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Chairman's Statement
 

 Mr. LI Jianhong
Chairman of the Board

The year 2018 marked the 40th anniversary of China’s reform and opening up. CMB was a brainchild of the reform and opening-up policy and has emerged strong in the historical development trend. Amid the changes and challenges in the internal and external business environment, CMB has maintained its strategic resolve, laid solid foundation and achieved outstanding results with its excellent business performance in regaining its past glory.

 

Both the customer base and profits reached a new level. As at the end of 2018, the number of retail customers of CMB reached 125 million. The total number of monthly active users (MAU) of CMB APP and CMB Life APP exceeded 81 million and the number of corporate customers exceeded 1.8 million. With the expansion of customer base, CMB continued to build a customer service ecosystem, enhanced customer experience, and realised “double-digit growth” in net operating income and net profit, with net profit exceeding RMB80 billion. The average return on equity (ROAE) attributable to ordinary shareholders of the Bank continued to increase, while assets and liabilities maintained a steady growth. At the same time, CMB actively optimised the customer structure and asset structure, strengthened risk management, and continued to realise the decrease in both non-performing loan ratio and balance of non-performing loans.

 

The innovation-driven development strategy was further promoted. In 2018, the Board of Directors decided to increase the allocation to our new Financial Technology Innovation Project Fund from “1% of the pre-tax profit of the previous year” to “1% of the operating income of the previous year”, and enhanced the efforts in promoting the strategic plan for “building the best commercial bank in China with innovation-driven development, leading retail banking and distinguished features”. Adhering to the mindset of “error tolerance and win-win”, CMB promoted business agility by means of technology agility and quickened its pace of innovation. CMB established a technology-empowered Fintech innovation incubation platform, put in place an independent teamwork operation system and supported various innovation projects. It also drove forward staff composition change, and increased the talent bench in technology and data science,thereby making various breakthroughs in infrastructure and capacity building of Fintech such as artificial intelligence,big data, blockchain and cloud computing. The atmosphere of innovation in CMB became more zealous; the efficiency of innovation continued to increase; the layout of scenarios and ecology was further enriched; the perception of the technological innovation frontier became more acute.

 

We actively fulfilled social responsibilities and created values for various sectors of the society. In 2018, PB ratio of A Shares and H Shares of CMB continued to rank first among the major listed banks in mainland China, and continued to create value for shareholders and investors through steady growth in profits and dividends. At the same time, CMB fully supported people’s needs for a better life and actively supported the national strategic emerging industries and the real economy. By fully leveraging the advantages of Fintech, CMB offered more intelligent and more inclusive financial services with more scenarios for customers and users. CMB adhered to the “people-oriented” concept, safeguarded the legitimate rights and interests of employees, and provided diversified channels for their professional development. Through enhancing their capability and quality and setting a stage to showcase their talents, we helped employees to develop and excel themselves, so as to realise mutual growth for both employees and CMB. In this regard, CMB was selected as one of the top 30 employers of the year in China by Zhaopin Limited. CMB adhered to the notion of “helping the poorheartily and helping the really poor”, invested a large amount of our resources in the poverty alleviation campaign, and approved financial targeted poverty alleviation loans totalling RMB20.85 billion in 2018. In addition, CMB has been actively advocating and exploring poverty alleviation through industrial development so that poverty-stricken counties would be in a better position to lift themselves out of poverty and generate income. It can be seen that CMB has deployed both physical and mental resources for the fight against poverty.

 

Good corporate governance provides important backing for CMB to achieve the above performances. Facing the complicated changes in the internal and external situation, the Board of Directors has always upheld the prudent operation principles of “ensuring assets quality, efficiency first, putting risks under control and maintaining proper scale”, and abided by the market-oriented systems and mechanisms. Through such forward-looking measures as strategic directing, assessment and guidance as well as resource allocation incentives, CMB took initiative to regulate business expansion, fully exposed non-performing assets, removed the blind spots and flaws in risk management, promoted the innovation-driven development strategy, and continued to increase investment in Fintech at the same time. All members of the Board of Directors have been fully dedicated to their jobs, leveraged their professional expertise and rich experience to predict the market and industry development trend, carried out specialised researches, effectively performed the duties of Directors, and effectively ensured the efficient operation and scientific decision-making process of the Board of Directors.

 

Change” is the keynote of the modern era. Looking into the future, the scope, speed and intensity of the major changes we face are unprecedented. Firstly, there have been changes in economic situation. We saw changes in what was a generally stable economic performance, some of which caused concern. Downward pressure on the economy has continued to mount; the growth of household consumption has slowed down; the growth of effective investment has been weakened; the trade friction between China and the United States has brought great uncertainties; macro risks have intensified. Secondly, there have been changes in the financial market. Long accumulated financial risks keep emerging; the financial supply side structural reform has commenced; the strict regulatory control has placed higher demand on compliance management of banks. Thirdly, there have been changes in customer needs. With the substantial penetration of mobile Internet, customers have been requesting better service efficiency and experience, and competition among financial institutions and non-financial institutions has increasingly intensified.

 

How to respond to the changes? By adhering to long-term strategies, seizing present opportunities, focusing on technology-driven development and embracing changes, we will stay sensitive in identifying changes, do our best to adapt to changes, and proactively pursue changes. Particularly, we will grasp the great opportunities associated with the ever-expanding application of Fintech, and focus on science and technology-driven development in order to reconstruct the operating model of CMB. Technology-driven development is not only to improve efficiency and reduce costs through the application of technology, but more importantly, to reshape the business model of the Bank through Fintech, so as to enable CMB to develop into a Fintech bank offering the best customer experience.

 

CMB will continue to increase investment in Fintech as a long-term strategy. Through constant investment in Fintech, we will continue to foster enthusiasm for innovation, drive breakthroughs in technological innovation, promote business model innovation through technological innovation, and promote a shift from a business model with capital as its core asset to one with technology and talent as its core asset, so as to pursue incessant improvement in the level of financial services and customer experience.

 

CMB will continue to improve the supporting system driven by science and technology. In terms of strategy, we will further assert the leading role of science and technology; in terms of organisation, we will further build a fittingly agile organisation; in terms of capabilities, we will further strengthen the infrastructure and capabilities of Fintech; in terms of system, we will further improve our systems and mechanisms to satisfy the needs of scientific and technological innovation; in terms of culture, we will further develop an open culture that promotes technological innovation.

 

CMB will always keep to the market-based incentive mechanism. To achieve technology-driven development, we must have sufficient talents for scientific and technological innovation. The competition for talents rests on the competitiveness of mechanisms. CMB will draw on the advantages of market-oriented talent management mechanism in a market-based approach, maximise the attraction and incentive for best talents, continuously optimise remuneration incentives and ensure the adequacy of incentives, so as to secure adequate talent supply for CMB to develop into a Fintech bank offering the best customer experience.

 

Facing the era of change, CMB has constantly made changes in tandem with variation of time and situation, whereas the only thing remained unchanged is “we are here just for you”. The well-known brand slogan of “we are here just for you” reflects the original “customer-centric” mindset and philosophy of CMB. In 2019, with the strong support from varies sectors of the society, CMB will continue to forge ahead in regaining its past glory, use technology to drive the transformation of business model to make new breakthroughs for the cause of reform and opening up, so as to honour the 70th anniversary of the founding of the nation with remarkable achievements.

China Merchants Bank Co., Ltd. Chairman: