附件：2011年年度报告摘要（英文）.pdf

2011 Summarized Annual Report of Qilu Bank Co., Ltd. (The annual report is prepared in Chinese and English. English translation is purely for reference only. Should there be any inconsistencies between them; the report in Chinese shall prevail.) Ⅰ. General Introduction (Ⅰ)Legal Name in Chinese：齐鲁银行股份有限公司 (Abbreviation: 齐鲁银行 ) Legal Name in English: Qilu Bank Co., Ltd. (Ⅱ) Legal Representative: Wang Xiaochun (Ⅲ) Secretary of the Board of Directors: Mao Fangzhu Address: No.176 Shunhe Street, Shizhong District, Jinan City, Shandong Province Tel: 0531-86075850 Fax: 0531-86923511 Email: boardoffice@qlbchina.com (Ⅳ) Registered Address: No.176 Shunhe Street, Shizhong District, Jinan City Office Address: No.176 Shunhe Street, Shizhong District, Jinan City Postcode: 250001 Website: http://www.qlbchina.com (Ⅴ) Place where copies of the annual report are available at: The Board of Directors' Office of the Bank (Ⅵ) Other Relevant Information Date of the Initial Registration: 5 June 1996 Address of the Initial Registration: Shandong Administration for Industry and Commerce Corporate Business License Number: 370000018009391 Tax Registration Number: Ludishuiji Zi No.370103264352296 Auditors: Ernst & Young Hua Ming LLP Auditors’ Address: Level 16, Ernst & Young Tower, Oriental Plaza No.1, East Changan Avenue, Dong Cheng District, Beijing, China 1 II. Financial Highlights （I） Main Profit Indicators for the Reporting Period (Group) Unit (RMB thousand) Item Amount Profit Before Tax 958,842 Net Profit 787,725 Operating Income 2,119,490 Operating Expense 1,179,384 Operating Profit 940,106 Non-Operating Profit 18,735 Net Cash Flow from Operating Activities -8,131,979 Net Cash Flow from Operating Activities per Share (yuan / share) -3.43 （II）Main Financial Data and Indicators of 3 Years as at the End of the Reporting Period (The data of 2011 was measured in group) Unit (RMB thousand) Item 2011 2010 2009 Operating Income 2,119,490 2,301,954 1,840,384 Total Assets 77,279,391 85,805,775 61,359,430 Deposits Balance 66,112,588 71,094,662 54,655,444 Loans Balance 43,443,836 46,694,731 35,310,065 Shareholders’ Equity 4,401,377 3,626,262 1,341,516 Earnings per Share (yuan / share) 0.333 0.164 0.291 Net Assets Value per Share (yuan / share) 1.858 1.531 0.804 Cost to Income Ratio (%) 43.85 34.90 33.44 Return on Equity (%) 19.63 13.42 38.23 Cost-Benefit Ratio (%) 26.90 11.40 22.71 Note: The balance of deposits and loans were calculated according to the statistical caliber of CBRC and The People’s Bank of China. 2 （III）Capital Structure and Changes for the Reporting Period (The data of closing balance was measured in group) Item Closing balance 1.Core Capital Unit (RMB thousand) Opening Changes for balance the Period 4,401,167 3,625,043 776,124 336,350 326,910 9,440 3.Net Core Capital 4,064,817 3,298,133 766,684 4.Supplementary Capital 1,136,445 1,169,730 -33,285 5.Measurable Value of Supplementary Capital 1,136,445 1,169,730 -33,285 6.Deductions 672,701 653,820 18,881 7.Net Capital 4,864,911 4,140,953 723,958 8.Risk Weighted Assets 44,645,049 45,288,684 -643,635 Of which: On-balance sheet items 37,086,854 40,014,986 -2,928,132 Off-balance sheet items 7,558,195 5,273,698 2,284,497 2.Core Capital's Deductions 3 III. Risk Management (I) Supplementary Financial Data as at the End of the Reporting Period (Group) Unit (%) Criteria As at the end of 2011 Capital Adequacy Ratio ≥8 10.90 Core Capital Adequacy Ratio ≥4 9.10 Liquidity Ratio ≥25 52.35 Loan / Deposit Ratio ≤75 65.71 Borrowing to Deposit Ratio ≤8 0.00 Lending to Deposit Ratio ≤8 0.28 ≤5 9.56 Item Borrowing/Lending to Deposit Ratio Non-Performing Loan Ratio Interest Collection Ratio 97.98 Ratio of Single Largest Borrower’s Loan Against Net Capital ≤10 6.17 Ratio of Top 10 Borrowers’ Loan Against Net Capital ≤50 40.30 Note：The last two indicators about loan against net capital in this table were calculated by excluding the loans involving in the Case. (II) Distribution of Loans by Main Industry (Group) Unit (RMB thousand, %) Category of Industry Balance Percentage Wholesale and Retail 8,197,069 18.97 Manufacturing 6,090,752 14.10 Leasing and Business Services 2,504,402 5.79 Real Estates 1,428,182 3.30 Building and Construction 1,380,253 3.19 Total 19,600,658 45.35 (III) Loans Granted to Top 10 Borrowers (The balance of loans were calculated according to the statistical caliber of CBRC and The People’s Bank of China) Serial number 1 Outstanding Loan Name of Borrower Jinan City River Development Construction Investment Co., Ltd. and 4 300,000 Unit (RMB thousand, %) As a As a percentage Percentage of Total of Net Outstanding Capital Loans 0.69 6.17 2 Baiti Group Co., Ltd. 230,000 0.53 4.73 3 Jinan Geely Automobile Co., Ltd. 200,000 0.46 4.11 4 Jinan Hi-tech Holding Group Co., Ltd. 200,000 0.46 4.11 5 Tianjin Soda Plant Tianjin Bohai Chemical Industry Co., Ltd. 199,000 0.46 4.09 6 Jinan Taiyue Estate Development Co., Ltd. 180,000 0.41 3.70 7 Tianjin Naile Real Estates Co., Ltd. 175,000 0.40 3.60 8 Shandong Zhongqiao Investment Group Co., Ltd. 170,000 0.39 3.49 9 Jinan Qisheng Digital Technology Co., Ltd. 156,880 0.36 3.22 10 Jinan Iron and Steel Co., Ltd. 150,000 1,960,880 Total 0.35 4.51 3.08 40.30 Notes：The loans with respect to the case were not involved. (Ⅳ) The Classification Method of Loan Risks and the Structure of Various NPLs i. Classification Method of Loan Risks The Bank has formulated its 5-tier classification method of credit assets based on the China Banking Regulatory Commission’s “Guidelines on Classification of Loan Risks” in order to measure and manage loan risks. The Bank divides both on-and off-balance-sheet assets into 5 classes: Pass, Special-mention, Substandard, Doubtful and Loss, in which last three classes are deemed to be NPLs (Non-performing Loans). The core definitions of the credit assets set out in the Bank’s detailed rules for 5-tier classification of credit assets are as follows: Pass: Borrowers are able to honor the terms of the contracts and the Bank does not have sufficient reasons to doubt their ability to repay the principals and interests of loan in full and in a timely manner. Special-mention: Although borrowers are able to service their loan’s principals and interests currently, repayments may be affected by existing unfavorable factors. Substandard: Borrowers’ ability to service their loans are in question. Borrowers are not able to depend on their normal business revenues to pay back the principals and interests so certain losses may be incurred even when guarantees are invoked. Doubtful: Borrowers are unable to pay back the principals and interests in full and significant losses will be incurred even when guarantees are invoked. Loss: The principals and interests of loans will not be recovered or only a small portion will be recovered after the Bank takes all possible measures or necessary legal procedures. ii. Five-tier Classification of Loans (Group） 5 As a Percentage of the Closing Balance Unit: (RMB thousand, %) As a Change for Percentage the Period of the (Increase+, Opening Decrease- ) Balance Closing Balance Opening Balance Change for the Period (Increase+, Decrease-) Pass Loans 38,263,852 39,052,224 -788,372 88.08 83.63 +4.45 Special Mention Loans 1,027,619 1,120,541 -92,922 2.37 2.40 -0.03 Substandard Loans 3,867,584 6,227,896 -2,360,312 8.90 13.34 -4.44 Doubtful Loans 279,105 290,509 -11,404 0.64 0.62 +0.02 Loss Loans 5,676 3,561 +2,115 0.01 0.01 0.00 Total NPLs 4,152,365 6,521,966 -2,369,601 9.56 13.97 -4.41 Total Loans 43,443,836 46,694,731 -3,250,895 100 100 Type Note: The statistical method used was consistent with that applied in the reports to regulators. (Ⅴ)Change of Provision for Loans (Group) Unit (RMB thousand) Item Opening Balance Provision charges Transferred in from financial contract of guarantee Loan Provision 4,002,247 44,426 12,680 WriteOff 1,583,004 Write-up Due to Rise in Discounted Value Writeup Closing Balance 167,806 10,242 2,318,785 （VI）Impairment Provision for Investments, Pledged Assets and Other Assets (Group) Unit (RMB thousand) Item Opening Balance Closing Balance Impairment Provision for Inter-bank Balances 19,503 19,503 Impairment Provision Receivable investments 9,355 9,355 Provision for Other Receivables 50,827 52,170 Impairment Provision for Pledged Assets 39,184 35,819 for Loans and (VII) Pledged Assets (Group) Unit (RMB thousand, %) Type Closing Balance Percentage Real Estates 36,607 65.56 Machinery 0 0 Shareholding 0 0 6 Others 19,228 34.44 Total 55,835 100 （VIII） Main External Equity Investments (the Bank) Unit (RMB thousand, %) Amount of Investment as at the Share End of the Reporting Proportion Period External Equity Investments Zhangqiu Qilu Village Bank Co., Ltd. 25,500 51 Bank of Jining Co., Ltd. 500,850 18.41 Bank of Dezhou Co., Ltd. 102,000 5.57 Shandong City Commercial Bank Association Co., Ltd 20,000 7.14 China UnionPay Co., Ltd. 8,135 0.27 400 1.33 City Commercial Banks’ Funds Clearing Center 656,885 Total Note: The investment on Bank of Dezhou Co., Ltd. was accounted under equity method; the others were accounted under cost method. (IX) Off-Balance Sheet Items that may have significant influence on the Financial Position and Operating Results i. Letters of Guarantee (L/Gs) and Letters of Credit (L/Cs) Issued As at the end of the reporting period, the balance of L/Gs issued was RMB621.52 million and the balance of L/Cs issued was RMB610.21 million. ii. Guarantees and Loans Commitment As at the end of the reporting period, there was no outstanding balance of Guarantees and Loans Commitment. iii. Banker's Acceptance Bills Issued As at the end of the reporting period, the balance of banker’s acceptance bills issued was RMB 20,177.58 million. iv. Import Refinance As at the end of the reporting period, the balance of import refinance was RMB 54.82 million. (X) Risk Management of Credits Granted to Group Clients As at the end of the reporting period, among the Bank’s group clients, the amount of credit granted to Baiti Group Co., Ltd. was RMB230 million which accounted for 4.73% of the net capital of the Bank. The amount of credit granted to Shandong Fengxiang (Group) Co., Ltd. was RMB211.35 million which accounted for 4.34% of the net capital of the Bank. The amount of credit granted to Jigang Group 7 Corporation was RMB210.73 million which accounted for 4.33% of the net capital of the Bank. The amount of credit granted to China National Petroleum Corporation was RMB210 million which accounted for 4.32% of the net capital of the Bank. (XI) Various Risks Faced by the Bank and Risk Management During the reporting period, the Bank has faced different kinds of risks such as credit risk, operation risk, market risk, liquidity risk, compliance risk, information technology risk, reputation risk, etc., in view of the existing risk situation, the Bank has actively taken relevant measures to continuously improve the Bank’ level of risk management. i. Credit Risk Management (1) Improving the Management of the Comprehensive Credit Process First, the Bank has optimized credit process to establish a sound credit policy system. Secondly, the Bank has improved the credit review and approval quality, and established a professional credit approval system by industries. Thirdly, the Bank has developed post-loan management mechanism by strengthening position settings. Fourthly, the Bank has organized conferences for non-performing loans analysis timely and implemented the plans and the measures of recovery. (2) Implementing New Regulations and Regulatory Requirements on Loans The Bank has strengthened compliance review of loan payment in accordance with the regulatory requirements. The bank has checked and rectified government platform loans and actively promoted the work of changing repayment method of current medium and long-term loans. (3) Optimizing the Credit Structure The Bank has formulated ‘The 2011 Credit Approval and Marketing Policies’, timely adjusted the policies in accordance with the macroeconomic situation and regulatory requirements, compressed real estate loans, raised the standard of granting loans, and so on. (4) Strengthening Post-loan Management Firstly, the Bank has monitored the loans usage and followed up the progress of post-loan inspections. Secondly, the Bank has investigated and filtered potential risk customers by using cash flow monitoring tools and financial trend analysis tools. Thirdly, the Bank has organized on-site inspections on large credit customers and risk warning customers. Fourthly, the Bank has organized special business inspections to standardize the credit operation. (5) Enhancing Constructions of the IT System The Enterprise Risk Management System (ERMS) has come into operation. The Bank has improved the loan process, management of credit authorization and the function of 5-tier classification. ii. Operation Risk Management 8 (1) Standardizing Loan Payment Management The Bank has set up the loan payment center in the Head Office, appointed full-time staff to be responsible for loan payment review in the county sub-branches, and standardized the operations of loan payment centers of the Branches and Administrative Branches. (2) Strengthening the Operational Risk Management of Accounting Settlement The Bank has centralized the account-opening approval authority, The Bank has implemented to withdraw bills centrally, assigned accounting supervisors to strengthen operational risk management of frontline businesses, developed accounting risk warning system, applied electronic payment cipher instruments, and enhanced the security of deposit certificates. (3)Improving the operational risk management of E-banking The Bank has formulated the ‘Qilu Bank Online Banking Operational Risk Prevention Requirements of Counter Service’, which clearly defined matters ‘Ten Should Follow and Ten Should not Follow’ in the E-banking business, developed the internet banking risk-monitoring and anti-fraud management system, enhanced public safety awareness, guaranteed high quality of new customers, carried out the risk prevention work continuously via customers transactions analysis and on-site inspections, etc. (4)Organizing Investigations of Risk Points and Special Points First, the Bank has completed detecting risk points of credit, settlement and international businesses by organizing investigations. Secondly, the Bank has investigated Teller system vulnerabilities. Thirdly, the Bank has carried out several on-site checks, such as rolling-type inspections of deposit risks, counter services and so on. iii. Market Risk Management (1) Perfecting Institutional Construction The Bank has issued ‘Market Risk Limit Management Policy of Qilu Bank’, and established the market risk limit management system on the whole basically. (2) Monitoring the Market Risk Level The Bank has monitored risk indicators and risk limits through risk models and tools such as Value at Risk (VAR), Duration, sensitivity analysis and stress testing; monitored the risk limit. (3) Continuously Monitoring and Reviewing The Bank has supervised and checked daily financial market businesses one by one by way of giving play to the middle-ground controlling function of market risk management. (4) The Bank has strengthened the daily management of funds management system and market risk management system, and engaged in sorting out and accumulating market risk data. iv. Liquidity Risk Management 9 (1)Performing Stress Testing The Bank has completed the stress testing of the liquidity, and the stress testing of raising deposit reserve in a single scenario. The Bank has designed different scenarios to take gentle, moderate and severe stress testing. The Bank has taken proper measures of the liquidity, which were on asset-liabilities basis combining with stress testing results. (2)The Bank has periodically analyzed the liquidity risk, and reported the management of liquidity risk. v. Compliance Risk Management (1)Establishing and improving the supervising system to regulate staff’s conduct The Bank has established and improved the supervising system to regulate staff’s conduct by formulating a series of rules such as＂management approach on the anomie behavior of employee＂,＂ Qilu Bank Rules Concerning Strict Prohibition of Fund and Capital Transactions Between Staff and Corporate Customers or Individuals with Lending Relationships＂, etc. (2) Strengthening the Construction of Internal Control The Bank has summarized situations of internal control construction from five aspects which include internal control environment, risk identification and assessment, internal control measures, monitoring evaluation and correction, and information communication and feedback. vi. Information Technology Risk Management (1)Improving the Construction of IT System In accordance with the requirements of ‘Commercial Bank Information Technology Risk Management Guidelines’ issued by CBRC, the Bank has improved the information security management system. (2) Establishing the IT System Operation Monitoring Platform. Through the platform, the Bank has monitored the usage of Teller System, database resources and network resources in real time. The Bank has monitored transactions situations of the Teller System, ATM and other channels in real time. (3) Advancing the Security Management. The Bank has made the penetration test of the E-banking, taken measures to prevent DDOS (Distributed Denial of Service) attacks, scanned bugs of critical information systems, optimized and upgraded program according to the scan results and strengthened the security of the Teller System, etc. vii. Reputational Risk Management The Bank has continuously monitored the events and information that may affect the Bank’s reputation by public opinion detection system of reputational risk. The Bank has periodically reported situations of monitoring public opinion. 10 (XII) Main Policy Measures and Results of NPLs Management During the reporting period, the Bank continued to perfect the management of NPLs, established NPLs dispatching and analyzing mechanism. The Bank focused on risk control of the problematic debts and controlling the increment of NPLs in accordance with the situations of economy. During the reporting period, the Bank continued to promote suing and recovering NPLs as well as corporate with judicial authorities, and adopted various methods to dispose of NPLs, including writing-off RMB1,583 million. 11 IV. Changes of Shareholding and Related-party Transactions (I) Changes of Shareholding Unit (shares) Before Change Changes for the period (Increase+, Decrease-) 557,500,000 0 557,500,000 1,200,667,747 -528,311 1,200,139,436 Shares Held by Foreign Entities 473,750,000 0 473,750,000 Shares Held by Natural Persons 136,832,253 +528,311 137,360,564 2,368,750,000 0 2,368,750,000 Nature of the Share Shares Held by State Shares Held by Domestic Legal Entities Total After Change (II) Information of Shareholders i. The Top 10 Shareholders and their Shareholdings as at the End of the Reporting Period Commonwealth Bank of Australia held 473.75 million shares which accounted for 20% of the total shares； Jinan State-owned Assets Operation Co., Ltd. held 422.50 million shares (17.84%); Jigang Group Co., Ltd. held 117 million shares (4.94%); Jinan City Economic Development Investment Co., Ltd. held 115 million shares (4.85%); Shandong Jianbang Investment Management Co., Ltd. held 106 million shares (4.47%); Rizhao Steel Holding Group Co., Ltd. held 100 million shares (4.22%); Shandong Tri-cel Estates Co., Ltd. held 99 million shares (4.18%); China National Heavy Duty Truck Group Corp., Ltd. held 70.50 million shares (2.98%); Shandong Zhongrun Estates Group Co., Ltd. held 45 million shares (1.90%) and Huasheng Jiangquan Group Co., Ltd. held 40 million shares (1.69%). ii. Transfer of Shares by the Top 10 Shareholders There were no transfer of shares by the top 10 shareholders happened during the reporting period. (III) The Shares of Top 10 Shareholders of the Bank which were Pledged, Held in Custody or Frozen At the end of the reporting period, shares held by the top 10 shareholders that were pledged were as follows: 154.50 million held by Jinan State-owned Assets Operation Co., Ltd., 105.50 million held by Jinan City Economic Development Investment Co., Ltd., 106 million held by Shandong Jianbang Investment Management Co., Ltd., 70 million held by Shandong Tri-cel Estates Co., Ltd., 45 million held by Shandong Zhongrun Estates Group Co., Ltd., 40 million held by Huasheng Jiangquan Group Co., Ltd., totaling 521 million shares. During the reporting period, no shares of the top 10 shareholders of the bank were frozen. 12 (IV) Significant Related-party Transactions Unit (RMB thousand) Related Shareholders Jigang Group Co., Ltd. Shandong Jianbang Investment management Co., Ltd. Shandong Tri-cel Estates Co., Ltd. Significant Related-party Transactions Business Amount of Name of Borrower type credit Jinan Iron and Steel Co., Ltd. Shandong Ruide Development Co., Ltd. Economic Shandong Tri-cel Technology Development Company Shandong Guoqing Machinery and Electronic Technology Co., Ltd. Risk Exposure Loan 110,000 110,000 Loan 75,000 75,000 Loan 60,000 60,000 Loan 50,000 50,000 Note: The transactions were measured by the adjusted Net Capital from the 2011 Auditor’s report. (V) NPLs of Shareholders and Affiliated Companies As of the end of 2011, the non-performing loans of Bank’s shareholders and its affiliated companies were as follows: i. The Yellow River Auto-Parts Factory of Shandong Kuangshan Holding Company holds 204,471 shares, which accounts for 0.0086%. As at the end of 2011, the company’s loan balance (principal) was RMB750 thousand with no overdue interest and the loan was classified as substandard which was not under litigation. ii. Aluminum Paste Factory, Huaiyin District, Jinan City holds 127,794 shares, which accounts for 0.0054%. As at the end of 2011, the company’s loan balance (principal) was RMB350 thousand with no overdue interest and the loan was classified as substandard which was not under litigation. 13 V. Corporate Governance (I) Overview of Corporate Governance In compliance with the relevant laws and regulations such as “Company Law”, “Commercial Bank Law” and the relevant banking regulations such as “Guidelines on Corporate Governance of Joint-Stock Commercial Banks”, “Guidelines on Independent Directors and External Supervisors Systems for Joint-Stock Commercial Banks” and “Guidelines on Due Diligence of Board of Directors of Joint-Stock Commercial Banks (Trial)”, the Bank continued to strengthen the Bank’s corporate governance mechanism. i. Shareholders and Shareholders’ Meeting The Bank did not have controlling shareholders. During the reporting period, the Bank held the 2011 First Interim Shareholders’ Meeting. ii. Directors, Board of Directors and its Specialized Committees The Board of Directors was composed of 13 directors. The number and composition of directors of the Board of Directors met the requirements of the related laws and regulations. During the reporting period, the Board of Directors held 11 meetings. 4 specialized committees were set up under the Board of Directors, i.e. Related-party Transactions Control and Risk Management Committee, Nomination and Remuneration Committee, Audit Committee and Strategy Committee and the chairpersonships of the 4 specialized committees were all assumed by Independent Directors. iii. Supervisors, Board of Supervisors and its Specialized Committees The Board of Supervisors consisted of 9 members. During the reporting period, the Board of Supervisors held 5 meetings. Nomination Committee, Risk Monitoring Committee and Financial Monitoring Committee were set up under the Board of Supervisors, and the chairpersonships of the 3 specialized committees were all assumed by External Supervisors. iv. The Executive Management and its Subsidiary Committees The Bank’s Executive Management consisted of 1 President, 1 Executive Vice President, 4 Vice Presidents, 1 Assistant President, 1 Chief Financial Officer, and 1 Chief Information Officer. Under the Executive Management, there were committees including the Assets and Liabilities Management Committee (ALCO), Loan Review and Approval Committee, Risk Management Executive Committee, Innovation Committee, Sales and Marketing Steering Committee, Service Committee, Management Refinement Steering Committee and Financial Review Committee. v. Information Disclosure and Investor Relationship Management Because of the auditing of 2010 financial statements did not finish, authorized by CBRC, the 2011 annual report was delayed to disclose and didn’t disclose within the reporting period. During the reporting 14 period, the Bank kept on contacting with investors through the external website, investors’ mailbox, telephone and face to face inquiries, supplying service for investor. (II) The Organizational Structure of the Bank and its Branches i. The Organizational Structure of the Bank 15 Corporate Banking Dept. Related Party Transactions Control and Risk Management Committee Small Enterprises Banking Dept. Nomination and Remuneration Committee Retail Banking Dept. Audit Committee Financial Market Dept. Internal Audit Dept. Strategy Committee International Banking Dept. Electronic Banking Dept. Board of Directors’ Office Banking Dept. Board of Directors Executive Management Risk Management Dept. Credit Approval Dept. Compliance Dept. Discipline Inspection Office Shareholders’ Meeting Operations Dept. IT Dept. Human Resources Dept. Financial Review Committee Management Refinement Steering Committee Service Committee Sales and Marketing Steering Committee Innovation Committee Risk Management Executive Committee Credit Approval Committee Assets and Liabilities Management Committee Board of Supervisors Nomination Committee Planning ＆ Finance Dept. General Office Administration ＆ Security Dept. Party and Masses Working Committee Liaocheng Branch ( 5 sub-branches) Risk Monitoring Committee Financial Monitoring Committee Tianjin Branch ( 5sub-branch) Board of Supervisors’ Office Qingdao Branches 68 Sub-Branches (Jinan Area) 16 ii. Branches and Sub-branches of the Bank were as follows No. Name Address 1 Jinan Beitan Sub-Branch No.15 Yingxian Street, Tianqiao District, Jinan 2 Jinan Beiyuan Sub-Branch No.548 Beiyuan Avenue ,Tianqiao District, Jinan 3 Jinan Changqing Sub-Branch No.999 Bingu Street, Changqing Distinct, Jinan 4 Jinan Chaoshanjie Sub-Branch No.59 Chaoshan Street, Lixia District, Jinan 5 Jinan Chengdong Sub-Branch Unit 1, No.6 Huaxin Road, Licheng District, Jinan 6 Jinan Chengnan Sub-Branch No.222&223&224, Yingxiongshan Road, Shizhong District, Jinan 7 Jinan Chengxi Sub-Branch No.190 Zhangzhuang Road, Huaiyin District, Jinan 8 Jinan Daguanyuan Sub-Branch No.51 Jingwu Road, Shizhong District, Jinan 9 Jinan Daminghu Sub-Branch No.1 Baobei Road, Lixia District, Jinan 10 Jinan Daqiaolu Sub-Branch No.78 Daqiao Road, Licheng District, Jinan 11 Jinan Dianchang Sub-Branch No.164 Gongyebei Road, Licheng District, Jinan 12 Jinan Donghuan Sub-Branch 13 Jinan Duandian Sub-Branch No.66 Jiyan Road, Huaiyin District, Jinan 14 Jinan Erhuandonglu Sub-Branch ZhongRunShijiCheng ,No.13777 Jingshi Road, Lixia District, Jinan 15 Jinan Ganshiqiao Sub-Branch No.87 Jingqi Road, Shizhong District, Jinan 16 Jinan Gaoxin Sub-Branch No.746 Xinyu Road, High-tech Development Zone, Jinan 17 Jinan Gongyebeilu Sub-Branch No.303 Gongyebei Road, Licheng District, Jinan 18 Jinan Gongyenanlu Sub-Branch 19 Jinan Guangming Sub-Branch No.53 Yingxiongshan Road, Shizhong District, Jinan 20 Jinan Honglou Sub-Branch Unit 1, No.1 Honglounan Road, Licheng District, Jinan 21 Jinan Huayuan Sub-Branch No.59 Lishan Road, Lixia District, Jinan 22 Jinan Huaiyin Sub-Branch No.573 Jingqi Road, Huaiyin District, Jinan 23 Jinan Yangguangxinlu Sub-Branch 24 Jinan Jigang Sub-Branch No.3966 Donghuan International Square, Erhuandong Road, Licheng District, Jinan 1st floor and 2nd floor, Block B, Sanqing Fengrun Building, No.100 Gongyenan Road, Lixia District, Jinan No.19 Yangguangxin Road, Huaiyin District, Jinan West Front of Qingnian Street, Jigang New Village, Licheng District, Jinan 17 25 Jinan Jiyang Sub-Branch No.180 Kaiyuan Street, Jiyang County, Jinan 26 Jinan Jianshelu Sub-Branch No.1 Liuchangshan Road, Shizhong District, Jinan 27 Jinan Jiefanglu Sub-Branch No.10 Shimuyuandong Street, Lixia District, Jinan 28 Jinan Jinniu Sub-Branch No.4 Beima'anshan Road, Tianqiao District, Jinan 29 Jinan Jingqilu Sub-Branch No.425 Jingshi Road, Huaiyin District, Jinan 30 Jinan Jingqiweier Sub-Branch No.14 Building, No.227 Jingqiweiyi Road, Shizhong District, Jinan 31 Jinan Jingshidonglu Sub-Branch 32 Jinan Kaiyuan Branch No.55 Huanshan Road, Lixia District, Jinan 33 Jinan Keji Sub-Branch No.555 Jingsi Road, Huaiyin District, Jinan 34 Jinan Lanxianglu Sub-Branch 35 Jinan Licheng Sub-Branch No.41 Honglouxi Road, Licheng District, Jinan 36 Jinan Lishanbeilu Sub-Branch No.4 Lishanbei Road, Tianqiao District, Jinan 37 Jinan Lishandonglu Sub-Branch No.112 Jiefang Road, Lixia District, Jinan 38 Jinan Lixia Sub-Branch 39 Jinan Liuhang Sub-Branch No.226 Beiyuan Avenue, Tianqiao District, Jinan 40 Jinan Luoyuandajie Sub-Branch No.61 Luoyuan Avenue, Lixia District, Jinan 41 Jinan Luokou Sub-Branch Unit 1,No.87 Jiluo Road,Tianqiao District, Jinan 42 Jinan Minshengdajie Sub-Branch No.74 Minsheng Avenue, Shizhong District, Jinan 43 Jinan Minyingkejiyuan Sub-Branch Zone B-C, 1st floor, Area B Yike Production Base, the Crossroad of Jingshidong Road and Shunhua Road, Gaoxin District, Jinan No.1 Building, Zone2 Shidaizongbujidi, No.15 Lanxiang Road, Tianqiao District, Jinan 106 Room, Block C2, Lishanmingjun, No.173 Lishan Road, Lixia District, Jinan No.1 Sushan Road, Huaiyin District, Jinan 44 Jinan Minghudonglu Sub-Branch No.12 Minghudong Road ,Lixia District, Jinan 45 Jinan Nanjiao Sub-Branch No.306 Yingxiongshan Road, Shizhong District, Jinan 46 Jinan Pingyin Sub-Branch Unit 2, No.23 Fuqian Street, Pingyin County, Jinan 47 Jinan Qianfoshan Sub-Branch No.2 Yanzishanxi Road , Lixia District, Jinan 48 Jinan Qinghe Sub-Branch No.483 Beiyuan Avenue, Tianqiao District, Jinan 49 Jinan Shandalu Sub-Branch No.185 Shanda Road, Lixia District, Jinan 18 50 Jinan Shanghe Sub-Branch No.1 Minghui Road,Shanghe County, Jinan 51 Jinan Shizhong Sub-Branch No.131 Jinger Road, Shizhong District, Jinan 52 Jinan Shuanglong Sub-Branch Middle Section of Nanwaihuan Road, Shizhong District, Jinan 53 Jinan Shunjing Sub-Branch No.59 Heihuquanxi Road, Lixia District, Jinan 54 Jinan Shunnan Sub-Branch 55 Jinan Tianqiao Sub-Branch No.20 Wuyingshanzhong Road, Tianqiao District, Jinan 56 Jinan Wanzixiang Sub-Branch No. 333 Jinger Road, Huaiyin District, Jinan 57 Jinan Wangguanzhuang Sub-Branch No.3 Store, Weidongxindu Community, No.57 Shungeng Road, Shizhong District, Jinan Unit 9, No.73 Jiwei Road, Shizhong District, Jinan 58 Jinan Wendong Sub-Branch Unit 2, No.242 Shanda Road, Lixia District, Jinan 59 Jinan Wenxi Sub-Branch No.3 Qianfoshan Road, Lixia District, Jinan 60 Jinan Wuyingshan Sub-Branch No.15 Shifan Road, Tianqiao District, Jinan 61 Jinan Wuyingtan Sub-Branch No.50 Wuyingshanzhong Road, Tianqiao District, Jinan 62 Jinan Ximen Sub-Branch No.342 Quancheng Road, Lixia District, Jinan 63 Jinan Xishichang Sub-Branch No.575 Jinger Road, Huaiyin District, Jinan 64 Jinan Yanshan Sub-Branch Dashuntianchengshangdu, No. 5 Jiefang Road, Lixia District, Jinan 65 Jinan Yaojia Sub-Branch No.75 Jiefangdong Road, Lixia District, Jinan 66 Jinan Yingxiongshan Sub-Branch Unit 12, No.58 Ma'anshan Road, Shizhong District, Jinan 67 Jinan Zhangzhuang Sub-Branch No.191 Zhangzhuang Road, Huaiyin District , Jinan 68 Jinan Zhangqiu Sub-Branch No.76 Huiquan Road, Zhangqiu 69 Liaocheng Branch 70 Liaocheng Chiping Sub-Branch 71 Liaocheng Kaifaqu Sub-Branch 72 Liaocheng Linqing Sub-Branch 73 Liaocheng Gaotang Sub-Branch 74 Liaocheng Yanggu Sub-branch South-east corner of the crossroad of Dongchang Road and Weiyu Road, Liaocheng , Shandong Province No.115 Yudong Road, Chiping County, Shandong Province No.54 Dongchang Road, Liaocheng Economic &Technological Development Area, Liaocheng No.2009 Guloudong Street, Linqing , Shandong Province No.511 Guandao Street, Huashengyuan Community, Gaotang Country, Liaocheng , Shandong Province No. 145 Gushan Road, Yanggu County, Shandong Province 19 75 Tianjin Branch No.37&39 Youyibei Road, Hexi Distinct, Tianjin 2175,2176,1193 and 1194 Room, No.1 & 2 & 3 Building, Changying 76 Tianjin Beichen Sub-Branch Commercial Plaza, northwest corner of the crossroad of Jingjin Road and Longzhou Road, Beichen District,Tianjin 101,201,301 Room，Unit 5, No.1 Building, 101,201,301 Room, Unit 6, 77 Tianjin Huayuan Sub-Branch No.1 Building, Caizi Community, Western part of the North of Yashi Road, Nankai District ,Tianjin 78 Tianjin Kaifaqu Sub-Branch 79 Tianjin Jinnan Sub-Branch 80 Tianjin Jinghai Sub-Branch 81 Qingdao Branch 104A, 204 Room, No.39 east of 3rd Avenue, Binhai New District, Economic & Technological Development Zone, Tianjin No.3 and 4,Ground Floor, Binheyanyuan 4,north of Jingu Road and west of Xianshuigu Yueya River,Jinnan District ,Tianjin 1st and 2nd floor,Hailan Building,west of Lianmeng Road and north of Jingwen Road,Jinghai Town,Jinghai County, Tianjin 1st and 3rd Floor,Crowne Plaza, No.76 Xianggang Zhong Road,Shinan District, Qingdao (III) Status of Directors, Supervisors, Senior Executives and Employees during the Reporting Period i. Profile of Directors, Supervisors and Senior Executives Position Name Gender Age Chairperson (Directors) Wang Xiaochun Female 51 Vice Chairperson (Directors) Hu Xiaomeng Male 54 Male 48 Male 46 Executive Director Executive Director Huang Jiadong Mao Fangzhu Independent Director Shi Jianping Male 50 Independent Director Liu Feng Male 48 Independent Director Chen Xiao Male 48 Company and Position Chairperson of Board of Directors and Vice Party Secretary of Qilu Bank Director of Jinan Municipal Office of Financial Service & Party Secretary and Vice Chairperson of Board of Directors of Qilu Bank President and Vice Party Secretary of Qilu Bank Secretary of Board of Directors of Qilu Bank Professor of Central University of Finance and Economics Chairperson of Board of Directors of Modern International Financial Planning Standards Co., Ltd. Director of Accounting Department of School of Economics and Management of Tsinghua University 20 Remunerated or Not Shareholding（No. of Shares） Yes 0 Yes 0 Yes 0 Yes 138,919 No 0 Yes 0 Yes 0 Independent Director Zhang Yichi Male 45 Independent Director Wang Xiaodong Male 51 Shareholder Director Zhang Liang Male 41 Shareholder Director Zhao Mingkui Male 54 Shareholder Director Bi Zhichao Male 55 Shareholder Director Chen Jian Male 50 Chairperson (Supervisors) Wang Jianjun Male 54 Employee Supervisor Zhang Haiyan Female 50 Employee Supervisor Liu Yuhua Female 49 External Supervisor Hu Jinyan Male 45 External Supervisor Su Yuhai Male 47 External Supervisor Zhang Zhiyuan Male 48 Shareholder Supervisor Fang Chao Male 37 Shareholder Supervisor Wu Lichun Male 48 Shareholder Supervisor Li Mingji Male 46 Vice Party Secretary Wang Hongye Male 56 Professor of Guanghua School of Management of Peking University Partner of Grandall Legal Group Chief Representative, China of Commonwealth Bank of Australia Chairperson of Board of Directors of Jinan City State-Owned Assets Operation Co., Ltd. Chairperson of Board of Directors of Jigang Group Co., Ltd. Chairperson of Board of Directors of Shandong Jianbang Investment Management Co., Ltd. Chairperson of Board of Supervisors of Qilu Bank Chief Audit Officer of Qilu Bank & Chairperson of Board of Supervisors of Zhangqiu Qilu Village Bank General Manager of Operations Dept. of Qilu Bank Executive Vice Dean of School of Economics of Shandong University Vice Dean of School of Finance of Shandong University of Finance Vice Dean of School of Finance of Shandong University of Economics & Dean of Shandong Regional Economic Research Institute Vice General Manager of Rizhao Steel Holding Group Co., Ltd. President of Shandong Tri-cel Estates Co., Ltd. General Manager of Zhongrun Resources Investment Corporation Vice Party Secretary of Qilu Bank﹠Chairperson of Board of Directors of Zhangqiu Qilu Village Bank 21 Yes 0 Yes 0 Yes 0 Yes 0 Yes 0 Yes 0 Yes 0 Yes Yes Yes Yes Yes 50,000 90,000 0 0 0 Yes 0 Yes 0 Yes Yes 0 70,000 Executive Vice President Vice President Vice President Vice President Vice President Zhao Xuejin Zhang Changping Jia Hanzhong Zhang Zhigao Chai Chuanzao Male 50 Male 46 Male 47 Male 50 Male 49 Secretary of Disciplinary Inspection Committee Li Yingchun Female 57 Assistant President Zhanghua Male 45 Cui Xiang Female 49 Zhang Diandong Male 52 Chief Financial Officer Chief Information Officer Executive Vice President of Qilu Bank Vice President of Qilu Bank Vice President of Qilu Bank Vice President of Qilu Bank Vice President of Qilu Bank Secretary of Disciplinary Inspection Committee of Qilu Bank Assistant President of Qilu Bank Chief Financial Officer of Qilu Bank Chief Information Officer of Qilu Bank Yes 164,107 Yes 286,359 Yes 110,000 Yes 70,000 Yes 70,000 Yes 163,256 Yes 150,000 Yes 249,000 Yes 50,000 ii. Areas of Responsibilities of Executive Management Year of Position Name Areas of Responsibilities Experience Responsible for the Bank's overall executive management， Huang President 30 assist in the management of cadres＆personnel work, in Jiadong charge of supervision work. In Charge of Financial Market Dept., International Executive Banking Dept., IT Dept., cum GM of Corporate Banking Zhao Vice 30 Xuejin Dept., cum the Director of Innovation Committee＆ President Financial Review Committee. Vice President Zhang Changping 15 Responsible for Trade Union’s overall executive management, In charge of Banking Dept. cum GM of the Administration & Security Dept., cum the Deputy Director of the Party and Masses Working Committee. Vice President Jia Hanzhong 25 In Charge of Credit Approval Dept., Compliance Dept., cum GM of Small Enterprises Banking Dept. and the Director of Credit Approval Committee. Vice President Zhang Zhigao 30 In charge of Electronic Banking Dept., Operations Dept., cum GM of Retail Banking Dept. and the Director of Service Committee. Vice President Chai Chuanzao 26 Responsible for Tianjin Branch's overall executive management Assistant President Zhang Hua 26 Responsible for Qingdao Branch's overall executive management Cui Xiang 33 cum GM of Planning & Finance Dept., and the Director of Financial Review Committee. Zhang Diandong 17 cum GM of IT Dept. Chief Financial Officer Chief Information Officer 22 Note: Bisset Richard Francis Hart was in charge of Risk Management Dept. until the Board of Directors discharged him the Vice President and CRO of the Bank for the reason of the termination of his transfer agreement. After that President Huang Jiadong was in charge of Risk Management Dept.. iii. Employees Profile At the end of the reporting period, the company had 2,110 employees, of which, 283 employees with master's degree and accounted for 13％, 1,727 employees with bachelor’s degree and diploma (82％), 100 employees with below secondary and vocational qualifications (5％). There were 381 employees with middle and senior professional technical qualifications (18％) and 609 employees with junior professional technical qualifications (29％). (Ⅳ) The Remuneration of Directors, Supervisors and Senior Executives For the reporting period, a total of 20 persons (including ex-Chairperson of Board of Directors, ex-Chairperson of Board of Supervisors, ex-President and ex-Vice President Bisset Richard Francis Hart), including directors (except Independent Directors，Shareholder Directors), supervisors (except External Supervisors，Shareholder Supervisors) and senior executives, was remunerated by the Bank, and the amount of remunerations (after tax) paid for the reporting period was RMB 8.92 million. The actual allowances (after tax) received by the Independent Directors (4 people) were RMB 407.7 thousand. The actual allowances (after tax) received by the Shareholder Directors (5 people) were RMB 135 thousand. The actual allowances (after tax) received by the External Supervisors (3 people) were RMB 157 thousand. The actual allowances (after tax) received by the Shareholder Supervisors (3 people) were RMB 39 thousand. (Ⅴ) Changes of Directors, Supervisors and Senior Executives During the Reporting Period During the reporting period, Qiu Yunzhang resigned the Chairperson of the Board of Directors and the Director of the Bank, Guo Tao resigned the Director and the President the Bank, and Wang Hongye resigned the director of the Bank according to the work requirements. Zhang Suning resigned the Chairperson of the Board of Supervisors and the Supervisor. The 2011 First Interim Shareholders’ Meeting was held on 22 March 2011 agreed to added Wang Xiaochun, Hu Xiaomeng, and Huang Jiadong as Director of the 5th Board of Directors of the Bank. The 9th meeting of the 3rd Employee Congress elected Wang Jianjun as the Employee Supervisor. The 9th of the 5th Board of Directors which was held on 22 March, 2011 elected Wang Xiaochun as the Chairperson of the Board of Directors, elected Hu Xiaomeng as Vice Chairperson of the Board of Directors, agreed to appoint Huang Jiadong as the President. The 6th meeting of the 5th Board of Supervisors which was held on 22 March, 2011 elected Wang Jianjun as the Chairperson of the Supervisors. The 16th meeting of the 5th Board of Directors which was held on 23 Dec, 2011 agreed the discharging Bisset Richard Francis Hart as the Vice President and CRO of the Bank for the 23 reason of the termination of his transfer agreement. (VI) Shareholders’ Meeting The 2011 First Interim Shareholders’ Meeting was held on 22 March 2011 on the 3rd floor in the first conference room of Qilu Bank Building at No.176, Shunhe Street, Shizhong District, Jinan City. 51 shareholders and representatives of the shareholders attended the meeting representing 2,055,496,310 shares, 86.78% of the total shareholding. The meeting was convened by the 5th Board of Directors of the Bank. The following resolutions were deliberated and passed by voting: agreed to added Wang Xiaochun as Director of the 5th Board of Directors of the Bank; agreed to added Hu Xiaomeng as Director of the 5th Board of Directors of the Bank; agreed to add Huang Jiadong as Director of the 5th Board of Directors of the Bank. (VII) The Work of the Board of Directors i. The Meetings of the Board of Directors and the Major Resolutions Passed during the Reporting Period The 6th meeting of the 5th Board of Directors was held on 7 January 2011 in the conference room on the 16th floor of Qilu Bank Building at No. 176 Shunhe Street, Shizhong District, Jinan City. 10 out of 13 directors attended the meeting. The meeting was chaired by Qiu Yunzhang, reported the situation of the case that the Bank involved. The 7th meeting of the 5th Board of Directors was held on 7 March 2011 in the conference room on the 16th floor of Qilu Bank Building at No. 176 Shunhe Street, Shizhong District, Jinan City. All 13 directors attended the meeting. The meeting was chaired by Qiu Yunzhang and the following resolutions were passed: agreed to accept Guo Tao’s resignation of the director of Qilu Bank Co., Ltd; agreed to accept Qiu Yunzhang’s resignation of the director of Qilu Bank Co., Ltd; According to the work requirements, agreed to accept Wang Hongye’s application of resigning director of Qilu Bank Co., Ltd, with the Board of Directors and above directors’ agreement, directors would continue to perform their responsibilities after submitting the resignation until 2011 First Interim Shareholders’ Meeting elected new directors. Agreed Wang Xiaochun as additional director candidate of Qilu Bank Co., Ltd, and the submission of election in 2011 First Interim Shareholders’ Meeting; Agreed Hu Xiaomeng as additional director candidate of Qilu Bank Co., Ltd, and the submission of election in 2011 First Interim Shareholders’ Meeting; Agreed Huang Jiadong as additional director candidate of Qilu Bank Co., Ltd, and the submission of election in 2011 First Interim Shareholders’ Meeting; Agreed to the proposed agenda for 2011 First Interim Shareholders’ Meeting. The 8th meeting of the 5th Board of Directors was held on 22 March 2011 in the conference room on the 16th floor of Qilu Bank Building at No. 176 Shunhe Street, Shizhong District, Jinan City. 12 out of 13 24 directors attended the meeting. The meeting was chaired by Qiu Yunzhang and the following resolutions were passed: agreed that Guo Tao resigned the President of Qilu Bank Co., Ltd; agreed that Qiu Yunzhang resigned the Chairperson of Board of Directors; agreed that Guo Tao resigned the member of the Strategy Committee of the 5th Board of Directors, and Wang Hongye resigned the member of the Nomination and Remuneration Committee of the 5th Board of Directors; Agreed to the arrangement for the 2011 First Interim Shareholders’ Meeting. The 9th meeting of the 5th Board of Directors was held on 22 March 2011 on the 3rd floor in the third conference room of Qilu Bank Building at No. 176 Shunhe Street, Shizhong District, Jinan City. 12 out of 13 directors attended the meeting. The meeting was chaired by Wang Xiaochun and the following resolutions were passed: elected Wang Xiaochun as the Chairperson of the 5th Board of Directors of Qilu Bank Co., Ltd; elected Hu Xiaomeng as Vice Chairperson of the 5th Board of Directors of Qilu Bank Co., Ltd; agreed to appoint Huang Jiadong as President of the Bank and the appointment was settled on the term of the 5th Board of Directors; agreed to the proposal for the adjustment of Specialized Committee of the 5th Board of Directors . The 10th meeting of the 5th Board of Directors was held on 11 April 2011 by means of telecommunication and agreed to delay to release 2010 annual report. The 11th meeting of the 5th Board of Directors was held on 24 May 2011 by means of telecommunication and agreed to the proposal for the 2011 Branches Development Plan of Qilu Bank Co., Ltd and the adjustment of the duties of Head Office departments of the Bank. The 12th meeting of the 5th Board of Directors was held on 14 July 2011 in the conference room on the 16th floor of Qilu Bank Building at No. 176 Shunhe Street, Shizhong District, Jinan City. All 13 directors attended the meeting. The meeting was chaired by Wang Xiaochun and the following resolutions were passed: agreed to the operation business plan of 2011; agreed to the “External Equity Investment Management Measures of Qilu Bank Co., Ltd. ”; agreed to the proposal for the remuneration standard of the new senoir executives the Bank. The 13th meeting of the 5th Board of Directors was held on 30 August 2011 by means of telecommunication and agreed to the report on share pledged registration when the Bank’s shares are counter-pledged to get credit in the Bank. The 14th meeting of 5th Board of Directors was held on 13 October 2011 in the conference room on the 16th floor of Qilu Bank Building at No. 176, Shunhe Street, Shizhong District, Jinan City. All 13 directors attended the meeting. The meeting was chaired by Wang Xiaochun and the following resolutions were passed: agreed to the proposal for appointing Ernst & Young Huaming CPAs Co., Ltd to be the auditor for the Bank’s 2011 annual financial report; the delay voting on the supplementary regulation of 25 “Information Reporting System of Executive Management of Qilu Bank Co., Ltd”, the amended “Performance Appraisal Measures of Directors” and the “2011 Performance Appraisal of Executive Management of Qilu Bank”; which would be vote on the Board of Directors by means of telecommunication after amending. The 15th meeting of the 5th Board of Directors was held on 24 November 2011 by means of telecommunication and agreed to the supplementary regulation of “Information Reporting System of Executive Management of Qilu Bank Co., Ltd”, the “Performance Appraisal Measures of Directors” and the “2011 Performance Appraisal of Executive Management of Qilu Bank”; The 16th meeting of the 5th Board of Directors was held on 23 December 2011 in the conference room on the 16th floor of Qilu Bank Building at No. 176, Shunhe Street, Shizhong District, Jinan City. 11 out of 13 directors attended the meeting. The meeting was chaired by Wang Xiaochun and the following resolutions were passed: agreed to the proposal for establishing the Administrative Branches in Jinan District in 2012; agreed to the proposal of 2012 Branches Development Plan of Qilu Bank Co., Ltd ; agreed to the proposal for shares transfer; agreed to the proposal for 2011 write-off of NPLs; agreed to the proposal for discharging Bisset Richard Francis Hart as the Vice President and CRO of the Bank for the reason of the termination of his transfer agreement . ii. The Meetings of Specialized Committees of the Board of Directors during the Reporting Period During the reporting period, the Related-party Transactions Control and Risk Management Committee held 8 meetings, the Audit Committee held 3 meetings, the Nomination and Remuneration Committee held 4 meetings. iii The Work of Independent Directors during the Reporting Period Name of Independent Director Number of Board of Directors’ Meetings to Attend (times) Personal Attendance (times) Attendance by Proxy (times) Absence (times) Shi Jianping 11 9 2 0 Liu Feng 11 10 1 0 Chen Xiao 11 8 3 0 Zhang Yichi 11 11 0 0 Wang Xiaodong 11 10 1 0 (VIII) The Work of the Board of Supervisors i. Meetings of the Board of Supervisors during the Reporting Period During the reporting period, the following meetings were held, or attended, or observed by the Board of Supervisors: 26 On 22 March 2011, members of the Board of Supervisors attended the 2011 First Interim Shareholders’ Meeting. On 7 March 2011, the 5th meeting of the 5th Board of Supervisors was held in the conference room on the 15th floor of Qilu Bank Building at No.176 Shunhe Street, Shizhong District, Jinan City. All of the 9 supervisors attended the meeting. The meeting was chaired by Zhang Suning and agreed to the resignation of the Supervisor. On 22 March 2011, the 6th meeting(Interim meeting) of the 5th Board of Supervisors was held in the 2nd conference room on the 3rd floor of Qilu Bank Building at No.176 Shunhe Street, Shizhong District, Jinan City. All of the 9 supervisors attended the meeting. The meeting was chaired by Wang Jianjun and elected Wang Jianjun as Chairperson of the 5th Board of Supervisors of Qilu Bank Co.,Ltd. On 14 July 2011, the 7th meeting of the 5th Board of Supervisors was held in the conference room on the 12th floor of Qilu Bank Building at No.176 Shunhe Street, Shizhong District, Jinan City. 7 out of 9 supervisors were present. The meeting was chaired by Wang Jianjun, and the following resolutions were passed in principle: agreed to “Measures for the Execution of duty of Directors by the Board of Supervisors of Qilu Bank Co., Ltd.”; agreed to the revisions of “Rules of Procedure of the Board of Supervisors of Qilu Bank Co., Ltd.”; agreed to the revisions of “Interim Measures of Liaison of the Board of Supervisors of Qilu Bank Co., Ltd.”; agreed to the revisions of “Measures for Performance Appraisal of the Board of Directors by the Board of Supervisors of Qilu Bank Co., Ltd.”; agreed to the revisions of “Measures for Performance Appraisal of the Executive Management by the Board of Supervisors of Qilu Bank Co., Ltd.”; agreed to the revisions of “Responsibilities of the Board of Supervisors Office of Qilu Bank Co., Ltd.”. On 13 October 2011, the 8th meeting of the 5th Board of Supervisors was held in the conference room on the 12th floor of Qilu Bank Building at No.176 Shunhe Street, Shizhong District, Jinan City. 8 out of 9 supervisors attended the meeting. The meeting was chaired by Wang Jianjun, Chairperson of the Board of Supervisors, who conveyed the main content of Chairmen of the Board of Supervisors Forum of city commercial banks in Shandong Province, and led the Supervisors to learn the forum speech of Liu Yueqin, deputy Director of CBRC Shandong Bureau. On 23 December 2011, the 9th meeting of the 5th Board of Supervisors was held in the conference room on the 12th floor of Qilu Bank Building at No.176 Shunhe Street, Shizhong District, Jinan City. 7out of 9 supervisors attended the meeting. The meeting was chaired by Wang Jianjun and the following resolutions were passed: agreed to the revisions of “Measures for Inquiry of the Board of Supervisors”, “Measures for Inspection of the Board of Supervisors” and “Measures for Proposal of the Board of Supervisors”; agreed to the revisions of “Work Rules for Nomination Commission of the Board of Supervisors”, “Work Rules for Financial Supervision Commission of the Board of Supervisors”, and 27 “Work Rules for Risk Supervision Commission of the Board of Supervisors”. On 14 July 2011, the members of Board of Supervisors, as non–voting delegates, attended the 12th meeting of the 5th Board of Directors. On 13 October 2011, the members of Board of Supervisors, as non–voting delegates, attended the 14th meeting of the 5th Board of Directors. On 23 December 2011, the members of Board of Supervisors, as non–voting delegates, attended the 16th meeting of the 5th Board of Directors. ii. Conclusion of Special Inspection of the Board of Supervisors during the Reporting Period In 2011, the Board of Supervisors successively carried out on-site inspection of 5 sub-branches, in order to knowing the sub-branches’ operating condition in 2011, working thoughts in 2012, and opinions and proposals to the Board of Supervisors. According to the inspection, the Board of Supervisors concluded that all the sub-branches could stabilize business positively, and strengthen internal management, and all the work made positive progress on the special condition of 2011. iii. Work of External Supervisors during the Reporting Period Number of Board of Personal Name of External Supervisors’ Meetings to Attendance Supervisors Attend（times） （times） Attendance by Proxy（times） Absence （times） Hu Jinyan 5 5 0 0 Su Yuhai 5 5 0 0 Zhang Zhiyuan 5 4 1 0 iv. Independent Opinions from the Board of Supervisors on the following issues During the reporting period, the Board of Supervisors carried out supervision on the performance of Directors and senior executives，listened to the report of finance revenues and expenditures in the 2011,and concluded that the responsibilities of Directors and senior executives were fully performed and the accounting revenues and expenditures were in legal and compliance. VI. Key Events （Ⅰ）During the reporting period, whether the Bank was involved in any litigation and arbitration events , legal case which had a material impact on the operating activities During the reporting period, the Bank was not involved in any litigation or arbitration events, legal case which had a material impact on the operating activities. （Ⅱ）During the reporting period, whether the Bank had any major acquisition, merger or sale of assets events During the reporting period, the Bank was not involved in any major acquisition, merger or sale of 28 assets events. (Ⅲ) During the reporting period, whether the Bank had any significant custody, guarantee, commitment, management of entrustment assets During the reporting period, the Bank was not involved in significant custody, guarantee, commitment, management of entrustment assets (Ⅳ) During the reporting period, whether members of the Board of Directors, members of the Board of Supervisors and the Executives were subject to punishment by the relevant regulatory authorities and judicial authorities During the reporting period，the Executives were subject to punishment by the relevant regulatory authorities please refer to 2010 annual report. VII. Important Notice The Board of Directors and its directors hereby assure that there are no false records and misleading statements or major omissions in the report, and undertake responsibility jointly and severally that the contents of the report are true, accurate and complete. The meeting of the 5th Board of Directors of the Bank deliberated and approved the annual report on 28 March 2013. The Chairperson, Wang Xiaochun, the President, Huang Jiadong and the Chief Finance Officer, Cui Xiang, hereby assure that the financial reporting of the annual report is true and complete. All relevant figures in the report are consolidated figures of RMB and foreign currencies. VIII. Balance Sheet, Income Statement, and Cash Flow Statement that were audited by the Auditors of Ernst & Young Hua Ming LLP 29 QILU BANK COMPANY LIMITED CONSOLIDATED BALANCE SHEET 31 DECEMBER 2011 (All amounts expressed in RMB unless otherwise stated) [English translation for reference only] Assets Cash and balances with the central bank Due from banks Placements with banks Financial assets, held-for-trading Reverse repurchase agreements Interest receivables Loans and advances to customers Financial assets, available-for-sale (“AFS”) Financial assets, held-to-maturity (“HTM”) Investments classified as loans and receivables Investment property Fixed assets and construction in progress Intangible assets Long term equity investments Deferred income tax assets Long-term prepaid expenses Other assets TOTAL ASSETS . 31 December 2011 31 December 2010 14,757,351,997 1,664,522,842 185,923,616 50,235,059 392,664,000 301,855,286 40,917,701,935 19,283,807,486 305,668,192 162,585,900 81,067,825 3,228,786,089 286,173,066 42,629,240,324 7,628,639,254 7,476,478,001 6,451,574,234 6,800,201,775 1,834,418,159 41,315,838 2,213,021,132 44,434,858 535,815,857 27,373,737 631,384,839 788,254,500 40,179,388 1,030,180,334 586,378,438 36,495,790 609,384,839 947,122,453 40,216,822 1,074,711,579 77,279,390,875 85,805,774,569 QILU BANK COMPANY LIMITED CONSOLIDATED BALANCE SHEET(CONTINUED) 31 DECEMBER 2011 (All amounts expressed in RMB unless otherwise stated) [English translation for reference only] LIABILITIES and SHAREHOLDERS’ EQUITY 31 December 2011 31 December 2010 LIABILITIES: Due to central banks Due to banks and other financial institutions Placements from banks Repurchase agreements Due to customers Employee benefits payable Taxes payable Bonds payable Interest payable Provision Other liabilities 639,392,701 - 1,244,099,369 4,058,077,788 65,122,846,863 207,255,748 61,412,929 700,000,000 626,077,742 39,908,282 178,942,307 1,521,492,890 39,736,200 8,877,350,655 70,104,534,452 181,849,013 46,243,933 700,000,000 425,588,214 40,252,768 242,464,343 TOTAL LIABILITIES 72,878,013,729 82,179,512,468 SHAREHOLDERS’ EQUITY: Share capital Capital reserve Surplus reserve General reserve Retained profits Equity attributable to equity holders of the parent company 2,368,750,000 1,505,770,276 209,107,149 286,866,249 8,155,570 2,368,750,000 1,542,880,641 184,655,343 76,800,000 ( 546,823,883 ) 4,378,649,244 3,626,262,101 22,727,902 - TOTAL SHAREHOLDERS’ EQUITY 4,401,377,146 3,626,262,101 TOTAL LIABILITIES AND EQUITY 77,279,390,875 85,805,774,569 Non-controlling interests QILU BANK COMPANY LIMITED CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts expressed in RMB unless otherwise stated) [English translation for reference only] I. 2011 2010 Operating income Interest income Interest expense Net interest income 2,119,490,791 3,911,716,880 (1,916,537,683) 1,995,179,197 2,301,953,644 3,312,025,783 (1,142,243,772) 2,169,782,011 Fee and commission income Fee and commission expenses Net fee and commission income ( Investment income Including: Share of profits of associates Fair value (losses)/gains Foreign exchange gains Other operating income II. Operating expense Business tax and surcharges Operating and administrative expenses Impairment losses on assets Other operating expenses IV. Profit before tax Less: Income tax V. Profit for the year Attributable to: Equity holders of the parent company Non-controlling interests VI. Other comprehensive income VII. Total comprehensive income Attributable to: Equity holders of the parent company Non-controlling interests ( 101,499,318 23,112,769) 78,386,549 30,303,064 27,751,803 27,510,000 39,045) 5,393,315 16,165,254 13,527,200 1,345,961 9,848,047 14,839,273 (1,179,384,334) ( 194,376,243) (1,909,865,512) ( 150,270,918) ( 923,099,923) ( 55,513,858) ( 6,394,310) ( 798,119,029) ( 956,202,583) ( 5,272,982) 940,106,457 392,088,132 ( III. Operating profit Non-operating income Non-operating expenses 99,613,773 27,124,767) 72,489,006 29,728,325 10,992,904) ( 9,090,333 4,365,258) 958,841,878 ( 171,116,468) ( 396,813,207 63,430,916) ( 787,725,410 333,382,291 ( 789,497,508 1,772,098) 333,382,291 - ( 37,110,365) ( ( 61,727,380) 750,615,045 271,654,911 752,387,143 1,772,098) 271,654,911 - QILU BANK COMPANY LIMITED CONSOLIDATED STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts expressed in RMB unless otherwise stated) [English translation for reference only] 2011 2010 1,792,769,443 639,392,701 50,000,000 30,793,721 949,462,089 3,728,704,174 99,613,772 131,317,013 7,422,052,913 10,638,421,260 2,401,081,849 921,527,732 8,877,350,655 3,177,063,595 101,499,318 58,727,181 26,175,671,590 1 Cash flows from operating activities Net increase in due to customers, banks and other financial institutions Net decrease in loans and advances to customers Net increase in placements from banks Net decrease in placements with banks Net decrease in financial asset held-for-trading Net decrease in reverse repurchase agreements Net increase in repurchase agreements Interest received Fee and commission received Cash received relating to other operating activities Subtotal of cash inflows Net decrease in due to customers, banks and other financial institutions Net increase in loans and advances to customers Net increase in due from central bank and other banks Net decrease in repurchase agreements Net increase in placements with banks Net decrease in placements from banks Interest paid Fee and commission paid Cash paid to employees Payment of taxes Cash paid relating to other operating activities Subtotal of cash outflows ( 5,259,081,110 ) - ( 7,274,600,417 ) ( 2,699,922,516 ) ( 4,819,272,867 ) ( 39,736,200 ) ( 1,675,448,155 ) ( 27,124,767 ) ( 411,912,158 ) ( 238,863,024 ) ( 382,671,178 ) (15,554,031,975 ) ( 3,035,015,323 ) ( 50,000,000 ) ( 14,889,400 ) ( 961,836,751 ) ( 23,112,769 ) ( 334,487,955 ) ( 466,244,229 ) ( 337,616,807 ) (12,497,803,651 ) Net cash flows from operating activities ( 8,131,979,062 ) 13,677,867,939 Net cash received from disposals of investments Net cash received from disposals of fixed assets, intangible assets and other non-current assets Dividends received Subtotal of cash inflows 3,273,585,254 1,623,460,842 19,407,100 3,734,000 3,296,726,354 1,831,010 2,527,200 1,627,819,052 Purchase of investments Purchase of fixed assets, intangible assets and other non-current assets Net cash paid for other investing activities Subtotal of cash outflows ( 2,736,399,000 ) ( 8,194,253,200 ) ( 77,932,150 ) ( 2,458,643 ) ( 2,816,789,793 ) ( 112,054,455 ) ( 8,306,307,655 ) 479,936,561 ( 6,678,488,603 ) 2 Cash flows from investing activities Net cash flows from investing activities QILU BANK COMPANY LIMITED CONSOLIDATED STATEMENT OF CASH FLOW(CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2011 (All amounts expressed in RMB unless otherwise stated) [English translation for reference only] 2011 2010 24,500,000 24,500,000 429,800,000 429,800,000 3 Net cash flows from financing activities Cash received from investments Cash received from bonds issued Cash received from other financing activities Subtotal of cash inflows Dividends and interests paid Subtotal of cash outflows ( ( 41,430,978 ) 41,430,978 ) Net cash flows from financing activities ( 16,930,978 ) 229,717,083 4 Effect of foreign exchange rate changes on cash and cash equivalents ( 11,872,159 ) 2,410,771 5 Net increase in cash and cash equivalents ( 7,680,845,638 ) 7,231,507,190 Add: Cash and cash equivalents at beginning of the year 13,488,133,222 6,256,626,032 6 Cash and cash equivalents at end of the year 5,807,287,584 13,488,133,222 ( ( 200,082,917 ) 200,082,917 )