Bank Of Communications Co., Ltd. Class ASSE: 601328

2024 Interim report

Sep 23, 2024 at 9:51 AM UTC · Issued by Bank Of Communications Co., Ltd. Class A

2024 INTERIM REPORT

CREATE SHARED VALUE

Bank of Communications Co., Ltd.

Interim Report 2024 H Share

IMPORTANT REMINDERS

The Board of Directors, the Board of Supervisors and Directors, Supervisors, Senior Management of the Bank are responsible for the authenticity, accuracy and completeness of the Interim Report, free of false records, misleading statements or material omissions and assume individual and joint legal responsibilities.

The 2024 Interim Report and results announcement of the Bank were reviewed and approved at the 17th Meeting of the 10th Session of the Board of Directors of the Bank on 28 August 2024. The number of directors who should attend the meeting was 18, with 18 directors attending the meeting in person.

Mr. Ren Deqi, Chairman of the Bank, Mr. Zhou Wanfu, Principal in charge of accounting and Mr. Chen Yu, Head of Accounting Department represent that they are responsible for the authenticity, accuracy and completeness of the financial statements in the Interim Report.

IV. This Interim Report is unaudited.

The proposal on profit distribution for the half year of 2024 was reviewed by the Board of Directors: based on a total number of ordinary shares of 74.263 billion shares of the Bank as at the end of the Reporting Period, a cash dividend of RMB0.182 (inclusive of tax) per share would be distributed to registered shareholders of A share and H share, totalling RMB13.516 billion. There is no proposal on bonus share or proposal on conversion of capital reserve into share capital for the current year.

VI. Prospective statements involved in the report, such as future plans and development strategies, do not constitute a substantive commitment of the Group to investors. Investors and stakeholders are required to keep sufficient risk awareness and understand the differences between plan, forecasting and commitment.

VII. The Group's operation is mainly exposed to risks including credit risk, market risk, operational risk and compliance risk. The Group has taken and will continue to take various steps to effectively manage risks. For more details which requires investors' attention, please refer to the section of "Management Discussion and Analysis - Risk Management".

This interim financial report is prepared in both Chinese and English. Should there be any inconsistency between the Chinese and English versions, the Chinese version should prevail.

Bank of Communications Co., Ltd.

Interim Report 2024 H Share

Contents

Important Reminders

Definitions
General Information

Financial Highlights

Management Discussion and Analysis

Financial Statement Analysis

Business Review

Risk Management

Outlook

Major Concerns of Capital Market

Corporate Governance

Changes in Shares and Shareholders

Corporate Governance

Environmental and Social Responsibilities

Significant Events

List of Institutions

Financial Statement and Others

Report on Review of Interim Financial Information
Unaudited Condensed Consolidated Financial Statements

94 Notes to the Unaudited Interim Condensed Consolidated Financial Statements

184 Unaudited Supplementary Financial Information

Bank of Communications Co., Ltd.

Interim Report 2024 H Share

DEFINITIONS

The following terms will have the following meanings in this Report unless otherwise stated:

"Bank", "BoCom"	Bank of Communications Co., Ltd.
"Group"	The Bank and its subsidiaries
"Ministry of Finance"	Ministry of Finance of the People's Republic of China
"HSBC"	The Hongkong and Shanghai Banking Corporation Limited
"SSF"	The National Council for Social Security Fund
"PBOC"	The People's Bank of China
"NAFR"	National Administration of Financial Regulation
"CSRC"	China Securities Regulatory Commission
"SSE"	The Shanghai Stock Exchange
"Hong Kong Stock Exchange"	The Stock Exchange of Hong Kong Limited
"Hong Kong Listing Rules"	The Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong
	Limited
"the Articles of Association"	The Articles of Association of Bank of Communications Co., Ltd.
"Win to Fortune"	A corporate and interbank wealth management brand of the Bank providing
	comprehensive one-stop wealth management solutions for corporate, government
	institutions and interbank financial customers through intelligent financial service and
	digital transformation.
"OTO Fortune"	A main brand of retail business of the Bank with the core value of "creating and
	sharing abundant wealth with noble virtue" devoted to realizing value maintenance
	and appreciation of wealth for customers
"BoCom Zhanyetong"	The Bank's unified brand of inclusive finance, comprising the online product "Inclusive
	e-Loan" and the offline product.
"BoCom Yinongtong"	The Bank's unified brand of rural rejuvenation, comprising the online product
	"Xingnong e-Loan" and the offline product.
"Personal Mobile Banking"	A mobile APP providing online business processing and other services to personal
	customers of the Bank and covering a variety of financial products and life service
	needs of customers.
"Corporate Mobile Banking"	A portable and convenient channel providing online account opening, account
	services, transfer and payment, agency payment and withholding, loan financing,
	group services, bill businesses, wealth management and investment, international
	businesses for corporate customers through APPs on mobile phones and tablet
	computers, with close and convenient channels.
"Corporate Online Banking"	An electronic transaction system of the Bank providing online account opening,
	account services, transfer and payment, agency payment and withholding, loan
	financing, group services, bill businesses, wealth management and investment,
	international businesses for corporate customers through the Internet.
"Go Pay"	A one-stop digital service platform of finance and life for all customers.
"Benefit Loan"	An online credit consumption loan product of the Bank for qualified customers.
"BOCOM On-cloud"	A digital service brand, practicing the service concept of "institution online, employee
	online, product online, and service online", building a "cloud outlet, cloud teller, and
	cloud butler" system based on remote video services, meeting customers' digitalised
	service needs through a new mode of online service as screen-to-screen service.
"Yuan"	Renminbi Yuan (RMB)

CORPORATE INFORMATION

Chinese name:	交通銀行股份有限公司
Chinese abbreviation:	交通銀行
English name:	Bank of Communications Co., Ltd.
Legal representative:	Ren Deqi
Authorised representatives:	Ren Deqi, He Zhaobin
Secretary of the Board of	He Zhaobin
Directors and Company
Secretary:
Registered address:	188 Yin Cheng Zhong Lu, (Shanghai)
	Pilot Free Trade Zone, PRC
Contact and address:

188 Yin Cheng Zhong Lu, Pudong New District, Shanghai

Postal code:	200120
Tel:	86-21-58766688
Fax:	86-21-58798398
E-mail:	investor@bankcomm.com
Official website:	www.bankcomm.com,
	www.bankcomm.cn
Principal place of business	20 Pedder Street, Central, Hong Kong
in Hong Kong:

Information Disclosure Channels and Places Where the Interim Report is Available

A share:		China Securities Journal, Shanghai
		Securities News, Securities Times
		and website of the SSE at
		www.sse.com.cn
H share:		Website of the Hong Kong Exchanges
		and Clearing Limited at
		www.hkexnews.hk
Places where the interim	Board of Directors Office of the Bank
report is available:
Information of Shares
Classes	Stock exchange		Stock name	Stock code
A Share	Shanghai Stock Exchange	Bank of Communications	601328
H Share	The Stock Exchange of	BANKCOMM	03328
	Hong Kong Limited
Domestic Preference	Shanghai Stock Exchange	BOCOM PREF1	360021
Share

	Bank of Communications Co., Ltd.
		Interim Report 2024 H Share
		GENERAL INFORMATION
Domestic auditor:	KPMG Huazhen LLP
		8/F, Office Tower E2,
		Oriental Plaza, 1 East Chang
		An Avenue, Dongcheng District,
		Beijing, PRC
Name of the undersigned	SHI Haiyun, LI Li
accountants:
International auditor:	KPMG
		8/F, Prince's Building, 10 Chater
		Road, Central, Hong Kong, PRC
Name of the undersigned	CHEN Shaodong
accountants:
PRC legal advisor:	AllBright Law Offices
Hong Kong legal advisor:	Herbert Smith Freehills
Share Registrar and Transfer Office
A Share:	China Securities Depository and Clearing Corporation
	Limited, Shanghai Branch
	No. 188 South Yanggao Road, Pudong New District,
	Shanghai, P.R. China
H Share:	Computershare Hong Kong Investor Services Limited
	Shops 1712-1716, 17th Floor, Hopewell Centre,
	183 Queen's Road East, Wanchai, Hong Kong
Other Information
Unified social credit code:	9131000010000595XD

Bank of Communications Co., Ltd.

Interim Report 2024 H Share

GENERAL INFORMATION

COMPANY PROFILE AND PRINCIPAL ACTIVITIES

Founded in 1908, the Bank is one of banks with the longest history in modern China. The Bank reopened after reorganisation on 1 April 1987 and became the first nationwide state-ownedjoint-stock commercial bank in China, with Head Office located in Shanghai. The Bank was listed on the Hong Kong Stock Exchange in June 2005 and on the Shanghai Stock Exchange in May 2007. In 2023, the Bank selected as a global systemically important bank, and ranked 9th among global banks in terms of tier-1 capital.

Guided by the strategic goal of "building a world-class banking group with distinctive advantages", the Group regarded green finance as the keynote for operation development, continued to build four major business characteristics, which include inclusive finance, trade finance, sci-tech finance and wealth finance, and made significant efforts in the "five priorities" of finance. The Group continuously improved the five professional capabilities of customer management, technology leadership, risk management, co-operation and resource allocation. With the construction of "Shanghai Base" and digital transformation as strategic breakthroughs, the Group was guided towards a high-quality development.

Upon approval by the NFRA, the Bank provides comprehensive financial services including deposits and loans, supply chain finance, cash management, international settlement and trade financing, investment banking, asset custody, wealth management, bank cards, private banking, treasury businesses, etc. for 2.7565 million corporate customers and 195 million retail customers through online service channels such as mobile banking and online banking, as well as over 2,800 domestic outlets and 23 overseas branches (subsidiaries) and representative offices. The Group is involved in businesses such as financial leasing, fund, wealth management, trust, insurance, overseas securities, and debt-to-equity swap through wholly-owned or controlling subsidiaries.

As a long-standinglarge-scalestate-owned banking group with a long history, the Bank will fulfil the role as an important force to support the real economy and the ballast for maintaining financial stability, maintain strategic stability, prevent and resolve risks, strive to provide high-quality services to our customers, create more value for shareholders, build a happy home for employees, and make greater contributions to society!

During the Reporting Period, the Group's operating mode, primary businesses and key performance drivers had no significant change.

Bank of Communications Co., Ltd.

Interim Report 2024 H Share

FINANCIAL HIGHLIGHTS

KEY FINANCIAL DATA AND FINANCIAL INDICATORS

As at the end of the Reporting Period, key financial data and financial indicators prepared by the Group under International Financial Reporting Standards ("IFRSs") are as follows:

(in millions of RMB unless otherwise stated)

			January to		January to	Increase/
Key financial data			June 2024		June 2023	(decrease) (%)

Net interest income	84,234	82,387	2.24
Net fee and commission income	21,000	24,580	(14.56)
Net operating income	132,550	137,307	(3.46)
Credit impairment losses	33,021	36,346	(9.15)
Operating expenses	39,621	40,079	(1.14)
Profit before tax	47,678	49,674	(4.02)
Net profit (attributable to shareholders of the
parent company)	45,287	46,039	(1.63)
Earnings per share (attributable to holders of ordinary shares
of the parent company, in RMB yuan)1	0.56	0.57	(1.75)

			30 June		31 December	Increase/
	2024	2023		(decrease) (%)

Total assets	14,177,914	14,060,472	0.84
Loans and advances to customers2	8,267,734	7,957,085	3.90
Total liabilities	13,058,623	12,961,022	0.75
Deposits from customers2	8,650,116	8,551,215	1.16
Shareholders' equity (attributable to shareholders of the
parent company)	1,107,374	1,088,030	1.78
Net assets per share (attributable to holders of ordinary
shares of the parent company, in RMB yuan)3	12.56	12.30	2.11
Net capital4	1,471,631	1,351,116	8.92
Including: Net core tier-1 capital4	927,346	905,394	2.42
Net other tier-1 capital4	176,146	176,289	(0.08)
Net tier-2 capital4	368,139	269,433	36.63
Risk-weighted assets4	9,005,179	8,850,786	1.74

						Change
			January to		January to	(percentage
Key financial ratios (%)			June 2024		June 2023	point)

Annualised return on average assets	0.65	0.69	(0.04)
Annualised weighted average return on net assets1	9.29	10.16	(0.87)
Net interest margin5	1.29	1.31	(0.02)
Cost-to-income ratio6	29.94	29.22	0.72

						Change
			30 June		31 December	(percentage
	2024	2023		point)

Non-performing loan ratio7	1.32	1.33	(0.01)
Provision coverage ratio	204.82	195.21	9.61
Capital adequacy ratio4	16.34	15.27	1.07
Tier-1 capital adequacy ratio4	12.25	12.22	0.03
Core tier-1 capital adequacy ratio4	10.30	10.23	0.07
Leverage Ratio4	7.11	7.03	0.08

Bank of Communications Co., Ltd.

Interim Report 2024 H Share

FINANCIAL HIGHLIGHTS

Notes:

Calculated pursuant to the Regulations on the Preparation of Information Disclosure for Companies Offering Securities to the Public No. 9 - Calculation and Disclosure of Return on Net Assets and Earnings per Share (2010 Revision) issued by the China Securities Regulatory Commission (the "CSRC").
Loans and advances to customers do not include interest receivable of related loans and advances. Deposits from customers include interest payable of related deposits.
Refer to shareholder's equity attributable to holders of ordinary shares of the parent company after the deduction of other equity instruments against the total issued ordinary shares as at the end of the period.
Calculated pursuant to the Administrative Measures for the Capital Management of Commercial Banks and relevant regulations by the National Financial Regulatory Administration ("NFRA"), including all of the Group's domestic and overseas branches and subsidiaries of those financial institutions (excluding insurance companies).
Represented the ratio of annualised net interest income to total average interest-bearing assets.
Calculated as operating expenses divided by net operating income after the deduction of other operating expenses, consistent with the financial report in accordance with China Accounting Standards ("CAS").
Calculated according to the regulatory standards.

As at the end of the Reporting Period, the Group's capital adequacy ratio, leverage ratio all met the regulatory requirements. For further information on the Group's capital and leverage ratio measurement, please refer to the Pillar 3 Report at 30 June 2024 published on the official website of the Bank.

Bank of Communications Co., Ltd.

Interim Report 2024 H Share

FINANCIAL STATEMENT ANALYSIS

FINANCIAL STATEMENT ANALYSIS

In the first half of 2024, the Group strictly abided by the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, focused on the goal of building China into a strong financial power, and adhered to the theme of seeking high-quality development. By concentrating our efforts mainly on supply-side structural reform of the financial industry and coordinating development with security, we achieved the phased goal of pursuing stability through growth, and our business performance generally met our expectations.

During the Reporting Period, the Group's net profit (attributable to shareholders of the parent company) amounted to RMB45.287 billion, representing a year-on-year decrease of 1.63%. The Group's net operating income amounted to RMB132.550 billion representing a year-on-year decrease of 3.46%, of which, the Group's net interest income amounted to RMB84.234 billion representing a year-on-year increase of 2.24%.

As at the end of the Reporting Period, the balance of the Group's loans and advances to customers increased by RMB310.649 billion or 3.90% over the end of the previous year to RMB8.27 trillion; the balance of deposits from customers increased by RMB98.901 billion or 1.16% over the end of the previous year to RMB8.65 trillion.

As at the end of the Reporting Period, the non-performing loan ratio of the Group was 1.32%, representing a decrease of 0.01 percentage point over the end of the previous year. The provision coverage ratio was 204.82%, representing an increase of 9.61 percentage points over the end of the previous year.

Analysis on Key Income Statement Items

1. Profit before tax

During the Reporting Period, the Group's profit before tax decreased by RMB1.996 billion on a year-on-year basis, representing a decrease of 4.02% to RMB47.678 billion.

Bank of Communications Co., Ltd.

MANAGEMENT DISCUSSION AND ANALYSIS

Interim Report 2024 H Share

FINANCIAL STATEMENT ANALYSIS

The selected items from the income statement of the Group during the periods indicated are shown below:

(in millions of RMB unless otherwise stated)

		January to		January to	Increase/
		June 2024		June 2023	(decrease) (%)

Net interest income	84,234	82,387	2.24
Net non-interest income	48,316	54,920	(12.02)
Including: Net fee and commission income	21,000	24,580	(14.56)
Net operating income	132,550	137,307	(3.46)
Credit impairment losses	(33,021)	(36,346)	(9.15)
Impairment losses on other assets	(467)	(594)	(21.38)
Other operating expenses	(51,384)	(50,693)	1.36
Including: Operating expenses	(39,621)	(40,079)	(1.14)
Profit before tax	47,678	49,674	(4.02)
Income tax	(1,853)	(3,108)	(40.38)
Net profit	45,825	46,566	(1.59)
Net profit attributable to shareholders of the
parent company	45,287	46,039	(1.63)

The breakdown of the net operating income of the Group during the periods indicated is shown below:

(in millions of RMB unless otherwise stated)

		January to June 2024
				Proportion		Increase/
		Amount	(%)		(decrease) (%)

Net interest income	84,234	63.55	2.24
Net fee and commission income	21,000	15.84	(14.56)
Net gains/(losses) arising from trading activities	12,089	9.12	(31.46)
Net gains/(losses) arising from financial investments	934	0.71		Not applicable
Net gains/(losses) on investments in associates and
joint ventures	307	0.23	90.68
Other operating income	13,986	10.55	11.23
Total net operating incomes	132,550	100.00	(3.46)

2. Net interest income

During the Reporting Period, the Group's net interest income increased by RMB1.847 billion or 2.24% on a year-on-year basis to RMB84.234 billion, accounting for 63.55% of the net operating income, which was a major component of the Group's income.