ABC Releases the 2017 Annual Results

(Hong Kong, March 27, 2018) Agricultural Bank of China Limited (“ABC” or “the Bank”; Stock code SH: 601288; HK: 1288) presented its 2017 Annual Results on March 26, 2018.

  According to the Report, the Bank recorded a net profit of RMB193.1 billion for the year, which represents an increase of 4.9% from the previous year. Basic earnings per share was RMB0.58. In 2017, facing a complex situation in financial markets, at home and abroad, the Bank diligently implemented China’s economic directives and plans. Adhering to the principle of “seeking progress while maintaining stability”, as well as focusing on continuing to promote supply-side structural reform, the Bank put tremendous effort into providing support to Sannong and the real economy. Through optimizing processesstructure, promoting development, effectively managing risk and strengthening foundation, the Bank maintained stable operations, while making meaningful enhancements, to achieve results that exceeded the expectations. This, again, illustrates that the Bank have realized tangible synergies through successfulcoordinated developments in scale, quality and efficiency.

  Maintaining stable operation with performance gradually improved.

  At the end of 2017, the Bank’s total assets were RMB21.05 trillion, representing an increase of RMB1.48 trillion (7.6%) from the end of the previous year. The bank’s balance sheet maintained steady expansion. Loan balance amounted to RMB10.7 trillion, increasing by RMB1.0 trillion or 10.3% from the end of the previous year. Deposit balance amounted to RMB16.19 trillion, increasing by RMB1.16 trillion or 7.7% from the end of the previous year. In particular, the balance and growth of retail deposits maintained a leading position in the banking industry. Return on average total assets (ROAA) and return on weighted average net asset (ROAE) reached 0.95% and 14.57% respectively. The non-performing loan ratio was 1.81%, representing a decrease of 0.56 percentage points from the end of the previous year. The allowance to non-performing loan ratio was 208.37%, representing an increase of 34.97 percentage points from the end of the previous year. The cost-to-income ratio was 32.96%, representing a decrease of 1.63 percentage points from the previous year.

  Proactively supporting the supply-side structural reform in agricultural sector with effortswork serving Sannong and poverty alleviation initiatives advanced to a new stage.

  The Bank persevered in its strategic position serving Sannong, especially in supporting “Large Sannong, New Sannong and Featured Sannong”. Accordingly, the loans in key areas achieved rapid growth. These included hydraulic projects, urbanization in county areas, and large-scale agricultural businesses. In response to evolving financing demands in rural areas, the Bank successfully launched the “No.1 Project for Providing Internet Financial Services” for Sannong . The Bank also directed significant effort to targeted poverty alleviation initiatives. The loans provided to 832 key poverty alleviation counties amounted to RMB815.1 billion, increaseding by RMB110.7 billion, which represents an RMB18.7 billion increase from the end of the previous year. The average new loans to these counties amounted to RMB133 million. The Bank actively supported rural households to purchase property in cities, with the “Anjiadai” loans for rural households increasing by RMB182.0 billion. At the end of 2017, the balance of loans in county areas amounted to RMB3.57 trillion, representing an increase of RMB390.0 billion from the end of the previous year - a historical high. The growth rate of loans in county areas was 12.3%, which was 2.0 percentage points higher than that of the Bank. The incremental loan-to-deposit ratio in county areas was 78.9%. The balance of agriculture-related loans and loans to rural households exceeded RMB3 trillion and RMB1 trillion, respectively. The balance of non-performing loans and non-performing loan ratio in county areas reached the lowest point since the completion of shareholdingthe Bank’s joint-stock reform. All regulatory indicators for the County Area Banking DivisionUnit met regulatory standards, marking a new breakthrough in serving Sannong.

  Achieving remarkable results in serving the real economy through increased credit origination extension and structural adjustments.

  Adhering to the ultimate objective and mission of serving the real economy, the Bank allocated more financial resources to key areas and weak sectors to support national economic development. The loans provided for major projects, such as railways, highways, electrical facilities, environmental protection, urban infrastructure, and shanty town renovation amounted to RMB567.8 billion, representing an increase of RMB208.1 billion from the previous year. The Bank implemented the “Guiding Opinions on New Economy and Financial Services”, under which the new loans provided for strategic emerging industries amounted to RMB45.7 billion. The Bank furthered the development of an inclusive finance service system and steadily expanded key businesses such as “Data Based Online Loan”. Loans to small- and micro-enterprises increased by RMB160.2 billion, with a total balance of RMB1.36 trillion. Adhering to the principle of sustainable development, the Bank regarded green credit as major direction for business development and structural adjustment. As of the end of 2017, loan balance of green credit business amounted to RMB747.63 billion, representing an increase of 15.1% from the end of the previous year. By strictly following the state policies on lending to the real estate industry, the Bank controlled the total volume and regional distribution of residential mortgage loans appropriately, while steadily developing consumption loans. The retail loans increased by RMB659.39 billion. Moreover, the Bank strictly followed the policies on cutting overcapacity. The credit risk exposures to the iron and steel industry, and coal industry continued to decline, while loans to customers in wholesale and retail industry, and low-end manufacturing industry with high non-performing ratio were gradually withdrawn. Consequently, the Bank made new progress in the adjustment of the credit structure.

  Achieving rapid growth in strategic businesses through deepening ed reforms as well as accelerating innovation and transformation.

  Maintaining its approach of transformation driven by reforms and innovation, the Bank continued to promote the refinement of business structure and ongoing evolution of profit models. The investment capability in financial markets and market-making ability continuously improved, as the Bank maintained a leading position in the banking industry, in terms of returns of bond investments and market-making volume, in both the bond market and the spot exchange market. The Bank’s wealth management business maintained steady growth, with the average daily balance reaching RMB1.75 trillion. The financial assets of private banking customers reached RMB1 trillion and the assets under custody exceeded RMB10 trillion. Its credit card, precious metal, international settlement, foreign exchange settlement and purchase, foreign exchange trading and other operations all achieved rapid growth. In respect of investment banking, focusing on business innovation, the Bank became one of the first batches of underwriters for “Bond Connect”, and offered several asset-backed securitization products which were first launched in China, such as “Green Nature Bonds” and the shanty town renovation. The subsidiaries under integrated business platform and overseas affiliates maintained steady development, with improved profitability. The Dubai Branch commenced operations, while the London Branch, Macao Branch, Hanoi Branch and the representative office in Sao Paulo obtained approvals from local regulatory authorities, making new progress in the expansion of its overseas network.

  Following the policy of “dispose of the existing non-performing loans and control the occurrence of additional non-performing loans” with asset quality significantly improved.

  The Bank attached more importance to risk prevention and control by creating tailored solutions and addressing both symptoms and root causes, so as to reduce non-performing loans. It further strengthened management of group customers and their related parties, and enhanced the risk control in key areas such as guarantee circles with high risk exposures, zombie enterprises, and local government financing. Accordingly, inflow ofincremental non-performing loans declined, with improvement in data and indicators. These include the proportion of special mention loans, the overdue loan ratio and loans overdue for over 90 days. The momentum of high risk exposure was effectively controlled. At the same time, the Bank put greater efforts into the disposal of non-performing loans and raising the recovery rate. As a result, the Bank recorded significant “double-digit drop” in non-performing loans and NPL ratio. The balance of non-performing loans amounted to RMB194.03 billion, representing a decrease of RMB36.80 billion from the end of the previous year. The non-performing loanNPL ratio was 1.81%, representing a decrease of 0.56 percentage points from the end of the previous year. This indicated that the quality of assets was further improved.

  Enhancing the level of sophistication in branch management with the development foundation further consolidated.

  In strictly complyingcompliance with the regulatory requirements of CBRC, the Bank participated in several specialized inspections and rectifications, such as “Rectifying Market Chaos”. In addition, the Bank further improved its internal control and compliance management. The Bank continued activities to support the “Year to Strengthen Management Basics and Management for Branch-level Institutions” initiatives, promoted the management model of “Three Lines and One Grid”, strengthened operating risk control, inspected cases of violations to identify potential risks, and continuously enhanced the management standards for anti-money laundering and compliance operations. Furthermore, the Bank promptly discovered and eliminated certain potential risks, and internal control system was further improved. The Bank efficiently furthered the development of IT-based banking, with some of the major projects, such as the first phase of the Large-sum and Suspicious Transactions Reporting System, successfully commencing operation. The application of big data analysis achieved a successful result. Information technology has played a more important role in supporting business operation and management. By adopting a series of effective measures aimed at optimizing systems and closing loopholes, compliance operation awareness was significantly enhanced throughout the Bank.

  The year 2018 marks the commencement of the implementation of the spirit of the 19th CPC National Congress and the Thought on Socialism with Chinese Characteristics for a New Era, as well as a pivotal year to comprehensively build a moderately prosperous society and implement the “13th Five-Year Plan” on a continuous basis. It is also an important year for the Agricultural Bank of China to deepen its reforms and transformation, and accelerate the progress of establishing itself as an international first-class commercial banking group. In the coming year, the Bank will center on the working principle of “seeking progress while maintaining stability” and adhere to the new development concepts and requirements for high quality development. The Bank will focus on its key missions in serving the real economy, preventing financial risks, facilitating operation transformation and deepening reforms on continuous basis, therefore maintaining sustainable development and creating greater value for the shareholders and customers. The bank will make every effort to build itself into a world-class commercial banking group.