#1S中国民生银行 CHINA MINSHENG BANK ---------- China Minsheng Banking Corp., Ltd. 2019 Annual Results Announcement S March 2020 H 2326888 8888 8888 VISA --------- ■#2Disclaimer S 中国民生银行 CHINA MINSHENG BANK This presentation contains forward-looking statements that involve risks and uncertainties. These statements are generally indicated by the use of forward- looking word such as believe, expect, anticipate, estimate, plan, predict, target, may, will or other similar word that express indications of actions or results of expectations or actions that may or are expected to occur in the future. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this presentation. These forward-looking statements are based on our own information and information from other sources we believe to be reliable. Our actual results may be materially less favorable than those expressed or implied by these forward-looking statements which could affect the share price of our shares. 1#3Agenda II III Overview Operational Performance Outlook S 中国民生銀行 CHINA MINSHENG BANK 2#4Overview of business S 中国民生银行 CHINA MINSHENG BANK During 2019, the Group took proactive measures in coping with the adjustments and changes in the internal and external operating environment and continued to promote the three major strategic positioning of becoming "a bank for the non-state-owned enterprises ("NSOES"), a fintech-based bank and a bank of comprehensive services". Operating efficiency improved steadily with continuous optimization of operation structure. The Company has seen more technology and innovations introduction, more effective risk prevention, stable asset quality and sound operation across business lines 1 2 3 4 Significant improvement in operating efficiency with steady growth in profits Operating efficiency continued to increase: operating income was RMB177,745 million, representing an increase of 15.30% yoy; net profit attributable to equity shareholders of the Company was RMB53,819 million, representing an increase of 6.94% yoy; net interest margin (restated) was 2.11%, representing an increase of 0.24ppts yoy; cost-to-income ratio was 27.14%1, representing a decrease of 3.44ppts yoy Returns to shareholders remained steady: ROAA was 0.87%1, representing an increase of 0.02ppts yoy Asset and liability scale maintained coordinated growth: total assets amounted to RMB6,681,841 million, representing an increase of 11.46% as compared with the end of the previous year; total loans and advances to customers amounted to RMB3,487,601 million, representing an increase of 14.10% as compared with the end of the previous year; total deposits from customers amounted to RMB3,604,088 million, representing an increase of 13.79% as compared with the end of the previous year Focus on NSOEs and continuous improvement in comprehensive services Implemented strategies to support NSOEs and developed and promoted services for niche NSOE customers: By the end of reporting period, strategic NSOE customers amounted to 650, representing an increase of 83.62% as compared with the end of the previous year; daily average deposit amounted to RMB359,855 million, representing an increase of 86.20% as compared with the end of the previous year; total loans amounted to RMB 436,468 million, representing an increase of 113.00% as compared with the end of the previous year Breakthrough in innovation for SME customers and enhanced value of customers of small business finance: During the reporting period, daily average deposits of SMEs amounted to RMB594,855 million, representing an increase of 12.83% as compared with the end of the previous year Business development with technologies and achievements in digitalised transformation Transformed business models with technologies and steady progress of digitalised transformation: As at the end of the reporting period, public online platform users of the Company amounted to 2,310.3 thousand, representing an increase of 27.50% as compared with the end of the previous year; retail online platform users amounted to 70,411.8 thousand, representing an increase of 18.74% as compared with the end of the previous year; total number of direct bank customers was 29,203 thousand Coordinated business development with continuous enhancement in comprehensive service capabilities Strengthened cross-selling among customers and products and enhanced synergy between the parent company and subsidiaries: during the reporting period, total operating income of subsidiaries amounted to RMB6, 141 million, representing an increase of 9.45% yoy; net profit of subsidiaries amounted to RMB2,427 million and net profit attributable to shareholders of the Bank amounted to RMB1,331 million, with an increase of 100.75% yoy 5 6 Strengthened risk prevention and control and maintained generally stable asset quality The NPL ratio was 1.56%, representing a decrease of 0.20% yoy; the allowance to NPLs and the allowance to total loans were 155.50% and 2.43%, representing increases of 21.45 ppts and 0.07 ppts respectively as compared with the end of the previous year Expanded channels to replenish capital and strengthened capital capabilities Actively grasped market opportunities and policy windows to replenish capital and successfully issued Tier-2 capital bonds of RMB40 billion, undated capital bonds of RMB40 billion and preference shares of RMB20 billion At the end of the reporting period, net capital base amounted to RMB673,741 million 1, representing an increase of 23.11% yoy; capital adequacy ratio was 13.17%, representing an increase of 1.42 ppts as compared with the end of the previous year Note: 1 Group level E3#5Continuous improvement in profitability and stable shareholder return Net profit attributable to equity shareholders of the Company S 中国民生银行 CHINA MINSHENG BANK Return on weighted average equity (RMB million) Growth rate = 6.94% 60,000 53,819 20.0% 50,327 Down by 0.54 ppts 50,000 12.94% 40,000 12.40% 30,000 10.0% 20,000 10,000 0 2018 0.0% 2019 2018 2019 Basic earnings per share Return on average assets (RMB) 1.50 Growth rate=7.02% Up by 0.02 ppts 1.0% 1.22 0.85% 0.87% 1.14 1.20 0.90 0.5% 0.60 0.30 0.00 0.0% 2018 2019 2018 2019 Source: Company's Annual Report 4#6200,000 Growth rate: = 15.30 % Stable revenue growth and improved operation efficiency Operating income (RMB million) S 中国民生银行 CHINA MINSHENG BANK Net interest margin¹ Up by 0.24 ppts 2.40% 2.11% 177,745 2.00% 1.87% 1.60% 160,000 154,161 1.20% 0.80% 0.40% 120,000 0.00% 80,000 40,000 0 2018 Source: Company's Annual Report Note: 1 Restated net interest margin 2 2018 Cost-to-income ratio² Down by 3.44 ppts 2019 40.0% 30.58% 30.0% 27.14% 20.0% 10.0% 0.0% 2019 2018 2019 Cost-to-income ratio = (operating and other operating expenses - tax and surcharges)/operating income 5#7Proactive adjustment in business size and continuous optimisation of business structure Total assets and total liabilities Total assets up by 11.46% Total liabilities up by 10.55% S 中国民生银行 CHINA MINSHENG BANK Total loans and advances to customers and deposits from customers (RMB million) Loans and advances to customers up by 14.10% (RMB million) 8,000,000 7,000,000 6,000,000 5,994,822 5,563,821 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 31 December 2018 31 December 2019 Total assets Total liabilities 6,681,841 4,000,000 6,151,012 3,056,746 3,167,292 Deposits from customers up by 13.79% 3,487,601 3,604,088 3,000,000 2,000,000 1,000,000 0 31 December 2018 31 December 2019 Loans and advances to customers Deposits from customers Net investment in trading and banking books Total debt securities issued (RMB million) Growth rate = 10.88% (RMB million) 2,400,000 2,184,305 1,000,000 Growth rate = 21.16% 1,970,017 817,225 800,000 1,800,000 674,523 600,000 1,200,000 400,000 600,000 200,000 0 0 31 December 2018 31 December 2019 31 December 2018 31 December 2019 As % of total assets 32.86% 32.69% As % of total liabilities 12.12% 13.29% Source: Company's Annual Report HELL 6#8Continually enhanced risk management and stable asset quality Enhanced overall risk management S 中国民生银行 CHINA MINSHENG BANK Established an overall risk management system to enhance risk management Enhanced money-laundering risk management system to lay a sound foundation for business development and reform and transformation Further optimised internal control system and refined the operation mechanism of the internal control committee Revised collaborative administrative measures for audit, risk management and internal control and compliance management departments and effectively promoted collaboration of these departments on a day-to-day basis Established and promoted a specialised operation and management mechanism for distressed assets to strengthen the efficiency of disposal of distressed assets; allocated additional resources to the collection and disposal of existing problem loans and non-performing assets. The assets quality remained generally stable and the allowance to NPLs has gradually improved Strengthened the internal control and compliance guidance and management of affiliated institutions to ensure the compliant operation of Minsheng Bank and its affiliated institutions NPL ratio Down by 20 bps 2.0% 1.76% 1.56% 1.5% 1.0% 0.5% 0.0% 31 December 2018 31 December 2019 Allowance to NPLs Up by 21.45 ppts 155.50% 134.05% 100.0% 200.0% 0.0% 31 December 2019 31 December 2019 Allowance to total loans Up by 7 bps 3.0% 2.36% 2.43% 2.0% 1.0% 0.0% 31 December 2018 31 December 2019 Source: Company's Annual Report 7#9Capital adequacy ratio remains sound with improved liquidity 中国民生银行 CHINA MINSHENG BANK S Core tier-one capital adequacy ratio¹ Tier-one capital adequacy ratio¹ Capital adequacy ratio¹ Down by 4 bps Up by 112 bps 10.0% 8.93% 8.89% 12.0% 15.0% 10.28% 8.0% 10.0% 9.16% 11.75% Up by 142 bps 13.17% 12.0% 8.0% 6.0% 9.0% 6.0% 4.0% 6.0% 4.0% 2.0% 3.0% 2.0% 0.0% 0.0% 0.0% 31 December 2018 31 December 2019 31 December 2018 31 December 2019 31 December 2018 31 December 2019 Total equity to total assets ratio Leverage ratio 2 Up by 75 bps Liquidity ratio 1.3 10.0% 8.0% Up by 83 bps 75.0% 6.87% Up by 242 bps 7.94% 8.0% 7.19% 6.04% 6.0% 51.64% 54.06% 6.0% 50.0% 4.0% 4.0% 25.0% 2.0% 2.0% 0.0% 0.0% 0.0% 31 December 2018 31 December 2019 31 December 2018 31 December 2019 31 December 2018 31 December 2019 Source: Note: Company's Annual Report 1 3 23 Calculated in accordance with the Capital Rules for Commercial Banks (Provisional) («LR†††¤()») and other relevant regulatory provisions Group level Bank standalone 8#10Agenda II III Overview Operational Performance Outlook S 中国民生銀行 CHINA MINSHENG BANK 6#11Strengthened corporate banking business with further improvement in professional abilities S 中国民生银行 CHINA MINSHENG BANK In active response to the new changes and challenges in market and regulatory environment, the Company captured the crucial opportunities arising from the shift in growth drivers of corporate banking business and adopted reform and business development as two major strategies, so as to promote development through transformation. It also pressed ahead with the NSOE strategy, strengthened segmented management of different customer groups, improved the quality and structure of liabilities and assets, accelerated product innovation and upgrading as well as facilitated the transformation from an extensive style to a capital- saving business model. As a result, the corporate banking business was continuously expanded Total corporate loans¹ (RMB million) Number of domestic corporate customers with deposits of the Company1 (Thousands) Growth rate=13.67% Growth rate =11.09% 2,400,000 2,071,935 1,822,835 1,400 1,200 1,297.4 1,167.9 1,800,000 1,000 1,200,000 800 600 600,000 400 200 0 0 31 December 2018 31 December 2019 31 December 2018 31 December 2019 Further adoption of new investment banking business framework Effectively promoted investment banking business system reform and further implemented new investment banking framework Source: Note: 1 Achievements have been witnessed in key areas with the establishment of a fundamental customer base and strengthened management based on project classifications Ranked No.9 among lead underwriters in the interbank bond market¹ In respect of asset securitisation, the Company introduced innovative products and successfully launched the first consolidated fund units securitisation project for enterprises owned by the central government/state- owned enterprises in China, the first utility corridor PPP + ABS project in China and the first scalable REITs project in China Company's Annual Report Bank standalone Transformation and upgrading of corporate banking business driven by transaction banking Focused on the financial demands from daily production and operation of customers, improved and optimised the new transaction banking service solutions Modified settlement and cash management business according to changes in customers' demands and further enriched its product offering International business maintained sound development with remarkable improvements in market competitiveness Continuous upgrading of digital service capabilities to effectively improve customers' experience HERE 10#12Rapid growth of retail banking business and customer base S 中国民生银行 CHINA MINSHENG BANK In accordance with the strategic deployment of reform and transformation for its retail banking, the Company implemented reform and transformation measures in an orderly manner. With the successful implementation of various reforms, retail banking business recorded rapid income growth and high-quality development Net operating income from retail business as % of operating income of the Company1 Balance of retail loans¹ Up by 152 bps (RMB million) 1,600,000 Growth rate=14.72% 37.63% 39.15% 1,397,216 1,217,894 1,200,000 800,000 400,000 50% 40% 30% 20% 10% 0% 2018 Financial assets of retail customers¹ 2019 0 31 December 2018 31 December 2019 # of retail customers with deposits¹ (RMB million) Growth rate = 11.32% (Thousands) Growth rate = 9.03% 2,000,000 1,836,975 50,000 1,650,120 1,600,000 38,394.5 41,859.7 40,000 1,200,000 30,000 800,000 20,000 400,000 10,000 0 31 December 2018 0 31 December 2019 31 December 2018 31 December 2019 Source: Note: 1 Company's Annual Report Bank standalone HERE 11#13Rapid expansion in small business finance activities 中国民生银行 with further promotion of new business model SPERER CHINA MINSHENG BANK The Company further promoted the new business model of small business finance, enhanced product and service innovation, consolidated customer base and further enhanced comprehensive financial services. Loans increased significantly and sources of income were diversified. Fintech support was strengthened to improve smart services and digital management Loans to small and micro enterprises¹ Total savings deposits of the community (small business) outlets1 (RMB million) Growth rate = 9.25% (RMB million) 500,000 444,560 120,000.0 406,938 400,000 100,000.0 Growth rate = 31.05% 103,179 78,732 80,000.0 300,000 60,000.0 200,000 40,000.0 100,000 20,000.0 0 0.0 31 December 2018 31 December 2019 31 December 2018 31 December 2019 (RMB million) 300,000 Balance of financial assets of community outlets¹ 11.96% Growth rate = # of customers of community outlets¹ (Thousands) Growth rate = 6.85% 284,060 8,000 6,267.2 6,696.5 253,706 6,000 250,000 4,000 2,000 200,000 31 December 2018 31 December 2019 Source: Note: 1 Company's Annual Report Bank standalone 0 31 December 2018 31 December 2019 12#14Innovations in credit card business and deepening transformation of private banking business S 中国民生银行 CHINA MINSHENG BANK The Company targeted at millennial customers and took into account of features and preferences of the customer group in brand positioning, product design, business channels and scenarios. The private banking business of the Company was further reformed with enhanced efficiency as a result of the "three reforms" in respect of the classified customer management system for wealth management, comprehensive services for entrepreneurs and the cooperation between personal and corporate banking businesses, and the product system was in compliance with the new regulations on asset management. All major indicators achieved historical breakthroughs Transaction volume of credit card business¹ Balance of accounts receivable from credit card business¹ (RMB million) (RMB million) 3,000,000 Growth rate = 12.16% 500,000 Growth rate = 13.38% 2,480,530 445,881 2,500,000 450,000 2,211,625 400,000 393,249 2,000,000 350,000 300,000 1,500,000 250,000 1,000,000 200,000 150,000 500,000 100,000 50,000 0 2018 # of credit cards issued¹ (Thousands) Growth rate = 15.96% 70,000 60,000 49,547 50,000 40,000 30,000 20,000 10,000 0 31 December 2018 2019 31 December 2018 31 December 2019 # of eligible private banking customers Growth rate = 14.28% 25,000 57,456 21,998 19,250 20,000 15,000 10,000 5,000 0 31 December 2019 31 December 2018 31 December 2019 Company's Annual Report Source: Note: 1 Bank standalone Represents the number of eligible private banking customers with financial assets of more than RMB8 million TEEE 13#15Optimised financial markets business with continuous improvement in profitability S 中国民生银行 CHINA MINSHENG BANK The interbank business continued to be dually driven by customer groups and products. The Company further strengthened interbank customer group management and optimised business structure, and achieved stable and healthy development with sound risk management and control Balance of assets under custody¹ (RMB trillion) Transaction volume of domestic spot settlement of the Company1 (USD million) (USD million) Transaction volume of RMB foreign exchange options¹ 12 Growth rate=14.88% 800,000 10 8 8.7 10.0 + Growth rate = 44.71% stable 120,000 736,758 112,308 700,000 112,819 6 600,000 509,143 500,000 400,000 100,000 80,000 60,000 4 2 300,000 200,000 100,000 40,000 20,000 0 0 0 31 December 2018 31 December 2019 2018 2019 2018 2019 Source: Note: 1 Company's Annual Report Bank standalone 14#16Promoting Internet finance business to build an Internet finance ecosystem S 中国民生银行 CHINA MINSHENG BANK In accordance with the strategic positioning of "a fintech-based bank", the Company focused on the pain points in customer needs, fully leveraged emerging financial technologies, proactively explored new internet finance development models and continuously innovated platforms, products and services of direct bank, retail internet finance and online payment. as a result, customer experience was improved while the Company maintained first-tier status among commercial banks in terms of market share # of direct banking customers¹ (Thousands) # of mobile payment transactions via debit cards 1 (Thousands) 32,000 28,000 Growth rate=52.33% 29,203.0 24,000 19,171.3 20,000 16,000 12,000 8,000 4,000 31 December 2018 31 December 2019 80,000 40,000 Growth rate=385.56% 63,253 0 31 December 2018 31 December 2019 # of retail online platform customers¹ (Thousands) Growth rate=18.74% # of corporate users of online platform¹ (Thousands) 80,000 70,411.8 70,000 59,299.8 60,000 50,000 40,000 3,000 1,812.0 1,500 Growth rate=27.50% 2,310.3 30,000 20,000 10,000 0 0 31 December 2018 31 December 2019 31 December 2018 31 December 2019 Source: Company's Annual Report Note: 1 Bank standalone HEE 15#17Promotion of international development strategy and stable expansion of global network S 中国民生银行 CHINA MINSHENG BANK The Hong Kong Branch actively followed the Company's development strategy, implemented reform and transformation as well as the three-year development plan. Capitalising on the cross-border synergy with the Head Office and focusing on the strategic opportunities arising from the "Guangdong-Hong Kong-Macau Greater Bay Area" and others, the Hong Kong Branch served as an important overseas business platform of the Company and recorded steady business growth and continuous improvement in efficiency Steady business growth of the Hong Kong Branch with continuous improvement in efficiency Capitalising on the cross-border synergy with the Head Office and grasping the strategic opportunities arising from the "Guangdong-Hong Kong-Macau Greater Bay Area" and others, the Hong Kong Branch focused on providing professional cross-border financial solutions for quality customers and strengthened the professional services in capital market and new economic sectors The Hong Kong Branch focused on the capital market, expanded its featured business and recorded a remarkable income from investment banking businesses, such as syndicated loans, loans for merger and acquisition and structured financing. Cooperation with State Power Investment Corporation, China Duty Free International Limited and Mutual Fund of Greater Bay Area and other enterprises with high influence in the industry were successfully launched, giving full play to the overseas business platform Individual business of the Hong Kong Branch continued to grow rapidly. The number of customers who had opened accounts for personal wealth management exceeded 57,600, with total deposits of HKD4, 120 million. The sales of "Minsheng Insurance", a high-end retail banking product series, recorded 440 transactions with the total insurance premium amount exceeding HKD10 billion, effectively driving the growth of high-end private banking customer base Bond investment balance of Hong Kong Branch # of customers who had opened accounts for personal wealth management with Hong Kong Branch (HKD million) Growth rate=15.30% 70,000 63,031 60,000 54,668 50,000 40,000 30,000 20,000 10,000 31 December 2018 31 December 2019 Source: Company's Annual Report (Thousands) 70 60 50 40.0 + 40 30 20 10 57.6+ 2018 2019 16#18Agenda II ווו Overview Operational Performance Outlook S 中国民生銀行 CHINA MINSHENG BANK 17#19Prospects S 中国民生银行 CHINA MINSHENG BANK In the coming three years, the Company will commit to becoming a benchmark bank with distinctive features, increased value and continuous innovation. It will also strategically position itself as a bank for NSOES, a fintech-based bank and a bank with comprehensive services A bank for NSOES A fintech-based bank A bank with comprehensive services Focus on large- and medium-size high-quality NSOEs, enterprises along the upstream and downstream of the supply chain of core enterprises and small and micro enterprises Serve as a financial butler of NSOES and their senior management with integrated, customised and comprehensive financial services and strive to become the host bank and preferred bank of NSOEs Vigorously develop direct banking, online small business loans and credit card online customer acquisition to enhance fintech capabilities Enhance its scientific and technological strength to promote technology-empowered businesses and build an Internet banking business with the best customer experience in China Expedite its business layout diversification and establish cross-selling and business coordination mechanisms under its "One Minsheng" strategy Provide its customers with comprehensive financial services with the integration of commercial, investment and transaction banking and the combination of capital, intelligence and commerce Prioritise its customers and provide integrated and comprehensive services through the cooperation of front, middle and back offices • • • "3+3+5" strategy deployment Strengthen three primary businesses, namely direct banking, small business finance and investment banking Consolidate three leading businesses, namely credit card, supply chain finance and asset management Enhance five major business segments, namely corporate finance, retail finance, financial markets, Internet finance and comprehensive operation Transform into a benchmark bank of the industry principally engaging in digitalised, light-capital and comprehensive business in addition to the traditional business Make greater reform and innovation efforts, revitalise the structure by innovative mechanisms and systems of major management aspects, and establish a customer-oriented operation and management system and extensively enhance professional management to facilitate and support the implementation of business development strategies HERE 18#202019 2018 Growth (%) 中国民生银行 Appendix: Overview of key financial indicators STERE Income statement highlights (RMB million, except per share data) CHINA MINSHENG BANK Balance sheet highlights (RMB million) 31 Dec 2019 31 Dec 1 2018 I Growth (%) Operating income 177,745 154,161 ↑ 15.30 Total assets 6,681,841 5,994,822 ↑ 11.46 Of which: Net interest income 97,943 76,680 ↑ 27.73 Of which: Total loans and advances to customers 3,487,601 3,056,746 14.10 Net non-interest income 79,802 77,4811 3.001 Total liabilities 6,151,012 5,563,821 ↑ 10.55 Profit before income tax 64,738 58,785 ↑ 10.13 Net profit attributable to equity shareholders of the Company Of which: Deposits from customers 3,604,088 3,167,292 13.79 53,819 50,327 ↑ 6.94 Basic earnings per share (RMB) 1.22 1.141 ↑ Total equity attributable to equity shareholders of the 7.02 Company 518,845 420,074 ↑ 23.51 31 Dec 31 Dec Key profitability indicators (%) 2019 2018 Change (ppt) | Return on average assets 0.87 0.85 ↑ 0.021 Assets quality indicators (%) NPL ratio 2019 2018 Change (ppt) 1.56 1.76 -0.20 Return on weighted average Allowance to total loans 2.43 2.36 0.07 12.40 12.94 -0.54 equity Capital adequacy ratio indicators (%)² Net interest margin (restated) 2.11 1.87 ↑ 0.24 Core tier-one capital 8.89 8.93 -0.04 adequacy ratio Net fee and commission income 29.42 31.22 -1.80 to operating income ratio Tier-one capital adequacy ratio 10.28 9.16 ↑ 1.12 Cost-to-income ratio¹ 27.14 30.58 -3.44 Capital adequacy ratio 13.17 11.75 ↑ 1.42 Source: Company's Annual Report Note: 1 2 Cost-to-income ratio = (operating and other operating expenses - tax and surcharges) / operating income Calculated in accordance with the Capital Rules for Commercial Banks (Provisional) and other relevant regulatory provisions d in accordance with the HEER 19#21Thank you! S 中国民生银行 CHINA MINSHENG BANK 20