Download - Fubon Bank (China) Co., Ltd
FUBON BANK (CHINA) CO., LTD.
Financial Statements and Auditor’s Report
For the year ended 31 December 2015
[Translation]
FUBON BANK (CHINA) CO., LTD.
FINANCIAL STATEMENTS AND AUDITOR’S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2015
CONTENTS PAGE(S)
AUDITOR’S REPORT 1 - 2
BALANCE SHEET 3 - 4
INCOME STATEMENT 5
CASH FLOW STATEMENT 6
STATEMENT OF CHANGES IN OWNERS’ EQUITY 7
NOTES TO THE FINANCIAL STATEMENTS 8 - 75
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AUDITOR’S REPORT
De Shi Bao (Shen) Zi (16) No.P0981
[Translation]
TO THE BOARD OF DIRECTORS OF FUBON BANK (CHINA) CO., LTD. : We have audited the accompanying financial statements of Fubon Bank (China) Co., Ltd. (the “Bank”), which comprise the balance sheet as at 31 December 2015, the income statement, the statement of changes in owners’ equity, the cash flow statement for the year then ended, and the notes to the financial statements.
1. Management’s responsibility for the financial statements
Management of the Bank is responsible for the preparation and fair presentation of these
financial statements. This responsibility includes: (1) preparing the financial statements in
accordance with Accounting Standards for Business Enterprises to achieve fair presentation of
the financial statements; (2) designing, implementing and maintaining internal control that is
necessary to enable the financial statements that are free from material misstatement, whether
due to fraud or error. 2. Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with China Standards on Auditing. Those standards require
that we comply with the Code of Ethics for Chinese Certified Public Accountants and plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, we consider the
internal control relevant to the preparation and fair presentation of the financial statements in
order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
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AUDITOR’S REPORT - continued
De Shi Bao (Shen) Zi (16) No.P0981
[Translation]
3. Opinion
In our opinion, the financial statements of the Bank present fairly, in all material respects, the
financial position of the Bank as of 31 December 2015, and the results of its operations and cash
flows for the year then ended in accordance with Accounting Standards for Business
Enterprises.
Deloitte Touche Tohmatsu Chinese Certified Public Accountant
Certified Public Accountants LLP Li Bing Wen
Shanghai, China Zhang Lun Qi
25 March 2016
The auditor’s report and the accompanying financial statements are English translations of the Chinese auditor’s report
and statutory financial statements prepared under accounting principles and practices generally accepted in the
People’s Republic of China. These financial statements are not intended to present the financial position and results of
operations in accordance with accounting principles and practices generally accepted in other countries and
jurisdictions. In case the English version does not conform to the Chinese version, the Chinese version prevails.
FUBON BANK (CHINA) CO., LTD.
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BALANCE SHEET
AT 31 DECEMBER 2015
NOTES 2015/12/31 2014/12/31
RMB RMB
ASSETS
Cash and balances with the Central Bank 7 7,810,457,420.24 7,281,521,107.60
Due from banks 8 1,271,121,748.15 834,799,412.52
Placement to banks 9 10,971,849,600.00 8,193,592,062.93
Financial assets at fair value through profit or loss 10 291,039,500.00 163,372,300.00
Derivative financial assets 11 213,592,519.42 60,605,522.90
Financial assets purchased under resale agreements 12 300,000,000.00 1,099,736,952.00
Interest receivable 13 358,062,228.53 377,592,346.24
Loans and advances to customers 14 29,969,200,467.14 30,383,866,872.75
Available-for-sale financial assets 15 11,062,477,348.00 5,881,047,540.00
Held-to-maturity investments 16 7,310,476,711.16 5,914,827,300.73
Receivable investments 17 2,521,464,932.89 -
Fixed assets 18 1,194,973,028.46 1,191,060,601.62
Construction in process 19 82,430,000.00 -
Intangible assets 20 28,329,860.63 20,598,307.96
Deferred tax assets 21 125,465,536.07 110,776,945.12
Other assets 22 135,764,402.56 90,717,368.91 ________________ ________________
TOTAL ASSETS 73,646,705,303.25 61,604,114,641.28 ________________ ________________ ________________ ________________
(Continued)
FUBON BANK (CHINA) CO., LTD.
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BALANCE SHEET - continued
AT 31 DECEMBER 2015
NOTES 2015/12/31 2014/12/31
RMB RMB
LIABILITIES
Due to banks and other financial institutions 23 6,482,433,137.06 3,378,808,378.14
Taking from banks 24 1,704,570,000.00 2,168,333,500.00
Derivative financial liabilities 11 177,311,660.04 85,177,546.54
Financial assets sold under repurchase agreements 25 8,745,100,000.00 6,825,500,000.00
Customer deposits 26 46,012,657,735.60 42,062,569,950.72
Employee benefits payable 27 64,238,810.00 56,139,507.00
Taxes payable 28 47,698,059.72 30,674,697.63
Interest payable 29 330,314,654.39 449,046,631.37
Debt securities issued 30 4,945,936,674.69 1,870,467,371.22
Other liabilities 31 257,109,352.43 130,746,030.62 ________________ _______________
TOTAL LIABILITIES 68,767,370,083.93 57,057,463,613.24 ________________ _______________
OWNERS’ EQUITY
Paid-in capital 32 2,100,000,000.00 2,100,000,000.00
Capital reserve 33 93,176,446.10 93,176,446.10
Other comprehensive income/(loss) 34 (7,538,508.74) 7,970,795.58
Surplus reserve 35 305,739,855.97 266,701,606.41
General risk reserve 36 943,277,650.15 775,020,149.28
Retained earnings 37 1,444,679,775.84 1,303,782,030.67 ________________ _______________
TOTAL OWNERS’ EQUITY 4,879,335,219.32 4,546,651,028.04 ________________ _______________
TOTAL LIABILITIES AND OWNERS’ EQUITY 73,646,705,303.25 61,604,114,641.28 ________________ _______________ ________________ _______________
The accompanying notes are part of the financial statements.
The financial statements on pages 3 to 75 were signed by the following:
Hong Peili Yueh Tso-Shun Wang Yan ____________________ _____________________ _____________________________
Chairman of the Board Chief Financial Officer Head of Accounting Department
FUBON BANK (CHINA) CO., LTD.
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INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES 2015 2014
RMB RMB
Operating income 1,178,902,935.14 1,064,503,201.91
Net interest income 38 306,574,705.07 578,605,917.37
Interest income 38 2,231,967,134.60 2,424,661,662.09
Interest expense 38 1,925,392,429.53 1,846,055,744.72 ______________ ______________
Net fee and commission income 39 111,950,384.19 133,504,955.91
Fee and commission income 39 127,951,207.99 137,790,973.48
Fee and commission expense 39 16,000,823.80 4,286,017.57 ______________ ______________
Investment income 40 874,336,469.78 419,272,258.81
Gains/ (losses) from changes in fair value 41 21,040,696.06 (4,191,806.03)
Foreign exchange losses (143,391,718.21) (70,198,723.36)
Other operating income 8,392,398.25 7,510,599.21 ______________ ______________
Operating expenses 682,579,613.60 531,447,006.63
Business tax and levies 42 83,459,689.37 95,057,632.47
Operating expenses 43 515,404,987.91 377,008,444.50
Impairment loss 44 83,714,936.32 59,380,929.66 ______________ ______________
Operating profit 496,323,321.54 533,056,195.28
Add: Non-operating income 45 164,486.43 230,370.99
Less: Non-operating expenses 46 3,144,444.85 1,314,050.00 ______________ ______________
PROFIT BEFORE TAX 493,343,363.12 531,972,516.27 ______________ ______________
Less: Income tax expenses 47 102,960,867.52 110,083,247.04 ______________ ______________
NET PROFIT 390,382,495.60 421,889,269.23 ______________ ______________ ______________ ______________
Other comprehensive income/(loss) (15,509,304.32) 62,424,626.60
Other comprehensive income/(loss) items
which will be reclassified subsequently to profit or loss (15,509,304.32) 62,424,626.60 ______________ ______________
Changes in fair value of available-for-sale financial assets 34 (15,509,304.32) 62,424,626.60 ______________ ______________
TOTAL COMPREHENSIVE INCOME 374,873,191.28 484,313,895.83 ______________ ______________ ______________ ______________
The accompanying notes are part of the financial statements.
FUBON BANK (CHINA) CO., LTD.
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CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2015
NOTES 2015 2014 RMB RMB Cash flow from operating activities
Interest, fee and commission received 2,381,275,373.04 2,408,443,317.92 Net decrease in balance with the Central Bank and due from banks 359,701,460.00 - Net decrease in loans and advances to customers 326,661,969.02 - Net increase in customer deposits and due to banks and other financial institutions 7,053,712,543.80 651,052,872.01 Net decrease in taking from banks 1,455,836,500.00 8,071,895,500.00 Other cash receipts relating to operating activities 639,879,651.75 7,915,032.72 ________________ ________________
Subtotal of cash inflows 12,217,067,497.61 11,139,306,722.65 ________________ ________________
Interest, fee and commission paid 1,932,929,806.84 1,767,950,983.46 Net increase in placement to banks 2,595,570,137.07 6,104,208,362.93 Net increase in loans and advances to customers - 187,234,836.88 Net increase in balance with the Central Bank and due from banks - 540,104,049.01 Cash payments to and on behalf of employees 261,761,667.17 218,451,344.00 Payments of taxes 178,916,017.64 184,364,253.14 Other cash payments relating to operating activities 493,913,495.06 717,960,417.81 ________________ ________________
Subtotal of cash outflows 5,463,091,123.78 9,720,274,247.23 ________________ ________________
Net cash flow from operating activities 6,753,976,373.83 1,419,032,475.42 ________________ ________________
Cash flow from investing activities Cash receipts from disposals of investments 24,462,169,920.00 3,434,885,280.00 Cash receipts from returns on investment 849,895,231.99 379,063,277.95 Net cash receipts from disposal of fixed assets, intangible assets and other long-term assets 43,917.00 - ________________ ________________
Subtotal of cash inflows 25,312,109,068.99 3,813,948,557.95 ________________ ________________
Cash payments to acquire investments 33,687,016,368.63 9,407,207,730.00 Cash payments to acquire fixed assets, intangible assets and other long-term assets 169,850,853.46 63,065,135.85 ________________ ________________
Subtotal of cash outflows 33,856,867,222.09 9,470,272,865.85 ________________ ________________
Net cash flows from investing activities (8,544,758,153.10) (5,656,324,307.90) ________________ ________________
Cash flow from financing activities Cash receipts from debt securities issuance 9,328,273,880.00 1,860,142,050.00 Cash receipts from capital contributions - 1,000,000,000.00 ________________ ________________
Subtotal of cash inflows 9,328,273,880.00 2,860,142,050.00 ________________ ________________
Cash repayments of borrowings 6,380,000,000.00 - Cash payments for distribution of dividends 42,189,000.00 - ________________ ________________
Subtotal of cash outflows 6,422,189,000.00 - ________________ ________________
Net cash flows from financing activities 2,906,084,880.00 2,860,142,050.00 ________________ ________________
Effect of foreign exchange rate changes on cash and cash equivalents 92,344,407.54 2,988,567.55 ________________ ________________
Net increase/(decrease) in cash and cash equivalents 1,207,647,508.27 (1,374,161,214.93) ________________ ________________
Add: Opening balance of cash and cash equivalents 48 2,920,838,825.78 4,295,000,040.71 Closing balance of cash and cash equivalents 48 4,128,486,334.05 2,920,838,825.78 ________________ ________________ ________________ ________________
The accompanying notes are part of the financial statements.
FUBON BANK (CHINA) CO., LTD.
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STATEMENT OF CHANGERS IN OWNERS’ EQUITY FOR THE YEAR ENDED 31 DECEMBER 2015
2015
Other comprehensive Surplus General Retained
NOTES Paid-in capital Capital reserve income reserve Risk Reserve Earnings Total
RMB RMB RMB RMB RMB RMB RMB
I. Balance at 31 December 2014 and 1 January 2015 2,100,000,000.00 93,176,446.10 7,970,795.58 266,701,606.41 775,020,149.28 1,303,782,030.67 4,546,651,028.04
II. Current year movement - - (15,509,304.32) 39,038,249.56 168,257,500.87 140,897,745.17 332,684,191.28
(I) Comprehensive income - - (15,509,304.32) - - 390,382,495.60 374,873,191.28
1. Net profit - - - - - 390,382,495.60 390,382,495.60
2. Other comprehensive income - - (15,509,304.32) - - - (15,509,304.32)
(III) Profit distribution - - - 39,038,249.56 168,257,500.87 (249,484,750.43) (42,189,000.00)
1. Transfer to surplus reserve - - - 39,038,249.56 - (39,038,249.56) -
2. Transfer to general risk reserve - - - - 168,257,500.87 (168,257,500.87) -
3. Payment of cash dividends - - - - - (42,189,000.00) (42,189,000.00) ______________ _____________ ______________ ______________ ______________ _____________ _______________
III. Balance at 31 December 2015 2,100,000,000.00 93,176,446.10 (7,538,508.74) 305,739,855.97 943,277,650.15 1,444,679,775.84 4,879,335,219.32 ______________ _____________ ______________ ______________ ______________ _____________ _______________ ______________ _____________ ______________ ______________ ______________ _____________ _______________
2014
Other comprehensive Surplus General Retained
NOTES Paid-in capital Capital reserve income reserve Risk Reserve Earnings Total
RMB RMB RMB RMB RMB RMB RMB
I. Balance at 31 December 2013 and 1 January 2014 1,100,000,000.00 93,176,446.10 (54,453,831.02) 224,512,679.48 584,912,793.16 1,114,189,044.49 3,062,337,132.21
II. Current year movement 1,000,000,000.00 - 62,424,626.60 42,188,926.93 190,107,356.12 189,592,986.18 1,484,313,895.83
(I) Comprehensive income - - 62,424,626.60 - - 421,889,269.23 484,313,895.83
1. Net profit - - - - - 421,889,269.23 421,889,269.23
2. Other comprehensive income - - 62,424,626.60 - - - 62,424,626.60
(II) Owners’ contributions and
reduction in capital 1,000,000,000.00 - - - - - 1,000,000,000.00
1. Capital contribution from owners 1,000,000,000.00 - - - - - 1,000,000,000.00
(III) Profit distribution - - - 42,188,926.93 190,107,356.12 (232,296,283.05) -
1. Transfer to surplus reserve - - - 42,188,926.93 - (42,188,926.93) -
2. Transfer to general risk reserve - - - - 190,107,356.12 (190,107,356.12) - ______________ _____________ ______________ ______________ ______________ _____________ _______________
III. Balance at 31 December 2014 2,100,000,000.00 93,176,446.10 7,970,795.58 266,701,606.41 775,020,149.28 1,303,782,030.67 4,546,651,028.04 ______________ _____________ ______________ ______________ ______________ _____________ _______________ ______________ _____________ ______________ ______________ ______________ _____________ _______________
The accompanying notes are part of the financial statements.
FUBON BANK (CHINA) CO., LTD.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 December 2015
1. GENERAL Fubon Bank (China) Co., Ltd (previously named First Sino Bank, the “Bank”) is a joint venture
bank in Shanghai Pudong District, the People’s Republic of China (the “PRC”) invested by
Shanghai Pudong Development Bank and Lotus Worldwide Ltd. in accordance with the
“Regulation Governing Foreign Financial Institutions in the People’s Republic of China” on 20
March 1997. Lotus Worldwide Ltd. transferred 5% shares to Wing Hang Bank in 2004. The Bank
mainly engages in a full scope of foreign currency services and RMB service to customers except
citizens in the territory of China.
According to the permission (Yinjianfa [2013] No.657) announced by China Banking Regulatory
Commission (the “CBRC”) on 19 December 2013, Lotus Worldwide Ltd. is approved to transfer
41% of the Bank shares to Taipei Fubon Commercial Bank Co., Ltd. and 25.11% to Fubon
Financial Holding Co., Ltd. ; Shanghai Pudong Development Bank is approved to transfer 10% of
the Bank shares to Taipei Fubon Commercial Bank Co., Ltd.; Wing Hang Bank is approved to
transfer 3.89% of the Bank shares to Fubon Financial Holding Co., Ltd.. The permission approved
the Bank to increase its paid-in capital by RMB1,000,000,000.00, in which RMB510,000,000.00
was funded by Taipei Fubon Commercial Bank Co., Ltd., RMB290,000,000.00 was appropriated
by Fubon Financial Holding Co., Ltd. and RMB200,000,000.00 was sponsored by Shanghai
Pudong Development Bank.
The permission launched by CBRC on 28 April 2014 (Yinjianfu [2014] No.266) approved the
Bank officially changed its name to Fubon Bank (China) Co., Ltd. The Bank obtained an updated
business license No. 310000400523055 on 29 July 2014.
Based on the relevant permission launched by CBRC from 1 January 2015 to the present day of
financial statements, the Bank officially establish the following sub-branches:
Approval Documents Approval Date
Shanghai Changning Sub-branch Hu Yinjianfu [2015] No.63 29 January 2015
Shanghai Pilot Free Trade Zone Issued financial license
Sub-branch N/A on 23 July 2015
Shanghai Ri Yue Guang
Sub-branch Hu Yinjianfu [2015] No.488 13 August 2015
Nanjing Branch Su Yinjianfu [2015] No.269 21 September 2015
Shanghai Bund Sub-branch Hu Yinjianfu [2015] No.723 22 December 2015
Shenzhen Qianhai Sub-branch Shen Yinjianfu [2015] No.384 24 December 2015
Suzhou Kunshan Sub-branch Su Yinjianfu [2016] No.6 4 January 2016
Beijing Branch Jing Yinjianfu [2015] Under preparatory
No.450 (Preparatory Approval) process
FUBON BANK (CHINA) CO., LTD.
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1. GENERAL - continued
The Bank has established Shenzhen Branch(including Shenzhen Bao’an Sub-branch and
Shenzhen Qianhai Sub-branch), Tianjin Branch(including Tianjing Binhai Sub-branch), Su Zhou
Branch(including Suzhou Kunshan Sub-branch), Nanjing Branch, Shanghai Hongqiao Sub-branch,
Shanghai Xuhui Sub-branch, Shanghai Jiading Sub-branch, Shanghai Songjiang Sub-branch,
Shanghai Minhang Sub-branch, Shanghai Xin Tian Di Sub-branch, Shanghai Jing An Sub-branch,
Shanghai Lu Jia Zui Sub-branch, Shanghai Changning Sub-branch, Shanghai Pilot Free Trade
Zone Sub-branch, Shanghai Ri Yue Guang Sub-branch, Shanghai Bund Sub-branch and Beijing
Branch (preparatory).
As of 31 December 2015, the registered capital of the Bank is RMB2,100 million. Details of
capital contribution of the investors are shown in Note 32. The registered address of the Bank is
1st, 18
th, 19
th and 20
th floor, Tower A, No. 1168 Century Avenue, Pudong New District, Shanghai.
2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS
The Bank has adopted the Accounting Standards for Business Enterprises (hereinafter referred to
as “CASs”) issued by the Ministry of Finance (MoF).
3. STATEMENT OF COMPLIANCE WITH THE ACCOUNTING STANDARD FOR BUSINESS
ENTERPRISES
The financial statements of the Bank have been prepared in accordance with CASs, and present
truly and fairly the Bank’s financial position as of 31 December 2015 and the results of operations
and cash flows for the year of 2015.
4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
The following significant accounting policies and accounting estimates are determined in
accordance with the CASs.
Accounting period The Bank has adopted the calendar year as its accounting period, i.e. from 1 January to 31
December.
Functional currency RMB is the currency of the primary economic environment in which the Bank operates. Therefore
the functional currency of the Bank is RMB. The reporting currency of the financial statements is
RMB.
FUBON BANK (CHINA) CO., LTD.
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4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
Basis of accounting and principle of measurement
The Bank has adopted the accrual basis of accounting. Except for certain financial instruments
which are measured at fair value, the Bank has adopted the historical cost model as the
measurement basis. Where assets are impaired, provisions for asset impairment are made in
accordance with relevant requirements.
Under historical cost measurement, assets are measured by the cash or cash equivalents payment,
or by the fair value of the consideration given in exchange for them. Liabilities are recorded at the
amount of proceeds or assets received in exchange for the present obligation, or the amount
payable under contract for assuming the present obligation, or at the amount of cash or cash
equivalents expected to be paid to satisfy the liability in the normal course of business.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. Fair value for
measurement and/or disclosure purposes in the financial statements is determined on such a basis,regardless of whether that price is directly observable or estimated using another valuation
technique.
The fair value measurement is categorized into 3 levels based on the degree to which the inputs to
the fair value measurements are observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities
that the Bank has the ability to access at the measurement date.
- Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly or indirectly.
- Level 3 inputs are unobservable inputs for the asset or liability.
Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of change in value.
Translation of transactions denominated in foreign currencies
On initial recognition, foreign currency transactions are translated by applying the spot exchange
rate at the dates of the transactions or an exchange rate that approximates the actual spot exchange
rate at the dates of the transactions, which is calculated at the average daily rate.
At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are
translated into functional currency at the exchange rate of that date. Exchange differences arising
from the differences between the spot exchange rate prevailing at the balance sheet date and those
spot rates used on initial recognition or at the previous balance sheet date are recognized in profit
or loss for the current period.
FUBON BANK (CHINA) CO., LTD.
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4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
Translation of transactions denominated in foreign currencies - continued
Non-monetary assets and liabilities denominated in foreign currency are carried at historical cost
using spot exchange rates at the dates of the transactions; non-monetary assets and liabilities
carried at fair value and denominated in foreign currency are translated using the spot exchange
rates at the date when the fair value was determined. Differences between the translated amount
and the original amount of functional currency are accounted for as changes in fair value
(including changes in foreign exchange rates) in profit or loss for the period or owner’s equity.
Financial instruments
When the Bank becomes a party to the contract of a financial instrument, related financial assets
or financial liabilities are recognized. Financial assets and financial liabilities are initially
recognized at fair value. For financial assets and financial liabilities classified as fair value
through profit and loss (“FVTPL”), related transaction costs are charged to the profit or loss for
the current period; for financial assets and financial liabilities classified as other categories,
related transaction costs are included in the initial recognition amounts.
The effective interest method
The effective interest method is a method of calculating the amortized cost of a financial asset or a
financial liability (or group of financial assets or financial liabilities) and of allocating the interest
income or interest expense over the relevant period, using the effective interest rate. The effective
interest rate is the rate that exactly discounts estimated future cash payments or receipts through
the expected life of the financial instrument or, when appropriate, a shorter period to the net
carrying amount of the financial asset or financial liability.
When calculating the effective interest rate, the Bank estimates the future cash flows considering
all contractual terms of financial assets and financial liabilities (without considering future credit
losses). The calculation includes all fees paid or received between the parties to the contract that
are an integral part of the effective interest rate, transaction costs, and all other premiums or
discounts.
Recognition and measurement of financial assets
On initial recognition, financial assets are classified into the following categories: financial assets
at fair value through profit or loss (FVTPL), held-to-maturity investments, loans and receivables
and available-for-sale (AFS) financial assets. For a financial asset trade in regular way, the Bank
recognizes and derecognizes the financial asset on trade date.
FUBON BANK (CHINA) CO., LTD.
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4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
Recognition and measurement of financial assets - continued
(1) Financial assets at FVTPL
Financial assets are classified as at FVTPL where the financial asset is either held for trading or it
is designated as at FVTPL. The Bank’s FVTPL is held for trading purpose. A financial asset is classified as held for trading if: (1) it has been acquired principally for the
purpose of selling in the near future; or (2) it is part of a portfolio of identified financial
instruments that are managed together and for which there is evidence of a recent actual pattern of
short-term profit-taking; or (3) it is a derivative, except for a derivative that is a designated and
effective hedging instrument, or a financial guarantee contract, or a derivative that is linked to and
must be settled by delivery of an unquoted equity instrument (without a quoted price from an
active market) whose fair value cannot be reliably measured.
Financial assets at FVTPL are subsequently measure at fair value, with gains or losses arising
from changes in fair value as well as dividends and interest income related to such financial assets
recognized in profit or loss for the current period. (2) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable
payments and fixed maturities that the Bank has the positive intention and ability to hold to
maturity.
Held-to-maturity investments are subsequently measured at amortized cost using the effective
interest method; gains or losses arising from de-recognition, impairment or amortization is
recognized in profit or loss for the current period. (3) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Financial assets divided into loans and receivables include balances with the Central Bank, due from banks, placement to banks, financial assets purchased under resale agreements, interest reveivables, loans and advances to customers, receivable investments and other receivables etc. Loans and receivables are subsequently measured at amortized cost using the effective interest
method. Gains or losses arising from de-recognition, impairment or amortization are recognized
in profit or loss for the current period.
(4) AFS financial assets AFS financial assets are those non-derivative financial assets that are designated as available-for-
sale or are not classified as (1) financial assets at FVTPL, (2) loans and receivables, and (3)
held-to-maturity investments. AFS financial assets are subsequently measured at fair value. Gains or losses arising from changes
in fair value (other than impairment losses and foreign exchange gains and losses resulted from
foreign currency monetary assets which are recognized in profit or loss for the current period) are
recognized directly in owners’ equity, and are reversed and recognized in profit or loss for the
period when such financial assets are derecognized.
FUBON BANK (CHINA) CO., LTD.
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4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
Financial instruments - continued
Recognition and measurement of financial assets - continued
(4) AFS financial assets - continued
Interest received during the period in which the Bank holds the AFS financial assets and cash
dividends declared by the investee are recognized as investment income.
For investments in equity instruments that do not have a quoted market price in an active market
and whose fair value cannot be reliably measured they are measured at cost.
Impairment of financial assets
The Bank assesses the carrying amount of financial assets, other than those at FVTPL, at each
balance sheet date. If there is objective evidence that financial assets are impaired, the Bank
determines the amount of any impairment loss. The objective evidence that financial assets are
impaired is the evidence that happened actually, after initially recognized, which will have an
impact upon expected future cash flow of the financial asset, and the impact can be reliably
measured by the Bank.
Objective evidence that a financial asset is impaired includes evidence arising from the following
events:
(1) Significant financial difficulty of the issuer or obligor;
(2) A breach of contract by the borrower, such as a default or delinquency in interest or principal
payments;
(3) The lender, for economic or legal reasons relating to the borrower’s financial difficulty,
granting a concession to the borrower;
(4) It has become probable that the borrower will enter into bankruptcy or other financial
reorganization;
(5) The disappearance of an active market for a financial asset because of financial difficulties of
the issuer;
(6) Upon an overall assessment of a group of financial assets, observable data indicates that there
is a measurable decrease in the estimated future cash flows from the group of financial assets
since the initial recognition of those assets, although the decrease cannot yet be identified with
the individual financial assets in the a group. Such observable data includes:
- adverse changes in the payment status of borrowers in the group;
- adverse changes in national or local economic conditions of the borrowers that might affect
the repayment of the group of financial assets;
(7) Significant adverse changes in the technological, market, economic or legal environment in
which the issuer operates, indicating that the cost of the investment in the equity instrument
may not be recovered by the investor;
(8) A significant or prolonged decline in the fair value of an investment in an equity instrument
below its cost;
(9) Other objective evidence indicating an impairment of a financial asset.
FUBON BANK (CHINA) CO., LTD.
- 14 -
4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
Impairment of financial assets - continued
Impairment of financial assets carried at amortized cost
If financial assets carried at amortized cost are impaired, the carrying amount of the financial
asset shall be reduced to the present value of estimated future cash flows discounted at the
financial asset’s original effective interest rate (excluding future credit losses that have not been
incurred). The amount of reduction shall be recognized as an impairment loss in profit or loss. If,
after the recognition of impairment losses, the carrying amount of financial assets increases and
the increase can be related objectively to an event occurring after the impairment was recognized,
the previously recognized impairment losses are reversed through profit or loss to the extent that
the carrying amount of the financial assets at the date the impairment is reversed does not exceed
what the amortized cost would have been had the impairment not been recognized.
For a financial asset that is individually significant, the Bank assesses the asset individually for
impairment. For a financial asset that is not individually significant, the Bank assesses the asset
individually for impairment or includes the asset in a group of financial assets with similar credit
risk characteristics and collectively assesses them for impairment. For a financial asset that does
not need impairment after individual assessment (include individually significant and
non-significant financial asset), the Bank reassesses the asset collectively with a group of
financial assets with similar credit risk characteristics for impairment. The financial asset that has
impaired in individual assessment does not need to be included in collectively assessment for
impairment with a group of financial assets with similar credit risk characteristics.
Impairment of AFS financial assets
Where AFS financial assets are impaired, accumulated losses due to decreases in fair value
previously recognized directly in capital reserve are reversed and charged to profit or loss for the
current period. The reversed accumulated losses are the asset’s initial acquisition costs after
deducting amounts recovered and amortized, current fair value and impairment losses previously
recognized in profit or loss.
If, in a subsequent period, the carrying amount of financial assets increases and the increase can
be related objectively to an event occurring after the impairment was recognized, the previously
recognized impairment losses are reversed. The reversal of impairment losses of AFS equity
instruments is recognized as other comprehensive income and recorded in equity, and the
impairment losses of AFS debt instruments are recognized in profit or loss for the current period.
FUBON BANK (CHINA) CO., LTD.
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4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
Transfer of financial assets
The Bank derecognizes a financial asset only when: (1) the contractual rights to receive the cash
flows from the financial asset expire; or (2) it transfers the financial asset and substantially all the
risks and rewards of ownership of the asset to the transferee; or (3) it transfers the financial asset,
neither transfers nor retains substantially all the risks and rewards of ownership but has not
retained control of the financial asset.
If the Bank neither transfers nor retains substantially all the risks and rewards of ownership and
continues to control the transferred assets, the Bank recognizes its retained interest according to
the extent of the enterprise’s continuing involvement in the asset and an associated liability for
amounts it may have to pay. The extent of the enterprise’s continuing involvement in the
transferred asset is the extent to which it is exposed to changes in the value of the transferred
asset.
For a transfer of a financial asset in its entirety that satisfies the de-recognition criteria, the
difference shall be recognized in profit or loss for the current period between the carrying amount
of the financial asset transferred and the sum of the consideration received from the transfer.
If a part of the transferred financial asset qualifies for de-recognition, the carrying amount of the
transferred financial asset is allocated between the part that continues to be recognized and the
part that is derecognized, based on the respective fair values of those parts. The difference
between (1) the carrying amount allocated to the part derecognized; and (2) the sum of the
consideration received for the part derecognized and any cumulative gain or loss allocated to the
part derecognized which has been previously recognized in other comprehensive income, is
recognized in profit or loss.
Classification, recognition and measurement of financial liabilities
Debt and equity instruments issued by the Bank are classified into financial liabilities or equity on
the basis of the substance of the contractual arrangements and definitions of financial liability and
equity instrument.
On initial recognition, financial liabilities are classified into financial liabilities at fair value
through profit or loss and other financial liabilities.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL where the financial liability is either held for
trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if: (1) it has been acquired principally for the
purpose of selling in the near future; or (2) it is part of a portfolio of identified financial
instruments that are managed together and for which there is evidence of a recent actual pattern of
short-term profit-taking; or (3) it is a derivative, except for a derivative that is a designated and
effective hedging instrument, or a financial guarantee contract, or a derivative that is linked to and
must be settled by delivery of an unquoted equity instrument (without a quoted price from an
active market) whose fair value cannot be reliably measured.
FUBON BANK (CHINA) CO., LTD.
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4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
Classification, recognition and measurement of financial liabilities - continued
A financial liability other than a financial liability held for trading may also be designated as at
FVTPL upon initial recognition if: (1) such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would otherwise arise; or (2) the financial liability
forms part of a group of financial assets or financial liabilities or both, which is managed and its
performance is evaluated on a fair value basis, in accordance with the Bank’s documented risk
management or investment strategy, and information about the grouping is reported to key
management personnel internally on that basis.(3)the hybrid instrument that is embedded with
derivative instruments may be designated as at FVTPL in accordance with the principles set out in
CAS No.22 – Financial Instruments: Recognition and Measurement .
Financial liabilities at FVTPL are subsequently measured at fair value, with gains or losses arising
from changes in fair values as well as dividends and interest income related to such financial
liabilities recognized in profit or loss for the current period.
Other financial liabilities
Derivative financial liabilities linked to and which must be settled by delivery of an unquoted
equity instrument (without a quoted price in an active market) whose fair value cannot be
measured reliably is subsequently measured at cost. Other financial liabilities are subsequently
measured at amortized cost using the effective interest method; gains or losses arising from
de-recognition or amortizations are recognized in profit or loss for the current period.
Financial guarantee contracts and loan commitments
Financial guarantee contracts refer to the agreement of guarantor and creditor when the debtor
fails to perform his obligation, the guarantor shall perform the obligation or bear the liability of
the contract. Financial guarantee contracts that are not designated as financial liabilities at
FVTPL , or loan commitments to provide a loan at a below-market interest rate which are not
designated as financial liabilities at FVTPL are initially recognized at fair value less related trade
expenses, and are subsequently measured at the higher of the following two amounts: (1) the
amount determined in accordance with Accounting Standard for Business Enterprises No. 13 –
Contingencies; and (2) the amount initially recognized less cumulative amortization recognized in
accordance with the principles set out in Accounting Standard for Business Enterprises No. 14 –
Revenue.
De-recognition of financial liabilities An enterprise shall derecognize a financial liability (or part of it) only when the underlying
present obligation (or part of it) is discharged. An agreement between the Bank (a debtee) and a
debtor to replace the original financial liability with a new financial liability with substantially
different terms shall be accounted for as an extinguishment of the original financial liability and
the recognition of a new financial liability.
When the Bank derecognizes a financial liability or a part of it, the Bank shall recognize the
difference between the carrying amount of the financial liability (or part of the financial liability)
derecognized and the consideration paid (including any non-cash assets transferred or new
financial liabilities assumed) in profit or loss for the period.
FUBON BANK (CHINA) CO., LTD.
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4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
Derivatives and embedded derivatives
Derivative instruments include Forward Foreign Exchange Contracts, Currency Swap Contracts,
Foreign Exchange Option Contracts, Interest Rate Swap Contracts, Interest Rate Option Contracts
and Commodity Option Contracts. Derivatives are initially recognized at fair value on the date
when related contracts are signed, and are subsequently measured at fair value. The changes in
fair value of derivatives are recognized in profit or loss for the period.
For hybrid instruments containing embedded derivatives, if they are not designated as financial
assets or financial liabilities at fair value through profit or loss, where the economic characteristics
and risks of the embedded derivative are not closely related to those of the host contract, and
where they are of the same condition as embedded derivatives and meet the definition of a
derivative on a stand-alone basis, the embedded derivative is accounted for as a stand-alone
derivative financial instrument separately from the host contract. If the embedded derivative
cannot be measured on a stand-alone basis at the time when acquired or at subsequent balance
sheet dates, the hybrid instrument is designated as financial assets or financial liabilities at fair
value through profit or loss as a whole.
Offsetting a financial asset and a financial liability
Financial assets and liabilities are offset and the net amount is reported in the balance sheet if, and
only if, the Bank has a currently enforceable legal right to set off the recognized amounts and
intends to settle on a net basis, or to realize an asset and settle the liability simultaneously. In all
other situations they are presented separately in the balance sheet and are not offset.
Asset transfer under redemptory agreement
Financial assets purchased under resale agreements
According to the agreement, the financial assets which will be resold at a certain future date are
not recognized in the balance sheet. The cost by purchasing these assets including interests is
stated as financial assets purchased under resale agreements. The margin between purchasing
price and reselling price at the duration of the agreement is recognized by the effective interest
method as interest income.
Financial assets sold under repurchase agreement
According to the agreement, the financial assets which will be bought back at a certain future date
are not derecognized in the balance sheet. The sales from such assets including the interest are
stated as financial assets sold under repurchase agreement in the balance sheet. The margin
between selling price and repurchase price at the duration of the agreement is recognized by the
effective interest method as interest expense.
FUBON BANK (CHINA) CO., LTD.
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4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
Fixed assets and depreciation Fixed assets are tangible assets that are held for operational and administrative purposes and have
useful lives more than one accounting year. A fixed asset shall be recognized only when both of
the following conditions are satisfied: (1) it is probable that economic benefits associated with the
asset will flow to the Bank; and (2) the cost of the asset can be measured reliably. A fixed asset is
initially measured at cost and the effect of any expected costs of abandoning the asset at the end of
its use is considered.
Subsequent expenditure incurred on a fixed asset is included in the cost of the fixed asset, only if
it is probable that economic benefits associated with the asset will flow into the Bank and relevant
cost can be measured reliably. Meanwhile the carrying amount of the replaced part is
derecognized. Other subsequent expenditure that fails to meet the capitalization criteria is charged
to profit or loss when incurred. Depreciation is provided over their estimated useful lives from the month after they are brought to
working condition for the intended use, using the straight-line method. The useful lives, estimated
net residual values rates and annual depreciation rates of each class of fixed assets are as follows:
Classes Useful Life Residual value rates Depreciation rates
Buildings 40 years 10% 2.25%
Transportation vehicles 5 years 10% 18%
Office equipment 5 years 10% 18%
Fixed assets improvement 5 years 0% 20%
Estimated net residual value of a fixed asset is the estimated amount that the Bank would
currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the
asset were already of the age and in the condition expected at the end of its useful life.
The carrying amount of a fixed asset shall be derecognized when the asset is on disposal or when
no future economic benefits are expected to be generated from its use or disposal. When a fixed
asset is sold, transferred, retired or damaged, the Bank recognizes the amount of any proceeds on
disposal of the asset net of the carrying amount and related taxes in profit or loss for the current
period.
The Bank reviews the useful life and estimated net residual value of a fixed asset and the
depreciation method applied at least at each financial year-end. A change in the useful life or
estimated net residual value of a fixed asset or the depreciation method used is accounted for as a
change in an accounting estimate.
Construction in progress
Construction in progress is measured at its actual costs. The actual costs include various
construction expenditures during the construction period, and other relevant costs. Construction in
progress is not depreciated. Construction in progress is transferred to a fixed asset when it is ready
for intended use.
FUBON BANK (CHINA) CO., LTD.
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4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
Intangible assets
Intangible asset of the Bank includes software and etc.
An intangible asset is initially measured at cost. An intangible asset with a finite useful life is
amortized using the straight-line method over its useful life when the asset is available for use. An
intangible asset with an indefinite useful life is not amortized.
For an intangible asset with a finite useful life, the Bank reviews the useful life and amortization
method at least at each financial year-end and makes changes if necessary.
Long-term prepayments
Long-term prepayments are various expenditures incurred but that should be allocated over the
current and future periods of more than one year. Long-term prepayments are evenly amortized
over expected beneficial period.
Impairment of non-financial assets
The Bank assesses at each balance sheet date whether there is any indication that fixed assets and
intangible assets with finite useful life and other assets may be impaired. If any indication that an
asset may be impaired occurred, the recoverable amount should be estimated. No matter whether
there are indications of potential impairment, the intangible assets with infinite useful life or these
hasn’t reached working conditions shall be subjected to impairment testing each year.
Recoverable amount is determined based on individual assets. If it is not possible to estimate the
recoverable amount of the individual asset, the Bank determines the recoverable amount of the
asset group to which the asset belongs to. The recoverable amount of an asset is the higher of its
fair value less costs of disposal and the present value of the future cash flows expected to be
derived from the asset.
If the recoverable amount of an asset is less than its carrying amount, the difference is recognized
as an impairment loss and charged to profit or loss for the current period.
Once an impairment loss is recognized, it is not reversed in a subsequent period.
Employee benefits
When an employee has rendered service to the Bank during an accounting period, the Bank shall
recognize the short-term employee benefits expected to be paid in exchange for that service as a
liability, and as an expense or the cost of an asset. For the employee welfare incurred, the Bank
shall recognize the actual amount of employee welfare as an expense or the cost of an asset when
it occurs. If the employee benefit is non-monetary, it shall be measured at fair value.
FUBON BANK (CHINA) CO., LTD.
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4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
Employee benefits - continued
For social insurance including medical care, employment injury insurance, maternity insurance
and housing fund, as well as labor union cost and employee training expense, the Bank will
calculate the amount of employee benefit according to defined base and percentage and recognize
as a liability and an expense or the cost of an asset.
The Bank shall recognize the contribution payable to a defined contribution plan, in exchange for
the service rendered by an employee during an accounting period, as a liability and as an expense
or the cost of an asset.
The Bank shall recognize a liability and expense for termination benefits at the earlier of the
following dates:
- when the Bank can no longer withdraw the offer of those benefits; and
- when the Bank recognizes costs for a restructuring and involves the payment of termination
benefits.
General risk reserve
Pursuant to Caijin [2012] No. 20 “Regulations on creation provisions for Financial Institutions”
issued by MoF and the related regulations, the Bank provided 1.5% of risk assets balance as of the
balance sheet date as the general risk reserve. The provision of general risk reserve is considered
as the distribution of current profits and presented separately in the owners’ equity.
Interest income and expenses
Interest income and expenses are determined at amortized costs of relevant financial assets and
financial liabilities using the effective interest rate, and recognized in profit or loss for current
period. If the difference in amount between effective interest rate method and contract interest rate
method is small, contract interest method can be used.
Fees and commission income
Fees and commission income are recognized on an accrual basis when the related services are
delivered.
Government grants
Government grants are the transfer of monetary assets or non-monetary assets from the
government to the Bank at no consideration. Government grants are recognized when the Bank
complies with the conditions attaching to the grant and when the Bank is able to receive the grant.
If a government grant is in the form of a transfer of a monetary asset, the item is measured at the
amount received or receivable. If a government grant is in the form of a transfer of a
non-monetary asset, the item is measured at fair value. If fair value is not reliably determinable,
the item is measured at a nominal amount. A government grant measured at a nominal amount is
recognized immediately in profit or loss for the current period.
FUBON BANK (CHINA) CO., LTD.
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4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued
Government grants - continued
A government grant related to an asset is recognized as deferred income, and evenly amortized to
profit or loss over the useful life of the related asset.
For a government grant related to income, if the grant is a compensation for related expenses or
losses to be incurred in subsequent periods, the grant is recognized as deferred income, and
recognized in profit or loss over the periods in which the related costs are recognized; if the grant
is a compensation for related expenses or losses already incurred, the grant is recognized
immediately in profit or loss for the current period.
For the repayment of a government grant already recognized, if there is any related deferred
income, the repayment is offset against the carrying amount of the deferred income, and any
excess is recognized in profit or loss for the current period; if there is no related deferred income,
the repayment is recognized immediately in profit or loss for the current period.
Entrusted business
Entrusted business of the Bank mainly consists of entrusted loan. Entrusted loans are a form of
agency business in which the capital is provided by the client (trustor) and is loaned to the target
borrower for specified uses, in specified amounts, over specified maturity periods and at a
specified interest rate as instructed by the trustor through the Bank (the trustee), who grants,
monitors, uses as well as helps retrieve the loan on the trustor’s behalf. The loan risks will be
assumed by the trustor and the Bank charges only a service commission. The entrusted loan is
presented in off-balance sheet.
Income tax
Income tax expenses comprise current income taxes and deferred taxes.
(1) Current income tax
At the balance sheet date, the current income tax liabilities (or assets) for the current period or
previous periods are measured at the amount expected to be paid (or recovered) according to the
requirements of tax law.
(2) Deferred tax assets and deferred tax liabilities
Temporary differences arising from the difference between the carrying amount of an asset or
liability and its tax base, or the difference between the tax base and the carrying amount of those
items that are not recognized as assets or liabilities but have a tax base that can be determined
according to tax laws, are recognized as deferred tax assets and deferred tax liabilities using the
balance sheet liability method.
In general, deferred tax assets are recognized for all deductible temporary differences to the extent
that it is probable that taxable profits will be available against which the deductible temporary
differences can be utilized.
FUBON BANK (CHINA) CO., LTD.
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4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES - continued Income tax - continued
(2) Deferred tax assets and deferred tax liabilities - continued
The Bank recognizes a deferred tax asset for the carry forward of unused deductible losses and tax
credits to the extent that it is probable that future taxable profits will be available against which
the deductible losses and tax credits can be utilized.
At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at the tax
rates that are expected to apply to the period when the asset is realized or the liability is settled,
according to the requirements of tax laws.
Current income taxes and deferred taxes are recognized in current year profit and loss, except for
the transactions related to the other comprehensive income or equity, which should be recognized
in the other comprehensive income or equity. At the balance sheet date, the Bank reviews the carrying amount of any deferred tax asset. If it is
probable that sufficient taxable profits will not be available in future periods to allow the benefit
of the deferred tax asset to be utilized, the carrying amount of the deferred tax asset is reduced.
Any such reduction in amount is reversed to the extent that it becomes probable that sufficient
taxable profits will be available.
(3) Tax asset and tax liability offset When the Bank has a legal right to offset the recognized amounts and intends to either settle on a
net basis, or realize the asset and settle the liability simultaneously, tax asset and tax liability of
current period are offset and the net amount is presented in the balance sheet.
When the Bank has a legal right to offset the recognized amounts, and the deferred tax assets and
the deferred tax liabilities relate to income taxes levied by the same taxation authority on either
the same taxable entity, or different taxable entities which intend to either settle current tax
liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously,
in each future period in which significant amounts of deferred tax liabilities or assets are expected
to be settled or recovered, are reported on a net basis.
Leases A finance lease is a lease that transfers in substance all the risks and rewards incidental to
ownership of an asset. Title may or may not eventually be transferred. An operating lease is a
lease other than a finance lease. Recording of operational lease by the bank as lessee Lease payments under an operating lease are recognized on a straight-line basis over the lease
term to the cost of the assets or to profit or loss for the period in which they are incurred. Initial
direct costs are charged to profit or loss for the current period. Contingent rents are charged to
profit or loss in the period when they are actually incurred.
FUBON BANK (CHINA) CO., LTD.
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5. THE CRITICAL JUDGMENTS THAT MADE IN THE PROCESS OF APPLYING THE
ACCOUNTING POLICY AND KEY ASSUMPTIONS AND UNCERTAINTIES IN
ACCOUNTING ESTIMATES In the application of the Bank’s accounting policies, which are described in Note 4, the Bank is
required to make judgments, estimates and assumptions about the carrying amounts of items in
the financial statements that cannot be measured accurately. These judgments, estimates and
assumptions are based on historical experience of the Bank’s management as well as other factors
that are considered to be relevant. Actual results may differ from these estimates.
The aforementioned judgments, estimates and assumptions are reviewed regularly on a going
concern basis. Revisions to accounting estimates are recognized in the period in which the
estimate is revised if the revision affects only that period, or in the period of the revision and
future periods if the revision affects both current and future periods. Key assumptions and uncertainties in accounting estimates As of the balance sheet date, the following are the key assumptions and uncertainties that the
Bank has made in the process of applying the accounting estimates and that have the most
significant effect on the amounts recognized in financial statements:
Impairment losses of loans and advances Except for the provision made before the month-end, the Bank makes assessment of impairment
provision on loan portfolios at the end of each month. For the loan portfolios that have not been
found decline in cash flow of single loan, the Bank makes judgment whether or not there is any
evidence showing the portfolio’s estimated future cash flow will decrease, so as to determine
whether or not any provision for impairment need to be made. The evidences showing that
impairment losses incur include observable evidence reflecting that the payment situation of a
borrower in the portfolio has adverse changes (e.g. the borrower does not repay according to
agreement), or there are disadvantaged changes in national or regional economic situation that
may lead to defaults of loans in the portfolio, and etc.
For loan portfolio assets with similar credit risk characteristics and objective impairment
evidences, the Bank adopts the historical loss experience of similar assets as the basis for
calculating the future cash flow of the loan portfolio. The Bank periodically reviews the methods
and assumptions used to estimate the amount and time of future cash flow, to reduce the
difference between the estimated loan impairment losses and the actual loan impairment losses.
Fair value of financial assets
For the financial instrument without active trading market, the Bank determines its fair value by
various valuation methods. The valuation methods that the Bank uses include Discounted Cash
Flow (DCF) model analysis, and etc. The Bank need to make estimates in such aspects as credit
risks of itself and counterparties, market volatility and relevance. The changes in the assumptions
about these relevant elements will have effects on the fair values of financial instruments.
FUBON BANK (CHINA) CO., LTD.
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5. THE CRITICAL JUDGMENTS THAT MADE IN THE PROCESS OF APPLYING THE
ACCOUNTING POLICY AND KEY ASSUMPTIONS AND UNCERTAINTIES IN
ACCOUNTING ESTIMATES - continued
Impairment of available-for-sale financial assets The Bank determined the AFS financial assets of impairment according to the CAS No.22. During
the process of management's judgement, the Bank assessed the extent and duration of which the
fair value is lower than the cost, as well as the financial position of the investee, short-term
business outlook, industry conditions, technology change, credit rating, default rates and
counterparty risk.
Held-to-maturity investments
Following the requirements in CAS No.22 - Recognition and Measurement of Financial
Instruments, the Bank classifies the non-derivative financial assets with a fixed or determinable
repayment amount and a fixed maturity date, and those the Bank has definitude intent and ability
to hold to maturity, as held-to-maturity investments. Such type of classification involves a large
amount of judgments. In the process of making judgments, the Bank will assess its intent and
ability to hold such type of bonds to maturity date. Except the special circumstances stipulated in
CAS No. 22 - Recognition and Measurement of Financial Instruments (e.g. sell bonds of
insignificant amount when approaching maturity), if the Bank cannot hold these bonds to maturity
date, all such type of bonds must be reclassified into available-for-sale financial assets.
Impairment of held-to-maturity investments and receiveable investments
The determination of whether a held-to-maturity financial asset or receiveable investments
classified as receivables is impaired requires significant judgement. Objective evidence that a
financial asset or group of assets is impaired includes a breach of contract, such as a default or
delinquency in interest or principal payments, etc. In making such judgement, the impact of
objective evidence for impairment on expected future cash flows of the investment is taken into
account. Income tax There are a number of transactions for which the final tax determination and calculation is
uncertain during the ordinary course of business operation. In particular, the deductibility of
certain items is subjected to government approval. Where the final tax outcome is different from
the amount that was initially recorded, such differences will impact the income tax and deferred
income tax provisions in the period during which such a determination is made.
Deferred tax assets and liabilities
Deferred tax assets and liabilities, are measured at the tax rates that are expected to apply to the
period when the assets are realized or the liabilities are settled, according to the requirements of
tax laws. Within the limit of sufficient available taxable profits against which the temporary
differences can be deductible, the Bank recognizes deferred tax assets against the deductible
temporary differences. This requires management judgment to estimate the time of taxable profits
and appropriate tax rate, combined with tax strategy, to determine the amount of deferred tax
assets and liabilities.
FUBON BANK (CHINA) CO., LTD.
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6. TAXATION
Income tax
The corporate income tax rate is 25%。
Business tax
The business tax rate is 5%.
The Bank is liable for paying levis of business tax according to local tax bureau’s request.
7. CASH AND BALANCES WITH THE CENTRAL BANK
2015/12/31 2014/12/31
RMB RMB
Cash 19,814,042.64 14,459,328.44
Deposit reserves 5,937,258,311.36 6,784,636,694.33
Other deposits with the Central Bank 1,853,385,066.24 482,425,084.83 ______________ ______________
Total 7,810,457,420.24 7,281,521,107.60 ______________ ______________ ______________ ______________
Deposit reserve is placed according to relevant regulations promulgated by the People’s Bank of
China (the “PBOC”). In accordance with “Notice on Raising Reserve Rate for Foreign Currency
Deposits Issued by the People’s Bank of China” [YinFa (2007) No.134], reserve rate for all foreign
currency deposits of financial institutions was adjusted to 5% effective 15 May 2007. Deposit reserve
for foreign currency business is deposited at 5% of the month-end balances of the relevant deposit and
reserves items. Deposit reserve for foreign currency business is non-interest bearing. In accordance
with regulations issued by PBOC, reserve rate for all RMB deposits of foreign banks was 15% on 31
December 2015 and 18% on 31 December 2014. Deposit reserve for RMB operation is deposited at
rate based on the RMB deposit balance from last one third of the current month.
FUBON BANK (CHINA) CO., LTD.
- 26 -
8. DUE FROM BANKS
2015/12/31 2014/12/31
RMB RMB
Due from domestic banks 1,184,530,594.75 618,007,265.81
Due from oversea banks 86,591,153.40 216,792,146.71 ______________ ______________
Total 1,271,121,748.15 834,799,412.52 ______________ ______________ ______________ ______________
9. PLACEMENT TO BANKS
2015/12/31 2014/12/31
RMB RMB
Placement to domestic banks 10,971,849,600.00 8,193,592,062.93 ______________ ______________ ______________ ______________
10. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
2015/12/31 2014/12/31
RMB RMB
Financial institution bonds - 163,372,300.00
Negotiable certificate deposits 291,039,500.00 - _____________ _____________
Total 291,039,500.00 163,372,300.00 _____________ _____________ _____________ _____________
11. DERIVATIVE FINANCIAL ASSETS 2015/12/31 2014/12/31
Fair value Fair value Item Nominal amount Assets Liabilities Nominal amount Asset Liabilities
RMB RMB RMB RMB RMB RMB
Interest rate
derivatives
- Interest rate swaps 464,394,866.24 225,543.83 225,543.83 475,506,520.36 2,610,580.54 2,878,407.94 Money-derivative
instrument
- Foreign exchange
forward contract 1,636,382,742.80 19,982,381.33 8,578,946.89 6,840,431,076.89 43,622,416.05 36,669,282.54
- Foreign exchange swaps contract 48,020,465,692.72 181,580,040.50 157,403,696.00 11,294,302,683.73 8,607,368.20 40,349,751.08
- Foreign exchange
options contract 636,266,508.00 6,227,589.66 5,526,509.22 375,703,832.00 5,765,158.11 5,280,104.98
Equity-derivative
instrument
- Equity exchange swap contract 411,060,000.00 5,576,964.10 5,576,964.10 - - - _______________ _____________ _______________ _______________ _____________ ________________
Total 51,168,569,809.76 213,592,519.42 177,311,660.04 18,985,944,112.98 60,605,522.90 85,177,546.54 _______________ _____________ _______________ _______________ _____________ ________________ _______________ _____________ _______________ _______________ _____________ ________________
FUBON BANK (CHINA) CO., LTD.
- 27 -
12. FINANCIAL ASSETS PURCHASED UNDER RESALE AGREEMENTS
2015/12/31 2014/12/31
RMB RMB
Bonds 300,000,000.00 600,000,000.00
Notes - 499,736,952.00 ______________ ______________
Total 300,000,000.00 1,099,736,952.00 ______________ ______________ ______________ ______________
13. INTEREST RECEIVABLE
(1) Movement in interest receivable is as follows: 2015/12/31 2014/12/31
RMB RMB
Opening balance 377,592,346.24 194,589,981.67
Addition during the year 2,231,967,134.60 2,424,661,662.09
Receipts during the year (2,253,903,720.25) (2,241,691,004.92)
Exchange differences 2,406,467.94 31,707.40 _______________ ______________
Closing balance 358,062,228.53 377,592,346.24 _______________ ______________ _______________ ______________
(2) The interest receivable categorized by nature is as follows:
2015/12/31 2014/12/31
RMB RMB
Loans and advances to customers 51,122,684.83 79,848,074.82
Due from banks and placement to banks 42,943,195.75 56,526,097.86
Available-for-sale financial assets
and held-to-maturity investments 263,978,841.11 241,160,694.11
Financial assets purchased under resale agreements 17,506.84 57,479.45 _____________ ____________
Total 358,062,228.53 377,592,346.24 _____________ ____________ _____________ ____________
FUBON BANK (CHINA) CO., LTD.
- 28 -
14. LOANS AND ADVANCES TO CUSTOMERS
(1) The loans and advances categorized by individual and corporate are as follows:
2015/12/31 2014/12/31
RMB RMB
Personal loans and advances
- Housing mortgage 225,213,841.79 311,513,184.26
- Others 194,579,360.27 251,749,321.22 _______________ ______________
Subtotal 419,793,202.06 563,262,505.48 _______________ ______________
Corporate loans and advances
- Loans 23,075,254,562.10 19,788,522,221.20
- Bills discount 7,072,483,815.05 10,308,949,213.16
- Receivable and payable financing 121,198,188.36 331,963,740.76
- Negotiations 71,158,626.00 151,141,907.46
- Factoring 57,448,388.42 17,703,521.03
- Forfeiting 4,207,622.93 -
- L/C advanced payment 660,060.73 1,393,727.00 _______________ ______________
Subtotal 30,402,411,263.59 30,599,674,330.61 _______________ ______________
Total 30,822,204,465.65 31,162,936,836.09 _______________ ______________
Less: Loan loss provision 853,003,998.51 779,069,963.34
- Individual assessment 198,884,313.31 97,069,720.78
- Collective assessment 654,119,685.20 682,000,242.56 _______________ ______________
Net book value 29,969,200,467.14 30,383,866,872.75 _______________ ______________ _______________ ______________
FUBON BANK (CHINA) CO., LTD.
- 29 -
14. LOANS AND ADVANCES TO CUSTOMERS - continued
(2) The loans and advances categorized by industry are as follows:
By industry 2015/12/31 Proportion 2014/12/31 Proportion
RMB (%) RMB (%)
Construction 5,650,459,279.73 18.33 1,686,339,550.62 5.41
Real estate 4,209,337,329.31 13.66 5,009,825,072.94 16.08
Water conservancy and
environment 3,972,790,595.68 12.89 7,296,721.60 0.02
Manufactory 3,034,221,241.09 9.84 5,134,102,229.55 16.47
Wholesale and retail 2,662,429,236.87 8.64 5,604,107,874.06 17.98
Leasing and commerce 2,187,238,914.63 7.10 1,872,825,610.88 6.01
Transportation 482,033,224.76 1.56 431,934,236.53 1.39
Information and computer 456,925,717.71 1.48 239,217,008.38 0.77
Personal loans 419,793,202.06 1.36 563,262,505.48 1.81
Electronic, power, gas and water 144,180,711.20 0.47 261,000,000.00 0.84
Hotel and catering 137,302,735.99 0.45 285,604,001.97 0.92
Research and technical services 114,400,000.00 0.37 143,388,000.00 0.46
Culture, sports and entertainment 87,599,657.24 0.28 83,409,287.24 0.27
Agriculture, livestock and fishery 40,000,000.00 0.13 34,007,290.00 0.11
Public service 33,293,200.00 0.11 38,293,200.00 0.12
Education 16,822,351.43 0.05 - -
Residents and other services 3,000,000.00 0.01 - -
Others 7,170,377,067.95 23.27 9,768,324,246.84 31.34 ________________ ______ _______________ ______
Total 30,822,204,465.65 100.00 31,162,936,836.09 100.00 ________________ ______ _______________ ______
Less: Loan loss provision 853,003,998.51 779,069,963.34
- Individual assessment 198,884,313.31 97,069,720.78
- Collective assessment 654,119,685.20 682,000,242.56 ________________ _______________
Net book value 29,969,200,467.14 30,383,866,872.75 ________________ _______________ ________________ _______________
(3) The loans and advances categorized by regions are as follows:
By region 2015/12/31 Proportion 2014/12/31 Proportion
RMB (%) RMB (%)
East China 15,690,047,968.72 50.91 24,345,254,321.26 78.12
Southwest China 5,897,707,887.64 19.13 704,188,968.79 2.26
North China 3,058,696,411.61 9.92 1,689,472,875.10 5.42
South China 2,208,021,662.59 7.16 1,882,237,828.19 6.04
Other regions 3,547,937,333.03 11.52 1,978,520,337.29 6.35
Personal loans 419,793,202.06 1.36 563,262,505.46 1.81 _______________ ______ _______________ ______
Total 30,822,204,465.65 100.00 31,162,936,836.09 100.00 ________________ ______ _______________ ______
Less: Loan loss provision 853,003,998.51 779,069,963.34
- Individual assessment 198,884,313.31 97,069,720.78
- Collective assessment 654,119,685.20 682,000,242.56 ________________ _______________
Net book value 29,969,200,467.14 30,383,866,872.75 ________________ _______________ ________________ _______________
FUBON BANK (CHINA) CO., LTD.
- 30 -
14. LOANS AND ADVANCES TO CUSTOMERS - continued
(3) The loans and advances categorized by regions are as follows: - continued
Notes:
East China includes: Shandong Province, Jiangsu Province, Jiangxi Province, Zhejiang Province, Anhui
Province, Fujian Province and Shanghai;
Southwest China includes: Chongqing, Sichuan Province, Guizhou Province, Yunnan Province and
Tibet Autonomous Region.
North China includes: Beijing, Tianjin, Hebei Province, Shanxi Province and Inner Mongolia
Autonomous Region.
South China includes: Guangdong Province, Guangxi Zhuang Autonomous Region and Hainan
Province.
Other regions include provinces other than the above regions.
(4) The loans and advances categorized by contract agreement terms and guarantee pattern are as
follows:
2015/12/31 2014/12/31
Within a year 1year to 5 years Within a year 1year to 5 years
(including 1year) (including 5 years) Over 5 years Total (including 1year) (including 5 years) Over 5 years Total RMB RMB RMB RMB RMB RMB RMB RMB
Unsecured loans 17,136,099,466.36 1,389,767,274.36 - 18,525,866,740.72 15,617,430,841.45 875,290,545.53 - 16,492,721,386.98
Guaranteed loans 592,820,715.51 226,296,556.03 - 819,117,271.54 769,534,266.07 134,316,599.07 - 903,850,865.14
Collateral loans 7,021,580,299.63 4,030,293,312.91 425,346,840.85 11,477,220,453.39 7,875,119,971.94 5,225,987,259.23 665,257,352.80 13,766,364,583.97
- Mortgage loans 2,710,304,324.59 3,168,993,313.84 422,296,840.85 6,301,594,479.28 5,211,245,024.34 4,532,679,375.88 635,257,352.80 10,379,181,753.02
- Pledge loans 4,311,275,975.04 861,299,999.07 3,050,000.00 5,175,625,974.11 2,663,874,947.60 693,307,883.35 30,000,000.00 3,387,182,830.95 _______________ _______________ _______________ ________________ _______________ ______________ _______________ ________________
Total 24,750,500,481.50 5,646,357,143.30 425,346,840.85 30,822,204,465.65 24,262,085,079.46 6,235,594,403.83 665,257,352.80 31,162,936,836.09 _______________ _______________ _______________ ________________ _______________ ______________ _______________ ________________
Less: Loan loss provision 853,003,998.51 779,069,963.34
- Individual assessment 198,884,313.31 97,069,720.78
- Collective assessment 654,119,685.20 682,000,242.56 ________________ ________________
Net book value 29,969,200,467.14 30,383,866,872.75 ________________ ________________ ________________ ________________
(5) Overdue loans are as follows:
2015/12/31 2014/12/31
Overdue 1- Over due 90 Overdue 360 Overdue 1 Overdue 90 Overdue 360
90 days -360 days 3 years Overdue more -90 days -360 days -3 years Overdue more
Item (including 90 days) (including 360days) (including 3years) than 3 years Total (including 90 days) (including 360 days) (including 3years) than 3 years Total
RMB RMB RMB RMB RMB RMB RMB RMB RMB RMB
Unsecured loans - 64,385,840.80 61,230,632.74 - 125,616,473.54 41,881,849.67 38,047,484.83 24,621,166.32 - 104,550,500.82
Guaranteed loan - - - - - 48,150,000.00 - - - 48,150,000.00
Collateral loans 316,768,284.14 298,303,402.21 393,876,766.23 - 1,008,948,452.58 404,665,239.47 322,396,757.24 151,060,208.55 - 878,122,205.26 - Mortgage loans 316,768,284.14 298,303,402.21 389,953,266.23 - 1,005,024,952.58 401,665,239.47 318,473,257.24 151,060,208.55 - 871,198,705.26
- Pledge loans - - 3,923,500.00 - 3,923,500.00 3,000,000.00 3,923,500.00 - - 6,923,500.00 _______________ _______________ _______________ ______________ ________________ _______________ _______________ _______________ _______________ _______________
Total 316,768,284.14 362,689,243.01 455,107,398.97 - 1,134,564,926.12 494,697,089.14 360,444,242.07 175,681,374.87 - 1,030,822,706.08 _______________ _______________ _______________ ______________ ________________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ _______________ ______________ ________________ _______________ _______________ _______________ _______________ _______________
(6) Loan loss provision:
2015
Individual Collective
assessment assessment Total
RMB RMB RMB
Opening balance 97,069,720.78 682,000,242.56 779,069,963.34
Accural/(reversal) for the year 113,484,057.68 (30,389,359.96) 83,094,697.72
Write off (11,669,465.15) (2,400,936.27) (14,070,401.42)
Exchange differences - 4,909,738.87 4,909,738.87 _____________ _____________ _____________
Closing balance 198,884,313.31 654,119,685.20 853,003,998.51 _____________ _____________ _____________ _____________ _____________ _____________
FUBON BANK (CHINA) CO., LTD.
- 31 -
15. AVAILABLE-FOR-SALE FINANCIAL ASSETS
2015/12/31 2014/12/31
RMB RMB
Government bonds 1,014,101,050.00 69,313,790.00
Financial institutions bonds 4,925,065,908.00 4,103,102,390.00
Corporate bonds 709,941,730.00 684,730,850.00
Negotiable certificate deposits 4,313,368,660.00 1,023,900,510.00
Trust beneficial right (Note) 100,000,000.00 - ______________ ______________
Total 11,062,477,348.00 5,881,047,540.00 ______________ ______________ ______________ ______________
Note: Trust beneficial rights are purchased by the Bank and recognized as available-for-sale
financial assets at the beginning of investment, which is a trust plan operated by the
counterparty. According to the Bank’s liquidity management and operating demands, this
kind of trust beneficial rights may be sold.
16. HELD-TO-MATURITY INVESTMENTS 2015/12/31 2014/12/31
Nominal amount Fair value Nominal amount Fair value
RMB RMB RMB RMB
Government bonds 1,728,391,121.15 1,757,351,110.00 2,525,964,394.43 2,536,028,550.00
Financial institutions bonds 4,218,931,468.21 4,501,856,252.81 3,388,862,906.30 3,558,421,790.00
Corporate bonds 160,554,369.96 165,338,180.00 - -
Negotiable certificate deposits 1,202,599,751.84 1,172,920,220.00 - - ______________ ______________ ______________ ______________
Total 7,310,476,711.16 7,597,465,762.81 5,914,827,300.73 6,094,450,340.00 ______________ ______________ ______________ ______________ ______________ ______________ ______________ ______________
17. RECEIVABLE INVESTMENTS
2015/12/31 2014/12/31
RMB RMB
Trust and other beneficial rights principal (Note) 2,500,473,698.63 -
Interest receivable of trust
and other beneficial rights 20,991,234.26 - ______________ ______________
Total 2,521,464,932.89 - ______________ ______________ ______________ ______________
Note: Trust and other beneficial rights mainly are trust beneficial rights and wealth
management plans and etc. These products mainly invest trust loans or asset management
plans run by trust companies, securities companies or asset management companies as
entrusted fund administrators.
FUBON BANK (CHINA) CO., LTD.
- 32 -
18. FIXED ASSETS
Transportation Office Fixed assets Buildings vehicles equipment improvement Total RMB RMB RMB RMB RMB Original cost
Opening 1,201,568,109.49 8,805,680.79 89,618,546.21 39,055,620.36 1,339,047,956.85 Additions - - 34,784,072.08 15,727,011.20 50,511,083.28
Decreases - - (7,414,441.80) - (7,414,441.80) _____________ ____________ _____________ ____________ _____________
Closing 1,201,568,109.49 8,805,680.79 116,988,176.49 54,782,631.56 1,382,144,598.33 _____________ ____________ _____________ ____________ _____________
Accumulated
depreciation
Opening 73,718,538.92 5,279,270.53 47,200,624.05 21,788,921.73 147,987,355.23 Charged in
the year 27,035,282.52 1,112,867.16 10,672,866.49 7,019,184.29 45,840,200.46
Decreases - - (6,655,985.82) - (6,655,985.82) _____________ ____________ _____________ ____________ _____________
Closing 100,753,821.44 6,392,137.69 51,217,504.72 28,808,106.02 187,171,569.87 _____________ ____________ _____________ ____________ _____________
Net book value
Opening 1,127,849,570.57 3,526,410.26 42,417,922.16 17,266,698.63 1,191,060,601.62 _____________ ____________ _____________ ____________ _____________ _____________ ____________ _____________ ____________ _____________
Closing 1,100,814,288.05 2,413,543.10 65,770,671.77 25,974,525.54 1,194,973,028.46 _____________ ____________ _____________ ____________ _____________ _____________ ____________ _____________ ____________ _____________
19. CONSTRUCTION IN PROCESS
2014/12/31 Additions Transfer to fixed assets 2015/12/31
RMB RMB RMB RMB
Office premises - 82,430,000.00 - 82,430,000.00 _____________ ____________ _____________ ____________ _____________ ____________ _____________ ____________
20. INTANGIBLE ASSETS
Software
RMB
Original cost
Opening 37,047,630.59
Additions 13,867,383.00 ____________
Closing 50,915,013.59 ____________
Accumulated amortization
Opening 16,449,322.63
Charged in the year 6,135,830.33 ____________
Closing 22,585,152.96 ____________
Net book value
Opening 20,598,307.96 ____________ ____________
Closing 28,329,860.63 ____________ ____________
FUBON BANK (CHINA) CO., LTD.
- 33 -
21. DEFERRED TAX ASSETS
(1) Deferred tax assets are disclosed in gross as follows:
Deductible temporary differences Deferred tax assets
2015/12/31 2014/12/31 2015/12/31 2014/12/31
RMB RMB RMB RMB
Change in fair value of
available-for-sale financial assets 105,853,192.59 20,684,121.78 26,463,298.15 5,171,030.44
Change in fair value of
derivative financial assets - 12,693,149.50 - 3,173,287.38
Employee benefits payable 64,238,810.00 56,139,507.00 16,059,702.50 14,034,876.75
Allowances for impairment losses 435,063,457.85 385,444,075.83 108,765,864.46 96,361,018.97
Impairment allowance for
the continuing involvement assets 1,128,864.20 508,625.60 282,216.05 127,156.40 _____________ ____________ ____________ _____________
Total 606,284,324.64 475,469,479.71 151,571,081.16 118,867,369.94 _____________ ____________ ____________ _____________ _____________ ____________ ____________ _____________
Taxable temporary differences Deferred tax liabilities
2015/12/31 2014/12/31 2015/12/31 2014/12/31
RMB RMB RMB RMB
Changes in fair value of financial assets
at fair value through profit or loss 479,500.00 1,049,850.00 119,875.00 262,462.50
Changes in fair value of
available-for-sale financial assets 95,801,847.68 31,311,849.23 23,950,461.92 7,827,962.32
Changes in fair value of
derivative financial assests 8,140,832.69 - 2,035,208.17 - _____________ ____________ ____________ _____________
Total 104,422,180.37 32,361,699.23 26,105,545.09 8,090,424.82 _____________ ____________ ____________ _____________ _____________ ____________ ____________ _____________
(2) Deferred tax assets and liabilities are disclosed in net as follows:
2015/12/31 2014/12/31
RMB RMB
Deferred tax assets 151,571,081.16 118,867,369.94
Deferred tax liabilities 26,105,545.09 8,090,424.82 ______________ ______________
Net total 125,465,536.07 110,776,945.12 ______________ ______________ ______________ ______________
(3) According to the expectation regarding future operations, the Bank believes that sufficient
taxable income will be obtained in the future periods to deduct deductible temporary
difference, and thus recognize the relevant deferred tax assets.
FUBON BANK (CHINA) CO., LTD.
- 34 -
22. OTHER ASSETS
2015/12/31 2014/12/31
RMB RMB
Other receivables (1) 56,969,524.98 28,423,658.36
Long-term prepayments (2) 29,061,181.78 11,939,776.15
Continuing involvement assets (3) 50,862,560.00 50,862,560.00 _____________ _____________
Total other assets 136,893,266.76 91,225,994.51 _____________ _____________
Less: Impairment allowance 1,128,864.20 508,625.60 _____________ _____________
Net value 135,764,402.56 90,717,368.91 _____________ _____________ _____________ _____________
(1) Other receivables
Categorized by aging
2015/12/31 2014/12/31
Allowance for Allowance for
Amount Proportion (%) bad debt Booking value Amount Proportion (%) bad debt Booking value
RMB RMB RMB RMB RMB RMB
Within 1 year 45,599,383.90 80.04 - 45,599,383.90 23,514,727.56 82.73 - 23,514,727.56
1~2 years 7,319,701.44 12.85 - 7,319,701.44 2,309,096.12 8.12 - 2,309,096.12
Over 2 years 4,050,439.64 7.11 - 4,050,439.64 2,599,834.68 9.15 - 2,599,834.68 ______________ ______ ____________ _____________ ______________ ______ ____________ _____________
56,969,524.98 100.00 - 56,969,524.98 28,423,658.36 100.00 - 28,423,658.36 ______________ ______ ____________ _____________ ______________ ______ ____________ _____________ ______________ ______ ____________ _____________ ______________ ______ ____________ _____________
Categorized by nature
2015/12/31 2014/12/31
RMB RMB
Security deposits 17,323,432.38 5,456,686.91
Prepayments 22,161,367.10 13,899,783.60
Receivables from customers 323,217.37 16,193.20
Deferred expenses 3,416,136.81 -
Receivables from spot foreign exchange transactions - 312,754.39
Others 13,745,371.32 8,738,240.26 _____________ _____________
Total 56,969,524.98 28,423,658.36 _____________ _____________ _____________ _____________
FUBON BANK (CHINA) CO., LTD.
- 35 -
22. OTHER ASSETS - continued
(2) Long-term prepayment
Leasehold
Fee expenses Improvement Others Total
RMB RMB RMB RMB
Opening 8,725,220.00 3,057,879.19 156,676.96 11,939,776.15
Additions - 18,042,387.18 5,000,000.00 23,042,387.18
Amortization 2,908,406.64 2,480,898.16 531,676.75 5,920,981.55 _____________ ____________ _____________ ____________
Closing 5,816,813.36 18,619,368.21 4,625,000.21 29,061,181.78 _____________ ____________ _____________ ____________ _____________ ____________ _____________ ____________
(3) The Bank transferred credit assets and provided credit enhancement for the asset management
plan with the maximum risk exposure of RMB50,862,560.00, and recognized the continuing
involvement assets (Note 59). 23. DUE TO BANKS AND OTHER FINANCIAL INSTITUTIONS
2015/12/31 2014/12/31
RMB RMB
Due to banks
Due to domestic banks 5,981,427,892.02 1,631,404,200.02
Due to overseas banks 220,735,245.04 1,449,484,178.12 ______________ ______________
Sub-total 6,202,163,137.06 3,080,888,378.14 ______________ ______________
Due to other financial institutions
Due to other domestic financial institutions 280,270,000.00 297,920,000.00 ______________ ______________
Total 6,482,433,137.06 3,378,808,378.14 ______________ ______________ ______________ ______________
24. TAKING FROM BANKS
2015/12/31 2014/12/31
RMB RMB
Taking from domestic banks 795,466,000.00 835,243,500.00
Taking from overseas banks 909,104,000.00 1,333,090,000.00 ______________ ______________
Total 1,704,570,000.00 2,168,333,500.00 ______________ ______________ ______________ ______________
FUBON BANK (CHINA) CO., LTD.
- 36 -
25. FINANCIAL ASSETS SOLD UNDER REPURCHASE AGREEMENTS
2015/12/31 2014/12/31
RMB RMB
Securities:
- Government Bonds 1,040,800,000.00 2,355,600,000.00
- Financial institution bonds 5,340,800,000.00 4,469,900,000.00
- Corporate bonds 220,000,000.00 -
- Notes 2,143,500,000.00 - ______________ ______________
Total 8,745,100,000.00 6,825,500,000.00 ______________ ______________ ______________ ______________
26. CUSTOMER DEPOSITS
2015/12/31 2014/12/31
RMB RMB
Current deposits
Corporate 10,216,814,917.21 8,570,426,593.96
Individual 1,748,497,212.55 924,278,657.31 _______________ ______________
Sub-total 11,965,312,129.76 9,494,705,251.27 _______________ ______________
Time deposits
Corporate 23,337,617,297.21 23,010,763,443.37
Individual 10,709,728,308.63 9,557,101,256.08 _______________ ______________
Sub-total 34,047,345,605.84 32,567,864,699.45 _______________ ______________
Total 46,012,657,735.60 42,062,569,950.72 _______________ ______________ _______________ ______________
27. EMPLOYEE BENEFITS PAYABLE
2014/12/31 Accrual Payment 2015/12/31
RMB RMB RMB RMB
Wages or salaries, bonus,
allowance and subsidies 56,139,507.00 200,733,016.33 192,633,713.33 64,238,810.00
Social security contributions - 9,207,921.96 9,207,921.96 -
- Medical insurance - 7,498,884.19 7,498,884.19 -
- Inductrial injury insurance - 370,046.88 370,046.88 -
- Maternity insurance - 704,592.73 704,592.73 -
- Other - 634,398.16 634,398.16 -
Housing funds - 8,190,815.38 8,190,815.38 -
Defined contribution plan - 21,068,687.51 21,068,687.51 -
- Pension insurance - 14,933,530.62 14,933,530.62 -
- Annuity - 5,147,237.00 5,147,237.00 -
- Unemployment insurance - 987,919.89 987,919.89 -
Termination benefits - 759,321.32 759,321.32 -
Employee welfare - 27,106,200.02 27,106,200.02 -
Labour union and
staff education cost - 2,795,007.65 2,795,007.65 - _____________ _____________ _____________ ____________
Total 56,139,507.00 269,860,970.17 261,761,667.17 64,238,810.00 _____________ _____________ _____________ ____________ _____________ _____________ _____________ ____________
FUBON BANK (CHINA) CO., LTD.
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28. TAXES PAYABLE 2015/12/31 2014/12/31
RMB RMB Corporate income tax 23,587,060.37 5,745,289.44
Business tax and levies 20,559,192.77 22,447,832.90
Others 3,551,806.58 2,481,575.29 ____________ ____________
Total 47,698,059.72 30,674,697.63 ____________ ____________ ____________ ____________
29. INTEREST PAYABLE
(1) Movement in interest payable is as follows: 2015/12/31 2014/12/31
RMB RMB Opening balance 449,046,631.37 366,655,852.54
Additions during the year 1,925,392,429.53 1,846,055,744.72
Payment during the year (2,045,981,328.72)(1,763,803,198.50)
Exchange differences 1,856,922.21 138,232.61 _____________ _____________
Closing balance 330,314,654.39 449,046,631.37 _____________ _____________ _____________ _____________
(2) The interest payable categorized by nature is as follows: 2015/12/31 2014/12/31
RMB RMB
Interest payable from
- Due to banks and other financial institutions
and taking from banks 34,252,465.63 49,021,304.94
- Customers deposits 283,293,939.51 385,973,357.74
- Financial assets purchased under resale agreements 12,768,249.25 14,051,968.69 _____________ ____________
Total 330,314,654.39 449,046,631.37 _____________ ____________ _____________ ____________
30. DEBT SECURITIES ISSUED
2015/12/31 2014/12/31
RMB RMB
Interbank negotiable certificate deposits 4,945,936,674.69 1,870,467,371.22 _______________ ______________ _______________ ______________
FUBON BANK (CHINA) CO., LTD.
- 38 -
30. DEBT SECURITIES ISSUED - continued
Detailed information for debt securities issued as follows:
2015/12/31 2014/12/31
RMB RMB
Nominal of interbank negotiable certificate deposits 5,000,000,000.00 1,900,000,000.00 _______________ _______________
Less: unamortized issuing cost 54,063,325.31 29,532,628.78 _______________ _______________
Total 4,945,936,674.69 1,870,467,371.22 _______________ _______________ _______________ _______________
The Bank had 23 unexpired interbank negotiable certificate deposits on 31 December 2015
amounting to RMB 5 billion, which were all zero coupon bonds in one-month to one-year with
interest rate of 3.10% to 5.02%.
31. OTHER LIABILITIES 2015/12/31 2014/12/31
RMB RMB Notes payable 492,979.10 2,000,300.00
Due to customers 156,005,971.89 39,443,814.38
Finance lease payables 930,961.00 717,216.00
Spot foreign exchange transactions payables 7,737.92 -
Deferred income (Note) 15,560,500.00 28,528,500.00
Continuing involvement of liabilities 50,862,560.00 50,862,560.00
Others 33,248,642.52 9,193,640.24 _____________ _____________
Total 257,109,352.43 130,746,030.62 _____________ _____________ _____________ _____________
Note: Deferred income is the facility set up fee received and to be amortized over expected
beneficial period.
32. PAID-IN CAPITAL The register capital of the Bank is RMB 2,100,000,000.00, which has been already paid in full
amount.
2015/12/31
Currency Proportion (%) RMB
Taipei Fubon Commercial Bank Co., Ltd. RMB 51.00 1,071,000,000.00
Fubon Financial Holdings Co., Ltd. RMB 29.00 609,000,000.00
Shanghai Pudong Development Bank RMB 20.00 420,000,000.00 ________ ______________
Total RMB 100.00 2,100,000,000.00 ________ ______________ ________ ______________
The above capital contributed had been verified by Chinese Certified Public Accountants.
FUBON BANK (CHINA) CO., LTD.
- 39 -
33. CAPITAL RESERVE 2015/12/31
&2014/12/31
RMB
Capital premium 93,176,446.10 ____________ ____________
34. OTHER COMPREHENSIVE INCOME/(LOSS)
(1) Other comprehensive income/(loss) items
2015 2014
RMB RMB
Other comprehensive income items which will
be reclassified subsequently to profit or loss
Gains or losses arising from changes
in fair value of AFS financial assets (20,679,072.43) 83,232,835.48
Less: Tax effect resulting from fair value
changes of AFS financial assets (5,169,768.11) 20,808,208.88 _______________ _____________
Total (15,509,304.32) 62,424,626.60 _______________ _____________ _______________ _____________
(2) Movement of other comprehensive income/(loss):
Changes in fair
value of
available-for-sale
finanicial assests
1 January 2014 (54,453,831.02)
Movement in 2014 62,424,626.60 ______________
31 December 2014 and 1 January 2015 7,970,795.58
Movement in 2015 (15,509,304.32) ______________
31 December 2015 (7,538,508.74) ______________ ______________
35. SURPLUS RESERVE
2015 2014
RMB RMB
Opening balance 266,701,606.41 224,512,679.48
Additions 39,038,249.56 42,188,926.93 _____________ ____________
Closing balance 305,739,855.97 266,701,606.41 _____________ ____________ _____________ ____________
FUBON BANK (CHINA) CO., LTD.
- 40 -
36. GENERAL RISK RESERVE
2015 2014
RMB RMB Opening balance 775,020,149.28 584,912,793.16
Additions 168,257,500.87 190,107,356.12 _____________ ____________
Closing balance 943,277,650.15 775,020,149.28 _____________ ____________ _____________ ____________
37. RETAINED EARNINGS
2015 2014
RMB RMB Opening balance 1,303,782,030.67 1,114,189,044.49
Net profit for the year 390,382,495.60 421,889,269.23
Less: Transfer to surplus reserve (1) 39,038,249.56 42,188,926.93
Less: Transfer to general risk reserve (2) 168,257,500.87 190,107,356.12
Less: Cash dividends (3) 42,189,000.00 - ______________ ____________
Closing balance 1,444,679,775.84 1,303,782,030.67 ______________ ______________ ______________ ______________
(1) Transfer to surplus reserve
In 2015, the Bank appropriated 10% of net profit of this year RMB 39,038,249.56 to surplus
reserve.
(2) Transfer to general risk reserve
According to Caijin [2012] No. 20 issued by MoF, the general risk reserve should be provided
by 1.5% of the aggregate amount of risk assets as at the balance sheet date. Upon the approval
of the seventh session of the sixth conference of the Board meeting on 30 November 2012, the
Bank implemented above regulations since 2013 and provided an amount of RMB
168,257,500.87 for general risk reserve in the current year.
(3) Cash dividends
According to the 2014 annual profit distribution solution approved by the board of directors
on 10 April 2015, the Bank issued cash dividend of RMB 42,189,000.00 before 25 June 2015,
based on 10% of the net profit RMB 421,889,269.23 for the year 2014. As of 31 December
2015, the dividend payment has been completed.
FUBON BANK (CHINA) CO., LTD.
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38. NET INTEREST INCOME
2015 2014
RMB RMB Interest income
- Balances with the Central Bank 98,970,654.04 107,259,643.30
- Due from banks 42,530,086.09 69,101,065.83
- Placements to banks 541,155,332.86 121,333,799.15
- Financial assets purchased under resale agreements 3,793,842.23 139,721,105.96
- Loans and advance to customers 1,243,762,361.03 1,534,087,284.87
Including: Personal loans and advances 29,126,360.63 38,099,856.24
Corporate loans and advances 1,214,636,000.40 1,495,987,428.63
- Rediscount income of financial institutions 301,754,858.35 453,158,762.98 _______________ ______________
Subtotal 2,231,967,134.60 2,424,661,662.09 _______________ ______________
Interest expense
- Due to banks and other financial institutions 152,149,978.17 98,231,632.97
- Taking from banks 84,678,406.57 16,695,646.10
- Financial assets purchased under resale agreements 211,716,826.69 105,813,792.34
- Customer deposits 1,349,497,170.00 1,614,088,238.21
- Interest expense on issuing debt securities 127,234,816.53 10,325,321.22
- Rediscount interest expense from drafts 115,231.57 901,113.88 _______________ ______________
Subtotal 1,925,392,429.53 1,846,055,744.72 _______________ ______________
Net interest income 306,574,705.07 578,605,917.37 _______________ ______________ _______________ ______________
39. NET FEE AND COMMISSION INCOME
2015 2014
RMB RMB
Fee and commission income
- Settlement and clearing fees 6,420,728.20 6,926,059.53
- Agent business fees 7,997,729.83 5,627,803.93
- Guarantee fees 13,327,267.61 12,669,288.81
- Fees related to granting facilities 72,750,978.35 37,652,088.78
- Fees for setting loan facilities 19,939,500.00 52,470,496.00
- Others 7,515,004.00 22,445,236.43 _____________ _____________
Subtotal 127,951,207.99 137,790,973.48 _____________ _____________
Fee and commission expense
- Fee expenses 16,000,823.80 4,286,017.57 _____________ _____________
Subtotal 16,000,823.80 4,286,017.57 _____________ _____________
Net fee and commission income 111,950,384.19 133,504,955.91 _____________ _____________ _____________ _____________
FUBON BANK (CHINA) CO., LTD.
- 42 -
40. INVESTMENT INCOME
2015 2014
RMB RMB
Investment income from financial assets
at fair value through profit or loss 15,804,016.54 13,556,790.62
Available-for-sale financial assets 528,307,267.44 179,827,712.39
Held-to-maturity investments 309,233,951.54 225,887,755.80
Receivable investments 20,991,234.26 - _____________ _____________
Total 874,336,469.78 419,272,258.81 _____________ _____________ _____________ _____________
41. GAINS/(LOSSES) FROM CHANGES IN FAIR VALUE
2015 2014
RMB RMB
Investment income from financial assets
at fair value through profit or loss (570,350.00) 1,049,850.00
Derivative financial instruments 21,611,046.06 (5,241,656.03) _____________ _____________
Total 21,040,696.06 (4,191,806.03) _____________ _____________ _____________ _____________
42. BUSINESS TAX AND LEVIES
2015 2014
RMB RMB
Operating tax 73,968,328.75 84,283,272.31
Urban maintenance and construction tax
and education surcharge 8,876,235.47 10,113,992.69
River administrative surcharges 615,125.15 660,367.47 _____________ _____________
Total 83,459,689.37 95,057,632.47 _____________ _____________ _____________ _____________
FUBON BANK (CHINA) CO., LTD.
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43. OPERATING EXPENSES
2015 2014
RMB RMB
Staff salary and welfare 269,860,970.17 224,040,263.16
Depreciation 45,840,200.46 40,190,249.04
Amortization of intangible assets 6,135,830.33 2,899,231.93
Operating lease rentals and utilities 38,224,352.74 17,595,406.15
Including: Amortization of rental 405,306.05 1,343,677.66
Decoration and maintenance 11,174,184.33 10,774,585.06
Including: Amortization of leasehold improvement 2,075,592.11 1,377,276.88
Entertainment 6,428,203.53 4,436,261.01
Including: Amortization of golf membership fee 531,676.75 156,677.52
Electrical equipment maintenance fee 5,506,492.85 3,016,167.67
Including:Amortization on network device maintenance - 21,840.00
Miscellaneous fees or expenses 18,114,611.44 14,978,795.25
Taxes 13,066,851.05 14,514,960.78
Travelling expenses 11,452,262.80 7,731,091.07
Administration fee for vehicle operating 5,297,836.70 3,678,787.22
Security expenses 3,462,640.48 3,035,724.87
Regulatory membership fee 2,872,726.05 1,820,834.62
Conference expense of the board of directors 2,240,603.12 1,982,030.13
Consulting expenses 395,713.46 880,090.67
Others 75,331,508.40 25,433,965.87 _____________ _____________
Total 515,404,987.91 377,008,444.50 _____________ _____________ _____________ _____________
44. IMPAIRMENT LOSS
2015 2014
RMB RMB
Impairment loss for loans 83,094,697.72 58,872,304.06
Impairment loss for continuing involvement assets 620,238.60 508,625.60 _____________ _____________
Total 83,714,936.32 59,380,929.66 _____________ _____________ _____________ _____________
45. NON-OPERATING INCOME 2015 2014
RMB RMB
Government grants 60,634.95 118,636.27
Penalty income 100,000.00 39,270.00
Others 3,851.48 72,464.72 ____________ ____________
Total 164,486.43 230,370.99 ____________ ____________ ____________ ____________
FUBON BANK (CHINA) CO., LTD.
- 44 -
46. NON-OPERATING EXPENSES
2015 2014
RMB RMB
Donation - 1,300,000.00
Loss from disposal of fixed assets 714,538.98 -
Penalty 33.87 10,050.00
Sponsorship fee 2,429,872.00 -
Others - 4,000.00 ____________ ____________
Total 3,144,444.85 1,314,050.00 ____________ ____________ ____________ ____________
47. INCOME TAX EXPENSES
2015 2014
RMB RMB
Current year income tax expenses 112,480,925.21 91,698,545.77
Adjustment for last year tax filing (1,234.85) -
Deferred tax expenses (9,518,822.84) 18,384,701.27 _____________ _____________
Total 102,960,867.52 110,083,247.04 _____________ _____________ _____________ _____________
(1) Current year income tax expenses
The current year income tax expense is 25% of income which calculated by adjusting the
accounting profit before tax for the year in accordance with the relevant tax laws.
(2) Reconciliation of income tax expenses to accounting profits is as follows:
2015 2014
RMB RMB
Profits before tax 493,343,363.12 531,972,516.27
Income tax calculated at statutory tax rate
of current year 123,335,840.78 132,993,129.07
Add: Expenses not deductible for tax purposes 1,539,202.17 815,944.66
Less : Adjustment for last year tax filing 1,234.85 -
Less: Non-taxable proceeds 21,912,940.58 23,725,826.69 ____________ ____________
Total 102,960,867.52 110,083,247.04 ____________ ____________ ____________ ____________
FUBON BANK (CHINA) CO., LTD.
- 45 -
48. CASH AND CASH EQUIVALENTS
2015 2014
RMB RMB
Cash and balances with the Central Bank 7,810,457,420.24 7,281,521,107.60
Less: deposit reserves 5,937,258,311.36 6,784,636,694.33
Original maturity within 3 months:
Due from banks 273,444,825.17 324,799,412.51
Placement to banks 1,681,842,400.00 1,499,155,000.00
Financial assets held under resale agreement 300,000,000.00 600,000,000.00 _______________ _____________
Total 4,128,486,334.05 2,920,838,825.78 _______________ _____________ _______________ _____________
49. SUPPLEMENTARY CASH FLOW STATEMENT
2015 2014
RMB RMB
Reconciliation of net profit to cash flows
from operating activities
Net profit 390,382,495.60 421,889,269.23
Add: Impairment loss 83,714,936.32 59,380,929.66
Depreciation of fixed assets 45,840,200.46 40,190,249.04
Amortization of intangible assets 6,135,830.33 2,899,231.93
Amortization of long-term prepayments 5,920,981.55 2,899,472.06
Loss on disposal of fixed assets, intangible
assets and other long-term assets 714,538.98 -
Investment income (874,336,469.78) (419,272,258.81)
(Gains)/losses from changes in fair value (21,040,696.06) 4,191,806.03
Decrease/(increase) in deferred tax assets (9,518,822.84) 18,384,701.27
Increase in operating receivables (1,412,061,607.73) (7,536,005,587.47)
Increase in operating payables 8,538,224,987.00 8,824,474,662.48 _______________ _______________
Net cash inflow from operating activities 6,753,976,373.83 1,419,032,475.42 _______________ _______________ _______________ _______________
Net changes in cash and cash equivalents
Closing balance of cash 19,814,042.64 14,459,328.44
Less: Opening balance of cash 14,459,328.44 12,484,882.12
Add: Closing balance of cash equivalents 4,108,672,291.41 2,906,379,497.34
Less: Opening balance of cash equivalents 2,906,379,497.34 4,282,515,158.59 _______________ _______________
Net decrease in cash and cash equivalents 1,207,647,508.27 (1,374,161,214.93) _______________ _______________ _______________ _______________
FUBON BANK (CHINA) CO., LTD.
- 46 -
50. STRUCTURED ENTITIES
To better utilize the capital, the right of the unconsolidated structured entity owned by the Bank
mainly includes capital trust and asset management plans operated and managed by an
independent third party. The Bank receives interest revenues and investment gains through
holding this kind of structured entity. The Bank does not control the structured entity and does not
merge it therefore. The Bank did not give any financial support to the structured entity in 2015.
The following shows the information of the Bank’s unmerged structured entity by 2015/12/31.
2015/12/31
Available-for-sale Receivable Maximum risk Main type of
financial assets investments Book value exposure(1) benefits
RMB RMB RMB RMB
Trust 100,000,000.00 300,240,000.00 400,240,000.00 400,240,000.00 Investment gains
Wealth management - 2,221,224,932.89 2,221,224,932.89 2,221,224,932.89 Investment gains ________________________ ________________________ ________________________ _______________________
Total 100,000,000.00 2,521,464,932.89 2,621,464,932.89 2,621,464,932.89 ________________________ ________________________ ________________________ _______________________ ________________________ ________________________ ________________________ _______________________
(1) The maximum risk exposure of trust and wealth management is the amortized cost or fair
value recognized in balance sheet on the report day.
51. SEGMENT REPORTING According to the Bank’s internal organizational structure, regulatory requirements and internal
reporting system, the Bank’s businesses are divided into 5 segments, which are based on the
Bank’s internal organization. The Bank’s management can periodically evaluates operating results
of these segments reporting then determine resources allocation based on operating results
evaluation.
Information of segment reporting is disclosed based on the accounting policies and measurement
basis used when segments report provided to the management. This measurement basis should
also be consistent with the accounting policies and measurement used when preparing the
financial statements.
FUBON BANK (CHINA) CO., LTD.
- 47 -
51. SEGMENT REPORTING - continued
Segment information: Unit: RMB
2015 Item Head Office Shenzhen Branch Tianjin Branch Suzhou Branch Nanjing Branch Elimination Total
Operating income 897,433,397.24 120,975,696.00 94,391,320.17 65,874,460.83 228,060.90 - 1,178,902,935.14
Net interest income 43,822,764.69 109,877,740.83 83,274,346.62 69,370,537.28 229,315.65 - 306,574,705.07
Including:
Net interest income
among segments (239,304,036.04) 132,776,071.10 42,331,724.81 63,976,129.37 220,110.76 - -
Net fee and
commission income 87,097,974.66 7,819,648.68 9,581,016.01 7,452,999.59 (1,254.75) - 111,950,384.19
Others 766,512,657.89 3,278,306.49 1,535,957.54 (10,949,076.04) - - 760,377,845.88 _______________ _______________ _______________ _______________ ____________ _______________ ________________
Operating expense 643,535,222.77 6,591,740.79 17,860,021.85 (1,992,732.87) 16,585,361.06 - 682,579,613.60 _______________ _______________ _______________ _______________ ____________ _______________ ________________
Operating profit 253,898,174.47 114,383,955.21 76,531,298.32 67,867,193.70 (16,357,300.16) - 496,323,321.54 _______________ _______________ _______________ _______________ ____________ _______________ ________________ _______________ _______________ _______________ _______________ ____________ _______________ ________________
Segment assets 68,919,917,784.13 6,343,233,920.97 3,268,434,017.57 4,222,425,482.60 251,150,014.04 (9,483,921,452.13) 73,521,239,767.18
Deferred tax assets 125,465,536.07 - - - - - 125,465,536.07 _______________ _______________ _______________ _______________ ____________ _______________ ________________
Total assets 69,045,383,320.20 6,343,233,920.97 3,268,434,017.57 4,222,425,482.60 251,150,014.04 (9,483,921,452.13) 73,646,705,303.25 _______________ _______________ _______________ _______________ ____________ _______________ ________________ _______________ _______________ _______________ _______________ ____________ _______________ ________________
Segment liabilities 64,166,048,100.88 6,243,233,920.97 3,168,434,017.57 4,122,425,482.60 231,150,014.04 (9,163,921,452.13) 68,767,370,083.93 _______________ _______________ _______________ _______________ ____________ _______________ ________________ _______________ _______________ _______________ _______________ ____________ _______________ ________________
Additional information:
Depreciation
and amortization 47,881,079.61 305,954.82 830,621.76 2,816,960.28 141,414.33 - 51,976,030.80
Long-term payments 5,274,044.82 221,914.13 305,003.50 - 120,019.10 - 5,920,981.55
Capital expenditure:
Expenditure on
purchasing fixed assets 48,157,693.28 38,070.00 18,000.00 64,000.00 2,233,320.00 - 50,511,083.28
Expenditure on purchasing
intangible assets 13,867,383.00 - - - - - 13,867,383.00
Additional construction
in process 82,430,000.00 - - - - - 82,430,000.00
2014
Item Head Office Shenzhen Branch Tianjin Branch Suzhou Branch Elimination Total
Operating income 746,487,366.26 96,698,897.68 119,318,663.44 101,998,274.53 - 1,064,503,201.91
Net interest income 301,259,555.47 81,082,063.66 104,787,609.70 91,476,688.54 - 578,605,917.37
Including:
Net interest income
among segments (103,832,217.39) 102,754,503.85 47,622,291.24 (46,544,577.70) - -
Net fee and
commission income 96,803,980.74 10,796,949.15 13,014,320.17 12,889,705.85 - 133,504,955.91
Others 348,423,830.05 4,819,884.87 1,516,733.57 (2,368,119.86) - 352,392,328.63 ________________ _______________ _______________ _______________ _______________ ________________
Operating expense 404,333,073.41 84,921,016.06 23,603,941.48 18,588,975.68 - 531,447,006.63 ________________ _______________ _______________ _______________ _______________ ________________
Operating profit 342,154,292.85 11,777,881.62 95,714,721.96 83,409,298.85 - 533,056,195.28 ________________ _______________ _______________ _______________ _______________ ________________ ________________ _______________ _______________ _______________ _______________ ________________
Segment assets 54,344,520,572.31 6,744,232,737.71 2,232,631,618.55 2,463,203,107.27 (4,291,250,339.68) 61,493,337,696.16
Deferred tax assets 110,776,945.12 - - - - 110,776,945.12 ________________ _______________ _______________ _______________ _______________ ________________
Total assets 54,455,297,517.43 6,744,232,737.71 2,232,631,618.55 2,463,203,107.27 (4,291,250,339.68) 61,604,114,641.28 ________________ _______________ _______________ _______________ _______________ ________________ ________________ _______________ _______________ _______________ _______________ ________________
Segment liabilities 49,908,646,489.39 6,644,232,737.71 2,132,631,618.55 2,363,203,107.27 (3,991,250,339.68) 57,057,463,613.24 ________________ _______________ _______________ _______________ _______________ ________________ ________________ _______________ _______________ _______________ _______________ ________________
Additional information: Depreciation
and amortization 38,653,665.77 381,581.44 1,165,548.66 2,888,685.10 - 43,089,480.97
Long-term payments 2,207,617.26 325,580.80 344,434.00 21,840.00 - 2,899,472.06
Capital expenditure
Expenditure on
purchasing fixed assets 35,951,229.81 298,069.28 73,800.00 238,586.00 - 36,561,685.09
Expenditure on purchasing
intangible assets 15,147,861.00 - - - - 15,147,861.00
FUBON BANK (CHINA) CO., LTD.
- 48 -
51. SEGMENT REPORTING - continued (1) External revenue categorized by products or business
2015 2014
RMB RMB
Corporation banking 1,326,966,546.08 1,658,886,472.27
Private banking 29,126,360.63 38,099,856.24
Treasury and others 1,764,203,281.76 1,217,858,635.69 ______________ _____________
Total 3,120,296,188.47 2,914,844,964.20 ______________ _____________ ______________ _____________
(2) External revenue categorized by regions and non-current assets categorized by assets’
locations
2015 2014
RMB RMB
Domestic external revenue 3,083,162,708.25 2,883,421,347.06
Overseas external revenue 37,133,480.22 31,423,617.14 ______________ _____________
Total 3,120,296,188.47 2,914,844,964.20 ______________ _____________ ______________ _____________
The Bank’s non-current assets are all located in China.
External revenue in (1) and (2) is stated in gross amount, excluding non-operating income.
(3) Key client’s dependency
There’s no client from whom the revenue accounted for 10% or more of the Bank’s operating
income.
Inter-segment transfers are measured on the basis of actual transaction price or internal
settlement price according to the situation for such transfers. Segment revenue and segment
expense are determined on the basis of actual revenue and expense of the segment
respectively.
FUBON BANK (CHINA) CO., LTD.
- 49 -
52. RELATED PARTIES RELATIONSHIP AND TRANSACTIONS
As of 31 December 2015, the related parties’ relationship and transactions listed below are based
on equity structure on 31 December 2015, as shown in Note 32.
(1) Related parties where a control relationship exists
Name Place of registration Principal business Register capital Share proportion
Taipei Fubon Commercial
Bank Co., Ltd. Tai Wan Investment holdings NT100,000,000,000 51.00% Fubon Financial Holding
Co., Ltd. Tai Wan Ultimate Controlling Party NT150,000,000,000 29.00%
(2) Related party relationship without control relationship
Name Relationship
Shanghai Pudong Development Bank Shareholder of the Bank
Xiamen Bank Co., Ltd. Great influence from insiders
Fubon Gehua (Beijing) Trading Co., Ltd. Great influence from insiders
Fubon Property & Casualty Insurance Co., Ltd. Great influence from insiders
LT & Partners Inc. Great influence from insiders
Shanghai Ruidong Hospital Great influence from insiders
He Yu investment consulting (Shanghai) Co., Ltd. Great influence from insiders
Wuxi Huanyu Enterprise Management Services Limited Great influence from insiders
Founder Fubon Financial Asset Management Co., Ltd Great influence from insiders
Cai Mingzhong, Cai Mingxing, Zhang Changbang,
Han Weiting, Hong Peili, Li Lin, Jiang Mingsheng,
Li Xiulun, Wu Hemao, Xu Wanmei, Zhan Wenyue Directors
The related parties of the Bank also includes key management personnel, their close family
members or entities which are subject to control, joint control or significant influence from key
management personnel’s close family members. Significant transactions between the Bank and the
related parties are disclosed separately while those others are disclosed together.
The Bank has business with related party in the course of daily business according to general
business articles.
FUBON BANK (CHINA) CO., LTD.
- 50 -
52. RELATED PARTIES RELATIONSHIP AND TRANSACTIONS - continued
(3) As of balance sheet date, the significant transactions between the Bank and the above related
parties in the year are as follows:
Loans and advances to customers
2015/12/31 2014/12/31
RMB Proportion RMB Proportion
(%) (%)
Related individuals (Note) 2,677,381.43 0.01 2,720,094.01 0.01
Shanghai Ruidong Hospital 33,293,200.00 0.11 33,293,200.00 0.11
Shanghai Pudong
Development Bank - - 168,429,281.32 0.55 ______________ ______ _______________ _________
Total 35,970,581.43 0.12 204,442,575.33 0.67 ______________ ______ _______________ _________ ______________ ______ _______________ _________
Note: Related individuals include the directors of the Bank, key management personnel and
their close family members.
Due from banks
2015/12/31 2014/12/31
RMB Proportion RMB Proportion
(%) (%)
Due from banks - current deposits
Shanghai Pudong
Development Bank 18,409,787.13 1.45 23,274,406.69 2.79
Taipei Fubon
Commercial Bank Co., Ltd. 2,231,175.97 0.18 862,353.51 0.10 ______________ ______ _______________ _________
Total 20,640,963.10 1.63 24,136,760.20 2.89 ______________ ______ _______________ _________ ______________ ______ _______________ _________
Due to banks and other financial institutions
2015/12/31 2014/12/31
RMB Proportion RMB Proportion
(%) (%)
Due to banks -current deposits
Taipei Fubon
Commercial Bank Co., Ltd. 8,668,373.16 0.13 6,361,195.87 0.19
Due to banks -time deposits
Taipei Fubon
Commercial Bank Co., Ltd. 212,000,000.00 3.27 1,443,060,000.00 42.71
Shanghai Pudong
Development Bank 60,000,000.00 0.93 - - ______________ ______ _______________ _________
Total 280,668,373.16 4.33 1,449,421,195.87 42.90 ______________ ______ _______________ _________ ______________ ______ _______________ _________
FUBON BANK (CHINA) CO., LTD.
- 51 -
52. RELATED PARTIES RELATIONSHIP AND TRANSACTIONS - continued
(3) As of balance sheet date, the significant transactions between the Bank and the above related
parties in the year are as follows:- continued
Customer deposits
2015/12/31 2014/12/31
RMB Proportion RMB Proportion
(%) (%)
Related Individuals 63,307,989.85 0.14 29,669,756.44 0.07
LT & Partners Inc. 39,250,704.49 0.09 36,770,328.88 0.09
Fubon Gehua (Beijing) Trading Co., Ltd. 4,089,705.90 0.01 22,791,210.35 0.05
He Yu Investment
Consulting (Shanghai) Co., Ltd. 889.25 0.00 1,647,592.69 0.00
Shanghai Ruidong Hospital 133,466.21 0.00 53,929.91 0.00
Wuxi Huanyu Enterprise
Management Services Limited 4,500,867.64 0.01 5,500,402.83 0.01 ______________ ______ _______________ _________
Total 111,283,623.34 0.25 96,433,221.10 0.22 ______________ ______ _______________ _________ ______________ ______ _______________ _________
Other Liabilities
2015/12/31 2014/12/31
RMB Proportion RMB Proportion
(%) (%)
Beijing Founder Fubon
Asset Management Co., Ltd. (Note) 1,651,537.50 1.26 3,985,382.50 3.05 ______________ ______ _______________ _________ ______________ ______ _______________ _________
Note: Beijing Founder Fubon Asset Management Co., Ltd. paid consulting fee for
investment to the Bank amounted to RMB 4,667,200.00. The Bank amortized the fee
by straight-line method during the term of the contract. On 31 December 2015, the
amortized value was RMB 1,651,537.50.
(4) As of balance sheet date, the off-balance sheet balances between the Bank and the above
related parties are as follows:
Notional amount of forward foreign exchange contracts
2015/12/31 2014/12/31
RMB Proportion RMB Proportion
(%) (%)
Shanghai Pudong Development Bank - - 91,556,900.00 1.34 ______________ ______ _______________ _________ ______________ ______ _______________ _________
FUBON BANK (CHINA) CO., LTD.
- 52 -
52. RELATED PARTIES RELATIONSHIP AND TRANSACTIONS - continued
(4) As of balance sheet date, the off-balance sheet balances between the Bank and the above
related parties are as follows: - continued
Notional amount of foreign exchange option contracts
2015/12/31 2014/12/31
RMB Proportion RMB Proportion
(%) (%)
Taipei Fubon
Commercial Bank Co., Ltd. - - 220,284,000.00 58.63 ______________ ______ _______________ _________ ______________ ______ _______________ _________
Notional amount of interest rate swap contracts
2015/12/31 2014/12/31
RMB Proportion RMB Proportion
(%) (%)
Taipei Fubon Commercial Bank Co., Ltd. 32,197,433.12 6.93 237,753,260.18 50.00 ______________ ______ _______________ _________ ______________ ______ _______________ _________
(5) As of balance sheet date, the income interest and income expenses between the Bank and the
above related parties are as follows:
Interest income -placement to banks
2015 2014
RMB RMB
Xiamen Bank Co., Ltd. 2,890.53 -
Taipei Fubon Commercial Bank Co., Ltd. 505.07 - ______________ _____________
Total 3,395.60 - ______________ _____________ ______________ _____________
Interest income -due from banks
2015 2014
RMB RMB
Shanghai Pudong Development Bank 8,842,489.65 6,696,454.58
Xiamen Bank Co., Ltd. - 17,555,472.22 ______________ _____________
Total 8,842,489.65 24,251,926.80 ______________ _____________ ______________ _____________
FUBON BANK (CHINA) CO., LTD.
- 53 -
52. RELATED PARTIES RELATIONSHIP AND TRANSACTIONS - continued
(5) As of balance sheet date, the income interest and income expenses between the Bank and the
above related parties are as follows: - continued
Interest income from loans and advances to customers
2015 2014
RMB RMB
Related individuals 117,753.46 125,238.81
Shanghai Ruidong Hospital 2,184,093.14 2,386,142.15
Fubon Gehua (Beijing) Trading Co., Ltd. - 1,918,284.36
Shanghai Pudong Development Bank 2,570,718.68 14,720,588.63 ______________ _____________
Total 4,872,565.28 19,150,253.95 ______________ _____________ ______________ _____________
Interest expense - taking from banks
2015 2014
RMB RMB
Shanghai Pudong Development Bank 3,633.34 30,714.01
Xiamen Bank Co., Ltd. - 46,402.42
Taipei Fubon Commercial Bank Co., Ltd. 676.44 - ______________ _____________
Total 4,309.78 77,116.43 ______________ _____________ ______________ _____________
Interest expense - due to banks
2015 2014
RMB RMB
Taipei Fubon Commercial Bank Co., Ltd. 60,138,024.08 39,654,163.54
Xiamen Bank Co., Ltd. - 277,777.78
Shanghai Pudong Development Bank 1,883,293.14 - ______________ _____________
Total 62,021,317.22 39,931,941.32 ______________ _____________ ______________ _____________
Interest expense - Customer deposits
2015 2014
RMB RMB
Related individuals 4,824,945.55 2,786,946.45
LT & Partners Inc. 255,082.96 341,206.58
Fubon Gehua (Beijing) Trading Co., Ltd. 93,424.70 16,449.54
HeYu Investment Consulting (Shanghai) Co., Ltd. 18,198.06 140,205.85
Shanghai Ruidong Hospital 555.59 381.50
Wuxi Huanyu Enterprise Management Services Limited 204,964.23 494,406.79
Fubon Property & Casualty Insurance Co., Ltd. - 0.43 ______________ _____________
Total 5,397,171.09 3,779,597.14 ______________ _____________ ______________ _____________
FUBON BANK (CHINA) CO., LTD.
- 54 -
52. RELATED PARTIES RELATIONSHIP AND TRANSACTIONS - continued
(6) As of balance sheet date, the other operating income between the Bank and the above related
parties are as follows:
Other operating income
2015 2014
RMB RMB
Beijing Founder Fubon Asset Management Co., Ltd. 2,333,845.00 5,432,307.50 ______________ _____________ ______________ _____________
(7) Credit assets transfer
On 14 December 2015, the Bank transferred credit assets to Beijing Founder Fubon
Chuangrong Financial Asset Management Co., Ltd. (hereinafter refer to “Fubon Chuangrong”),
which represents “Founder Fubon Asset Management - Fubon Bank (China) Co., Ltd. Asset
Management Plan No.3. The principal equaled to RMB310,119,304.45 and the interest
equaled to RMB 21,420,525.39 (RMB 331,539,829.84 in total). The transfer price equaled to
RMB 307,800,000.00. On 30 June 2014, the Bank transferred credit assets to Founder Fubon
Chuangrong, which represents “Founder Fubon Asset Management - Fubon Bank (China) Co.,
Ltd. Asset Management Plan No.1. The principal equaled to RMB 187,827,022.64 and the
interest equaled to RMB 16,669,825.23 (RMB 204,496,847.87 in total). The transfer price
equaled to RMB 150,350,000.00.
(8) Compensation of key management personnel
2015 2014
RMB Proportion RMB Proportion
(%) (%)
Compensation of key
Management personnel 32,564,451.72 12.07 35,599,913.07 15.89 ______________ ______ _______________ _________ ______________ ______ _______________ _________
Key management personnel are those personnel who have the authority and responsibility for
planning, directing and controlling the activities of the Bank, including board of Director,
General Manager, Chief Executive Officer,Head of Internal Audit,Department Director,
Sub-branch General Manager and other persons who carry on the similar responsibilities.
FUBON BANK (CHINA) CO., LTD.
- 55 -
53. OFF-BALANCE-SHEET CREDIT FACILITIES
2015/12/31 2014/12/31
RMB RMB
Bank acceptance bill 601,205,684.86 118,362,154.58
Amount from sight L/C 2,121,619.48 4,111,301.03
Amount from usance L/C 109,764,341.07 70,990,463.70
Sight L/C issued 1,467,588.22 17,530,851.93
Usance L/C issued 345,563,345.71 150,284,146.29
Letter of guarantee 54,267,128.18 112,404,370.57
Stand-by L/C 1,519,940,699.93 1,703,767,337.59 ______________ ______________
Total 2,634,330,407.45 2,177,450,625.69 ______________ ______________ ______________ ______________
54. ENTRUSTED DEPOSITS AND LOANS
2015/12/31 2014/12/31
RMB RMB
Entrusted deposits 6,452,550,392.00 10,309,604,027.23 _______________ ______________
Entrusted loans 6,452,550,392.00 10,309,604,027.23 _______________ ______________ _______________ ______________
55. CAPITAL MANAGEMENT
To ensure going concern as well as increase returns to shareholders, the Bank manages capital
through optimizing the structure of liabilities and shareholders' equity. The Bank calculates and
discloses Capital Adequacy Ratio in accordance with “The Rules on Capital Adequacy Ratios of
Commercial Banks” as amended by CBRC in June 2012. As requested, in the reporting period,
credit risk weighted assets are measured by the weighted method, market risk weighted assets are
measured by the standard method, and operation risk weighted assets are measured by basic
indicator approach. The Bank calculates leverage ratio in accordance with “Administrative
Measures for the Leverage Ratio of Commercial Banks” issued by CBRC in June 2015. 2015/12/31 2014/12/31
RMB'000 RMB'000
Net Core Tier 1 Capital 4,851,005 4,526,053
Net Tier 1 Capital 4,851,005 4,526,053
Net Capital 5,293,245 4,900,504
Risk-weighted assets 38,481,784 32,500,228
Core Tier 1 Capital Adequacy Ratio 12.61% 13.93%
Tier 1 Capital Adequacy Ratio 12.61% 13.93%
Capital Adequacy Ratio 13.76% 15.08%
Leverage Ratio 6.08% 6.59%
FUBON BANK (CHINA) CO., LTD.
- 56 -
56. LEASE COMMITMENTS
At the balance sheet date, the Bank as a lessee has outstanding commitments in respect of
non-cancelable operating leases, which fall due as follows:
2015/12/31 2014/12/31
RMB’000 RMB’000 The minimum lease payments under
Non-cancelable operating leases:
Within one year 60,998 22,234
In the second year 58,724 16,820
In the third year 54,508 12,566
In the following year 121,660 19,708 _______ _______
Total 295,890 71,328 _______ _______ _______ _______
57. CAPITAL COMMITMENTS
Within 1 Year 1-5 Years Total
RMB RMB RMB The amount unpaid of the
contract as of 2015/12/31 12,369,196.44 1,195,553.28 13,564,749.72 _____________ ____________ _____________ _____________ ____________ _____________
The amount unpaid of the
contract as of 2014/12/31 17,643,592.80 8,490,155.73 26,133,748.53 _____________ ____________ _____________ _____________ ____________ _____________
58. COLLATERALS
Certain assets are pledged as collateral under repurchase agreements with other Banks and
financial institutions. For repurchase agreement conducted through PBOC platform, acceptors are
not entitled to sell or re-pledge the underlying assets.
2015/12/31 2014/12/31
Financial assets Financial assets
at fair value through Available-for-sale Held-to-maturity at fair value through Available-for-sale Held-to-maturity
profit or loss financial assets investments Total profit or loss financial assets investments Total
RMB RMB RMB RMB RMB RMB RMB RMB
Investment securities 98,317,900.00 5,205,712,240.00 3,679,280,418.78 8,983,310,558.78 152,714,700.00 1,838,866,590.00 4,840,892,053.60 6,832,473,343.60 _____________ ______________ ______________ ______________ _____________ ______________ ______________ _____________ _____________ ______________ ______________ ______________ _____________ ______________ ______________ _____________
FUBON BANK (CHINA) CO., LTD.
- 57 -
59. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(I) Overview of risk management
The Bank is exposed to various risks in its banking and financial business operations, especially
the diversity and complication of risk for application of financial instruments. The key risks faced
by the Bank are credit risk, liquidity risks, market risks and operation risks. Market risks include
foreign exchange risk and interest rate risk.
The Bank’s risk management objectives are to achieve proper balance between risks and yield,
minimize the adverse impacts of risks on the Bank’s operation performance, and maximize the
benefits of the Bank. Based on these risk management objectives, the Bank’s basic risk
management strategy is to identify and analyze the industry’s exposure to various risks, establish
appropriate bottom line for risk tolerance, implement risk management, and monitor these risks
according to the information provided by the system on a timely and effective manner eventually
control the risk within the limits. (II) Credit risk
(1) Credit risk management
Credit risk arises when the borrower or counterparty fails to meet the required obligations in
the agreement on due date because of the deterioration of the financial situation or other
situations.
The Bank’s credit risk is mainly arise from credit business (including: loans and advances to
customers, bills discount, negotiations, factoring , receivable and payable financing, sight L/C
issued, other facilities, etc.), derivatives and bond investment. The Bank has implemented the
defined lending procedures strictly, carrying out credit review before lending and obtaining
approval step by step. The Bank has also established policies related to daily loans and
post-lending management, classification, interest calculation, and loan provision write-off.
The Bank monitor and supervise the above mentioned credit risks. The Bank controls credit
risks through investigation of clients and counterparties creditability, financial reports and
operational conditions. The Bank classifies the loans strictly following the five-classification
standards issued by CBRC, assesses the clients’ credit standing according to the
five-classification standard, and then provides facilities, and clients are permitted to borrow
within the approved facilities.
FUBON BANK (CHINA) CO., LTD.
- 58 -
59. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
(II) Credit risk - continued
Regardless of collaterals available risk mitigation measures, maximum credit risk exposure
information represents the worst situation of the credit risk exposure as of balance sheet date.
The financial assets value, indicative of the credit risk exposure class as of the balance sheet
date, is the balance of the carrying amount of the financial assets less the following two items:
(1) the amount offset pursuant to the requirement in the Accounting Standards for Business
Enterprises No. 37 - Financial instrument reporting; (2) the recognized impairment loss of the
financial assets.
(2) Maximum credit risk exposure information
Information on the maximum credit risk exposure of the Bank is as below:
2015/12/31 2014/12/31
RMB RMB Balance sheet items
Loans and advances to customers 29,969,200,467.14 30,383,866,872.75 Including:
Corporate loans and advances to customers 30,402,411,263.59 30,599,674,330.61
Personal loans and advances to customers 419,793,202.06 563,262,505.48
Impairment loss for loans (853,003,998.51) (779,069,963.34)
Inter-banks receivables 12,542,971,348.15 10,128,128,427.45 Including:
Due from banks 1,271,121,748.15 834,799,412.52
Placement to banks 10,971,849,600.00 8,193,592,062.93 Financial assets purchased
under resale agreements 300,000,000.00 1,099,736,952.00
Investment in financial assets 21,185,458,492.05 11,959,247,140.73 Including:
Financial assets at
fair value through profit or loss 291,039,500.00 163,372,300.00
Available-for-sale financial assets 11,062,477,348.00 5,881,047,540.00
Held-to-maturity investments 7,310,476,711.16 5,914,827,300.73
Receivable investments 2,521,464,932.89 -
Derivative financial assets 213,592,519.42 60,605,522.90
Interest receivable 358,062,228.53 377,592,346.24
Other financial assets (Note) 67,380,345.55 56,139,568.90
Including:
Total other financial assets 68,509,209.75 56,648,194.50
Impairment allowance for assets (1,128,864.20) (508,625.60) _______________ ______________
Balance sheet items total 64,336,665,400.84 52,965,579,878.97 _______________ ______________
Off-balance sheet items total 2,634,330,407.45 2,177,450,625.69 _______________ ______________
Total 66,970,995,808.29 55,143,030,504.66 _______________ ______________ _______________ ______________
Note: Other financial assets include refundable deposit, accounts receivable, receivables for
Spot foreign exchange trading and continuing involvement of assets and etc.
FUBON BANK (CHINA) CO., LTD.
- 59 -
59. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued (II) Credit risk - continued
(2) Maximum credit risk exposure information- continued
Besides credit loan, certain risk mitigation measures were taken by the Bank with respect to
guaranteed and pledged loans, off-sheet items, and derivative financial instruments, to
reduce credit risk exposure to an acceptable level:
①Guarantees and pledges
The Bank determines the ratio of collaterals to loan principal as follows:
Types of collateral and pledge the maximum ratio
Certificate of deposit 100%
Collateral property 80%
Collateral fixed assets 40%
The Bank usually demands guarantee for long-term financing from clients. In addition, in
order to minimize credit risk, the Bank will usually demand additional guarantee from
borrowers if the Bank discovers evidence of impairment in relevant loans or advances.
②Derivative financial assets
Derivative financial assets represent the positive change in fair value favorable to the Bank
caused by the derivative instruments contract undelivered. The amount of change accounts
for only a small percentage of the nominal amount of the derivative instrument contract.
The Bank manages credit risk exposure resulting from derivative financial assets by
controlling the match between delivery dates and integrating part of the credit limits of the
counterpart.
③Credit-related commitments
Credit risk of financial guarantee is the same as that of credit. However, credit risks of
guarantee and commercial letter of credit are lower compared with direct loan since the
relevant goods forwarded are usually pledged. Credit-related commitments are
incorporated into management of overall credit limit. The Bank demands relevant deposit
from the applicant to reduce credit risk exposure.
FUBON BANK (CHINA) CO., LTD.
- 60 -
59. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
(II) Credit risk - continued
(3) Loans and advances issued and interbank receivables
Overdue and impairment
2015/12/31 2014/12/31
Loans and advance Interbank Loans and advance Interbank
to customers receivables to customers receivables
RMB RMB RMB RMB
Not yet overdue and
not yet impaired (i) 29,687,639,539.53 12,542,971,348.15 30,132,114,130.01 10,128,128,427.45
Overdue but not yet impaired (ii) 769,051,534.59 - 754,802,296.61 -
Impaired (iii) 365,513,391.53 - 276,020,409.47 - _______________ _______________ _______________ ______________
Total 30,822,204,465.65 12,542,971,348.15 31,162,936,836.09 10,128,128,427.45 _______________ _______________ _______________ ______________
Less: loan loss provision (853,003,998.51) - (779,069,963.34) - _______________ _______________ _______________ ______________
Net 29,969,200,467.14 12,542,971,348.15 30,383,866,872.75 10,128,128,427.45 _______________ _______________ _______________ ______________ _______________ _______________ _______________ ______________
(i) Not yet overdue and not yet impaired
2015/12/31
Normal Special mentioned Total
RMB RMB RMB
Loans 22,172,728,736.74 274,745,267.24 22,447,474,003.98
Trade finance 71,158,626.00 - 71,158,626.00
Bills discount 6,991,720,774.75 - 6,991,720,774.75
Other facilities 177,286,134.80 - 177,286,134.80 ________________ ______________ ________________
Loans and advances to customers total 29,412,894,272.29 274,745,267.24 29,687,639,539.53 ________________ ______________ ________________ ________________ ______________ ________________
Interbank receivables 12,542,971,348.15 - 12,542,971,348.15 ________________ ______________ ________________ ________________ ______________ ________________
2014/12/31
Normal Special mentioned Total
RMB RMB RMB
Loans 18,445,684,186.79 953,088,534.39 19,398,772,721.18
Trade finance 151,141,907.45 - 151,141,907.45
Bills discount 10,231,138,512.57 - 10,231,138,512.57
Other facilities 351,060,988.81 - 351,060,988.81 ________________ ______________ ________________
Loans and advances to customers total 29,179,025,595.62 953,088,534.39 30,132,114,130.01 ________________ ______________ ________________ ________________ ______________ ________________
Interbank receivables 10,128,128,427.45 - 10,128,128,427.45 ________________ ______________ ________________ ________________ ______________ ________________
(ii) Overdue but not yet impaired
2015/12/31 2014/12/31
Overdue 1 Overdue 90 Overdue 360 Overdue 1 Overdue 90 Overdue 360
to 90 days to 360 days to 3 years to 90 days to 360 days to 3 years
Items (including 90 days) (including 360 days) (including 3 years) Total (including 90 days) (including 360 days) (including 3 years) Total RMB RMB RMB RMB RMB RMB RMB RMB
Loans and advances
to customers 316,768,284.14 289,499,862.94 162,783,387.51 769,051,534.59 494,004,773.74 260,797,522.87 - 754,802,296.61 _____________ _____________ ____________ _____________ _____________ ____________ ____________ _____________ _____________ _____________ ____________ _____________ _____________ ____________ ____________ _____________
FUBON BANK (CHINA) CO., LTD.
- 61 -
59. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
(II) Credit risk - continued
(3) Loans and advances issued and interbank receivables - continued
Overdue and impairment - continued
(iii) Impaired
2015/12/31 2014/12/31
Corporate loans Personal loans Inter-banks Corporate loans Personal loans Inter-banks
and advances and advances Total receivables and advances and advances Total receivables
RMB RMB RMB RMB RMB Equivalent RMB Equivalent RMB Equivalent RMB Equivalent
Individually identified impaired assets
Including:
Overdue 365,513,391.53 - 365,513,391.53 - 276,020,409.47 - 276,020,409.47 - _____________ ____________ _____________ ____________ _____________ ____________ ____________ ____________ _____________ ____________ _____________ ____________ _____________ ____________ ____________ ____________
Proportion of the individually
identified impaired assets 1.22% - 1.22% - 0.89% - 0.89% - _____________ ____________ _____________ ____________ _____________ ____________ ____________ ____________ _____________ ____________ _____________ ____________ _____________ ____________ ____________ ____________
Fair value of collateral 550,545,368.00 - 550,545,368.00 - 566,413,800.00 - 566,413,800.00 - _____________ ____________ _____________ ____________ _____________ ____________ ____________ ____________ _____________ ____________ _____________ ____________ _____________ ____________ ____________ ____________
(4) Investment in debt securities
2015/12/31 2014/12/31
RMB RMB
Not yet overdue and not yet impaired (i) 21,185,458,492.05 11,959,247,140.73 _________________ ________________
Less: provisions for impairment - - _________________ ________________
Net 21,185,458,492.05 11,959,247,140.73 _________________ ________________ _________________ ________________
(i) Not yet overdue and not yet impaired
2015/12/31 2014/12/31
RMB RMB
Financial assets at fair value through profit or loss 291,039,500.00 163,372,300.00
Available-for-sale financial assets 11,062,477,348.00 5,881,047,540.00
Held-to-maturity investments 7,310,476,711.16 5,914,827,300.73
Receivable investments 2,521,464,932.89 - ________________ _______________
Total 21,185,458,492.05 11,959,247,140.73 ________________ _______________ ________________ _______________
(5) Analysis on credit risk concentration of financial assets
The Bank manages credit risk concentration of loans and advances by regions. Please refer to
Note 14(3) for relevant analysis. The Bank manages credit risk concentration of loans and
advances by industries, please see Note 14(2) for relevant analysis.
FUBON BANK (CHINA) CO., LTD.
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59. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
(III) Liquidity risk
Liquidity refers to the assets that have quick cash conversion ability without any value impaired.
Liquidity risk is the risk that no sufficient funds will be available for debt repayment when it falls
due. Liquidity risk is mainly due to the structure and duration of assets and liabilities arising from
a mismatch. According to “Regulations of the People’s Republic of China on Administration of
Foreign-funded Banks” and related regulations, the Bank controls the liquidity ratio of no less
than 25%. At the same time, the Bank manages liquidity risk according to the maturity date of
assets and liabilities.
The following is the maturity analysis for assets and liabilities held by the Bank as of 31
December 2015:
(1) Non-derivative liquidity risk analysis
The following table presents the maturity analysis of the Bank for non-derivative financial
assets and liabilities by contractual maturity. And the financial assets and the liabilities are
presented in un-discounted cash flow according to the contracts: 2015/12/31
On demand/Overdue Within 1 month 1-3months 3-12months Over 1 year No maturity date Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Assets Cash and balances with
the Central Bank 1,873,199 - - - - 5,937,258 7,810,457
Due from banks 346,186 103,858 51,009 803,630 - - 1,304,683 Placement to banks - 1,454,604 372,433 4,819,714 4,989,783 - 11,636,534 Financial assets at fair value
through profit or loss - - 100,000 200,000 - - 300,000 Financial assets purchased
under repurchase agreements - 300,071 - - - - 300,071
Loans and advances to customers 1,134,565 8,595,698 6,505,601 11,040,874 4,507,986 - 31,784,724
Available-for-sale financial assets - 963,800 334,113 3,743,435 6,949,305 - 11,990,653 Held-to-maturity investment - 82,254 724,609 1,972,927 5,651,642 - 8,431,432
Receivable investments - 2,018,478 510,017 - - - 2,528,495 Other financial assets - 323 - 50,863 - 17,323 68,509 ____________ ___________ ____________ ______________ _____________ ____________ _____________
Total non-derivative financial
assets 3,353,950 13,519,086 8,597,782 22,631,443 22,098,716 5,954,581 76,155,558 ____________ ___________ ____________ ______________ _____________ ____________ _____________ ____________ ___________ ____________ ______________ _____________ ____________ _____________
Liabilities
Due to banks and other
financial institutions 17,565 3,221,728 1,546,088 1,753,513 - - 6,538,894 Taking from banks - 381,821 1,059,927 288,668 17,340 - 1,747,756
Financial assets sold under
repurchase agreements - 8,363,549 399,115 - - - 8,762,664 Customer deposits 12,099,682 9,698,616 6,722,157 15,415,165 3,011,934 - 46,947,554 Debt securities issued - 690,000 1,250,000 3,060,000 - - 5,000,000
Other financial liabilities 8 189,771 45 51,063 664 - 241,551 ____________ ___________ ____________ ______________ _____________ ____________ _____________
Total non-derivative financial
liabilities 12,117,255 22,545,485 10,977,332 20,568,409 3,029,938 - 69,238,419 ____________ ___________ ____________ ______________ _____________ ____________ _____________
Net (8,763,305) (9,026,399) (2,379,550) 2,063,034 19,068,778 5,954,581 6,917,139 ____________ ___________ ____________ ______________ _____________ ____________ _____________ ____________ ___________ ____________ ______________ _____________ ____________ _____________
FUBON BANK (CHINA) CO., LTD.
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59. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT- continued
(III) Liquidity risk - continued
(1) Non-derivative liquidity risk analysis - continued
2014/12/31 On demand/Overdue Within 1 month 1-3months 3-12months Over 1 year No maturity date Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Assets Cash and balances with
the Central Bank 496,884 - - - - 6,784,637 7,281,521
Due from banks 324,799 - 112,220 425,550 - - 862,569
Placement to banks - 1,643,489 370,791 3,194,363 3,674,954 - 8,883,597
Financial assets at fair value
through profit or loss - 575 - 7,035 180,071 - 187,681 Financial assets purchased
under repurchase agreements - 1,100,233 - - - - 1,100,233
Loans and advances to customers 1,102,721 8,624,554 10,026,068 6,941,677 4,531,731 - 31,226,751
Available-for-sale financial assets - 121,730 49,250 1,234,150 5,383,363 - 6,788,493
Held-to-maturity investment - 40,504 32,465 1,078,033 5,981,774 - 7,132,776
Other financial assets 313 16 - - 50,863 5,456 56,648 ____________ ___________ ____________ ______________ _____________ ____________ _____________
Total non-derivative financial
assets 1,924,717 11,531,101 10,590,794 12,880,808 19,802,756 6,790,093 63,520,269 ____________ ___________ ____________ ______________ _____________ ____________ _____________ ____________ ___________ ____________ ______________ _____________ ____________ _____________
Liabilities
Due to banks and other
financial institutions 6,424 226,933 646,946 2,615,460 - - 3,495,763
Taking from banks - 397,757 61,358 386,036 1,521,096 - 2,366,247 Financial assets sold under
repurchase agreements - 4,303,605 1,705,630 867,427 - - 6,876,662
Customer deposits 9,698,354 9,158,940 10,053,472 12,602,001 1,426,962 - 42,939,729
Debt securities issued - - 300,000 1,600,000 - - 1,900,000
Other financial liabilities - 50,599 50 169 51,400 - 102,218 ____________ ___________ ____________ ______________ _____________ ____________ _____________
Total non-derivative financial
liabilities 9,704,778 14,137,834 12,767,456 18,071,093 2,999,458 - 57,680,619 ____________ ___________ ____________ ______________ _____________ ____________ _____________
Net (7,780,061) (2,606,733) (2,176,662) (5,190,285) 16,803,298 6,790,093 5,839,650 ____________ ___________ ____________ ______________ _____________ ____________ _____________ ____________ ___________ ____________ ______________ _____________ ____________ _____________
Assets can be used to repay all liabilities and used to pay outstanding loan commitments
include cash and balances with central banks, due from banks and placements to banks, etc. In
the normal operations, most of due deposits are not withdrawn on the due date but still stay
with the Bank, and available-for-sale financial assets can also be disposed when needed to
obtain funds to repay due liabilities.
FUBON BANK (CHINA) CO., LTD.
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59. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
(III) Liquidity risk - continued
(2) Derivative liquidity risk analysis ①Derivative financial instruments liquidated at net value
The derivative instruments that the Bank liquidates at their net values include: currency
derivatives and interest rate derivatives. The following table analyzes undiscounted cash
flows of derivative financial instruments liquidated at net value by remaining period from
the balance sheet date to the due date stipulated by contracts:
2015/12/31
Item Within 1 month 1 month to 3 months 3 months to 1 year 1 year to 5 years Over 5 years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Currency swap
- Cash inflow 10,133,240 8,140,527 12,078,850 - - 30,352,617 - Cash outflow (10,124,345) (8,125,457) (12,080,970) - - (30,330,772) Foreign exchange forward - Cash inflow 90,008 19,516 86,334 - - 195,858
- Cash outflow (89,618) (19,375) (85,646) - - (194,639) Interest rate swap - Cash inflow - 229 - - - 229
- Cash outflow (93) (134) - - - (227) _________ __________ _________ _________ _________ _________
Total 9,192 15,306 (1,432) - - 23,066 _________ __________ _________ _________ _________ _________ _________ __________ _________ _________ _________ _________
2014/12/31
Item Within 1 month 1 month to 3 months 3 months to 1 year 1 year to 5 years Over 5 years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Interest rate swap - Cash inflow 564 120 1,703 239 - 2,626
- Cash outflow (645) (120) (1,892) (239) - (2,896) _________ __________ _________ _________ _________ _________
Total (81) - (189) - - (270) _________ __________ _________ _________ _________ _________ _________ __________ _________ _________ _________ _________
②Derivative financial instruments liquidated at gross value
The derivative instruments that the Bank liquidates at their gross values are currency
derivatives and equity swap. The following table analyzes undiscounted cash flows of
derivative financial instruments liquidated at gross value by remaining period from the
balance sheet date to the due date stipulated by contracts:
2015/12/31
Item Within 1 month 1 month to 3 months 3 months to 1 year 1 year to 5 years Over 5 years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Currency swap - Cash inflow 3,678,609 2,348,977 11,726,830 - - 17,754,416
- Cash outflow (3,676,618) (2,343,993) (11,734,558) - - (17,755,169) Foreign exchange forward
- Cash inflow 347,054 324,547 775,023 - - 1,446,624
- Cash outflow (345,196) (323,010) (768,145) - - (1,436,351) Foreign exchange options
- Cash inflow 217,274 285,943 639,257 - - 1,142,474
- Cash outflow (215,765) (285,790) (639,464) - - (1,141,019)
Equity swap
-Cash inflow - - 16,442 - - 16,442
-Cash outflow - - (16,442) - - (16,442) _________ __________ _________ _________ _________ _________
Total 5,358 6,674 (1,057) - - 10,975 _________ __________ _________ _________ _________ _________ _________ __________ _________ _________ _________ _________
FUBON BANK (CHINA) CO., LTD.
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59. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
(III) Liquidity risk - continued
(2) Derivative liquidity risk analysis - continued
2014/12/31 Item Within 1 month 1 month to 3 months 3 months to 1 year 1 year to 5 years Over 5 years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Currency swap - Cash inflow 2,594,523 2,313,339 6,457,166 - - 11,365,028
- Cash outflow (2,626,016) (2,326,681) (6,452,550) - - (11,405,247) Foreign exchange forward
- Cash inflow 630,239 904,353 5,350,583 - - 6,885,175 - Cash outflow (629,734) (904,888) (5,343,962) - - (6,878,584) Foreign exchange options
- Cash inflow 21,569 198,341 154,599 - - 374,509
- Cash outflow (22,895) (187,084) (152,669) - - (362,648) _________ __________ _________ _________ _________ _________
Total (32,314) (2,620) 13,167 - - (21,767) _________ __________ _________ _________ _________ _________ _________ __________ _________ _________ _________ _________
(IV) Market risks
Market risks refer to the risks of losses in the Bank’s on-sheet and off-sheet transactions due to
adverse changes in market prices. The Bank’s market risks mainly include foreign exchange risk
and interest rate risk. Market risks lay in the Bank’s trading account and bank account.
As a specialized management department of the Bank’s treasury mid-office department, Market
Risk Department, set up by Risk Management Department, implements centralized management
on the Bank’s market risks. The Bank has established and well defined market risk limit
management system, specified and standardized the process and reporting system of market risk
management. The Internal Audit Department processes periodical audits on market risk
management.
Trading accounts reflect the trading financial assets and liabilities in the Bank’s treasury business,
including derivative financial instruments. The Bank implements limit management on market
risks of trading accounts. According to the analysis of position distributing, the Bank carries out
combined operation on trading accounts and also properly utilizes financial derivatives, etc. to
realize the management, control and hedging of market risks of trading accounts.
Banking accounts reflect the Bank’s financial assets and liabilities not held for trading. The major
risks that the Bank’s banking accounts face are interest rate risk and foreign exchange risk.
Sensitivity analysis is the Bank’s major means to assess and measure the market risks of trading
accounts and banking account. Sensitive analysis considers effects on relevant market risks when
it is assumed that only one single variable changes. As any risk variable seldom changes alone and
the relevance between variables will have significant effects on the final effect amount of changes
of one certain risk variable, the results of sensitivity analysis can only provide limited information
about market risks.
(1) Foreign exchange risk
The Bank is set up and operates in People’s Republic of China; the Bank mainly conducts
foreign business by USD, JPY and HKD. The Bank’s loans to customers are mainly in RMB
and USD.
FUBON BANK (CHINA) CO., LTD.
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59. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
(IV) Market risks - continued
(1) Foreign exchange risk - continued
The foreign exchange risk is mainly from the transaction risks arising from the Bank’s
proprietary trading and agency of foreign exchange transactions and structure risks arising
from maintaining certain foreign currency positions for overseas operation. Based on its own
risk appetite and operation level, with the support of various transaction systems and
management information systems, through limit set and control, the Bank enhances the
matching of assets and liabilities currency type structure, properly uses such methods as
financial derivatives to manage and control the exchange rate risks of the whole bank.
The following table presents the structure analysis of the Bank’s financial assets and financial
liabilities by currency:
2015/12/31
Items RMB USD JPY HKD Other currencies Total
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 Assets Cash and balances with the Central Bank 7,536,512 271,825 - 2,120 - 7,810,457 Due from banks 776,654 459,924 6,436 9,362 18,746 1,271,122 Placement to banks 8,790,000 2,181,850 - - - 10,971,850 Financial assets at fair value through profit or loss 291,040 - - - - 291,040 Derivative financial assets 157,811 55,226 - - 556 213,593 Financial assets purchased under resale agreements 300,000 - - - - 300,000 Interest receivable 344,797 12,219 1,001 3 42 358,062 Loans and advances to customers 28,446,860 1,400,349 113,142 2,181 6,668 29,969,200 Available-for-sale financial assets 10,997,541 64,936 - - - 11,062,477 Held-to-maturity investments 7,005,147 305,330 - - - 7,310,477 Receivable investments 2,521,465 - - - - 2,521,465 Other financial liabilities 67,380 - - - - 67,380 __________ ___________ __________ _________ __________ __________
Financial assets total 67,235,207 4,751,659 120,579 13,666 26,012 72,147,123 __________ ___________ __________ _________ __________ __________ __________ ___________ __________ _________ __________ __________
Liabilities Due to banks and other financial institutions 4,442,071 2,040,362 - - - 6,482,433 Taking from banks - 1,704,570 - - - 1,704,570 Derivative financial liabilities 19,166 157,514 - 582 50 177,312 Financial assets sold under repurchase agreements 8,745,100 - - - - 8,745,100 Customer deposits 39,912,943 5,976,488 34,573 11,141 77,513 46,012,658 Interest payable 306,295 23,855 - 3 162 330,315 Debt securities issued 4,945,937 - - - - 4,945,937 Other financial liabilities 168,074 73,198 180 3 94 241,549 __________ ___________ __________ _________ __________ __________
Financial liabilities total 58,539,586 9,975,987 34,753 11,729 77,819 68,639,874 __________ ___________ __________ _________ __________ __________ __________ ___________ __________ _________ __________ __________
Net position 8,695,621 (5,224,328) 85,826 1,937 (51,807) 3,507,249 __________ ___________ __________ _________ __________ __________ __________ ___________ __________ _________ __________ __________
FUBON BANK (CHINA) CO., LTD.
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59. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
(IV) Market risks - continued
(1) Foreign exchange risk - continued
2014/12/31
Items RMB USD JPY HKD Other currencies Total
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 Assets Cash and balances with the Central Bank 6,940,862 336,452 - 4,203 4 7,281,521 Due from banks 548,953 244,675 13,512 6,366 21,293 834,799 Placement to banks 6,459,091 1,734,501 - - 8,193,592 Financial assets at fair value through profit or loss 163,372 - - - - 163,372 Derivative financial assets 42,339 17,426 - 787 54 60,606 Financial assets purchased under resale agreements 1,099,737 - - - - 1,099,737 Interest receivable 338,283 37,859 21 1,429 - 377,592 Loans and advances to customers 26,964,540 3,324,028 12,305 82,779 215 30,383,867 Available-for-sale financial assets 5,881,048 - - - - 5,881,048 Held-to-maturity investments 5,914,827 - - - - 5,914,827 Other financial assets 56,140 - - - - 56,140 __________ ___________ __________ _________ __________ __________
Financial assets total 54,409,192 5,694,941 25,838 95,564 21,566 60,247,101 __________ ___________ __________ _________ __________ __________ __________ ___________ __________ _________ __________ __________
Liabilities Due to banks and financial institutions 2,543,547 835,261 - - - 3,378,808 Taking from banks 660,000 1,508,334 - - - 2,168,334 Derivative financial liabilities 31,829 51,502 38 912 897 85,178 Financial assets sold under repurchase agreements 6,825,500 - - - - 6,825,500 Customer deposits 35,345,170 6,546,142 33,172 46,598 91,488 42,062,570 Interest payable 418,715 30,087 3 17 225 449,047 Debt securities issued 1,870,467 - - - - 1,870,467 Other financial liabilities 70,963 30,017 767 3 468 102,218 __________ ___________ __________ _________ __________ __________
Financial liabilities total 47,766,191 9,001,343 33,980 47,530 93,078 56,942,122 __________ ___________ __________ _________ __________ __________ __________ ___________ __________ _________ __________ __________
Net position 6,643,001 (3,306,402) (8,142) 48,034 (71,512) 3,304,979 __________ ___________ __________ _________ __________ __________ __________ ___________ __________ _________ __________ __________
The following table illustrates the impact of a 5% appreciation and depreciation of the spot
exchange rate and forward exchange rate of RMB against all foreign currencies on net profit of
the Bank.
2015 2014
Net profit/(loss) Net profit/(loss)
RMB’000 RMB’000
Appreciate by 5% (11,658) 2,707
Depreciate by 5% 11,658 (2,707)
FUBON BANK (CHINA) CO., LTD.
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59. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
(IV) Market risks - continued
(2) Interest rate risk Interest rate risk is the impact of change in market interest rate on fair value of financial
assets and liabilities of the balance sheet and interest income and expenses of the income
statement for the period. The Bank performs timely analysis and forecast on the
macroeconomic situation. Based on the forecast, the Bank will adjust the relevant gap and
period between the interest bearing assets and interest bearing liabilities beforehand and
decrease the interest risk derived from the fluctuation of the interest rate. As of balance sheet date, the earlier of re-pricing day or maturity of the interest-bearing assets
and liabilities of the Bank are summarized as follows:
2015/12/31
Item Within 1 month 1-3 months 3 months-1year 1-5 years Over 5 years Non-interest-bearing Total
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
Assets
Cash and balances with
the Central Bank 7,521,999 - - - - 288,458 7,810,457
Due from banks 446,186 50,000 774,936 - - - 1,271,122
Placement to banks 1,454,566 6,739,327 2,755,457 22,500 - - 10,971,850 Financial assets at fair value
through profit or loss - 98,318 192,722 - - - 291,040
Derivative financial assets - - - - - 213,593 213,593
Financial assets purchased under
repurchase agreements 300,000 - - - - - 300,000
Interest receivable - - - - - 358,062 358,062
Loans and advances to customers 15,117,565 3,527,379 8,368,531 2,199,099 756,626 - 29,969,200
Available-for-sale financial assets 907,296 298,543 3,378,476 5,548,955 929,207 - 11,062,477
Held-to-maturity investments 49,957 697,698 1,773,946 3,054,021 1,734,855 - 7,310,477
Receivable investments 2,015,522 505,943 - - - - 2,521,465
Other financial assets - - - - - 67,380 67,380 _________ __________ _________ _________ _________ _________ _________
Financial assets total 27,813,091 11,917,208 17,244,068 10,824,575 3,420,688 927,493 72,147,123 _________ __________ _________ _________ _________ _________ _________ _________ __________ _________ _________ _________ _________ _________
Liabilities Due to banks and other
financial institutions 3,225,119 1,532,448 1,724,866 - - - 6,482,433
Taking from banks 379,876 1,051,963 272,731 - - - 1,704,570
Derivative financial liabilities - - - - - 177,312 177,312 Financial assets sold under
repurchase agreements 8,349,100 396,000 - - - - 8,745,100
Customer deposits 20,089,793 8,168,238 14,058,498 1,133,377 2,552,558 10,194 46,012,658
Interest payable - - - - - 330,315 330,315
Debt securities issued 688,611 1,242,650 3,014,676 - - - 4,945,937
Other financial liabilities - - - - - 241,549 241,549 _________ __________ _________ _________ _________ _________ _________
Financial liabilities total 32,732,499 12,391,299 19,070,771 1,133,377 2,552,558 759,370 68,639,874 _________ __________ _________ _________ _________ _________ _________ _________ __________ _________ _________ _________ _________ _________
Net position (4,919,408) (474,091) (1,826,703) 9,691,198 868,130 168,123 3,507,249 _________ __________ _________ _________ _________ _________ _________ _________ __________ _________ _________ _________ _________ _________
FUBON BANK (CHINA) CO., LTD.
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59. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
(IV) Market risks - continued
(2) Interest rate risk- continued
2014/12/31
Item Within 1 month 1-3 months 3 months-1year 1-5 years Over 5 years Non-interest-bearing Total
RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000 RMB ’000
Assets
Cash and balances with
the Central Bank 6,929,944 - - - - 351,577 7,281,521
Due from banks 324,799 110,000 400,000 - - - 834,799
Placement to banks 1,637,965 361,190 3,050,000 3,144,437 - - 8,193,592 Financial assets at fair value
through profit or loss - - - 163,372 - - 163,372
Derivative financial assets - - - - - 60,606 60,606
Financial assets purchased under
repurchase agreements 1,099,737 - - - - - 1,099,737
Interest receivable - - - - - 377,592 377,592
Loans and advances to customers 16,822,874 6,599,503 4,876,846 1,522,499 562,145 - 30,383,867
Available-for-sale financial assets 98,817 29,639 1,044,859 4,190,439 517,294 - 5,881,048
Held-to-maturity investments - - 902,708 3,032,767 1,979,352 - 5,914,827
Other financial assets - - - - - 56,140 56,140 _________ __________ _________ _________ _________ _________ _________
Financial assets total 26,914,136 7,100,332 10,274,413 12,053,514 3,058,791 845,915 60,247,101 _________ __________ _________ _________ _________ _________ _________ _________ __________ _________ _________ _________ _________ _________
Liabilities Due to banks and other
financial institutions 232,827 641,082 2,504,899 - - - 3,378,808
Taking from banks 397,735 61,190 376,319 1,333,090 - - 2,168,334
Derivative financial liabilities - - - - - 85,178 85,178 Financial assets sold under
repurchase agreements 4,292,900 1,686,100 846,500 - - - 6,825,500
Customer deposits 17,924,670 10,609,105 12,125,180 832,299 503,189 68,127 42,062,570
Interest payable - - - - - 449,047 449,047
Debt securities issued - 297,347 1,573,120 - - - 1,870,467
Other financial liabilities - - - - - 102,218 102,218 _________ __________ _________ _________ _________ _________ _________
Financial liabilities total 22,848,132 13,294,824 17,426,018 2,165,389 503,189 704,570 56,942,122 _________ __________ _________ _________ _________ _________ _________ _________ __________ _________ _________ _________ _________ _________
Net position 4,066,004 (6,194,492) (7,151,605) 9,888,125 2,555,602 141,345 3,304,979 _________ __________ _________ _________ _________ _________ _________ _________ __________ _________ _________ _________ _________ _________
Interest rate sensitivity analysis
The following sensitivity analysis is based on the interest rates gap between the interest
bearing assets such as cash and balances with the Central Bank, due from banks and other
financial institutions, loans and other receivables and interest bearing liabilities such as
customer deposits, due to banks and other financial institutions and debt securities issued as
of the balance sheet date. The upward and downward floating within 50 basis points is used
by management and local supervisor in evaluating the possible changes in interest rates and
the corresponding interest rate risks.
The sensitivity analysis on interest rate risk is based on the following assumptions:
Changes in the market interest rate may influence the interest income or expense of the
variable interest rate financial instruments;
For fixed rate financial instruments measured at fair value, changes in the market interest
rate only influence their interest income or expense;
Changes in the fair value of derivative financial instruments and other financial assets and
liabilities are calculated at the market interest rate as at the balance sheet date, using the
method of discounted cash flow analysis.
FUBON BANK (CHINA) CO., LTD.
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59. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
(IV) Market risks - continued
(2) Interest rate risk- continued
The following table illustrates the impact of the increase or decrease of the yield rate of all
currencies by 50 basis points in parallel on the net profit and capital reserve of the Bank,
based on the structure of earning assets and interest-bearing liabilities on the balance sheet
date. 2015 2014
Other comprehensive Other comprehensive Interest Floating Net profit income Net profit income
RMB ’000 RMB ’000 RMB ’000 RMB ’000
Appreciate by 50 basis points (19,534) (21,389) (12,548) (11,589)
Depreciate by 50 basis points 19,534 21,469 12,548 11,773
The above impact on net profit includes the impact of change in net interest income.
The analysis of the impact of net interest is based on the standardization framework of weight
factors in the appendix of “Principles for the Management and Supervision of Interest Rate
Risk” (July 2004) issued by The Basel Committee on Banking Supervision. Such factors are
determined based on the assumption that the Bank can continue to obtain the net interest
income calculated with the changed interest rate after the re-pricing date.
The Bank believes the assumption does not represent the Bank’s policy on use of funds and
interest rate risk management. As a result, the above impact may be different from the real
situation.
(V) Transfer of financial assets
(1) Financial assets sold under repurchase agreements
Sales and repurchase agreements are transactions in which the Bank sells a security and
simultaneously agrees to repurchase it (or an asset that is substantially the same) at a fixed
price on a future date. Since the repurchase prices are fixed, the Bank is still exposed to
substantially all the credit risks and market risks and rewards of those securities sold. These
securities, which the Bank does not have the ability to use during the term of the
arrangements, are not derecognized from the financial statements but regarded as “collateral”
for the secured lending from these because the Bank retains substantially all the risks and
rewards of these securities. In addition, it recognizes a financial liability for cash received.
FUBON BANK (CHINA) CO., LTD.
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59. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
(V) Transfer of financial assets - continued
(1) Financial assets sold under repurchase agreements - continued
The following table provides a summary of carrying amounts related to transferred financial
assets that are not derecognized and associated liabilities:
2015/12/31 2014/12/31
Financial assets Available-for-sale Held-to-maturity Financial assets Available-for-sale Held-to-maturity
at fair value through financial assets investments at fair value through financial assets investments
profit or loss Total profit or loss Total
RMB RMB RMB RMB RMB RMB RMB RMB
Carrying amount of transferred
assets 98,317,900.00 5,205,712,240.00 3,679,280,418.78 8,983,310,558.78 152,714,700.00 1,838,866,590.00 4,840,892,053.60 6,832,473,343.60
Carrying amount
of associated
liabilities 97,000,000.00 5,038,000,000.00 3,610,100,000.00 8,745,100,000.00 150,000,000.00 1,809,600,000.00 4,865,900,000.00 6,825,500,000.00 _____________ ______________ ______________ ______________ _____________ ______________ ______________ _____________ _____________ ______________ ______________ ______________ _____________ ______________ ______________ _____________
(2) Continuing involvement assets
On 30 June 2014, the Bank transferred credit assets to Beijing Founder Fubon Chuangrong
Financial Asset Management Co., Ltd. (hereinafter refer to “Fubon Chuangrong”) with a gross
amount of RMB 187,827,022.64 (net carrying amount of RMB 138,317,074.31). As the asset
manager, Fubon Chuangrong originated “Founder Fubon Asset Management - Fubon Bank
(China) Co., Ltd. Asset Management Plan No.1”, of which specified the transferred credit
assets as the underlying investment. The Bank issued a “Commitment Letter for Beijing
Founder Fubon Chuangrong Financial Asset Management Co., Ltd.” to provide credit
enhancement for the asset management plan with the maximum risk exposure of RMB
24,800,000.00.
On 12 November 2014, the Bank transferred credit assets to Shenzhen Ping An UOB Huitong
Wealth Management Co., Ltd. (hereinafter refer to “Ping An UOB”) with a gross amount of
RMB 274,000,000.00(net carrying amount of RMB 267,150,000.00). As the asset manager,
Ping An UOB originated “Ping An UOB Huitong Baofeng Asset Management Plan No.1”.
Meanwhile, Fubon Chuangrong originated “Founder Fubon Asset Management - Fubon Bank
(China) Co., Ltd. Asset Management Plan No.2” mainly investing in “Ping An UOB Huitong
Baofeng Asset Management Plan No.1”, of which designated to be a transferee of the Bank’s
credit assets with maximum amount of RMB 260,650,000.00. As for other funds raised within
the asset management plan, asset managers will invest in financial products which are
premitted by the China Securities Regulatory Commission (the “CSRC”), including but are
not limited: (1) inter-bank bond market or exchange traded bonds, central bank bills, financial
bonds and unsecured bonds with relatively high ratings; and (2) inter-bank deposits, bills, etc.
on the inter-bank trade market. The Bank issued a “Liquidity Assistance Commitment for
Shenzhen Ping An UOB Huitong Wealth Management Co., Ltd.” in order to provide credit
enhancement for the asset management plan and with the maximum risk exposure of RMB
26,062,560.00.
FUBON BANK (CHINA) CO., LTD.
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59. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - continued
(V) Transfer of financial assets - continued
(2) Continuing involvement of assets - continued
With respect to aforementioned transfers of financial assets, the Bank neither transferred, nor
retained substantially all of the risks and rewards of ownership, and retained control of those
assets, as a result, the Bank continued to recognise the asset to the extent of its continuing
involvement. Continuing involvement represents the extent to which the Bank continues to be
exposed to the changes in the value of the transferred asset. A corresponding asset and liability
was recognized with the amount of maximum risk exposure of RMB 50,862,560.00. The Bank
also charged impairment loss amounted to RMB 1,128,864.20.
60. FAIR VALUE OF FINANCIAL INSTRUMENTS When determining the fair value of financial instruments, the Bank considers the market price as
the best approximation of the fair value of the financial instruments for which there is an active
market. For financial instruments of which the market does not exist, the Bank adopts current
value or other valuation techniques to determine the fair value of these financial assets and
financial liabilities (refer to Note 4).
The fair values of financial assets and financial liabilities are determined as follows:
The fair values of financial assets and financial liabilities with standard terms and conditions
and traded on active markets are determined with reference to asking or bidding market
prices;
The fair values of other financial assets and financial liabilities (excluding derivative
instruments) are determined in accordance with generally accepted pricing models based on
discounted cash flow analysis or observable market prices;
The fair value of derivative instruments are measured at quoted prices. Where such prices are
not available, a discounted cash flow analysis is performed using the applicable yield curve
for the duration of the instruments for fair value of non-optional derivatives, and option
pricing models, such as binomial model, for fair value of optional derivatives.
(1) Financial assets and liabilities measured by fair value
Three levels of financial assets and liabilities measured at fair value are analyzed as follows:
2015/12/31
Item Level 1 Level 2 Level 3 Total
RMB RMB RMB RMB
Financial assets
at fair value through profit or loss - 291,039,500.00 - 291,039,500.00
Derivative financial assets - 213,592,519.42 - 213,592,519.42
Available-for-sale financial assets - 10,962,477,348.00 100,000,000.00 11,062,477,348.00 ________________ ________________ ________________ ________________
Financial assets total - 11,467,109,367.42 100,000,000.00 11,567,109,367.42 ________________ ________________ ________________ ________________ ________________ ________________ ________________ ________________
Derivative financial liabilities - 177,311,660.04 - 177,311,660.04 ________________ ________________ ________________ ________________
Financial liabilities total - 177,311,660.04 - 177,311,660.04 ________________ ________________ ________________ ________________ ________________ ________________ ________________ ________________
FUBON BANK (CHINA) CO., LTD.
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60. FAIR VALUE OF FINANCIAL INSTRUMENTS - continued
(1) Financial assets and liabilities measured by fair value - continued 2014/12/31
Item Level 1 Level 2 Level 3 Total
RMB RMB RMB RMB
Financial assets at fair value
through profit or loss - 163,372,300.00 - 163,372,300.00
Derivative financial assets - 60,605,522.90 - 60,605,522.90
Available-for-sale financial assets - 5,881,047,540.00 - 5,881,047,540.00 ________________ ________________ ________________ ________________
Financial assets total - 6,105,025,362.90 - 6,105,025,362.90 ________________ ________________ ________________ ________________ ________________ ________________ ________________ ________________
Derivative financial liabilities - 85,177,546.54 - 85,177,546.54 ________________ ________________ ________________ ________________
Financial liabilities total - 85,177,546.54 - 85,177,546.54 ________________ ________________ ________________ ________________ ________________ ________________ ________________ ________________
There were no transfers from Level 1 and 2 to Level 3, and no transfer between Level 1 and Level
2 in 2015 and 2014. The information of Level 3 fair value is as follows:
Fair value as of Fair value as of Item 2015/12/31 2014/12/31 Valuation method RMB RMB Available-for-sale
financial assets 100,000,000.00 - Discounted cash flow ________________ ________________ ________________ ________________
The main significant unobservable input of these available-for-sale financial assets, using the
discounted cash flow model to evaluate, is the effective interest rate 4.4%. The significant
unobservable inputs are inversely proportional to the fair value.
Adjustments to Level 3 fair value of financial assets and liabilities are as follows:
2014/12/31 Interest Income Buy-in Close 2015/12/31
RMB RMB RMB RMB RMB
Available-for-sale
financial assets - - 100,000,000.00 - 100,000,000.00 ___________ ____________ ____________ ___________ ____________ ___________ ____________ ____________ ___________ ____________
The amount of financial assets and liabilities measured by fair value counted into current year's
income and other comprehensive income is as follows:
2015 2014
RMB RMB
Current year’s income/(loss) 21,040,696.06 (4,191,806.03)
Other comprehensive income/(loss) (15,509,304.32) 62,424,626.60
FUBON BANK (CHINA) CO., LTD.
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60. FAIR VULE OF FINANCIAL INSTRUMENT - continued
(2) Financial assets and liabilities not measured by fair value
Management of the Bank considers that the book value of financial assets and liabilities measured
by amortized cost in financial statements is close to the fair value of assets and liabilities of the
same kind. For instance, cash and balances with the Central Bank, due from banks, placement to
banks, financial assets purchased under resale agreements, loans and advances, due to banks and
other financial institutions, taking from banks, financial assets sold under repurchase agreements,
customer deposits and debt securities issued are not included in the following statement.
The book value and fair value of financial assets, which are not measured by fair value, on
balance sheet day are as follows:
2015/12/31 2014/12/31
Book value Fair value Book value Fair value
RMB RMB RMB RMB
Held-to-maturity investments 7,310,476,711.16 7,597,465,762.81 5,914,827,300.73 6,094,450,340.00
Receivable investments 2,521,464,932.89 2,521,142,195.90 - - ______________ ______________ ______________ ______________
Total 9,831,941,644.05 10,118,607,958.71 5,914,827,300.73 6,094,450,340.00 ______________ ______________ ______________ ______________ ______________ ______________ ______________ ______________
Three levels of financial assets and liabilities not measured at fair value are analyzed as follows:
2015/12/31
Level 1 Level 2 Level 3 Total
RMB RMB RMB RMB
Held-to-maturity investments - 7,597,465,762.81 - 7,597,465,762.81
Receivable investments - - 2,521,142,195.90 2,521,142,195.90 ________________ ________________ ________________ ________________
Total - 7,597,465,762.81 2,521,142,195.90 10,118,607,958.71 ________________ ________________ ________________ ________________ ________________ ________________ ________________ ________________
2014/12/31
Level 1 Level 2 Level 3 Total
RMB RMB RMB RMB
Held-to-maturity investments - 5,914,827,300.73 - 5,914,827,300.73 ________________ ________________ ________________ ________________ ________________ ________________ ________________ ________________
FUBON BANK (CHINA) CO., LTD.
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60. FAIR VALUE OF FINANCIAL INSTRUMENT - continued
(2) Financial assets and liabilities not measured by fair value - continued
The information of Level 2 and Level 3 fair value is as follows:
Fair value on Fair value on Item 2015/12/31 2014/12/31 Valuation method Input RMB RMB Held-to-maturity investments 7,597,465,762.81 6,094,450,340.00 Discounted cash flow bond yield rate Receivable investment 2,521,142,195.90 - Discounted cash flow discount rate ________________ ________________ ________________ ________________
All of the above-mentioned assumptions and methods provide a consistent basis for the
calculation of the fair values of the Bank’s assets and liabilities. However, other institutions may
use different assumptions and methods. Therefore, the fair values disclosed by different financial
institutions may not be entirely comparable.
61. COMPARATIVE FIGURES Certain comparative figures have been reclassed to conform 2015’s presentation.
62. SUBSEQUENT EVENTS
In March 2016, the Fourth Session of the Twelfth National People's Congress approved the full
implementation of the VAT reform in the government work report. From 1 May 2016, the VAT
reform will be rolled out to cover construction, real estate, financial service and lifestyle service
sectors. Meanwhile, Ministry of Finance and State Administration of Taxation issued the Notice
on full roll-out plan of the VAT reform (Cai Shui [2016] No. 32). From 1 May 2016, the Bank will
be subject to VAT in lieu of business tax.
63. APPROVAL OF THE FINANCIAL STATEMENTS
The financial statements were approved by the Board of Directors of the Bank on 25 March 2016.
* * * END OF FINANCIAL STATEMENTS * * *