Capital and Market Presence - The registered capital of Guangzhou Rural Commercial Bank is RMB 9,808,268,539.00[4] - The bank operates under the stock code 1551.HK on the Hong Kong Stock Exchange[4] - The company operates multiple subsidiaries across various provinces, including Beijing, Shandong, and Jiangsu, with a total of 15 listed branches[14] - The registered address for the subsidiaries spans from Beijing to Guangdong, indicating a broad geographical presence in China[17] Financial Performance - Net interest income for 2019 reached RMB 18,563.65 million, a 39.87% increase from RMB 13,271.65 million in 2018[23] - Total operating income increased by 14.47% to RMB 23,657.28 million in 2019, compared to RMB 20,666.67 million in 2018[23] - Net profit for 2019 was RMB 7,910.71 million, reflecting a 15.79% growth from RMB 6,832.16 million in 2018[23] - Total assets as of December 31, 2019, amounted to RMB 894,154.29 million, up from RMB 763,289.60 million in 2018, representing an increase of RMB 130,864.69 million[23] - Customer loans and advances net amount reached RMB 463,051.37 million, an increase of RMB 98,083.40 million from RMB 364,967.97 million in 2018[23] Operational Efficiency - The average return on total assets for 2019 was 0.95%, up from 0.91% in 2018[25] - The net interest margin improved to 2.66% in 2019, compared to 2.28% in 2018[25] - The cost-to-income ratio decreased to 27.25% in 2019 from 28.05% in 2018, indicating improved operational efficiency[25] Risk Management and Compliance - The bank's financial report highlights a commitment to improving corporate governance and transparency[3] - Emphasis on compliance and risk management will be strengthened to ensure operational safety and integrity[44] - The company implemented a comprehensive risk management framework, focusing on balancing scale, efficiency, and quality in its credit risk management[198] Strategic Goals and Future Outlook - Future outlook includes plans for new product development and technological advancements to enhance service offerings[3] - The bank aims to strengthen its market position through strategic mergers and acquisitions[3] - The bank aims to become a world-class bank as part of its long-term strategic goal, focusing on digital transformation and customer-centric services[42][44] Customer Growth and Services - The bank reported a significant increase in user data, reflecting a growing customer base[3] - The bank achieved rapid growth in personal savings deposits, ranking first in incremental deposits among peers in Guangzhou, with an increase in market share to second place compared to the previous year[146] - The bank successfully expanded the online consumer loan service from Guangzhou to the entire Guangdong province (excluding Shenzhen), enhancing customer experience and meeting growing consumer demand[147] Employee and Training Initiatives - The total number of employees increased to 12,668 by December 31, 2019, reflecting a growth of 21% compared to the previous year[187] - In 2019, the company organized over 450 training programs, covering more than 40,000 employee training sessions[189] Innovative Products and Technology - The company launched innovative products such as "Lianlian Loan" to support enterprises and reduce financing costs[141] - The company launched 33 information technology projects in 2019, focusing on integrating technology with business operations[185] - The bank enhanced its risk control and compliance management while leveraging fintech to support business growth and operational efficiency[144] Awards and Recognition - The bank received multiple awards for its financial market operations, including recognition as a top active trader in the interbank market and outstanding self-operated trader[151] - The bank's wealth management products received accolades, including the "2019 China Open-Ended Net Value Bank Wealth Management Product Award" and "2019 China High Net Worth Client Exclusive Wealth Management Product Award"[153]

[Company Overview](index=3&type=section&id=Company%20Overview) This section provides an overview of Guangzhou Rural Commercial Bank Co., Ltd. (GRCB), detailing its registration, capital, listing status, and key accolades received in H1 2019 [Legal Name and Basic Information](index=3&type=section&id=Legal%20Name%20and%20Basic%20Information) Guangzhou Rural Commercial Bank Co., Ltd. (GRCB) was established on December 9, 2009, with a registered capital of **RMB 9.808 billion**, and its H-shares are listed on the HKEX - The company's official Chinese name is Guangzhou Rural Commercial Bank Co., Ltd., and its English name is Guangzhou Rural Commercial Bank Co., Ltd. (GRCB)[4](index=4&type=chunk) - Registered capital is **RMB 9,808,268,539.00**[4](index=4&type=chunk) - H-shares are listed on The Stock Exchange of Hong Kong Limited, with the ticker GRCB (1551.HK)[4](index=4&type=chunk) - Offshore preference shares are listed as GRCB 19USDPREF (4618.HK)[4](index=4&type=chunk) [Major Honors in H1 2019](index=4&type=section&id=Major%20Honors%20in%20H1%202019) In H1 2019, GRCB received multiple domestic and international honors, including "China Top 500 Enterprises by Credit" and ranking 185th in "The Banker's Top 1000 World Banks" - Awarded the title of "**China Top 500 Enterprises by Credit**"[5](index=5&type=chunk) - Received the "**Top 10 Rural Commercial Bank Retail Bank Award**"[5](index=5&type=chunk) - Ranked **62nd** in the "**2018 Global Top 100 Banks for Invention Patents**"[5](index=5&type=chunk) - Ranked **185th** in The Banker's "**2019 Top 1000 World Banks**"[5](index=5&type=chunk) [Financial Data Summary](index=5&type=section&id=Financial%20Data%20Summary) This section summarizes GRCB's key financial data for H1 2019, covering operating performance, scale indicators, capital adequacy, profitability, and asset quality [Operating Performance](index=5&type=section&id=Operating%20Performance) In H1 2019, the Group achieved operating income of **RMB 10.80 billion**, a **32.11% year-on-year increase**, with net profit growing by **8.30%** to **RMB 3.673 billion**, primarily driven by significant growth in net interest income H1 2019 Operating Performance Overview | Item | Six Months Ended June 30, 2019 (RMB Million) | Six Months Ended June 30, 2018 (RMB Million) | Change (RMB Million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net interest income | 7,737.30 | 5,589.18 | 2,148.12 | 38.43 | | Net fee and commission income | 816.62 | 965.95 | (149.33) | (15.46) | | Operating income | 10,800.11 | 8,175.24 | 2,624.87 | 32.11 | | Profit before tax | 4,543.96 | 4,333.37 | 210.59 | 4.86 | | Net profit | 3,672.70 | 3,391.34 | 281.36 | 8.30 | | Net profit attributable to parent company shareholders | 3,591.55 | 3,321.64 | 269.91 | 8.13 | | Basic earnings per share (RMB) | 0.37 | 0.34 | 0.03 | 8.82 | [Scale Indicators](index=5&type=section&id=Scale%20Indicators) As of June 30, 2019, the Group's total assets reached **RMB 853.35 billion**, an **11.80% increase** from year-end, with double-digit growth in net customer loans and deposits, and a **25.33% increase** in total equity H1 2019 Scale Indicators Overview | Item | As of June 30, 2019 (RMB Million) | As of December 31, 2018 (RMB Million) | Change (RMB Million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total assets | 853,345.90 | 763,289.60 | 90,056.30 | 11.80 | | Of which: Net customer loans and advances | 434,412.07 | 364,967.97 | 69,444.10 | 19.03 | | Total liabilities | 783,685.67 | 707,708.53 | 75,977.14 | 10.74 | | Of which: Customer deposits | 618,863.96 | 542,335.16 | 76,528.80 | 14.11 | | Equity attributable to parent company shareholders | 64,967.29 | 52,861.33 | 12,105.96 | 22.90 | | Total equity | 69,660.23 | 55,581.07 | 14,079.16 | 25.33 | [Capital Adequacy Ratios](index=6&type=section&id=Capital%20Adequacy%20Ratios) As of June 30, 2019, the Group's capital adequacy ratio was **14.98%**, up **0.70 percentage points** from year-end, while the core Tier 1 capital adequacy ratio slightly decreased H1 2019 Capital Adequacy Ratios | Item | As of June 30, 2019 (%) | As of December 31, 2018 (%) | Change (%) | | :--- | :--- | :--- | :--- | | Core Tier 1 capital adequacy ratio | 9.83 | 10.50 | (0.67) | | Tier 1 capital adequacy ratio | 11.59 | 10.53 | 1.06 | | Capital adequacy ratio | 14.98 | 14.28 | 0.70 | [Profitability Ratios](index=6&type=section&id=Profitability%20Ratios) In H1 2019, the Group's net interest margin and net interest spread significantly improved, increasing by **0.40** and **0.51 percentage points** respectively, while the cost-to-income ratio substantially optimized H1 2019 Profitability Ratios | Item | Six Months Ended June 30, 2019 (%) | Six Months Ended June 30, 2018 (%) | Change (%) | | :--- | :--- | :--- | :--- | | Return on average total assets | 0.91 | 0.91 | 0.00 | | Return on average equity | 11.73 | 13.64 | (1.91) | | Net interest spread | 2.43 | 2.03 | 0.40 | | Net interest margin | 2.35 | 1.84 | 0.51 | | Net fee and commission income to operating income ratio | 7.56 | 11.82 | (4.26) | | Cost-to-income ratio | 24.33 | 33.64 | (9.31) | [Asset Quality Ratios](index=6&type=section&id=Asset%20Quality%20Ratios) As of June 30, 2019, the Group's non-performing loan ratio increased to **1.40%**, up **0.13 percentage points** from year-end, with both provision coverage and loan loss provision ratios decreasing H1 2019 Asset Quality Ratios | Item | As of June 30, 2019 (%) | As of December 31, 2018 (%) | Change (%) | | :--- | :--- | :--- | :--- | | Non-performing loan ratio | 1.40 | 1.27 | 0.13 | | Provision coverage ratio | 234.34 | 276.64 | (42.30) | | Loan loss provision ratio | 3.27 | 3.52 | (0.25) | [Other Ratios](index=6&type=section&id=Other%20Ratios) As of June 30, 2019, the Group's loan-to-deposit ratio was **72.49%**, an increase of **2.79 percentage points** from year-end H1 2019 Other Ratios | Item | As of June 30, 2019 (%) | As of December 31, 2018 (%) | Change (%) | | :--- | :--- | :--- | :--- | | Loan-to-deposit ratio | 72.49 | 69.70 | 2.79 | [Management Discussion and Analysis](index=8&type=section&id=Management%20Discussion%20and%20Analysis) This section provides a detailed analysis of the Group's financial performance, business operations, and risk management strategies for H1 2019 [H1 2019 Financial Review](index=8&type=section&id=H1%202019%20Financial%20Review) This section reviews the Group's H1 2019 financial performance, analyzing key indicators from the income statement, balance sheet, loan quality, capital adequacy, and off-balance sheet items - In H1 2019, the Group achieved a pre-tax profit of **RMB 4.544 billion**, a **4.86% year-on-year increase**, and a net profit of **RMB 3.673 billion**, an **8.30% year-on-year increase**[430](index=430&type=chunk) - The steady growth in net profit was primarily due to the increase in net interest income[430](index=430&type=chunk) H1 2019 Key Income Statement Items Changes | Item | Six Months Ended June 30, 2019 (RMB Million) | Six Months Ended June 30, 2018 (RMB Million) | Change (RMB Million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net interest income | 7,737.30 | 5,589.18 | 2,148.12 | 38.43 | | Net fee and commission income | 816.62 | 965.95 | (149.33) | (15.46) | | Net trading gains | 2,000.07 | 2,570.85 | (570.78) | (22.20) | | Net gains/(losses) from financial investments | 211.53 | (1,041.12) | 1,252.65 | (120.32) | | Operating income | 10,800.11 | 8,175.24 | 2,624.87 | 32.11 | | Operating expenses | (2,701.05) | (2,841.51) | 140.46 | (4.94) | | Net credit impairment losses | (3,554.66) | (989.45) | (2,565.21) | 259.26 | [Net Interest Income](index=9&type=section&id=Net%20Interest%20Income) In H1 2019, the Group's net interest income surged by **38.43%** to **RMB 7.737 billion**, accounting for **71.64%** of operating income, driven by asset structure adjustments, loan growth, and lower funding costs - Net interest income was **RMB 7.737 billion**, a year-on-year increase of **RMB 2.148 billion**, representing a **38.43% growth**[431](index=431&type=chunk)[432](index=432&type=chunk) - Net interest income accounted for **71.64%** of total operating income[431](index=431&type=chunk) - Net interest spread increased by **40 basis points** year-on-year to **2.43%**, and net interest margin increased by **51 basis points** year-on-year to **2.35%**[434](index=434&type=chunk)[442](index=442&type=chunk) - The change in interest income was primarily contributed by **RMB 1.858 billion** from scale factors and **RMB 0.054 billion** from interest rate factors[435](index=435&type=chunk) - The change in interest expense was primarily due to a **RMB 0.209 billion** decrease from scale factors and a **RMB 0.027 billion** decrease from interest rate factors[435](index=435&type=chunk) [Non-Interest Income](index=15&type=section&id=Non-Interest%20Income) In H1 2019, the Group's net fee and commission income decreased by **15.46%**, mainly due to lower consulting and advisory fees, while net trading gains and net gains from financial investments positively contributed - Net fee and commission income was **RMB 0.817 billion**, a year-on-year decrease of **RMB 0.149 billion**, or **15.46%**, primarily due to reduced consulting and advisory service fees[443](index=443&type=chunk) - Net trading gains were **RMB 2.000 billion**, mainly from interest income on financial investments measured at fair value through profit or loss[444](index=444&type=chunk) - Net gains from financial investments were **RMB 0.212 billion**, primarily from fair value changes of financial assets measured at fair value through other comprehensive income[444](index=444&type=chunk) [Operating Expenses](index=16&type=section&id=Operating%20Expenses) In H1 2019, the Group's operating expenses decreased by **4.94%** to **RMB 2.701 billion**, mainly due to lower staff costs, although depreciation and amortization significantly increased from new right-of-use assets - Operating expenses were **RMB 2.701 billion**, a year-on-year decrease of **RMB 0.140 billion**, or **4.94%**[446](index=446&type=chunk) - Staff costs were **RMB 1.649 billion**, a year-on-year decrease of **RMB 0.161 billion**, or **8.90%**, representing the largest component of operating expenses[447](index=447&type=chunk)[448](index=448&type=chunk) - Depreciation and amortization were **RMB 0.413 billion**, a year-on-year increase of **RMB 0.147 billion**, or **55.52%**, primarily due to depreciation of new right-of-use assets[450](index=450&type=chunk) [Impairment Losses](index=17&type=section&id=Impairment%20Losses) In H1 2019, the Group's net credit impairment losses significantly increased by **259.26%** to **RMB 3.555 billion**, mainly due to growth in loan balances and NPLs, and higher expected default probabilities for some financial investments H1 2019 Net Credit Impairment Losses | Item | Six Months Ended June 30, 2019 (RMB Million) | Six Months Ended June 30, 2018 (RMB Million) | Change (RMB Million) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Loans and advances | 2,152.86 | 987.21 | 1,165.65 | 118.08 | | Loans and advances measured at fair value through other comprehensive income | 366.30 | 23.29 | 343.01 | 1,472.78 | | Other | 1,035.50 | (21.05) | 1,056.55 | 5,019.24 | | Total | 3,554.66 | 989.45 | 2,565.21 | 259.26 | - The increase in impairment losses was mainly due to the growth in various loan balances and non-performing loan balances, as well as an increase in the expected default probability for some financial investments[452](index=452&type=chunk) [Income Tax Expense](index=17&type=section&id=Income%20Tax%20Expense) In H1 2019, income tax expense was **RMB 0.871 billion**, a year-on-year decrease of **RMB 0.071 billion**, primarily due to increased tax incentives, resulting in an effective tax rate of **19.17%** - Income tax expense was **RMB 0.871 billion**, a year-on-year decrease of **RMB 0.071 billion**, mainly due to increased tax incentives[453](index=453&type=chunk) - The effective income tax rate was **19.17%**[453](index=453&type=chunk) [Balance Sheet Analysis](index=18&type=section&id=Balance%20Sheet%20Analysis) As of June 30, 2019, the Group's total assets and liabilities both grew steadily, primarily driven by loans and advances and customer deposits, with total shareholders' equity significantly increasing due to preference share issuance - Total assets were **RMB 853.346 billion**, an increase of **RMB 90.056 billion** from year-end, representing an **11.80% growth**[455](index=455&type=chunk) - Total liabilities were **RMB 783.686 billion**, an increase of **RMB 75.977 billion** from year-end, representing a **10.74% growth**[464](index=464&type=chunk) - Equity attributable to parent company shareholders was **RMB 64.967 billion**, an increase of **RMB 12.106 billion** from year-end, representing a **22.90% growth**[424](index=424&type=chunk) [Assets](index=18&type=section&id=Assets) The Group's total assets grew steadily, primarily driven by increases in loans and advances and financial investments, while cash and balances with central banks decreased, and interbank placements and loans to banks significantly increased H1 2019 Asset Composition | Item | As of June 30, 2019 (RMB Million) | % of Total (%) | As of December 31, 2018 (RMB Million) | % of Total (%) | | :--- | :--- | :--- | :--- | :--- | | Net loans and advances | 434,412.07 | 50.91 | 364,967.97 | 47.82 | | Financial investments | 253,189.62 | 29.67 | 227,853.14 | 29.85 | | Cash and balances with central banks | 88,787.21 | 10.40 | 101,589.71 | 13.31 | | Placements with and loans to banks and other financial institutions | 24,161.83 | 2.83 | 10,866.56 | 1.42 | | Loans to banks | 30,039.75 | 3.52 | 15,299.11 | 2.00 | | Financial assets held under resale agreements | 9,297.40 | 1.09 | 29,338.95 | 3.84 | | Total assets | 853,345.90 | 100.00 | 763,289.60 | 100.00 | - Total loans and advances increased by **RMB 70.611 billion** from year-end, a **18.68% growth**, mainly due to the growth in corporate loans and bill discounting business[455](index=455&type=chunk) - Financial investments increased by **RMB 25.336 billion** from year-end, an **11.12% growth**, mainly due to increased holdings of interbank certificates of deposit, policy bank bonds, and local government bonds[455](index=455&type=chunk) - Total placements with and loans to banks and other financial institutions increased by **RMB 28.036 billion** from year-end, a **107.15% growth**[455](index=455&type=chunk) [Liabilities](index=21&type=section&id=Liabilities) The Group's total liabilities grew by **10.74%**, with customer deposits, the primary funding source, increasing by **14.11%**, while interbank and other financial institution deposits and repurchase agreements decreased, and issued bonds significantly increased H1 2019 Liability Composition | Item | As of June 30, 2019 (RMB Million) | % of Total (%) | As of December 31, 2018 (RMB Million) | % of Total (%) | | :--- | :--- | :--- | :--- | :--- | | Deposits from customers | 618,863.96 | 78.96 | 542,335.16 | 76.63 | | Deposits from banks and other financial institutions | 27,163.61 | 3.47 | 63,215.97 | 8.93 | | Debt securities issued | 104,431.97 | 13.33 | 65,875.44 | 9.31 | | Total liabilities | 783,685.67 | 100.00 | 707,708.53 | 100.00 | - Deposits from customers increased by **RMB 76.529 billion** from year-end, a **14.11% growth**[464](index=464&type=chunk) - Personal deposit balances increased by **19.72%** from year-end, and corporate deposit balances increased by **14.81%**[466](index=466&type=chunk) - The proportion of demand deposits decreased by **6.25 percentage points**, while time deposits increased by **8.71 percentage points**[466](index=466&type=chunk) [Shareholders' Equity Composition](index=23&type=section&id=Shareholders%27%20Equity%20Composition) As of June 30, 2019, the Group's total shareholders' equity was **RMB 69.660 billion**, a **25.33% increase** from year-end, primarily due to the issuance of preference shares and an increase in retained earnings H1 2019 Shareholders' Equity Composition | Item | As of June 30, 2019 (RMB Million) | % of Total (%) | As of December 31, 2018 (RMB Million) | % of Total (%) | | :--- | :--- | :--- | :--- | :--- | | Share capital | 9,808.27 | 14.08 | 9,808.27 | 17.65 | | Preference shares | 9,820.73 | 14.10 | – | – | | Capital reserve | 10,861.00 | 15.59 | 10,861.00 | 19.54 | | Retained earnings | 18,907.70 | 27.14 | 17,277.80 | 31.09 | | Total shareholders' equity | 69,660.23 | 100.00 | 55,581.07 | 100.00 | - The introduction of preference shares significantly altered the shareholders' equity structure, accounting for **14.10%**[467](index=467&type=chunk) [Loan Quality Analysis](index=24&type=section&id=Loan%20Quality%20Analysis) As of June 30, 2019, the Group's non-performing loan ratio increased to **1.40%**, mainly due to the consolidation of Chaozhou Rural Commercial Bank and the acquisition of NPL packages, with overdue loans slightly decreasing as a percentage of total loans - The non-performing loan ratio was **1.40%**, an increase of **0.13 percentage points** from year-end[469](index=469&type=chunk)[470](index=470&type=chunk) - The increase in the non-performing loan ratio was mainly affected by factors such as the consolidation of Chaozhou Rural Commercial Bank and the acquisition of non-performing asset packages[470](index=470&type=chunk) - The non-performing loan ratio for corporate loans was **1.25%**, an increase of **0.12 percentage points** from year-end; for personal loans, it was **1.41%**, an increase of **0.09 percentage points** from year-end[474](index=474&type=chunk) - Overdue loans were **RMB 9.681 billion**, an increase of **RMB 1.230 billion** from year-end; the proportion of overdue loans was **2.16%**, a decrease of **0.08 percentage points** from year-end[476](index=476&type=chunk) [Capital Adequacy Ratio Analysis](index=28&type=section&id=Capital%20Adequacy%20Ratio%20Analysis) As of June 30, 2019, the Group's capital adequacy ratio was **14.98%**, up **0.70 percentage points** from year-end, primarily due to preference share issuance and retained earnings, with capital growth exceeding risk-weighted asset growth H1 2019 Capital Adequacy Ratios | Item | As of June 30, 2019 (%) | As of December 31, 2018 (%) | | :--- | :--- | :--- | | Core Tier 1 capital adequacy ratio | 9.83 | 10.50 | | Tier 1 capital adequacy ratio | 11.59 | 10.53 | | Capital adequacy ratio | 14.98 | 14.28 | - Net capital was **RMB 85.257 billion**, an increase of **RMB 12.450 billion** from year-end, representing a **17.10% growth**, mainly due to the issuance of preference shares to supplement capital by **RMB 9.821 billion** and retained earnings in H1[479](index=479&type=chunk) - Risk-weighted assets were **RMB 569.290 billion**, an increase of **RMB 59.453 billion** from year-end, representing an **11.66% growth**, mainly due to the increase in loan business and interbank lending to non-bank financial institutions[479](index=479&type=chunk) [Leverage Ratio Analysis](index=29&type=section&id=Leverage%20Ratio%20Analysis) As of June 30, 2019, the Group's leverage ratio was **7.27%**, meeting regulatory requirements H1 2019 Leverage Ratio | Item | As of June 30, 2019 (RMB Million) | | :--- | :--- | | Net Tier 1 capital | 65,989.40 | | Adjusted on- and off-balance sheet assets | 908,202.86 | | Leverage ratio (%) | 7.27 | [Distribution Information](index=29&type=section&id=Distribution%20Information) The Group primarily operates in Guangdong Province, China, with corporate banking being the largest revenue source, accounting for **53.80%** of operating income - The Group primarily operates in Guangdong Province, China, with its main customers and non-current assets located in Guangdong Province, China[481](index=481&type=chunk) H1 2019 Operating Income Distribution | Business | Six Months Ended June 30, 2019 (RMB Million) | % of Total (%) | | :--- | :--- | :--- | | Corporate banking business | 5,810.04 | 53.80 | | Personal banking business | 3,747.99 | 34.70 | | Financial markets business | 1,241.08 | 11.49 | | Other businesses | 1.00 | 0.01 | | Total operating income | 10,800.11 | 100.00 | [Off-Balance Sheet Items](index=29&type=section&id=Off-Balance%20Sheet%20Items) As of June 30, 2019, the Group's off-balance sheet items primarily included bankers' acceptances, letters of guarantee, and letters of credit, with balances of **RMB 26.491 billion**, **RMB 26.618 billion**, and **RMB 1.150 billion**, respectively - Bankers' acceptances balance was **RMB 26.491 billion**[482](index=482&type=chunk) - Letters of guarantee issued balance was **RMB 26.618 billion**[482](index=482&type=chunk) - Letters of credit issued balance was **RMB 1.150 billion**[482](index=482&type=chunk) [Contingent Liabilities and Pledged Assets](index=29&type=section&id=Contingent%20Liabilities%20and%20Pledged%20Assets) Details of the Group's contingent liabilities and pledged assets can be found in Notes 41 and 43 to the condensed consolidated financial statements [Business Operations](index=30&type=section&id=Business%20Operations) This section details GRCB's business operations and development strategies across corporate banking, personal banking, financial markets, inclusive finance, "Sannong" finance, distribution channels, subsidiaries, and information technology [Corporate Banking Business](index=30&type=section&id=Corporate%20Banking%20Business) The Bank's corporate banking business developed steadily in H1 2019, expanding corporate deposits, supporting the real economy with a focus on agriculture and small businesses, and innovating in international and transaction banking - Actively expanded corporate deposit business, promoting steady growth in corporate deposits[484](index=484&type=chunk) - Adhered to the strategic positioning of supporting agriculture and small businesses, focusing on private enterprises, SMEs, rural revitalization, "Sannong" (agriculture, rural areas, and farmers), and green credit businesses[484](index=484&type=chunk) - International business developed steadily, launching fixed-rate flexible foreign currency deposits and "International Remittance and Tax Link" products, and strengthening collaboration with Hong Kong and Macao counterparts[485](index=485&type=chunk) - Transaction banking business launched industry-first "Smart Transaction" and "Easy Bidding" products, and built foundational platforms such as a new generation corporate online banking system[486](index=486&type=chunk) [Personal Banking Business](index=31&type=section&id=Personal%20Banking%20Business) In H1 2019, the Bank's personal banking business achieved growth in deposits and loans through product innovation and marketing, optimized wealth management, and saw continued increases in bank card issuance and transaction volumes - Launched multiple deposit products such as "Dream Deposit," "Happiness Deposit," and "Monthly Gain," with strong sales of large-denomination certificates of deposit[487](index=487&type=chunk) - Optimized personal wealth management product structure, with open-ended wealth management products accounting for **32.11%** of the balance, and an outstanding balance of **RMB 64.864 billion**[488](index=488&type=chunk) - Cumulatively issued **509.8 thousand** new personal debit cards, with **6.9967 million** existing personal debit cards, and cumulative deposits of **RMB 109.421 billion**, a year-on-year increase of **RMB 29.476 billion**[489](index=489&type=chunk) - Cumulatively issued **1.4928 million** credit cards, with operating income of **RMB 0.415 billion**, a year-on-year increase of **20.62%**[490](index=490&type=chunk) [Financial Markets Business](index=32&type=section&id=Financial%20Markets%20Business) In H1 2019, the Bank's financial markets business focused on steady operations, enhancing investment capabilities, promoting wealth management transformation with significant growth in net-value products, and advancing asset custody and bond underwriting - Continuously enhanced investment research and market judgment capabilities, timely adjusting investment directions to improve profitability[492](index=492&type=chunk) - Actively adjusted wealth management business structure, reducing interbank wealth management scale and vigorously developing retail wealth management, with net-value wealth management products balance of **RMB 6.456 billion**, a significant increase from the beginning of the year[493](index=493&type=chunk) - In the Q1 2019 National Wealth Management Capability Ranking Report released by Puyi Standard, the Bank ranked **first** among rural financial institutions[493](index=493&type=chunk) - In H1 2019, the average daily scale of asset custody was **RMB 421.734 billion**[494](index=494&type=chunk) [Inclusive and Micro Finance Business](index=33&type=section&id=Inclusive%20and%20Micro%20Finance%20Business) In H1 2019, the Bank's inclusive and micro finance business grew steadily, with increases in loan customers and balances, enhancing service precision and coverage through team building, product innovation, and technological support - The number of micro and small enterprise loan customers was **17,144**, an increase of **2,793** from the beginning of 2019[495](index=495&type=chunk) - The balance of micro and small enterprise loans was **RMB 125.629 billion**, an increase of **RMB 15.036 billion** from the beginning of the year, representing a **13.60% growth**[495](index=495&type=chunk) - Established a vertical management model to cultivate an efficient and orderly business marketing team[496](index=496&type=chunk) - Launched the "Sun Inclusive Finance" brand series products, such as "Sun Micro Loan" and "Sun Micro E-Loan"[498](index=498&type=chunk) - Actively promoted cooperation with third-party e-commerce platforms and big data institutions to transform business towards scenario-based and batch processing[499](index=499&type=chunk) ["Sannong" Finance Business](index=34&type=section&id=Sannong%22%20Finance%20Business) The Bank maintained its "Sannong" service focus, significantly increasing agricultural-related loan balances, implementing a rural revitalization plan, and innovating savings products to support targeted poverty alleviation - Agricultural-related loan balance was **RMB 36.394 billion**, an increase of **RMB 5.593 billion** from the beginning of the year, representing an **18.16% growth**[501](index=501&type=chunk) - Formulated the "Guangzhou Rural Commercial Bank Three-Year Action Plan for Promoting Rural Revitalization Strategy (2018-2020) (Revised 2019)"[502](index=502&type=chunk) - Established a "Sannong" finance approval channel and a green approval channel for inclusive businesses, simplifying business approval processes[504](index=504&type=chunk) - Issued **25** village and community-exclusive wealth management products, raising **RMB 3.582 billion**[505](index=505&type=chunk) - Actively promoted the "Yue Wang Model" for industrial poverty alleviation and leveraged the "Sun Market" e-commerce platform to boost sales of poverty alleviation agricultural products[507](index=507&type=chunk) [Distribution Channels](index=36&type=section&id=Distribution%20Channels) The Bank continuously optimized its distribution channels, expanding its physical and self-service networks, and vigorously developing internet finance, including direct banking, e-commerce, mobile banking, and new payment methods, to provide integrated online and offline financial services - Operates **632** branches, including **619** in Guangzhou and **13** in other cities within Guangdong Province, with Guangzhou branches ranking first in number[509](index=509&type=chunk) - Established **163** 24-hour self-service banks, with **2,859** ATMs and automatic inquiry terminals[510](index=510&type=chunk) - Operates **56** smart bank branches, with cumulative transaction volume reaching **RMB 4.1 billion**[511](index=511&type=chunk) - Direct banking customers totaled approximately **876.9 thousand**, with financial product transaction volume of **RMB 11.315 billion**[511](index=511&type=chunk) - Sun Market had approximately **350 thousand** customers, with about **203.7 thousand** orders, a **292% year-on-year increase**, and transaction volume of **RMB 27.5962 million**, a **182% year-on-year increase**[512](index=512&type=chunk) - Mobile banking had **4.035 million** individual customers and **14.8 thousand** corporate customers, with financial transaction volume of **RMB 167.700 billion**[513](index=513&type=chunk) - New payment transaction volume was **201 million** transactions, with a transaction value of **RMB 150.112 billion**[514](index=514&type=chunk) [Major Subsidiaries](index=38&type=section&id=Major%20Subsidiaries) As of June 30, 2019, the Group established **25** Pearl River Village Banks across **9** provinces and cities, and controls Pearl River Financial Leasing Co., Ltd., Hunan Zhuzhou Pearl River Rural Commercial Bank Co., Ltd., and Chaozhou Rural Commercial Bank Co., Ltd., continuously expanding its business reach - The Bank established **25** Pearl River Village Banks across **9** provinces and cities nationwide[515](index=515&type=chunk) - Pearl River Financial Leasing Co., Ltd. is a wholly-owned subsidiary of the Bank, primarily engaged in financial leasing related businesses[515](index=515&type=chunk) - Hunan Zhuzhou Pearl River Rural Commercial Bank Co., Ltd. and Chaozhou Rural Commercial Bank Co., Ltd. are subsidiaries controlled by the Bank[515](index=515&type=chunk) [Information Technology](index=38&type=section&id=Information%20Technology) In H1 2019, the Bank actively advanced information system construction, strengthened technology governance and information security, enhanced business continuity management, and supported business development and risk management through big data applications - Information systems operated stably, with no unplanned system outages[516](index=516&type=chunk) - Information technology regulatory rating improved by another level, achieving two consecutive years of rating upgrades[517](index=517&type=chunk) - Continuously built and improved information security management and protection systems, launching the "Cyber Shield 2019" initiative[518](index=518&type=chunk) - Completed five batches of local availability switchover drills for **68** business systems, enhancing business continuity assurance for critical systems[519](index=519&type=chunk) - Completed the launch of **15** system projects and focused on researching and implementing big data technology exploration and practice[520](index=520&type=chunk) [Human Resources Management](index=40&type=section&id=Human%20Resources%20Management) As of June 30, 2019, the Group had **11,302** employees, with **66.97%** holding a bachelor's degree or higher, and continued to enhance employee training through its internal "Pearl River Business School" - As of June 30, 2019, the Group had **11,302** active employees, of whom **7,178** were employees with labor contracts signed with the Bank[521](index=521&type=chunk) - Employees with a bachelor's degree or higher totaled **4,807**, accounting for **66.97%** of active employees[521](index=521&type=chunk) - In H1 2019, over **230** training programs were organized, covering more than **20,000** employee-times across all levels of the Bank, with an average of **22** hours of online learning per person[522](index=522&type=chunk) [Risk Management](index=41&type=section&id=Risk%20Management) In H1 2019, the Group implemented a comprehensive, counter-cyclical risk management strategy, strengthening control over credit, liquidity, market, and operational risks, while advancing Basel III implementation and anti-money laundering efforts - The Group strictly implemented regulatory policy requirements, thoroughly applied comprehensive risk management concepts, and adopted counter-cyclical risk management strategies[523](index=523&type=chunk) - During the reporting period, the Group's risks were generally controllable, internal control management was effective, and risk management capabilities and levels continuously improved[523](index=523&type=chunk) [Credit Risk Management](index=41&type=section&id=Credit%20Risk%20Management) The Group continuously improved its credit risk management framework, policies, and systems, strengthening vertical risk management, optimizing lending policies, and enhancing performance assessment to improve credit risk control capabilities - Strengthened vertical risk management and enhanced full-process management of credit business[524](index=524&type=chunk) - Optimized credit and investment policies, strictly controlling access standards for industries, customers, and products deeply affected by counter-cyclical factors[524](index=524&type=chunk) - Promoted optimization of credit business structure, strictly controlled off-site business deployment, and enhanced the desirability of business development[524](index=524&type=chunk) - Improved accountability management systems, introduced the concept of primary business responsibility, and established an assessment and accountability mechanism with balanced responsibilities, rights, and interests[524](index=524&type=chunk) [Liquidity Risk Management](index=42&type=section&id=Liquidity%20Risk%20Management) The Group's Asset and Liability Management Committee formulated liquidity risk policies, strengthened centralized management, managed daily funding positions, set and monitored risk limits quarterly, and conducted regular stress tests to ensure overall controllable liquidity risk - The Asset and Liability Management Committee is responsible for formulating liquidity risk policies and strategies[525](index=525&type=chunk) - Strengthened unified and centralized management of liquidity risk, managed daily funding positions, and ensured adequate reserves[525](index=525&type=chunk) - Liquidity risk limits are set quarterly, and their implementation is monitored monthly and assessed quarterly[525](index=525&type=chunk) - In H1 2019, liquidity risk was generally controllable, with no major liquidity risk events, and all key liquidity risk indicators met targets each month[525](index=525&type=chunk) [Market Risk Management](index=43&type=section&id=Market%20Risk%20Management) The Group manages interest rate and exchange rate risks through limit management, sensitivity analysis, and duration models, continuously monitoring market price changes, standardizing new businesses, and strengthening its market risk management team - Interest rate risk is the primary market risk faced by the banking book, mainly arising from mismatches in repricing dates of interest-earning assets and interest-bearing liabilities[526](index=526&type=chunk) - Exchange rate risk primarily stems from foreign exchange exposures to currency fluctuations[526](index=526&type=chunk) - Implemented multiple measures to enhance market risk management capabilities, including strict adherence to regulatory requirements, formulating annual basic investment policies, implementing market risk monitoring mechanisms, and strengthening talent development[526](index=526&type=chunk) [Operational Risk Management](index=43&type=section&id=Operational%20Risk%20Management) In H1 2019, the Bank continuously strengthened business process standardization, steadily advanced business continuity management, restructured its IT risk monitoring system, and conducted on-site inspections of key IT outsourcing providers to prevent operational risks - Steadily carried out business continuity management, optimized recovery objectives for critical business continuity, and revised and improved emergency plans[527](index=527&type=chunk) - Restructured the information technology risk monitoring and quantitative indicator system, and conducted IT development testing and information security risk assessments[527](index=527&type=chunk) - Conducted on-site inspections of key information technology outsourcing service providers[527](index=527&type=chunk) [Implementation of Basel III](index=44&type=section&id=Implementation%20of%20Basel%20III) The Group actively implemented Basel III, establishing a risk measurement model laboratory and a comprehensive risk measurement system, achieving compliance with the standardized approach for capital measurement in H1 2019, laying the foundation for digital risk management transformation - Gradually established a risk measurement model laboratory to develop various risk measurement and monitoring models[528](index=528&type=chunk) - Built a comprehensive risk measurement system that meets the Bank's risk appetite, risk limits, capital assessment, and stress testing requirements[528](index=528&type=chunk) - In H1 2019, the Bank's standardized approach for capital measurement met the requirements, and the basic conditions for the advanced internal ratings-based approach for capital measurement were largely in place[528](index=528&type=chunk) - Issued the 2019 Risk Appetite Statement and indicator system, and carried out comprehensive risk stress testing and Internal Capital Adequacy Assessment Process (ICAAP) projects[528](index=528&type=chunk) [Anti-Money Laundering Status](index=44&type=section&id=Anti-Money%20Laundering%20Status) In H1 2019, the Group diligently fulfilled its anti-money laundering responsibilities, improved its AML framework, implemented effective controls in high-risk areas, and conducted extensive training and public awareness campaigns to enhance AML management and defense capabilities - Fully benchmarked against the requirements of the "Guidelines for Anti-Money Laundering and Counter-Terrorist Financing Risk Management for Legal Entity Financial Institutions (Trial)," establishing and improving the AML work and institutional system[529](index=529&type=chunk) - Conducted employee training and public awareness campaigns through various methods, including on-site and off-site training, online articles and WeChat promotions, branch electronic signage, and community outreach[529](index=529&type=chunk) - A total of over **1,600** employee-times participated in on-site and off-site training[529](index=529&type=chunk) [Internal Audit](index=45&type=section&id=Internal%20Audit) The Bank established an independent and vertical internal audit management system, with the Internal Audit Department performing its supervisory role through special audits and internal control evaluations to enhance overall internal control and promote steady business development - Established an independent and vertical internal audit management system, with an Audit Committee under the Board of Directors and an Audit and Supervision Committee under the Board of Supervisors[530](index=530&type=chunk) - The Internal Audit Department conducted special audits and internal control evaluation audits with the aim of strengthening internal control, improving internal management, and enhancing economic efficiency[530](index=530&type=chunk) - Innovated management methods, improved audit system functions to achieve full-process audit management, and optimized audit resource allocation through internal rotation of audit personnel via two-way selection[530](index=530&type=chunk) [Outlook](index=45&type=section&id=Outlook) In H1 2019, the Bank maintained stable operations amidst a complex economic environment, achieving good asset growth and profitability, and plans to flexibly adjust strategies and enhance business innovation in H2 to serve the real economy - In H1 2019, China's economic growth faced a complex internal and external environment, with external deterioration increasing downward pressure on the domestic economy[531](index=531&type=chunk) - Despite the unfavorable environment, the Bank maintained stable operations, with steady asset growth and good levels of profitability growth and asset quality[531](index=531&type=chunk) - In H2, the Bank will flexibly adjust its operating strategies, strengthen business innovation capabilities, and better serve real enterprises in response to changes in the macroeconomic environment[531](index=531&type=chunk) [Share Capital Changes and Shareholder Information](index=46&type=section&id=Share%20Capital%20Changes%20and%20Shareholder%20Information) This section details GRCB's H1 2019 share capital changes, shareholder holdings, and information on the offshore non-public issuance of preference shares, including issuance size, dividend terms, and liquidation priority [Table of Share Changes](index=46&type=section&id=Table%20of%20Share%20Changes) As of June 30, 2019, the Bank's total share capital remained unchanged, with a decrease in non-listed corporate shares and an increase in non-listed natural person shares, while offshore listed foreign shares remained constant H1 2019 Share Changes | Item | Number of Shares as of December 31, 2018 (Shares) | Proportion (%) | Change During Reporting Period (Shares) | Number of Shares as of June 30, 2019 (Shares) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total share capital | 9,808,268,539 | 100 | – | 9,808,268,539 | 100 | | Non-offshore listed corporate shares | 5,584,950,888 | 56.94 | -82,800,000 | 5,502,150,888 | 56.10 | | Non-offshore listed natural person shares | 2,402,982,651 | 24.50 | 82,800,000 | 2,485,782,651 | 25.34 | | Offshore listed foreign shares | 1,820,335,000 | 18.56 | – | 1,820,335,000 | 18.56 | [Shareholder Holdings](index=46&type=section&id=Shareholder%20Holdings) As of June 30, 2019, the Bank's total share capital was **9.808 billion shares**, with a dispersed ownership structure where the top ten shareholders collectively held **41.56%**, and Hong Kong Securities Clearing Company Nominees Limited was the largest shareholder - As of June 30, 2019, the Bank's total share capital was **9.808 billion shares**, including **7.988 billion** non-offshore listed shares and **1.820 billion** offshore listed shares[533](index=533&type=chunk) - The top ten shareholders collectively held **41.56%** of the shares, indicating a relatively dispersed ownership structure[534](index=534&type=chunk) - Hong Kong Securities Clearing Company Nominees Limited was the largest shareholder, holding **18.56%** of the shares[535](index=535&type=chunk) - The Guangzhou Municipal People's Government indirectly held **18.22%** of the Bank's shares through **13** corporate shareholders it controls[542](index=542&type=chunk) [Information on Offshore Non-Public Issuance of Preference Shares](index=50&type=section&id=Information%20on%20Offshore%20Non-Public%20Issuance%20of%20Preference%20Shares) On June 20, 2019, the Bank successfully issued **USD 1.43 billion** in non-cumulative perpetual offshore preference shares, raising approximately **RMB 9.839 billion** to supplement additional Tier 1 capital, with a **5.90%** dividend rate and mandatory conversion triggers - On June 20, 2019, **USD 1.43 billion** of non-cumulative perpetual offshore preference shares were issued[543](index=543&type=chunk) - The total proceeds from this offshore preference share issuance were approximately **RMB 9.839 billion**, all of which were used to supplement the Bank's additional Tier 1 capital[543](index=543&type=chunk) - The offshore preference shares have a dividend rate of **5.90%**, are non-cumulative, and include mandatory conversion trigger events[548](index=548&type=chunk)[708](index=708&type=chunk)[710](index=710&type=chunk) - The offshore preference shares are perpetual, with no maturity date, and the Bank has the right to redeem all or part of them after five years[712](index=712&type=chunk) [Directors, Supervisors, and Senior Management Information](index=52&type=section&id=Directors%2C%20Supervisors%2C%20and%20Senior%20Management%20Information) This section outlines the composition of GRCB's Board of Directors, Board of Supervisors, and senior management as of June 30, 2019, confirming their compliance with securities trading codes during the reporting period [The Bank's Directors](index=52&type=section&id=The%20Bank%27s%20Directors) As of June 30, 2019, the Bank's Board of Directors comprised **13** members, including **2** executive, **6** non-executive, and **5** independent non-executive directors, with two directors resigning post-reporting period - As of June 30, 2019, the Board of Directors had **13** directors, including **2** executive directors, **6** non-executive directors, and **5** independent non-executive directors[549](index=549&type=chunk) - Mr. Wang Jikang and Mr. Shao Jianming resigned as directors of the Bank on July 19, 2019, and August 14, 2019, respectively[549](index=549&type=chunk) [The Bank's Supervisors](index=52&type=section&id=The%20Bank%27s%20Supervisors) As of June 30, 2019, the Bank's Board of Supervisors comprised **8** members, including **3** employee supervisors, **3** external supervisors, and **2** shareholder supervisors - As of June 30, 2019, the Board of Supervisors had **8** supervisors, including **3** employee supervisors, **3** external supervisors, and **2** shareholder supervisors[550](index=550&type=chunk) [The Bank's Senior Management](index=52&type=section&id=The%20Bank%27s%20Senior%20Management) As of June 30, 2019, the Bank's senior management team consisted of **10** members, including the President, Secretary of the Discipline Inspection Commission, **3** Vice Presidents, **3** Business Directors, Chief Information Officer, and Board Secretary - As of June 30, 2019, the senior management team comprised **10** members, including Mr. Yi Xuefei (President), Mr. Zuo Yi (Secretary of the Discipline Inspection Commission), **3** Vice Presidents, **3** Business Directors, Mr. Cai Huiran (Chief Information Officer), and Ms. Zheng Ying (Board Secretary)[551](index=551&type=chunk) [Securities Transactions by Directors and Supervisors](index=52&type=section&id=Securities%20Transactions%20by%20Directors%20and%20Supervisors) All directors and supervisors confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers during the six months ended June 30, 2019 - All directors and supervisors of the Bank confirmed compliance with the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules during the reporting period[552](index=552&type=chunk) [Significant Matters](index=53&type=section&id=Significant%20Matters) This section covers GRCB's key corporate governance practices, dividend distribution, related party transactions, legal proceedings, major asset acquisitions and operations, and post-balance sheet events, highlighting compliance and business developments [Corporate Governance](index=53&type=section&id=Corporate%20Governance) During the reporting period, the Bank strictly adhered to relevant laws and regulations, continuously improved its corporate governance structure, and complied with the Code Provisions and most Recommended Best Practices of the Corporate Governance Code - The Bank strictly adhered to relevant laws and regulations, including the "Company Law of the People's Republic of China" and the "Commercial Bank Law of the People's Republic of China," as well as the Listing Rules, continuously improving its corporate governance structure[553](index=553&type=chunk) - The Bank has consistently complied with and met the Code Provisions of the Corporate Governance Code in Appendix 14 of the Listing Rules, and complied with most of the Recommended Best Practices[553](index=553&type=chunk) [Dividend Distribution Status](index=53&type=section&id=Dividend%20Distribution%20Status) The Bank distributed a final dividend of **RMB 0.20** per share (tax inclusive) for 2018, totaling **RMB 1.962 billion**, on June 21, 2019, and did not declare an interim dividend for 2019 - The Bank distributed a final dividend of **RMB 0.20** per share (tax inclusive) for 2018 to shareholders registered as of June 4, 2019[554](index=554&type=chunk) - A total of **RMB 1.962 billion** (tax inclusive) was distributed[554](index=554&type=chunk) - The Bank did not declare an interim dividend for 2019[554](index=554&type=chunk) [Purchase, Sale, and Redemption of Listed Securities](index=53&type=section&id=Purchase%2C%20Sale%2C%20and%20Redemption%20of%20Listed%20Securities) During the reporting period, the Bank did not repurchase, sell, or redeem any of its listed securities - During the reporting period, the Bank did not repurchase, sell, or redeem any of its listed securities[555](index=555&type=chunk) [Significant Related Party Transactions](index=53&type=section&id=Significant%20Related%20Party%20Transactions) As of the end of the reporting period, significant related party loans totaled **RMB 3.897 billion**, accounting for **0.98%** of the Bank's total loans, with no negative impact on operating results or financial position - Significant related party loan balance was **RMB 3.897 billion**, accounting for **0.98%** of the Bank's total loans[555](index=555&type=chunk) - Significant related party loans had no negative impact on the Bank's operating results or financial position[555](index=555&type=chunk) [Significant Litigation and Arbitration](index=53&type=section&id=Significant%20Litigation%20and%20Arbitration) During the reporting period, the Bank had no litigation or arbitration matters with a significant impact on its operations, and pending cases totaling **RMB 41.337 million** are not expected to have a material effect - During the reporting period, the Bank had no litigation or arbitration matters that had a significant impact on its operating activities[556](index=556&type=chunk) - As of the end of the reporting period, the Bank was a defendant or third party in pending litigation cases involving an amount of **RMB 41.337 million**, which the Bank believes will not have a significant impact on its operating activities[556](index=556&type=chunk) [Interests and Short Positions of Directors, Chief Executive, and Supervisors in the Company](index=54&type=section&id=Interests%20and%20Short%20Positions%20of%20Directors%2C%20Chief%20Executive%2C%20and%20Supervisors%20in%20the%20Company) As of June 30, 2019, the Bank's directors, supervisors, and chief executive held interests in the Bank's shares, all disclosed in compliance with the SFO and Model Code - The Bank's directors, supervisors, and chief executive held interests in the Bank's shares, which have been disclosed in accordance with the SFO and the Model Code[557](index=557&type=chunk)[558](index=558&type=chunk)[559](index=559&type=chunk) [Penalties Imposed on the Bank, its Directors, Supervisors, and Senior Management](index=56&type=section&id=Penalties%20Imposed%20on%20the%20Bank%2C%20its%20Directors%2C%20Supervisors%2C%20and%20Senior%20Management) During the reporting period, neither the Bank nor its directors, supervisors, or senior management received any significant penalties from the CSRC, HKEX, or other regulatory bodies - During the reporting period, neither the Bank nor its directors, supervisors, and senior management were subject to investigations, administrative penalties, public criticisms by the CSRC, or public condemnations by the HKEX[560](index=560&type=chunk) - Nor were they subject to penalties from other regulatory bodies that had a significant impact on the Bank's operations[560](index=560&type=chunk) [Significant Contracts and Their Performance](index=56&type=section&id=Significant%20Contracts%20and%20Their%20Performance) During the reporting period, the Bank had no significant contracts or their performance to report - During the reporting period, the Bank had no significant contracts or their performance to report[560](index=560&type=chunk) [Major Asset Acquisitions, Disposals, and Business Combinations](index=56&type=section&id=Major%20Asset%20Acquisitions%2C%20Disposals%2C%20and%20Business%20Combinations) During the reporting period, Chaozhou Rural Commercial Bank, in which the Bank holds a **57.72%** stake, officially commenced operations on June 29, 2019, marking a significant business combination - Chaozhou Rural Commercial Bank, in which the Bank holds a **57.72%** stake, officially commenced operations on June 29, 2019[560](index=560&type=chunk) [Major Asset Operations](index=56&type=section&id=Major%20Asset%20Operations) On June 20, 2019, the Bank successfully issued **USD 1.43 billion** in non-cumulative perpetual offshore preference shares in Hong Kong, raising approximately **RMB 9.839 billion** to supplement additional Tier 1 capital - On June 20, 2019, the Bank successfully issued **USD 1.43 billion** of non-cumulative perpetual offshore preference shares in Hong Kong, with a dividend rate of **5.90%**[561](index=561&type=chunk) - The total proceeds from the offshore preference share issuance were approximately **RMB 9.839 billion**, all of which were used to supplement the Bank's additional Tier 1 capital[561](index=561&type=chunk) [Post-Balance Sheet Events](index=56&type=section&id=Post-Balance%20Sheet%20Events) As of the latest practicable date, Guangdong Nanxiong Rural Commercial Bank commenced operations in July 2019, and the establishment of Shaoguan Rural Commercial Bank is progressing, indicating the Bank's continued rural cooperative restructuring strategy - Guangdong Nanxiong Rural Commercial Bank, a subsidiary acquired by the Group, commenced operations in July 2019[562](index=562&type=chunk) - The establishment of Shaoguan Rural Commercial Bank is progressing in an orderly manner[562](index=562&type=chunk) [Review of Interim Results](index=56&type=section&id=Review%20of%20Interim%20Results) The Bank's condensed consolidated interim financial information for the six months ended June 30, 2019, was reviewed by PricewaterhouseCoopers, which issued an unmodified review report, and was also reviewed by the Bank's Audit Committee and Board of Directors - The condensed consolidated interim financial information was reviewed by PricewaterhouseCoopers, which issued an unmodified review report[563](index=563&type=chunk) - The interim report was reviewed by the Bank's Audit Committee and Board of Directors[563](index=563&type=chunk) [Organizational Chart](index=56&type=section&id=Organizational%20Chart) This section presents the organizational chart of Guangzhou Rural Commercial Bank Co., Ltd., clearly depicting its management hierarchy and departmental structure [Interim Financial Information Review Report](index=58&type=section&id=Interim%20Financial%20Information%20Review%20Report) PricewaterhouseCoopers reviewed GRCB's condensed consolidated interim financial information for the six months ended June 30, 2019, issuing an unmodified review conclusion, confirming compliance with IAS 34 for interim financial reporting - The auditor has reviewed the condensed consolidated interim financial information of Guangzhou Rural Commercial Bank Co., Ltd. and its subsidiaries as of June 30, 2019[566](index=566&type=chunk) - The scope of the review is substantially less than that of an audit conducted in accordance with International Standards on Auditing, and therefore no audit opinion is expressed[567](index=567&type=chunk) - The auditor has not found anything that causes them to believe that the Group's interim financial information is not prepared, in all material respects, in accordance with International Accounting Standard 34 "Interim Financial Reporting"[568](index=568&type=chunk) [Interim Financial Information (Unaudited)](index=59&type=section&id=Interim%20Financial%20Information%20(Unaudited)) This section provides the unaudited condensed consolidated interim financial information for the six months ended June 30, 2019, including income statements, balance sheets, and detailed notes, presenting the Group's financial performance and position [Condensed Consolidated Interim Income Statement](index=59&type=section&id=Condensed%20Consolidated%20Interim%20Income%20Statement) In H1 2019, the Group's net profit was **RMB 3,672,701 thousand**, a **8.30% year-on-year increase**, primarily driven by significant growth in net interest income, despite decreases in net fee and commission income and net trading gains H1 2019 Condensed Consolidated Interim Income Statement Key Data | Item | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Net interest income | 7,737,303 | 5,589,183 | | Net fee and commission income | 816,622 | 965,945 | | Net trading gains | 2,000,070 | 2,570,849 | | Net gains/(losses) from financial investments | 211,525 | (1,041,123) | | Operating income | 10,800,110 | 8,175,239 | | Operating expenses | (2,701,050) | (2,841,512) | | Net credit impairment losses | (3,554,664) | (989,452) | | Net profit | 3,672,701 | 3,391,337 | | Net profit attributable to parent company shareholders | 3,591,552 | 3,321,637 | | Basic earnings per share (RMB) | 0.37 | 0.34 | [Condensed Consolidated Interim Statement of Comprehensive Income](index=60&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Comprehensive%20Income) In H1 2019, the Group's total comprehensive income was **RMB 4,328,100 thousand**, a decrease from **RMB 4,870,063 thousand** in H1 2018, mainly due to fair value changes of financial assets measured at fair value through other comprehensive income H1 2019 Condensed Consolidated Interim Statement of Comprehensive Income Key Data | Item | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Net profit for the period | 3,672,701 | 3,391,337 | | Fair value changes of financial assets measured at fair value through other comprehensive income | (110,496) | 1,516,101 | | Expected credit loss provision for financial assets measured at fair value through other comprehensive income | 762,671 | (16,189) | | Total comprehensive income for the period | 4,328,100 | 4,870,063 | | Total comprehensive income attributable to parent company shareholders | 4,246,886 | 4,800,363 | [Condensed Consolidated Interim Statement of Financial Position](index=61&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Financial%20Position) As of June 30, 2019, the Group's total assets were **RMB 853,345,899 thousand**, total liabilities were **RMB 783,685,666 thousand**, and total shareholders' equity was **RMB 69,660,233 thousand**, all showing significant growth from year-end 2018, particularly due to preference share issuance H1 2019 Condensed Consolidated Interim Statement of Financial Position Key Data | Item | As of June 30, 2019 (RMB Thousand) | As of December 31, 2018 (RMB Thousand) | | :--- | :--- | :--- | | Total assets | 853,345,899 | 763,289,597 | | Loans and advances | 434,412,069 | 364,967,971 | | Financial investments | 253,189,618 | 227,853,131 | | Total liabilities | 783,685,666 | 707,708,529 | | Customer deposits | 618,863,963 | 542,335,162 | | Debt securities issued | 104,431,970 | 65,875,435 | | Share capital | 9,808,269 | 9,808,269 | | Preference shares | 9,820,734 | – | | Equity attributable to parent company shareholders | 64,967,293 | 52,861,327 | | Total equity | 69,660,233 | 55,581,068 | [Condensed Consolidated Interim Statement of Changes in Equity](index=63&type=section&id=Condensed%20Consolidated%20Interim%20Statement%20of%20Changes%20in%20Equity) In H1 2019, the Group's total shareholders' equity increased to **RMB 69,660,233 thousand**, primarily driven by the issuance of preference shares totaling **RMB 9,820,734 thousand** and net profit contributions, while also reflecting declared and distributed dividends H1 2019 Condensed Consolidated Interim Statement of Changes in Equity Key Data | Item | Balance as of January 1, 2019 (RMB Thousand) | Net Profit for the Period (RMB Thousand) | Subtotal of Other Comprehensive Income for the Period (RMB Thousand) | Total Comprehensive Income (RMB Thousand) | Issuance of Preference Shares (RMB Thousand) | Dividends Declared and Paid (RMB Thousand) | Balance as of June 30, 2019 (RMB Thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total equity attributable to parent company shareholders | 52,861,327 | 3,591,552 | 655,334 | 4,246,886 | 9,820,734 | (1,961,654) | 64,967,293 | | Non-controlling interests | 2,719,741 | 81,149 | 65 | 81,214 | – | (41,690) | 4,692,940 | | Total equity | 55,581,068 | 3,672,701 | 655,399 | 4,328,100 | 9,820,734 | (2,003,344) | 69,660,233 | [Condensed Consolidated Interim Cash Flow Statement](index=66&type=section&id=Condensed%20Consolidated%20Interim%20Cash%20Flow%20Statement) In H1 2019, the Group's net cash used in operating activities was **RMB (69,746,100) thousand**, net cash generated from investing activities was **RMB 1,865,020 thousand**, and net cash generated from financing activities was **RMB 44,842,923 thousand**, resulting in a net decrease of **RMB 23,038,157 thousand** in cash and cash equivalents H1 2019 Condensed Consolidated Interim Cash Flow Statement Key Data | Item | 2019 (RMB Thousand) | 2018 (RMB Thousand) | | :--- | :--- | :--- | | Net cash used in operating activities | (69,746,100) | (31,996,977) | | Net cash generated from/(used in) investing activities | 1,865,020 | (4,546,174) | | Net cash generated from/(used in) financing activities | 44,842,923 | (6,291,235) | | Net decrease in cash and cash equivalents | (23,038,157) | (42,834,386) | | Cash and cash equivalents at end of period | 54,299,530 | 66,432,834 | | Interest received | 12,769,332 | 9,828,347 | | Interest paid | (6,788,240) | (5,618,768) | [Notes to the Condensed Consolidated Interim Financial Information](index=68&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Interim%20Financial%20Information) This section provides detailed explanations and disclosures for various items in the consolidated financial statements, including company information, accounting policies, significant judgments, operating segments, and financial risk management - The Group has a total of **28** subsidiaries across China, including **25** village banks, one financial leasing company, and two rural commercial banks[583](index=583&type=chunk)[584](index=584&type=chunk) - The Group adopted IFRS 16 "Leases" from January 1, 2019, recognizing lease liabilities and right-of-use assets in the statement of financial position[589](index=589&type=chunk)[591](index=591&type=chunk) - In H1 2019, interest income from customer loans and advances was **RMB 11.822 billion**, a year-on-year increase of **RMB 2.732 billion**, representing a **30.06% growth**[437](index=437&type=chunk) - As of June 30, 2019, the balance of non-guaranteed wealth management products initiated by the Group and not included in the consolidated financial statements was **RMB 84,145,579 thousand**[730](index=730&type=chunk) - The Bank obtained control of Chaozhou Rural Commercial Bank on June 21, 2019, holding a **57.72%** equity stake and entitled to **74.38%** of the voting rights[736](index=736&type=chunk) [Unaudited Supplementary Financial Information](index=151&type=section&id=Unaudited%20Supplementary%20Financial%20Information) This section provides unaudited supplementary financial information, focusing on liquidity ratios, currency concentration, cross-border claims, and the geographical distribution of overdue customer loans, offering a more comprehensive risk management perspective [Liquidity Ratio, Liquidity Coverage Ratio, and Net Stable Funding Ratio](index=152&type=section&id=Liquidity%20Ratio%2C%20Liquidity%20Coverage%20Ratio%2C%20and%20Net%20Stable%20Funding%20Ratio) As of June 30, 2019, the Group's liquidity ratio was **78.16%**, liquidity coverage ratio was **133.69%**, and net stable funding ratio was **107.77%**, all meeting regulatory requirements H1 2019 Liquidity Ratios | Item | As of June 30, 2019 (%) | As of December 31, 2018 (%) | | :--- | :--- | :--- | | Liquidity ratio (RMB and foreign currency) | 78.16 | 76.91 | | Liquidity coverage ratio | 133.69 | 271.21 | | Net stable funding ratio | 107.77 | 115.15 | - The liquidity coverage ratio significantly decreased from **271.21%** at year-end 2018 to **133.69%**[823](index=823&type=chunk) [Currency Concentration](index=153&type=section&id=Currency%20Concentration) As of June 30, 2019, the Group's net long position was **RMB 68.72 million**, primarily concentrated in USD, indicating a small foreign currency exposure H1 2019 Currency Concentration | Currency | Net Long/(Short) Position (RMB Million) | | :--- | :--- | | USD | 68.36 | | HKD | 0.29 | | Other | 0.07 | | Subtotal | 68.72 | - The Group had no structural positions as of June 30, 2019, and December 31, 2018[828](index=828&type=chunk) [Cross-Border Claims](index=154&type=section&id=Cross-Border%20Claims) A

廣州農村商業銀行股份有限公司 ( 於中華人民共和國註冊成立的股份有限公司 ) 股份代號 : 1551 年度報告 2018年 目錄 公司簡介 2 財務數據摘要 7 董事長致辭 10 行長致辭 11 管理層討論與分析 13 股本變動及股東情況 54 董事、 監事及高級管理人員 62 企業管治報告 74 董事會報告 98 財務報表及附註 133 未經審計補充財務信息 291 監事會報告 109 新闻网 MME. mm 重要事項 112 三農金融服務報告 114 獨立審計師報告 125 釋義 295 公司簡介 | --- | --- | --- | --- | |-------|----------|--------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------- ...