodian sale and management services. Income is recognized in the annual consolidated statement of profit or loss as commission income. The Group has entered into placements transactions at market interest rates with the wealth management products vehicles (Note 58 (b)).As at 31 December 2023 the total investment of non-principal guaranteed wealth management products managed by the Group that was not included in the Group’s consolidated financial statements was disclosed in Note 58(b). 270 China CITIC Bank Corporation Limited – F-231 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 53 Segment reporting Measurement of segment assets and liabilities and segment income and expenses are based on the Group’s accounting policies.Internal charges and transfer pricing of transactions between segments are determined for management purpose and have been reflected in the performance of each segment. Net interest income and expenses arising from internal charges and transfer pricing adjustments are referred to as “Internal net interest income/expenses”. Interest income and expenses earned from third parties are referred to as “External net interest income/expenses”.Segment income expense assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Segment assets and liabilities do not include deferred tax assets and liabilities. Segment income expenses assets and liabilities are determined before intra-group balances and intra-group transactions are eliminated as part of the consolidation process. Segment capital expenditure is the total costs incurred during the year to acquire assets (including both tangible assets and intangible assets) whose estimated useful lives are over one year.(a) Business segments The Group has the following main business segments for management purpose: Corporate banking This segment represents the provision of a range of financial products and services to corporations government agencies and non-financial institutions as well as conducts investment banking businesses and international businesses. The products and services include corporate loans deposit taking activities agency services remittance and settlement services and guarantee services.Personal banking This segment represents the provision of a range of financial products and services to individual customers.The products and services comprise loans deposit services securities agency services remittance and settlement services and guarantee services.Treasury business This segment conducts capital markets operations inter-bank operations which specifically includes inter- bank money market transactions repurchase transactions and investments and trading in debt instruments.Furthermore treasury business segment also carries out derivatives and forex trading both for the Group and for customers. 2023 Annual Report 271 – F-232 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 53 Segment reporting (continued) (a) Business segments (continued) Others and unallocated Others comprise components of the Group that are not attributable to any of the above segments along with certain assets liabilities income or expenses of the Head Office that could not be allocated on a reasonable basis. This segment also manages the Group’s liquidity position.Year ended 31 December 2023 Corporate Personal Treasury Others and Banking Banking Business Unallocated Total External net interest income/ (expense) 44798 87014 40396 (28669) 143539 Internal net interest income/ (expense) 32960 (25165) (37720) 29925 – Net interest income 77758 61849 2676 1256 143539 Net fee and commission income/(expense) 11440 20463 5949 (5469) 32383 Other net income/(expense) (Note (i)) 2359 4113 17363 5813 29648 Operating income 91557 86425 25988 1600 205570 Operating expenses — depreciation and amortisation (2514) (2024) (2725) (978) (8241) — others (25154) (31499) (2577) (1743) (60973) Credit impairment losses (21709) (36967) (3405) 155 (61926) Impairment losses on other assets (278) – – – (278) Revaluation loss on investment properties – – – (1) (1) Share of profits of associates and joint ventures – – – 736 736 Profit before tax 41902 15935 17281 (231) 74887 Income tax (6825) Profit for the year 68062 Capital expenditure 1804 1509 2198 861 6372 272 China CITIC Bank Corporation Limited – F-233 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 53 Segment reporting (continued) (a) Business segments (continued) Others and unallocated (continued) 31 December 2023 Corporate Personal Treasury Others and Banking Banking Business Unallocated Total Segment assets 2822064 2249644 3336485 584866 8993059 Interest in associates and joint ventures – – – 6945 6945 Deferred tax assets 52480 Total asset 9052484 Segment liabilities 3968855 1553644 1136712 1658597 8317808 Deferred tax liabilities 1 Total liabilities 8317809 Off-balance sheet credit commitments 1407233 780715 – – 2187948 Year ended 31 December 2022 Corporate Personal Treasury Others and Banking Banking Operations Unallocated Total External net interest income/ (expense) 41133 102227 37443 (30156) 150647 Internal net interest income/ (expense) 39377 (41619) (29454) 31696 – Net interest income 80510 60608 7989 1540 150647 Net fee and commission income/(expense) 10813 22787 3120 372 37092 Other net income/(expense) (Note (i)) 3113 1282 19203 (228) 23370 Operating income 94436 84677 30312 1684 211109 Operating expenses — depreciation and amortisation (2091) (1376) (2124) (1729) (7320) — others (24688) (30486) (3543) (801) (59518) Credit impairment losses (34550) (35435) (1323) (51) (71359) Impairment losses on other assets (79) – – 34 (45) Revaluation loss on investment properties – – – (74) (74) Share of profits of associates and joint ventures – – 14 609 623 Profit before tax 33028 17380 23336 (328) 73416 Income tax (10466) Profit for the year 62950 Capital expenditure 1544 995 1645 1137 5321 2023 Annual Report 273 – F-234 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 53 Segment reporting (continued) (a) Business segments (continued) Others and unallocated (continued) 31 December 2022 Corporate Personal Treasury Others and Banking Banking Operations Unallocated Total Segment assets 2933628 2207675 2713020 631868 8486191 Interest in associates and joint ventures – – 135 6206 6341 Deferred tax assets 55011 Total asset 8547543 Segment liabilities 3881053 1357988 1065610 1557059 7861710 Deferred tax liabilities 3 Total liabilities 7861713 Off-balance sheet credit commitments 1311248 704268 – – 2015516 Note: (i) Other net income consists of net trading gain net gain from investment securities net hedging gain and other operating income.(b) Geographical segments The Group operates principally in Mainland China with branches located in 31 provinces autonomous regions and municipalities. The Bank’s principal subsidiaries CNCB Investment and CIFH are registered and operating in Hong Kong. The other subsidiaries Lin’an Rural Bank CITIC Wealth and CFLL are registered and operating in Mainland China.In presenting information by geographical segments operating income is allocated based on the location of the branches that generated the revenue. Segment assets and capital expenditure are allocated based on the geographical location of the underlying assets.Geographical segments as defined for management reporting purposes are as follows: – “Yangtze River Delta” refers to the following areas where Tier-One branches of the Group are located: Shanghai Nanjing Suzhou Hangzhou and Ningbo as well as Lin’an Rural Bank and CITIC Wealth; – “Pearl River Delta and West Strait” refers to the following areas where Tier-One branches of the Group are located: Guangzhou Shenzhen Dongguan Fuzhou Xiamen and Haikou; – “Bohai Rim” refers to the following areas where Tier-One branches of the Group are located: Beijing Tianjin Dalian Qingdao Shijiazhuang Jinan and CFLL; – “Central” region refers to the following areas where Tier-One branches of the Group are located: Hefei Zhengzhou Wuhan Changsha Taiyuan and Nanchang; – “Western” region refers to the following areas where Tier-One branches of the Group are located: Chengdu Chongqing Xi’an Kunming Nanning Hohhot Urumqi Guiyang Lanzhou Xining Yinchuan and Lhasa; – “North-eastern” region refers to the following areas where Tier-One branches of the Group is located: Shenyang Changchun and Harbin; 274 China CITIC Bank Corporation Limited – F-235 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 53 Segment reporting (continued) (b) Geographical segments (continued) – “Head Office” refers to the headquarters of the Bank and the Credit Card Center; and – “Overseas” includes all the operations of London branch Hong Kong branch CNCB Investment CIFH and its subsidiaries.Year ended 31 December 2023 Pearl River Yangtze Delta and River Delta West Strait Bohai Rim Central Western Northeastern Head Office Overseas Elimination Total External net interest income 29405 10713 (5496) 20028 16992 1159 63807 6931 – 143539 Internal net interest (expense)/income 3609 931 25902 (1712) (3901) 461 (25321) 31 – – Net interest income 33014 11644 20406 18316 13091 1620 38486 6962 – 143539 Net fee and commission income 5185 1674 3092 1406 942 154 18610 1320 – 32383 Other net income/(expense) (Note (i)) 1804 599 722 184 270 40 25795 234 – 29648 Operating income 40003 13917 24220 19906 14303 1814 82891 8516 – 205570 Operating expense — depreciation and amortisation (988) (798) (1119) (653) (744) (195) (3164) (580) – (8241) — others (9677) (5200) (7207) (5935) (5023) (1059) (23295) (3577) – (60973) Credit impairment losses (8481) (6500) (3855) (5122) (4337) (332) (30723) (2576) – (61926) Impairment losses on other assets (65) (22) (34) (44) (111) (2) – – – (278) Revaluation loss on investment properties – – – – – – – (1) – (1) Share of gains/(loss) of associates and joint ventures – – – – – – – 736 – 736 Profit before tax 20792 1397 12005 8152 4088 226 25709 2518 – 74887 Income tax (6825) Profit for the year 68062 Capital expenditure 395 247 238 205 222 34 4624 407 – 6372 31 December 2023 Pearl River Yangtze Delta and River Delta West Strait Bohai Rim Central Western Northeastern Head Office Overseas Elimination Total Segment assets 2009211 994510 1889859 879067 732239 126449 3436157 480095 (1554528) 8993059 Interest in associates and joint ventures – – – – – – 6573 372 – 6945 Deferred tax assets 52480 Total assets 9052484 Segment liabilities 1995433 1041109 1884262 854890 733286 132996 2817827 412405 (1554400) 8317808 Deferred tax liabilities 1 Total liabilities 8317809 Off-balance sheet credit commitments 395730 255105 254314 281328 175195 21048 770572 34656 – 2187948 2023 Annual Report 275 – F-236 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 53 Segment reporting (continued) (b) Geographical segments (continued) Year ended 31 December 2022 Pearl River Yangtze Delta and River Delta West Strait Bohai Rim Central Western Northeastern Head Office Overseas Elimination Total External net interest income 34446 19339 (78) 22603 19931 2167 45993 6246 – 150647 Internal net interest (expense)/income (4641) (4477) 20783 (5504) (7672) (245) 1714 42 – – Net interest income 29805 14862 20705 17099 12259 1922 47707 6288 – 150647 Net fee and commission income 5812 1737 3298 1640 1119 178 22028 1280 – 37092 Other net income (Note (i)) 1858 577 879 475 239 51 18603 688 – 23370 Operating income 37475 17176 24882 19214 13617 2151 88338 8256 – 211109 Operating expense — depreciation and amortisation (947) (786) (899) (654) (733) (202) (2486) (613) – (7320) — others (10190) (6365) (8089) (5614) (5650) (1128) (19184) (3298) – (59518) Credit impairment losses (10905) (4966) (5942) (3987) (4140) (495) (39214) (1710) – (71359) Impairment (losses)/gains on other assets – – 1 (12) (68) – – 34 – (45) Revaluation loss on investment properties – – – – – – – (74) – (74) Share of gains/(loss) of associates and joint ventures – – – – – – 611 12 – 623 Profit before tax 15433 5059 9953 8947 3026 326 28065 2607 – 73416 Income tax (10466) Profit for the year 62950 Capital expenditure 570 246 152 225 219 43 3626 240 – 5321 31 December 2022 Pearl River Yangtze Delta and River Delta West Strait Bohai Rim Central Western North eastern Head Office Overseas Elimination Total Segment assets 1883859 989734 1853384 830699 671733 120001 3386176 452313 (1701708) 8486191 Interest in associates and joint ventures – – – – – – 5811 530 – 6341 Deferred tax assets 55011 Total assets 8547543 Segment liabilities 1650156 777003 1440598 759105 610456 111866 3827767 392380 (1707621) 7861710 Deferred tax liabilities 3 Total liabilities 7861713 Off-balance sheet credit commitments 357706 252497 223088 270915 163125 19830 694944 33411 – 2015516 Note: (i) Other net income consists of net trading gain net gain from investment securities net hedging gain and other operating income. 276 China CITIC Bank Corporation Limited – F-237 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management This section presents information about the Group’s exposure to and its management and control of risks in particular the primary risks associated with its use of financial instruments: – Credit risk Credit risk represents the potential loss that may arise from the failure of a customer or counterparty to meet its contractual obligations or commitments to the Group.– Market risk Market risk arises from unfavorable changes in market prices (interest rate exchange rate stock price or commodity price) that lead to a loss of on-balance sheet or off-balance sheet business in the Group.– Liquidity risk Liquidity risk arises when the Group in meeting the demand of liabilities due and other payment obligations as well as the needs of business expansion is unable to sufficiently timely or cost-effectively acquire funds.– Operational risk Operational risk arises from inappropriate or problematic internal procedures personnel IT systems or external events such risk includes legal risk but excluding strategic risk and reputational risk.The Group has established policies and procedures to identify and analyse these risks to set appropriate risk limits and controls and to constantly monitor the risks and limits by means of reliable and up-to-date management information systems. The Group regularly modifies and enhances its risk management policies and systems to reflect changes in markets products and best practice risk management processes. Internal auditors also perform regular audits to ensure compliance with relevant policies and procedures.(a) Credit risk Credit risk management Credit risk refers to the risk of loss caused by default of debtor or counterparty. Credit risk also occurs when the Group makes unauthorized or inappropriate loans and advances to customers financial commitments or investments. The credit risk exposures of the Group mainly arise from the Group’s loans and advances to customers bonds interbank business receivables lease receivables other debt investments and other on-balance sheet assets and also off-balance sheet items. such as credit commitments.The Group has standardized management on the entire credit business process including loan application and its investigation approval and granting of loan and monitoring of non-performing loans. Through strictly standardized credit business process strengthening the whole process management of pre-lending investigation credit rating and credit granting examination and approval loan review and post-lending monitoring improving risk mitigating impact of collateral accelerating the collection and disposal of non-performing loans and promoting the upgrading and transformation of credit management system the credit risk management of the Group has been comprehensively improved.The Group writes off financial asset when it cannot reasonably expect to recover all or part of the asset. Signs indicating that the recoverable amount cannot be reasonably expected to recover include: (1) the enforcement has been terminated and (2) the Group’s recovery method is to confiscate and dispose of the collateral but the expected value of the collateral cannot cover the entire principal and interest.In addition to the credit risk caused by credit assets the Group manages the credit risk for treasury businesses through prudently selecting peers and other financial institutions with comparable credit levels as counterparties balancing credit risk with returns on investment comprehensively considering internal and external credit rating information granting credit hierarchy and using credit management system to review and adjust credit commitments on a timely basis etc. In addition the Group provides off-balance sheet commitment and guarantee businesses to customers so it is possible for the Group to make payment on behalf of the customer in case of customer’s default and bear risks similar to the loan. Therefore the Group applies similar risk control procedures and policies to such business to reduce the credit risk. 2023 Annual Report 277 – F-238 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) The Group adopts the “expected credit loss model” on its debt instruments which are classified as financial assets measured at amortised cost and at fair value through other comprehensive income and off-balance sheet credit assets in accordance with the provisions of IFRS 9.For financial assets that are included in the measurement of expected credit losses the Group evaluates whether the credit risks of related financial assets have increased significantly since the initial recognition. The impairment model is used to measure their allowances for impairment losses respectively to recognize expected credit losses and their movements: Stage 1: Financial assets with no significant increase in credit risk since initial recognition will be classified as “Stage 1” and the Group continuously monitors their credit risk. The loss allowance of financial assets in Stage 1 is measured based on the expected credit losses in the next 12 months which represent the proportion of the lifetime expected credit losses that may arise from possible default events in the next 12 months.Stage 2: If there is a significant increase in credit risk from initial recognition but not has been credit-impaired the Group transfers the related financial assets to Stage 2 but does not consider them as credit-impaired instruments.The expected credit losses of financial assets in Stage 2 are measured based on the lifetime expected credit losses.Stage 3: If a financial asset has been credit-impaired it will be moved to Stage 3. The expected credit losses of financial assets in Stage 3 are measured based on the lifetime expected credit losses.Purchased or originated credit-impaired financial assets refers to financial assets that are credit-impaired at initial recognition. Allowance for impairment losses on these assets are the lifetime expected credit losses.The Group measures ECLs of financial assets through testing models including the risk parameters model and discounted cash flows model. The risk parameters model method is applicable to the financial assets in Stages 1 and 2. Both the risk parameter model and discounted cash flows model are applicable to the Stage 3 financial assets. The discounted cash flow model is used to calculate the impairment allowance for an asset based on the regular forecasts of the future cash flows of the asset. At each measurement date the Group makes forecasts of the future cash inflows of the asset in different periods and in different scenarios applies probability weightings to obtain the weighted averages of the future cash flows applies appropriate discount rates to the weighted averages and adds these discounted weighted averages to obtain the present value of the future cash inflows.The risk parameter model has two main components: 1) the assessment methods under the Internal Rating- Based (IRB) approach for key parameters such as probability of default (PD) and loss given default (LGD); and 2) the forward-looking adjustment model for multi-scenario forecasts based on the key parameters. The expected credit losses of financial assets are assessed individually by measuring PDs LGDs and forward-looking adjustments. The key judgments involved and assumptions adopted by the Group in assessing expected credit losses are as follows: (1) Grouping of risks According to the nature of the businesses the Group mainly divides its financial assets into three major categories i. e. corporate assets personal loans and credit card assets according to the asset categories and further divides them into risk groups in light of their credit risk characteristics including the industries in which the customers operate product type and staging assessments. 278 China CITIC Bank Corporation Limited – F-239 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) (2) Significant increase in credit risk On each balance sheet date the Group evaluates whether the credit risk of the relevant financial instruments has increased significantly since the initial recognition. When one or more quantitative or qualitative threshold or pre-set upper limit are triggered the credit risk of financial instruments would be considered as having increased significantly.By setting quantitative and qualitative criteria the Group determines whether the credit risk of financial instruments has increased significantly since initial recognition. The criteria mainly include days past due the absolute level and relative level of default probability changes changes in credit risk classification and other circumstances indicating significant changes in credit risk.In accordance with the policies of the central government and regulatory authorities and in light of its credit management needs the Group makes prudential assessments of the repayment ability of borrowers who apply for loan extensions To eligible borrowers provides a number of relief options including deferred repayment of interest and adjustment of repayment schedules. and at the same time the Group makes individual and collective assessments to assess whether there has been a significant increase in the credit risk of these borrowers. (3) Definition of credit-impaired assets When credit impairment occurred the Group defines that the financial asset is in default. In general a financial asset that is overdue for more than 90 days is considered to be in default.When one or more events that significant adversely affect the expected future cash flow of a financial asset occurs the financial asset becomes a credit-impaired financial asset. Evidence of credit-impaired financial assets includes the following observable information: * The issuer or borrower is in significant financial difficulties; * The borrower is in breach of financial covenant(s) such as default or overdue in repayment of interests or principal etc.; * The creditor gives the debtor concession that would not be offered otherwise considering for economic or contractual reasons relating to the debtor’s financial difficulties; * It is becoming probably that the borrower will enter bankruptcy or other financial restructuring; * An active market for that financial asset has disappeared because of financial difficulties from issuer or borrower; * Financial assets are purchased or originated at a deep discount that reflects the incurred credit losses. 2023 Annual Report 279 – F-240 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) (4) Inputs for measurement of expected credit losses The expected credit loss is measured on either a 12-month or lifetime basis depending on whether a significant increase in credit risk has occurred or whether an asset is considered to be credit-impaired.Related definitions are as follows: * The probability of default (“PD”) represents the likelihood of a borrower defaulting on its financial obligations either over the next 12 months or over the remaining lifetime of the obligation.* Loss given default (“LGD”) represents the Group’s expectation of the extent of loss on a defaulted exposure. LGD varies by type of counterparty type and seniority of claim and availability of collateral or other credit support. LGD is expressed as a percentage loss per unit of exposure at the time of default and is calculated on a 12-month or lifetime basis.* Exposure at default (“EAD”) is based on the amounts that the Group expects to be owned at the time of default over the next 12 months or over the remaining lifetime of the obligation.The Group regularly monitors and reviews the assumptions related to the calculation of ECL including the PDs for various maturities and the changes in the values of collateral over time.The Group classifies exposures with similar risk characteristics into groups and collectively estimates their risk parameters including PDs LGDs and EADs. In the first half of 2023 based on data accumulation the Group optimized and updated the relevant models and parameters. The Group has obtained sufficient information to ensure its statistical reliability. The Group makes allowances for its expected credit losses based on on-going assessment of and follow-up on changes in its customers and their financial assets on an individual basis. (5) Forward-looking information The assessment of significant increases in credit risk and the calculation of expected credit losses both involve forward-looking information. Based on historical analysis the Group has identified the key economic variables impacting expected credit losses for various risk groups.These economic variables have different impacts on the probabilities of default and the losses given default of different risk groups. The Group makes forecasts of these economic indicators at least semi-annually.In this process the Group also resorts to expert judgment and applies expert judgment to determine the impact of these economic variables on the probabilities of and the losses given default..In addition to the neutral economic scenario the Group determines the possible scenarios and their weightings by a combination of statistical analysis and expert judgment. The Group measures expected credit losses as either a probability weighted 12 months expected credit losses (Stage 1) or a probability weight lifetime expected credit losses (Stage 2 and Stage 3). These probability-weighted expected credit losses are determined by running each scenario through the relevant expected credit losses model and multiplying it by the appropriate scenario weighting. 280 China CITIC Bank Corporation Limited – F-241 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) (5) Forward-looking information (continued) Macroeconomic scenario and weighting information The Group has performed historical analysis and identified the key economic variables impacting credit risk and ECL for each portfolio. Based on comprehensive considerations of internal and external dataexpert forecasts and the best estimate of future outcomes the Group makes regular forecasts of the macro indicators in three macro-economic scenarios i. e. the positive neutral and negative scenarios to determine the coefficients for forward-looking adjustments. Neutral is defined as the most likely to happen in the future as compared to other scenarios. Positive scenario and negative scenario represent the likely scenario that is better off or worse off as compared to the neutral scenario.The Group reassessed and updated the key economic indicators affecting ECLs and their estimates during the reporting period based on the latest historical data. The economic indicators currently applied in the neutral scenario including consumer price index narrow money supply and per capita disposable income of urban residents etc. are basically consistent with the forecasts of research institutions.Considered different macroeconomic scenarios and the key macroeconomic scenario assumptions uesd in estimating ECL are set out below: Variables Range Consumer Price Index 0.21%~1.54% Industrial Added Value 2.57%~5.93% Per capita Disposable Income of Urban Residents 3.71%~7.14% Currently the weighting of neutral scenario is equal to the sum of the weightings of other scenarios.Following this assessment the Group measures ECL as a weighted average probability of ECL in the next 12-month under the three scenarios for Stage 1 financial instruments; and a weighted average probability of lifetime ECL for Stage 2 and 3 financial instruments. (6) Sensitivity information and management overlay Changes to the inputs and forward-looking information used in ECL measurement will affect the assessment of significant increase in credit risk and the measurement expected of credit losses.As at 31 December 2023 assuming a 10% increase in the weighting of the optimistic scenario and a 10% decrease in the weighting of the neutral scenario the Group’s credit impairment losses would be reduced by no more than 5% of the current credit impairment losses; assuming a 10% increase in the weighting of the optimistic scenario and a 10% decrease in the weighting of the neutral scenario the Group’s credit impairment losses would increase by no more than 5% of the current credit impairment losses.As at 31 December 2023 assuming an overall increase or decrease of 5%in the macroeconomic factors the change to the impairment loss allowances for the main credit assets of the Group and the Bank would not exceed 10% of the current impairment loss allowances of the Group and the Bank and an assumption of a 5% decrease in all macroeconomic factors would result in an increase of no more than 10% of the current impairment loss allowances For risks in specific areas the impacts of deferred principal also considered and applied management overlays to increase the impairment provisions to further boostits risk mitigation capacity and the subsequent increase in the impairment loss allowances did not exceed 5% of the current impairment loss allowances 2023 Annual Report 281 – F-242 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) (6) Sensitivity information and management overlay (continued) Allowance for impairment losses of performing loans and advances to customers consists of ECLs for Stage 1 and Stage 2 assets which represent 12 months ECL and lifetime ECL respectively. Loans and advances to customers in Stage 1 transfer to Stage 2 when there is a significant increase in credit risk.The following table presents the estimated impact if the ECLs of all performing loans and advances to customers are measured based on 12 months ECL assuming all other risk factors remain the same. 31 December 31 December 20232022 Performing loans and advances to customers Allowance of impairment losses assuming performing loans and advances to customers are in Stage 1 86425 78523 Impact of stage transfers 3569 4316 Current allowance for impairment losses 89994 82839 (i) Maximum credit risk exposure The maximum exposure to credit risk at the reporting date without taking into consideration of any collateral held or other credit enhancement is represented by the net balance of each type of financial assets in the consolidated annual statement of financial position after deducting any allowance for impairment losses. A summary of the maximum exposure is as follows: 31 December 2023 Not Stage 1 Stage 2 Stage 3 applicable Total Balances with central banks 411975 – – – 411975 Deposits with bank and non- bank financial institutions 81075 – – – 81075 Placements with and loans to banks and non-bank financial institutions 230422 – – 7320 237742 Derivative financial assets – – – 44675 44675 Financial assets held under resale agreements 104773 – – – 104773 Loans and advances to customers 5285333 69674 23185 5558 5383750 Financial investments — at fair value through profit or loss – – – 613824 613824 — at amortised cost 1055785 4574 25239 – 1085598 — at fair value through other comprehensive income 887165 503 1009 – 888677 — designated at fair value through other comprehensive income – – – 4807 4807 Other financial assets 18604 9815 756 – 29175 Subtotal 8075132 84566 50189 676184 8886071 Credit commitments 2186860 1032 56 – 2187948 Maximum credit risk exposure 10261992 85598 50245 676184 11074019 282 China CITIC Bank Corporation Limited – F-243 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) (i) Maximum credit risk exposure (continued) 31 December 2022 Not Stage 1 Stage 2 Stage 3 applicable Total Balances with central banks 471849 – – – 471849 Deposits with bank and non- bank financial institutions 78834 – – – 78834 Placements with and loans to banks and non-bank financial institutions 209425 – – 8739 218164 Derivative financial assets – – – 44383 44383 Financial assets held under resale agreements 13730 – – – 13730 Loans and advances to customers (Notes (i)) 4938600 68954 27532 3881 5038967 Financial investments — at fair value through profit or loss – – – 557594 557594 — at amortised cost 1101975 3709 29768 – 1135452 — at fair value through other comprehensive income 803583 136 976 – 804695 — designated at fair value through other comprehensive income – – – 5128 5128 Other financial assets 11513 4484 1303 – 17300 Subtotal 7629509 77283 59579 619725 8386096 Credit commitments 2014016 1245 255 – 2015516 Maximum credit risk exposure 9643525 78528 59834 619725 10401612 According to the quality of assets the Group classified the credit rating of the financial assets as risk level 1 risk level 2 risk level 3 and default. “Risk level 1” refers to customers who have competitive advantages among local peers with good foundations outstanding operation results strong operational and financial strength and/or good corporate governance structure. “Risk level 2” refers to customers who are in the middle tier among local peers with fair foundations fair operation results fair operational and financial strength and/or fair corporate governance structure. “Risk level 3” refers to customers who are in the lower tier among local peers with weak foundations poor operation results poor operational and financial strength and/or deficiency in corporate governance structure. The definition of “Default” is same as the definition of credit impaired. The credit rating is used for internal risk management. 2023 Annual Report 283 – F-244 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) (i) Maximum credit risk exposure (continued) The following table provides an analysis of loans and advances to customers and financial investments that are included in the ECL assessment according to the credit risk level. The book value of the following financial assets is the Group’s maximum exposure to credit risk for these assets. 31 December 2023 Allowance for Risk Risk Risk impairment Net level 1 level 2 level 3 Default Subtotal losses balance Loans and advances to customers (Note (i)) Stage 1 3989361 1198860 160088 – 5348309 (62976) 5285333 Stage 2 2663 14094 80022 – 96779 (27105) 69674 Stage 3 – – – 67646 67646 (44461) 23185 Financial investments at amortised cost Stage 1 1020411 37356 694 – 1058461 (2676) 1055785 Stage 2 – – 5935 – 5935 (1361) 4574 Stage 3 (Note (ii)) – – – 47507 47507 (22268) 25239 Financial investments at fair value through other comprehensive income Stage 1 885937 1228 – – 887165 (1289) 887165 Stage 2 – 503 – – 503 (219) 503 Stage 3 – – – 1009 1009 (460) 1009 Maximum credit risk exposure 5898372 1252041 246739 116162 7513314 (162815) 7352467 31 December 2022 Allowance for Risk Risk Risk impairment Net level 1 level 2 level 3 Default Subtotal losses balance Loans and advances to customers (Note (i)) Stage 1 3893401 992389 113014 – 4998804 (60204) 4938600 Stage 2 1398 18111 71942 – 91451 (22497) 68954 Stage 3 – – – 75816 75816 (48284) 27532 Financial investments at amortised cost Stage 1 745762 356012 2684 – 1104458 (2483) 1101975 Stage 2 – – 5096 – 5096 (1387) 3709 Stage 3(Note (ii)) – – – 54464 54464 (24696) 29768 Financial investments at fair value through other comprehensive income Stage 1 412730 390853 – – 803583 (1416) 803583 Stage 2 – 136 – – 136 (98) 136 Stage 3 – – – 976 976 (1203) 976 Maximum credit risk exposure 5053291 1757501 192736 131256 7134784 (162268) 6975233 284 China CITIC Bank Corporation Limited – F-245 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) (i) Maximum credit risk exposure (continued) Notes: (i) Loans and advances to customers include loans and advances to customers measured at fair value through other comprehensive income and its corresponding impairment are not included in the “Allowance for impairment losses” as shown in the table.(ii) Claims in Stage 3 mainly represent investment management products and trust investment plans (Note 54(a)(viii)).(ii) Measurement of expected credit losses The following table shows the movement in carrying value of loans and advances to customers in current reporting period: Year ended 31 December 2023 Stage 1 Stage 2 Stage 3 As at 1 January 2023 4998804 91451 75816 Movements Net transfers out from Stage 1 (104735) – – Net transfers into Stage 2 – 26544 – Net transfers into Stage 3 – – 78191 Net transactions incurred during the year (Note(i)) 443018 (20657) (26433) Write-off – – (60054) Others (Note (ii)) 11222 (559) 126 As at 31 December 2023 5348309 96779 67646 Year ended 31 December 2022 Stage 1 Stage 2 Stage 3 As at 1 January 2022 4708658 85046 75329 Movements Net transfers out from Stage 1 (109279) – – Net transfers into Stage 2 – 28507 – Net transfers into Stage 3 – – 80772 Net transactions incurred during the year (Note(i)) 380470 (23863) (23508) Write-off – – (57791) Others (Note (ii)) 18955 1761 1014 As at 31 December 2022 4998804 91451 75816 2023 Annual Report 285 – F-246 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) (ii) Measurement of expected credit losses (continued) The following table shows the movement in carrying value of financial investment in current reporting period: Year ended 31 December 2023 Stage 1 Stage 2 Stage 3 As at 1 January 2023 1908041 5232 55440 Movements Net transfers out from Stage 1 (5334) – – Net transfers into Stage 2 – 3460 – Net transfers into Stage 3 – – 1874 Net transactions incurred during the year (Note(i)) 38725 (2366) (3020) Write-off – – (5629) Others (Note (ii)) 4194 112 (149) As at 31 December 2023 1945626 6438 48516 Year ended 31 December 2022 Stage 1 Stage 2 Stage 3 As at 1 January 2022 1780877 16208 51728 Movements Net transfers out from Stage 1 (3525) – – Net transfers into Stage 2 – (7376) – Net transfers into Stage 3 – – 10901 Net transactions incurred during the year (Note(i)) 121588 (3412) (5634) Write-off – – (1558) Others (Note (ii)) 9101 (188) 3 As at 31 December 2022 1908041 5232 55440 Notes: (i) Net transactions during the year mainly include changes in carrying amount due to purchase origination or derecognition (excluding write-offs).(ii) Others include changes in accrued interest receivables and effect of exchange differences during the year. 286 China CITIC Bank Corporation Limited – F-247 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) (ii) Measurement of expected credit losses (continued) The following table shows the movement in allowance for impairment of loans and advances to customers in current reporting period: Year ended 31 December 2023 Stage 1 Stage 2 Stage 3 As at 1 January 2023 60727 22524 48363 Movements (Note(i)) Net transfers out from Stage 1 (3045) – – Net transfers into Stage 2 – 9082 – Net transfers into Stage 3 – – 34778 Net transactions incurred during the year (Note(ii)) 6982 (3989) (6742) Changes in parameters for the year (Note (iii)) (1171) (149) 14094 Write-off – – (60054) Others (Note (iv)) 69 (363) 14092 As at 31 December 2023 63562 27105 44531 Year ended 31 December 2022 Stage 1 Stage 2 Stage 3 As at 1 January 2022 51215 21686 48805 Movements (Note(i)) Net transfers out from Stage 1 (2776) – – Net transfers into Stage 2 – 3011 – Net transfers into Stage 3 – – 33661 Net transactions incurred during the year (Note(ii)) 5338 (4560) (14373) Changes in parameters for the year (Note (iii)) 7408 498 27579 Write-off – – (57791) Others (Note (iv)) (458) 1889 10482 As at 31 December 2022 60727 22524 48363 2023 Annual Report 287 – F-248 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) (ii) Measurement of expected credit losses (continued) The following table shows the movement in allowance for impairment of financial investment in current reporting period: Year ended 31 December 2023 Stage 1 Stage 2 Stage 3 As at 1 January 2023 3899 1485 25899 Movements (Note(i)) Net transfers out from Stage 1 (177) – – Net transfers into Stage 2 – 650 – Net transfers into Stage 3 – – 893 Net transactions incurred during the year (Note(ii)) 232 119 2373 Changes in parameters for the year (Note (iii)) 5 (676) (810) Write-off – – (5629) Others (Note (iv)) 6 2 2 As at 30 June 2023 3965 1580 22728 Year ended 31 December 2022 Stage 1 Stage 2 Stage 3 As at 1 January 2022 5197 4234 19683 Movements (Note(i)) Net transfers out from Stage 1 (209) – – Net transfers into Stage 2 – (2184) – Net transfers into Stage 3 – – 6436 Net transactions incurred during the year (Note(ii)) 160 (630) (2313) Changes in parameters for the year (Note (iii)) (1200) 56 1695 Write-off – – (1558) Others (Note (iv)) (49) 9 1956 As at 31 December 2022 3899 1485 25899 Notes: (i) Movements in allowance for impairment during the year mainly include the impact of stage changes on the measurement of ECLs.(ii) Net transactions during the year mainly include changes in allowance for impairment due to financial assets purchased newly originated purchased or derecognized (excluding write-offs).(iii) Changes in parameters mainly include changes in risk exposures and the impacts on ECLs due to changes in PDs and LGDs following regular updates on modelling parameters rather than stages movements.(iv) Others include recovery of loans written off changes of impairment losses of accrued interest and effect of exchange differences. 288 China CITIC Bank Corporation Limited – F-249 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) (iii) Loans and advances to customers analysed by industry sector: 31 December 2023 31 December 2022 Loans and Loans and advances advances Gross secured by Gross secured by balance % collateral balance % collateral Corporate loans — rental and business services 531424 9.6 148751 491301 9.5 193562 — manufacturing 500002 9.1 177434 419507 8.1 171117 — water environment and public utility management 434570 7.9 104719 413399 8.0 129983 — real estate 259363 4.7 171880 277173 5.4 229939 — wholesale and retail 213632 3.9 100650 177612 3.4 95000 — transportation storage and postal services 139201 2.5 63159 149891 2.9 79475 — construction 116099 2.1 45125 103335 2.0 54426 — production and supply of electric power gas and water 96190 1.7 39998 89609 1.7 41650 — financial industry 78756 1.4 4720 73619 1.4 7413 — Information transmission software and information technology services 54705 1.0 21882 46343 0.9 22076 — others 273208 5.0 82093 282227 5.5 89725 Subtotal 2697150 48.9 960411 2524016 48.8 1114366 Personal loans 2283846 41.3 1510757 2116910 41.0 1423097 Discounted bills 517348 9.4 – 511846 9.9 – Accrued interest 19948 0.4 – 17180 0.3 – Gross loans and advances to customers 5518292 100.0 2471168 5169952 100.0 2537463 (iv) Loans and advances to customers analysed by geographical sector: 31 December 2023 31 December 2022 Loans and Loans and advances advances Gross secured by Gross secured by balance % collateral balance % collateral Yangtze River Delta 1538269 27.9 723947 1381673 26.7 721324 Bohai Rim (including Head Office) 1423026 25.8 431641 1400562 27.2 442754 Central 790477 14.3 379773 730240 14.1 390082 Pearl River Delta and West Strait 782231 14.2 459753 731224 14.1 498620 Western 669589 12.1 328307 598729 11.6 330962 Northeastern 85037 1.5 52682 87630 1.7 57244 Outside Mainland China 209715 3.8 95065 222714 4.3 96477 Accrued interest 19948 0.4 – 17180 0.3 – Total 5518292 100.0 2471168 5169952 100.0 2537463 2023 Annual Report 289 – F-250 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) (v) Loans and advances to customers analysed by type of security 31 December 31 December 20232022 Unsecured loans 1546536 1384754 Guaranteed loans 963292 718709 Secured loans 2471168 2537463 — loans secured by collateral 2057869 2018796 — pledged loans 413299 518667 Subtotal 4980996 4640926 Discounted bills 517348 511846 Accrued interest 19948 17180 Gross loans and advances to customers 5518292 5169952 (vi) Rescheduled loans and advances to customers 31 December 2023 31 December 2022 % of total % of total loans and loans and Gross balance advances Gross balance advances Rescheduled loans and advances 17477 0.32% 12511 0.24% — rescheduled loans and advances overdue more than 3 months 3147 0.06% 5695 0.11% Rescheduled loans and advances are those loans and advances to customers which have been restructured or renegotiated because of deterioration in the financial position of the borrowers or of the inability of the borrower to meet the original repayment schedule and for which the revised repayment terms are a concession that the Group would not otherwise consider.According to the “Classification Measures for Financial Asset Risk of Commercial Banks” issued by The National Administration of Financial Regulation and the People’s Bank of China which came into effect on July 1 2023 restructured loans refer to loans made by the Group in favor of the borrower’s adjustment of the loan contract or refinancing of the borrower’s existing loans in order to encourage the borrower to repay the debt due to financial difficulties including borrowing new loans to repay the old adding new loans etc. As of December 31 2023 the balance of restructured loans that meet the requirements of the above measures for the Group was RMB17477 billion. 290 China CITIC Bank Corporation Limited – F-251 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) (vii) Debt securities analysed by credit rating The Group adopts a credit rating approach to manage credit risk of its debt instruments portfolio. The ratings are obtained from major rating agencies where the debt instruments are issued. As at 31 December 2023 and 2022 debt instruments investments analysed by rating as at the end of the reporting period are as follows: 31 December 2023 Unrated AAA AA A Below A Total (Note (i)) Debt securities issued by: — governments 898954 512419 59173 2270 – 1472816 — policy banks 23606 24039 – 5859 – 53504 — public entities – – 3987 – – 3987 — banks and non-bank financial institutions 7545 260681 13116 20840 2189 304371 — corporates 21349 64269 13208 8838 5314 112978 Investment management products managed by securities companies 19176 – – – – 19176 Trust investment plans 189733 – – – – 189733 Total 1160363 861408 89484 37807 7503 2156565 31 December 2022 Unrated AAA AA A Below A Total (Note (i)) Debt securities issued by: — governments 884388 236364 40794 3965 – 1165511 — policy banks 81966 – – 7661 – 89627 — public entities – – 1308 – – 1308 — banks and non-bank financial institutions 77584 337801 6270 17645 4257 443557 — corporates 25519 43702 25746 10576 11376 116919 Investment management products managed by securities companies 31593 – – – – 31593 Trust investment plans 207865 – – – – 207865 Total 1308915 617867 74118 39847 15633 2056380 Note: (i) Unrated debt securities held by the Group are primarily bonds issued by the Chinese government policy banks banks non-bank financial institutions investment management products managed by securities companies and trust investment plans. 2023 Annual Report 291 – F-252 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (a) Credit risk (continued) Measurement of expected credit losses (“ECL”) (continued) (viii) Investment management products managed by securities companies and trust investment plans analysed by type of underlying assets 31 December 31 December 20232022 Investment management products managed by securities companies and trust investment plans — credit assets 227748 262447 Total 227748 262447 The Group puts investment management products managed by securities companies and trust investment plans into comprehensive credit management system to manage its credit risk exposure in a holistic manner. The type of security of credit assets includes guarantee secured by collateral and pledge.(b) Market risk Market risk refers to risks that may cause a loss of on-balance sheet and off-balance sheet businesses for the Group due to the adverse movement of market prices including interest rates foreign exchange rates stock prices and commodity prices. The Group has established a market risk management system that formulates procedures to identify measure supervision and control market risks. This system aims to limit market risk to an acceptable level through examining and approving new products and limit management.Management of the Group is responsible for approving market risk management policies establishing appropriate organizational structure and information systems to effectively identify measure monitor and control market risks and ensuring adequate resources to reinforce the market risk management. The Risk Management Department is responsible for independently managing and controlling market risks of the Group including developing market risk management policies and authorization limits providing independent report of market risk to identify measure and monitor the Group’s market risk. Business departments are responsible for the day-to-day management of market risks including effectively identifying measuring controlling market risk factors associated with the relevant operations so as to ensure the dynamic balance between business development and risk undertaking.The Group uses sensitivity analysis foreign exchange exposure and interest rate re-pricing gap analysis as the primary instruments to monitor market risk.Interest rate risk and currency risk are the major market risks that the Group is exposed to.Interest rate risk The Group’s interest rate exposures mainly arise from the mismatching of assets and liabilities’ re-pricing dates as well as the effect of interest rate volatility on trading positions.The Group primarily uses gap analysis to assess and monitor its re-pricing risk and adjust the ratio of floating and fixed rate exposures the loan re-pricing cycle as well as optimization of the term structure of its deposits accordingly.The Group implements various methods such as duration analysis sensitivity analysis stress testing and scenario simulation to measure manage and report the interest rate risk on a regular basis. 292 China CITIC Bank Corporation Limited – F-253 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (b) Market risk (continued) Interest rate risk (continued) The following tables summarise the average interest rates and the next re-pricing dates or contractual maturity date whichever is earlier for the assets and liabilities as at the end of each reporting date. 31 December 2023 Between three Average Non- Less than months Between interest interest three and one one and More than rate Total bearing months year five years five years (Note (i)) Assets Cash and balances with central banks 1.60% 416442 10592 405850 – – – Deposits with banks and non-bank financial institutions 2.07% 81075 2651 53098 25326 – – Placements with and loans to banks and non-bank financial institutions 3.18% 237742 1288 86813 148141 1500 – Financial assets held under resale agreements 1.61% 104773 35 104738 – – – Loans and advances to customers (Note (ii)) 4.56% 5383750 19267 3560330 1527678 261492 14983 Financial investment — at fair value through profit or loss 613824 421787 79060 87297 10806 14874 — at amortised cost 3.16% 1085598 12920 65996 184679 630192 191811 — at fair value through other comprehensive income 2.73% 888677 6419 130264 132711 426617 192666 — designated at fair value through other comprehensive income 4807 4807 – – – – Others 235796 235796 – – – – Total assets 9052484 715562 4486149 2105832 1330607 414334 31 December 2023 Between three Average Non- Less than months Between interest interest three and one one and More than rate Total bearing months year five years five years (Note (i)) Liabilities Borrowings from central banks 2.61% 273226 2026 53857 217243 100 – Deposits from banks and non-bank financial institutions 2.12% 927887 4808 779154 143925 – – Placements from banks and non-bank financial institutions 3.00% 86327 165 44843 40319 1000 – Financial liabilities at fair value through profit or loss 1588 – 519 – 8 1061 Financial assets sold under repurchase agreements 2.13% 463018 193 458439 4386 – – Deposits from customers 2.12% 5467657 99191 3600066 681129 1087271 – Debt securities issued 2.62% 965981 4104 271275 466722 153885 69995 Lease liabilities 4.46% 10245 – 832 2112 5998 1303 Others 121880 121880 – – – – Total liabilities 8317809 232367 5208985 1555836 1248262 72359 Interest rate gap 734675 483195 (63275) (95903) 66593 344065 2023 Annual Report 293 – F-254 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (b) Market risk (continued) Interest rate risk (continued) 31 December 2022 Between three Average Non- Less than months Between interest interest three and one one and More than rate Total bearing months year five years five years (Note (i)) Assets Cash and balances with central banks 1.50% 477381 7705 469676 – – – Deposits with banks and non-bank financial institutions 1.75% 78834 3090 39442 36302 – – Placements with and loans to banks and non-bank financial institutions 2.49% 218164 1048 67007 108371 41738 – Financial assets held under resale agreements 1.45% 13730 5 13725 – – – Loans and advances to customers (Note (ii)) 4.81% 5038967 17331 2665381 1596021 733001 27233 Financial investment — at fair value through profit or loss 557594 435561 70773 28234 8464 14562 — at amortised cost 3.55% 1135452 – 87626 259083 556979 231764 — at fair value through other comprehensive income 2.66% 804695 478 146837 122169 382895 152316 — designated at fair value through other comprehensive income 5128 5128 – – – – Others 217598 217598 – – – – Total assets 8547543 687944 3560467 2150180 1723077 425875 31 December 2022 Between three Average Non- Less than months Between interest interest three and one one and More than rate Total bearing months year five years five years (Note (i)) Liabilities Borrowings from central banks 2.94% 119422 – 20917 98505 – – Deposits from banks and non-bank financial institutions 2.09% 1143776 4908 814885 323983 – – Placements from banks and non-bank financial institutions 2.41% 70741 162 49080 19992 1507 – Financial liabilities at fair value through profit or loss 1546 2 4 13 125 1402 Financial assets sold under repurchase agreements 2.00% 256194 75 247237 8882 – – Deposits from customers 2.06% 5157864 82696 3493074 781501 800591 2 Debt securities issued 2.80% 975206 3968 264606 486864 129781 89987 Lease liabilities 4.51% 10272 3066 170 251 2827 3958 Others 126692 126692 – – – – Total liabilities 7861713 221569 4889973 1719991 934831 95349 Interest rate gap 685830 466375 (1329506) 430189 788246 330526 294 China CITIC Bank Corporation Limited – F-255 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (b) Market risk (continued) Interest rate risk (continued) Notes: (i) Average interest rate represents the ratio of interest income/expense to average interest bearing assets/liabilities during the year.(ii) For loans and advances to customers the “Less than three months” category includes overdue amounts (net of allowance for impairment losses) of RMB39762 million as at 31 December 2023 (as at 31 December 2022: RMB34823 million).The Group uses sensitivity analysis to measure the potential effect of changes in interest rates on the Group’s net interest income. The following table sets forth the results of the Group’s interest rate sensitivity analysis as at 31 December 2023 and 2022. 31 December 2023 31 December 2022 Other Other Net interest comprehensive Net interest comprehensive Income income Income income +100 basis points (3103) (7681) (10068) (6517) – 100 basis points 3103 7681 10068 6517 This sensitivity analysis is based on a static interest rate risk profile of the Group’s non-derivative assets and liabilities and certain assumptions as discussed below. The analysis measures only the impact of changes in interest rates within one year showing how annualized interest income would have been affected by repricing of the Group’s non-derivative assets and liabilities within the one-year period. The analysis is based on the following assumptions: (i) all assets and liabilities that reprice or mature within the three months bracket and the beyond three months but within one year bracket both are repriced or mature at the beginning of the respective periods (ii) it does not reflect the potential impact of unparalleled yield curve movements and (iii) there are no other changes to the portfolio all positions will be retained and rolled over upon maturity. The analysis does not take into account the effect of risk management measures taken by management. Due to the assumptions adopted actual changes in the Group’s net interest income and other comprehensive income resulted from increases or decreases in interest rates may differ from the results of this sensitivity analysis.Currency risk Currency risk arises from the potential change of exchange rates that cause a loss to the on-balance sheet and off-balance sheet business of the Group. The Group measures its currency risk with foreign currency exposures and manages its currency risk by spot and forward foreign exchange transactions and matching its foreign currency denominated assets with corresponding liabilities in the same currency as well as using derivative financial instruments mainly foreign exchange swaps to manage its exposure. 2023 Annual Report 295 – F-256 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (b) Market risk (continued) Currency risk (continued) The exposures at the reporting date were as follows: 31 December 2023 RMB USD HKD Others Total (RMB (RMB (RMB equivalent) equivalent) equivalent) Assets Cash and balances with central banks 404812 10786 587 257 416442 Deposits with banks and non- bank financial institutions 51017 23943 1737 4378 81075 Placements with and loans to banks and non-bank financial institutions 161314 43837 32132 459 237742 Financial assets held under resale agreements 102194 2579 – – 104773 Loans and advances to customers 5102314 133675 117147 30614 5383750 Financial investments — at fair value through profit or loss 598687 10160 3716 1261 613824 — at amortised cost 1074428 10817 – 353 1085598 — at fair value through other comprehensive income 733213 98491 42191 14782 888677 — designated at fair value through other comprehensive income 4565 174 68 – 4807 Others 202586 15316 16640 1254 235796 Total assets 8435130 349778 214218 53358 9052484 Liabilities Borrowings from central banks 273226 – – – 273226 Deposits from banks and non- bank financial institutions 888524 37999 479 885 927887 Placements from banks and non- bank financial institutions 58438 22989 2595 2305 86327 Financial liabilities at fair value through profit or loss 519 8 1061 – 1588 Financial assets sold under repurchase agreements 442491 19779 – 748 463018 Deposits from customers 5050568 237047 151310 28732 5467657 Debt securities issued 940714 20962 3330 975 965981 Lease liability 9219 40 888 98 10245 Others 92886 12279 11619 5096 121880 Total liabilities 7756585 351103 171282 38839 8317809 Net on-balance sheet position 678545 (1325) 42936 14519 734675 Credit commitments 2076747 92982 5101 13118 2187948 Derivatives (Note (i)) 17877 1176 (164) (15443) 3446 296 China CITIC Bank Corporation Limited – F-257 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (b) Market risk (continued) Currency risk (continued) 31 December 2022 RMB USD HKD Others Total (RMB (RMB (RMB equivalent) equivalent) equivalent) Assets Cash and balances with central banks 460550 15991 653 187 477381 Deposits with banks and non- bank financial institutions 53989 15928 4453 4464 78834 Placements with and loans to banks and non-bank financial institutions 172752 34443 9020 1949 218164 Financial assets held under resale agreements 11950 1780 – – 13730 Loans and advances to customers 4732459 160506 118379 27623 5038967 Financial investments — at fair value through profit or loss 535552 17131 4911 – 557594 — at amortised cost 1122942 8356 – 4154 1135452 — at fair value through other comprehensive income 671715 94174 25881 12925 804695 — designated at fair value through other comprehensive income 4719 148 261 – 5128 Others 201395 9833 5735 635 217598 Total assets 7968023 358290 169293 51937 8547543 Liabilities Borrowings from central banks 119422 – – – 119422 Deposits from banks and non- bank financial institutions 1132064 10660 198 854 1143776 Placements from banks and non- bank financial institutions 48566 20397 1336 442 70741 Financial liabilities at fair value through profit or loss 99 1446 1 – 1546 Financial assets sold under repurchase agreements 251685 4509 – – 256194 Deposits from customers 4721203 252574 159353 24734 5157864 Debt securities issued 959984 15085 137 – 975206 Lease liability 9395 754 1 122 10272 Others 120517 3449 2438 288 126692 Total liabilities 7362935 308874 163464 26440 7861713 Net on-balance sheet position 605088 49416 5829 25497 685830 Credit commitments 1912368 87219 6125 9804 2015516 Derivatives (Note (i)) 37956 (55048) 32009 (26305) (11388) Note: (i) Derivatives represent the net notional amount of currency derivatives including undelivered foreign exchange spot foreign exchange forward foreign exchange swap and currency option. 2023 Annual Report 297 – F-258 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (b) Market risk (continued) Currency risk (continued) The Group uses sensitivity analysis to measure the potential effect of changes in foreign currency exchange rates on the Group’s profit or loss and other comprehensive income. The following table sets forth as at 31 December 2023 and 2022 the results of the Group’s foreign exchange rate sensitivity analysis. 31 December 2023 31 December 2022 Other Other Profit comprehensive Profit comprehensive before tax income before tax income 5% appreciation 2095 (10) 1613 (43) 5% depreciation (2095) 10 (1613) 43 This sensitivity analysis is based on a static foreign exchange exposure profile of assets and liabilities and certain assumptions as follows: (i) the foreign exchange sensitivity is the gain and loss realised as a result of 500 basis point fluctuation in the foreign currency exchange rates against RMB at the reporting date (ii) the exchange rates against RMB for all foreign currencies change in the same direction simultaneously and does not take into account the correlation effect of changes in different foreign currencies and (iii) the foreign exchange exposures calculated include both spot foreign exchange exposures foreign exchange derivative instruments and; all positions will be retained and rolled over upon maturity. The analysis does not take into account the effect of risk management measures taken by management. Due to the assumptions adopted actual changes in the Group’s profit and other comprehensive income resulting from increases or decreases in foreign exchange rates may differ from the results of this sensitivity analysis. Precious metal is included in foreign currency for the purpose of this sensitivity analysis.(c) Liquidity risk Liquidity risk arises when the Group in meeting the demand of liabilities due and other payment obligations as well as the needs of business expansion is unable to sufficiently timely or cost-effectively acquire funds. The Group’s liquidity risk arises mainly from the mismatch of assets to liabilities and customers may concentrate their withdrawals.The Group has implemented overall liquidity risk management on the entity level. The headquarters has the responsibility for developing the entire Group’s liquidity risk policies strategies and implements centralised management of liquidity risk on the entity level. The domestic and foreign affiliates develop their own liquidity policies and procedures within the Group’s liquidity strategy management framework based on the requirements of relevant regulatory bodies.The Group manages liquidity risk by setting various indicators and operational limits according to the overall position of the Group’s assets and liabilities with referencing to market condition. The Group holds assets with high liquidity to meet unexpected and material demand for payments in the ordinary course of business.The tools that the Group uses to measure and monitor liquidity risk mainly include: – Liquidity gap analysis; – Liquidity indicators (including but not limited to regulated and internal managed indicators such as liquidity coverage ratio net stable funding ratio loan-to-deposit ratio liquidity ratio liquidity gap rate excess reserves rate) monitoring; – Scenario analysis; – Stress testing. 298 China CITIC Bank Corporation Limited – F-259 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (c) Liquidity risk On this basis the Group establishes regular reporting mechanisms for liquidity risk to report the latest situation of liquidity risk to the senior management on a timely basis.Analysis of the remaining contractual maturity of assets and liabilities 31 December 2023 Between three Repayable Within months Between on three and one one and More than demand months year five years five years Undated Total (Note (i)) Assets Cash and balances with central banks 57118 – 2926 – – 356398 416442 Deposits with banks and non-bank financial institutions 45927 8925 26031 – – 192 81075 Placements with and loans to banks and non-bank financial institutions – 87489 148752 1501 – – 237742 Financial assets held under resale agreements – 104773 – – – – 104773 Loans and advances to customers (Note (ii)) 14349 1121367 1095556 1367925 1749012 35541 5383750 Financial investments — at fair value through profit or loss – 83544 87306 11725 15021 416228 613824 — at amortised cost – 47010 186182 634834 191911 25661 1085598 — at fair value through other comprehensive income 118399 134949 440219 194134 976 888677 — designated at fair value through other comprehensive income – – – – – 4807 4807 Others 45184 37882 13658 63270 1797 74005 235796 Total assets 162578 1609389 1695360 2519474 2151875 913808 9052484 31 December 2023 Between three Repayable Within months Between on three and one one and More than demand months year five years five years Undated Total (Note (i)) Liabilities Borrowings from central banks – 55883 217343 – – – 273226 Deposits from banks and non-bank financial institutions 496771 286740 144376 – – – 927887 Placements from banks and non-bank financial institutions – 43553 39739 3035 – – 86327 Financial liabilities at fair value through profit or loss – 519 – 8 1061 – 1588 Financial assets sold under repurchase agreements – 458632 4386 – – – 463018 Deposits from customers 2638317 1060525 681532 1087283 – – 5467657 Debt securities issued – 271299 467229 156830 70623 – 965981 Lease liabilities – 832 2112 5998 1303 – 10245 Others 46096 21744 12983 24205 4512 12340 121880 Total liabilities 3181184 2199727 1569700 1277359 77499 12340 8317809 (Short)/Long position (3018606) (590338) 125660 1242115 2074376 901468 734675 2023 Annual Report 299 – F-260 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (c) Liquidity risk (continued) 31 December 2022 Between three Within months Between Repayable three and one one and More than on demand months year five years five years Undated Total (Note (i)) Assets Cash and balances with central banks 110572 – 1693 – – 365116 477381 Deposits with banks and non-bank financial institutions 38772 3496 36566 – – – 78834 Placements with and loans to banks and non-bank financial institutions – 67838 108588 41738 – – 218164 Financial assets held under resale agreements – 13730 – – – – 13730 Loans and advances to customers (Note (ii)) 20458 855226 1238912 1139067 1736343 48961 5038967 Financial investments — at fair value through profit or loss – 71505 28237 8481 5377 443994 557594 — at amortised cost – 67441 255615 552436 229916 30044 1135452 — at fair value through other comprehensive income – 140796 123462 387261 149933 3243 804695 — designated at fair value through other comprehensive income – – – – – 5128 5128 Others 40857 30382 12437 68494 2167 63261 217598 Total assets 210659 1250414 1805510 2197477 2123736 959747 8547543 31 December 2022 Between three Within months Between Repayable three and one one and More than on demand months year five years five years Undated Total (Note (i)) Liabilities Borrowings from central banks – 20917 98505 – – – 119422 Deposits from banks and non-bank financial institutions 582376 235726 325674 – – – 1143776 Placements from banks and non-bank financial institutions – 46226 24052 463 – – 70741 Financial liabilities at fair value through profit or loss – 4 14 126 1402 – 1546 Financial assets sold under repurchase agreements – 247312 8882 – – – 256194 Deposits from customers 2385973 1188967 782255 800667 2 – 5157864 Debt securities issued – 265317 482743 135930 91216 – 975206 Lease liabilities 3006 718 1977 3527 1015 29 10272 Others 50723 20801 16205 25769 2321 10873 126692 Total liabilities 3022078 2025988 1740307 966482 95956 10902 7861713 (Short)/Long position (2811419) (775574) 65203 1230995 2027780 948845 685830 300 China CITIC Bank Corporation Limited – F-261 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (c) Liquidity risk (continued) The tables below present the cash flows of the Group’s financial assets and liabilities. The amounts disclosed in the table are the contractual undiscounted cash flow: 31 December 2023 Three Repayable Within months on three and one One and More than demand months year five years five years Undated Total (Note (i)) Non-derivative cash flow Assets Cash and balances with central banks 57118 1459 7565 – – 356398 422540 Deposits with banks and non-bank financial institutions 45927 9207 26809 – – 192 82135 Placements with and loans to banks and non-bank financial institutions – 88479 151343 1550 – – 241372 Financial assets held under resale agreements – 104806 – – – – 104806 Loans and advances to customers (Note (ii)) 14349 1163696 1197943 1733077 2107869 35541 6252475 Financial investments — at fair value through profit or loss – 83838 89353 13114 17256 416228 619789 — at amortised cost – 49169 210463 702595 212508 26811 1201546 — at fair value through other comprehensive income – 119405 150851 494372 222304 976 987908 — designated at fair value through other comprehensive income – – – – – 4807 4807 Others 45184 37882 13658 63270 1797 74006 235797 Total assets 162578 1657941 1847985 3007978 2561734 914959 10153175 31 December 2023 Three Repayable months on Within 3 and one One and More than demand months year five years five years Undated Total (Note (i)) Liabilities Borrowings from central banks – 56040 222765 – – – 278805 Deposits from banks and non-bank financial institutions 496771 292455 153100 – – – 942326 Placements from banks and non-bank financial institutions – 46081 40415 3302 – – 89798 Financial liabilities at fair value through profit or loss – 519 – 17 2121 – 2657 Financial assets sold under repurchase agreements – 459256 4490 – – – 463746 Deposits from customers 2638318 1078870 808372 1224844 – – 5750404 Debt securities issued – 276079 486317 175649 79910 – 1017955 Lease liability – 836 2163 6745 1567 – 11311 Others 46096 21744 12983 24205 4512 12340 121880 Total liabilities 3181185 2231880 1730605 1434762 88110 12340 8678882 (Short)/Long position (3018607) (573939) 117380 1573216 2473624 902619 1474293 Derivative cash flow Derivative financial instrument settled on a net basis – 127 (45) 261 25 – 368 Derivative financial instruments settled on a gross basis – (1474) (1958) 19 (17) – (3430) — cash inflow – 1604991 1251430 217411 1281 – 3075113 — cash outflow – (1606465) (1253388) (217392) (1298) – (3078543) 2023 Annual Report 301 – F-262 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (c) Liquidity risk (continued) 31 December 2022 Three Within months Repayable three and one One and More than on demand months year five years five years Undated Total (Note (i)) Non-derivative cash flow Assets Cash and balances with central banks 110573 1501 6534 – – 365115 483723 Deposits with banks and non-bank financial institutions 38772 3750 37373 – – – 79895 Placements with and loans to banks and non-bank financial institutions – 68416 110718 44012 – – 223146 Financial assets held under resale agreements – 13732 – – – – 13732 Loans and advances to customers (Note (ii)) 20458 897769 1343254 1458349 2194769 54499 5969098 Financial investments — at fair value through profit or loss – 74613 29072 9932 5799 444029 563445 — at amortised cost – 75708 284176 630543 273623 31416 1295466 — at fair value through other comprehensive income – 144503 137130 430875 170692 3273 886473 — designated at fair value through other comprehensive income – – – – – 5128 5128 Others 40857 30382 12437 68494 2167 63261 217598 Total assets 210660 1310374 1960694 2642205 2647050 966721 9737704 31 December 2022 Three Within months Repayable three and one One and More than on demand months year five years five years Undated Total (Note (i)) Liabilities Borrowings from central banks – 21495 101118 – – – 122613 Deposits from banks and non-bank financial institutions 582376 240606 338448 – – – 1161430 Placements from banks and non-bank financial institutions – 46249 24052 463 – – 70764 Financial liabilities at fair value through profit or loss – 4 14 126 1402 – 1546 Financial assets sold under repurchase agreements – 247730 9060 – – – 256790 Deposits from customers 2385973 1209399 823601 880908 2 – 5299883 Debt securities issued – 271693 498663 156939 98308 – 1025603 Lease liability 3006 721 2028 3932 1232 29 10948 Others 50723 20801 16205 25769 2321 10873 126692 Total liabilities 3022078 2058698 1813189 1068137 103265 10902 8076269 (Short)/Long position (2811418) (748324) 147505 1574068 2543785 955819 1661435 Derivative cash flow Derivative financial instrument settled on a net basis – 30 11 472 992 – 1505 Derivative financial instruments settled on a gross basis – 10299 (19510) 4712 (4) – (4503) — cash inflow – 1243343 865045 241355 1139 – 2350882 — cash outflow – (1233044) (884555) (236643) (1143) – (2355385) 302 China CITIC Bank Corporation Limited – F-263 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (c) Liquidity risk (continued) Credit Commitments include bank acceptances credit card commitments guarantees loan commitments and letters of credit. The tables below summarise the amounts of credit commitments by remaining contractual maturity. 31 December 2023 Less than 1 year 1-5 years Over 5 years Total Bank acceptances 867523 – – 867523 Credit card commitments 779947 – – 779947 Guarantees 154927 81806 626 237359 Loan commitments 4288 11889 30591 46768 Letters of credit 255478 873 – 256351 Total 2062163 94568 31217 2187948 31 December 2022 Less than 1 year 1-5 years Over 5 years Total Bank acceptances 795833 – – 795833 Credit card commitments 704268 – – 704268 Guarantees 119249 65802 1566 186617 Loan commitments 16728 18428 22805 57961 Letters of credit 269893 944 – 270837 Total 1905971 85174 24371 2015516 Notes: (i) For cash and balances with central banks the undated period amount represented statutory deposit reserve funds and fiscal deposits maintained with the PBOC. For loans and advances to customers and investments the undated period amount represented the balances being credit-impaired or overdue for more than one month. Equity investments and investment funds were also reported under undated period.(ii) The balances of loans and advances to customers which were overdue within one month but not impaired are included in repayable on demand.(d) Operational risk Operational risk refers to the risk of loss arising from inappropriate or problematic internal procedures personnel IT systems or external events including legal risk but excluding strategic risk and reputational risk.The Group manages operational risk through a control-based environment by establishing a sound mechanism of operational risk management in order to identify assess monitor control mitigate and report operational risks. The framework covers all business functions ranging from finance credit accounting settlement savings treasury intermediary business computer applications and management special assets resolution and legal affairs. Key controls include: – by establishing a matrix authorisation management system of the whole group carrying out the annual unified authorisation work and strictly restricting the institutions and personnel at all levels to carry out business activities within the scope of authority granted the management requirements of prohibiting the overstepping of authority to engage in business activities were further clarified at the institutional level; 2023 Annual Report 303 – F-264 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 54 Financial risk management (continued) (d) Operational risk (continued) – through consistent legal responsibility framework taking strict disciplinary actions against non-compliance in order to ensure accountability; – promoting the culture establishments throughout the organisation; building a team of operational risk management strength training and performance appraisal management in raising risk management awareness; – strengthening cash and account management in accordance with the relevant policies and procedures intensifying the monitoring of suspicious transactions. Ensure our staff are well-equipped with the necessary knowledge and basic skills on anti-money laundering through continuous training; – Disaster backup systems and recovery plans covering all the important activities in order to minimize any unforeseen interruption. Insurance cover is arranged to mitigate potential losses associated with certain disruptive events.In addition to the above the Group improves its operational risk management information systems on an ongoing basis to efficiently identify evaluate monitor control and report its level of operational risk. The Group’s management information system has the functionalities of recording and capturing lost data and events of operational risk to further support operational risk control and self-assessment as well as monitoring of key risk indicators. 55 Capital Adequacy Ratio Capital adequacy ratio reflects the Group’s operational and risk management capability and it is the core of capital management. The Group considers its strategic development plans business expansion plans and risk variables in conducting its scenario analysis stress testing and other measures to forecast plan and manage capital adequacy ratio.The Group’s capital management objectives are to meet the legal and regulatory requirements and to prudently determine the capital adequacy ratio under realistic exposures with reference to the capital adequacy ratio levels of leading global banks and the Group’s operating situations.From 1 January 2013 the Group commenced the computation of its capital adequacy ratios in accordance with the Regulation Governing Capital of Commercial Banks (Provisional) and other relevant regulations promulgated by the former CBIRC in the year of 2012. According to the requirements for credit risk the capital requirement was measured using the weighting method. The market risk was measured by adopting the standardised approach and the operational risk was measured by using the basic indicator approach. From 1 January 2019 on the Group calculates the default risk assets of the counterparties of derivatives in accordance with the Regulations on Measuring the Risk Assets of the Counterparties of Derivative Instruments promulgated by the former CBIRC in 2018. The requirements pursuant to these regulations may have certain differences comparing to those applicable in Hong Kong and other jurisdictions.The Group’s management monitors the Group’s and the Bank’s capital adequacy regularly based on regulations issued by the former CBIRC. The required information is filed with National Financial Regulatory Administration by the Group and the Bank quarterly. 304 China CITIC Bank Corporation Limited – F-265 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 55 Capital Adequacy Ratio (continued) The Group’s ratios calculated based on the relevant requirements promulgated by the former CBIRC are listed as below. 31 December 31 December 20232022 Core Tier-One capital adequacy ratio 8.99% 8.74% Tier-One capital adequacy ratio 10.75% 10.63% Capital adequacy ratio 12.93% 13.18% Components of capital base Core Tier-One capital: Share capital 48967 48935 Capital reserve 59410 59172 Other comprehensive income and qualified portion of other equity instruments 7224 1505 Surplus reserve 60992 48932 General reserve 105127 98103 Retained earnings 320802 293956 Qualified portion of non-controlling interests 8287 7992 Total core Tier-One capital 610809 558595 Core Tier-One capital deductions: Goodwill (net of related deferred tax liability) (926) (903) Other intangible assets other than land use right (net of related deferred tax liability) (4727) (3831) Other deductible amounts of net deferred tax assets depending on Bank’s future earnings – (1998) Net core Tier-One capital 605156 551863 Other Tier-One capital (Note (i)) 118313 119614 Tier-One capital 723469 671477 Tier-Two capital: Qualified portion of Tier-Two capital instruments issued and share premium 69995 89987 Surplus allowance for loan impairment 73674 68481 Qualified portion of non-controlling interests 2715 2142 Net capital base 869853 832087 Total risk-weighted assets 6727713 6315506 Note: (i) As at 31 December 2023 the Group’s other Tier-One capital included preference shares perpetual bonds issued by the Bank (Note 42) and non-controlling interests (Note 48). 2023 Annual Report 305 – F-266 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 56 Fair value Fair value estimates are generally subjective in nature and are made as of a specific point in time based on the characteristics of the financial instruments and relevant market information. The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date. This level includes listed equity instruments and debt instruments on exchanges and exchange-traded derivatives.Level 2: I nputs other than quoted prices included within Level 1 are observable for assets or liabilities either directly or indirectly. A majority of the debt securities classified as level 2 are Renminbi bonds. The fair values of these bonds are determined based on the valuation results provided by China Central Depository & Clearing Corporate Limited. This level also includes part of the bills rediscounting and forfeiting in loans and advances part of the investment management products managed by securities companies and trust investment plans as well as a majority of over-the-counter derivative contracts. Foreign exchange forward and swaps interest rate swap and foreign exchange options use discount cash flow evaluation method and the valuation model of which includes Forward Pricing Model Swap Model and Option Pricing Model. Bills rediscounting forfeiting investment management products managed by securities companies and trust investment plans use discount cash flow evaluation method to estimate fair value. Input parameters are sourced from the open market such as Bloomberg and Reuters.Level 3: Inputs for assets or liabilities are based on unobservable parameters. This level includes equity instruments and debt instruments with one or more than one significant unobservable parameter. Management determines the fair value through inquiring from counterparties or using the valuation techniques. The model incorporates unobservable parameters such as discount rate and market price volatilities.The fair value of the Group’s financial assets and financial liabilities are determined as follows: – If traded in active markets fair values of financial assets and financial liabilities with standard terms and conditions are determined with reference to quoted market bid prices and ask prices respectively; – If not traded in active markets fair values of financial assets and financial liabilities are determined in accordance with generally accepted pricing models or discounted cash flow analysis using prices from observable current market transactions for similar instruments. If there were no available observable current market transactions prices for similar instruments quoted prices from counterparty are used for the valuation and management performs analysis on these prices. Discounted cash flow analysis using the applicable yield curve for the duration of the instruments is used for derivatives other than options and option pricing models are used for option derivatives.The Group has established an independent valuation process for financial assets and financial liabilities. The Financial Market Department the Financial Institution Department and the Investment Bank Department are responsible for the valuation of financial assets and financial liabilities. The Risk Management Department performs an independent review of the valuation methodologies inputs assumptions and valuation results. The Operations Department records the accounting for these items according to the result generated from the valuation process and accounting policies.The Finance and Accounting Department prepares the disclosure of the financial assets and financial liabilities based on the independently reviewed valuation.The Group’s valuation policies and procedures for different types of financial instruments are approved by the Risk Management Committee. Any change to the valuation policies or the related procedures must be reported to the Risk Management Committee for approval before they are implemented.For the year ended 31 December 2023 there was no significant change in the valuation techniques or inputs used to determine fair value measurements. 306 China CITIC Bank Corporation Limited – F-267 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 56 Fair value (continued) (a) Financial assets and financial liabilities not measured at fair value Financial assets and liabilities not carried at fair value of the Group include cash and balances with central banks deposits with banks and non-bank financial institutions placements with and loans to banks and non- bank financial institutions financial assets held under resale agreements loans and advances to customers at amortised cost financial investments at amortised cost borrowings from central banks deposits from banks and non-bank financial institutions placements from banks and non-bank financial institutions financial assets sold under repurchase agreements deposits from customers and debt securities issued.Except for the items shown in the tables below the maturity dates of aforesaid financial assets and liabilities are within a year or are mainly floating interest rates as a result their carrying amounts are approximately equal to their fair value.Carrying values Fair values 31 December 31 December 31 December 31 December 2023202220232022 Financial assets: Financial investments — at amortised cost 1085598 1135452 1093861 1141092 Financial liabilities: Debt securities issued — certificates of deposit (not for trading purpose) issued 1430 1047 1430 1047 — debt securities issued 140599 118255 141123 114609 — subordinated bonds issued 77781 94714 78722 95813 — certificates of interbank deposit issued 705316 720446 694130 704197 — convertible corporate bonds 40855 40744 44666 44688 2023 Annual Report 307 – F-268 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 56 Fair value (continued) (a) Financial assets and financial liabilities not measured at fair value (continued) Fair value of financial assets and liabilities above at fair value hierarchy is as follows: 31 December 2023 Level 1 Level 2 Level 3 Total Financial assets: Financial investments — at amortised cost 8885 871585 213391 1093861 Financial liabilities: Debt securities issued — certificates of deposit (not for trading purpose) issued – – 1430 1430 — debt securities issued 4671 136452 – 141123 — subordinated bonds issued 7255 71467 – 78722 — certificates of interbank deposit issued – 694130 – 694130 — convertible corporate bonds issued – – 44666 44666 31 December 2022 Level 1 Level 2 Level 3 Total Financial assets: Financial investments — at amortised cost 7248 886459 247385 1141092 Financial liabilities: Debt securities issued — certificates of deposit (not for trading purpose) issued – – 1047 1047 — debt securities issued 11163 103446 – 114609 — subordinated bonds issued 3462 92351 – 95813 — certificates of interbank deposit issued – 704197 – 704197 — convertible corporate bonds issued – – 44688 44688 308 China CITIC Bank Corporation Limited – F-269 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 56 Fair value (continued) (b) Financial assets and financial liabilities measured at fair value Level 1 Level 2 Level 3 Total (Note (i)) (Note (i)) (Note (ii)) As at 31 December 2023 Recurring fair value measurements Assets Loans and advances to customers at fair value through other comprehensive income — loans – 58163 – 58163 — discounted bills – 515664 – 515664 Loans and advances to customers at fair value through current profit or loss — loans – – 5558 5558 Financial investments at fair value through profit or loss — investment funds 105538 271297 44319 421154 — debt securities 19608 81428 5465 106501 — certificates of deposit – 75790 – 75790 — wealth management 514 2098 1433 4045 — equity instruments 892 14 5428 6334 Financial investments at fair value through other comprehensive income — debt securities 139599 737350 475 877424 — certificates of deposit 1117 3805 – 4922 Financial investments designated at fair value through other comprehensive income — equity instruments 173 – 4634 4807 Derivative financial assets — interest rate derivatives 15 14641 – 14656 — currency derivatives 27 29845 – 29872 — precious metals derivatives – 147 – 147 Total financial assets measured at fair value 267483 1790242 67312 2125037 Liabilities Financial liabilities at fair value through profit or loss — short position in debt securities 8 519 – 527 — structured products – – 1061 1061 Derivative financial liabilities — interest rate derivatives 18 14342 – 14360 — currency derivatives 148 26600 – 26748 — precious metals derivatives – 742 – 742 Total financial liabilities measured at fair value 174 42203 1061 43438 2023 Annual Report 309 – F-270 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 56 Fair value (continued) (b) Financial assets and financial liabilities measured at fair value (continued) Level 1 Level 2 Level 3 Total (Note (i)) (Note (i)) (Note (ii)) As at 31 December 2022 Recurring fair value measurements Assets Loans and advances to customers at fair value through other comprehensive income — loans – 54851 – 54851 — discounted bills – 508142 – 508142 Loans and advances to customers at fair value through current profit or loss — loans – – 3881 3881 Financial investments at fair value through profit or loss — investment funds 141302 262741 27915 431958 — debt securities 17670 58067 4953 80690 — certificates of deposit – 35543 – 35543 — wealth management products 1058 303 155 1516 — equity instruments 2562 – 5325 7887 Financial investments at fair value through other comprehensive income — debt securities 118342 658690 406 777438 — certificates of deposit 15135 6366 – 21501 — investments management products managed by securities companies – – – – Financial investments designated at fair value through other comprehensive income — equity instruments 292 – 4836 5128 Derivative financial assets — interest rate derivatives 28 14931 – 14959 — currency derivatives 105 29068 – 29173 — precious metals derivatives – 250 – 250 — credit derivatives – 1 – 1 Total financial assets measured at fair value 296494 1628953 47471 1972918 Liabilities Financial liabilities at fair value through profit or loss — short position in debt securities 406 106 – 512 — structured products – – 1034 1034 Derivative financial liabilities — interest rate derivatives 58 14829 – 14887 — currency derivatives 310 28470 – 28780 — precious metals derivatives – 598 – 598 Total financial liabilities measured at fair value 774 44003 1034 45811 310 China CITIC Bank Corporation Limited – F-271 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 56 Fair value (continued) (b) Financial assets and financial liabilities measured at fair value (continued) Notes: (i) During the current period there were no significant transfers amongst Level 1 Level 2 and Level 3 of the fair value hierarchy.(ii) The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in the Level 3 fair value hierarchy: Assets Liabilities Financial assets Financial assets at fair value designated at fair Financial liabilities Financial assets at through other value through other at fair value fair value through comprehensive comprehensive Loans and advances through profit profit or loss income income to customers Total or loss Total As at 1 January 2023 38348 406 4836 3881 47471 (1034) (1034) Total gains or losses — in profit or loss 770 – – 25 795 – – — in comprehensive income – 397 61 – 458 – – Purchases 18523 333 91 1612 20559 – – Settlements (2020) (678) (359) (72) (3129) – – Transfer in/out 806 13 – – 819 – – Exchange effect 218 4 5 112 339 (27) (27) As at 31 December 2023 56645 475 4634 5558 67312 (1061) (1061) For unlisted equity investments fund investments bond investments structured products the Group determines the fair value through counterparties’ quotations and valuation techniques etc. Valuation techniques include discounted cash flow analysis and the market comparison approach etc. The fair value measurement of these financial instruments may involve important unobservable inputs such as credit spread and liquidity discount etc. The fair value of the financial instruments classified under level 3 is not significantly influenced by the reasonable changes in these unobservable inputs. 57 Related parties (a) Relationship of related parties (i) The Group is controlled by CITIC Financial Holding Co. Ltd (incorporated in Mainland China) which owns 65.37% of the Bank’s shares. The ultimate parent of the Group is CITIC Group (incorporated in Mainland China).(ii) Related parties of the Group include subsidiaries joint ventures and associates of CITIC Financial Holding Co. Ltd and CITIC Group. The Bank entered into banking transactions with its subsidiaries at arm’s length in the ordinary course of business. These transactions are eliminated on consolidation.China National Tobacco Corporation (“CNTC”) and Xinhu Zhongbao Co. Ltd. have a non-executive director on the Board of Directors of the Bank which can exert significant influence on the Bank and constitute a related party of the Bank. 2023 Annual Report 311 – F-272 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 57 Related parties (continued) (b) Related party transactions The Group entered into transactions with related parties in the ordinary course of its banking businesses including lending assets transfer (i.e. issuance of asset-backed securities in the form of public placement) wealth management investment deposit settlement and clearing off-balance sheet transactions and purchase sale and leases of property. These banking transactions were conducted under normal commercial terms and conditions and priced at the relevant market rates prevailing at the time of each transaction.The major related party transaction between the Group and related parties are submitted in turn to the board of directors for deliberation and the relevant announcements have been posted on the websites of the Shanghai Stock Exchange the Hong Kong Stock Exchange and the Bank.In addition transactions during the relevant year and the corresponding balances outstanding at the reporting dates are as follows: Year ended 31 December 2023 Ultimate holding Other major company and equity holders Associates and affiliates and subsidiaries joint ventures Profit and loss Interest income 5063 837 315 Fee and commission income and other operating income/expense 335 134 2 Interest expense (2278) (2887) (25) Net trading gains/(losses) 111 (18) – Other service fees (2214) (863) (89) Year ended 31 December 2022 Ultimate holding company and Other major Associates and affiliates equity holders joint ventures Note (i) Profit and loss Interest income 3171 1318 997 Fee and commission income and other operating income 258 122 4 Interest expense (2081) (3240) (30) Net trading loss (477) 73 – Other service fees (2870) (979) (2) 312 China CITIC Bank Corporation Limited – F-273 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 57 Related parties (continued) (b) Related party transactions (continued) 31 December 2023 Ultimate holding Other major company and equity holders Associates and affiliates and subsidiaries joint ventures Assets Gross loans and advances to customers 45584 17512 – Less: allowance for impairment losses on loans and advances (989) (70) – Loans and advances to customers (net) 44595 17442 – Deposits with banks and non-bank financial institutions – – 29506 Placements with and loans to banks and non- bank financial institutions 33850 – – Derivative financial assets 546 – – Financial assets held under resale agreement 3000 – – Investment in financial assets — at fair value through profit or loss 3255 – – — at amortised cost 17435 2325 – — at fair value through other comprehensive income 4360 1223 – — designated at fair value through other comprehensive income 460 – – Investments in associates and joint ventures – – 6942 Right-of-use assets 32 – – Other assets 709 2 3 Liabilities Deposits from banks and non-bank financial institutions 53424 1307 125 Derivative financial liabilities 424 – – Deposits from customers 75466 157974 1 Debt securities issued – – – Lease liabilities 73 2 – Other liabilities 93 – 23 Off-balance sheet items Guarantees and letters of credit 5187 8821 – Acceptances 1913 – – Nominal amount of derivatives financial instruments 160188 – – 2023 Annual Report 313 – F-274 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 57 Related parties (continued) (b) Related party transactions (continued) 31 December 2022 Ultimate holding Other major company and equity holders Associates and affiliates and subsidiaries joint ventures Assets Gross loans and advances to customers 35316 19032 – Less: allowance for impairment losses on loans and advances (1074) (302) – Loans and advances to customers (net) 34242 18730 – Deposits with banks and non-bank financial institutions 1 – 33712 Placements with and loans to banks and non- bank financial institutions 25810 – – Derivative financial assets 505 – – Financial assets held under resale agreement Investment in financial assets — at fair value through profit or loss 4428 – – — at amortised cost 16573 4065 – — at fair value through other comprehensive income 4153 1688 – — designated at fair value through other comprehensive income 450 – – Investments in associates and joint ventures – – 6302 Right-of-use assets Other assets 825 2 – Liabilities Deposits from banks and non-bank financial institutions 55167 492 663 Derivative financial liabilities 591 – – Deposits from customers 45849 84698 230 Debt securities issued 350 – – Lease liabilities 72 2 – Other liabilities 324 – – Off-balance sheet items Guarantees and letters of credit 3499 4789 – Acceptances 3177 114 – Nominal amount of derivatives financial instruments 193962 – – Note: (i) Other major equity holders include CNTC and Xinhu Zhongbao Co. Ltd.The related party transactions and balances between the Group and CNTC Xinhu Zhongbao disclosed above fell into the period when related party relationship exists. During the year ended 31 December 2023 the transactions between the Group and the subsidiaries of CNTC were not significant. 314 China CITIC Bank Corporation Limited – F-275 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 57 Related parties (continued) (c) Key management personnel and their close family members and related companies Key management personnel are those persons who have the authority and responsibility for planning directing and controlling the activities of the Group directly or indirectly including directors supervisors and executive officers.The Group entered into banking transactions with key management personnel and their close family members and those companies controlled or jointly controlled by them in the normal course of business. Other than those disclosed below there was no material transactions and balances between the Group and these individuals their close family members or those companies controlled or jointly controlled by them.The aggregate amount of relevant loans outstanding as at 31 December 2023 to directors supervisors and executive officers amounted to RMB0.57 million (as at 31 December 2022: RMB0.69 million).The aggregated compensations for directors supervisors and executive officers of the Bank during the year ended 31 December 2023 amounted to RMB27.14million (year ended 31 December 2022: RMB29.42 million).(d) Supplementary defined contribution plan The Group has established a supplementary defined contribution plan for its qualified employees which is administered by CITIC Group (Note 36(b)).(e) Transactions with state-owned entities in the PRC The Group operates in an economic regime currently predominated by entities directly or indirectly owned by the PRC government through its government authorities agencies affiliations and other organisations (collectively referred to as “state-owned entities”).Transactions with state-owned entities including CNTC’s indirect subsidiaries include but are not limited to the following: – lending and deposit taking; – taking and placing of inter-bank balances; – derivative transactions; – entrusted lending and other custody services; – insurance and securities agency and other intermediary services; – sale purchase underwriting and redemption of bonds issued by state-owned entities; – purchase sale and leases of property and other assets; and – rendering and receiving of utilities and other services.These transactions are conducted in the ordinary course of the Group’s banking business on terms similar to those that would have been entered into with non-state-owned entities. The Group has also established its pricing strategy and approval processes for major products and services such as loans deposits and commission income.The pricing strategy and approval processes do not depend on whether the customers are state-owned entities or not. The Directors are of opinion that none of these transactions are material related party transactions that require separate disclosure. 2023 Annual Report 315 – F-276 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 58 Structured entities (a) Unconsolidated structured entities sponsored and managed by third parties The Group invests in unconsolidated structured entities which are sponsored and managed by other entities for investment return and records trading gains or losses and interest income therefrom. These unconsolidated structured entities primarily include wealth management products trust investment plans investment management products investment funds and asset-backed securities.The following table sets out an analysis of the carrying amounts of interests held by the Group as at 31 December 2023 in the structured entities sponsored by third party institutions as well as an analysis of the line items in the consolidated annual statement of financial position under which relevant assets are recognized: 31 December 2023 Maximum loss Carrying amount exposure Investments in Investments in financial assets financial assets Investments in at fair value at fair value financial assets through other through profit at amortised comprehensive or loss costs income Total Wealth management product 4045 – – 4045 4045 Investment management products managed by securities companies – 22908 – 22908 22908 Trust investment plans – 204840 – 204840 204840 Asset-backed securities 912 123158 19666 143736 143736 Investment funds 421154 – – 421154 421154 Total 426111 350906 19666 796683 796683 31 December 2022 Maximum loss Carrying amount exposure Investments in Investments in financial assets financial assets Investments in at fair value at fair value financial assets through other through profit at amortised comprehensive or loss costs income Total Wealth management product of other banks 1516 – – 1516 1516 Investment management products managed by securities companies – 39628 – 39628 39628 Trust investment plans – 222819 – 222819 222819 Asset-backed securities 1335 252525 44697 298557 298557 Investment funds 431958 – – 431958 431958 Total 434809 514972 44697 994478 994478 The maximum exposures to risk in the above wealth management products trust investment plans investment management products investment funds and asset-backed securities managed by securities companies and trust investment funds are the carrying value of the assets held by the Group at the reporting date. The maximum exposures to risk in the asset-backed securities are the amortised cost or fair value of the assets held by the Group at the reporting date in accordance with the line items under which these assets are presented in the consolidated annual statement of financial position. 316 China CITIC Bank Corporation Limited – F-277 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 58 Structured entities (continued) (b) Unconsolidated structured entities sponsored and managed by the Group Unconsolidated structured entities sponsored and managed by the Group mainly include non-principal guaranteed wealth management products. The wealth management products invest in a range of primarily fixed-rate assets most typically money market instruments debt securities and loan assets. As the manager of these wealth management products the Group invests on behalf of its customers in assets as described in the investment plan related to each wealth management product and receives fee and commission income.As at 31 December 2023 the total assets invested by these outstanding non-principal guaranteed wealth management products issued by the Group amounted to RMB1728406 million (31 December 2022: RMB1577077 million).During the year ended 31 December 2023 the Group’s interest in these wealth management products included fee and commission income of RMB3462 million (year ended 31 December 2022: RMB8523 million).The Group enters into repo transactions at market interest rates with these wealth management products and the outstanding balance of these transactions was represented the Group’s maximum exposure to the wealth management products. During the year ended 31 December 2023 net interest income which related to repo transactions entered into by the Group with these wealth management products were RMB149 million (year ended 31 December 2022: RMB72 million) In order to achieve a smooth transition and steady development of the wealth management business in 2023in accordance with the requirements of the “Guiding Opinions on Regulating the Asset Management Businessof Financial Institutions” the Group continues to promote net-value-based reporting of its asset management products and dispose of existing portfolios.As at 31 December 2023 assets of these wealth management products amounting to RMB187083million (31 December 2022: RMB233528 million) were invested in investments in which certain subsidiaries and associates of the CITIC Group acted as trustees. 59 Transfers of financial assets For the year ended 31 December 2023 the Group entered into transactions which involved securitisation transactions and transfers of non-performing financial assets.These transactions were entered into in the normal course of business by which recognized financial assets were transferred to third parties or structured entities. Transfers of assets may give rise to full or partial derecognition of the financial assets concerned. On the other hand where transferred assets do not qualify for derecognition as the Group has retained substantially all the risks and rewards of these assets the Group continues to recognize the transferred assets.Details of the financial assets sold under repurchase agreements are set forth in Note 34. Details of securitisation transactions and non-performing financial assets transfer transactions conducted by the Group for the year ended 31 December 2023 totaled RMB45172 million (year ended 31 December 2022: RMB34212 million) are set forth below.Securitisation transactions During the year ended 31 December 2023 the Group through securitisation transferred financial assets at the original cost of RMB17510 million which qualified for full de-recognition (year ended 31 December 2022:RMB14994 million which qualified for full de-recognition). 2023 Annual Report 317 – F-278 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 59 Transfers of financial assets (continued) Loan and other Financial assets transfers During the year ended 31 December 2023 the Group also transferred loan and other financial assets of book value before impairment of RMB27662 million through other types of transactions (year ended 31 December 2022: RMB19218 million). RMB19272 million of this balance (year ended 31 December 2022: RMB5628 million) was non-performing loans. RMB7990 million of this balance (year ended 31 December 2022: RMB13590 million) was non-performing financial investments. RMB400 million of this balance (year ended 31 December 2022: nil) was Bond financing. The Group carried out assessment based on the transfer of risks and rewards of ownership and concluded that these transferred assets qualified for full de-recognition. 60 Offsetting financial assets and financial liabilities Financial assets and financial liabilities are offset and the net amount is reported in the consolidated annual statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.As at 31 December 2023 the amount of the financial assets and financial liabilities subject to enforceable master netting arrangements or similar agreements are not material to the Group. 61 Annual statements of financial position and changes in equity of the Bank Statement of financial position 31 December 31 December 20232022 Assets Cash and balances with central banks 413366 472441 Deposits with banks and non-bank financial institutions 67014 63712 Precious metals 11674 5985 Placements with and loans to banks and non-bank financial institutions 187695 190693 Derivative financial assets 25120 22347 Financial assets held under resale agreements 97780 11295 Loans and advances to customers 5114597 4760238 Financial investments 2460003 2394927 — at fair value through profit or loss 606972 553863 — at amortised cost 1086156 1137654 — at fair value through other comprehensive income 762773 699157 — designated at fair value through other comprehensive income 4102 4253 Investments in subsidiaries and joint ventures 33821 33060 Property plant and equipment 34316 33870 Right-of-use assets 9707 9956 Intangible assets 4071 3206 Deferred tax assets 50781 53088 Other assets 55300 48242 Total assets 8565245 8103060 318 China CITIC Bank Corporation Limited – F-279 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 61 Annual statements of financial position and changes in equity of the Bank (continued) Statement of financial position (continued) 31 December 31 December 20232022 Liabilities Borrowings from central banks 273126 119334 Deposits from banks and non-bank financial institutions 930090 1146264 Placements from banks and non-bank financial institutions 24216 19374 Financial liabilities at fair value through profit or loss 519 290 Derivative financial liabilities 22436 22792 Financial assets sold under repurchase agreements 442491 251685 Deposits from customers 5155140 4854059 Accrued staff costs 21297 20680 Taxes payable 3353 7420 Debt securities issued 952909 968086 Lease liabilities 9219 9363 Provisions 10759 9618 Other liabilities 36070 35797 Total liabilities 7881625 7464762 Equity Share capital 48967 48935 Preference shares 118060 118076 Capital reserve 61790 61598 Other comprehensive income 1867 (1736) Surplus reserve 60992 54727 General reserve 101140 96906 Retained earnings 290804 259792 Total equity 683620 638298 Total liabilities and equity 8565245 8103060 2023 Annual Report 319 – F-280 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 61 Annual statements of financial position and changes in equity of the Bank (continued) Statement of changes in equity Other Other equity Capital comprehensive Surplus General Retained Share capital instruments reserve income reserve reserve earnings Total equity As at 1 January 2023 48935 118076 61598 (1736) 54727 96906 259792 638298 (i) Profit for the year – – – – – – 62651 62651 (ii) Other comprehensive income – – – 3361 – – – 3361 Total comprehensive income – – – 3361 – – 62651 66012 (iii) Investor capital — Capital injection by issuing convertible corporate bonds 32 (16) 192 – – – – 208 (iv) Profit appropriations — Appropriations to surplus reserve – – – – 6265 – (6265) – — Appropriations to general reserve – – – – – 4234 (4234) – — Dividend distribution to ordinary shareholders of the Bank – – – – – – (16110) (16110) — Dividend distribution to preference shareholders – – – – – – (1428) (1428) — Interest paid to holders of perpetual bonds – – – – – – (3360) (3360) (v) Transfers within the owners’ equity — Other comprehensive income transferred to retained earnings – – – 242 – – (242) – As at 31 December 2023 48967 118060 61790 1867 60992 101140 290804 683620 Other Preference Capital comprehensive Surplus General Retained Share capital shares reserve income reserve reserve earnings Total equity As at 1 January 2022 48935 118076 61598 4524 48937 94430 229886 606386 (i) Net profit – – – – – – 57895 57895 (ii) Other comprehensive income – – – (6417) – – – (6417) Total comprehensive income – – – (6417) – – 57895 51478 (iii) Profit appropriations — Appropriations to surplus reserve – – – – 5790 – (5790) – — Appropriations to general reserve – – – – – 2476 (2476) – — Dividend distribution to ordinary shareholders of the bank – – – – – – (14778) (14778) — Dividend distribution to preference shareholders – – – – – – (1428) (1428) — In terest paid to holders of perpetual bonds – – – – – – (3360) (3360) (iv) Transfers within the owners’ equity — Other comprehensive income transferred to retained earnings – – – 157 – – (157) – As at 31 December 2022 48935 118076 61598 (1736) 54727 96906 259792 638298 320 China CITIC Bank Corporation Limited – F-281 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 62 Benefits and interests of directors and supervisors (a) Relationship of related parties For the year ended 31 December 2023 Emoluments paid or receivable in respect of services as director or supervisor of the Group Emoluments paid or receivable in respect of director or Remunerations supervisor’s paid or other services receivable in connection Employer’s in respect of with the Allowances contribution accepting office management of Discretionary Housing and benefits to retirement as director and the affairs of Fees Salary bonuses allowance in kind benefit scheme supervisor the Group Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Executive directors Fang Heying Note (i) – – – – – – – – – Liu Cheng – 1624 420 – 47 261 – – 2352 Non-executive directors Cao Guoqiang Note (i) – – – – – – – – – Huang Fang Note (i) – – – – – – – – – Wang Yankang Note (i) – – – – – – – – – Independent non-executive directors Liu Tsz Bun Bennett 299 – – – – – – – 299 Song FangXiu 52 – – – – – – – 52 Wang Huacheng 70 – – – – – – – 70 Zhou Bowen 90 – – – – – – – 90 Emoluments paid or receivable in respect of services as director or supervisor of the Group Emoluments paid or receivable in respect of director or Remunerations supervisor’s paid or other services receivable in connection Employer’s in respect of with the Allowances contribution accepting office management of Discretionary Housing and benefits to retirement as director and the affairs of Fees Salary bonuses allowance in kind benefit scheme supervisor the Group Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Supervisors Li Rong – 434 810 – 47 261 – – 1552 Cheng Pusheng – 424 820 – 47 261 – – 1552 Chen Panwu – 414 1271 – 47 261 – – 1993 Zeng Yufang – 345 620 – 53 245 – – 1263 Wei Guobin 260 – – – – – – – 260 Sun Qi Xiang 260 – – – – – – – 260 Liu Guoling 260 – – – – – – – 260 Former Directors and Supervisors resigned in 2023 Guo Danghuai(Note (ii)) – 1293 310 – 47 175 – – 1825 Zhu Hexin (Note (ii)) – – – – – – – – – He Cao (Note (ii)) 200 – – – – – – – 200 Chen Lihua (Note (ii)) 215 – – – – – – – 215 Qian Jun (Note (ii)) 253 – – – – – – – 253 2023 Annual Report 321 – F-282 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 62 Benefits and interests of directors and supervisors (continued) (a) Relationship of related parties (continued) For the year ended 31 December 2022 Emoluments paid or receivable in respect of services as director or supervisor of the Group Emoluments paid or receivable in respect of Remunerations director or paid or supervisor’s receivable other services in Employer’s in respect of connection with contribution accepting office the management Discretionary Housing Allowances and to retirement as director and of the affairs of Fees Salary bonuses allowance benefits in kind benefit scheme supervisor the Group Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Executive directors Fang Heying Note (i) – – – – – – – – – Liu Cheng – 1620 120 – 43 244 – – 2027 Guo Danghuai – 1512 133 – 43 244 – – 1932 Non-executive directors Zhu Hexin Note (i) – – – – – – – – – Cao Guoqiang Note (i) – – – – – – – – – Huang Fang Note (i) – – – – – – – – – Wang Yankang Note (i) – – – – – – – – – Independent non-executive directors He Cao 300 – – – – – – – 300 Chen Lihua 280 – – – – – – – 280 Qian Jun 310 – – – – – – – 310 Liu Tsz Bun Bennett 150 – – – – – – – 150 Emoluments paid or receivable in respect of services as director or supervisor of the Group Emoluments paid or receivable in respect of Remunerations director or paid or supervisor’s receivable other services in Employer’s in respect of connection with contribution accepting office the management Discretionary Housing Allowances and to retirement as director and of the affairs of Fees Salary bonuses allowance benefits in kind benefit scheme supervisor the Group Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Supervisors Li Rong – 390 847 – 43 244 – – 1524 Cheng Pusheng – 380 843 – 43 243 – – 1509 Chen Panwu – 375 822 – 43 244 – – 1484 Zeng Yufang – 340 580 – 51 219 – – 1190 Wei Guobin 260 – – – – – – – 260 Sun Qi Xiang 260 – – – – – – – 260 Liu Guoling 260 – – – – – – – 260 Former Directors and Supervisors resigned in 2022 Li Gang (Note (ii)) – 400 698 – 43 247 – – 1388 322 China CITIC Bank Corporation Limited – F-283 –Chapter 9 Notes to the Consolidated Annual Financial Statements For the year ended 31 December 2023 (Amounts in millions of Renminbi unless otherwise stated) 62 Benefits and interests of directors and supervisors (continued) (a) Relationship of related parties (continued) Notes: (i) Mr. Fang Heying Mr. Cao Guoqiang Ms. Huang Fang and Mr. Wang Yankang did not receive any emoluments from the Bank in 2023. Their salary is borne by the main common shareholders of the Bank. Two of the four directors are appointed by CITIC Limited and CITIC Group (“Parent Companies”). Their emoluments were paid by the Parent Companies in 2023. The other two directors are appointed respectively by Xinhu Zhongbao Co. Ltd. and CNTC. Their emolument allocations are not disclosed due to the difficulty to apportion the services provided by the directors to the Bank.(ii) Mr. Guo Danghuai resigned in October 2023 Mr. Zhu Hexin resigned in April 2023 Mr. He Cao resigned in August 2023 Ms. Chen Lihua resigned in October 2023 Mr. Qian Jun resigned in October 2023.(b) Other benefits and interests No direct or indirect retirement benefits and termination benefits were paid to directors as at 31 December 2023 (as at December 2022: Nil). For the year ended 31 December 2023 and 31 December 2022 the balance of loans and advances from the Group to Directors Supervisors or certain controlled body corporates and connected entities of the Directors or Supervisors was not significant.No significant transactions arrangements and contracts in relation to the Group’s business to which the Company was a party and in which a director of the Company had a material interest whether directly or indirectly subsisted at the end of the year or at any time during the year 2023 (2022: Nil). 2023 Annual Report 323 – F-284 –China CITIC Bank Corporation Limited Consolidated Statement of Profit or Loss and Other Comprehensive Income For the Period of Three Months Ended 31 March 2024 (Amounts in millions of Renminbi unless otherwise stated) January – January – March 2024 March 2023 (Unaudited) (Unaudited) Interest income 78731 79090 Interest expense (43771) (42464) Net interest income 34960 36626 Fee and commission income 9389 9462 Fee and commission expense (1013) (916) Net fee and commission income 8376 8546 Net trading gain 1606 1692 Net gain from investment securities 8433 4100 Net hedging income 1 – Other net operating income 193 288 Operating income 53569 51252 Operating expenses (15061) (14739) Net operating profit before impairment 38508 36513 Credit impairment losses (16819) (14109) Impairment losses on other assets (26) (91) Share of profit of associates and joint ventures 251 198 Profit before tax 21914 22511 Income tax expense (2523) (3066) Profit for the period 19391 19445 Profit attributable to: Equity holders of the Bank 19191 19144 Non-controlling interests 200 301 – F-285 –January – January – March 2024 March 2023 (Unaudited) (Unaudited) Other comprehensive income net of tax i. Items that will not be reclassified to profit or loss (net of tax): – Fair value changes on financial investments designated at fair value through other comprehensive income 15 (30) ii. Items that may be reclassified subsequently to profit or loss (net of tax): – Other comprehensive income transferable to profit or loss under equity method 17 18 – Fair value changes on financial assets at fair value through other comprehensive income 3301 1360 – Credit impairment allowance on financial assets at fair value through other comprehensive income 12 (70) – Exchange difference on translation of financial statements denominated in foreign currency 952 (677) – Others – (4) Other comprehensive income net of tax 4297 597 Total comprehensive income for the period 23688 20042 Total comprehensive income attributable to Equity holders of the Bank 23489 19755 Non-controlling interests 199 287 Earnings per share attributable to the ordinary shareholders of the Bank Basic earnings per share (RMB) 0.39 0.39 Diluted earnings per share (RMB) 0.38 0.35 – F-286 –China CITIC Bank Corporation Limited Consolidated Statement of Financial Position As at 31 March 2024 (Amounts in millions of Renminbi unless otherwise stated) 31 March 31 December 20242023 (Unaudited) (Audited) Assets Cash and balances with central banks 379719 416442 Deposits with banks and non-bank financial institutions 86753 81075 Precious metals 8036 11674 Placements with and loans to banks and non-bank financial institutions 280307 237742 Derivative financial assets 45963 44675 Financial assets held under resale agreements 76641 104773 Loans and advances to customers 5466525 5383750 Financial investments – at fair value through profit or loss 569478 613824 – at amortized cost 1055155 1085598 – at fair value through other comprehensive income 872649 888677 – designated at fair value through other comprehensive income 4808 4807 Investments in associates and joint ventures 7218 6945 Investment properties 537 528 Property plant and equipment 38577 38309 Right-of-use assets 10607 10643 Intangible assets 3997 4595 Goodwill 942 926 Deferred tax assets 51158 52480 Other assets 111241 65021 Total assets 9070311 9052484 – F-287 –31 March 31 December 20242023 (Unaudited) (Audited) Liabilities Borrowings from central banks 277453 273226 Deposits from banks and non-bank financial institutions 906930 927887 Placements from banks and non-bank financial institutions 76367 86327 Financial liabilities at fair value through profit or loss 1261 1588 Derivative financial liabilities 42722 41850 Financial assets sold under repurchase agreements 214065 463018 Deposits from customers 5488529 5467657 Accrued staff costs 17645 22420 Taxes payable 4636 3843 Debt securities issued 1189387 965981 Lease liabilities 10318 10245 Provisions 10674 10846 Deferred tax liabilities 2 1 Other liabilities 45641 42920 Total liabilities 8285630 8317809 – F-288 –31 March 31 December 20242023 (Unaudited) (Audited) Equity Share capital 53293 48967 Other equity instruments 115992 118060 Capital reserve 83530 59400 Other comprehensive income 8355 4057 Surplus reserve 60992 60992 General reserve 105196 105127 Retained earnings 339741 320619 Total equity attributable to equity holders of the Bank 767099 717222 Non-controlling interests 17582 17453 Total equity 784681 734675 Total liabilities and equity 9070311 9052484 Approved and authorized for issue by the board of directors on 29 April 2024.Fang Heying Liu Cheng Chairman Executive Director Executive Director President Xue Fengqing (Company stamp) Head of the Finance and Accounting Department – F-289 –China CITIC Bank Corporation Limited Consolidated Statement of Cash Flows For the Period of Three Months Ended 31 March 2024 (Amounts in millions of Renminbi unless otherwise stated) January – January – March 2024 March 2023 Unaudited Unaudited Operating activities Profit before tax 21914 22511 Adjustments for: – revaluation gains on investments derivatives and investment properties (1973) (2170) – investment gains (5707) (1928) – net gain from disposal of property plant and equipment intangible assets and other assets (17) (4) – unrealized foreign exchange (gains)/losses (1044) 758 – credit impairment losses 16819 14109 – impairment losses on other assets 26 91 – depreciation and amortization 1324 1112 – interest expense on debt securities issued 6899 6198 – depreciation of right-of-use assets and interest expense on lease liabilities 883 915 – income tax paid (3248) (4989) Subtotal 35876 36603 – F-290 –January – January – March 2024 March 2023 Unaudited Unaudited Changes in operating assets and liabilities: Decrease/(Increase) in balances with central banks 30319 (3575) Decrease in deposits with banks and non-bank financial institutions 14161 1082 Increase in placements with and loans to banks and non-bank financial institutions (55671) (7773) Decrease/(Increase) in financial assets held for trading 25775 (60167) Decrease/(Increase) in financial assets held under resale agreements 28332 (54378) Increase in loans and advances to customers (91560) (204668) Increase in borrowings from central banks 3918 33832 Decrease in deposits from banks and non-bank financial institutions (20641) (7905) (Decrease)/Increase in placements from banks and non-bank financial institutions (10872) 13082 (Decrease)/Increase in financial liabilities at fair value through profit or loss (345) 1480 Decrease in financial assets sold under repurchase agreements (249248) (76444) Increase in deposits from customers 11750 342778 Increase in other operating assets (48728) (11112) Decrease in other operating liabilities (6205) (15568) Subtotal (369015) (49336) Net cash flows from operating activities (333139) (12733) – F-291 –January – January – March 2024 March 2023 Unaudited Unaudited Investing activities Proceeds from disposal and redemption of investments 875269 640202 Proceeds from disposal of property plant and equipment land use rights and other assets 20 12 Cash received from equity investment income 136 146 Payments on acquisition of investments (854688) (549346) Payments on acquisition of property plant and equipment land use rights and other assets (1795) (1221) Net cash flows from investing activities 18942 89793 Financing activities Cash received from debt securities issued 531114 206904 Cash paid for redemption of debt securities issued (279165) (274734) Interest paid on debt securities issued (6584) (5912) Cash paid for dividends (70) (67) Cash paid in connection with other financing activities (774) (806) Net cash flows from financing activities 244521 (74615) Net (decrease)/increase in cash and cash equivalents (69676) 2445 Cash and cash equivalents as at 1 January 249002 307871 Effect of exchange rate changes on cash and cash equivalents 2333 (996) Cash and cash equivalents as at 31 March 181659 309320 Cash flows from operating activities include: Interest received 78320 81332 Interest paid not including interest paid on debt securities issued (35468) (39650) – F-292 –THE BANK China CITIC Bank Corporation Limited 6-30/F and 32-42/F Building No. 1 10 Guanghua Road Chaoyang District Beijing 100020 PRC FISCAL AGENT REGISTRAR Citicorp International Limited Citibank N.A. London Branch 40/F Champion Tower c/o 1 North Wall Quay 3 Garden Road Dublin 1 Ireland Central Hong Kong PRINCIPAL PAYING AGENT CMU LODGING AND AND TRANSFER AGENT PAYING AGENT Citibank N.A. London Branch Citicorp International Limited Citigroup Centre Canada Square 9/F Citi Tower One Bay East Canary Wharf 83 Hoi Bun Road Kwun Tong London E14 5LB Kowloon Hong Kong United Kingdom LEGAL ADVISERS To the Issuer To the Arranger and Dealers as to English law as to English law Clifford Chance Allen Overy Shearman Sterling 27th Floor Jardine House 9th Floor One Connaught Place Three Exchange Square Hong Kong Hong Kong To the Issuer To the Arranger and Dealers as to PRC law as to PRC law Jingtian & Gongcheng East & Concord Partners 34/F Tower 3 China Central Place 20-25/F Landmark Building Tower 1 77 Jianguo Road 8 Dongsanhuan Beilu Beijing PRC Chaoyang District Beijing PRC INDEPENDENT AUDITORS OF THE BANK FOR THE YEARS ENDED CURRENT AUDITOR 31 DECEMBER 2021 AND 2022 PricewaterhouseCoopers KPMG Certified Public Accountants Certified Public Accountants Registered Public Interest Entity Auditor 8th Floor Prince’s Building 22/F Prince’s Building 10 Chater Road Central Hong Kong Central Hong KongIMPORTANT NOTICE THIS OFFERING IS AVAILABLE ONLY TO INVESTORS WHO ARE ADDRESSEES OUTSIDE OF THE UNITED STATES AND (IN THE CASE OF NOTES OFFERED OR SOLD IN RELIANCE ON CATEGORY 2 OF REGULATION S) ARE NOT U.S. PERSONS.IMPORTANT: You must read the following disclaimer before continuing. The following disclaimer applies to the attached pricing supplement (the “Pricing Supplement”). You are advised to read this disclaimer carefully before accessing reading or making any other use of Pricing Supplement. In accessing the Pricing Supplement you agree to be bound by the following terms and conditions including any modifications to them from time to time each time you receive any information from us as a result of such access.Confirmation of your representation: The Pricing Supplement is being sent to you at your request and by accepting the e- mail and accessing the attached document you shall be deemed to represent to the Managers (as defined in the Pricing Supplement) or China CITIC Bank Corporation Limited London Branch (the “Issuer”) that (1) you and any customers yourepresent are not U.S. persons (as defined in Regulation S under the U.S. Securities Act of 1933 as amended (the “SecuritiesAct”)) and that the e-mail address that you gave us and to which this e-mail has been delivered is not located in the United States its territories or possessions and (2) that you consent to the delivery of the attached and any amendments or supplements thereto by electronic transmission.The attached document has been made available to you in electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of transmission and consequently none of the Bank the Issuer the Managers the agents named herein (the “Agents”) nor their respective affiliates and their respective directors officers employees representatives agents and each person who controls the Bank the Issuer a Manager an Agent or their respective affiliates accepts any liability or responsibility whatsoever in respect of any discrepancies between the document distributed to you in electronic format and the hard copy version available to you on request from the Managers.THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND THE SECURITIES MAY NOT BE OFFERED OR SOLD OR (IN THE CASE OF SECURITIES IN BEARER FORM) DELIVERED WITHIN THE UNITED STATES OR (IN THE CASE OF NOTES BEING SOLD OR OFFERED IN RELIANCE ON CATEGORY 2 OF REGULATION S) TO OR FOR THE ACCOUNT OR BENEFIT OF U.S.PERSONS EXCEPT PURSUANT TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS. 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If a jurisdiction requires that the offering be made by a licensed broker or dealer and a Manager or any affiliate of it is a licensed broker or dealer in that jurisdiction the offering shall be deemed to be made by it or such affiliate on behalf of the Issuer in such jurisdiction.You are reminded that you have accessed the Pricing Supplement on the basis that you are a person into whose possession the Pricing Supplement may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not nor are you authorised to deliver this document electronically or otherwise to any other person. If you have gained access to this transmission contrary to the foregoing restrictions you are not allowed to purchase any of the securities described in the attached.Actions that you may not take: If you receive this document by e-mail you should not reply by e-mail to this document and you may not purchase any securities by doing so. Any reply e-mail communications including those you generate by using the “Reply” function on your e-mail software will be ignored or rejected.YOU ARE NOT AUTHORISED TO AND YOU MAY NOT FORWARD OR DELIVER THE PRICING SUPPLEMENT ELECTRONICALLY OR OTHERWISE TO ANY OTHER PERSON OR REPRODUCE SUCH PRICING SUPPLEMENT IN ANY MANNER WHATSOEVER. ANY FORWARDING DISTRIBUTION OR REPRODUCTION OF THE PRICING SUPPLEMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS DIRECTIVE MAY RESULT IN A VIOLATION OF THE SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS.You are responsible for protecting against viruses and other destructive items. If you receive this document by e-mail your use of this e-mail is at your own risk and it is your responsibility to take precautions to ensure that it is free from viruses and other items of a destructive nature. 0111498-0000063 HKO1: 2007380268.3 1PRICING SUPPLEMENT UK MIFIR product governance/Professional investors and ECPs only target market – Solely for the purposes of each manufacturer’s product approval process the target market assessment in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is only eligible counterparties as defined in the FCA Handbook Conduct of Business Sourcebook (“COBS”) and professional clients as defined in Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (“UK MiFIR”); and (ii) all channels for distribution of the Notes to eligible counterparties and professional clients are appropriate. Any person subsequently offering selling or recommending the Notes (a “distributor”) should take into consideration the manufacturers’ target market assessment; however adistributor subject to the FCA Handbook Product Intervention and Product Governance Sourcebook (the “UKMiFIR Product Governance Rules”) is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturers’ target market assessment) and determining appropriate distribution channels.Pricing Supplement dated 2 July 2024 China CITIC Bank Corporation Limited London Branch (a branch of China CITIC Bank Corporation Limited a joint stock company incorporated in the People’s Republic of China with limited liability) Issue of U.S.$300000000 Floating Rate Notes due 2027 (the “Notes”) under the U.S.$5000000000 Medium Term Note Programme (the “Programme”) This document constitutes the Pricing Supplement for the Notes described herein. This document must be read in conjunction with the Offering Circular dated 18 June 2024 (the “Offering Circular”). Full information on the Issuer and the offer of the Notes is only available on the basis of the combination of this Pricing Supplement and the Offering Circular.Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions (the “Conditions”) set forth in the Offering Circular.This document is for distribution to professional investors (as defined in Chapter 37 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited) (the “Professional Investors”) only.The Stock Exchange of Hong Kong Limited (“HKSE”) has not reviewed the contents of this document other than to ensure that the prescribed form disclaimer and responsibility statements and a statement limiting distribution of this document to Professional Investors only have been reproduced in this document. Listing of the Programme and the Notes on HKSE is not to be taken as an indication of the commercial merits or credit quality of the Programme the Notes or the Issuer the Bank or the Group or quality of disclosure in this document.Hong Kong Exchanges and Clearing Limited and HKSE take no responsibility for the contents of this document make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.Notice to Hong Kong investors: The Issuer confirms that the Notes are intended for purchase by Professional Investors only and will be listed on the HKSE on that basis. Accordingly the Issuer confirms that the Notes are not appropriate as an investment for retail investors in Hong Kong. Investors should carefully consider the risks involved. 0111498-0000063 HKO1: 2007380268.3 2This document (together with the Offering Circular) includes particulars given in compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited for the purpose of giving information with regard to the Issuer the Bank or the Group. The Issuer accepts full responsibility for the accuracy of the information contained in this document and confirms having made all reasonable enquiries that to the best of its knowledge and belief there are no other facts the omission of which would make any statement herein misleading. 1. Issuer: China CITIC Bank Corporation Limited London Branch 2. (i) Series Number: 03 (ii) Tranche Number 01 (If fungible with an existing Series details of that Series including the date on which the Notes become fungible.) 3. Specified Currency or Currencies: United States dollars (“U.S.$”) 4. Aggregate Nominal Amount: U.S.$300000000 5. (i) Issue Price: 100.00 per cent. of the Aggregate Nominal Amount (ii) Gross proceeds: U.S.$300000000 (iii) Use of proceeds: An amount equal to the net proceeds from the issuance of the Notes will be used to finance and/or refinance in full or in part the eligible green assets or projects in accordance with Green Financing Framework 6. (i) Specified Denominations: U.S.$200000 and integral multiples of U.S.$1000 in excess thereof (ii) Calculation Amount: U.S.$1000 7. (i) Issue Date: 9 July 2024 (ii) Interest Commencement Issue Date Date: 8. Maturity Date: The Interest Payment Date falling on or nearest to 9 July 2027 9. Interest Basis: Compounded SOFR Index + 0.55 per cent. per annum Floating Rate (further particulars specified below) 10. Redemption/Payment Basis: Redemption at par 11. Change of Interest or Redemption / Not Applicable Payment Basis: 12. Put/Call Options: Not Applicable 0111498-0000063 HKO1: 2007380268.3 313. Status of the Notes: Senior Notes 14. Listing: Application will be made to The Stock Exchange of Hong Kong Limited (the expected effective listing date will be on or about 10 July 2024) 15. Method of distribution: Syndicated PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE 16. Fixed Rate Note Provisions Not Applicable 17. Floating Rate Note Provisions Applicable (i) Interest Period(s): Each period beginning on (and including) the Interest Commencement Date or any Specified Interest Payment Date and ending on (but excluding) the next Specified Interest Payment Date subject to adjustment in accordance with the Business Day Convention set out in (iv) below (ii) Specified Interest Payment 9 January 9 April 9 July and 9 October in each year Dates: commencing on 9 October 2024 and ending on the Maturity Date in each case subject to adjustment in accordance with the Business Day Convention set out in (iv) below (iii) Interest Period Date(s): Not Applicable (iv) Business Day Convention: Modified Following Business Day Convention (v) Business Centre(s) New York City (Condition 5(j)): (vi) Manner in which the Rate(s) of Screen Rate Determination (SOFR) Interest is / are to be determined: (vii) Party responsible for calculating The Principal Paying Agent shall be the Calculation Agent the Rate(s) of Interest and Interest Amount(s): (viii) Screen Rate Determination Not Applicable (Condition 5(b)(iii)(B)): (ix) Screen Rate Determination (SOFR) (Condition 5(b)(iii)(C)): - SOFR Benchmark: Compounded SOFR Index - Compounded Daily SOFR Not Applicable Method: - Interest Determination The fifth U.S. Government Securities Business Day prior to Date(s) the last day of each Interest Accrual Period - Lookback Days: Not Applicable 0111498-0000063 HKO1: 2007380268.3 4- SOFR Observation Shift Five (5) U.S. Government Securities Business Days Days: - Interest Payment Delay Not Applicable Days: - SOFR Rate Cut-Off Date: Not Applicable - SOFR IndexStart Five (5) U.S. Government Securities Business Day(s) - SOFR IndexEnd Five (5) U.S. Government Securities Business Day(s) (x) ISDA Determination (Condition Not Applicable 5(b)(iii)(A)): (xi) Margin(s): + 0.55 per cent. per annum (xii) Minimum Rate of Interest: Not Applicable (xiii) Maximum Rate of Interest: Not Applicable (xiv) Day Count Fraction Actual/360 (Condition 5(j)): (xv) Fall back provisions rounding Benchmark Discontinuation (SOFR) (Condition 5(b)(v)) provisions denominator and applies if a SOFR Benchmark Transition Event and its any other terms relating to the related SOFR Benchmark Replacement Date have method of calculating interest occurred.on Floating Rate Notes if different from those set out in the Conditions: 18. Zero Coupon Note Provisions Not Applicable 19. Index Linked Interest Note Not Applicable Provisions 20. Dual Currency Note Provisions Not Applicable PROVISIONS RELATING TO REDEMPTION 21. Call Option Not Applicable 22. Put Option Not Applicable 23. Final Redemption Amount of each U.S.$1000 per Calculation Amount Note 24. Early Redemption Amount (i) Early Redemption Amount(s) U.S.$1000 per Calculation Amount per Calculation Amount payable on redemption for taxation 0111498-0000063 HKO1: 2007380268.3 5reasons (Condition 6(c)) or an Event of Default (Condition 10 and/or the method of calculating the same (if required or if different from that set out in the Conditions): GENERAL PROVISIONS APPLICABLE TO THE NOTES 25. Form of Notes: Registered Notes Global Certificate exchangeable for Definitive Certificates in the limited circumstances specified in the Global Certificate 26. Financial Centre(s) (Condition 7)) or London and Hong Kong other special provisions relating to payment dates: 27. Talons for future Coupons or Receipts No to be attached to Definitive Notes (and dates on which such Talons mature): 28. Details relating to Partly Paid Notes: Not Applicable amount of each payment comprising the Issue Price and date on which each payment is to be made and consequences (if any) of failure to pay including any right of the Issuer to forfeit the Notes and interest due on late payment: 29. Details relating to Instalment Notes: Not Applicable 30. Redenomination renominalisation and Not Applicable reconventioning provisions: 31. Consolidation provisions: Not Applicable 32. Other terms or special conditions: Not Applicable DISTRIBUTION China CITIC Bank International Limited Agricultural 33. (i) If syndicated names of Bank of China Limited Hong Kong Branch ABCI Capital Managers: Limited Bank of China Limited London Branch Industrial and Commercial Bank of China Limited Singapore Branch Mizuho Securities Asia Limited Australia and New Zealand Banking Group Limited Bank of Communications Co. Ltd. Hong Kong Branch Barclays Bank PLC BNP Paribas China Construction Bank (Asia) Corporation Limited China Everbright Bank Co. Ltd.Hong Kong Branch China International Capital Corporation Hong Kong Securities Limited China Minsheng Banking Corp. Ltd. Hong Kong Branch China 0111498-0000063 HKO1: 2007380268.3 6Securities (International) Corporate Finance Company Limited CLSA Limited Citigroup Global Markets Limited CMB Wing Lung Bank Limited CNCB (Hong Kong) Capital Limited CTBC Bank Co. Ltd. The Hongkong and Shanghai Banking Corporation Limited ICBC Standard Bank Plc Industrial Bank Co. Ltd. Hong Kong Branch J.P. Morgan Securities plc Shanghai Pudong Development Bank Co. Ltd. Hong Kong Branch and Standard Chartered Bank (together the "Managers").(ii) Stabilisation Manager (if Any one of the Managers appointed and acting in its any): capacity as a stabilising manager other than China CITIC Bank International Limited 34. If non-syndicated name of Dealer: Not Applicable 35. U.S. Selling Restrictions Regulation S Category 2 36. Prohibition of Sales to EEA and UK Not Applicable Retail Investors: 37. Prohibition of Sales to UK Retail Not Applicable Investors: 38. Singapore Sales to Institutional Investors Applicable and Accredited Investors only 39. Additional selling restrictions: Not Applicable OPERATIONAL INFORMATION 40. ISIN Code: XS2846968670 41. Common Code: 284696867 42. CMU Instrument Number: Not Applicable 43. Legal Entity Identifier of the Issuer: 2138007VTXDM13PEUR82 44. Any clearing system(s) other than Not Applicable Euroclear Clearstream and the CMU and the relevant identification number(s): 45. Delivery: Delivery against payment 46. Additional Paying Agents (if any): Not Applicable GENERAL 47. The aggregate principal amount of Not Applicable Notes issued has been translated into U.S. dollars producing a sum of (for Notes not denominated in U.S. dollars): 0111498-0000063 HKO1: 2007380268.3 748. In the case of Registered Notes specify Dublin the location of the office of the Registrar if other than Hong Kong: 49. In the case of Bearer Notes specify the Not Applicable location of the office of the Fiscal Agent if other than London: 50. (i) Date of corporate approval(s) for Date of board resolutions of the Bank: 24 December 2021; the issuance of the Notes Date of shareholders resolutions of the Bank: 20 January 2022 (ii) Date of any regulatory approval The Certificate of Examination and Registration for for the issuance of the Notes Foreign Debts Borrowed by Enterprises dated 15 December 2023 granted by the NDRC to CITIC Group Corporation Limited (“CITIC Group”) pursuant to the NDRC Administrative Measures and CITIC Group’s authorisation dated 20 December 2023 authorising the Issuer to utilise the foreign debt quota granted by the NDRC. 51. Ratings: The Notes to be issued are expected to be rated A- by S&P Global Ratings 52. Hong Kong SFC Code of Conduct (i) Rebates Not Applicable (ii) Contact email addresses of the TMG_Syndicate@cncbinternational.com Overall Coordinators where fmd.dcm@abchina.com dcm.emea@uk.bankofchina.com underlying investor information dcm@bankcomm.com.hk ccba_dcm@asia.ccb.com in relation to omnibus orders dcm.cebhk@cebbank.com.hk should be sent CM_SYN_HK@cicc.com.cn ib.dcm.fig@clsa.com DCM.Omnibus@citi.com bondissuance@cmbwinglungbank.com dcm@cncbinvestment.com cmd_dcm@cibhk.com investor.info.hk.oc.bond.deals@jpmorgan.com Omnibus_Bond@hk.mizuho-sc.com SYNHK@sc.com (iii) Marketing and Investor As indicated in the Offering Circular Targeting Strategy LISTING APPLICATION This Pricing Supplement comprises the final terms required to list the issue of Notes described herein pursuant to the U.S.$5000000000 Medium Term Note Programme of China CITIC Bank Corporation Limited (中信 银行股份有限公司). 0111498-0000063 HKO1: 2007380268.3 8STABILISATION In connection with this issue one or more of the Managers named as Stabilisation Manager (or person(s) acting on behalf of any Stabilisation Manager(s)) in this Pricing Supplement may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However stabilisation may not necessarily occur. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the Notes is made and if begun may cease at any time but it must end no later than the earlier of 30 days after the issue date of the Notes and 60 days after the date of the allotment of the Notes. Any stabilisation action or overallotment must be conducted by the relevant Stabilisation Manager(s) (or person(s) acting on behalf of any Stabilisation Manager) in accordance with all applicable laws and rules.MATERIAL ADVERSE CHANGE STATEMENT Save as disclosed in the Offering Circular there has been no significant change in the financial or trading position of the Issuer or of the Group since 31 December 2023 and no material adverse change in the financial position or prospects of the Issuer or of the Group since 31 December 2023.RESPONSIBILITY The Issuer accepts responsibility for the information contained in this Pricing Supplement. 0111498-0000063 HKO1: 2007380268.3 9Signed on behalf of CHINA CITIC BANK CORPORATION LIMITED LONDON BRANCH By: __(_S_.D__.)_________________ Duly authorised Project Blossom 2024 – Signature Page to Pricing SupplementSCHEDULE DESCRIPTION OF THE ISSUER The Issuer the Bank’s first overseas branch directly managed by the Head Office opened for business on 21 June 2019. It is engaged in deposits business and loans businesses such as bilateral lending syndicated lending trade finance and cross-border M&A finance financial market businesses such as agency spot foreign exchange trading money market transactions derivative transactions offshore RMB trading bond repurchase and investment in and issuance of bonds and certificates of deposits as well as financial services such as cross- border RMB payment settlement.The Issuer was established in order to develop the Bank’s cross-border business centre overseas capital trading centre international talent cultivation centre and business synergy centre across the region covering Europe the Middle East and Africa. The Issuer plays and will continue to play an important role in the Bank’s international integrated financing services.In recent years based on the macroeconomy and international geopolitical situations the Issuer strengthened risk control and compliance management deepened the collaboration between domestic and overseas operations gave full play to its functions as the financing centre in EMEA and expanded cooperation with its overseas subsidiaries in one-stop comprehensive services. It further sought for market opportunities resulted from the fluctuations of macro-economy and stayed active in the money market and forex market. It undertook the forex transactions of the Head Office during European trading sessions provided customers with efficient and convenient forex trading services throughout the day actively performed its duties as an interbank forex market maker and offered the market continuous two-way quotations. 0111498-0000063 HKO1: 2007380268.3 11RISK FACTORS The section entitled “Risk Factors” of the Offering Circular shall be supplemented with the following: The Notes being issued as green bonds may not be a suitable investment for all investors seeking exposure to green or other equivalently-labelled assets.In relation to the Framework (as defined in the section entitled “Description of the Green Bonds” of this Schedule) the Bank has engaged each of Moody’s Investors Service Sustainable Fitch and S&P Global Ratings to provide an independent second-party opinion (each a “Second-Party Opinion” and together the “Second-Party Opinions”).There is currently no market consensus on what precise attributes are required for a particular project to be defined as “green” and therefore no assurance can be provided to potential investors that the relevant Eligible Green Assets (as defined in the Framework) will continue to meet the relevant eligibility criteria. There can be no guarantee that adverse environmental and/or social impacts will not occur during the design construction commissioning and/or operation of any such green projects. Where any negative impacts are insufficiently mitigated green projects may become controversial and/or may be criticised by activist groups or other stakeholders. In addition while the Issuer will apply an amount equal to the net proceeds from the issue of the Notes to finance and/or refinance in full or in part the eligible green assets or projects in accordance with the Framework investors should note that the Bank has previously provided currently provides and may in the future provide financing to borrowers which are active in industries which may not be categorised as “green” or “sustainable”.None of the Second-Party Opinions are a recommendation to buy sell or hold securities and each Second- Party Opinion is only current as of its date of issue and is subject to certain disclaimers set out therein and may be updated suspended or withdrawn at any time. The Second-Party Opinions may not reflect the potential impact of all risks related to the Notes their marketability trading price or liquidity or any other factors that may affect the price or value of that series of Notes. Furthermore the Second-Party Opinions are for information purposes only and none of the Issuer the Bank the Group the Managers or any of their respective affiliates directors officers employees representatives advisers agents accepts any form of liability for the substance of the Second-Party Opinions and/or any liability for loss arising from the use of the Second-Party Opinions and/or the information provided in them. The Framework and the Second-Party Opinions are not incorporated into and do not form part of the Offering Circular or this Pricing Supplement.Any second-party opinion provider and providers of similar opinions certifications and validations are not currently subject to any specific regulatory or other regime or oversight. Any such opinion certification or validation is not nor should be deemed to be a recommendation by the Issuer the Bank the Group the relevant Managers or any of their respective affiliates directors officers employees representatives advisers or agents in relation to the Notes any second-party opinion provider or any other person to buy sell or hold the Notes. Noteholders have no recourse against the Issuer the Bank the Group any of the Managers or any of their respective affiliates directors officers employees representatives advisers agents or the provider of any such opinion certification or validation for the contents of any such opinion certification or validation which is only current as at the date it was initially issued. Prospective investors must determine for themselves the relevance of any such opinion certification or validation and/or the information contained therein and/or the provider of such opinion certification or validation for the purpose of any investment in the Notes. Any withdrawal of any such opinion certification or validation or any such opinion certification or validation attesting that the Group or the Issuer is not complying in whole or in part with any matters for which such opinion certification or validation is opining on or certifying on may have a material adverse effect on the value of the Notes and/or result in adverse consequences for certain investors with portfolio mandates to invest in securities to be used for a particular purpose. 0111498-0000063 HKO1: 2007380268.3 12Whilst the Issuer and the Bank have agreed to certain obligations relating to reporting and use of proceeds as described under the section headed “Description of the Green Bonds” of this Schedule if (i) the Issuer or the Bank were to fail to comply with such obligations or were to fail to use the proceeds of the issue of the Notesin the manner specified in this Pricing Supplement (as further described in the section entitled “Description ofthe Green Bonds” of this Schedule) and/or (ii) any Second-Party Opinions issued in connection with such Notes were to be withdrawn it would not (x) be an Event of Default under the Terms and Conditions of the Notes; (y) lead to an early redemption right of any Noteholder or obligation of the Issuer to redeem such Notes; or (z) result in any increased payments of interest principal or any other amounts under the Terms and Conditions of the Notes. Any failure to use an amount equal to the net proceeds of the issue of the Notes in connection with eligible green projects and/or any failure to meet or to continue to meet the investment requirements of certain investors with environmental and/or social concerns with respect to such Notes may affect the value and/or trading price of such Notes and/or may have consequences for certain investors with portfolio mandates to invest in green projects. In the event that the Notes are included in any dedicated “green” “environmental” “social” “sustainable” or other equivalently-labelled index no representation or assurance is given by the Issuer or the Bank or any Manager any of their respective affiliates directors officers employees representatives advisers or agents or any other person that such listing or admission or inclusion in such index satisfies any present or future investor expectations or requirements as regards to any investment criteria or guidelines with which such investor or its investments are required to comply whether by any present or future applicable law or regulations or by its own constitutive documents or other governing rules or investment portfolio mandates.None of the Issuer the Bank the Group the Managers or any of their respective affiliates directors officers employees representatives advisers or agents makes any representation as to (i) the suitability for any purpose of the Second-Party Opinions (ii) whether the Notes will meet investor criteria and expectations regarding environmental impact and sustainability performance for any investors (iii) the characteristics of Eligible Green Assets including their relevant environmental and sustainability criteria. None of the Managers or any of their respective affiliates directors officers employees representatives advisers or agents makes any representation as to whether an amount equal to the net proceeds will be used to finance and/or refinance in full or in part the eligible green assets or projects in accordance with the Framework (as further described in the section entitled “Description of the Green Bonds” of this Schedule). The Managers have not undertaken nor are responsible for any assessment or verification of the eligibility of the assets within the definition of Eligible Green Assets or the impact or monitoring of the use or allocation of proceeds from the offering of the Notes. None of the Managers nor any of their respective affiliates directors officers employees representatives advisers or agents accepts any responsibility for any environmental assessment of any Notes issued as green bonds or makes any representation or warranty or gives any assurance as to whether such Notes will meet any investor expectations or requirements regarding such “green” or similar labels. Each potential purchaser of the Notes should have regard to the relevant assets and eligibility criteria described under the sections headed “Description of the Green Bonds” of this Schedule and determine for itself the relevance of the information contained in this Schedule regarding the use of proceeds and its purchase of any Notes should be based upon such investigation as it deems necessary. Therefore the Notes may not be a suitable investment for all investors seeking exposure to green assets. The description of Eligible Green Assets provided elsewhere in this Schedule is for illustrative purposes only and no assurance can be provided that investment in assets with these specific characteristics will be made by the Issuer during the term of the Notes.The Bank and the Issuer are subject to risks relating to environmental social and governance (“ESG”) matters that could materially adversely affect its reputation business financial condition and results of operation.The Bank and the Issuer are subject to a variety of risks including reputational risk associated with ESG matters. Adverse incidents with respect to ESG activities could impact the Bank’s and the Issuer’s reputation and relationships with investors all of which could materially adversely affect its business and results of operations. For example the Bank may be subject to allegations of greenwashing (for example over-stating the credentials or environmental benefits of its projects or not delivering on commitments made). The Bank’s expectations estimates and aspirational statements regarding ESG matters including the potential 0111498-0000063 HKO1: 2007380268.3 13environmental impacts of its projects and initiatives involve known and unknown risks uncertainties and other factors beyond the Bank’s control that could cause the actual results to be different from such expectations estimates and aspirational statements. As a result there can be no assurance that the Bank’s or the Issuer’s ESG initiatives including the use of proceeds from the Notes and any further issuances of green notes/bonds will not be subject to heightened scrutiny or public commentary in the future. Such scrutiny or public commentary could materially adversely affect the Bank’s and the Issuer’s reputation business financial condition and results of operations and in particular could create legal and reputational risks and could have an adverse effect on the price or value of the Notes. 0111498-0000063 HKO1: 2007380268.3 14DESCRIPTION OF THE GREEN BONDS The Issuer plans to issue the Notes as green bonds. The Bank has established its Green Financing Framework (the “Framework”). The Framework has been developed to demonstrate the Bank’s intention to issue bonds loans certificate of deposits or any other similar forms of financing instruments (“GFTs”) and to fund projects that would deliver positive environmental impacts and foster sustainable practices.The Framework and the Second-Party Opinions are not incorporated into and do not form part of the Offering Circular or this Pricing Supplement. None of the Managers or any of their respective directors officers employees representatives advisers agents or affiliates accepts any responsibility for the contents of the Framework or the Second-Party Opinions.The Notes are aligned with the Green Bond Principles 2021 (with June 2022 Appendix 1) (the “Green BondPrinciples”) by the International Capital Markets Association (“ICMA”) or as they may subsequently be updated.USE OF PROCEEDS The Bank will exclusively allocate an amount at least equivalent to the net proceeds of the Notes to finance orrefinance in whole or in part new or existing projects which meet the eligibility criteria (the “EligibilityCriteria”) of the following categories (the “Eligible Green Asset Categories”) of eligible green assets (the “Eligible Green Assets”).The Bank expects the Notes to be fully allocated within 24 months from the date of issuance and on a best- efforts basis. A maximum of 36 months look-back period would apply for refinance projects. The proportion of finance and refinance for the Eligible Green Assets will be disclosed.Eligible Green Asset Categories Eligible Categories Eligibility Criteria and Technical Screening Criteria Reference to Green Environmental Objectives and Description and/or Actions prior the Taxonomy/Catalogue UNSDG Mapping Investment Renewable Energy Loans credits investments or The concentrated solar power China Green Bond Endorsed other types of financings to with a minimum 85% of power Projects Catalogue 3.2.1.1 ，Key Objectives: support: generation derived from solar 3.2.1.2 3.2.2.1 3.2.2.2 3.2.2.6 sources; and 3.2.3.2 Climate Change Mitigation The projects related to manufacture construction The geothermal with direct Common Ground Taxonomy installation development emissions below 100gCO2/kWh C2.3 C2.4 C2.8 D1.1 D1.3 upgrade and operation of 1) D1.7 and D1.8 renewable energy systems The transmission and including solar and wind power distribution infrastructure is (onshore/offshore) generation located on a system for which at facilities 2) geothermal energy 3) least 67% of its added energy storage system facilities generation capacity in the last 5 (i.e. batteries) and 4) electricity years falls below the low carbon transmission and distribution power threshold of infrastructure assets. 100gCO2/kWh Clean Transportation Loans credits investments or The transportation assets will China Green Bond Endorsed other types of financings to have zero direct tailpipe CO2 Projects Catalogue 5.5.1.5 and Key Objectives: support: emission; 5.5.4.1 Climate Change Mitigation The projects related to purchase Common Ground Taxonomy construction installation H1.1 and F2.4 Pollution Prevention and operation and maintenance of the Control 1) public transportation system (i.e. subways light railways tram public transportation vehicles and other urban rail transportation facilities) in urban and rural areas 2) new energy vehicles (i.e. electric and hydrogen) and 3) its 0111498-0000063 HKO1: 2007380268.3 15infrastructure such as electric vehicle charging and hydrogen filling stations.Green Building(1) Loans credits investments or U.S. Leadership in Energy and China Green Bond Endorsed other types of financings to Environmental Design (LEED) Projects Catalogue 5.2.1.2 and Key Objectives: support: – minimum certification of 5.2.1.5.Gold; or Climate Change Mitigation The projects(2) related to construction of new buildings BREEAM – minimum Natural Resource Conservation renovation and refurbishment (3) of certification level of Excellent; existing owned and/or managed or properties (including public service commercial residential Chinese Green Building and recreational) which meet the Evaluation Label(4) (GBL) – requirements of recognised green minimum certification level of 3 building certification standards. stars; or BEAM Plus – minimum certification level of Gold; (1) All eligible green building projects are required to obtain Green Building Certification Labels within 24 months after construction is completed. (2) For avoidance of doubt for new and/or existing buildings it should not include any direct fossil fuel heating and cooling sources. (3) For avoidance of doubt for renovation and refurbishment of existing properties projects it should improve at least one level to reach the green building certification mentioned in the technical screening criteria. In addition the proceeds will preferably allocated to renovation/refurbishment projects. (4) Assessment Standard for Green Building GB/T 50378-2019. Exclusion Criteria For the avoidance of doubt in any case the Eligible Green Assets shall exclude the assets that are involved in the following activities from consideration for eligibility: Activity considered as illegal under host country laws or regulations or international conventions and agreements or subject to international bans.Production or trade in weapons and munitions.Production or trade in alcoholic beverages (excluding beer and wine).Production or trade in tobacco.Gambling casinos and equivalent enterprises.Production or trade in radioactive materials. This does not apply to the purchase of medical equipment quality control (measurement) equipment and any equipment where any international financial company considers the radioactive source to be trivial and/or adequately shielded.Production or activities involving of forced labour and child labour. 0111498-0000063 HKO1: 2007380268.3 16 Palm oil related activities. Projects related to nuclear energy production.Projects related to fossil fuel production.Projects related to coal mining.Projects related to hydropower which installed capacity > 25MW.PROCESS FOR PROJECT EVALUATION AND SELECTION The Bank’s Eligible Green Assets evaluation and screening process is divided into two stages: (I) Preliminary screening stage and (II) Projects review and approval stage.I. Preliminary Screening The branches of the Bank will propose potential green projects and conduct a preliminary screening and classification of potential assets in accordance with the criteria and standards set out in the Framework. The preliminary potential assets list will be formed and submitted to the Bank’s headquarters for further review and approval.II. Review and Approval A Green Financing Working Group (the “GFWG”) has been established to confirm and monitor the Eligible Green Assets. The GFWG will review potential assets to determine their compliance with the Bank’s internal policy and the Eligible Green Asset Categories as described in the Framework and form an Eligible Green Assets list (the “Eligible Green Assets List”). The decision by each expert of the GFWG to form the Eligible Green Assets List must be unanimous.The GFWG will meet at least annually or when necessary to: Review the allocation of the proceeds to the Eligible Green Assets List and determine if any changes are necessary (i.e. if a project has amortised been prepaid sold or otherwise become ineligible).Removing loans from the Eligible Green Assets List if the Bank becomes aware of a loan ceasing to fulfil the Eligibility Criteria.Managing any future updates to the Framework including expansions to the list of Eligible Green Asset Categories and overseeing its implementation. 0111498-0000063 HKO1: 2007380268.3 17MANAGEMENT OF PROCEEDS The Bank will allocate an amount equal to the net proceeds of the Notes to finance or refinance the Eligible Green Assets which are selected according to the Eligibility Criteria of the evaluation and selection process outlined above.The net proceeds of the Notes will be deposited in the general funding accounts and earmarked for allocation towards the Eligible Green Assets. The Bank will establish a GFT allocation register to track the use of proceeds for the Notes.The register will contain information including the following: 1. Details of transactions: currency amount ISIN (if applicable) pricing date maturity date etc.; and 2. Eligible Green Assets allocation list information including: Eligible Green Asset Categories; Details of eligible projects financed such as project description project location ownership percentage total amount amount allocated settled currency etc.; Estimated environmental impact where applicable of the projects financed; The balance of unallocated proceeds; and The information of temporary investment for unallocated proceeds.The Bank will match the net proceeds raised from the Notes to the Eligible Green Assets during the time of the outstanding Notes annually or on a timely basis. Any balance of issuance net proceeds which are not yet allocated to Eligible Green Assets will be temporarily held in accordance with the Bank’s sound and prudent liquidity management practice. The remaining unallocated proceeds could be temporarily invested in green bonds issued by non-financial enterprises money market instruments with good credit rating and market liquidity in the domestic and international markets until they are allocated to Eligible Green Assets. The unallocated proceeds shall not be invested in high polluting high-carbon emission projects and as well as subject to exclusions criteria under the Framework.During the life of the Notes if the designated projects cease to fulfil the eligibility criteria the net proceeds will be re-allocated to replacement projects that comply with the eligibility criteria as soon as reasonably practicable.REPORTING For the Notes the Bank will publish and keep readily available category level disclosure Green Financing Report (the “Report”) of the previous year via the official website or through other channels where feasible such as annual reports and/or sustainability report. The Report will provide information on proceeds allocation and environmental impacts as at the time the Report is composed. The Report will provide annually or on a timely basis of the net proceeds to the Eligible Green Assets until the maturity of the Notes and thereafter in case of any material developments and issues related to the projects.Allocation Report The allocation report will include the following information at Note and eligible category levels where applicable: The aggregate amount allocated to the various Eligible Green Asset Categories; The temporary investments of unallocated proceeds; 0111498-0000063 HKO1: 2007380268.3 18 The remaining balance of proceeds which have not yet been allocated; The share of finance vs. refinance; The geographical distribution of the proceeds (on country level); The examples and brief description of Eligible Green Assets (subject to confidentiality disclosures).Impact Report The Bank will report the impacts arising from the Eligible Green Assets and provide the methodology and assumptions used for calculation of the impact indicators.The Bank will align the reporting with the project approach described in ICMA’s “Handbook – HarmonisedFramework for Impact Reporting (June 2023)” subject to the availability of suitable information and data.External review Pre-issuance The Bank has engaged each of Moody’s Investors Service Sustainable Fitch and S&P Global Ratings as external reviewers to provide a Second-Party Opinion on the Framework to review and confirm its alignment with the Green Bond Principles and Green Loan Principles. The Second-Party Opinions together with the Framework will publish on the public website. The Framework and the Second-Party Opinions are not incorporated into and do not form part of the Offering Circular or this Pricing Supplement. None of the Managers or any of their respective directors officers employees representatives advisers agents or affiliates accepts any responsibility for the contents of the Framework or the Second-Party Opinions.Post-issuance The Bank will engage an independent third party to provide assurance on the Report which will provide information on allocation and impacts until the maturity of the Notes. The assurance report will publish on the public website together with the Report. 0111498-0000063 HKO1: 2007380268.3 19OVERVIEW OF THE UK REGULATORY FRAMEWORK Prudential Regulation Authority As part of the Bank of England (the “BoE”) the Prudential Regulation Authority (the “PRA”) is the UK’s prudential regulator of deposit-takers insurers and major investment firms. These firms are referred to as PRA- authorised firms. The PRA regulates over 1400 firms and groups. This includes over 700 banks building societies credit unions and designated investment firms and over 600 insurers of all types (general insurers life insurers friendly societies mutuals the London market and insurance special purpose vehicles).Reflecting this role in international finance the PRA also supervises branches and subsidiaries of foreign banks from various jurisdictions.The PRA’s general primary objective is to promote the safety and soundness of PRA-authorised persons. The PRA’s supervisory approach is forward-looking and judgement-based and key to enabling the PRA to meet its strategy.The PRA adopts a proportional approach which focuses on the harm that firms can cause to the stability of the UK financial system. Also a primary objective of the PRA in relation to insurance firms is to contribute to the securing of an appropriate degree of protection for those who are or may become policyholders. The PRA’s secondary objective is to act so far as is reasonably possible in a way which facilitates effective competition in the markets for services provided by PRA-firms.The Prudential Regulation Committee is the body within the BoE responsible for exercising the BoE’s functions as the PRA. The Prudential Regulation Committee has twelve members consisting of the Governor of the BoE the Deputy Governor for Financial Stability of the BoE the Deputy Governor for Markets and Banking of the BoE the Deputy Governor for Prudential Regulation of the BoE the Chief Executive of the Financial Conduct Authority one member appointed by the Governor of the BoE with the approval of the Chancellor of the Exchequer and at least six members appointed by the Chancellor of the Exchequer. The Prudential Regulation Committee is independent in all its decision-making functions including making rules and the PRA’s most important supervisory and policy decisions.Financial Conduct Authority The Financial Conduct Authority (the “FCA”) was created by Parliament in 2013 as the regulator of the conduct of financial services in the UK. Its remit is broad. The FCA is the conduct regulator for around 50000 financial services firms in the UK. The FCA is also the prudential regulator for around 48000 firms. Around 18000 of these must meet the FCA’s specific prudential standards. The FCA (among other things): is responsible for the conduct of business regulation of all firms including those regulated for prudential matters by the PRA; and has market conduct regulatory functions with the exception of responsibility for systemically important infrastructure which is the responsibility of the BoE.The FCA’s strategic objective is to ensure that the relevant markets function well and its three operational objectives are to: secure an appropriate degree of protection for consumers; protect and enhance the integrity of the UK financial system; and promote effective competition in the interests of consumers in (among other things) the markets for regulated financial services. 0111498-0000063 HKO1: 2007380268.3 20The FCA is also obliged to discharge its general functions in a way that promotes competition. A memorandum of understanding between the FCA and the PRA describes how the two regulators co-ordinate their duties in a way that supports each regulator’s ability to advance its own objectives. A key principle for this co-operation given the regulators’ separate mandates for prudential and conduct regulation of PRA-authorised firms is that each authority should focus on the key risks to its own objectives while being aware of the potential for concerns of the other. 0111498-0000063 HKO1: 2007380268.3 21DIRECTORS SUPERVISORS AND SENIOR MANAGEMENT The section headed “Directors Supervisors and Senior Management” on pages 156 to 161 of the Offering Circular shall be supplemented with the following: The term of the sixth session of the board of directors of the Bank expired on the date of the 2023 annual general meeting which was held on 20 June 2024. The appointment of the seventh session of the board of directors of the Bank was approved at the 2023 annual general meeting. The term of office of the seventh session of the board of directors of the Bank is three years. Mr. Fang Heying and Mr. Liu Cheng were re- elected and Mr. Hu Gang was elected as executive directors of the Bank. Mr. Cao Guoqiang Ms. Huang Fang and Mr. Wang Yankang were re-elected as non-executive directors of the Bank. Mr. Liu Tsz Bun Bennett Mr.Zhou Bowen Mr. Wang Huacheng and Ms. Song Fangxiu were re-elected as independent non-executive directors of the Bank.Mr. Hu Gang is Party committee member vice president and chief risk officer of the Bank. Mr. Hu concurrently serves as a director of CITIC Bank International Limited. He used to be deputy head of the preparatory team for the establishment of the Bank’s Changsha Branch Party committee member and vice president of Changsha Branch; Party committee member vice president secretary of Party committee and president of the Bank’s Chongqing Branch; secretary of Party committee and president of the Bank’s Shanghai Branch; chief risk officer and head of the wholesale business of the Bank. Prior to that he successively worked for the Political Department of Hunan Provincial Procuratorate and served as deputy section chief at the Personnel Department of Hunan Provincial Party Committee Office assistant general manager and general manager of Beihaixiang Properties Development Company vice chairman of the company’s affiliated Hongdu Enterprise Company (both affiliated to Hunan Zhongli Industrial Group Co. Ltd.) and chairman of Changsha Xiangcai Urban Credit Cooperative in Hunan Province. Mr. Hu graduated from Hunan University with a doctoral degree in economics. He has over 20 years of experience in the Chinese banking industry and is a senior economist. Mr. Hu will take office as an executive director of the Bank after the regulatory authorities have approved his qualification as an executive director. 0111498-0000063 HKO1: 2007380268.3 22TAXATION The statements under the section “Taxation” on pages 174 to 178 of the Offering Circular do not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase own or dispose of the Notes and does not purport to deal with the tax consequences applicable to all categories of investors some of which may be subject to special rules. Investors should consult their own tax advisers regarding the tax consequences of an investment in the Notes.In addition such section headed “Taxation” on pages 174 to 178 of the Offering Circular shall be supplemented with the following: UNITED KINGDOM The comments below are of a general nature based on current UK tax law as applied in England and Wales and HM Revenue and Customs (“HMRC”) practice (which may not be binding on HMRC) in relation to the UK withholding tax treatment of payments of interest (as that term is understood for UK tax purposes) in each case as at the latest practicable date before the date of this Pricing Supplement and are not intended to be exhaustive. They assume that there will be no substitution of the Issuer and do not address the consequences of any such substitution. They relate only to the position of persons who hold their Notes as investments and only apply to persons who are absolute beneficial owners of the Notes. The comments below do not necessarily apply where the income is deemed for tax purposes to be the income of any other person and may not apply to certain classes of person such as dealers or certain professional investors. Any Noteholders who are in doubt as to their own tax position or who may be subject to tax in a jurisdiction other than the UK should consult their professional advisers. In particular Noteholders should be aware that the tax legislation of any jurisdiction where a Noteholder is resident or otherwise subject to taxation (as well as the jurisdiction discussed below) may have an impact on the tax consequences of an investment in the Notes including in respect of any income received from the Notes.Withholding tax on payments of interest on notes issued by the London branch of the Bank (“UK Notes”) References to “interest” in this section mean interest as understood for UK withholding tax purposes. Any redemption premium may be “interest” for these purposes although the position will depend upon the particular terms and conditions. For Notes issued at a discount the difference between the face value and the issue price will not generally be regarded as “interest” for these purposes.Whilst any UK Notes are and continue to be “quoted Eurobonds” within the meaning of Section 987 of the Income Tax Act 2007 (the “Act”) payments of interest by the Issuer on those UK Notes may be made without withholding or deduction for or on account of UK income tax. UK Notes will constitute “quoted Eurobonds” provided that and so long as such UK Notes carry a right to interest and are and continue to be listed on a “recognised stock exchange” within the meaning of section 1005 of the Act. The Stock Exchange of Hong Kong Limited is a recognised stock exchange. The UK Notes will satisfy this requirement if they carry a right to interest and are and remain officially listed in the Hong Kong Special Administrative Region of the People’s Republic of China in accordance with provisions corresponding to those generally applicable in EEA states and are admitted to trading on The Stock Exchange of Hong Kong Limited.Payment by a bank in the ordinary course of its business Payments of interest by the Issuer may be made without withholding or deduction for or on account of UK income tax provided that the Issuer is and continues to be a bank within the meaning of Section 991 of the Act and the interest on the UK Notes is paid in the ordinary course of its business within the meaning of Section 878 of the Act. In all other cases interest will generally be paid by the Issuer under deduction of UK income tax at the basic rate (currently 20 per cent.) subject to other exemptions and reliefs which may be available under domestic law or to any direction to the contrary from HMRC in respect of such relief as may be available pursuant to the provisions of any applicable double taxation treaty. 0111498-0000063 HKO1: 2007380268.3 23