江西银行(01916) - 2020 - 年度财报

Chairman's Statement Chairman Chen Xiaoming's statement reviews the achievements in overcoming COVID-19 challenges in 2020, highlighting progress in party building, corporate governance, supporting the real economy, technological innovation, and risk mitigation, with a focus on optimizing structure and service quality for 2021 Chairman's Statement Chairman Chen Xiaoming's statement reviews the achievements in overcoming COVID-19 challenges in 2020, highlighting progress in party building, corporate governance, supporting the real economy, technological innovation, and risk mitigation, with a focus on optimizing structure and service quality for 2021 - Actively responded to "Six Stabilities" and "Six Guarantees" policies, increasing lending to small and micro enterprises, agriculture-related sectors, and poverty alleviation, supporting business resumption, and earning the "Best Small and Medium-sized Bank Supporting Anti-epidemic and Resumption of Production" award[3] - Promoted technological innovation and transformation, leveraging blockchain technology for supply chain finance, launching social finance products like "Jiangyin Micro-store," and increasing green credit issuance[4] - Successfully advanced non-performing asset disposal, strengthened internal control and compliance foundations, and won the battle against financial risk prevention and mitigation[4] Company Profile This chapter provides an overview of Jiangxi Bank, its market position, financial highlights, and key achievements in 2020 Company Overview and Introduction Jiangxi Bank, the sole provincial-level corporate bank in Jiangxi, listed in Hong Kong in 2018, reported total assets of RMB 458.693 billion by the end of 2020, holding an AAA credit rating and focusing on local economy, SMEs, community services, green finance, and technology finance 2020 Year-End Financial Data (RMB) | Metric | 2020 Year-End Data (RMB) | | :--- | :--- | | Total Assets | 458.693 billion yuan | | Total Deposits | 315.771 billion yuan | | Net Loans and Advances | 217.449 billion yuan | | Operating Income | 10.285 billion yuan | | Net Profit | 1.905 billion yuan | - The bank's main credit rating is AAA, the highest among domestic city commercial banks, and its Tier 1 capital ranked 264th in The Banker's "Top 1000 World Banks 2020" list[7] - In the field of technology finance, the bank launched "Yunqilian," an online factoring financing business based on blockchain technology[7] Major Awards in 2020 In 2020, Jiangxi Bank received multiple awards, reflecting its outstanding performance and market recognition in bond business, interbank market trading, wealth management, anti-epidemic support, inclusive finance, and green finance - Awarded "Best Small and Medium-sized Bank Supporting Anti-epidemic and Resumption of Production" by Financial Times[12] - Ranked 35th in the "Top 100 Chinese Banking Industry List 2019" published by the China Banking Association[10] - Recognized as an "Excellent Unit in Green Credit Work Assessment for Provincial Banking Institutions 2019" by the Jiangxi Banking and Insurance Regulatory Bureau[10] Summary of Accounting Data and Financial Indicators This chapter provides a concise overview of the bank's key financial performance and position, highlighting revenue, profit, asset quality, and capital adequacy metrics for the reporting period Financial Data Summary In 2020, the Group's operating income decreased by 20.59% to RMB 10.285 billion, and net profit decreased by 9.68% to RMB 1.905 billion, while asset quality significantly improved with non-performing loan ratio falling to 1.73% and provision coverage ratio increasing to 171.56% Operating Performance (RMB Million) | Metric | 2020 | 2019 | Change (%) | | :--- | :--- | :--- | :--- | | Operating Income | 10,285.45 | 12,952.81 | (20.59) | | Profit Before Tax | 2,484.70 | 2,957.16 | (15.98) | | Net Profit for the Year | 1,904.94 | 2,109.16 | (9.68) | | Net Profit Attributable to Bank Shareholders | 1,859.17 | 2,050.59 | (9.33) | Profitability Indicators (%) | Metric | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Return on Average Total Assets | 0.42% | 0.48% | (0.06%) | | Return on Average Equity | 5.33% | 6.15% | (0.82%) | | Net Interest Margin | 2.10% | 2.62% | (0.52%) | Asset Quality Indicators (%) | Metric | 2020 | 2019 | Change | | :--- | :--- | :--- | :--- | | Non-performing Loan Ratio | 1.73% | 2.26% | (0.53%) | | Provision Coverage Ratio | 171.56% | 165.65% | 5.91% | | Capital Adequacy Ratio | 12.89% | 12.63% | 0.26% | Management Discussion and Analysis This chapter provides an in-depth analysis of the Group's financial performance, asset and liability structure, risk management, and business segments in the context of the macroeconomic environment Macroeconomic Environment Review In 2020, China's economy steadily recovered from the COVID-19 impact with a 2.3% GDP growth, while Jiangxi Province also showed robust recovery with a 3.8% GDP growth, providing a favorable external environment for the bank's operations - China's GDP grew by 2.3% year-on-year in 2020, with economic operations recovering steadily after an initial decline[18] - Jiangxi Province, the bank's primary operating region, saw its GDP grow by 3.8% year-on-year in 2020, with the economy accelerating towards normalized recovery[18] Overall Business Overview During the reporting period, Jiangxi Bank achieved good results despite pandemic challenges, optimizing its asset-liability structure, strengthening risk management with a reduced non-performing loan ratio of 1.73%, and enhancing service quality for the real economy, particularly in inclusive finance - Optimized asset-liability structure: total deposits reached RMB 315.771 billion, a 10.97% year-on-year increase; net loans and advances as a percentage of total assets increased to 47.41%[20] - Significant achievements in risk management: non-performing loan ratio decreased to 1.73%[21] - Deepened development of inclusive finance: outstanding inclusive small and micro enterprise loans reached RMB 32.328 billion, an increase of RMB 4.309 billion from the end of the previous year, with 3,423 more borrowing accounts[22] Income Statement Analysis In 2020, the Group's net profit decreased by 9.68% to RMB 1.905 billion, primarily due to a 20.59% decline in operating income from reduced loan interest rates and service fees, and a 63.60% drop in net financial investment income, partially offset by a 33.98% reduction in asset impairment losses Item (RMB Million) | Item (RMB Million) | 2020 | 2019 | Change (%) | | :--- | :--- | :--- | :--- | | Operating Income | 10,285.45 | 12,952.81 | (20.59) | | Net Interest Income | 9,053.68 | 10,744.81 | (15.74) | | Net Gains from Financial Investments | 536.74 | 1,474.65 | (63.60) | | Asset Impairment Losses | (4,284.43) | (6,489.59) | (33.98) | | Profit Before Tax | 2,484.70 | 2,957.16 | (15.98) | | Net Profit for the Year | 1,904.94 | 2,109.16 | (9.68) | Net Interest Income, Net Interest Spread, and Net Interest Margin In 2020, the Group's net interest income decreased by 15.74% to RMB 9.054 billion, with both Net Interest Spread (NIS) and Net Interest Margin (NIM) narrowing by 49 and 52 basis points respectively, primarily due to a larger decline in average yield on interest-earning assets than the increase in average cost of interest-bearing liabilities Net Interest Income, Net Interest Spread, and Net Interest Margin | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Net Interest Income (Million) | 9,053.68 | 10,744.81 | | Net Interest Spread (NIS) | 2.07% | 2.56% | | Net Interest Margin (NIM) | 2.10% | 2.62% | Interest Income Interest income decreased by 3.93% year-on-year to RMB 19.805 billion in 2020, mainly due to a decline in the average yield of interest-earning assets, particularly a drop in the average yield on loans and advances from 6.06% to 5.39% as the bank implemented preferential interest rate policies - Interest income from loans and advances decreased by 1.83%, primarily due to a decline in average yield from 6.06% to 5.39%[32] - Interest income from financial investments decreased by 6.65%, primarily due to a 0.30 percentage point decrease in average yield[34] Interest Expense Interest expense increased by 8.91% year-on-year to RMB 10.751 billion in 2020, primarily driven by a 29.90% increase in interest expense on deposits due to higher average deposit balances and an increase in the average cost rate from 2.04% to 2.37%, reflecting intense competition in the deposit market - Interest expense on deposits increased by RMB 1.648 billion, a 29.90% year-on-year rise, primarily due to an increase in average balance and a 0.33 percentage point increase in average cost rate[40] Non-Interest Income In 2020, non-interest income saw significant structural changes, with net fee and commission income growing by 6.98% due to reduced platform cooperation service fees, but net gains from financial investments sharply declined by 63.60% to RMB 537 million due to bond market volatility and fair value changes, significantly impacting overall revenue - Net fee and commission income increased by 6.98% year-on-year, primarily due to a significant decrease in platform cooperation service fees from RMB 399 million to RMB 58 million[47][48] - Net gains from financial investments decreased by RMB 938 million, a 63.60% year-on-year decline, mainly due to reduced disposal gains and fair value changes of financial investments measured at fair value through profit or loss[50] Operating Expenses Operating expenses remained stable in 2020, with a slight increase of 0.45% to RMB 3.524 billion, as a 9.39% rise in staff costs due to increased headcount and wages was effectively offset by a 19.17% decrease in other general and administrative expenses from enhanced cost control Item (RMB Million) | Item (RMB Million) | 2020 | 2019 | Change (%) | | :--- | :--- | :--- | :--- | | Staff Costs | 2,133.05 | 1,949.87 | 9.39 | | Other General and Administrative Expenses | 694.20 | 858.79 | (19.17) | | Total Operating Expenses | 3,523.78 | 3,508.05 | 0.45 | Asset Impairment Losses Asset impairment losses significantly decreased by 33.98% to RMB 4.284 billion in 2020, primarily due to the bank's intensified efforts in non-performing asset recovery and disposal, which reduced impairment losses on loans and advances from RMB 4.638 billion to RMB 876 million, despite an 88.83% increase in impairment losses on financial investments Item (RMB Million) | Item (RMB Million) | 2020 | 2019 | Change Amount | | :--- | :--- | :--- | :--- | | Loans and Advances | 875.85 | 4,638.40 | (3,762.55) | | Financial Investments | 3,362.97 | 1,780.94 | 1,582.03 | | Total | 4,284.43 | 6,489.59 | (2,205.16) | Income Tax Expense Income tax expense decreased by 31.63% to RMB 580 million in 2020, mainly because the bank's intensified non-performing asset disposal efforts led to the reversal of deferred tax assets previously recognized for asset impairment losses - Income tax expense decreased by RMB 268 million, a 31.63% year-on-year decline, primarily due to the conversion of temporary differences related to previously recognized asset impairment losses into substantive differences as a result of non-performing asset disposal[57] Balance Sheet Analysis As of year-end 2020, the Group's total assets remained stable, increasing by 0.56% to RMB 458.693 billion, with asset structure shifting towards credit business as net loans and advances grew by 7.12% to 47.41% of total assets, while deposits increased by 10.97% to become the primary funding source, reducing reliance on interbank liabilities and issued bonds Asset Analysis As of the end of the reporting period, the Group's total assets reached RMB 458.693 billion, a 0.56% year-on-year increase, with core assets of loans and advances growing by 6.38% to RMB 223.422 billion, driven by a 13.28% increase in corporate loans, while financial investments decreased by 7.11% to RMB 176.093 billion to optimize asset structure Asset Item (RMB Million) | Asset Item (RMB Million) | 2020 Year-End | 2019 Year-End | Proportion Change | | :--- | :--- | :--- | :--- | | Net Loans and Advances | 217,448.76 | 202,989.37 | 44.50% -> 47.41% | | Financial Investments | 176,093.09 | 189,577.67 | 41.56% -> 38.39% | | Total Assets | 458,692.82 | 456,118.53 | - | Liability Analysis As of the end of the reporting period, the Group's total liabilities slightly increased by 0.41% to RMB 422.750 billion, with a significant optimization in liability structure as core deposits grew by 10.97% to RMB 315.771 billion, increasing their proportion of total liabilities from 67.58% to 74.68%, while market-based liabilities like interbank deposits and issued bonds decreased, indicating reduced reliance on wholesale funding Liability Item (RMB Million) | Liability Item (RMB Million) | 2020 Year-End | 2019 Year-End | Proportion Change | | :--- | :--- | :--- | :--- | | Deposits from Customers | 315,770.82 | 284,548.91 | 67.58% -> 74.68% | | Deposits from Banks and Other Financial Institutions | 21,416.59 | 31,212.14 | 7.41% -> 5.07% | | Issued Debt Securities | 42,439.82 | 55,178.64 | 13.11% -> 10.04% | | Total Liabilities | 422,750.37 | 421,030.83 | - | Shareholders' Equity As of year-end 2020, the Group's total equity increased by 2.44% to RMB 35.942 billion, with equity attributable to bank shareholders growing by 2.35% to RMB 35.268 billion, primarily driven by an increase in retained earnings - Total equity attributable to bank shareholders was RMB 35.268 billion, an increase of RMB 811 million or 2.35% from the end of the previous year[75] Off-Balance Sheet Credit Commitments As of year-end 2020, the Group's major off-balance sheet credit commitments increased by 26.08% to RMB 47.961 billion from RMB 38.040 billion in the previous year, primarily driven by a 68.75% year-on-year increase in outstanding guarantees issued Item (RMB Million) | Item (RMB Million) | 2020 Year-End | 2019 Year-End | | :--- | :--- | :--- | | Bank Acceptance Bills | 19,748.12 | 19,365.05 | | Guarantees Issued | 16,474.21 | 9,762.59 | | Letters of Credit Issued | 5,639.16 | 2,982.12 | | Unused Credit Card Limits | 5,954.49 | 5,655.79 | | Total | 47,960.98 | 38,039.56 | Loan Quality Analysis In 2020, the Group's loan quality significantly improved, with non-performing loans decreasing by RMB 867 million to RMB 3.870 billion, and the non-performing loan ratio sharply declining from 2.26% to 1.73%, indicating a better asset risk profile with an increased proportion of normal loans and a decreased proportion of special mention loans - The non-performing loan ratio decreased by 0.53 percentage points from 2.26% at the end of the previous year to 1.73%[80] - The proportion of normal loans increased from 92.83% to 96.19%, while special mention loans decreased from 4.91% to 2.08%[80] - Total overdue loans decreased from RMB 9.143 billion to RMB 4.299 billion, with their proportion falling from 4.36% to 1.92%[88] Large Exposure Risk As of year-end 2020, the Group's largest single non-interbank client exposure accounted for 12.64% of Tier 1 capital, and the largest non-interbank related client exposure accounted for 14.82%, both within regulatory limits, with the top ten single client exposures primarily concentrated in leasing and business services - Total exposure to the top ten non-interbank single clients was RMB 30.371 billion, accounting for 86.22% of net Tier 1 capital[90] - Total exposure to the top ten non-interbank related clients was RMB 36.758 billion, accounting for 104.36% of net Tier 1 capital[92] Non-Performing Asset Disposal Measures During the reporting period, the Group implemented various measures to dispose of non-performing assets, including strengthening organizational leadership, classifying and disposing of existing risks, leveraging government and judicial support, enhancing process management, and improving incentive mechanisms, thereby effectively improving disposal efficiency - Adopted a "one-account, one-strategy" approach for disposal plans, comprehensively utilizing various methods such as collection, auction, transfer, and write-off[96] - Actively sought government support and collaborated with courts and public security organs to combat debt evasion and accelerate litigation enforcement processes[96] Segment Reporting In 2020, corporate banking was the main profit contributor, with profit before tax increasing by 151.53% to RMB 2.375 billion due to significantly reduced asset impairment losses, while retail banking and credit card business profit before tax decreased by 43.51% to RMB 564 million due to narrower interest margins, and financial markets business turned to a pre-tax loss of RMB 260 million from reduced financial investment gains and increased impairment losses Business Segment (Profit Before Tax, RMB Million) | Business Segment (Profit Before Tax, RMB Million) | 2020 | 2019 | | :--- | :--- | :--- | | Corporate Banking Business | 2,374.88 | 944.19 | | Retail Banking and Credit Card Business | 564.07 | 998.55 | | Financial Markets Business | (259.71) | 701.62 | Business Overview During the reporting period, various businesses developed steadily, with corporate deposits reaching RMB 195.76 billion, retail deposits exceeding RMB 100 billion with a 35.27% increase, and financial markets business steadily advancing net-value wealth management products, while online finance, international business, and information technology construction also made positive progress Corporate Banking Business Corporate banking business made progress in deposits, loans, investment banking, and inclusive finance, with corporate deposits reaching RMB 195.76 billion, ranking first in Nanchang, corporate loans growing by 7.20% to RMB 122.033 billion, and bond underwriting amounting to RMB 5.422 billion, while inclusive small and micro enterprise loans under RMB 10 million increased by 15.38% with a reduced weighted average interest rate - Total corporate loans and advances amounted to RMB 122.033 billion, an increase of 7.20% from the end of the previous year[105] - Outstanding supply chain finance business reached RMB 4.673 billion, with cumulative online factoring financing "Yunqilian" disbursements of RMB 682 million[118] - Outstanding small and micro enterprise loans with single credit lines under RMB 10 million reached RMB 32.328 billion, an increase of 15.38% from the end of the previous year, with the weighted average interest rate decreasing by 0.93 percentage points to 5.01%[120] Retail Banking Business Retail banking business performed strongly, with retail deposits exceeding RMB 100 billion to reach RMB 116.362 billion, a 35.27% year-on-year increase and ranking first in Nanchang, while credit card issuance grew by 16.73% to 605,400 cards, and the proportion of net-value personal wealth management products significantly increased to 55.67% - Retail deposit balance reached RMB 116.362 billion, an increase of RMB 30.342 billion or 35.27% from the end of the previous year[123] - Cumulative credit card issuance reached 605,400 cards, a 16.73% year-on-year increase; credit card overdraft balance was RMB 3.838 billion, a 3.54% year-on-year increase[126] - The proportion of net-value personal wealth management product balance increased to 55.67%, a 54.73 percentage point increase from the beginning of the year[127] Financial Markets Business In financial markets business, the bank flexibly utilized monetary policy tools to maintain ample liquidity, optimized asset structure by increasing standardized investments, and steadily advanced the net-value transformation of wealth management products, with outstanding wealth management products totaling RMB 34.088 billion, a 2.67% year-on-year increase - Outstanding wealth management products amounted to RMB 34.088 billion, a 2.67% increase from the same period last year, with individual clients accounting for 97.30%[130] Information Technology Construction During the reporting period, the bank supported business development by ensuring security foundations and accelerating technological innovation, including promoting national cryptographic transformation, achieving no major security incidents, enhancing disaster recovery, applying blockchain for supply chain finance, launching WeChat ecosystem products like "Jiangyin Micro-store," and building a digital and intelligent risk control platform - Applied consortium blockchain technology to build "Yunqilian" nodes, enabling full online financing processes for upstream suppliers[137] - Launched "Jiangyin Micro-store" and "Micro-bank Platform," building customer marketing and operation platforms within the WeChat ecosystem[137] Subsidiary Business As of the end of the reporting period, subsidiary Jiangxi Financial Leasing Co., Ltd. reported total assets of RMB 13.381 billion and net profit of RMB 189 million, while the bank increased its stake in Jinxian Ruifeng Rural Bank to 69.50%, making it a subsidiary, and also holds four non-material associated rural banks - Jiangxi Financial Leasing achieved a net profit of RMB 189 million in 2020, a 27.56% year-on-year decrease, with its main credit rating being AAA[138] - During the reporting period, the bank increased its equity in Jinxian Ruifeng Rural Bank to 69.50%, making it a subsidiary of the bank[139][348] Risk Management The bank employs a comprehensive risk management approach with a "centralized management, matrix distribution" organizational structure and three lines of defense, implementing effective measures across credit, liquidity, market, and operational risks, maintaining robust liquidity indicators with a liquidity coverage ratio of 429.88%, and ensuring all capital adequacy ratios meet and exceed regulatory requirements - Established a three-line defense risk management system: "front-office business units self-control, mid-office risk departments management, and back-office audit departments supervision"[141] - As of year-end 2020, the liquidity coverage ratio was 429.88%, and the net stable funding ratio was 147.44%, indicating a sound liquidity position[144] Capital Adequacy Ratio Indicators | Capital Adequacy Ratio Indicators | 2020 Year-End | 2019 Year-End | | :--- | :--- | :--- | | Core Tier 1 Capital Adequacy Ratio | 10.29% | 9.96% | | Tier 1 Capital Adequacy Ratio | 10.30% | 9.97% | | Capital Adequacy Ratio | 12.89% | 12.63% | Social Responsibility In 2020, the bank actively fulfilled its social responsibilities by increasing credit support and offering fee reductions for pandemic control, donating RMB 23.4522 million, investing RMB 6.6 million in financial poverty alleviation to lift 20 villages out of poverty, and deploying over RMB 10 billion to major projects and RMB 14.941 billion in green credit, while also protecting consumer rights - Supported epidemic prevention and control: processed principal deferral for 2,460 enterprises, involving RMB 18.146 billion; total donations of funds and materials amounted to RMB 23.4522 million[158] - Financial precision poverty alleviation: invested RMB 6.6 million in assistance funds, enabling all 20 designated poverty-stricken villages to escape poverty[159] - Serving local development: as of the end of the reporting period, cumulative green credit disbursements reached RMB 14.941 billion[160] Future Development Outlook Looking ahead to 2021, the first year of the "14th Five-Year Plan," despite external uncertainties, China's economy is expected to continue its recovery, and the bank will adhere to the principle of seeking progress while maintaining stability, improve corporate governance, strengthen risk control, deepen reform and transformation, and enhance service quality for the real economy to support Jiangxi's new development paradigm - In 2021, the bank will embrace the new development stage, implement new development concepts, build a new development paradigm, further improve corporate governance, strengthen risk control, deepen reform and transformation, and promote business development[162] Changes in Share Capital and Shareholder Information This chapter details the bank's share capital structure, major shareholders, and any changes or pledges related to shareholdings during the reporting period Share Capital Structure and Major Shareholders As of year-end 2020, the bank's total share capital remained unchanged at 6.024 billion shares, comprising 4.679 billion domestic shares and 1.346 billion H shares, with Jiangxi Provincial Expressway Investment Group Co., Ltd. and Jiangxi Provincial Financial Holding Group Co., Ltd. as the top two shareholders, while some shares were pledged or judicially frozen Major Shareholders as of 2020 Year-End | Shareholder Name | Total Shares Held (Shares) | Percentage of Total Share Capital (%) | | :--- | :--- | :--- | | Jiangxi Provincial Expressway Investment Group Co., Ltd. | 937,651,339 | 15.56 | | Jiangxi Provincial Financial Holding Group Co., Ltd. | 347,546,956 | 5.77 | | China Tobacco Jiangxi Industrial Co., Ltd. | 263,000,000 | 4.37 | - As of the end of the reporting period, 682 million domestic shares held by 29 domestic shareholders were pledged, accounting for 11.31% of the bank's equity, with 152 million shares subject to judicial freeze[183] Directors, Supervisors, Senior Management, Employees, and Organizational Structure This chapter provides details on the composition and changes of the Board of Directors, Board of Supervisors, senior management, and employee demographics, as well as the bank's overall organizational structure Directors, Supervisors, and Senior Management As of the end of the reporting period, the Board of Directors comprised 12 members and the Board of Supervisors 9 members, with some changes in their composition and the appointment of Mr. Yu Jian as Vice President, while the bank's total workforce was 5,238, with nearly half aged 30 or below and over 90% holding a bachelor's degree or higher - During the reporting period, Ms. Zhuo Liping's qualification as a non-executive director was approved; Mr. Huang Zhenping resigned as a non-executive director; Ms. Tao Yulan and Mr. Liu Wei resigned as members of the Board of Supervisors, and Mr. Lou Mingnong and Mr. Wang Ruiqiang were elected as new supervisors[192][193] - Mr. Yu Jian was newly appointed as the bank's Vice President, with his qualification approved by the Jiangxi Banking and Insurance Regulatory Bureau on May 28, 2020[194] - As of the end of the reporting period, the bank had 5,238 employees, with 49.14% aged 30 or below and 91.85% holding a bachelor's degree or higher[215][216] Corporate Governance Report This chapter outlines the bank's corporate governance framework, compliance with regulatory codes, and the operational effectiveness of its Board of Directors, Board of Supervisors, and various committees Corporate Governance The bank established a comprehensive corporate governance structure, complying with all applicable code provisions of the Hong Kong Listing Rules' Corporate Governance Code, with the Board holding 26 meetings and the Board of Supervisors 4 meetings, and specialized committees actively performing their duties in reviewing and supervising major matters like strategy, audit, risk, and connected transactions, ensuring standardized governance operations with separate roles for Chairman and President - During the reporting period, the bank consistently complied with all applicable code provisions of the Corporate Governance Code set out in Appendix 14 of the Hong Kong Listing Rules[220] - The Board of Directors has eight specialized committees, including Strategy, Audit, Risk Management, and Connected Transactions Control, all of which convened meetings and performed their duties as required[238] - The Board of Directors conducted an annual review of the bank's risk management and internal control systems and deemed the existing systems adequate and effective[254] Board Report This chapter presents the Board of Directors' report on the bank's overall performance, financial results, and proposed profit distribution for the reporting period Dividend Distribution The Board proposes a final dividend of RMB 0.05 per share (tax inclusive) for 2020, maintaining the 5% payout ratio from 2019, totaling RMB 301 million, subject to shareholder approval Dividend Matters | Dividend Item | Amount | | :--- | :--- | | Dividends Paid for 2019 | RMB 0.05 per share (tax inclusive) | | Proposed Dividends for 2020 | RMB 0.05 per share (tax inclusive) | | Total Proposed Distribution | RMB 301 million | Supervisors' Report This chapter details the work of the Board of Supervisors, including its oversight activities and independent opinions on the bank's operations, financial reporting, and internal controls Supervisors' Work and Opinions During the reporting period, the Board of Supervisors effectively oversaw the bank's legal operations, financial reporting, connected transactions, and risk management through meetings, special inspections, and performance supervision, concluding that the bank's decision-making processes were compliant, directors and senior management were diligent, financial reports were accurate, internal controls were effective, and no actions detrimental to shareholders or the bank were found - The Board of Supervisors issued independent opinions without dissent on the bank's legal operations, the truthfulness of financial reports, compliance of connected transactions, execution of general meeting resolutions, information disclosure, risk management, and capital management[335][336][337] - During the reporting period, the Board of Supervisors held 4 meetings, reviewed 16 proposals, and arranged for supervisors to attend 5 Board of Directors meetings to oversee major decision-making[326][275] Significant Matters This chapter highlights key events and developments during the reporting period, including the utilization of proceeds from global offerings and significant corporate actions Significant Matters During the reporting period, all proceeds from the bank's global offering were used to strengthen its capital base, and the bank completed the acquisition and capital increase of Jinxian Ruifeng Rural Bank, making it a controlled subsidiary, with no other material penalties, significant contracts, or major connected transactions impacting operations - Net proceeds from the global offering of approximately HKD 8.598 billion were fully utilized to strengthen the capital base and support continuous business growth[342] - Completed the equity acquisition and private placement of Jinxian Ruifeng Rural Bank, increasing the shareholding from 39% to 69.5%, making it a subsidiary of the bank[348] Independent Auditor's Report This chapter presents the independent auditor's opinion on the Group's financial statements and highlights key audit matters Independent Auditor's Report KPMG issued an unmodified audit opinion on the Group's 2020 consolidated financial statements, affirming that they fairly present the Group's financial position and operating results, with key audit matters including impairment provisions for loans and advances and financial investments at amortized cost, fair value assessment of financial instruments, and consolidation of structured entities - The audit opinion was an unmodified opinion, stating that the financial statements fairly present the Group's financial position in accordance with International Financial Reporting Standards[350] - Key audit matters include: - Determination of impairment provisions for loans and advances and financial investments measured at amortized cost - Valuation of financial instruments at fair value - Consolidation of structured entities[352][353][362][364] Financial Statements This chapter contains the comprehensive financial statements of the Group for the reporting period, including the consolidated statement of financial position, income statement, statement of comprehensive income, statement of changes in equity, and cash flow statement Notes to Financial Statements This chapter provides detailed explanatory notes and disclosures supporting the financial statements, including accounting policies, significant judgments, estimates, and breakdowns of various financial statement line items