China Merchants Bank : Information of 2018 interim results presentation ·Press Release ·Powerpoint

China Merchants Bank Announces 2018 Interim Results

Net Profit Rose 14% Year-on-year;

Non-performing Loans and Ratio Both Decreased

Highlights

• ⚫Net operating income increased 11.56% year-on-year to RMB126.103 billion (A shares: operating income increased 11.75% year-on-year to RMB126.146 billion)

• ⚫Net profit attributable to the Bank's shareholders increased 14.00% year-on-year to RMB44.756 billion

• ⚫Basic earnings per share attributable to the Bank's shareholders increased 13.46% year-on-year to RMB1.77

• ⚫Net interest income increased 8.63% year-on-year to RMB77.012 billion. Net interest margin increased 0.11 percentage point year-on-year to 2.54%

• ⚫Net non-interest income increased by 16.51% year-on-year to RMB49.091 billion (A shares: increased by 17.04% year-on-year to RMB49.134 billion)

• ⚫Total assets increased 3.81% to RMB6,537.340 billion from the end of the previous year

• ⚫Capital adequacy ratio and the Core Tier 1 capital adequacy ratio of the Group under the advanced approach were 15.08% and 11.61%, respectively

• ⚫Non-performing loans decreased RMB2.011 billion to RMB55.382 billion from the end of the previous year; non-performing loan ratio was 1.43%, down by 0.18 percentage point as compared with the end of the previous year

• ⚫Non-performing loan allowance coverage ratio was 316.08%, up by 53.97 percentage points as compared with the end of the previous year; the loan allowance ratio was 4.51%, up by 0.29 percentage point compared with the end of the previous year

(Note: All financial information set out in this interim results press release is unaudited and prepared in accordance with the International Financial Reporting Standards. Unless stated otherwise, all of the above data belong to the Group and denominated in RMB.)

24 August, 2018 - China Merchants Bank Co., Ltd. (HKEx: 3968; SSE: 600036; "China Merchants Bank" or "the Company" or "the Bank") together with its subsidiaries ("the Group")

today announced its unaudited results for the six months ended 30 June, 2018.

In the first half of 2018, confronted with the cumulative influence of external conditions such as the macro-economic deleveraging and stringent financial regulation, the Group continuedto implement its strategic direction and positioning of "Light-operation Bank" and "One Body with Two Wings" bycarrying out various businesses in a proactive and sound manner. Our overall operation continued to improve and the dynamic and balanced development of"Quality, Efficiency and Scale" was achieved.

1. Analysis of the Operation

Earnings increased steadily.In the first half of 2018, the Group realised a net profit attributable to shareholders of the Bank of RMB44.756 billion, representing a year-on-year increase of 14.00%; the net interest income was RMB77.012 billion, representing a year-on-year increase of 8.63%; the net non-interest income was RMB49.091 billion, representing an increase of 16.51% as compared with the corresponding period of the previous year and an increase of 4.95% as compared with the corresponding period of the previous year without taking into consideration the impact of the new financial instruments standard. The return on average asset (ROAA) and return on average equity (ROAE) attributable to ordinary shareholders of the Bank were 1.39% and 19.61%, up by 0.10 percentage point and 0.50 percentage point from the corresponding period of the previous year, respectively.

The scale of assets and liabilities expanded steadily.As at the end of June 2018, theGroup's total assetsamounted to RMB6,537.340 billion, representing an increase of 3.81% as compared with the end of the previous year. The total loans and advances to customers amounted to RMB3,877.868 billion, representing an increase of 8.77% as compared with the end of the previous year. Total liabilities amounted to RMB6,033.289 billion, representing an increase of 3.77% as compared with the end of the previous year. Total deposits from customers amounted to RMB4,257.803 billion, representing an increase of 4.76% as compared with the end of the previous year.

The non-performing loans decreased and the allowance coverage ratio remained solid.

As at the end of June 2018, the Group had total non-performing loans of RMB55.382 billion, representing a decrease of RMB2.011 billion as compared with the end of the previous year. The non-performing loan ratio was 1.43%, down by 0.18 percentage point as compared with the end of the previous year. The non-performing loan allowance coverage ratio was 316.08%, representing an increase of 53.97 percentage points as compared with the end of the previous year.

2. Analysis of the Company's Business Development Strategies

During the reporting period, the Company further promoted the strategic transformation of"Light-operation Bank" and "One Body with Two Wings", and used Fintech as the locomotivetoprovide "nuclear power" for the secondhalf of the strategic transformation, so as to develop itself into the best customer experience bank.

1. Transforming foundational Fintech capabilities towards Internet-based

With respect to resource commitment, the Company raised the upper limit of Fintech innovationproject funds to 1% of the previous year's audited operating income, andincreased resources committed for construction of infrastructures, transformation and upgrading of service systems and establishment of ecological scenarios. With respect to infrastructure construction, the Company precipitated in the construction of cloud computing and distributed trading platform; continued to increase big data processing capacity; enhanced the construction of API (application programming interface) platform; and pushed forward the construction and application of Blockchain platform. With respect to agile IT development, the dual-model IT research and development system was further promoted. During the reporting period, 3,550 new applications were launched by the Company, up by 32% year-on-year. With respect to talent structure, the Company enriched the talent pool in the areas of IT and DT (data technology). The Company attracted talents and continued to establish a Fintech talent pool through measures such as Fintech training camp and visits paid to universities and colleges.

2.

The customer-centric approach was taken for retail finance to foster the best customer experience

i)

The operation model has been undergoing a change from card-based operation to APP-based operation.Customer engagement has been enhanced by the Company by means of strengthening the operation of the mobile banking app and focusing on the customer experience and the core scenarios. During the reporting period, the number of monthly active users of CMB APP and CMB Life APP reached 53,819,900 (excluding repeated users). The number of transactions and the sales amount of wealth management investments1of CMB APP accounted for 75.48% and 55.29% of the Bank respectively. The consumer finance transactions successfully conducted through CMB Life APP accounted for 48.81% of the total consumer finance transactions. CMB APP and CMB Life APP have become important front of retail operations for the Company.

1Including the investments in wealth management on custody, funds, precious metals, insurance, etc.

• ii)The online and offline multidimensional service systems have been established.During the reporting period, the Company, on the one hand, continuedto adhere to the "mobilepriority" development strategy spurred by mobile-centric app, made overall arrangement for financial social media and content services, promoted online and offline collaboration, explored intensive operating models aimed for customers. As a result, 1,876,200 new online accounts were opened.

• iii)Smart services have been enhanced.The Company enhanced its smart services in four aspects, including smart transaction, smart marketing, smart risk control and smart customer services. The cumulative sales volume of Machine Gene Investment product amounted to RMB11.625 billion, and the number of customers using Machine Gene Investment reached 166,900. Domestic precious metalarbitrage business was launched through the Company's online quantitative tradingsystem with a cumulative trading volume amounted to RMB22.723 billion. As a result, the performance efficiency was 90% higher than manual labor, saving labor costs by more than 80%. The Company has invested in the scale system for fraud risk control, integrating dozens of dimensions such as customer equipment, environment, and counterparty, and applying more than 2,000 variables. With a capacity of risk decision analysis within 30 milliseconds and calculation of billions of data streams, the scale system achieved the sensitivity level of microprobability of loss. Moreover, the Company established a smart real-time credit card risk management system, the non-performing rate of credit card was controlled at 1.14%, and the overall risk of credit card assets was stable and controllable.

3. The wholesale finance customer service system has been transforming itself into the Internet-based model at a faster pace

i)Launching online traditional customer services for wholesale finance.As at the end of the reporting period, the number of theCompany's corporate mobile bankingcustomers reached 580,000, representing a year-on-year growth of 44.42%. 12,033,700 transactions were recorded with a total amount of RMB786.096 billion in the reporting period. There were 1,032,800 mobile payment users, with the total amount of payment transactions through mobile channels reaching RMB785.316 billion.

• ii)Extending wholesale finance to industrial ecology.The Company developed an innovative financial institution service model that integrated online and offline services. It covers 12 businesses in 5 major categories including wealth management, third-party asset custody, financial market, cash management, asset sales, etc.

• iii)Promoting "Smart Service"at middle and back office supporting wholesale finance.The Company leveraged on the big data from internal and external sources

to build the data obtainment and risk assessment mechanism for customer pre-warning, thus realising the pre-warning on more than 50% of the customers with new non-performing loans, and achieving the average pre-warning time of more than 12 months for the customers with overdue loans.

4.Further enhancing comprehensive customer service by centering on "customer journey"

During the reporting period, the Company put its emphasis on building the bank with the best customer experience, and by leveraging on the concept of "customer journey", theCompany leveraged onFintech and through "end-to-end" to develop a

customer-oriented service system. The Company utilised Fintech to promote platform-based and intensive management of customers. With concentrated management of Gold Card and Sun-flower customers through direct banking, the accumulated value of customer asset under management has seen a new addition of

RMB23.9 billion. Net number of Sun-flower customers increased by 27,000, thus initially realizing"Light Operation" in retail business.

3.

Analysis of the Company's Business Overview

1. Retail finance maintained its growth momentum

In the first half of 2018, the profit of the retail finance business of the Company maintained its rapid growth, with the profit before tax amounting to RMB31.690 billion, representing a year-on-year increase of 17.76%. It accounted for 56.62% of the total profit before tax of the whole business lines of the Company. The net operating income from the retail finance amounted to RMB61.646 billion, representing a year-on-year increase of 12.60% and accounting for 51.88% of the net operating income of the Company, among which, the net interest income from retail finance amounted to RMB37.555 billion, representing a year-on-year increase of 7.96% and accounting for 60.92% of the net operating income from retail finance, while the net non-interest income from retail finance amounted to RMB24.091 billion, representing a year-on-year increase of 20.67% and accounting for 39.08% of the net operating income from retail finance, and 55.03% of the net non-interest income of the Company.

Retail customers and AUM continued to expand.The Company had 116.3261 million retail customers (including the customers of its debit cards and credit cards), representing an increase of 9.09% as compared with the end of the previous year, among which, the number of Sunflower-level and above customers (those with minimum daily average total assets of RMB500,000 for each month) reached 2,295,500, representing an increase of 7.94% as compared with the end of the previous year. The balance of total assets under