China CITIC Bank : Announcement of 2019 Interim Results

2019 Interim Results Highlights

Financial Performance

• Operating environment during 1H2019 remained challenging given the impact of Sino-US trade conflicts on loan demand and increasingly fierce market competition.
• Net profit after tax was HK$1.50 billion, down 7.7% year on year.
• Operating profit after impairment decreased by 7.3% to HK$1.83 billion, with HK$621 million of impairment made.
• Operating income dropped by 2.6% to HK$4.25 billion. Net interest income decreased by 3.5% to HK$3.19 billion. Net interest margin increased by 4 basis points to 1.86% versus FY2018 level as the increase in asset yields exceeded the increase in funding costs. Non-interestincome was up slightly by 0.2% to HK$1.06 billion.
• ROA was up 3 basis points to 0.87% versus FY2018 while ROE was 9 basis points lower at 8.28%.
• Total assets decreased by 3.4% versus end-2018 to HK$350.62 billion. Total deposits dropped by 4.1% to HK$276.71 billion while customer loans (including trade bills) were down 2.1% to HK$197.53 billion.
• Retail deposits and lending expanded by 4.6% and 10.2% respectively versus end-2018,while non-NIIfrom the retail business surged by 31.9% year on year.
• Impaired loan ratio as at end-June 2019 was 1.38% while non-performingloan coverage ratio was 107.7%.
• Capital adequacy ratio and CET1 ratio exceeded regulatory requirements at 19.0% and 13.3% respectively.
• Despite multiple challenges and mounting stress, the Bank will maintain its strategic focus and steadily press ahead with fintech transformation in order to achieve long-term sustainable development.

HK$m
2,000
			1,622		1,498
1,500	1,388	1,420		1,386
1,000
500
0	1H 2017	2H 2017	1H 2018	2H 2018	1H 2019

Capital Adequacy Ratio*

%			20.3
21			19.3	19.0
		17.8
18	16.5
15
12
9
6
3
0	2015	2016	2017	2018	1H 2019

• End-of-periodfigures

Core Businesses

Wholesale Banking Group (WBG) showed perseverance in the face of an adverse operating environment and placed greater emphasis on collaboration with the CITIC Group and CNCB. The number of corporate clients referred to WBG by the CITIC Group and CNCB reached 1,189, up 1.5% year on year. A joint marketing mechanism has been established with CNCB's branches and CITIC Bank International (China) Limited to deepen customer relationships and create more cross-selling opportunities. In an effort to diversify income sources, WBG reinvigorated the trade finance business with total bills turnover amounting to HK$13.60 billion during 1H2019, of which HK$7.82 billion was recorded in 2Q, representing an increase of 35.2% from 1Q.

Personal and Business Banking Group (PBG) recorded a 12.6% year-on-year growth in total operating income, reaching HK$1.43 billion in 1H2019 and attaining a new half-year record. Customer deposits reached HK$159.99 billion. Meanwhile, total retail lending balance also increased to a record high of HK$56.80 billion. PBG continued to focus on high net worth customers with total number of customers and assets under management up by 3.2% and 4.1% respectively versus end-2018. PBG has also expanded the product offering under "inMotion" and launched the first truly virtual credit card in Hong Kong and a full-function securities trading service via the platform. PBG customers can also purchase life insurance policies via "inMotion", making it a genuinely comprehensive virtual banking platform that enables customers to manage account opening, spending, investing and purchasing of insurance anytime and anywhere.

Treasury and Markets Group (TMG) recorded an increase of 7.8% in total operating income, reaching HK$631 million in 1H2019. The trading team maintained a competitive position in the market-making business on RMB and HKD products. According to Thomson Reuters, CNCBI was ranked top two among all Chinese banks for HKD FX spot trading volume in Asia and top three among banks in Asia for RMB FX spot trading volume during 1H2019. In March, the trading team completed the first HKEx centrally cleared CNH FX swap transaction in Hong Kong. CNCBI has also successfully joined the Continuous Linked Settlement system to achieve multi-currency, multilateral and real-time global FX trade settlement capabilities. The DCM team completed 75 deals with an aggregate issuance size of US$33.05 billion, of which CNCBI acted as global coordinator for 44 transactions. Starting from October this year, CNCBI will become a CNH HIBOR contributing bank as appointed by the Treasury Markets Association, which is an acknowledgement of CNCBI's increasing presence in the CNH market.

CHINA CITIC BANK INTERNATIONAL LIMITED

(Incorporated in Hong Kong with limited liability under the Companies Ordinance)

ANNOUNCEMENT OF 2019 INTERIM RESULTS

The Board of Directors of China CITIC Bank International Limited ("the Bank") is pleased to announce the unaudited consolidated results of the Bank and its subsidiaries ("the Group") for the six months ended 30 June 2019. The interim financial report is unaudited, but has been reviewed by PricewaterhouseCoopers, in accordance with Hong Kong Standards on Review Engagements 2410, Review of interim financial information performed by the independent auditor of the entity , issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA").

CONDENSED CONSOLIDATED INCOME STATEMENT For the six months ended 30 June 2019 - unaudited (Expressed in Hong Kong dollars)

		Six months ended 30 June
		2019			2018
	Note	HK$' 000	HK$' 000
Interest income	4(a)	6,121,530			5,441,182
Interest expense	4(b)	(2,933,016)		(2,138,071)
Net interest income		3,188,514			3,303,111
Fee and commission income		841,329			837,009
Fee and commission expense		(57,317)		(47,275)
Net fee and commission income	5	784,012			789,734
Net trading income	6	227,053			235,714
Net hedging (loss)/gain	7	(3,007)		4,344
Net gain on disposal of financial assets at fair value through
other comprehensive income	8	35,866			9,936
Other operating income	9	16,969			19,458
Operating income		4,249,407			4,362,297
Operating expenses	10	(1,800,781)		(1,617,443)
Operating profit before impairment		2,448,626			2,744,854
Expected credit losses on financial assets	11	(546,533)		(741,030)
Impairment losses on other assets		(74,029)		(32,000)
Impairment losses		(620,562)		(773,030)
Operating profit		1,828,064			1,971,824
Net loss on disposal of property and equipment		(2,630)		(527)
Revaluation gain/(loss) on investment properties	20	7,073			(170)
Share of profit of associates		841			-
Gain on disposal of interest in associates	19	9,226			-
Loss on partial redemption of loan capital	28	(58,995)		-
Profit before taxation		1,783,579			1,971,127
Income tax	12	(285,713)		(348,638)
Profit for the period		1,497,866			1,622,489
Profit attributable to shareholders		1,497,866			1,622,489

1

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2019 - unaudited

(Expressed in Hong Kong dollars)

		Six months ended 30 June
		2019		2018
		HK$' 000	HK$' 000
Profit for the period	1,497,866		1,622,489
Other comprehensive income for the period
Items that will be reclassified subsequently to consolidated income
statement when specific conditions are met
Exchange differences on translation of financial statements of foreign operations	(3,102)	(20,873)
Financial assets at fair value through other comprehensive income
- change in the fair value of debt instruments	667,489		(538,836)
- transfer to income statement on disposal	(35,391)	(11,120)
- transfer to income statement on impairment	(50,819)	74,011
- deferred tax related to the above	(109,191)	78,474
		472,088		(397,471)
Items that will not be reclassified subsequently to
consolidated income statement
Financial assets at fair value through other comprehensive income
- change in fair value of equity instruments	33,328		731
- deferred tax related to the above	(5,484)	(121)
		27,844		610
Property revaluation reserve
- transfer to deferred tax on disposal	10		-
Other comprehensive income/(loss) for the period	496,840		(417,734)
Total comprehensive income for the period	1,994,706		1,204,755
Total comprehensive income attributable to shareholders	1,994,706		1,204,755

2

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 June 2019 - unaudited

(Expressed in Hong Kong dollars)

		At 30 June	At 31 December
		2019		2018
	Note	HK$' 000	HK$' 000
ASSETS
Cash and balances with banks, central banks and other		20,969,197
financial institutions	13		29,622,486
Placements with and advances to banks, central banks and		52,621,210
other financial institutions	14		52,886,380
Financial assets at fair value through profit or loss	15	2,756,147		1,440,532
Derivative financial instruments	16	4,582,402		6,027,833
Loans and advances to customers and other accounts	17	200,726,694		203,829,256
Financial assets at fair value through other comprehensive income	18	66,568,136		66,977,407
Interest in associates	19	-	352,151
Property and equipment	20	237,662
- Investment properties			241,970
- Other premises and equipment		514,448		492,854
Right-of-use assets	2	787,766		-
Intangible assets	21	609,884		652,210
Tax recoverable	26(a)	24,554		8,353
Deferred tax assets	26(b)	220,646		413,359
Total Assets		350,618,746		362,944,791
LIABILITIES AND EQUITY
Liabilities		3,953,485
Deposits and balances of banks and other financial institutions	22		2,849,375
Deposits from customers	23	273,588,030		285,492,851
Derivative financial instruments	16	4,834,254		6,543,351
Certificates of deposit issued	24	3,120,265		3,133,151
Debt securities issued	25	3,402,991		3,408,077
Current tax liabilities	26(a)	411,759		600,053
Deferred tax liabilities	26(b)	6,269		7,940
Other liabilities	27	9,711,502		8,645,374
Loan capital	28	6,275,259		6,283,542
Total Liabilities		305,303,814		316,963,714
Equity
	18,404,013
Share capital	29(a)		18,404,013
Reserves		19,140,507		17,496,484
Total shareholders' equity
	37,544,520		35,900,497
Additional equity instruments	30	7,770,412		10,080,580
Total Equity		45,314,932		45,981,077
Total Equity and Liabilities		350,618,746		362,944,791

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CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2019 - unaudited

(Expressed in Hong Kong dollars)

								Exchange		Property	Investment			Regulatory				Total	Additional
	Share	Capital	General	differences	revaluation	revaluation	Statutory		general	Retained		reserves		equity	Total
	capital	reserve	reserve		reserve		reserve		reserve	reserve		reserve	profits	(note 29(b))	instruments	equity
	HK$'000	HK$'000	HK$'000		HK$'000		HK$'000		HK$'000	HK$'000		HK$'000	HK$'000		HK$'000		HK$'000	HK$'000
At 1 January 2019	18,404,013		6,589	100,000	(63,485)	76,300	(225,266)	58,073	149,500	17,394,773	17,496,484	10,080,580	45,981,077
Changes in equity for
the six months ended 30 June 2019:
Profit for the period	-	-	-		-		-		-	-		-	1,497,866	1,497,866		-	1,497,866
Other comprehensive income for the period	-	-	-	(3,102)	10	499,932	-		-	-	496,840		-	496,840
Total comprehensive income for the period	-	-	-	(3,102)	10	499,932	-		-	1,497,866	1,994,706		-	1,994,706
Release of reserve upon disposal of property	-	-	-		-	(65)		-	-		-	65		-		-	-
Transfer from retained profits	-	-	-		-		-		-	-		-	(308,022)	(308,022)	308,022	-
Distribution payment for Additional Tier 1
Capital Securities ("AT1 Capital Securities")	-	-	-		-		-		-	-		-	-		-	(308,022)	(308,022)
Redemption of AT1 Capital Securities	-	-	-		-		-		-	-		-	(42,661)	(42,661)	(2,310,168)	(2,352,829)
At 30 June 2019	18,404,013		6,589	100,000	(66,587)	76,245	274,666	58,073	149,500	18,542,021	19,140,507	7,770,412	45,314,932
At 1 January 2018	18,404,013		6,589	100,000	24,940	55	(18,767)	58,073	149,500	17,532,144	17,852,534	6,173,252	42,429,799
Changes in equity for
the six months ended 30 June 2018:
Profit for the period	-	-	-		-		-		-	-		-	1,622,489	1,622,489		-	1,622,489
Other comprehensive income for the period	-	-	-	(20,873)		-	(396,861)	-		-	-	(417,734)		-	(417,734)
Total comprehensive income for the period	-	-	-	(20,873)		-	(396,861)	-		-	1,622,489	1,204,755		-	1,204,755
Dividend paid	-	-	-		-		-		-	-		-	(2,808,437)	(2,808,437)		-	(2,808,437)
Transfer from retained profits	-	-	-		-		-		-	-		-	(168,784)	(168,784)	168,784	-
Distribution payment for AT1 Capital Securities	-	-	-		-		-		-	-		-	-		-	(168,784)	(168,784)
At 30 June 2018	18,404,013		6,589	100,000	4,067	55	(415,628)	58,073	149,500	16,177,412	16,080,068	6,173,252	40,657,333
At 1 July 2018	18,404,013		6,589	100,000	4,067	55	(415,628)	58,073	149,500	16,177,412	16,080,068	6,173,252	40,657,333
Changes in equity for
the six months ended 31 December 2018:
Profit for the period	-	-	-		-		-		-	-		-	1,385,869	1,385,869		-	1,385,869
Other comprehensive income for the period	-	-	-	(67,552)	76,245	190,362	-		-	-	199,055		-	199,055
Total comprehensive income for the period	-	-	-	(67,552)	76,245	190,362	-		-	1,385,869	1,584,924		-	1,584,924
Issue of AT1 Capital Securities	-	-	-		-		-		-	-		-	-		-	3,907,328	3,907,328
Transfer from retained profits	-	-	-		-		-		-	-		-	(168,508)	(168,508)	168,508	-
Distribution payment for AT1 Capital Securities	-	-	-		-		-		-	-		-	-		-	(168,508)	(168,508)
At 31 December 2018	18,404,013		6,589	100,000	(63,485)	76,300	(225,266)	58,073	149,500	17,394,773	17,496,484	10,080,580	45,981,077

4