China Zheshang Bank Co., Ltd . (2016.HK)

1 China Zheshang bank Co., Ltd. ( ). 2016 Interim Results Announcement 22 August 2016. Disclaimer This document is prepared by China Zheshang bank Co., Ltd. (the bank ) without independent verification. The information herein does not make any representation or guarantee explicitly or implicitly, therefore you shall not rely on the forward- looking statements in this document. The bank shall not be responsible for any errors, misrepresentation or omission or any direct or indirect loss derived from using or relying on this document or otherwise related to this document. For more financial information regarding the bank , please refer to the latest interim report of the bank . Table of Contents 1. Overview of the bank 2. Financial Performance 3. Business Development 4. Risk Management 5. Outlook 1. Overview of the bank A nationwide joint-stock commercial bank adopting a full-asset class operation strategy One of the 12 nationwide joint-stock commercial banks, headquartered in Hangzhou, Zhejiang Bohai Rim Area 24 outlets Including Beijing, Tianjing, Shenyang and Jinan 144 outlets in 13 provinces and provincial level Central and Western branches Area municipalities in the PRC have been established 24 outlets Including Chongqing, as of June 30, 2016, covering the Yangtze River Chengdu, Xi'an, Lanzhou and Wuhan branches Delta Area, the Bohai Rim Area, the Pearl River Delta Area and certain other areas in Central Liaoning and Western China Beijing Tianjin Yangtze River Shandong Gansu Delta Area Actively developing our Hong Kong branch in Shaanxi Jiangsu 89 outlets Shanghai Including Hangzhou.

2 Order to increase our international presence Sichuan Chongqing Hubei Ningbo, Wenzhou, Zhejiang Shaoxing, Yiwu, Zhoushan, Adhere to the overall goal of two most and the Pearl River Delta Guangdong Shanghai, Nanjing Hong Kong and Suzhou Area branches full-asset class operation strategy 7 outlets Two International Including Guangzhou and Shenzhen branches presence Currently developing our Most competitive nationwide joint-stock commercial bank Hong Kong branch Most Most important financial platform in Zhejiang 2. Overview of the bank Significant improvement in economic benefits, rapid increase in business scale, and good asset quality Significant improvement in economic benefits Operating Income Net Profit Attributable to Shareholders of the Company (RMB100 million) (RMB100 million). 2015 1H 2016 1H 2015 1H 2016 1H. Rapid increase of business scale Solid asset quality (RMB100 million).

3 Total Assets Non-performing Loan Ratio 11,816. 10,317. 2015 2016 1H 2015 2016 1H. 3. Overview of the bank Develop each business segment comprehensively, and enhance brand recognition and social reputation continuously Comprehensive development of business segments Award-winning bank Ranked 117 among the Top Corporate business Inter- bank financial 1000 World Banks in terms of total assets, up 28 places segment segment Providing corporate Providing inter- bank A credit rating of AAA by CCXI. liquidity services and full- trading services value- chain services Best bank of Investment Banking Full-asset Best Bond Underwriting bank Best Brand for Wealth class Management Products offered by operation a bank Small enterprise business Personal business Best Corporate Liquidity Service bank Providing customized Providing personal wealth services for small and management micro enterprises Excellent Financial Service Team for Small and Micro Enterprises 4.

4 Key Financial Indicators Indicator of operating Scale indicators performance 2016 1H 2015 1H Growth rate 2016 1H 2015 Growth rate (RMB100 million). (RMB100 million). Operating income Total assets 11,816 10,317 Net interest income Total loans and 4,106 3,454 Net non-interest advances to customers income Total liabilities 11,185 9,820 Operating expenses Impairment losses on Customer deposits 6,446 5,160. assets Net profit attributable to shareholders of the Shareholders' equity 631 497 Company Changes in Changes in Profitability Asset quality 2016 1H 2015 1H percentage 2016 1H 2015 percentage indicators indicators point point Return on average total Non-performing loan * * Flat assets ratio Return on average Allowance to total loans * * equity Allowance to non- performing loans Net interest margin * * Capital adequacy Changes in 2016 1H 2015.

5 Indicators percentage point Net interest spread * * Core tier-one capital adequacy ratio Proportion of net non- interest income Capital adequacy ratio Note: *represents an annualized ratio 5. Table of Contents 1. Overview of the bank 2. Financial Performance 3. Business Development 4. Risk Management 5. Outlook 6. Financial Performance Capital replenishment from both internal and external sources, 1. capital adequacy level on the rise Rapid growth in business scale, with gradually optimized 2. structure of assets and liabilities Adjusted business structure with steadily increasing net 3. interest income Diversified sources of net non-interest income, with 4. increasing aggregate amount and proportion Prudent provisions for impairment losses on assets and 5. enhancement of risk resistance capability Effective control on expenses and reasonable level of cost-to- 6.

6 Income ratio Rapid growth in net profit and ongoing improvement in 7. operating benefits 8 Cautious asset classification and good asset quality 7. 1 Capital replenishment from both internal and external sources, capital adequacy level on the rise Net capital base increased rapidly Asset density remained lower level (RMB100 million). 635 732. 502 593. December 31, 2015. 2015 12 31 June 30, 2016. 2016 6 30 June 30, 2015. 2015 6 30 December 31, 2015. 2015 12 31 June 30, 2016. 2016 6 30 . / Note: Asset density is risk-weighted assets divided by Net core tier-one capital Net capital base total assets. Further improvement on capital adequacy level Capital replenishment from external sources: Replenish tier-one capital through listing Capital replenishment from internal sources: Enhance profitability Full-asset class operating strategy: 2015 12 31 June 30, 2016.

7 2016 6 30 . December 31, 2015. Adhere to developing capital-efficient / . Core tier-one capital . Capital adequacy ratio business adequacy ratio 8. 2 Rapid growth in business scale, with gradually optimized structure of assets and liabilities Reasonable allocation of assets, Improved proportion of deposits , optimization of the asset structure optimization of liability structure (RMB100 million) (RMB100 million). 11,185. 11,816. 9,820 986. 10,317. 460 899. 3,346 766. 3,547. 6,074 5,101 6,446 5,160 3,981 3,352. 2015 2016 1H 2015 2016 1H. Others Others Due from banks and other financial institutions Debt securities issued Financial investments Due to banks and other financial institutions Loans and advances to customers Customer deposits Increase loans to key customers and financial investments, moderately reduce the deposits with banks, gradually optimizing the structure of assets Stabilize the source of liabilities, proactively absorbing deposit base, optimizing the liability structure as well Loans and advances to customers and customer deposits rose relatively fast, which is expected to achieve one of the highest growth among other banks 9.

8 3 Adjusted business structure with steadily increasing net interest income Daily average interest-earning assets and the yield of net Net interest income year-on-year increased interest . (RMB100 million) . (RMB100 million). 11,472. 7,487 8,894. 2015 1H 2015 2016 1H 2015 1H 2015 2016 1H. Daily average interest-earning assets Yield of net interest Structure of daily average interest-bearing liabilities Optimization of the structure of interest-earning assets remained stable . (RMB100 million) . (RMB100 million) 10,686. 11,472. 8,358. 8,894. 7,487 7,025 2015 1H 2015 2016 1H 2015 1H 2015 2016 1H. Customer Deposits Due to banks and other financial Debt securities issued . Loans and advances . Financial . Others institutions to customers investments 10. 4 Diversified sources of net non-interest income, with increasing aggregate amount and proportion Net non-interest income increased year on year, proportion expanded to Sources of net non-interest income RMB 100 million Net.

9 Gains on financial . Other operating Investments income ; ; . Net trading ; gains . Other net fee income ; . Fee income from wealth ;. management business Fee . income from ; underwriting service 2015 1H 2015 2016 1H. Net non interest income Income from credit . Proportion of net non interest income commitment ; business The net fee income was billion, representing an year-on-year increase of , mainly contributed from wealth management business, credit commitment and underwriting services. Our proprietary investment and trading business recorded rapid growth and the sources of net non-interest income are gradually diversified. 11. 5 Prudent provisions for impairment losses on assets and enhancement of risk resistance capability Relatively prudent provisions for Changes in provisions for the impairment losses impairment losses on assets on debt instruments classified as receivables RMB 100 million RMB 100 million.

10 2015 1H 2016 1H Balance at the Provision for the Balance at the end Others beginning of the period of the period period Debt instruments classified as receivables Loans and advances to customers Changes in allowances for Continuous Increase in allowance Slight decrease in allowance to impairment losses on loans to total loans non-performing loans RMB 100 million 150%. Regulatory requirements ( ) Regulatory requirements Balance at Provision for Write off Other Balance at 2015 1H 2015 2016 1H 2015 1H 2015 2016 1H. beginning of the period and transfer movements end of the the period out period Note: Other movements includes changes in the balance of allowances for impairment losses on loans arisen from unwinding of discount on allowance, recoveries and exchange differences 12. 6 Effective control on expenses and reasonable level of cost-to-income ratio Cost-to-income ratio Operating expenses managed at a reasonable level RMB 100 million.