附件：齐鲁银行股份有限公司2014年年报摘要（英文）.pdf

2014 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: Zhao Xuejin Address: No.176 Shunhe Street, Shizhong District, Jinan City, Shandong Province Tel: 0531-86075850 Fax: 0531-86923511 Email: boardoffice@qlbchina.com (Ⅳ) Registered Capital: RMB 2,368,750,000 (Ⅴ) 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 Customer service telephone number: 4006096588 (Ⅵ) Business of the Bank: RMB business: deposit-taking, short-term lending, medium-term lending and long-term lending, domestic clearing, bill discounting, financial institution bond issuances, certificate treasury bond distribution, early repayment and underwriting, government bond transactions, inter-bank placements and acceptances, bank guarantees, payment and collection agency, insurance agency business, deposit boxes services, entrusted loans services etc. Foreign currency business: deposit-taking and lending, remittance, currency exchange, international settlements, inter-bank placements and acceptances, bill discounting and acceptance, bank guarantees, foreign currency settlement and clearance etc. (Ⅶ) Newspapers for Information Disclosure: Financial News Website for Information Disclosure: http://www.qlbchina.com Place where copies of the annual report are available at: The Board of Directors' Office of the Bank (Ⅶ) Other Relevant Information 1 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 2 II. Financial Highlights （I） Main Profit Indicators for the Reporting Period Unit (RMB thousand) Item Amount Profit Before Tax 1,350,474 Net Profit 1,095,009 Operating Income 3,531,233 Operating Expense 2,146,365 Operating Profit 1,384,868 Investment Income 131,985 Non-Operating Profit -34,394 17,954,603 Net Cash Flow from Operating Activities 7.58 Net Cash Flow from Operating Activities per Share (yuan / share) （II）Main Financial Data and Indicators of past 3 Years as at the End of the Reporting Period Unit (RMB thousand) Item 2014 2013 2012 3,531,233 2,833,600 2,461,728 Total Assets 122,881,291 94,003,628 83,679,665 Deposits Balance 100,999,511 83,299,419 71,330,840 Loans Balance 61,492,502 53,546,833 47,056,564 Shareholders’ Equity 7,223,803 6,001,599 5,327,536 Earnings per Share (yuan / share) 0.46 0.42 0.36 Net Assets Value per Share (yuan / share) 3.05 2.53 2.25 Cost to Income Ratio (%) 33.93 36.77 39.89 Return on Equity (%) 16.56 17.71 16.12 Cost-Benefit Ratio (%) 24.75 30.56 28.94 Operating Income Note: 1. The balance of deposits and loans were calculated according to the statistical caliber of CBRC and The People’s Bank of China. 2. The 2013 and 2012 data were restated according with the CAS implemented in 2014. 3 III. Risk Management (I) Supplementary Financial Data as at the End of the Reporting Period Unit (%) Criteria As at the end of 2014 Capital Adequacy Ratio ≥10.5 11.15 Tier One Capital Adequacy Ratio ≥8.5 10.00 Core Tier One Capital Adequacy Ratio ≥7.5 9.99 RMB ≥25 37.61 Foreign Currency ≥25 171.96 RMB ≤75 61.03 Foreign Currency ≤75 23.04 Borrowing to Deposit Ratio ≤8 0.00 Lending to Deposit Ratio ≤8 0.00 ≤5 1.72 Item Liquidity Ratio Loan / Deposit Ratio Borrowing/Lending to Deposit Ratio Non-Performing Loan Ratio Interest Collection Ratio 96.98 Ratio of Single Largest Borrower’s Loan Against Net Capital ≤10 5.70 Ratio of Top 10 Borrowers’ Loan Against Net Capital ≤50 46.32 (II) Distribution of Loans by Main Industry Unit (RMB thousand,%) Category of Industry Balance Percentage (%) Manufacturing 11,064,733 18.08 Wholesale and Retail 10,310,591 16.84 Building and Construction 4,165,010 6.80 Real Estates 2,300,309 3.76 Leasing and Business Services 2,142,026 3.50 Total 29,982,669 48.98 (III) Loans Granted to Top 10 Borrowers Serial number 1 Outstandin g Loan Name of Borrower Tianjin housing industry Investment Corp. 4 440,000 Unit (RMB thousand,%) As a As a percentage Percentag of Total e of Net Outstandin Capital g Loans 0.72 5.70 2 Shandong Yongde Building Materials Sales Co.,Ltd. 404,350 0.66 5.24 3 Tianjin Junyuanheng Trading Company 403,150 0.66 5.23 4 Shandong Luban Engineering Materials Co.,Ltd. 380,000 0.62 4.93 5 Jinan Municipal Public Utilities Bureau 358,000 0.58 4.64 6 Tianjin Real Estate Building Materials Co.,Ltd. 328,060 0.53 4.25 7 Shandong Guolu Group Co.,Ltd. 323,760 0.53 4.20 8 Qingdao Co.,Ltd. 322,700 0.52 4.18 9 Jinan Yinhai Pharmaceutical Co.,Ltd. 313,000 0.51 4.06 10 Tianjin Binhai Co.,Ltd. 300,000 0.49 3.89 3,573,020 5.82 46.32 Jieneng High&New Mass Transit Technology Development Total Note: The balance of loans were calculated according to the statistical caliber of CBRC and The People’s Bank of China. (Ⅳ) The Classification Method of Loan Risks and the Structure of Various NPLs i. Classification Method of Loan Risks The Bank has formulated its risk-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 questionable. Borrowers are not able to pay back the principals and interests only by their normal revenues. Certain losses may be incurred even when guarantees are invoked. Doubtful: Borrowers are unable to fully pay back the principals and interests 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 5 recovered after the Bank takes all possible measures or necessary legal procedures. ii. Five-tier Classification of Loans (Group) As a Percentage of the Closing Balance Unit: (RMB thousand, %) As a Change for Percentage the Period of the (Increase+, Opening Decrease- ) Balance Type Closing Balance Opening Balance Change for the Period (Increase+, Decrease-) Pass Loans 58,854,065 52,874,709 +5,979,356 95.71 98.75 -3.04 1,581,749 156,964 +1,424,785 2.57 0.29 +2.28 704,334 184,934 +519,400 1.14 0.34 +0.80 347,910 309,343 +38,567 0.57 0.58 -0.01 Loss Loans 4,444 20,883 -16,439 0.01 0.04 -0.03 Total NPLs 1,056,688 515,160 +541,528 1.72 0.96 +0.76 Total Loans 61,492,502 53,546,833 +7,945,669 100 100 Special Mention Loans Substandard Loans Doubtful Loans Note: The statistical method used was consistent with that applied in the reports to regulators. (Ⅴ) Changes of Provision for Loans Item Opening Balance Provision Write-up Write-Off Loan Provision 1,841,653 663,060 13,176 389,080 Unit (RMB thousand) Write-up Due to Closing Rise in Balance Discounted Value 27,659 2,101,150 （VI）Impairment Provision for Investments, Pledged Assets and Other Assets Unit (RMB thousand) Item Impairment investments Provision Opening Balance for Receivable Closing Balance 30,511 69,004 Provision for Other Receivables 47,462 55,131 Impairment Provision for Pledged Assets 22,232 22,064 Impairment Provision for Inter-bank Balances 19,503 19,503 (VII) Pledged Assets Unit (RMB thousand, %) Type Closing Balance Real Estates Others 6 Percentage 583,022 99.92 449 0.08 583,471 Total 100 （VIII）Main External Equity Investments (the Bank) Unit (RMB thousand, %) Amount of Investment as Share at the End of the Reporting Proportion Period External Investments Zhangqiu Qilu Village Bank Co., Ltd. 25,500 51.00 Bank of Jining Co., Ltd. 718,164 18.41 Bank of Dezhou Co., Ltd. 140,438 4.76 Shandong City Commercial Bank Association Co，Ltd. 20,000 4.60 400 1.33 8,135 0.27 City Commercial Banks’ Funds Clearing Center China UnionPay Co.，Ltd. 912,637 Total Note: Zhangqiu Qilu Village Bank Co., Ltd. is subject to consolidation method, Bank of Jining Co., Ltd. and Bank of Dezhou Co., Ltd. are accounted with equity method, all the other equity investments are accounted with cost method and be counted in available for sale investments. (IX) Major off-balance sheet items i. Letters of Guarantee (L/Gs) Issued As at the end of the reporting period, the balance of L/Gs issued was RMB515.07 million ii. Letters of Credit (L/Cs) Issued As at the end of the reporting period, the balance of L/Cs issued was RMB2632.03million. iii. Banker's Acceptance Bills Issued As at the end of the reporting period, the balance of banker's acceptance bills issued was RMB 28031.08 million. iv. Loan commitment As at the end of the reporting period, the balance of loan commitments were RMB450.00 million. (X) Risk Management of Credits Granted to Group Clients In order to strengthening clients management associated with group, monitoring credit concentration index, preventing and taking control of client associated with the bank group credit business risk, according to the China Banking Regulatory Commission’ Risk Management Guidelines for Commercial Banks’ Credit to Group Clients, the bank formulated Qilu Bank’s Tentative Procedures for Group Clients to set up criteria for group clients recognizing, identifying and exit, define management responsibilities of each organization and department. As at the end of the reporting period, among the Bank’s group clients, the amount of credit granted to Shandong Tri-cel house purchasing Co.,Ltd. was RMB741 million which 7 accounted for 9.61% of the net capital of the Bank. The amount of credit granted to Shenzhen Neptunus Group was RMB618.14 million which accounted for 8.01% of the net capital of the Bank. The amount of credit granted to Waihai Group was RMB615.22 million which accounted for 7.98% of the net capital of the Bank. The amount of credit granted to Weifang Binhai Investment and Development Co., LTD was RMB600 million which accounted for 7.78% 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. During the reporting period, the Bank has established and improved management system applied for various risks, and unified the framework of risk management to constantly improve different kinds of risk system; By strengthening the system construction and optimizing management processes, the Bank has promoted the various risk management work planned, and constantly improved the level of the Bank's risk management. i. Credit Risk Management (i) Implementing the comprehensive risk management planning. We establish ‘the Comprehensive Risk Management Planning and Implementation Plan (2014-2017)’, determining the specific content of 18 implementation projects, that mainly covers three major risk and internal capital adequacy assessment process (ICAAP). (ii) The Bank has developed and implemented the internal credit risk rating system, finished the class internal rating model development work, has been launched and put into use. (iii) Improving the system of credit risk management. The Bank has formulated and timely adjusted the annual credit policies, guided the business. The Bank has improved the unified credit granting, the rules of approving, and the credit business management system. Paying close attention to credit institutions and work after credited. Improving the review approval procedures of significant related party transactions and concluding the annual credit-granting for main related parties.. (iv) Strengthening the risk monitor and supervision after credits are granted. The Bank has established parameter monitoring of key industry, monitored monthly. The Bank has driven the credit-granting fine management.The Bank has continued to strengthen the early-warning management to evaluate risk degree and to adopt relevant management measures through The Enterprise Risk Management System (ERMS). The Bank has enhanced the risk supervision and inspection work, such as Paper business, trade finance business, confirming the storehouse, guarantee circle business, large credit business. (v) Proceed the asset preservation. By resolving and disposing of the large-amount risk assets, the bank has strengthened collection, transformation, restructuring, the comprehensive utilization of a variety of means to effectively control the growth of non-performing loans. The Bank has established the Asset 8 Preservation Department to dispose non-performing assets. ii. Operation Risk Management (i) By implementing the CEPprojects, revising the relevant management measures and getting to know other banks’system development and construction, QLB advanced the construction of operation risk management system. (ii) Improveloan review work. The bank included investment banking business in centralized loan examination scope, loan review of all credit business, contract seal and centralized management of the branch stock of personal loan business archives; improve collateralsystem functions. (iii)Strengthening the management of anti-money laundering line and operation line. The Bank has improved the organizational structure of anti-money laundering, established the new risk rating system of anti-money laundering. QLB established a bank-enterprise checking account system to improve the financial reconciliation efficiency, putting the electronic banking business into after-event supervision. QLB optimized the electronic channel risk early warning and anti-fraud system function and developed real-time monitoring function on third party quick transaction... iii. Market Risk Management (i) Daily monitor market risk limits, transaction limits, stop loss limits and foreign exchange exposure limits. Daily supervise the delegations regarding fund business, bond funds business trade, wealth management , foreign exchange and discounting business. There were neither excess-limit nor beyond-delegation cases.(ii) Revised risk rating standards and improvedthe wealth management business risk management system. iv. Liquidity Risk Management (i) The Bank has closely monitored liquidity risk indicators and limits daily and carried out stress tests on liquidity quarterly (ii) The bank has went live the liquidity risk management information system, realized the calculation of cash flow, monitoring of all kinds of indicators and the limit, monitoring high quality liquid assets and collateral(pledged artifacts), and stresstest. v. Compliance Risk Management (i) The Bank has implemented the construction of internal control evaluation system and the continuity management program.. (ii) Through the tournament of internal control, enhancing the level of compliance management and internal control. (iii) The Bank has improved the accountability management, formulated the Administrative Measures on QLB Credit Business Accountability and carried out remediation work based on regulatory opinions.. 9 vi. Information Technology Risk Management The Bank has completed a thorough IT risk evaluation as well as a special evaluation on changes of major information systems and has conducted safety architecture upgrading on the e-banking system for an improvement of system operation efficiency and safety. The Bank hired professional agencies to do safety testing evaluation on both online and mobile bankings.vii. Reputational Risk Management The Bank has checked for the reputation risks of all functional areas, and regularly monitored the public opinions in internet. Reputational risk management gets continuously enhanced. (XII) Main Policy Measures and Results of NPLs Management During the reporting period, we continue to increase the intensity of non-performing asset management, straighten out the management process, setup the new department which is Asset Preservation Department. improved the professional level of non-performing bank asset management; Combined with the current economic situation and continue to strengthen the risk prevention and control of problematic loans and loans with hidden risks, flexible use of restructuring transformation method, improve the disposal efficiency of non-performing loans, get control with the non-performing loans growth; continue to strengthen the NPL management in branches and Admimistrative increase the intensity of the director of risk dispatching during this year, carry out the non-performing asset management and disposal plan, written off 389 million Yuan of loans in total this year. (XIII) Constituents and Management of Capital i. The calculation scope of capital adequacy ratio includes Qilu Bank and the financial institutions invested by QLB directly or indirectly according to ‘The Capital Management of Commercial Bank’ which was put into trial use by CBRC in the beginning of 2013. ii. Results of Capital Adequacy Ratio Measurement The following two tables disclose measurement results of capital adequacy ratio in two calibers set by CBRC in different regulation phase. (i) According to ‘Measures for the Management of Capital Adequacy Ratio of Commercial Bank’ which was put into effect by CBRC in 2004 and was amended in 2007. Closing balance Item Core Capital Unit (RMB thousand) Opening Changes for balance the Period 7,179,546 6,001,389 1,178,157 559,794 457,776 102,018 6,619,752 5,543,613 1,076,139 Supplementary Capital 663,813 1,235,468 -571,655 Measurable Value of Supplementary Capital 663,813 1,235,468 -571,655 Core Capital Deductions Net Core Capital 10 Deductions 1,119,588 915,552 204,036 Net Capital 6,723,771 6,321,305 402,466 Risk Weighted Assets 62,953,999 52,785,083 10,168,91 6 Of which: On-balance sheet items 51,146,255 41,486,056 9,660,199 Off-balance sheet items 11,807,744 11,299,027 508,717 Capital Adequacy Ratio (%) 10.68 11.98 -1.30 Core Capital Adequacy Ratio (%) 10.52 10.50 0.02 (ii) According to ‘The Capital Management of Commercial Bank’ which was put into trial use by CBRC in the beginning of 2013 Item Closing balance Net Capital Changes for the Period Opening balance 7,713,504 6,907,326 806,178 7,219,578 5,999,293 1,220,285 304,010 398,048 -94,038 6,915,568 5,601,245 1,314,323 960 296 664 0 0 0 6,916,528 5,601,541 1,314,987 796,976 1,305,785 -508,809 Tier II Capital Deductions 0 0 0 Credit Risk Weighted Assets 63,458,716 54,586,388 8,872,328 Market Risk Weighted Assets 254,783 116,580 138,203 Operational Risk Weighted Assets 5,478,237 4,630,234 848,003 Risk Weighted Assets 69,191,736 59,333,202 9,858,534 Core Tier One Capital Adequacy Ratio 9.99 9.44 0.55 Tier One Capital Adequacy Ratio 10.00 9.44 0.56 Capital Adequacy Ratio 11.15 11.64 -0.49 Core Tier One Capital Core Tier One Capital Deductions Net Core Tier One Capital Other Tier One Capital Other Deductions Tier One Capital Net Tier One Capital Tier II Capital iii. Measurement of Risk Weighted Assets The risk weighted assets of our banks are measured according to ‘The Capital Management of Commercial Bank’. The credit risk weighted assets are measured by weight method of which each asset is assumed a regulatory risk weight. The market risk weighted assets are measured by standard method and the operational risk weighted assets are measured by basic indicator method. The measurement results are 11 listed in the preceding tables. IV. Introduction of Implementing the New Capital Management Method Originated by CBRC in 2013 During the reporting period, according to the arrangement and requirements of CBRC and its Shandong branch about promoting Management Measures(interim) on Capital of Commercial Banks and based on Implementation Plan on QLB New Capital Management Measures ., we evaluated the capital adequacy ratio regularly and adjusted business operation accordingly by limiting assets expansion. We also formulated policy about methods of how to perform ICAAP. We hinged the risk management and capital management effectively and put into effect the Capital Adequacy Ratio Management Plan for 2014 as an effort to implementing capital blueprint. (XIV) Information on the development of consumer rights and interests protection work Our bank adapted a number of measures to actively implement all work of protection of consumers’ rights and interests and to protect consumers' legitimate rights and interests effectively. Our bank formulated documents about the protection work of consumers’ rights and interests, which related to various aspects such as customers' personal information protection, business for special customer groups and systems of public notice on charges and so on. Our bank implemented many facilities such as official card chip EMS express delivery, on-line financial IC card, self-back stand-alone project implementation, customer information query trading authorization, increasing the risk of early-warning system monitoring functions to further optimize the business process and system construction, strengthened risk control and effectively protect consumer information and transaction security. Our bank also strengthened the service consciousness and fully implements the complaint handling system. In order to strengthen the work of protection of consumers' rights and interests, our bank carried out financial knowledge propaganda jobs which were "financial literacy miles", "financial literacy month", "financial literacy households" and advertises anti-counterfeit special publicities. Due to the outstanding performance, our bank had been named the ‘2014 annual financial knowledge into household publicity month advanced banking institution’ by Shandong Banking Bureau. 12 IV. Changes of Shareholding and Related-party Transactions (I) Changes of Shareholding Unit (shares) Nature of the Share Shares Held by State Shares Held by Domestic Legal Entities Shares Held by Foreign Entities Shares Held by Natural Persons Total Changes for the period (Increase+, Decrease-) Before Change After Change 557,813,957 -532,252,200 25,561,757 1,199,501,448 +531,144,148 1,730,645,596 473,750,000 0 473,750,000 137,684,595 +1,108,052 138,792,647 2,368,750,000 0 2,368,750,000 Note: During Reporting Period, The Bank confirmed the shares and cleared up unqualified shares, reclassified the nature of shares of which the state-owned corporation shares of held by state shares into held by domestic legal entities. (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 115.313957 million shares (4.87%); 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 Co., Ltd. held 70.50 million shares (2.98%); Zhongrun Futai Investment 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 During the reporting period, the Top 10 Shareholders did not have any Changes of their Shareholdings. (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 shares held by Jinan State-owned Assets Operation Co., Ltd., 105.50 million shares held by Jinan City Economic Development Investment Co., Ltd., 95.4 million shares held by Shandong Jianbang Investment Management Co., Ltd., 89 million shares held by Shandong Tri-cel Estates Co., Ltd., 40.5 million shares held by Zhongrun Futai Investment Co., Ltd., 19.999999 million 13 shares held by Huasheng Jiangquan Group Co., Ltd., totaling 504,899,999 shares. At the end of the reporting period, all the bank’s The Bank’s total 2,368,750,000 shares were held in Custody in Shan Dong Financial Assets Exchange. At the end of the reporting period, no shares of the top 10 shareholders of the bank were frozen. (IV) Significant Related-party Transactions Significant Related-party Transactions Related Amount of Share-holders Name of Borrower Business type credit Shandong Kaiwen Info Tech Loan 286,000 Co.,Ltd. Shandong Kaiwen Technology Loan 85,000 Vocational College Shandong Tri-cel house purchasing Co.,Ltd. Shandong Jianbang Investment Management Co.,Ltd. Rizhao Steel Holding Group co., LTD Jinan Steel Group Co.,Ltd Risk Exposure 286,000 85,000 Shandong Wanhe Energy Technology Co.,Ltd. Loan 10,000 10,000 Shandong Tri-cel Technology Development Company Loan 60,000 60,000 Loan 150,000 150,000 Loan、L/G 156,492 150,000 Banker's Acceptance bill 150,000 0 Shandong Jianbang Investment Management Co.,Ltd. Banker's Acceptance bill 194,000 55,000 Shandong Ruide Economic Development Co.,Ltd. Loan、Banker's Acceptance bill Loan、Banker's Acceptance bill Banker's Acceptance bill 90,000 75,000 85,074 80,000 100,000 50,000 Jinan Qisheng Digital Technology Co.,Ltd. Shandong Rong Bao Zhai cultural investment industry co. , Ltd. Shandong Tri-cel city house purchasing co. , Ltd. Shandong Forster Trade Co.,Ltd Jinan Bituo Trade Co.,Ltd. Shandong Yongdao Investment Co.,Ltd. Loan 71,000 71,000 Shandong Taicun Trade Co.,Ltd Banker's Acceptance bill 70,000 0 Shandong Jinan Jianbang Yellow River highway bridge Co.,Ltd Loan 92,900 92,900 333,330 199,998 250,000 150,000 52,660 31,596 11,259 7,659 Rizhao Steel Holding Group Co., LTD. Banker's Acceptance bill Banker's Acceptance bill Jinan Steel Group co., LTD.,Steel Supermarket Jinan Steel Group International Engineering Technology Co., LTD. Banker's Acceptance bill Banker's Acceptance bill、L/C Rizhao Steel Rolling Co., LTD. 14 Jinan Steel Group Commercial Trade Co., LTD. Loan Shandong Iron and Steel Co., LTD.Jinan Branch 10,000 10,000 195,000 150,000 2,220 2,220 Jinan Steel Group Heavy Machinery Co.,Ltd Loan、Banker's Acceptance bill Banker's Acceptance bill Shandong Luye Ruibao Electric Automation Co., Ltd. Banker's Acceptance bill 15,300 15,300 Jinan Baode Motor Transport Co., LTD. Loan 18,430 18,430 Shandong Ductile Iron Pipes Co., LTD L/G 3,560 0 (V) NPLs of Shareholders and Affiliated Companies During the reporting period, there is no NPLs of Shareholders and Affiliated Companies. 15 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 the Corporate Governance of Commercial Banks’, the Bank continued to improve the effectiveness of its corporate governance structure and strengthened the Bank’s corporate governance mechanism. i. Shareholders and Shareholders’ Meeting During the reporting period, the Bank held the 2013 Annual Shareholders’ Meeting and 2014 First Interim Shareholders’ Meeting. The notification summons, convening and voting procedures of the meeting were complied with the applicable provisions of the ‘Company Law’ and the Memorandum and Articles of Association of the Bank and supported by the legal advice issued by the lawyers on the spot. 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 9 meetings and listened to the reporting on operations and risk management regularly and resolved the major operational management issues timely. The decision-making process, authorization procedures and voting procedures of the Board of Directors were strictly carried out in accordance with the relevant laws and regulations and the Memorandum and Articles of Association of the Bank. All of the Directors attended the meetings actively and deliberated the issues conscientiously and that protected the interests of the Bank and the shareholders effectively. 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 Related-party Transactions Control and Risk Management Committee, Nomination and Remuneration Committee, Audit Committee were assumed by Independent Directors. During the reporting period, the 4 committees diligently performed their duties in accordance with their own working procedures, actively provided constructive suggestions to the Board of Directors. iii. Supervisors, Board of Supervisors and its Specialized Committees The Board of Supervisors consisted of 9 members. The number and composition of directors of the Board of Supervisors met the requirements of the related laws and regulations. During the reporting period, the Board of Supervisors held 6 meetings. All supervisors remained highly responsible for the shareholders, diligently fulfilled their various supervisory duties and protected the legitimate interests of the shareholders and the relevant stakeholders effectively. Nomination Committee, Risk Monitoring Committee and Financial Monitoring Committee were set up under the Board of Supervisors, and the Chairpersonships of 16 the 3 specialized committees were all assumed by External Supervisors. During the reporting period, the 3 specialized committees, in accordance with their own working rules, carried out their work conscientiously and provided the Board of Supervisors with good service to enable the Board of Supervisors to carry out their work effectively. 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 Chief Information Officer and 3 Assistant governors. Under the Executive Management, there were committees including the Assets and Liabilities Management Committee (ALCO), Credit Approval Committee, Risk Management Executive Committee, Innovation Committee, Sales and Marketing Steering Committee, Service Committee, Management Refinement Steering Committee and Financial Review Committee. During the reporting period, the Executive Management conscientiously carried out the resolutions of the Board of Directors, executed the budget for the year and completed the operational assignments for the year. v. Information Disclosure and Investor Relationship Management During the reporting period, the Bank published the summarized 2013 Annual Report in Financial News and released the summarized 2013 Annual Report, both in English and Chinese, on the Bank’s official website (http://www.qlbchina.com). Meanwhile, the Bank released the 2013 Annual Report on www.chinamoney.com and www.chinabond.com. Furthermore, the printed copies of Annual Report were placed at the Board of Directors’ office and every banking halls of the Bank for Investors’ and other stakeholders’ reference. During the reporting 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 17 Corporate Banking Dept. Related Party Transactions Control and Risk Management Committee Small Enterprises Banking Dept. Retail Banking Dept. Nomination and Remuneration Committee Audit Committee Financail Market Dept. Internal Audit Dept. International Banking Dept. Strategy Committee Electronic Banking Dept. Board of Directors’ Office . Institutional Investment Dept Risk Management Dept. Board of Directors Executive Management . Assets Preservation 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 Board of Supervisors Assets and Liabilities Management Committee Planning & Finance Dept. General Office Administration & Security Dept. Party & Union Office Liaocheng Branch( 8 sub-branches) Tianjin Branch ( 6sub-branch) Nomination Committee Qingdao Branch (4sub-branch) Risk Monitoring Committee Financial Monitoring Committee Tai’an Branch Board of Supervisors’ Office Dezhou Brancht Beiyuan Sub-Branch(9 sub-branches) DuandianSub-Branch(9 sub-branches) 18 DonghuanSub-Branch(6 sub-branches) GanshiqiaoSub-Branch(7sub-branches) Gaoxin Sub-Branch (7sub-branches) Huayuan Sub-Branch (5 sub-branches) Jianshelu Sub-Branch (6 sub-branches) LishandongluSub-Branch(5 sub-branches) QianfoshanSub-Branch(8sub-branches) Straight Sub-Branch ( 7sub-branches) ⅱ. Branches and Sub-branches of the Bank are as follows: The Bank presently has 101 branches, including 5 branches, two more than the previous year and 96 sub-branches 13 more than the previous year. The branches consisted of Liaocheng Branch, Tianjin Branch,Qingdao Branch, Tai’an Branch and Dezhou Branch under which 18 sub-branches were established. There are 78 sub-branches in Jinan, including 73 traditional sub-branches, 1 community sub-branch, 4 small sub-branches, 9 of which are directly managed by the Head Office and operation management Dept. No. Name Address 1 QLB Head Office No.176 Shunhe Street, Shizhong District, Jinan 2 Liaocheng Branch South-west corner of the crossroad of Dongchang Road and Weiyu Road, Liaocheng , Shandong Province 3 Liaocheng Chiping Sub-Branch No.115 Yudong Road, Chiping County, Shandong Province 4 Liaocheng Gaotang Sub-Branch 5 Liaocheng Kaifaqu Sub-Branch 6 Liaocheng Linqing Sub-Branch No.2009 Gulou East Street, Linqing , Shandong Province 7 Liaocheng Yanggu Sub-branch No. 145 Gushan Road, Yanggu County, Shandong Province 8 Liaocheng Shenxian Sub-branch No.98 Shenting Road,Shen CountyShandongProvince 9 LiaochengGuanxian Sub-branch 10 LiaochengDong’e Sub-branch 11 Tianjin Branch 12 Tianjin Beichen Sub-Branch 13 Tianjin Huayuan Sub-Branch 14 Tianjin Jinnan Sub-Branch 15 Tianjin Jinghai Sub-Branch 16 Tianjin Kaifaqu Sub-Branch 17 Tianjin Wuqing Sub-Branch No.511 Guandao Street, Huashengyuan Community, Gaotang Country, Liaocheng , Shandong Province No.54,Dongchang Road, Liaocheng Economic &Technological Development Area, Liaocheng North-east corner of the cross road of Zhenxing Road and Heping Road,Guan County,Liaocheng,, ShandongProvince No133Qingnian Street,Dong’e County, ,Liaocheng,, ShandongProvince No.37&39 Youyibei Road, Hexi Distinct, Tianjin 2175,2176,1193 and 1194 Room,No.1 & 2 & 3 Building, Changying 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, No.1 Building, Caizi Community, Western part of the North of Yashi Road, Nankai District ,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 104A, 204 Room, No.39 east of 3rd Avenue, Binhai New District, Economic & Technological Development Zone, Tianjin 1st and 3rd floor of No.1845 of Jingjin Road in Wuqing Area,Tianjin 19 1st and 3rd Floor,Crowne Plaza, No.76 Xianggang Zhong Road,Shinan District, Qingdao 1st and 2nd floor of east of Fuying building in No.443 Changjiangdong Road, Economic and Technological Development Zone,Qingdao 18 Qingdao Branch 19 Qingdao Sub-Branch 20 Qingdao Jimo Sub-Branch No.1115,1117 Lan'ao Road,Jimo District, Qingdao 21 Qingdao Laixi Sub-Branch No.12,Chongqing 22 Qingdao Jiaozhou Sub-Branch No.6 buliding of east area of Tiantai Finnance Square in No.333of Aomen Road ,Jiaozhou,Qingdao. 23 Jinan Gaoxin Sub-Branch No.746 Xinyu Road, High-tech Development Zone, Jinan 24 Jinan Dianchang Sub-Branch No.164 Gongyebei Road, Licheng District, Jinan 25 Jinan Jigang Sub-Branch 26 Jinan Jingshidonglu Sub-Branch 27 Jinan Shunhuabei Sub-Branch 28 Jinan Jiefangdonglu Sub-Branch No.27 Jiefangdong Road,Lixia District,Jinan 29 Jinan ShengFu garden small Sub-Branch No.2Buliding of Gongjian Shengfu along the street, ,Lixia District, Jinan 30 Jinan Tangye Sub-Branch No555 in Jingde street , ,Lixia District, Jinan 31 Jinan Duandian Sub-Branch No. 28366 Jingshi Road, Huaiyin District, Jinan 32 Jinan Chengxi Sub-Branch No.190 Zhangzhuang Road, Huaiyin District, Jinan (B tower of No23 buliding in Qiantun community) 33 Jinan Huaiyin Sub-Branch No.573 Jingqi Road, Huaiyin District, Jinan 34 Jinan Jingqilu Sub-Branch No.425 Jingshi Road, Huaiyin District, Jinan 35 Jinan Keji Sub-Branch No.555 Jingsi Road, Huaiyin District, Jinan 36 Jinan Sub-Branch No. 2666 ErhuanxiRoad, Huaiyin District, Jinan 37 Jinan Xishichang Sub-Branch No.575 38 Jinan Zhangzhuang Sub-Branch No.191 Zhangzhuang Road, Huaiyin District , Jinan 39 Jinan Xizhan Sub-Branch No1shop in Yanmajiayuan in Ta’an Road , Huaiyin District , Jinan 40 Jinan Waihaixizi city garden small Sub-Branch 41 Jinan Donghuan Sub-Branch Unit 1, No.101 ,No1 building of Waihaixizi city garden guiyuyuan in No19 Xingfu street , Huaiyin District , Jinan No.3966 Donghuan International Square, Erhuandong Road, Licheng District, Jinan 42 Jinan Chengdong Sub-Branch Unit 1, No.6 Huaxin Road, Licheng District, Jinan 43 Jinan Daqiaolu Sub-Branch No.117 Daqiao Road, Licheng District, Jinan 44 Jinan Gongyebeilu Sub-Branch No.303 Gongyebei Road, Licheng District, Jinan 45 Jinan Honglou Sub-Branch No.1825 HualongRoad, Licheng District, Jinan 46 Jinan Licheng Sub-Branch No.41 Honglouxi Road, Licheng District, Jinan 47 Jinan Lingang Sub-Branch 1st floor ,office building of Guanweihui ,Lingangkaifaqu ,No7617 in airport Road, Licheng District, Jinan Jingjijishukaifa Minyingkejiyuan jingjikaifaqu Middle Road，Laixi District，Qingdao West Front of Qingnian Street, Jigang New Village, Licheng District, Jinan Zone B-C, 1st floor, Area B Yike Production Base, the Crossroad of Jingshidong Road and Shunhua Road, Gaoxin District, Jinan 108&109&110 Room,Unit 1, No. 38 Building, Xinshenghuojiayuan Community, west of Xinyubei Road,Gaoxin District, Jinan Jinger Road, Huaiyin District, Jinan 20 48 Jinan Qianfoshan Sub-Branch No.14306 JingshiRoad , Lixia District, Jinan 49 Jinan Erhuandonglu Sub-Branch ,No.1YaotouRoad, Lixia District, Jinan 50 Jinan Gongyenanlu Sub-Branch 1st floor and 2nd floor, Block B, Sanqing Fengrun Building, No.100 Gongyenan Road, Lixia District, Jinan 51 Jinan Kaiyuan Branch No.55 Huanshan Road, Lixia District, Jinan 52 Jinan Luoyuandajie Sub-Branch No.61 Luoyuan Avenue, Lixia District, Jinan 53 Jinan Shandalu Sub-Branch No.185 Shanda Road, Lixia District, Jinan 54 Jinan Wendong Sub-Branch Unit 2, No.242 Shanda Road, Lixia District, Jinan 55 Jinan Yanshan Sub-Branch Dashuntianchengshangdu, No.5 Jiefang Road, Lixia District, Jinan 56 Jinan Dianliu Sub-Branch 7th-20th floor of west gongjian of No.6 and No.7 bulidings,5th, area,Dianliu community, Lixia District, Jinan 57 Jinan Huayuan Sub-Branch No.59 Lishan Road, Lixia District, Jinan 58 Jinan Daminghu Sub-Branch No.1 Baobei Road, Lixia District, Jinan 59 Jinan Lishanbeilu Sub-Branch No.4 Lishanbei Road, Tianqiao District, Jinan 60 Jinan Lixia Sub-Branch 106 Room , Block C2, Lishanmingjun, No.173 Lishan Road, Lixia District, Jinan 61 Jinan Liuhang Sub-Branch No.226 62 Jinan Sub-Branch No.12 Minghudong Road ,Lixia District, Jinan 63 Jinan Lishandonglu Sub-Branch No.112 Jiefang Road, Lixia District, Jinan 64 Jinan Beitan Sub-Branch No.15 Yingxian Street, Tianqiao District, Jinan 65 Jinan Chaoshanjie Sub-Branch No.59 66 Jinan Jiefanglu Sub-Branch No. 159 Jiefang Road, Lixia District, Jinan 67 Jinan Shunjing Sub-Branch No.59 Heihuquanxi Road, Lixia District, Jinan 68 Jinan Wenxi Sub-Branch No.3 Qianfoshan Road, Lixia District, Jinan 69 Jinan Ganshiqiao Sub-Branch No.87 Jingqi Road, Shizhong District, Jinan 70 JinanJingbalu Sub-Branch No.104,east of Ziyou Street,Sanjianruifuyuan,No66 in Jingba Road Shizhong District, Jinan 71 Jinan Sub-Branch No.74 Minsheng Avenue, Shizhong District, Jinan 72 Jinan Shizhong Sub-Branch No.131 Jinger Road, Shizhong District, Jinan 73 Jinan Sub-Branch Unit 12,No.58 Ma'anshan Road, Shizhong District, Jinan 74 Jinan Shunnan Sub-Branch No.3 Store , Weidongxindu Community, No.57 Shungeng Road, Shizhong District, Jinan 75 Jinan Wanzixiang Sub-Branch No. 333 Jinger Road, Huaiyin District, Jinan 76 Jinan Yangguangshuncheng Small Sub-Branch Commercial shops near Yangguangshunchengshuiyinglishan Square ,the middle of Shunshi Road , Shizhong District, Jinan 77 Jinan Jianshelu Sub-Branch No.1 Liuchangshan Road, Shizhong District, Jinan 78 Jinan Baimashannan RoadSub-Branch No.2, baimashannanRoad, Shizhong District, Jinan Community Minghudonglu Minshengdajie Yingxiongshan Beiyuan Avenue, Tianqiao District, Jinan Chaoshan Street, Lixia District, Jinan 21 79 Jinan Guangming Sub-Branch No.53 Yingxiongshan Road, Shizhong District, Jinan 80 Jinan Nanjiao Sub-Branch No.222&223&224, Yingxiongshan Road, Shizhong District, Jinan 81 Jinan Shuanglong Sub-Branch No28,LangmaoshanRoad, Shizhong District, Jinan Jinan Sub-Branch Jinan Sub-Branch 82 83 Wangguanzhuang Yangguangxinlu Unit 9, No.73 Jiwei Road, Shizhong District, Jinan No.19 Yangguangxin Road, Huaiyin District, Jinan 84 Jinan Beiyuan Sub-Branch No.548 Beiyuan Avenue ,Tianqiao District, Jinan 85 Jinan Jinniu Sub-Branch No.153 Wuyingshanzhong Road, 86 Jinan Lanxianglu Sub-Branch No.1 Building ,Zone 2 Shidaizongbujidi, No.15 Lanxiang Road, Tianqiao District, Jinan 87 Jinan Luokou Sub-Branch Unit 1,No.87 Jiluo Road,Tianqiao District, Jinan 88 Jinan Qinghe Sub-Branch No.483 89 Jinan Tianqiao Sub-Branch Unit 1, No.38 Wuyingshandong Road, Tianqiao District, Jinan 90 Jinan Wuyingshan Sub-Branch No.15 Shifan Road, Tianqiao District, Jinan 91 Jinan Wuyingtan Sub-Branch No.50 Wuyingshanzhong Road, Tianqiao District, Jinan Jinan New Material Industry Park Sub-Branch Jinan Shangpinqinghe Small Sub-Branch No.1 Yuxing Road,the National Raod 308,Sangzidian County,Tianqiao District,Jinan Unit2105 No.2, A1 building area,Shangpinqinghe, Tianqiao District, Jinan 94 Jinan Quancheng Sub-Branch No.176 , Shunhe Street ,Shizhong District,Jinan 95 Jinan Pingyin Sub-Branch Unit 2,No.23 Fuqian Street, Pingyin County, Jinan 96 Jinan Shanghe Sub-Branch No.1 Minghui Road,Shanghe County, Jinan 97 Jinan Changqing Sub-Branch No.999 98 Jinan Jiyang Sub-Branch No.180 Kaiyuan Street, Jiyang County, Jinan 99 Jinan Zhangqiu Sub-Branch No.76 Huiquan Road, Zhangqiu 100 Jinan Zhangqiu Sub-Branch No.83,Zhongxin Street, Diao town,Zhangqiu 101 Tai’an 92 93 102 Diao town Branch Tianqiao District, Jinan Beiyuan Avenue, Tianqiao District, Jinan Bingu Street, Changqing Distinct, Jinan No.49,Dongyue street,Tai’an ,Shandong Province No.1577,Sanbazhong Road, Decheng District,Dezhou,Shandong Province (III) Status of Directors, Supervisors, Senior Executives and Employees during the Reporting Dezhou Branch Period i. Profile of Directors, Supervisors and Senior Executives Position Name Gend er Age Chairperson (Directors) Wang Xiaochun Fema le 54 Vice Chairperson (Directors) Huang Jiadong Male 51 Company and Position Party Secretary and Chairperson of Board of Directors of Qilu Bank President and Vice Party Secretary and vice 22 Remune rated or Not Shareholdi ng（No. of Shares） Yes 0 Yes 0 Executive Director Hu Xiaomeng Male 57 Independent Director Chen Xiao Male 51 Independent Director Zhang Yichi Male 48 Independent Director Lu Zhongnan Male 59 Independent Director Huang Shaoan Male 52 Independent r Director Li Wuling Fema le 64 Shareholder Director Michael Charles Blomfield Male 44 Shareholder Director Bi Zhichao Male 58 Shareholder Director Chen Jian Male 53 Chairperson (Supervisors) Wang Jianjun Male 57 Employee Supervisor Zhang Haiyan Fema le 53 Employee Supervisor Liu Xia Fema le 45 External Supervisor Shao Changnian Male 62 External Supervisor Li Tao Male 37 Shareholder Supervisor Hu Male 41 Chairperson of Board of Directors of Qilu Bank Vice Party Secretary of Qilu Bank Professor of Accounting Department of School of Economics and Management of Tsinghua University Professor of Guanghua School of Management of Peking University vice chairman of the board of directors in Xinhuaxintuo,LTD Dean of the Center of Economic Research Shandong University Audit Department Senior specialist of Shandong Branch of China Construction Bank (Retired) The Senior asia advisor of CBA Chairperson of Board of Directors of Jigang GroupCo., 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 Directors of Zhangqiu Qilu Village Bank General Mananger of Small Enterprises Banking dept of Qilu Bank Chairperson of Board of Directors of China Gold Coin Incorporation (Retired) President and secretary of the partyof school of Economics of Central University of Finance and Economics General manager of 23 Yes 0 Yes 0 Yes 0 Yes 0 Yes 0 Yes 0 No 0 Yes Yes 0 Yes 0 Yes 50,000 Yes 55,930 Yes 0 Yes 0 Yes 0 Wenming Shareholder Supervisor Wu Lichun Male 51 Shareholder Supervisor Li Mingji Male 49 Zhao Xuejin Male 53 Executive Vice President and the board secretary Secretary of Disciplinary Inspection Committee & Chairman of the Labor Union Vice President Vice President Zhang Changpin g Chai Chuanzao Xu Yedong Male 49 Male 52 Male 44 Vice President Zhanghua Male 48 Vice President Cui Xiang Fema le 52 Chief Information Officer Zhang Diandong Male 55 Assistant of President Zhu Ning Male Capital operations Department of Rizhao Steel Holding Group Co., Ltd. President of Shandong Tri-cel Estates Group Co., Ltd. President of Zhongrun Resources Investment Corporation Executive Vice President and the board secretary of Qilu Bank Secretary of Disciplinary Inspection Committee & Chairman of the Trade Union of Qilu Bank Vice Presidet of Qilu Bank Vice President of Qilu Bank Vice President of Qilu Bank Vice President of Qilu Bank and the officer in charge of finance Chief Information Officer of Qilu Bank Assistant of President of Qilu Bank and the general manager of Financail Market Dept. 40 Assistant of President Li Jiuxu Male 41 Assistant of President Ge Ping Fema le 43 Assistant of President of Qilu Bank and the general manager of Human Resources Dept. Assistant of President of Qilu Bank and the general manager of Electronic Banking Dept Yes 0 Yes 0 Yes 164,107 Yes 286,359 Yes 70,000 Yes 0 Yes 150,000 Yes 249,000 Yes 50,000 Yes 40,000 Yes 0 Yes 46,273 (i). The part of ‘Changes of Directors, Supervisors and Senior Executives During the Reporting Period’ is in the ‘(Ⅴ) Changes of Directors, Supervisors and Senior Executives During the Reporting Period’. (ii). The issue about the appointment of the senior management personnel was agreed in the 10th meeting of the sixth session of board of directors of QLB, on December 24, 2014. On February 10, 2015, approved by the shandong branch of Bank supervision and administration committee, Zhu Ning, Li Jiuxu, GePing were appointed as assistants of president of Qilu Bank by Qilu bank co., LTD from now to the 24 expiration of the sixth session of the board of directors. (iii) The qualifications of board secretary of Zhao Xuejin is waiting for approval by the regulators. ii. Areas of Responsibilities of Executive Management Year of Position Name Areas of Responsibilities Experience Responsible for the Bank's overall executive management, assist in the management of Cadres＆ Personnel work, In charge of the Discipline Inspection, Corporate Banking Dept. General President Huang Jiadong 33 Office, and Institutional Investment Dept. Take an alternative management role in the Banking Operation business for Executive Vice President Zhao Xuejin. Assist in the strategic transformation. In Charge of Retail Banking Dept., Electronic Banking Dept. and Executive Vice the leader office of Community Bank Transformation. Zhao Xuejin 33 President Take an alternative management role in the management of Small Enterprises Banking business for Vice President Xu Yedong. Vice President Chai Chuanzao 29 In charge of International Business and Administration and Security Dept. Vice President Xu Yedong 24 In charge of Small Enterprises Banking Dept. Vice President Zhang Hua 29 Vice President Cui Xiang 36 Chief Information Officer Zhang Diandong 20 In charge of Risk Management Dept., Credit Approval Dept and Compliance Dept, and Assets Preservation Dept, assume the director of Credit Approval Committee. In charge of Financial Market Dept. and Operations Dept and Planning & Finance Dept.. In charge of IT Dept. iii. Employees Profile At the end of the reporting period, the company had 2604 employees, of which, 456 employees with master's degree (17.51%), 1903 employees with bachelor’s degree (73.08%), 202 employees with junior college degree (7.76%), 43 employees below secondary and vocational qualifications (1.65%). There were 561 employees with middle and senior professional technical qualifications (21.54%) and 665 employees with junior professional technical qualifications (25.54%). iii. Employees Profile To meet the needs of market competition, according to the principle of "efficiency first, fairness considered", we established a competitive in the peer and unified compensation system in which that was integrated to the “head office--branch--sub-branch” management structure, income matches the contribution, different sequence difference in an orderly way. The employee compensation has three parts 25 including the fixed compensation, variable compensation and welfare income. During the reporting period, a total of 14 persons of Directors, Supervisor and senior executives (except Independent Directors，External Supervisors, Shareholder Directors, Shareholder Supervisors), were remunerated by the Bank, and the amount of remunerations (after tax) paid for the reporting period was RMB13.4723 million. The actual allowances (after tax) received by the Independent Directors (5people) were RMB741.7 thousand. The actual allowances (after tax) received by the Shareholder Directors (2people) were RMB25thousand. The actual allowances (after tax) received by the External Supervisors (3 people) were RMB161.6 thousand. The actual allowances (after tax) received by the Shareholder Supervisors (3people) were RMB18thousand. (Ⅴ) Changes of Directors, Supervisors and Senior Executives During the Reporting Period In March 2014, Wang Yi resigned from the board,according to Opinions on Rules of Part-Time Positions Taken by Party and Political cadres in Enterprises issued by Organization Department of CPC Central Committee In June 2014, Mao Fangzhu resigned his position of executive director of the bank, the board secretary, vice president, due to personal reasons. In July 2014, Zhang Zhiyuan resigned his position of external supervisor, according to Opinions on Rules of Part-Time Positions Taken by Party and Political cadres in Enterprises issued by Organization Department of CPC Central Committee In August 2014, Shao Changnian resigned his position of external supervisor, according to Opinions on Rules of Part-Time Positions Taken by Party and Political cadres in Enterprises issued by Organization Department of CPC Central Committee and that led to the amount of external supervisors is less than the least amount of external supervisors in the bank's articles of association. Therefore, Shao Changnian’s resignation shall enter into force when we have the new external supervisor, according to the bank's articles of association. On August 7, 2014, the bank held the fifth meeting of sixth session of board of directors, appointed Cui Xiang as the financial director, renewed Xu Yedong vice President. On September 16, 2014, we held the 7th meeting of the sixth session of board of directors, appointed Zhao Xuejin as the secretary to the board of directors (he also has other position) On December 24, 2014, we gathered at the tenth meeting of the sixth session, the board of directors agreed to the appointment of the senior management personnel, agreed to appoint Zhu Ning, Li Jiuxu, GePing as assistant of president of QLB, from now to the expiration of the session of the board of directors (VI) Shareholders’ Meeting The 2013 Annual Shareholders’ Meeting was held on 10 April 2014 on the 3rd floor in the first conference room of Qilu Bank Building at No.176, Shunhe Street, Shizhong District, Jinan City. 45 26 shareholders and representatives of the shareholders attended the meeting representing 2,043,612,927shares, 86.27%of the total shareholding. The meeting was convened by the 6th Board of Directors of QLB. The following resolutions were deliberated and passed by voting: agreed to the work report of the Board of Directors for 2013; agreed to the work report of the Board of Supervisors for 2013; agreed to the financial statements report for 2013; agreed to the financial budget proposal for 2014; agreed to the profit appropriation and dividend distribution proposals for 2013. The 2014 First Interim Shareholders’ Meeting was held on 16 September 2014 on the 3rd floor in the first conference room of Qilu Bank Building at No.176, Shunhe Street, Shizhong District, Jinan City. 55 shareholders and representatives of the shareholders attended the meeting representing 2,083,734,622 shares, 87.97% of the total shareholding. The meeting was convened by the 6th Board of Directors of QLB. The following resolutions were deliberated and passed by voting: agreed to’ the proposal of applying to the CSRC for stock transfer publicly in the small and medium-sized enterprise stock transfer system and incorporated into the non-listed public company supervision; agreed to the ‘proposal of adopting the mode of contract transfer after the stock listing and transferring publicly in the small and medium-sized enterprise stock transfer system’; agreed to’ the proposal of private placementof QLB’; agreed to ‘the proposal of processing solutions to the problems in the establishment of QLB and the process of clearing equity’; agreed to ‘the proposal of the collective capital held by the state’; agreed to’ the proposal of hosting the stock of QLB to Shandong trading center for financial assets after the completion of the stake in cleaning’; agreed to’ the proposal of the registration and depository of stock in China securities depository and clearing co., LTD after the listing of the shares of QLB’; agreed to ‘the proposal of developing the articles of association of QLB (draft)’; agreed to the ‘proposal of determining the scope of the senior management personnel of QLB’; agreed to’ the proposal of Authorizing the board of directors to deal with stock of QLB transfer publicly in the small and medium-sized enterprise stock transfer system and directional issuance’; agreed to Authorizing the board of directors to deal with stock of QLB transfer publicly in the small and medium-sized enterprise stock transfer system and directional issuance. (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 second meeting of the 6th Board of Directors was held on 7 March, 2014 in the conference room on the 16th floor of Qilu Bank Building at No. 176 Shunhe Street, Shizhong District, Jinan City. All of 13 directors attended the meeting. The meeting was chaired by Wang Xiaochun and the following resolutions were passed: agreed to the work report of the Board of Directors for 2013 and submission of the proposal to 27 the Shareholders’ Meeting for approval; agreed to the ‘General Policy of Operation and Management in 2014 of the Board of the Directors’; agreed to the 2013 businesswork report and the business plan of 2014; agreed to the audit report and financial account report for the year 2013 and submission of the proposal to the Shareholders’ Meeting for approval; agreed to the financial budget proposal for 2014 and submission of the proposal to the Shareholders’ Meeting for approval; agreed to the profit appropriation and dividend distribution proposals for 2013 and submission of the proposal to the Shareholders’ Meeting for approval; agreed to the proposed agenda for 2013 Shareholders’ Meeting; agreed to the implementation proposal for the disclosure of 2013 annual report; agreed to the audit plan for year 2014; agreed to the proposal of the rules on Bank's shareholders equity pledge; agreed to the proposal of setting Institutional Investment Department in headquarter; agreed to the ‘2014 Performance Appraisal Measures of the Senior Management of Qilu Bank Co., Ltd.’; agreed to the ‘2014 Performance Appraisal Measures of Internal Audit Department and Board of Directors’ Office’; agreed to the ‘Management method of Board Chairman reward fund of Qilu Bank Co., Ltd.’; agreed to Industrial and Commercial Bank of China Limited, Bank of China Limited, Agricultural Bank of China Limited, China Construction Bank Corporation, Bank of Communications Co., Ltd. and Nation-wide Joint-stock Commercial Bank handle financial businesses for Qilu Bank,, including but not limited to, International Settlements business, trade financing, Issuing bank’s acceptance of bill, Discounting and rediscounting bills, Funds business risk exposure. The 3rd meeting of the 6th Board of Directors was held on 10 April, 2014 in the conference room on the 16th floor of Qilu Bank Building at No. 176 Shunhe Street, Shizhong District, Jinan City. 9 out of 12 directors attended the meeting. The meeting was chaired by Wang Xiaochun and the following resolutions were passed: agreed to the 2013 Annual Report of Qilu Bank Co., Ltd. and its summary; agreed to ‘Proposal of Related-party Transactions of Rizhao Steel Holding Group Co., Ltd. affiliated enterprises’. The 4th meeting of the 6th Board of Directors was held on 16 June 2014 in circular and the following resolution was passed: agreed to the proposal of Credits Granted Business expired and renew of Shandong Jianbang Investment Management Co., Ltd. and its Related-party enterprises. The 5th meeting of the 6th Board of Directors was held on 7 August, 2014 in the conference room on the 16th floor of Qilu Bank Building at No. 176 Shunhe Street, Shizhong District, Jinan City. 11 out of 11 directors attended the meeting. The meeting was chaired by Wang Xiaochun and the following resolutions were passed: agreed to ‘the proposal of hiring Ernst & Young accounting firm as the audit agency in 2014’; agreed to ‘the application of the guarantee of supporting agriculture rediscount for the Qilu village Bank of Zhangqiu’; agreed to ‘measures for the management of capital of QLB’; agreed to ‘capital adequacy ratio management plan in 2014’; agreed to ‘application of Renewing Due Credits Jigang Group Co., Ltd and its associated enterprises’; agreed to ‘ application of Renewing Due Credits for Rizhao steel holding Group 28 Co., Ltd and its associated enterprises’; agreed to ‘the application of the overall credit business of Tri-cel Real Estate Group Co., LTD and its associated enterprises’; agreed to’ the application of unified credit business of Zhongrun resource investment Co., Ltd and its associated enterprises’; agreed to the revision of work procedures of the strategy committee of the board; agreed to the revision of work procedures of the Audit commission of the board; agreed to the revision of work procedures of nomination and remuneration committee; agreed to the revision of work procedures of Related-party Transactions Control and Risk Management Committee of the board; agreed to ‘the proposal of applying to the CSRC for stock transfer publicly in the small and medium-sized enterprise stock transfer system and for getting supervised as a non-listed public company supervision’ and; agreed to submit it to the shareholders meeting; agreed to ‘the proposal of adopting the mode of agreement transfer after the stock listing and transferring publicly in the small and medium-sized enterprise stock transfer system’ and; agreed to submit it to the shareholders meeting; agreed to ‘the proposal of private placement of QLB’ and; agreed to submit it to the shareholders meeting; agreed to ‘the proposal of handling problems emerged during QLB’s establishment and equity clearing process and agreed to submit it to the shareholders meeting; agreed to ‘the proposal of transferring the stock of QLB to Shandong Financial Assets Transaction center for registration and custody after the listing and agreed to submit it to the shareholders meeting; agreed to’ the proposal of the registration and depository of stock in China securities depository and clearing co., LTD after the listing of the shares of QLB’; agreed to submit it to the shareholders meeting; agreed to ‘the proposal of formulating the articles of association of QLB (draft)’ and agreed to submit it to the shareholders meeting; agreed to ‘the proposal of revision of management measures on information disclosure’; agreed to ‘the proposal of formulating Management Measures on investor relations; agreed to ‘the proposal of determining the scope of the senior management personnel of QLB’ and agreed to submit it to the shareholders meeting; agreed to’ the proposal of appointing senior management personnel’ and agreed to the proposal of employing Cui Xiang asthe financial manager and appointment to the board of directors expires; agreed to appointing Xu Ye dong as vice president of QLB from now to August 31th of 2015; agreed to’ the proposal of major changeson accounting measures; agreed to’ the proposal of applying for the delegation of the general meeting of shareholders to authorize the board of directors carte blanche in its shares in the share transfer system of the small and medium-sized enterprises transferring publicly andprivate placement and agreed to submit it to the shareholders meeting; agreed to’ the proposal of convening the first provisional shareholders meeting in 2014’; agreed to’ the proposal of development planning of QLB from 2014 to 2016’. The 6th meeting of the 6th Board of Directors was held on 25 August 2014in circular. ‘The proposal of the collective capital held by the state ‘was passed in the meeting. 29 The 7th meeting of the 6th Board of Directors was held on 16 September, 2014 in the conference room on the 16th floor of Qilu Bank Building at No. 176 Shunhe Street, Shizhong District, Ji’nan City. 7 out of 11 directors attended the meeting. The meeting was chaired by Wang Xiaochun and the following resolutions were passed: agreed to the audit report for 2012,2013 and 1H 2014; agreed to the proposal of hiring the Secretary of the board of directors; agreed to the executive vice president ZhaoXuejin Concurrently as the Secretary of the board of directors and appointment the board of directors expires. The 8th meeting of the 6th Board of Directors was held on 31 October, 2014 in the conference room on the 16th floor of QiLu Bank Building at No. 176 Shunhe Street, Shizhong District, Jinan City. 10 out of 11 directors attended the meeting. The meeting was chaired by Wang Xiaochun and the following resolutions were passed: agreed to revise the ‘Operational risk management policies and procedures of QiLu Bank’; agreed to revise the ‘Reputational risk management policies and procedures of Qilu Bank’; agreed to the proposal for the 2014 loans written off ; agreed to the proposal for establishing the Asset Preservation Department; agreed to ‘The application for the adjustment of the partial annual business plan’; agreed to the proposal for sortingthe remunerationscheme of Qilu Bank; agreed to the ‘Management measures for the undetermined- equity accounts of Qilu Bank’; agreed to the proposal of Ji’nan Lan Shi Tian Yuan Estates Group Co ,Ltd. Transferred 10.95 million shares to Shandong Jiaorui Estates Group Co ,Ltd; agreed to the proposal for the investment to the Clearing Center for City Commercial Banks The 9th meeting of the 6th Board of Directors was held on 13 November, 2014 in circularand the following resolution was passed: agreed to the Report of the bank card safety self- inspection of Qilu Bank. The 10th meeting of the 6th Board of Directors was held on 24 December,2014 in the conference room on the 16th floor of Qilu Bank Building at No. 176 Shunhe Street, Shizhong District, Jinan City. 8 out of 11 directors attended the meeting. The meeting was chaired by Wang Xiaochun and the following resolutions were passed: agreed to the ‘Risk appetite management policy of Qilu Bank’; agreed to revise the ‘Liquidity risk management policies and procedures of Qilu Bank’; agreed to the ‘Internal capital adequacy assessment process management approaches of Qilu Bank’; agreed to revise the ‘Comprehensive risk management approach of Qilu Bank’; agreed to the ‘Internal credit risk rating system construction plan of Qilu Bank’; agreed to the ‘Internal credit risk rating system management policy of Qilu Bank’; agreed to the ‘Business continuity management measures of Qilu Bank’. Agreed to the proposal for the appointment of Senior Managers, agreed to appoint ZhuNing、Li Jiuxu、GePing as the Assistant Governors of Qilu Bank and be going to expire by the term of this term of Board of Directors. Agreed to determining the Assistant Governors andChief Information Officer as the Senior Managers; branches development planning of 2015. 30 agreed to the proposal for the bank ii. The Execution of the Resolutions of Shareholders’ Meeting by the Board of Directors during the Reporting Period During the reporting period, the Board of Directors conscientiously carried out the resolutions of the Shareholders’ Meeting, and completed the operational assignments. iii. 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 4 meetings, the Audit Committee held 6 meetings, the Nomination and Remuneration Committee held 4 meetings and the Strategy Committee held 2 meetings. The committees were able to deliberate on the items under their respective responsibilities according to the working procedures of the committees and then submit them to the Board of Directors. iv. The Work of Independent Directors during the Reporting Period Name of Independent Director Personal Attendance (times) Number of Board of Directors’ Meetings to Attend (times) Attendance by Proxy (times) Absence (times) Chen Xiao 9 7 2 0 Zhang Yichi 9 9 0 0 Huang Shaoan 9 7 2 0 Lu Zhongnan 9 8 1 0 Li Wuling 9 9 0 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 attended, or held, or observed by the Board of Supervisors: On 10 April 2014, members of the Board of Supervisors attended the 2013 Annual Shareholders’ Meeting. On 16 September 2014, members of the Board of Supervisors attended the first Provisional Shareholders’ Meeting of 2014. On 17 March 2014, the 2nd meeting of the 6th 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 presided by Wang Jianjun, Chairman of the Board of Supervisors, and passed the following resolutions: agreed to the Work Report for the year 2013; agreed to the Work Plan for the year 2014;agreed to the performance appraisal’s results of the jobs of the Board of Directors for the year 2013; agreed to the performance appraisal’s results of the jobs of the Executive Management for the year 2013; agreed to the performance appraisal’s results of the jobs of the 31 Directors for the year 2013; agreed to the performance appraisal’s results of the jobs of the senior members of the Executive Management for the year 2013; agreed to the audit and financial statements report for the year 2013; agreed to the 2013 financial final accounts report; agreed to the financial budget proposal for 2014; agreed to the profit appropriation and dividend distribution proposals for 2013. On 10 April 2014, the 3th meeting of the 6th 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. 6 out of 9 supervisors were present. The meeting was presided by Wang Jianjun, Chairman of the Board of Supervisors, and passed the following resolutions: agreed to the 2013 Annual Report of Qilu Bank Co., Ltd. and its summary. On 7 August 2014, the 4th meeting of the 6th 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. 6 out of 8 supervisors were present. The meeting was presided by Wang Jianjun, Chairman of the Board of Supervisors, and passed the following resolutions: agreed to the revised work procedures of the Nomination committee; agreed to the revised work procedures of Financial supervision committee; agreed to the revised work procedures of Risk oversight committee; agreed to the Performance Appraisal Report by Risk Oversight Committee on liquidity risk management performance of Board of Directors and Business Management; agreed to the Performance Appraisal Report by Risk Oversight Committee on case prevention work performance of Board of Directors and Business Management. On 16 September 2014, the 5th meeting of the 6th 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. 5 out of 8 supervisors were present. The meeting was presided by Wang Jianjun, Chairman of the Board of Supervisors, and passed the following resolutions: agreed to the audit report for 2012,2013 and 1H 2014. On 31 October 2014, the 6th meeting of the 6th 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. 5 out of 8 supervisors were present. The meeting was presided by Wang Jianjun, Chairman of the Board of Supervisors, and passed the following resolutions: agreed to the Survey Report by Risk Oversight Committee about Ganshiqiao sub-branch. On 24 December 2014, the 7st meeting of the 6th 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.6 out of 8 supervisors were present. The meeting was presided by Wang Jianjun, Chairman of the Board of Supervisors, and passed the following resolutions: agreed to the Performance Appraisal Report oncapital management work of Board of Directors and Business Management. On 17 March 2014, the members of Board of Supervisors, as non–voting delegates, attended the 2nd 32 meeting of the 6th Board of Directors. On 10 April 2014, the members of Board of Supervisors, as non–voting delegates, attended the 3th meeting of the 6th Board of Directors. On 7 August 2014, the members of Board of Supervisors, as non–voting delegates, attended the 5th meeting of the 6th Board of Directors. On 16 September 2014, the members of Board of Supervisors, as non–voting delegates, attended the 7th meeting of the 6th Board of Directors. On 31 October 2014, the members of Board of Supervisors, as non–voting delegates, attended the 8th meeting of the 6th Board of Directors. On 24 December 2014, the members of Board of Supervisors, as non–voting delegates, attended the 10th meeting of the 6th Board of Directors. ii. The Meetings of Specialized Committees of the Board of Supervisors during the Reporting Period During the reporting period, the Nomination Committee held 1 meeting, the Risk Oversight Committee held 3 meetings, the financial supervision committee held 4 meetings, the committees were able to deliberate on the items under their respective responsibilities according to the working procedures of the various specialized committees and then submitted them to the Board of Supervisors. iii. Conclusion of Special Inspection of the Board of Supervisors during the Reporting Period On 16 July 2014, the Board of Supervisors made a performance appraisal about liquidity risk management of the Board of Directors and the Executive Management. And put proposals of strengthening the leading roleof the Board of Directors on liquidity risk management, makingliquidity risk appetite reasonably, etc. Thisurged the Board of Directors and the Executive Management to perform the responsibility of liquidity risk management effectively. On 16 July 2014, the Board of Supervisors made an performance appraisal about the case prevention of the Board of Directors and the Executive Management, And put proposals of improving the measures of Operation risk prevention, strengthening the training of case prevention, etc. This improved the system construction of the case prevention and made the bank operate steadily. On 24 October 2014, the Board of Supervisors made a field trip to one governance branch and two sub-branches. And put proposals of innovating the products and services of retail business, strengthening the idea of process management on credit business, advancing the credit system of retail customers, ect. This played a positive role in transforming and developing the Bank’s businesses. On 28 November 2014, the Board of Supervisors made a performance appraisal about the capital management of the Board of Directors and the Executive Management, And put proposals of improvingthe system of capital management, advancing the work of stress test with unified scenariosand risk 33 measurement, etc. This made the Bank further enhance its capital management capacity and improve its asset management and risk resistance capabilities . iv. Work of External Supervisors during the Reporting Period Name of Number of Board of Personal External Supervisors’ Meetings to Attendance by Proxy Supervisors Attend（times） （times） （times） Zhang Zhiyuan 2 1 1 0 Shao Changnian 6 2 4 0 Li Tao 6 6 0 0 Attendance Absence （times） v. Independent Opinions from the Board of Supervisors on the following issues During the reporting period, for the purpose of protecting the interest of the shareholders and the employees, the Board of Supervisors carried out supervision on the financial condition, and the performance of Directors and senior management staff，according to the applicable requirements of the Company Law and the Memorandum and Articles of Association of the Bank. The specific details were as follows: (i)Supervision on Operating Legally of the Bank During the reporting period, the Bank intensified the contact with the Banking Regulatory Bureau, strengthened the internal controls and system execution, and operated legally and managed properly with true and fair operating results, and the decision making procedures were legal and valid. There was no detection of behaviors of breaking laws, statutes and the Memorandum and Articles of Association, or harming the shareholders’ interest by the Directors and the Executive Management of the Bank when performing their duties. (ii)Supervision on Financial Condition of the Bank During the reporting period, the financial report of the bank has been audited by Ernst and Young Hua Ming LLP and received unqualified audit report. And the report truly and fairly reflects the financial position and the operating results of the bank. (iii)Supervision on Execution of the Resolutions of the Shareholders’ Meetings During the reporting period, the members of the Board of Supervisors attended the Board of Directors and the Shareholders’ meeting, and did not raise any objection to any of the reports and proposals submitted to the Shareholders’ Meetings by the Board of Directors, and supervising the executing of the resolution of the Shareholders’ meeting, and concluded that the Board of Directors seriously carried out the relevant resolutions of the Shareholders’ Meetings. (IX) The Major Business Operations Plan of 2015 34 The business operation plans are to realize 18% growth rate of total assets with balance of RMB145 billion at the end of 2015, to achieve year-end deposit balance of RMB117.5billion which is 17% more than that of 2014.The daily-average deposit is expected to be RMB106 billion which is 17% more than that of 2014. The operating profit of 2015 is expected to be more than RMB1.9 billion and the provision coverage ratio will be maintained above 150% and the capital adequacy ratio will be no less than 12%。 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 and 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 did not have any major acquisition, merger or sale of 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 did not have any 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, members of the Board of Directors, members of the Board of Supervisors and the Executives were not subject to punishment by the relevant regulatory authorities and judicial authorities. 35 VII. Important Notice The Board of Directors, the Board of Supervisors, Directors, Supervisors and Senior Executives 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 13rd meeting of the 6th Board of Directors of the Bank deliberated and approved the annual report on 16 April 2015. The Chairperson, Wang Xiaochun, the President, Huang Jiadong and the Vice President in charge for Finance, Cui Xiang, General Management of Planning ＆ Finance Dept, Gao Yongsheng, 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 36 CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2014 (All amounts expressed in RMB yuan unless otherwise stated) English translation for reference only Assets 31 December 2014 Cash and balances at central bank Due from banks Financial assets at fair value through profit or loss 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 andreceivables Investment properties Fixed assets and construction in progress Intangible assets Long-term equity investments Deferred income tax assets Long-term prepaid expenses Other assets TOTAL ASSETS 37 22,952,732,283 1,688,691,452 31 December 2013 (restated)* 18,496,984,798 1,968,719,314 386,962,778 7,403,100,000 646,104,941 59,109,584,660 425,177,307 1,816,564,000 385,269,487 51,431,892,077 9,723,424,130 8,283,054,647 13,843,368,644 5,787,395,746 4,043,216,986 2,244,805,178 28,680,974 30,456,264 642,443,533 497,798,538 16,446,005 858,601,411 611,736,220 41,559,395 884,637,386 16,791,327 756,560,377 597,052,863 31,472,459 1,233,633,838 122,881,290,798 94,003,628,220 CONSOLIDATED BALANCE SHEET(CONTINUED) AT 31 DECEMBER 2014 (All amounts expressed in RMB yuan unless otherwise stated) English translation for reference only 31 December 2014 Liabilities and Shareholders’ equity Liabilities: Due to central bank Due to banks and other financial institutions Financial liabilitiesat fair value through profit or loss Repurchase agreements Due to customers Employee benefits payable Taxes payable Bonds payable Interest payable Provision Other liabilities TOTAL LIABILITIES 31 December 2013 (restated)* 996,125 1,284,505,159 2,105,394,681 398,056,890 186,725,510 207,000,000 9,239,500,000 101,134,932,996 433,447,974 133,793,205 997,468,441 1,145,767,413 53,392,500 226,068,911 382,200,000 83,284,922,839 386,914,046 65,555,968 700,000,000 1,051,246,995 241,627,760 115,657,487,756 88,002,029,657 2,368,750,000 1,628,705,369 44,047,144 512,018,031 1,228,974,077 1,412,736,959 2,368,750,000 1,621,584,175 (311,731,515) 403,526,415 864,421,084 1,031,422,311 7,195,231,580 5,977,972,470 28,571,462 23,626,093 TOTAL SHAREHOLDERS’ EQUITY 7,223,803,042 6,001,598,563 TOTAL LIABILITIES AND EQUITY 122,881,290,798 94,003,628,220 Shareholders’ equity: Share capital Capital reserve Other comprehensive income Surplus reserve General reserve Retained profits Capital and reserves attributable to equity holders of the Bank Non-controlling interests 38 CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2014 (All amounts expressed in RMB yuan unless otherwise stated) English translation for reference only 2014 3,531,232,952 5,590,147,179 (2,477,768,482) 3,112,378,697 2013 (restated)* 2,833,599,629 4,395,085,695 (1,842,448,081) 2,552,637,614 Fee and commission income Fee and commissionexpense Net fee and commissionincome 286,657,586 (39,550,816) 247,106,770 194,546,764 (32,434,989) 162,111,775 Investment income Including: investment income from associatesand joint ventures Gains/(losses) on fair value changes Gains/(losses) on foreignexchanges Other operating income 131,984,895 98,565,392 104,423,831 96,060,917 (4,612,318) 26,655,379 17,719,529 (8,974,293) 13,462,838 15,796,303 II.Operating expense Business tax and surcharges Operating and administrativeexpenses Impairment losses on assets Other operating expenses (2,146,364,979) (238,925,889) (1,186,159,603) (1,600,736,385) (192,164,299) (1,036,538,277) (709,446,379) (11,833,108) (366,607,877) (5,425,932) III. Operating profit 1,384,867,973 1,232,863,244 Non-operating income Non-operating expenses 38,389,089 (72,782,982) 13,799,514 (4,283,243) IV. Profit before tax Less: Income tax 1,350,474,080 (255,465,332) 1,242,379,515 (238,999,856) V. Profit for the year Attributable to: Equity holders of the bank Non-controlling interests 1,095,008,748 1,003,379,659 1,090,063,379 4,945,369 1,001,294,454 2,085,205 I.Operating income Interest income Interest expense Net interest income 39 CONSOLIDATED INCOME STATEMENT(CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2014 (All amounts expressed in RMB yuan unless otherwise stated) English translation for reference only VI. Other comprehensive income for the year, net of tax Items that will not be reclassified to profit or loss 1.Actuarial (losses)/gains on defined benefit plans Items that may be reclassified subsequently to profit or loss 1.Fair value gains/(losses) on available for sale financial assets 2.Share of other comprehensive income of associates and joint ventures accounted for using the equity method VII. Total comprehensive income Attributable to: Equity holders of the Bank Non-controlling interests VIII.Earnings per share Basic (in RMB per share) Diluted (in RMB per share) 40 2014 2013 (restated)* 355,778,659 (262,518,319) (9,324,793) 7,743,851 355,720,848 (270,318,427) 9,382,604 56,257 1,450,787,407 740,861,340 1,445,842,038 4,945,369 738,776,135 2,085,205 0.46 0.46 0.42 0.42 CONSOLIDATED STATEMENT OF CASH FLOW FOR THE YEAR ENDED 31 DECEMBER 2014 (All amounts expressed in RMB yuan unless otherwise stated) English translation for reference only 2014 2013 (restated)* 19,557,347,948 12,077,533,274 - 794,780,708 - 207,000,000 33,665,829 - 8,857,300,000 5,262,798,855 286,657,586 308,368,950 34,306,139,168 60,000,000 4,316,236,508 194,546,764 158,862,771 17,808,960,025 (1,283,509,034) (8,347,770,142) (6,734,277,640) (2,774,438,030) (2,136,623,559) (27,000,000) - 1 Cash flows from operating activities Net increase in due to customers, banks and other financial institutions Net increase in due to central bank Net increase in financial liabilities at fair value through profit or loss Net decrease in financial asset at fair value through profit or loss 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 central bank Net increase in loans and advances to customers Net increase in due from central bank and other banks Net decrease in financial liabilities at fair value through profit or loss Net increase in financial asset at fair value through profit or loss Net decrease in repurchase agreements Interest paid Fee and commission paid Cash paid to employees Payment of taxes Cash paid relating to other operating activities Subtotal of cash outflows - (384,186,015) (2,322,057,624) (39,550,816) (623,534,907) (490,390,106) (443,285,779) (16,351,536,438) (3,812,700,000) (1,441,026,350) (32,434,989) (478,875,867) (452,007,786) (481,052,727) (15,953,184,933) Net cash flows from operatingactivities 17,954,602,730 1,855,775,092 50,416,669,062 11,507,276,971 25,939,142 9,147,575 31,165,797 50,473,774,001 30,476,034 11,546,900,580 (61,218,835,850) (12,110,884,348) (259,912,358) (97,787,439) (61,478,748,208) (12,208,671,787) 2 Cash flows from investing activities： Cash received from disposals of investments Cash received from disposals of fixed assets, intangible assets and other non-current assets Dividends received Subtotal of cash inflows Purchase of investments Purchase of fixed assets, intangible assets and other non-current assets Subtotal of cash outflows 41 CONSOLIDATED STATEMENT OF CASH FLOW(CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2014 (All amounts expressed in RMB yuan unless otherwise stated) English translation for reference only 2014 (11,004,974,207) 2013 (restated)) (661,771,207) Cash received from capital injection by share owners Proceeds from issuance of debt securities Subtotal of cash inflows 6,734,760 1,976,878,000 1,983,612,760 - Repayments of debts issued Payments of dividends and interests Subtotal of cash outflows (1,688,418,000) (282,209,909) (1,970,627,909) (174,122,087) (174,122,087) Net cash flows from financing activities 12,984,851 (174,122,087) 4 Effect of foreign exchange rate changes on cash and cash equivalents 25,204,220 1,115,899 5 Net increase in cash and cash equivalents 6,987,817,594 1,020,997,697 Add: Cash and cash equivalents at beginning of the year 7,585,241,730 6,564,244,033 6 Cash and cash equivalents at end of the year 14,573,059,324 7,585,241,730 Net cash flows from investing activities 3 Net cash flows from financing activities: 42