Review on the Management of the Board of Directors of China Everbright Bank in 2022
() The business review of the Board of Directors in the first half of 2022 is as follows:
I. Review of Main Work
(1) Taking the initiative to act in stabilizing the economic market and supporting the real economy, the Bank introduced 22 measures in six aspects to help stabilize the economic market and support the real economy; We will provide the service of "stabilizing the economy and entering all enterprises" for the single champion enterprises specializing in innovation and manufacturing; Focus on key areas and industries such as manufacturing, inclusive finance and green finance, expand pricing authorization, optimize credit approval and increase assessment; We will introduce special preferential support policies for high-quality customers, establish flexible and efficient "list system", "consultation system" and "pre-trial" mechanisms, unblock blocking points, solve difficulties, and accurately implement credit supply. By the end of the reporting period, total loans exceeded 3.5 trillion yuan, bond investment (including funds) exceeded 1.5 trillion yuan, manufacturing loans increased by 12.36%, green loans increased by 26.59%, clean energy loans increased by 44.16% and inclusive loans increased by 18.94%. (II) Stimulating innovation momentum and promoting business development during the transformation of wealth management. The Bank promoted the hierarchical and grouped retail customer business strategy and built a new hyperbolic business development model. The total retail AUM was 2.31 trillion yuan, and the proportion of retail operating income increased by 0.6 percentage points to 42.07%. There are 147 million retail customers and 1.1 million wealth customers. The balance of retail credit exceeded 1 trillion yuan, and the proportion of retail non-housing loans increased. The integrated comprehensive service capability of the company’s financial investment banks continued to improve, with FPA (total customer financing of the company) reaching 4.62 trillion yuan, an increase of 11.65% over the end of last year; For five consecutive years, it has achieved "three excellent results" in the evaluation of the central financial agency bank; The effect of public-private linkage was improved, the transaction volume and the retention rate of agency funds were both improved, and the service of supporting the military bank won the "China Financial Product Communication Model Award". The business collaboration capability has been continuously improved, and the collaboration of "mobile banking+cloud payment" has been strengthened to create a new service model of "one-stop service for financial management, social security, payment and loan"; Develop financial scene products such as "logistics link" and "automobile link" to enhance digital management ability; Strengthen the collaborative linkage mechanism of trust and bond investment, and use financial market and interbank business resources to coordinate the development of custody business; The scale of cooperation with China Everbright Group and its operating income have increased steadily. Iii. Tightening safety responsibilities and ensuring development quality while adhering to the risk bottom line, the Bank’s asset quality continued to improve, and the NPL ratio, interest rate, overdue interest rate and provision coverage ratio achieved "three reductions and one liter", and its risk resilience continued to increase; Build an automated examination and approval management system, implement unified examination and approval management, strengthen consolidated management, establish a pre-trial consultation mechanism between China and Taiwan, and improve examination and approval efficiency; Improve the management and control mechanism of large credit customers, and establish the concentration limit of large credit customers by layers; Implement mandatory withdrawal of potential risk customers, and orderly clear out the stock risks in key areas; Strengthen the monitoring and management of complaints, and get an A grade in the annual consumer protection evaluation organized by the People’s Bank of China for two consecutive years. (IV) Optimizing structural functions and strengthening team building in deepening mechanism reform; The Bank actively and orderly promoted the "two departments and two centers" structural setting of digital transformation, and enhanced the efficiency of "business+technology" integration; Deepen the reform of audit system and mechanism, strengthen the leadership of party committees on audit work, and improve the long-term mechanism of audit rectification; Improve the performance appraisal system and comprehensive appraisal methods, increase the assessment of supporting the real economy, internal control compliance and development quality, and encourage value creation and synergy; Establish a pool of outstanding young cadres, cultivate "finance+technology" compound talents, and strengthen grassroots exercise, multi-post experience and hard-working experience in cadre selection. II. Development Strategy of the Bank (A) strategic overview 1. Strategic Vision The Bank adheres to the strategic vision of "building a first-class wealth management bank" and is committed to creating greater value for society, shareholders, customers and employees. 2. Strategic Connotation The Bank resolutely implements the national strategy, actively serves and integrates into the new development pattern, and relies on the advantages of Everbright Group’s full financial license, production integration and land port to strengthen group linkage, strengthen innovation drive and create unique advantages in wealth management. (II) Implementation of the Strategy During the reporting period, the Bank carried out the missions of the national team of financial central enterprises, the wealth management professional team and the people’s livelihood service vanguard, based on the new development stage, implemented the new development concept, actively served to build a new development pattern, focused on the strategic vision of "building a first-class wealth management bank" and continuously improved its high-quality development capability. First, take root in the real economy and serve the people’s livelihood. We will fully support key areas such as manufacturing, inclusive finance, green finance and rural revitalization through the full implementation of special credit plan management, differentiated internal fund transfer pricing preferential policies, and strengthened balanced scorecard assessment; Medium-and long-term manufacturing loans and inclusive agriculture-related loans increased by 17.13% and 25.21% respectively over the end of last year, both higher than the average growth rate of various loans; Intensive cultivation of people’s livelihood services, such as pensions and third-generation social security cards, served 11,964,200 social security customers and realized pensions of 15.953 billion yuan; We continued to do a good job in supporting the army and giving special care to the disabled. The cooperation project of preferential treatment cards for retired military personnel and other special care recipients landed in 32 branches and successfully issued the first wealth management product with the theme of "supporting the army". The second is to promote structural transformation and highlight business characteristics. Broaden the transaction settlement business, increase the original and high-quality liabilities, and the deposit balance increased by 271.869 billion yuan over the end of last year; Continue to promote the development of green intermediary business, optimize the allocation of resources, and achieve the effect of light transformation, achieving a green revenue of 6.169 billion yuan, a year-on-year increase of 6.44%; Continue to cultivate the characteristics of wealth management, actively develop "cloud payment", and strengthen the ecological construction of education and training, logistics, housing transactions and other scenarios. The third is to optimize the quality and efficiency of operation and consolidate the customer base. Strengthen the role of corporate finance as a "ballast stone", take FPA as the engine, and accelerate the integrated transformation of "commercial bank+investment bank+asset management+transaction" to meet customers’ comprehensive financing needs; Play the role of "new force" in retail business and wealth management, with AUM(Retail customer asset management scale) is the Polaris indicator, which will strengthen the agency business, enrich product shelves and improve customer experience; Enhance the role of "booster" in the financial market, focus on GMV (transaction amount of interbank customers’ funds), strengthen transaction attributes, expand business cooperation, and promote multi-win situation. Fourth, strengthen risk control and improve asset quality. Continue to promote risk stationing and risk embedding for business front-end, and improve the accuracy of marketing services and risk prevention and control; Clarify the risk management requirements of key areas such as real estate business and local government financing platform, and formulate differentiated regional credit investment policies; Improve the research management system of credit industry, follow up key industry areas, and provide support for marketing services; Take measures to solve the stock risk and promote the stable and positive asset quality. III. Core Competitiveness of the Bank First, the background of diversified operation, industry-finance cooperation and full financial license shareholders. Everbright Group, the controlling shareholder, is a large-scale financial holding group directly under the central government, ranking among the top 500 in the world. Its business scope covers financial and environmental protection, tourism, health, high-tech and other characteristic industries. Its business area spans Hong Kong and the mainland, and its institutions and businesses are all over the world, providing a platform for the Bank to carry out comprehensive financial services and cooperation between industry and finance. The second is to unify the advantages of Sunshine brand. Over the years, with the concept of "sharing sunshine and innovating life", the Bank has strengthened brand building, strived to build a series of "sunshine" brands, and launched a series of famous products such as Sunshine Financial Management, Cloud Payment, Sunshine Pratt & Whitney, Autolink, Forfaiting Blockchain, Sunshine E-loan, Salary Loan and Sunshine Finance. The third is the advantage of excellent innovative genes. Under the background of establishing a competitive financial market in China, the Bank came into being, developed and strengthened through pioneering and innovation, and had a strong sense of innovation. The first to launch RMB wealth management products, the first to have the qualification of fully acting as a financial treasury business, and the first to obtain the qualifications of enterprise annuity fund custodian and account manager, to build the largest open payment platform "cloud payment" in China, to launch and expand the wealth E-SBU ecosystem, and to achieve good innovation results. The fourth is the leading edge of some businesses. The Bank is committed to "building a first-class wealth management bank" and has a strong competitive advantage in wealth management; Investment banking has established a first-Mover advantage in the industry and has the ability to provide comprehensive investment banking services for enterprises; Digital finance business is based on an open platform, and an open service system is constructed, and the business model is in a leading position in the industry; The financial market business maintained steady and compliant operation, and the trading strategy won high recognition from the market; The continuous improvement of the value creation and high-quality development ability of retail business has played a stabilizing role in the sustainable development of the Bank. The fifth is prudent and steady business style. The Bank has always adhered to prudent risk management concepts, sound business development strategies and compliant management measures, and the methods and means of comprehensive risk management have been continuously enriched, asset quality control has been effective, the management system has been continuously improved, and the initiative, foresight and predictability of risk management have been continuously improved. The sixth is the driving advantage of scientific and technological innovation. The Bank continued to deepen the "123+N" digital everbright development system of "one intelligent brain, two technical platforms, three service capabilities and n digital famous products". In the future, the Bank will continuously increase its investment in science and technology, optimize its governance in science and technology, enhance its basic capabilities in science and technology and empower its business development. Iv. overall operation of the bank (I) Steady growth in business scale and strengthening support for the real economy. At the end of the reporting period, the total assets of the Group were 6,257.247 billion yuan, an increase of 355.178 billion yuan or 6.02% over the end of the previous year; The total principal of loans and advances was 3,512.531 billion yuan, an increase of 205.227 billion yuan or 6.21% over the end of last year; The balance of deposits was 3,947.612 billion yuan, an increase of 271.869 billion yuan or 7.40% over the end of last year. During the reporting period, the Group actively implemented the decisions and arrangements made by the CPC Central Committee and the State Council, based on the needs of the country, gave full play to Everbright’s ability, and introduced a number of measures to stabilize the economic market and support the real economy. The average cost ratio of interest-bearing liabilities was 2.31%, down 3BPs year-on-year, and the debt cost remained improved. (II) The growth of operating income and profit accelerated, and the profitability continued to improve. During the reporting period, the Group achieved operating income of 78.454 billion yuan, up 1.77% year-on-year. Among them, the net interest income was 56.675 billion yuan, a year-on-year increase of 1.39%; The net fee and commission income was 14.835 billion yuan, a year-on-year decrease of 1.49%. The net profit was 23.446 billion yuan, the growth rate of operating income and net profit increased by 1.65 and 1.84 percentage points respectively compared with the first quarter, and the profitability continued to improve. (III) The asset quality is stable and the ability to resist risks is enhanced. At the end of the reporting period, the balance of non-performing loans of the Group was 43.643 billion yuan, an increase of 2.277 billion yuan over the end of the previous year; The non-performing loan ratio was 1.24%, down 0.01 percentage point from the end of last year; The loan ratio of concern was 1.84%, down 0.02 percentage points from the end of last year; The overdue loan ratio was 1.96%, down 0.03 percentage points from the end of last year; The provision coverage ratio was 188.33%, up 1.31 percentage points from the end of last year. (IV) The capital strength has been enhanced, and the regulatory requirements have been continuously met. At the end of the reporting period, the Group’s net capital was 542.714 billion yuan, with a capital adequacy ratio of 12.18%, a Tier 1 capital adequacy ratio of 10.95% and a core Tier 1 capital adequacy ratio of 8.59%, all of which met the regulatory requirements. V. Main items in the income statement (I) Changes of items in the income statement None. (2) Operating income During the reporting period, the Group achieved operating income of 78.454 billion yuan, an increase of 1.362 billion yuan or 1.77%. Net interest income accounted for 72.24%, down 0.27 percentage points year-on-year; The net fee and commission income accounted for 18.91%, down 0.62 percentage points year-on-year; Other income accounted for 8.85%, up 0.89 percentage points year-on-year. (3) Net interest income During the reporting period, the Group’s net interest income was 56.675 billion yuan, an increase of 778 million yuan or 1.39%. The Group’s net profit margin was 1.99%, down 12BPs； year-on-year; The net interest rate of return was 2.06%, down 14BPs year-on-year, mainly due to the implementation of the policy of reducing fees and making profits, reducing the financing cost of the real economy, and the average rate of return on interest-bearing assets decreased by 15BPs year-on-year. (4) Interest income During the reporting period, the Group realized interest income of RMB118.396 billion, up RMB5.311 billion or 4.70% year-on-year, mainly due to the increase in interest income from loans and advances. 1. Interest income from loans and advances During the reporting period, the Group realized interest income from loans and advances of RMB84.986 billion, up RMB4.552 billion or 5.66% year-on-year, mainly due to the increase in loan scale. 2. Investment interest income During the reporting period, the Group’s investment interest income was 26.034 billion yuan, down by 132 million yuan or 0.50% year-on-year, mainly due to the decrease in investment yield. 3. Interest income of financial assets lent out, deposited in banks and bought back for sale During the reporting period, the interest income of financial assets lent out, deposited in banks and bought back for sale of the Group was 2.088 billion yuan, up 1.136 billion yuan or 119.33% year-on-year, mainly due to the increase in the scale and yield of financial assets lent out, deposited in banks and bought back for sale. (5) Interest expenses During the reporting period, the Group’s interest expense was 61.721 billion yuan, up by 4.533 billion yuan or 7.93% year-on-year, mainly due to the increase in customer deposit interest expense. 1. Interest Expenditure on Customer Deposits During the reporting period, the interest expenditure on customer deposits was 41.172 billion yuan, an increase of 3.225 billion yuan or 8.50% year-on-year, mainly due to the increase in the scale of customer deposits and the increase in interest rates. 2. Interest expense of interbank deposits, borrowings and sales of repurchase funds During the reporting period, the interest expense of interbank deposits, borrowings and sales of repurchase funds of the Group was 8.889 billion yuan, a year-on-year decrease of 2.527 billion yuan or 22.14%, mainly due to the decrease in scale and interest rate. 3. Interest expenses on bond issuance During the reporting period, the interest expense of bonds issued by the Group was RMB11.66 billion, up RMB3.835 billion or 49.01% year-on-year, mainly due to the increase in the scale of bonds issued. (6) Net fee and commission income During the reporting period, the Group’s net fee and commission income was 14.835 billion yuan, a year-on-year decrease of 224 million yuan or 1.49%, mainly due to the year-on-year decrease of 214 million yuan in other fee income. (7) Other income During the reporting period, the Group’s other income was 6.944 billion yuan, up 808 million yuan year-on-year, mainly due to the increase in investment income. (8) Business and management fees During the reporting period, the Group’s business and management fees amounted to 18.788 billion yuan, a year-on-year decrease of 1.165 billion yuan or 5.84%. The cost-income ratio was 23.95%, down 1.93 percentage points year-on-year. (IX) Asset impairment losses During the reporting period, the Group adhered to an objective and prudent provision policy, continuously consolidated the provision base and enhanced its risk resilience, and accrued asset impairment losses of RMB29.025 billion, up RMB312 million or 1.09% year-on-year. (10) Income tax expenses During the reporting period, the Group’s income tax expense was 5.771 billion yuan, up by 1.089 billion yuan or 23.26% year-on-year, which was mainly due to the increase in assets losses that are not expected to be deductible before tax in this period. VI. Main items in the balance sheet (1) Assets At the end of the reporting period, the Group’s total assets amounted to RMB6,257.247 billion, an increase of RMB355.178 billion or 6.02% over the end of the previous year, mainly due to the increase in loans and advances. 1. Loans and advances At the end of the reporting period, the total principal of loans and advances of the Group was RMB3,512,531 million, an increase of RMB205,227 million or 6.21% over the end of the previous year; Net loans and advances accounted for 54.98% of the total assets, an increase of 0.09 percentage points over the end of last year. 2. Investing in securities and other financial assets At the end of the reporting period, the Group invested 1,958.801 billion yuan in securities and other financial assets, an increase of 109.080 billion yuan over the end of the previous year, accounting for 31.30% of the total assets and 0.04 percentage point lower than the end of the previous year. 3. Types and amounts of financial bonds held. At the end of the reporting period, the Group held financial bonds of RMB1,277.895 billion, an increase of RMB700.116 billion over the end of the previous year, of which financial bonds measured in amortized cost accounted for 81.13%. 4. Hold ten financial bonds with the largest face value. 5. Goodwill The cost of goodwill of the Group was 6.019 billion yuan. At the end of the reporting period, the provision for impairment of goodwill was 4.738 billion yuan, with a book value of 1.281 billion yuan, unchanged from the end of last year. 6. By the end of the reporting period, the Bank’s main assets were not sealed up, detained, frozen or mortgaged or pledged. (2) Liabilities At the end of the reporting period, the Group’s total liabilities amounted to RMB5,764,712 million, an increase of RMB347,009 million or 6.41% over the end of the previous year, mainly due to the increase in customer deposits. At the end of the reporting period, the balance of customer deposits of the Group was RMB3,947.612 billion, an increase of RMB271.869 billion or 7.40% over the end of the previous year. (III) Shareholders’ rights and interests At the end of the reporting period, the Group’s shareholders’ equity attributable to the Bank was RMB490.530 billion, a net increase of RMB8.041 billion over the end of the previous year, mainly due to the increase in profits realized in the current period. (4) Off-balance-sheet items The off-balance-sheet items of the Group are mainly credit commitments, including loan and credit card commitments, acceptance bills, letters of guarantee, letters of credit and guarantees. At the end of the reporting period, credit commitments totaled 1,404.146 billion yuan, an increase of 34.542 billion yuan over the end of the previous year. VII. Cash flow The net cash outflow from the Group’s operating activities was RMB178,781 million. Among them, the cash inflow was 417.47 billion yuan, up 80.453 billion yuan or 23.87% year-on-year, mainly due to the increase in customer deposits; The cash outflow was 596.251 billion yuan, an increase of 116.026 billion yuan or 24.16% year-on-year, mainly due to the increase in customer loans and advances. The net cash outflow from the Group’s investment activities was 43.761 billion yuan. Among them, the cash inflow was 441.387 billion yuan, an increase of 26.434 billion yuan or 6.37% year-on-year, mainly due to the increase in cash inflow from investment recovery; The cash outflow was 485.148 billion yuan, up 31.380 billion yuan or 6.92% year-on-year, mainly due to the increase in cash paid for investment. The Group’s net cash inflow from fund-raising activities was RMB123.38 billion, a year-on-year decrease of RMB50.841 billion, mainly due to the increase in cash paid for bonds. VIII. Loan Quality IX. Operating Performance of Various Business Lines (1) Financial business of the company In accordance with the strategic requirements of "building a first-class wealth management bank", the Bank’s corporate finance business strengthens customer thinking, adheres to customer orientation, pays attention to customer value, accelerates the establishment of a "layered, graded and grouped" marketing model, solidly promotes the strategic transformation of "commercial bank+investment bank+asset management+transaction", and strives to build high-quality first-class corporate finance; Actively integrate into the national development strategy, actively serve the development of the real economy, implement major regional strategies, and provide financial services in infrastructure construction, advanced manufacturing, green finance, coal and electricity supply, and epidemic relief; We will promote the incremental expansion and price reduction of microfinance services, vigorously support the development of the private economy, and launch a series of service activities of "stabilizing the economy and entering all enterprises" to help stabilize the economic market. During the reporting period, the operating income was 30.36 billion yuan, a year-on-year decrease of 787 million yuan or 2.53%, accounting for 38.70% of the bank’s operating income. At the end of the reporting period, the total number of customers was 927,000, an increase of 44,200 or 5.01% over the end of the previous year, of which 434,100 were effective corporate customers, an increase of 20,100 or 4.86% over the end of the previous year. 1. Corporate deposit and loan business The Bank insisted on serving the real economy, strengthened its support for key areas and weak links, actively increased the loan scale, reduced the financing cost of enterprises, and expanded FPA；; Adhere to the development orientation of "both quantity and price", focus on payment and settlement, scene construction and capital circulation, broaden the channels for deposit growth and optimize the deposit structure; Strengthen the construction of customer channels, promote the pilot work of electronic certificate accounting data standards of the Ministry of Finance, and successfully issue the first electronic receipt in the banking system; Promote digital construction, strengthen technology and data support, and empower customer marketing, product innovation and business development; Adhere to the risk bottom line, operate in compliance with the law, and the asset quality is stable and good. At the end of the reporting period, the balance of corporate deposits (including corporate portion of other deposits) was 2,935.961 billion yuan, an increase of 173.942 billion yuan or 6.30% over the end of the previous year, of which the balance of corporate RMB core deposits increased by 171.652 billion yuan or 7.40%; The balance of corporate loans (excluding discounts) was 1,908,885 million yuan, an increase of 118,066 million yuan or 659% over the end of last year. 2. inclusive finance business The Bank continued to increase the investment of inclusive loans, promoted the "incremental expansion" of inclusive finance, and achieved the phased supervision standards of "two increases and two controls"; Help small and micro enterprises to solve problems, introduce policies such as stabilizing the economy, ensuring smooth traffic and resuming production, and increase support for industries seriously affected by the epidemic, such as accommodation, catering, retail, culture, tourism and transportation; Strengthen chain financing and scenario application, and strive to build inclusive ecological chain projects such as "Sunshine Political Mining Loan", "Commercial Ticket Financing Loan" and "Sunshine Supply Loan" to help stabilize the industrial chain and supply chain; Promote the digital transformation of inclusive business, and iteratively upgrade online products such as "Sunshine e-loan" and "Sunshine e-tax loan" to provide customers with a convenient financing experience. At the end of the reporting period, the balance of inclusive loans was 281.884 billion yuan, an increase of 44.883 billion yuan or 18.94% over the end of the previous year, which was higher than the average growth rate of various loans. 451,600 customers, an increase of 59,500 over the end of last year; The weighted average interest rate of new loans was 4.62%, down 28BPs； from the end of last year; The defective rate is 0.63%. 3. Investment banking business The Bank continued to deepen the management concept of "commercial bank+investment bank+asset management+transaction", improve the professional service ability of investment banking business, and build a new competitive advantage of "integration of investment and commercial bank"; Promote the construction of customer system, establish an all-round marketing map for investment banks, and the business volume of strategic customers has grown steadily; Focus on FPA product system and realize "multi-dimensional drive" such as bond financing, M&A financing, structured financing, equity financing and intermediary matching; Vigorously support the real economy, landing rural revitalization bills, panda bonds, science and technology bills, equity investment bills, carbon neutral bonds and other projects. During the reporting period, the Bank underwritten 371 bonds with an amount of RMB243.890 billion; Newly added M&A loans of 14.085 billion yuan; Four credit asset securitization projects were issued, with an asset scale of 10.016 billion yuan. 4. Transaction banking business In line with the development trend of digitalization, online and scene, the Bank enhanced the comprehensive financial service capability of trading banks, and built various channels for core enterprises in the supply chain, public resource trading centers and corporate customers through Sunshine E-chain, Sunshine Supply Chain Cloud Platform and cash management system, continuously enriching the product system and providing scene financial services; The functions and advantages of "sunshine salary" in ensuring all aspects of migrant workers’ wage payment were further exerted, and the business scale grew steadily, helping to protect the legitimate rights and interests of new citizens. At the end of the reporting period, the accumulated guarantee amount of migrant workers’ wage guarantee was 7.813 billion yuan, serving 1,387 corporate customers; Implement the policy of stabilizing foreign trade and foreign financial services, and introduce financial support measures to promote the stability and quality of foreign trade; Relying on scientific and technological innovation, actively participate in docking new foreign trade formats and new models such as cross-border e-commerce and market procurement; Support the construction of Hainan Free Trade Port, improve free trade service measures, and promote the development of international settlement and cross-border RMB business. At the end of the reporting period, the balance of off-balance-sheet trade financing was 464.785 billion yuan. (2) Retail financial business The Bank strives to build a digital retail bank, adheres to the "customer-centered" business philosophy, builds a new "hyperbolic" business development model, deepens the "first curve", gives full play to the advantages of branch outlets and full-time wealth management managers, and enhances offline production capacity; Expand the "second curve" and accelerate the transformation and upgrading of services; Strengthen digital drive, continue to deepen the comprehensive operation of retail customers, increase the total number of retail customers and improve their quality; Accelerate the structural adjustment of the debt side, increase the scale of retail deposits, optimize the structure and improve the cost; Promote the transformation of asset-side business, start intensive management, create famous products of Sunshine retail loans, support the development of inclusive finance, increase the scale of retail loans, and maintain stable asset quality; Continue to deepen the transformation of wealth management, adapt to the diversified investment needs of customers, increase product supply, and the characteristics of wealth management become more and more distinct. During the reporting period, the operating income was 33.002 billion yuan, up 1.032 billion yuan year-on-year, or 3.23%, accounting for 42.07% of the bank’s operating income, of which the net interest income from retail sales was 22.987 billion yuan, up 3.56% year-on-year, accounting for 40.56% of the bank’s net interest income. The net non-interest income of retail sales was 10.015 billion yuan, up 2.48% year-on-year, accounting for 45.98% of the net non-interest income of the Bank. 1. Retail customers and managing the total assets of customers. The Bank promotes the construction of a retail customer management system with "hierarchical grouping, data-driven, channel collaboration and transaction transformation" as the core, optimizes the organizational structure, sets up a customer operation center, and gradually realizes the online operation of all basic customers; Focus on relying on offline channels to serve high-end customers and continuously improve the level of centralized management; Establish a retail business center, cultivate digital capabilities, promote digital retail construction, reshape business processes, re-create service models, vertically empower front-line account managers, drive customers to operate in layers and groups with data capabilities, and enhance customers’ comprehensive contributions. At the end of the reporting period, there were 146,998,900 retail customers (including debit and credit card customers), and the number of middle and high-end customers with monthly average assets of 500,000 yuan or more increased by 5.93% over the end of last year; Mobile banking, Sunshine Life and Cloud Payment have accumulated 220,893,200 users, a year-on-year increase of 42.07%, of which 37,202,600 are monthly users (MAU); Aum was 2,310.267 billion yuan, an increase of 187.800 billion yuan or 8.85% over the end of last year. 2. Retail deposit business The Bank deepened the comprehensive operation of deposits, upgraded the scale, optimized the structure and improved the cost according to the high-quality development orientation; Actively expand channels such as social security and people’s livelihood, health care, business circle management, community property, transportation, cultural and educational tourism, consumer payment and Internet innovation platform, and give full play to the role of the project in obtaining customers in batches; Strengthen the coordinated development of the public-private linkage agency business, optimize the comprehensive financial service platform of "salary manager", promote the marketing activities of "full salary and sufficient benefits", and carry out the characteristic operation of the agency customer base; Increase channel linkage, actively expand the third-party fast payment card-binding business, increase the transaction volume of online platforms, and drive the settlement funds to be deposited and retained; Adhere to differentiated product marketing strategies, implement refined product management, promote digital precision marketing, and enhance customers’ comprehensive income. At the end of the reporting period, the balance of retail deposits (including the retail part of other deposits) was 949.560 billion yuan, an increase of 91.258 billion yuan or 10.63% over the end of the previous year. 3. Retail loan business The Bank actively practices the concept of "finance for the people", fully serves the national strategy of expanding domestic demand, vigorously develops inclusive finance, increases the credit supply of small and micro customers, and increases the supply of inclusive credit loans; Continue to implement fee reduction and profit-making, give customers deferred debt service support, and help customers affected by the epidemic to bail out; Actively deploy financial support measures for new citizens to enhance their sense of gain; Keep a close eye on changes in policies and market situation, and adjust the strategies of mortgage and inclusive products in a timely manner; Carry out intensive management, promote the integration of business risks, promote the construction of risk control system in the whole process of online lending, adhere to the dual improvement of business development and risk control capabilities, and achieve balanced development of scale, efficiency and quality. At the end of the reporting period, retail loans exceeded the trillion yuan mark, and the balance (excluding credit cards) was 1,029.878 billion yuan, an increase of 46.914 billion yuan or 4.77% over the end of the previous year. 4. Wealth management business The Bank firmly takes the scale of expanding AUM as the "North Star" indicator, accelerates the transformation of wealth management, comprehensively enhances the value of retail financial channels through the "hyperbolic" integrated development, and injects new kinetic energy into retail finance; Create an offline hierarchical and professional team of financial managers, build a new management model of "hall integration" in outlets, and improve the service efficiency of outlets; Gradually build an open ecosystem of online Everbright characteristic wealth management, improve the content operation system, incubate scene financial projects, and strengthen marketing innovation; Strengthen the asset allocation ability, enrich the wealth management and agency product system, adapt to the diversified investment needs of customers, accompany customers well, and promote the continuous expansion of wealth management scale and steady improvement of benefits. During the reporting period, the net income from personal wealth management fees was 4.723 billion yuan, up 5.70% year-on-year, of which the income from agency wealth management increased by 14.24%, the income from agency trust increased by 18.58% and the income from agency insurance increased by 25.43%. 5. Private Banking The Bank adheres to the customer group business model of data guide+scene acquisition+full journey companionship (DSC), strengthens the construction of data center, and conducts in-depth insight, portrait, identification and positioning of customers through data center; Go deep into the whole life cycle scenes of private customers’ socialization, wealth, life, education, healthy pension, and open up the boundaries between transactions and non-transactions, financial and non-financial, online and offline services; From the perspective of internal operation to the perspective of customer journey, we will establish the omni-channel collaborative service capability of mobile banking+video investment+offline team (OVO, online+video IC+offline), so as to realize seamless connection and full journey companionship among all channels. We adjusted the agency business structure, focused on improving the insurance contribution, and optimized the strategy and layout of public offering and private placement. The retail agency business achieved a revenue of 1.804 billion yuan, up 0.43% year-on-year, ranking among the top in the industry. Accelerate the digital transformation, the three major product channels of mobile banking realize the transformation from shelf sales to content operation mode, iterative upgrade of private special edition, online customer journey, scene finance, interactive service and intelligent recommendation; Establish a platform for private bank customers’ A-currency points to improve their rights and interests service capabilities; The cloud payment platform has fully opened up the fund and insurance trading system, and initially realized the dual-platform layout of wealth management. At the end of the reporting period, there were 53,273 private bank customers, an increase of 3,252 or 6.50% over the end of last year. Assets under management amounted to 537.076 billion yuan, an increase of 35.948 billion yuan over the end of last year.An increase of 7.17%. 6. Credit card business The Bank firmly promoted the credit card business to return to the source of consumption, strengthened the introduction of young and high-spending customers, and launched the Yokado and Yaokado cards for young customers, with the proportion of high-quality customers increasing by 14 percentage points year-on-year; Strengthen customers’ use of cards to promote activities, and form normalized marketing activities such as "about Friday", "about dinner", "about shopping" and "about playing". During the reporting period, online transactions increased by 38.33% year-on-year, and Sunshine Life APP had 11,523,200 monthly users, ranking among the top three credit card apps; Improve the installment business management system, systematically optimize the approval, credit granting, product management and marketing promotion of installment business, and steadily increase the installment overdraft balance; Improve the response efficiency of science and technology to business, speed up the construction of a new generation of integrated business management system, and focus on promoting the construction of marketing activity operation management, integrated management of electricity and electricity; Improve the effectiveness of risk management and control, expand data sources, improve the ability to identify new customers, strengthen the normalized risk management and control of existing customers, and promote the collection and disposal of non-performing assets. The overdue rate and non-performing rate have decreased from the end of last year; Strengthen the protection of consumers’ rights and interests, improve the customer-centered whole-process service mechanism, and enhance customer satisfaction. At the end of the reporting period, there were 46,017,000 credit card customers, an increase of 1,662,000 this year; The transaction amount was 1,379.79 billion yuan, a year-on-year increase of 2.56%; The time-point overdraft balance (excluding the adjustment of in-transit losses) was 449.417 billion yuan; Realized business income of 21.488 billion yuan. 7. Digital Finance and Cloud Payment Service The Bank continued to promote the construction of digital banking and accelerated the digital transformation of the whole bank. At the end of the reporting period, the replacement rate of electronic transactions was 99.02%. There were 55,007,500 registered users of mobile banking and 16,018,500 monthly users, up 17.42% year-on-year; There are 916,300 registered users of corporate online banking, and the transaction amount is 27.68 trillion yuan, up 28.72% year-on-year. Cloud payment continues to maintain the leading edge of China’s largest open and convenient payment platform, the number of project access continues to increase, the coverage area of collection services is further expanded, and the output channels of the platform continue to expand. At the end of the reporting period, there were 13,354 access payment projects, with an increase of 1,091 this year, an increase of 8.90%; There are 703 cumulative output platforms, with 35 new platforms this year, an increase of 5.24%; The number of payment transactions was 1.134 billion, a year-on-year increase of 21.28%; The payment amount was 247.432 billion yuan, a year-on-year increase of 25.91%; There are 123 million direct customers, with 17 million new customers this year, an increase of 16.04%; The monthly users of direct link customers were 9,660,900, a year-on-year increase of 6.17%. Strengthen the collaborative empowerment of mobile banking and cloud payment dual apps and the characteristic construction of self-operated platforms to open up the whole process experience of customers; Complete the user information integration of mobile banking, online banking and light application platform, and launch the new mode of "one-stop service for financial management, social security, payment and loan"; The cloud payment platform will accelerate the ecological construction of "life+Microfinance" and improve the ability of social security applet traffic gathering and customer conversion. Focus on scene financial construction,From the four dimensions of industry, enterprise, government affairs and (), we will provide comprehensive financial service solutions, and key businesses such as logistics and Anjutong will achieve rapid development; Logistics has accelerated the horizontal and vertical three-dimensional promotion, and has formed certain advantages in the field of road freight. There are more than 40 head cooperative enterprises, serving more than 7 million freight drivers, and the transaction amount during the reporting period is 85.489 billion yuan; Anjutong established in-depth cooperation with a number of mainstream service organizations based on the second-hand housing transaction scenario, with a transaction amount of 123.379 billion yuan during the reporting period; In terms of government affairs scenes, focusing on customs, courts, welfare lottery and other scenes, important breakthroughs have been achieved in many regions. (III) Financial market business The Bank’s financial market business strictly implements regulatory requirements, focuses on wealth management and value creation, and continuously improves the operational level and investment and trading ability of financial market business from the perspective of serving the real economy; Strengthen inter-bank franchise management, optimize asset structure, control debt cost by using market band, and promote financial inter-bank business to improve quality and efficiency; Give full play to the role of hosting business platform, increase the integration of resources and realize the strategic value of hosting business; Continue to enrich the colorful sunshine product system, actively participate in the pilot project of old-age financial management, and create sustainable value returns for investors. During the reporting period, the operating income was 15.395 billion yuan, an increase of 1.421 billion yuan or 10.17%, accounting for 19.62% of the bank’s operating income. 1. Treasury business Focusing on the financial origin, the Bank optimized the asset-liability structure according to the market situation, improved the refined operation level of funds, and ensured the safety of liquidity; Give full play to the advantages of forward-looking judgment in the market and continuously improve the investment and trading level of local and foreign currency bonds; In-depth service to the national strategy, help the development of the real economy, and focus on the allocation of government bonds, local bonds, policy financial bonds and high-grade credit bonds, involving rural revitalization, clean energy, common prosperity, and foreign trade security; Do a good job in product pedigree construction, actively promote interest rate and exchange rate valet business, and serve the safe-haven needs of entity enterprises; Increase the business linkage between the head office and branches, promote collaborative empowerment, and meet the needs of customers for comprehensive financial services; Bond underwriting was strengthened, and the underwriting ranking of national debt and securities debt remained at the forefront of joint-stock banks. At the end of the reporting period, the Bank’s self-operated bond portfolio was 1,148.397 billion yuan, accounting for 18.35% of the Bank’s assets, of which national bonds and local government bonds accounted for 45.40%. 2. Financial interbank business The Bank strengthened the exclusive management of the same industry, maintained a moderate business scale, and ensured compliance and steady operation; Actively carry out market research and judgment, accelerate the transformation of inter-bank operations, continuously optimize the asset structure, and promote the quality and efficiency of inter-bank business; Enhance the ability to support the real economy, take the national strategy as the guide, increase support for manufacturing, benefiting small and micro enterprises, green finance, rural revitalization and other fields, and conscientiously implement the requirements of steady growth; Explore diversified development paths, enrich the connotation of inter-bank operation, release the efficiency of inter-bank operation, extend the boundary of collaborative service, accelerate the business development in the fields of bond, custody, wealth management and factor market, start the construction of digital integrated service platform for inter-bank institutions, and create a new starting point for inter-bank operation of "building external ecology and realizing internal synergy"; Continue to pay attention to liquidity safety and help the bank’s liquidity management; Adhere to the risk bottom line, strictly control business risks, strengthen credit risk monitoring and early warning, and maintain stable asset quality. During the reporting period, the Bank has carried out business cooperation with 3,829 peer customers. At the end of the reporting period, the balance of interbank deposits was 442.953 billion yuan. 3. Asset management business Industry, government affairs, new industries and other four dimensions to provide integrated financial services, logistics, housing and other key businesses to achieve rapid development; Logistics has accelerated the horizontal and vertical three-dimensional promotion, and has formed certain advantages in the field of road freight. There are more than 40 head cooperative enterprises, serving more than 7 million freight drivers, and the transaction amount during the reporting period is 85.489 billion yuan; Anjutong established in-depth cooperation with a number of mainstream service organizations based on the second-hand housing transaction scenario, with a transaction amount of 123.379 billion yuan during the reporting period; In terms of government affairs scenes, focusing on customs, courts, welfare lottery and other scenes, important breakthroughs have been achieved in many regions. (III) Financial market business The Bank’s financial market business strictly implements regulatory requirements, focuses on wealth management and value creation, and continuously improves the operational level and investment and trading ability of financial market business from the perspective of serving the real economy; Strengthen inter-bank franchise management, optimize asset structure, control debt cost by using market band, and promote financial inter-bank business to improve quality and efficiency; Give full play to the role of hosting business platform, increase the integration of resources and realize the strategic value of hosting business; Continue to enrich the colorful sunshine product system, actively participate in the pilot project of old-age financial management, and create sustainable value returns for investors. During the reporting period, the operating income was 15.395 billion yuan, an increase of 1.421 billion yuan or 10.17%, accounting for 19.62% of the bank’s operating income. 1. Treasury business Focusing on the financial origin, the Bank optimized the asset-liability structure according to the market situation, improved the refined operation level of funds, and ensured the safety of liquidity; Give full play to the advantages of forward-looking judgment in the market and continuously improve the investment and trading level of local and foreign currency bonds; In-depth service to the national strategy, help the development of the real economy, and focus on the allocation of government bonds, local bonds, policy financial bonds and high-grade credit bonds, involving rural revitalization, clean energy, common prosperity, and foreign trade security; Do a good job in product pedigree construction, actively promote interest rate and exchange rate valet business, and serve the safe-haven needs of entity enterprises; Increase the business linkage between the head office and branches, promote collaborative empowerment, and meet the needs of customers for comprehensive financial services; Bond underwriting was strengthened, and the underwriting ranking of national debt and securities debt remained at the forefront of joint-stock banks. At the end of the reporting period, the Bank’s self-operated bond portfolio was 1,148.397 billion yuan, accounting for 18.35% of the Bank’s assets, of which national bonds and local government bonds accounted for 45.40%. 2. Financial interbank business The Bank strengthened the exclusive management of the same industry, maintained a moderate business scale, and ensured compliance and steady operation; Actively carry out market research and judgment, accelerate the transformation of inter-bank operations, continuously optimize the asset structure, and promote the quality and efficiency of inter-bank business; Enhance the ability to support the real economy, take the national strategy as the guide, increase support for manufacturing, benefiting small and micro enterprises, green finance, rural revitalization and other fields, and conscientiously implement the requirements of steady growth; Explore diversified development paths, enrich the connotation of inter-bank operation, release the efficiency of inter-bank operation, extend the boundary of collaborative service, accelerate the business development in the fields of bond, custody, wealth management and factor market, start the construction of digital integrated service platform for inter-bank institutions, and create a new starting point for inter-bank operation of "building external ecology and realizing internal synergy"; Continue to pay attention to liquidity safety and help the bank’s liquidity management; Adhere to the risk bottom line, strictly control business risks, strengthen credit risk monitoring and early warning, and maintain stable asset quality. During the reporting period, the Bank has carried out business cooperation with 3,829 peer customers. At the end of the reporting period, the balance of interbank deposits was 442.953 billion yuan. 3. Asset management business Focusing on the colorful sunshine smile curve and starting from the national strategy and customer needs, the Bank continuously enriched the net worth wealth management product system, and issued a number of wealth management products such as Pratt & Whitney, Common Prosperity, New Energy, Support for the Army and Regional Theme. Deeply participate in the pilot project of old-age financial management, develop a series of old-age products that meet the long-term old-age needs and life cycle characteristics, and provide diversified solutions for new citizens’ old-age services; Strengthen the systematic investment capacity building of production-research-investment, pay attention to the investment opportunities of new economy, new energy and new infrastructure, and the transformation and upgrading of traditional economy, traditional energy and traditional infrastructure to create sustainable value returns for investors; Adhere to compliance management, implement risk control responsibilities, improve the initiative and foresight of risk management and control, and escort high-quality development. At the end of the reporting period, the balance of consolidated non-guaranteed wealth management products of the Bank was RMB1,185.323 billion, an increase of RMB117.614 billion or 11.02% over the end of the previous year, of which the balance of net wealth management products was RMB1,141.141 billion, accounting for 96.27%. During the reporting period, non-guaranteed wealth management products issued a total of 2.08 trillion yuan. Topic 1: Sunshine Wealth Management Reaches a New Level In 2004, the Bank launched RMB wealth management products for the first time in China, and Sunshine Wealth Management began to enter the public’s field of vision, becoming an indispensable financial tool for residents’ wealth management, public asset allocation and real economy services. After 18 years of accumulation, precipitation and continuous optimization and upgrading, especially since the new asset management regulations in 2018, under the vigorous promotion of the net transformation of wealth management products and the reform of corporate system of wealth management business, Sunshine Wealth Management adheres to the new development concept, comprehensively strengthens capacity building, and achieves a new level of wealth management business with a new look. First, focus on the transformation of net worth, and the product system will reach a new level. Around the market demand and product characteristics, combined with the general trend of asset management and wealth management, upgrade and build a "colorful sunshine net worth product system"; Taking "fixed income+"as the main product line, the all-weather series products are launched. By arranging products with different risk and return characteristics, the characteristics of colorful sunshine product system are more obvious and the sunshine smile curve is more flexible. We launched the first digital RMB wealth management product in the market, the first infrastructure public offering REITs investment product, the first batch of pension wealth management products and direct equity investment products, and issued theme products such as common prosperity, rural revitalization, ESG, children’s education, concerted anti-epidemic, and military exclusivity to meet the diversified needs of different customer groups. At the end of the reporting period, the balance of net wealth management products of Sunshine Wealth Management was 1,141.141 billion yuan, accounting for 96.27% of the total scale of Sunshine Wealth Management. Second, focus on serving the real economy, and the investment and research ability will reach a new level. Promote the systematic investment structure of production, research and investment, actively integrate into the national development strategy, support the development of green economy, lay out key industries such as new energy, high-end manufacturing and consumption upgrading, support the financing of specialized and special new enterprises, deeply participate in public investment in REITs, and comprehensively help small and medium-sized enterprises and private enterprises to solve problems. During the reporting period, under the complicated internal and external environment, the withdrawal of Sunshine wealth management products was controllable and the fluctuation was small, showing good risk control ability and the ability to continuously create income for investors in the face of market fluctuations. Since 2004, Sunshine Financial Management has accumulated more than 410 billion yuan for investors. Third, focus on refined management and reach a new level of comprehensive risk management and control. Adhere to the principle of maximizing the interests of investors and prudent and steady operation, improve the risk management structure of three lines of defense, and optimize the control of credit risk, market risk, liquidity risk, concentration risk, portfolio risk and operational risk from four levels: macro, regional/industry, enterprise/project and mode; Adhere to the "combination+diversification" risk management strategy, establish an elastic combination of risks and benefits that can reflect market characteristics, ensure that the net value of wealth management products fluctuates within a reasonable range, and achieve the control goal of risk isolation, measurability and affordability; For the first time in the industry, the self-assessment of institutional money laundering risk was carried out and completed, and it was the first among the financial subsidiaries of joint-stock commercial banks to pass the internal control verification of international standards. Faced with new opportunities such as the redistribution of residents’ wealth, the construction of the second and third pillars of old-age care, digital construction, and the universal development of wealth management, Sunshine Financial Management will shoulder the responsibility, keep its initial heart and continue to create sustainable value returns for investors. 4. Asset custody business The Bank’s asset custody business adheres to value symbiosis, co-construction and sharing, gives full play to the role of "big platform", strengthens coordination and integration of resources in various sectors, and achieves effective growth in custody scale and custody income; In view of market changes, optimize product strategy, actively market innovative products such as public offering REITs and pension financing, broaden the types of trust custody business, strengthen annuity marketing, and lay out personal pension business; Establish business structure, sort out business sectors, strengthen system construction, optimize and improve product system and business system, and improve service capacity; Actively respond to the impact of the epidemic, start an emergency plan, and ensure the safe and continuous operation of custody. At the end of the reporting period, the after-tax income of the Bank’s custody business was 927 million yuan, and the custody scale was 7,578.448 billion yuan. X. Business Innovation The Bank gave full play to the advantages of the special fund for financial science and technology innovation, improved the innovation management mechanism, strengthened innovation guidance and incentives, and strived to build a new pattern of hyperbolic innovation and development. By the end of the reporting period, the Bank had established 78 innovative projects, of which 23 have achieved phased results. Cloud Payment, Logistics Link and inclusive finance Cloud System were awarded "China Digital inclusive finance Innovation Achievements in 2021", and Social Security Cloud Payment won the gold medal in the 5th Digital Finance Innovation Competition; The Sunshine Supervision Platform for Medical Consumables has innovated the government’s "liquidation+supervision" process, integrated SAAS service modules to provide a full range of online financial services for the platform, serving more than 3,000 medical institutions and pharmaceutical companies. XI. Information Technology The Bank deepened the construction of "123+N" digital banking development system. "One Smart Brain" continues to be empowered, with over 900 training algorithm models and over 2,300 customer tags; Realize the cross application of multimodal biometrics, covering more than 500 scenes. The "two major technology platforms" accelerate self-control. The cloud computing platform 3.0 (full-stack cloud) adopts the technical architecture of "dual-stack and multi-core in one stack", providing 35 kinds of cloud services in 9 categories, and the cloud rate on business application systems is close to 90%; The total data of big data platform exceeded 11PB, increasing by 23.23% compared with the end of last year, making it the first bank in China to realize centralized localization of data warehouse platform. The "three service capabilities" focus on mobility, openness and ecology, innovate new online service models and channels, and build a digital-driven ecological service system with Everbright characteristics. The "N Digital Famous Products" include 24 items such as cloud payment, free loan and logistics, providing convenient online financial services. Outstanding achievements in scientific and technological projects, and 16 patents or soft works were obtained during the reporting period; "Distributed ledger application specification" and "mobile financial client application software specification" were selected as the "leaders" list of enterprise standards in the financial field in 2021. Continue to increase investment in science and technology and the construction of talent team. At the end of the reporting period, the investment in science and technology was 2.138 billion yuan, an increase of 434 million yuan or 25.47%. There are 2,598 scientific and technical personnel in the Bank, an increase of 237 over the end of last year, accounting for 5.69% of the employees in the Bank. Build a 7*24-hour security operation command center, upgrade the intelligent operation and maintenance system, and carry out network security inspection, data security inspection, information system emergency drills and centralized disaster backup switching drills to ensure the stable operation of the information system and business continuity during the epidemic. Topic 2: Financial technology helps digital transformation of business. The Bank adheres to technology leadership, strengthens technology empowerment, implements technology stationing mechanism in corporate, retail and digital finance fields, and conducts two-way communication between technology and business positions in departments of the Head Office, promoting deep integration of technology and industry, responding to business needs promptly, and promoting digital transformation and development of business. First, empower corporate finance and improve the level of customer acquisition and living. Promote the project of "China-Taiwan for corporate customers and China-Taiwan for corporate marketing", and make efforts to build the customer system and scenario finance; Strengthen the application of data analysis, push 3.58 million pieces of information about potential customers, and open 32,000 accounts; Expand the "1+N" financial scenario of trading banks, and realize the access of large enterprise platforms, with a total of over 10,000 customers; Build products such as Sunshine "Fortune+"and cash management cloud to enhance online financial service capabilities. 2. Empowering retail finance, improving customer service and business ability, promoting the new generation of retail credit, retail customers in Taiwan, retail marketing in Taiwan and operation strategy in Taiwan, and optimizing operation tools and marketing models; A new generation of retail credit system will be launched to realize online application, automatic approval, intelligent risk control and fine management. Enrich the function of the mobile phone version of the personal account manager’s workbench to help business people "fight the epidemic" to work at home; Carry out off-line data backflow of retail financial cloud studio, and assist business personnel in customer group operation analysis; Improve the precision marketing ability, provide a list of 3 million intelligent marketing activities, and increase the number of wealth customers by 58,000. Third, empower digital finance and improve online channel service capabilities We will promote the open banking project and intelligent operation strategy project, continue to build a "wealth+openness" service ecosystem, and jointly build a private domain traffic operation ecosystem with cooperative institutions. Mobile banking has added a special edition for private banks and a special zone for digital RMB. The innovative R&D portal of branches is connected to 17 branches, and the service number platform is connected to 34 merchants. The customer rights platform supports many rights and interests activities such as logistics communication and the exchange of A-currency points for private banks. A total of 30 long-tail customer group data mining models have been built, and more than 7,800 new business strategies have been added. The Bank continues to promote the reform of financial technology system and optimize the governance structure of technology. It plans to rename the Information Technology Department as the Financial Technology Department, and set up a new data asset management department, a technology research and development center and an intelligent operation center. In the future, a "two-department and two-center" financial technology system will be formed, which will promote the capacity building of business, data and technology, further strengthen technology empowerment and accelerate the pace of digital transformation. XII. Investment Situation (1) Foreign equity investment At the end of the reporting period, the balance of the Bank’s long-term equity investment was 12.983 billion yuan, and other major equity investments were 1.0975 billion yuan. XIII. During the reporting period, there was no significant equity sale of the Bank. XIV. Major Holding Companies (I) Everbright Financial Leasing Co., Ltd. The company was established in May 2010, engaged in financial leasing business, registered in Wuhan City, Hubei Province, with a registered capital of 5.9 billion yuan. During the reporting period, it mainly focused on public utilities, infrastructure construction, urbanization and other areas of the national economy and people’s livelihood, as well as new materials, new energy, high-end manufacturing and other national strategic emerging industries, forming a certain brand advantage in the field of aviation equipment and vehicle equipment, and actively expanding the field of wind power, covering the whole country. At the end of the reporting period, the total assets were 125.548 billion yuan, the net assets were 12.311 billion yuan, and the net profit during the reporting period was 876 million yuan. (2) Everbright Financial Management Co., Ltd. Founded in September 2019, the company is engaged in asset management related businesses such as issuing public wealth management products, issuing private wealth management products, wealth management consultants and consulting. It is registered in Qingdao, Shandong Province with a registered capital of 5 billion yuan. During the reporting period, we continuously enriched the "colorful sunshine" smile curve, continuously improved product lines such as retail, private banking, institutional customization, and off-bank agency sales, deepened pension financing, improved the availability of new citizen services, focused on national key strategies, and continuously increased service support for the real economy and market players. At the end of the reporting period, the total assets under management amounted to 1,185.515 billion yuan, with total assets of 7.820 billion yuan and net assets of 7.352 billion yuan. During the reporting period, the net profit was 984 million yuan. (III) Beijing Sunshine Consumer Finance Co., Ltd. The company was established in August 2020, engaged in the business of issuing personal consumption loans, registered in Beijing, with a registered capital of 1 billion yuan. During the reporting period, we actively promoted the construction of our own scenes and the improvement of our independent risk control capabilities. At the end of the reporting period, total assets were 9.444 billion yuan, net assets were 1.144 billion yuan, and net profit was 132 million yuan during the reporting period. (4) Guangyin International Investment Co., Ltd. Founded in June 2015, the company is registered in Hong Kong with a registered capital of HK$ 2.6 billion, and holds business licenses for securities trading, securities consulting, financing consulting and asset management. During the reporting period, investment banking services such as sponsorship and underwriting, additional placement of listed companies and corporate refinancing were mainly carried out. At the end of the reporting period, the total assets were HK$ 11.022 billion and the net assets were HK$ 1.919 billion, with a loss of HK$ 149 million during the reporting period. (V) China Everbright Bank Co., Ltd. (Europe) The company was established in July 2017, registered in Luxembourg with a registered capital of 20 million euros. It is a fully licensed banking institution, and its main business includes taking deposits, issuing loans, issuing bills, issuing bonds and all other businesses that can be carried out as a credit institution according to Luxembourg laws. During the reporting period, we focused on risk participation and buying. At the end of the reporting period, the total assets were 77.89 million euros, the net assets were 14.33 million euros, and the net profit during the reporting period was 810,000 euros. (VI) Shaoshan Everbright Rural Bank Co., Ltd. This rural bank was established in September 2009 and engaged in commercial banking business such as deposits and loans. It was registered in Shaoshan City, Hunan Province with a registered capital of 150 million yuan. During the reporting period, "based on agriculture, rural areas and farmers, serving Shaoshan", we developed small and micro businesses, boosted county economy and explored financial support for rural economic development. At the end of the reporting period, the total assets were 856 million yuan, the net assets were 233 million yuan, and the net profit during the reporting period was 4.27 million yuan. (VII) Jiangsu Huai ‘an Everbright Rural Bank Co., Ltd. The rural bank was established in February 2013, engaged in commercial banking business such as deposits and loans, registered in Huai ‘an City, Jiangsu Province, with a registered capital of 100 million yuan. During the reporting period, it served agriculture, rural areas and farmers, expanded small and micro businesses and maintained steady development. At the end of the reporting period, the total assets were 1.131 billion yuan, the net assets were 142 million yuan, and the net profit during the reporting period was 5.03 million yuan. (VIII) Jiangxi Ruijin Everbright Rural Bank Co., Ltd. The rural bank was established in November 2018 and engaged in commercial banking business such as deposits and loans. It was registered in Ruijin City, Jiangxi Province with a registered capital of 150 million yuan. During the reporting period, we actively explored services for agriculture, rural areas and farmers and developed small and medium-sized micro-businesses. At the end of the reporting period, the total assets were 573 million yuan, the net assets were 175 million yuan, and the net profit during the reporting period was 7.18 million yuan. XV. Structured entities controlled by the Bank The structured products in which the Group enjoys interests but are not included in the scope of consolidated financial statements mainly include special asset management plans. XVI. Risk Management (A) credit risk management The Bank improved the consolidated risk management mechanism and unified management at home and abroad to ensure the effective transmission of risk policies and credit policies; Continue to strengthen the management of loan concentration and reasonably control the credit scale and proportion of a single enterprise; Carry out the risk monitoring breakthrough mechanism under the unified risk limit, include the risk customers with both general credit and interbank credit into the key monitoring scope, and implement the management of tying the mouth; Further improve the remote credit management mechanism; Promote the construction of automatic examination and approval management system and sunshine early warning platform, implement unified examination and approval management, establish a pre-trial consultation mechanism between China and Taiwan, and improve the accuracy of marketing and risk prevention and control; Strengthen the research management of credit industry and improve the pertinence of risk management policy guidance; Use big data, artificial intelligence and blockchain to transform traditional risk control technologies to improve the digital and intelligent level of risk management. The Bank actively serves market players, helps stabilize the economic market and promotes the steady growth of credit; Support major national strategies and do a good job in financing services in infrastructure construction and major projects; Support strategic emerging industries, advanced manufacturing industries and modern service industries, and increase medium and long-term loans for manufacturing industries, private enterprises and green industries; Implement the policy of delaying repayment of principal and supporting credit loans, increase financial relief efforts, and help stabilize the main body and stabilize employment; Separate the credit plan for small and micro enterprises and give special credit support to small and medium-sized enterprises; Strengthen financial services in the consumer sector and implement the policy of expanding domestic demand. The Bank accurately classifies assets and dynamically and objectively reflects the risk status; Adhere to a prudent and prudent provision policy, and make impairment measurement and provision in strict accordance with the new accounting standards for financial instruments; Improve the whole process management mechanism of asset quality, strengthen portfolio monitoring and penetrating risk monitoring of large credit customers, and strengthen risk prevention in key areas; Increase the disposal of non-performing loans and broaden the disposal channels. (2) Liquidity risk management The Bank adheres to the prudent concept of liquidity risk management, maintains an adequate and steady liquidity level and strictly adheres to the bottom line of liquidity safety by implementing proactive liquidity management strategies; Closely follow the changes of economic and financial situation at home and abroad, face the uncertain factors such as epidemic situation and geopolitical conflict, make forward-looking liquidity strategy planning, and strengthen diversified debt planning; Regularly carry out stress tests and emergency plan evaluation, strictly control liquidity risk limits, and achieve a balance between liquidity, safety and efficiency; Strengthen the construction of consolidated management and governance system, and enhance the ability of bank groups to resist risks. (3) Market risk management The Bank closely follows the international political and economic situation and domestic and foreign markets, conducts forward-looking judgment and management on interest rate risk, exchange rate risk and liquidity, and establishes a market risk management system covering all aspects of market risk identification, measurement, monitoring and control; Strengthen the management of market risk limit; Actively promote the implementation of the Basel III market risk new standard method consulting and system construction project. (4) Management of large risk exposure The Bank implemented the Management Measures for Large-scale Risk Exposure of Commercial Banks (China Banking and Insurance Regulatory Commission Order No.1 of 2018), continuously strengthened the management of large-scale risk exposure, carried out the measurement, monitoring and system optimization of large-scale risk exposure in an orderly manner, and effectively controlled the risk of customer concentration. During the reporting period, all quota indicators of the Bank’s large risk exposure were controlled within the regulatory scope. (V) Country-specific risk management The Bank incorporated country risk management into the comprehensive risk management system, established a country risk management system suitable for the bank’s risk status and complexity, regularly monitored country risk exposure, carried out stress testing, and formulated major risk handling procedures. At the end of the reporting period, the international ratings of the countries with country risk exposure of the Bank were all above investment grade, and the country risk reserve was fully accrued according to the regulatory requirements. (VI) Operational risk management The Bank strengthened the dynamic identification and monitoring of operational risk management, effectively used historical data, and continued to do a good job in risk prevention, problem tracking, risk disposal and rectification; Pay attention to the trend of supervision and punishment in real time, analyze and summarize the key violations, and draw inferences from other cases to prevent the delay; Carry out risk case collection activities, and strengthen warning notification and education and training on common risks in key areas; Continue to promote consulting management projects, deepen scientific and technological empowerment, and constantly improve operational risk management and measurement systems. (VII) Compliance risk management The Bank keeps track of changes in external laws and regulations and dynamically optimizes the construction of internal rules and regulations; Focus on the key areas of regulatory concern, strengthen the governance of repeated investigations and repeated crimes, and improve the quality and efficiency of compliance inspections; Improve the comprehensive evaluation index system of internal control and compliance management, strengthen the early warning and reporting management of compliance risks of consolidated institutions, and build a long-term mechanism for compliance management; Establish the management mechanism of corporate lawyers and improve the echelon construction of legal compliance talents; Improve the authorization management system and strengthen dynamic adjustment; Optimize the flight inspection mechanism, continuously carry out the investigation of abnormal capital transactions of employees, and be serious and accurate in accountability. (VIII) Reputation risk management The Bank attaches great importance to reputation risk management, and has incorporated reputation risk management into the overall risk management system according to the management idea of "early warning, in-depth judgment and proper disposal". Further clarify the main responsibility, strengthen the regular investigation of reputation risk hidden dangers, do a good job of pre-prevention and post-evaluation and closely integrate reputation risk management with business development and customer service to effectively safeguard the good reputation and brand image of banks. During the reporting period, the Bank did not have any major reputational risk events that caused serious harm to the bank’s reputation. (9) Money laundering risk management The Bank revised the anti-money laundering internal control system and improved the money laundering risk management system; Strengthen the construction of anti-money laundering talent team; Carry out the risk assessment of money laundering of legal person institutions; Investigate the money laundering risks of digital RMB and correspondent banks; Strengthen the control of high-risk customers; Optimize the function of anti-money laundering system, improve the suspicious transaction monitoring model, and develop a new generation of anti-money laundering list monitoring system; Strengthen sanctions compliance and management of overseas institutions, strictly fulfill international obligations and fully implement relevant resolutions. (X) Credit policy in key areas The Bank complied with the regulatory guidance, increased credit support in the fields of coal, coal-fired electricity and hydropower, and ensured energy security and the stability of industrial chain and supply chain; Support the nuclear capacity increase, production expansion and new production projects of large coal enterprises in major coal producing areas such as Shanxi, Shaanxi and Mongolia, and promote the coal mines with potential for increasing production to release production capacity as soon as possible; Support the ultra-low emission reconstruction projects of large coal-fired power enterprises in areas with abundant coal resources and convenient transportation to ensure the reasonable financing needs of coal-fired power enterprises; Support coal production enterprises to save energy and reduce carbon, transform and upgrade and green development. The Bank attaches great importance to risk prevention in the real estate sector, adheres to the positioning of "housing and not speculating", implements the regulatory requirements of "two concentrations" and reasonably controls the total amount of real estate loans. Adhere to the management of customer list system for public business, and give priority to the selection of high-quality leading enterprises for cooperation; Strict project compliance management, the implementation of funds closed regulatory requirements. Retail business develops personal mortgage loans around core areas and projects, and implements differentiated mortgage and pledge rate management according to regional and project conditions; Do a good job in the access management of real estate projects, and choose developer projects with strong business ability and good financial status. Support the work of "ensuring the delivery of buildings, people’s livelihood and stability", handle risks according to the principles of marketization and rule of law, and resolve stock risks; According to the investigation results of risky buildings, the balance of overdue mortgage loans with the risk of "guaranteeing the property" is small, and the overall risk is controllable. Since the beginning of this year, the frequent spread of epidemic has caused a serious impact on the stable operation of the economy and greatly affected the consumption of residents.Credit card business development and asset quality are facing challenges. The Bank strengthened model transformation, focused on desirable customers, built a customer service ecosystem, and promoted customer structure optimization; Pay attention to the consumer service attribute of credit card business and improve the quality and efficiency of Huimin convenience service. Strengthen the construction of intelligent risk control, enhance the ability of customer risk and value identification, and provide high matching financial services; From the perspective of optimizing risk portfolio management, we will promote the optimal allocation of quotas and pricing, and enhance customer experience and contribution. Increase risk disposal, enrich the dimension of customer risk judgment, monitor the risk of existing credit card business, promote the optimization of collection management mechanism, improve the ability of independent collection and digital collection, and maintain the relative stability of credit card business assets quality. With the recovery of future economic growth and the improvement of consumption expectations, credit card business will usher in a higher quality, more standardized and healthier development stage. XVII. Future development prospect (a) the completion of the business plan The Bank actively implemented regulatory requirements, made overall plans for epidemic prevention and control and business development, steadily improved its asset-liability business, and achieved business results in line with expectations, maintaining a good momentum of steady progress. (II) Possible Risks and Countermeasures From the perspective of the international environment, the changes in the past 100 years and the epidemic in the century are intertwined, the world economic recovery is struggling, and global development has suffered serious setbacks. Some important industrial chains and supply chains have been artificially disturbed, commodity prices have fluctuated at a high level, global inflationary pressures have remained high, international financial markets have continued to be turbulent, and the momentum of world economic recovery has been weakening. From the domestic situation, China’s economic development and epidemic prevention and control have maintained a leading position in the world, with strong economic resilience, and the long-term positive fundamentals have not changed. At the same time, China’s economic development is also facing three pressures: demand contraction, supply shock and expected weakening. Competition in the banking industry will be more intense, financial technology will develop rapidly, and capital constraints will be tighter. The traditional business philosophy and model of commercial banks will face great challenges. Adhering to the strategic vision of "building a first-class wealth management bank", the Bank has firmly implemented the central decision-making and actively supported the strategy of serving the country. Second, persist in optimizing the business structure and promote high-quality development; The third is to persist in innovation-driven and strengthen scientific and technological empowerment; The fourth is to optimize customer service and safeguard consumers’ rights and interests; The fifth is to adhere to the bottom line thinking and resolutely prevent and resolve business risks.
