Ping An Bank 2019

Q3 Report

OCT 2019

• Key Financials

Appendixes 03

• Overall Performance

• Tech-driven Innovation

• Retail Breakthroughs

• Selective Corporate

Overview 01

• Key Works in the Next Stage

Outlook 02

Co

nte

nts

1 Overview

1.1 Overall Performance

1.1.1 Overall Performance Remained Sound

4

Total Assets

3,708bn Up 8.5%

Deposits

2,291bn Up 7.6%

ROAA

0.88% Up 0.05pct

Net Profit

24bn Up 15.5%

Loans

2,151bn Up 7.7%

Revenues

103bn Up 18.8%

ROAE*

12.64% Up 0.04pct

26bn CD has been considered when calculating the ROAE.

If not, the ROAE is 12.88%, i.e. YOY up 0.28pct.

1.1.2 Profitability Grew Steadily

5

% of Non-Interest Income Stayed Stable NIM/NIS Improved Steadily

PPOP Growth Sped Up YoY Revenues Growth Accelerated YoY

2.37% 2.29% 2.35%

2.62% 2.62%

2.20% 2.21% 2.26%

2.54% 2.54%

2017 2018Q3 2018 2019H1 2019Q3

NIM NIS

Note: Data in the four graphs are all cumulative amounts by the current year.

106 87

117

68

103

-1.8% 8.6%

10.3% 18.5% 18.8%

2017 2018Q3 2018 2019H1 2019Q3

73 60

80

47

72

-4.1% 4.2%

9.6% 19.0% 19.0%

2017 2018Q3 2018 2019H1 2019Q3

32 32 42

24 37

30.0%

37.1% 36.0% 35.7% 35.6%

2017 2018Q3 2018 2019H1 2019Q3

bn

bn

bn

1.1.3 Asset Quality Improved Noticeably

6

29 35 35 35 36

1.70% 1.75% 1.73% 1.68% 1.68%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

0

200

400

600

800

1000

1200

2017 2018 2019Q1 2019Q2 2019Q3

143%

97% 96% 94% 87%

2017 2018 2019Q1 2019Q2 2019Q3

106%

159% 178%

194% 214%

2017 2018 2019Q1 2019Q2 2019Q3

3.70%

2.73% 2.58% 2.48% 2.39%

2017 2018 2019Q1 2019Q2 2019Q3

151% 155%

171%

183% 186%

2017 2018 2019Q1 2019Q2 2019Q3

Down 7bp YTD

NPL Ratio Improved % of 90+ Overdue

Continued to Decrease

Down 34bp YTD

Down 10pct YTD Up 55pct YTD Up 31pct YTD

bn

42 34 34 33 32

2.43%

1.70% 1.66% 1.58% 1.46%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

0

200

400

600

800

1000

1200

2017 2018 2019Q1 2019Q2 2019Q3

bn

Down 24bp YTD

SML Ratio Went Down

Deviation Ratio

Stayed Below 1 Coverage on 90+ Overdue

Enhanced Significantly Provision Coverage

Ratio Increased Greatly

1.1.4 Higher Capital Position And Sounder Business Foundation

7

11.20% 11.50%

12.62%

13.36%

2017 2018 2019Q2 2019Q3

Total Capital Adequacy Ratio

9.18% 9.39%

9.71%

10.54%

2017 2018 2019Q2 2019Q3

Tier 1 Capital Ratio

8.28% 8.54%

8.89%

9.75%

2017 2018 2019Q2 2019Q3

Common Equity Tier 1 Ratio

• EVA/RAROC-based capital management

• Resource allocation steered toward low-

risk business

• Vigorous write-offs

• Dealing with pledged assets to reduce

inefficient capital occupation

Granular Capital Mgmt.

• 26bn yuan convertible bonds were issued

to the public in Jan 2019 and successfully

converted in Sep 2019, greatly enhanced

the bank’s CET 1.

• 30bn yuan tier-2 capital bonds were

issued to the public in Apr 2019.

Replenishments

8.7

9.5

3Q 2018 3Q 2019

Recovered NPLs Recovered

Write-offs

（bn） （bn）

+10% 16

17.3

3Q 2018 3Q 2019

+8%

1.1.5 Debt Collection Made New Progress

8

• Empowered by the big data technology, we have built an intelligent special asset

platform for debt recovery, with a focus on strengthening the capability of smart

collection, smart management and eco-operation.

• The business will be more intelligent and more results will show up.

1.1.6 Support For The Real Economy And Targeted Poverty Relief

9

Following market rules, we are doubling efforts to help the real economy and promote targeted anti-poverty.

2. Serving the private sector and SMEs

With cutting-edge technologies, we managed to offer differentiated and customized financial services to

private entities and SMEs and make financing easier and cheaper for them.

• As of 3Q19, among all corporate customers who received newly issued loans, private clients

accounted for over 70%;

• SME loans of 10mn or less grew 14.4% YTD, higher than the average loan growth rate. Accounts

with loan balance increased 19k YTD. Interest rate for SME loans went down 1.67pct YTD and NPL

was controlled within an appropriate range.

1. Promoting industrial upgrade and focusing on key industries

We stayed in line with national development policies and actively contributed our efforts to the supply-

side reform and industrial upgrade. By end-Sep 2019, key-industry clients accounted for 48% of the

total in terms of credit extension.

3. Targeted anti-poverty efforts

We formed a closed loop of “Finance + Tech + Produce-and-Sell” based on the “Finance + Industry”

strategy.

• In 3Q19, a total of 6.4bn was appropriated to the “three-village” relief program;

• 5,607 newly registered poor people received direct help and over 110k registered poor people were

benefitted;

• 107 items of agri-produce were available in the anti-poverty e-mall, which are sourced from 20 poor

counties of 13 provinces. This initiative helped the poor to raise their income by 9.8mn.

1.2 Tech-driven Innovation

1.2.1 Stronger Technology Prowess To Empower Digital Transition

11

Data Middle-office

Initiated the construction of a unified data &

indicator platform, a data service platform

and five banks of customer, product,

personnel, channel and business case.

Basic Platform

At end-Sep, more than 750 applications

have been migrated to the private cloud

and over 50 projects adopted distributive

PaaS platform development framework.

The block-chain comprehensive service

platform went into operation. In 3Q19,

over 200k transaction operations were

performed in the platform.

Business System

In 3Q19, the accumulative demand volume

increased 38% YoY and versions went in

to operation shot up 140%.

AI Platform

11 AI platforms went into operation. On the

front page of Pocket Bank App and credit

card zone, we enabled intelligent

recommendation to realize targeted

marketing. The conversion rate is more

than 50%.

Data Governance

At end-Sep, we laid down 636 pieces of

basic data standard and 1,442 pieces of

indicator standard.

• Smart approval: risk detecting with the window dressing model, three tool models, and the product model

• Smart management over industrial policies, product polices, black/grey list, ect

• Smart monitoring from multiple perspectives: personnel, institute, efficiency, product and industry

• Smart analysis on asset quality and key industries, etc

• Smart pre-warning system enables 90-days prior warning for 80% risky clients

• Risk panorama of risk tags, key information to facilitate cross-sales

1.2.2 Technology Empowerment — Management

12

• Multi-dimensional information cubic: use AI + BI to carry out profitability analysis for different business lines, units, products and customers

• To put detailed tags on data across the full process by doing process analysis and data governance

Technology empowering management

Build smart platforms

Operational Analysis Platform

Unified Product Mgmt. Platform

Financials & Data Mgmt. Platform

Improve Efficiency

Smart Finance —— Three intelligent platforms

Smart Risk Control —— Better efficiency, risk control and

business management • To know ahead, decide ahead, and act ahead: with smart search, real-time monitoring and pre-warning functions

• “Thousand people thousand faces” function: provides customized products and services based on different people

• To optimize resource allocation and adopt bottom-up flat and fine management

• Standardized product shelf management

• Online management on the full lifecycle of product-marketing

• To empower targeted marketing and input-output analysis

• Credit system restructuring: incorporated 3rd-party credit information; reduce human operation; granularized reports on due diligence investigation and auditing

• Smart approval: standardized approval process, project profile, vivid and comparable results

• Smart lending: 5-minute auto loan issuance and 7/24 services

Control Risks

1.2.3 Technology Empowerment — Product

13 13

Corporate

Technology

Empowering

Retail

• 【Wealth Mgmt.】 provided smart

consultancy and investment and research;

empowering the sales of private funds and

make all products available online; greatly

improved customer experience

• 【Credit Card】 provided personalized

marketing and improved payment experiences

based on client’s profile and geographic

locations

• 【XinYiDai】 enhanced market

competitiveness with the use of internet

technology, such as facial recognition, micro-

expression recognition and intelligent voice

recognition

• 【Auto Finance】 improved productivity by

promoting the use of AI customer manager

robots; to enable automatic application with

the “Open API” model

• Car ecosystem: built the most complete

data warehouse of the car industry

• Government finance: promoted

innovations in the “Smart City” project

• Strategic Clients: built a leading

management system for strategic clients

• SME digital finance: built an one-stop

management service platform featured

with openness, integration and

intelligence; verified the genuine

performance of clients based on data

and models we have and make financing

easier for them

• Cross-border E: optimized customer

experience and improved service by

making financial businesses available

online and more intelligent

• Supply chain receivables cloud

service platform: upgraded the platform

based on the cloud, block chain and AI in

order to build a Ping An Good Chain

Data

Middle-office

Block

Chain

5G

Cloud

NLP

Tag

Bank

Interface

Platform

Model

Bank

Map/Profiles

AI

14 14

1.2.4 Technology Empowerment — Service

Empowering

Service

• 24/7 AI customer service; a strong robot middle-office，quick consultancy service for front-

line employees; optimized operational efficiency; 83.5% AI customer service；

• Retail customer profile: provided differentiated services to targeted customer segments

based on the big data and machine learning technology

• Corporate client 360 profile platform: empowered use cases such as customer acquisition,

targeted marketing and pre-warning

• Online verification of XinYiDai: saved time by simplifying the application process

• Co-branded credit card with Costco: also a member card of Costco; offering seamless and

comprehensive financial services

• Special zone for premium used cars: officially launched in the Pocket Bank App. Financial

services can be accessed online in the CheEtong platform.

1.3 Retail Breakthroughs

Focusing on 3 Business Modules, 2 Core Capabilities and 1 Platform

3

Business

Modules

2

Capabilities

Target

1

Platform

16

1.3.1 Retail“3+2+1”Tactic

To Build an Fully AI-powered Intelligent Retail Bank

Mass Retail Private Banking & Wealth

Mgmt. Consumer

Finance

A Fully AI-powered Platform

Cost Control Risk Control

AI Bank Open Bank

1.3.2 Three Modules Gained Momentum – Mass Retail

17

70

84 90 94

2017 2018 2019Q2 2019Q3

mn Customer Number

15

26 28 30

2017 2018 2019Q2 2019Q3

mn Pocket APP

Monthly Active Users

1,087

1,417

1,755 1,872

2017 2018 2019Q2 2019Q3

Retail AUM bn

Mass Retail

Deposits bn

541

2017 2018 2019Q2 2019Q3

341

462

560

Up 32% YTD Up 12% YTD

Up 21% YTD Up 15% YTD

24 30 39 41

2017 2018 2019Q2 2019Q3

+6%

1.3.3 Three Modules Gained Momentum – Private Banking & WM

18

k

+28%

PB Customers

460 590

720 750

2017 2018 2019Q2 2019Q3

+22% +4%

k

Wealth Customers

341 458

612 669

2017 2018 2019Q2 2019Q3

+34%

bn

AUM of PB Customers

Incremental in 1H19 exceeded the total incremental of 2018FY

and the Q3 number kept growing

+6 +9

+2

+130 +130 +30

+117 +154

+57

Product

To provide high-quality products and benefit packages

relying on both internal and external resources

To build a strong system and team for investment

consultancy and use AI to boost sales power

Product committee: to bring in

diversified premium assets

A risk team designated for the

PB division

Three Business Models

Branch / Sub-branch

Private Bank Center

Integrated Finance

19

1.3.4 Three Modules Gained Momentum – Consumer Finance

Credit Card Cards in circulation: 58mn, up 13.3% YTD

Receivables: 519bn, up 9.7% YTD

Total transaction volume in 3Q19: 2,454bn, a YoY increase of 27.5%;

credit card e-mall transactions increased 23.6% YoY

XinYiDai UPL

1

2

3

Loan balance: 155bn, down 1.0% YTD

Online-merge-offline (OMO) strategy: use internet technology and

big data to explore the digital channel for greater customer flows, thus

expanding financial service coverage and supporting the real

economy

State-of-art technologies: facial recognition, micro expression recognition

and intelligent voice are used to improve business process, customer

experience and efficiency Mortgage

Loan balance: 191bn, increase 4.9% YTD

4 Auto Finance

Loan balance: 168bn, down 2.2% YTD

Given the macro downturn pressure and PAB’s priority on asset quality, we actively adjusted loan extension

strategies for loan products. We increased the underwriting bar for credit card and other loan products and steered

towards customers at the higher-quality spectrum.

1.3.5 Two Core Capabilities – Risk Management

20

1.18% 1.07% 1.09% 1.07%

Retail Loan NPL Ratio

• At end-Sep 2019, the bank's retail NPL rate was 1.07%, same as the year beginning.

• Since end-2017, the bank has adopted stricter risk policy to prevent multi-debt risks. We also tightened loan

quota and credit resources for risky customers who have multiple or heavy debts, thus effectively reduced the

proportion of high-risk customers. The quality of the newly issued loans is sound.

• Risk 3.0: building a new generation of intelligent risk management system based on the AI technology and

comprehensive value management; developing AI risk control robots to control the whole lending cycle for

products such as XinYiDai, auto loan, credit cards, etc.

2017 2018 2019 Q3 2019 Q3

1.3.6 Two Core Capabilities – Cost Management

21

In order to have a better cost-to-income ratio,

the bank invested 1.2bn in technology R&D. We

also kept upgrading traditional business by

creating new models and optimizing services

Operational Costs: Streamlined operation and management

process. For example, text message cost was

cut by 11%, cost per operation was cut by

12%;

Business volume handled by outlet staff

increased by 2X per person than that in 2016

Business volume handled by customer

service representative increased by 8.8X per

person than that in 2016

Productivity & Efficiency:

With the AI technology, productivity greatly

improved and revenue per person increased by

18% YoY

Applications for Credit Card, XinYiDai and Auto

Loan went 100% online

Credit card issuance jumped from 1 mn/year to

12mn/year while approval headcounts stayed

flat

Productivity for XinYiDai is 7X than that in 2016

Fixed Costs: reduced the cost by enforcing the same

standard for each and every outlet and

making them more digital-based and light-

asset. In 3Q19, the rented flood was reduced

by 23.3k square meters.

22

1.3.7 1 Platform – Intelligent OMO Service Mechanism

Online

Offline

Learning from top internet

giants and keep optimizing in-

app experience

Constructing online banking

eco-sphere to improve user-to-

customer conversion rate

As of end-Sep, monthly active

users of the Pocket Bank App

stood at 30mn, up 15.4% YTD

Expanding variety of daily life

services: credit card e-mall

transaction volume went up by

23.6% YoY

Pocket Bank APP

1

New Retail Outlets 2

Replicating the new outlet model

that is light-asset, community-

based, intelligent and

diversified

As of end-Sep, 245 new outlets

opened to business

Empowering employees with the

Pocket Banker App that covers

most retail business modules

Pushing for standardization with

stronger digital and intelligent

capabilities

Pocket Banker APP

3

23

1.3.8 1 Platform– Fully AI-powered

Customer

Experts

Marketing

Experts

Risk

Experts

Mgmt

Experts

Product

Experts

Customer

Experts

Marketing

Experts

Risk

Experts

Mgmt

Experts

Product

Experts

Emotion

Recognition Biometrics Smart Voice NLP OCR AR, VR

Customer

Bank

Product

Bank

Staff

Bank

Institution

Bank

Model

Bank

Channel

Bank

Dynamic

input

Technology

Knowledge

Bank

Marketing Experts Mgmt.

Experts

Risk

Experts

• Marketing robots

• Smart lending robot

• AI investment

consultants

• AI customer service

•Kanban robots

•Training

accompany robots

•……

• Risk control

robot

• ……

Business

Front-end

Application

AI

Banker

AI Self-driven Capability

Standard

Model

Use

cases AI

wealth

manager

•Customer

acquirement

•Maturity

•Compliant

handling

•……

AI Assistance

Standard

Model

Use

cases AI

president

assistant

•Morning/evening

meetings

•Business

performance

review

•Salons

•……

Strategy

Portfolios

Flexible

Invoking

Others

• Voice robots

• Quality review

robots

Different invoking capability based on

different use cases

A I M

idd

le O

ffice

4 layers of top-bottom construction: to build the leading AI banker

• Establish 7/24 “AI customer service”system;

As end-Jun, AI CS accounted for 83.5%, up

3.7pct YTD

• Intelligent recommendation function has been

enabled in the Pocket app; conversion rate for

partial use cases reached over 100% • Personalized referrals of products, benefits and

services based on the customer’s 360 profile

after online interactions

• In Q3 2019, money stopped from fraudulent cases

reached 730mn

• A new generation of intelligent risk control

system: AI will be fully used in risk control during

pre, interim and post-loan processes and

customer management will be unified

AI + Customer Service

AI + Marketing

AI+ Risk Control

Partial results

Basic AI technology is in place, with AI customer

service, AI marketing and AI risk control applied in

multiple front-end use cases. Efficiency is greatly

improved and models can be replicated across the

board.

1.3.9 Greater Contribution From Integrated Finance

24

Retail New

Customers New Wealth

Customers

40% 29%

Incremental

AUM

38%

1.9mn 62k 172bn

XinYiDai Issuance Auto Loan

Issuance

37% 58%

Newly Issued

Cards

34%

48bn 40bn 3.7mn

1.9 2.3

2018Q3 2019Q3

Fee Income of Insurance

Agency Service for PAG bn

24.5%

1.4 Selective Corporate

26

1.4.1 Corporate “3+2+1”Tactic

To be customer-centered and focus on 3 Business Pillars, 2 Core Client Groups and 1 Lifeline of Asset Quality

“1”Lifeline “3”Business Pillars “2” Groups

With the PAG’s resources and a focus on key

industries, we are offering“1+N”

comprehensive financial solutions and

portfolios to strategic customers and their

un/down stream companies.

1-Industry Bank

Driving the growth of demand deposits;

intelligent supply chain financing; cross-

border E offshore finance; case management

and payment settlement

2-Transaction Bank

Breaking barriers among channel, product

and sales to boost fee income growth;

serving as an engine for the group’s

integrated finance

3-Integrated Finance

SME

Client Group

Asset

Quality

Strategic

Client

Group

bn bn

3.5

24

2018Q3 2019Q3

5X

Supply Chain Receivables

Platform Transaction volume

1,906

2,749

2018Q3 2019Q3

+44%

Payment & Settlement Platform Transaction volume

518

686

2018Q3 2019Q3

bn

Cross-border E Platform Transaction volume

+32%

1.4.2 3 Business Pillars

27

Industry Banking

• Investment banking will have a new round of development

based on the new industry banking model. In 3Q19，bond

underwriting reached 192bn ； according to the China

Wealth.com, our underwriting volume of WM direct

financing business reached 50bn，accounting for 55.8%

of market shares; we also rank the 1st in terms off the

underwriting volume.

01 Integrated Finance 03

• In 3Q19, insurance premium sold by the bank

stood at 953mn, an increase of 329% than

that of the same period last year

• Volume of projects cooperated with subsidiaries

under the group umbrella stood at 147.5bn, an

YOY increase of 153.4%

Transaction Banking 02

• Optimized organizational structure

• Stronger middle office for the industrial BUs to support

the front-line personnel

28

1.4.3 2 Client Groups

• Focusing on ten major industries that are sizeable, less

cyclical and promising

• Cultivating key customers in the selected industries

• Key-industry customers accounted for 48% of the total

• Agile teams that consist of experts in industry research,

product and risk control to provide in-depth study on top-

name companies

• Tailor-made comprehensive financial solutions

• Leveraging on the group’s integrated finance to provide

strategical clients all-around financial services

• Developing up/downstream clients and forming our own

product and service system

•Customer development strategy: systematic, industry-

focused, professional and PAG-based

Strategic Client Group SME Client Group

Systematic

Industry-

focused

Professional

PAG-

based

• We launched the Pocket Finance APP (for

corporate clients) and SME digital Finance

platform to expand the platform customer base.

Pocket

Finance

APP

SME

Digital

Finance

Transaction Volume

(bn)

330,000 registered users and 3.9mn

transactions in 3Q19

26,974 customers, up 84% YTD

Loan Issuance (bn)

Note: SME digital finance was not launched in 1Q 2019

33 94 225

486 642

772 1,012

2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3

3.0 3.7 4.0 4.2

4.8

6.3

2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3

1.4.4 1 Lifeline

Eight Drivers

29

We will approach from“Four Capabilities”,“One

Engine”,“Eight Drivers”to improve risk control

and support business growth;

In 3Q19, corporate NPLs went down by 0.11 pct.

Smart Risk

Control Platform

Corporate NPL

Rate Decreased

2.68% 2.57%

Approval Lending

Analyzing

Control

Collection Pre-warning

Monitoring

End-2018 End-Sep 2019

• Key industries and products

• Keeping optimizing the special

asset mgmt. platform

Target-focused

Debt Collection

• Intensive supervision over the

approval, lending and post-loan

processes

Intensive Mgmt.

• 24H monitoring based on an

information “sky-net”

Pre-warning &

Monitoring

Four Capabilities

•Full range of assets

•Risk full coverage

•Asset structure optimization

•Asset allocation optimization

Risk Evaluation Tools

•window dressing

recognition system

•Three specialized

evaluation tools

Rating & Credit Models

•Customer rating model

•Rating model for special

projects

•Customer credit limit

Model

Asset & Portfolio Mgmt.

Exclude

potential risky

clients

One Engine

Compliance

1.5 Global Markets

1.5.1 Interbank “3+2+1”tactic

31

Interbank “3+2+1”tactic: 3 Battle Grounds, 2 Capabilities, and 1 System

Sales Capability Trading Capability

2

Capabilities

1

System Intelligent Quantitative Trading Mgmt. System

Integration

into the

ecosystem

Platform

construction Product + strategy + solutions fund + asset

The strongest FICC, sales & trading and

the most unique WM business

3

Battle

Grounds

Strong trading power Uniqueness

Infrastructure

+

Bond Portfolios

+

FOF/MOM

Strong sales skills

FICC

+

Smart Trading Platform

+

KYZ (Know your bond)

Direct Financing

+

HangEtong

+

Great Sales

New Trading New Interbank New Wealth Mgmt.

Target

Launched a new generation of financial market business system

1.5.2 Three Business Pillars

32

New Trading New Interbank New Wealth Mgmt.

3.1bn Trading net income，up 175% YoY

2.47tn Bond trading，up 273% YoY

2.37tn Interest rate swap，up 314% YoY

1.15tn

2,166 accounts “HangEtong”

platform clients

360bn

Volume of interbank

institutional sales

134%

180bn NAV products

1/3 WM products meet new

requirements of WM Rules, up

11pct YTD

Preparing for the WM subsidiary;

Launched the country’s first WM

Management System in

banking Gold business, up 76.9% YoY YoY growth of interbank

institutional sales

2 Outlook

2.1 Key Work - Retail

Retail“3+2+1”tactic: 3 Business Modules, 2 Core Capabilities, and 1 Platform

Intelligent Retail Bank

Acquiring customers both via on/offline

channels and providing customer-oriented

services, so as to improve customer’s asset

levels and cross selling rate

1. On/offline flows for integrated finance

2. Bulk customer acquisition via payroll and

merchant acquiring businesses

3. Focusing on both LUM and AUM

4. Seven AI robots to empower integrate

finance, customer and outlet management

Mass Retail Private Banking &

Wealth Mgmt. Consumer Finance

Applying the sophisticated SAT model into

banking business and building an open

product platform

1. Bringing in wider variety of products

2. Building a professional and digital-

powered investment and consultant

team

3. Strengthening PB customer

management capability and asset

allocation capability

4. Three AI robots to empower PB

business

Online and platform-based customer

acquirement and management

1. Online process optimization for key

products

2. Growing the credit card E-mall

3. Building a car ecosystem and developing

second car loan business

4. Four AI robots to empower consumer

finance （ for cards direct selling flow

acquiring, integrated finance flow

acquiring, retail loan product sales and

auto loan customer service

3

Business

Modules

2

Core

Capabilities

Target

1

Platform

Fully AI-powered Middle Office

Empowerment & Sharing

34

Risk Control Enhancing selective power with technology upgrade;

Improving the proportion of premium customer; Optimizing

asset structure and customer channels

Cost Control

Use integrated, automatic and digital ways to control

human and operational costs

AI Bank Open Bank Embedding bank accounts, banking

products and services into 3rd party’s use

cases to bring more traffic flows

2.2 Key Work - Corporate

Corporate “3+2+1”tactic : 3 Business Pillars, 2 Core Client Groups and 1 Lifeline

“1”Lifeline “3”Business Pillars “2”Groups

• To the way of thinking in product and customer;

• To integrate the investment banking and industrial

BU to provide customized solutions;

• To set up agile teams and fully bring the best out

from the “commercial banking + investment

banking + investment” strategy.

1 - Industry Banking

• To build four product centers with a focus on

product R&D; to build a strong middle office

to serve the core links of company management

2 -Transaction Banking

• Systematic, industry-focused,

professional and PAG-based

• To provide all-round services to key

customers and their up/downstream

companies

• To be an engine for the PAG’s

institutional Finance “1+N” initiative

3 - Integrated Finance

Strategic

Client

Group

SME

Client

Group

Focusing on solving their

pain points; set agile teams

to provide one-stop

comprehensive financial

services to strategic

customers and their

up/down stream companies

Leveraging advantages in

the consumer’s side, we

will reach more SME

customers via on/offline

channels; use a hook-

product to attract them and

then offer solutions and

portfolios applicable to

different use cases

• Enhancing risk control and

pre-warning capability

• Building the Smart Risk

Control Platform

• Improving the efficiency and

level of risk management

Asset

Quality

35

2.3 Key Work – Global Markets

36

Diversify

Products

Speed up

WM Development

Improve

Services

Re-construct

Platforms

To enhance competitiveness from four aspects

1 2

3 4

Intelligent

technologies

• New Trading: to diversify

FICC products

• New Interbank: to cover all

products of mainstream

institutions

• New WM: to create and

launch more alternative

products

• New Trading : to build an

intelligent quantitative trading

system

• New Interbank : to re-

construct the HangEtong

platform

• New WM : to improve on

intelligent WM trading,

investment research and

intelligent risk control platform

• New Interbank：to enhance

research capabilities , build up

client profile and provide

professional consultancy on

investment; and make sales &

trading and services all

available online

• New WM ： to promote the

establishment of WM

subsidiary, substitute the

existing WM products with

more NAV products; build an

open WM platform that

provide a full range of

products

37

2.4 Key Work - Technology

• To enhance granular management and

promoted agile models

• To promote the CMMI3 (capability

maturity model integration) and SDLC

(system development life cycle)

models；

• To promote monitoring tools like CAT

and Detector

Better Tech Governance and Stronger R&D

• Retail Hunter project

• New cores for credit card

business

• AI middle office

• Smart risk control platform

• Inter-city disaster recovery

construction and pilot

projects

Bank-wide Projects

• To restructure the old systems

• To construct an open bank

• To build a bank-wide middle office

system

• To plan for the corporate business

Key Work Planning and

Implementation

3 Appendixes

3.1 Asset & Liability

39

Amount %

1. Total Assets 37,077 34,186 2,891 8.5%

Total Loans 22,176 20,376 1,800 8.8%

Loans and Advances 21,512 19,975 1,537 7.7%

Corporate Loans 8,779 8,435 344 4.1%

Retail Loans 12,733 11,540 1,193 10.3%

2. Total Liabilities 34,196 31,786 2,410 7.6%

Total Deposits 26,379 25,051 1,328 5.3%

Deposit Principal 22,912 21,286 1,626 7.6%

Corporate Deposits 17,316 16,670 646 3.9%

Retail Deposits 5,596 4,616 980 21.2%

3. Shareholder Equity 2,881 2,400 481 20.0%

Sep. 30, 2019 Dec. 31, 2018 Changes YTD RMB100m

3.2 Income And Expenses

40

3Q, 2019

amount growth% amount % growth% changes

1. Operating Income 1,029.58 100.00% 866.64 100.00% 18.8%

Interest Income 662.69 64.4% 545.29 62.9% 21.5% +1.5pct

Non-Interest Income 366.89 35.6% 321.35 37.1% 14.2% -1.5pct

2. Operating Expenses 312.49 264.28 18.2%

Business and Overhead 302.97 29.4% 255.81 29.5% 18.4% -0.1pct

3. PPOP 717.09 602.36 19.0%

4. Asset Impairment Loss (-)

409.96 336.22 21.9%

5. Net Profit 236.21 204.56 15.5%

6. Basic EPS (RMB) 1.32 1.14 15.8%

7. Diluted EPS (RMB) 1.32 1.14 15.8%

3Q, 2018 Changes YTD RMB100m

3.3 Quality and Efficiency

41

1. Asset Quality

NPL Ratio 1.68% 1.75% -0.07pct

Provision to Loan Ratio 3.13% 2.71% +0.42pct

NPL Provision Coverage Ratio 186% 155% +31pct

Overdue 90+ Provision Coverage 214% 159% +55pct

NPL Deviation Ratio 87% 97% -10pct

2. Asset Yields

Average Return on Total Assets (annualized)

0.88% 0.83% +0.05pct

Weighted Average Return on Net Assets (annualized)

12.64% 12.60% +0.04pct

3. NIS 2.54 2.21 +0.33pct

4. NIM 2.62 2.29 +0.33pct

5. Cost Income Ratio 29.43% 29.52% -0.09pct

YoY/YTD Changes 3Q, 2019 /End-Sep

Note: In Mar 7th, 2016, PAB issued 20 bn yuan non-cumulative preference shares on a private placement basis; when calculating EPS and Weighted Average Return on Net Assets, the numerators already exclude interests issued to preferred shares

Thank you