Ping An Bank 2019

Interim Report

AUG 2019

Overview Outlook

Appendixes

• Overall Performance

• Tech-driven Innovation

• Retail Breakthroughs“3+2+1”Tactic

• Selective Corporate“3+2+1” Tactic • Key Financials

01 02

03

Co

nte

nts

1 Overview

1.1 Overall Performance

4

1.1.1 Overall Performance Remained Sound

Total Assets

3,590.8 bn Up 5.0%

Deposits

2,343.2 bn Up 10.1%

ROAA

0.88% Up 0.07 ppt

Net Profit

15.4 bn Up 15.2%

Loans

2,081.9 bn Up 4.2%

Revenues

67.8 bn Up 18.5%

ROAE

12.63% Up 0.27 ppt

5

1.1.2 Profitability Grew Steadily

2.25% 2.26% 2.29% 2.35% 2.53% 2.62%

2.05% 2.06% 2.21% 2.26%

2.44% 2.54%

2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2

NIM NIS

33.3% 34.6% 37.1% 36.0% 36.0% 35.7%

2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2

% of Non-Interest Income Stayed Stable NIM/NIS Improved Steadily

-6.9% -1.2%

4.2% 9.6%

17.1% 19.0%

2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2

PPOP Growth Sped Up YoY Revenues Growth Accelerated YoY

Note: Data in the four graphs are all cumulative amounts by the current year.

1.1%

5.9% 8.6%

10.3%

15.9% 18.5%

2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2

6

1.1.3 Asset Quality Improved Noticeably

29 34.9 35.4 34.9

1.70% 1.75% 1.73% 1.68%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

0

200

400

600

800

1000

1200

2017 2018 2019Q1 2019Q2

143%

97% 96% 94%

2017 2018 2019Q1 2019Q2

106%

159% 178%

194%

2017 2018 2019Q1 2019Q2

3.70%

2.73% 2.58% 2.48%

2017 2018 2019Q1 2019Q2

151% 155%

171%

183%

2017 2018 2019Q1 2019Q2

Down 7 bps YTD

NPL Ratio Improved % of 90+ Overdue

Continued to Decrease SML Ratio Went Down

Down 25 bps YTD

Deviation Ratio Stayed Below 1

Coverage on 90+ Overdue Enhanced Significantly

Provision Coverage Ratio Increased Greatly

Down 3 ppt YTD Up 35 ppt YTD Up 28 ppt YTD

bn

41.5 34 34 32.8

2.43%

1.70% 1.66% 1.58%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

0

200

400

600

800

1000

1200

2017 2018 2019Q1 2019Q2

bn Down 12 bps YTD

7

9.18%

9.39%

9.71%

2017 2018 2019H1

Tier 1 Capital Ratio

+32 bps

1.1.4 Higher Capital Position And Sounder Business Foundation

• EVA/RAROC-based capital management

• Resource allocation steered toward low-risk business

• Vigorous write-offs

Granular Capital Mgmt.

• 26 bn yuan convertible bonds were issued to the public in Jan 2019

• 30 bn yuan tier-2 capital bonds were issued to the public in Apr 2019

Replenishments

8.28% 8.54%

8.89%

2017 2018 2019H1

Common Equity Tier 1 Ratio

+35 bps

11.20% 11.50%

12.62%

2017 2018 2019H1

Total Capital Ratio

+112 bps

8

1.1.5 Debt Collection Made New Progress

• We have built an intelligent special asset platform for debt recovery based on the big data technology.

• With greater efforts in building up the capabilities of smart collection, management and eco-operation, we expect to see better results from the business.

6.6

7.6

1H 2018 1H 2019

Recovered NPLs Recovered Write-offs

（bn）

+12% +15%

12.3

13.8

1H 2018 1H 2019

（bn）

9

PAB made market-based efforts to help the real economy and targeted anti-poverty.

1.1.6 Support For The Real Economy And Targeted Poverty Relief

1. Promoting industrial upgrade and focusing on key industries

We stayed in line with national development policies and actively contributed our efforts to the supply-side reform and industrial upgrade. By the end-Jun 2019, key-industry clients accounted for

48% of the total in terms of credit extension. 2. Serving the private sector and SMEs

With cutting-edge technologies, we managed to offer differentiated and customized financial services to private entities and SMEs and make financing easier and cheaper. • In 1H19, loans newly issued to the private sector

as a percentage to the total corporate loan book

was 76.3%; • By end-Jun 2019, loan balance of the private

sector as a percentage to the total corporate loan

balance was 73.2%;

• SME loans of 10 million or less grew 7.1% YTD, higher than the average loan growth rate.

Accounts with loan balance increased 15K YTD. Interest rate for SME loans went down

1.27 ppt YTD and NPL was controlled within an appropriate range.

3. Targeted anti-poverty efforts

We formed a closed loop of “Finance + Tech + Produce-and-Sell” based on the “Finance + Industry” strategy.

• In 1H19, a total of 5.32 bn was appropriated to the “three-village” relief program;

• 4,930 newly registered poor people

received direct help and over 100k registered poor people were benefitted;

• 106 items of agri produce were available in our anti-poverty e-mall. These products are

from 20 poor counties of 13 provinces and

around 5.4 million increase in the poor’s income.

1.2 Tech-driven Innovation

Digital Operation

Swift Transformation

1.2.1 Stronger Technology Prowess To Empower Digital Transition

• In 1H19, PAB kept scaling up IT expenditures and saw a YoY growth of 36.9% in IT Capex and fees • We will focus on improving the capacity of computing platforms and R&D on core technologies

11

Leading Tech Platforms

Technology Innovation

• DevOps and SDLC: have been applied across the bank to streamline development process. DevOps is a compound word of "development" and "operations” and SDLC stands for systems development life cycle. Project visualization platform: supports real- time oversight over ongoing projects

• In 1H19, the demand volume for business development increased 30% YoY and procedural defaults decreased 39%.

• A unified data center ： for the integration and sharing of data across the bank.

• 360 corporate client profile system: to empower use cases such as customer acquisition, targeted marketing and risk pre-warning.

• AI Middle-office: robots for marketing / loan extension / accompany training / customer service have been put into operation.

• Distributed PaaS Platform: to establish a new credit card core system

• Private Cloud Platform: delivery cycle cut by 75% and delivery volume shot up by 11.2 times. Efficiency is greatly improved.

• AI technology: fully applied throughout the pre-loan, interim-loan and debt collection processes.

• An IoT-based system: saves costs by enabling online monitoring and operation for logistics and vehicles.

• IP Patent Applications: more than 140 patents have been applied in 1H19.

1.2.2 Technology Empowerment — Management

•To know ahead, decide ahead, and act ahead: with smart search, real-time monitoring and pre-warning functions

• To discern the business essence: for better resource allocation and business growth

• “Thousand people thousand faces” function: provides customized products and services based on different people

•Credit system restructuring: incorporated 3rd-party credit information; reduce human operation; granularized reports on due diligence investigation and auditing

• Smart approval: standardized approval process, project profile, vivid and comparable results

• Smart lending: 5-minute auto loan issuance and 7/24 services

• Smart approval: risk detecting with the window dressing model, three tool models, and the product model

• Smart management over industrial policies, product polices, black/grey list, portfolio quota and approval for credit extension

• Smart monitoring from multiple perspectives: personnel, institute, efficiency, product and industry

• Smart pre-warning system enables 90-days prior warning for 80% risky clients

Smart Finance —— Three intelligent platforms

• Standardized product shelf management

•Online management on the full lifecycle of product-marketing

• To empower targeted marketing and input-output analysis

•Multi-dimensional information cubic: use AI + BI to carry out profitability analysis for different business lines, units, products and customers

• Highly sensitive to market dynamics and business trends so as to help decision-making in business operation

Smart Risk Control —— Better efficiency, risk control and

business management Technology empowering management

Build smart platforms

Operational Analysis Platform

Unified Product Mgmt. Platform

Financials & data Mgmt. Platform

Hig

her

eff

icie

ncy

R

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ol

12

13 13

1.2.3 Technology Empowerment — Product

Corporate

Technology Empowering

Retail

• Car ecosystem: to build the most complete data warehouse of the car industry

• Health care: to work with Pingan Health Konnect to roll out unique medical treatment models

• Government finance: to promote innovations in the “Smart City” project

• Cross-border E: to optimize customer experience and service efficiency by making financial business more online-based and intelligent

• SME digital finance: to analyze the credit record of SMEs with quantitative models

• Supply chain receivables cloud service platform: based on block chain technology to build a Pingan Good Chain

Data Middle-office

Block Chain

5G

Cloud

NLP

Tag Bank

Interface Platform

Model Bank

Map/Profiles

AI

• 【Wealth Mgmt.】 real-time investment consultancy; reports on asset management for clients & demand-based investment planning service

• 【Credit Card】 personalized marketing and improved payment experiences based on client’s profile and geographic locations

• 【Xinyidai】 product perfection with the use of internet technology and other technologies like facial recognition, micro-expression recognition and intelligent voice recognition

• 【Auto Finance】 online loan renewal service

1.2.4 Technology Empowerment — Service

14

Empowering Service

• 24/7 AI customer service; a strong robot middle-office，quick consultancy service for

front-line employees; optimized operational efficiency; 82.9% AI customer service；

• Retail customer profile: supports differentiated services to targeted customer

segments based on the big data and machine learning technology

• Corporate Client 360 profile platform: empowers use cases such as customer

acquisition, targeted marketing and pre-warning

• Online verification of Xinyidai:，simplifies application materials and saves time

• One-click credit card account opening for immediate discounts: to acquire customers

and do advertisements based on premium business areas and the Pocket app online

mart; time for issuance shortened from 2 days to even within 2 minutes; better card

using experience for customers

• CheEtong APP : provides online financial services to the second car market

1.3 Retail Breakthroughs “3+2+1”Tactic

16

1.3.1 Retail Transformation Kept Deepening

Percentage of Retail Loans

58.8% Up 1.0 ppt

Percentage of Retail Deposits

23.1% Up 1.4 ppt

Percentage of Retail Revenues

56.9% Up 5.7 ppt

Percentage of Retail Net Profit

70.2% Up 2.3 ppt

02 03 04 01

51.2%

56.9% 2019H1

2018H1

67.9%

70.2% 2019H1

2018H1 57.8%

58.8% 2019H1

2018 21.7%

23.1% 2019H1

2018

Revenues 38.6 bn

The percentage of retail revenues, net profits, loans and deposits to the total continued to rise

Net Profits 10.8 bn

Loans 1,224.9 bn

Deposits 540.8 bn

Focusing on 3 Business Modules, 2 Core Capabilities and 1 Platform

3 Business Modules

2 Capabilities

Target

1 Platform

17

1.3.2 Retail“3+2+1”Tactic

To Build an Fully AI-powered Intelligent Retail Bank

Mass Retail Private Banking &

Wealth Mgmt. Consumer

Finance

Fully AI-Powered Platform

Cost Control Risk Control

AI Bank Open Bank

1.3.3 Three Modules Gained Momentum – Mass Retail (1/2)

14.8

25.9 28.4

2017 2018 2019H1

+10%

mn Pocket APP

Monthly Active Users

Mass Retail

18

1,087

1,417

1,755

2017 2018 2019H1

+24%

Retail AUM bn

69.9 83.9 90.2

2017 2018 2019H1

mn

+8%

Customer Number

Deposits bn

175 173 186

2017 2018 2019H1

Demand Deposits Term Deposits

+7%

+17%

341 462

541

19

1.3.3 Three Modules Gained Momentum – Mass Retail (2/2)

• We are developing the payroll and bulk business with an online platform that provides data support, business opportunity notifications and pre-warning alerts

• With a strategic focus on product upselling, we carved out a designated payroll zone in the pocket mobile app to send customized messages of benefit packages activity recommendation and specialized gifts, etc.

bn

143

202 253

2017 2018 2019H1

+25%

AUM

52 70

82

2017 2018 2019H1

+17%

Deposits bn

Payroll Business • Stable business growth with breakthroughs made

in bulk customer acquirement from different industries

• Early application of big data and AI technology to enhance productivity and risk control

• Newly acquired merchants increased by 15.4%

80

379 438

2017 2018 2019H1

+15%

Merchants

K

Merchant Acquiring

Product

To provide high-quality products and benefit packages relying on both internal and external resources

To build a strong system and team for investment consultancy and use AI to boost sales power

Product committee: to bring in diversified premium assets

A risk team designated for the PB division

Three Business Models

Branch / Sub-branch

Private Bank Center

Integrated Finance

1.3.4 Three Modules Gained Momentum – Private Banking & WM

23.5 30.0 38.4

2017 2018 2019H1

K

+28%

PB Customers

460 590 720

2017 2018 2019H1

+22%

K

Wealth Customers

341 458 612

2017 2018 2019H1

+34%

bn

AUM of PB Customers

20

Incrementals in 1H19 exceeded the total incrementals of the previous year

0.65 0.84

+13 +13

+1166

+1544

21

1.3.5 Three Modules Gained Momentum – Consumer Finance

Credit Card Cards in circulation: 55.79 mn, up 8.3% YTD

Receivables: 511 bn, up 8.0% YTD

Total transaction volume in 1H19: 1619 bn, a YoY increase of 34.1%;

credit card e-mall transactions increased 23.5% YoY

Xinyidai UPL

1

2

3

Loan balance: 153 bn, down 0.2% YTD

Online-merge-offline (OMO) strategy: use internet technology and big data to explore the digital channel for greater customer flows, thus expanding financial service coverage and supporting the real economy

State-of-art technologies: facial recognition, micro expression recognition and intelligent voice are used to improve business

process, customer experience and efficiency

Mortgage Loan balance: 188 bn, increase 3.1% YTD

4 Auto Finance

Loan balance: 166 bn, down 3.6% YTD

Registered users of the CheEtong APP exceeded 3,200 Enhancing cooperation with second car dealers, with the number

increased 828 YoY

Given the macro downturn pressure and PAB’s priority on asset quality, we actively adjusted loan extension strategies for loan products. We increased the underwriting bar for credit card and other loan products and steered towards customers at the higher-quality spectrum.

22

1.3.6 Two Core Capabilities – Risk Management

Note: vintage analysis is also referred as delinquency rate analysis; the formula is cumulative loan balances in the 30-day delinquency bucket six month after the origination / the origination balances.

1.18% 1.07% 1.09%

2017 2018 2019H1

Retail NPL Ratio

Vintage Analysis Higher Quality for PAG - Migrated Customers

1.13%

0.62%

1.37%

0.53% 0.54%

1.16%

Xinyidai Auto Finance Credit Card

Overall NPL ratio NPL ratio for PAG-migrated customers

0.48% 0.45%

0.35% 0.29% 0.27%

0.16% 0.20%

0.17%

0.12% 0.12% 0.18% 0.17%

2015 2016 2017 2018

Credit Card Xinyidai Auto Finance

23

1.3.7 Two Core Capabilities – Cost Management

In order to have a better cost-to-income ratio, we kept upgrading traditional business by creating new models and optimizing services

Operational Costs: streamlined operation and

management process. For example, text message cost was cut by 10%, cost per operation was cut by 7%;

Outlet staff handles 2X business operations than 2016

AI was fully used to improve productivity

Fixed Costs: reduced the cost by having the same standard for each and every outlet and making them more digital-based and light-asset. In 1H19, the rented flood was cut by 180K square meters and fixed costs reduced by 210 million

Productivity & Efficiency:

With the AI strategy, productivity improved and revenue per person increased by 14% YoY

Applications for credit card, Xinyidai and auto loan went 100% online

Credit card issuance jumped from 1 million/year to 12million/year while approval headcounts stayed flat

24

1.3.8 1 Platform – Intelligent OMO Service Mechanism

Online

Offline

Learning from top internet giants in optimizing the in-app experience

Constructing online banking eco-sphere to improve user-to-customer conversion rate

As of end-Jun, monthly active users of the Pocket Bank App stood at 28.35 million, up 9.5% YTD

Expanding variety of daily life services: credit card e-mall transaction volume went up by 23.5% YoY

Pocket Bank APP 1

New Retail Outlets 2

Replicating the new outlet model that is light-asset, community-based, intelligent and diversified

As of end-Jun, 211 new outlets opened to business

Empowering employees with the banker app that covers most retail business modules

Pushing for standardization with stronger digital and intelligent capabilities

Pocket Banker APP 3

25

1.3.8 1 Platform– Fully AI-powered

Customer

Experts

Marketing

Experts

Risk

Experts

Mgmt

Experts

Product

Experts

Customer

Experts

Marketing

Experts

Risk

Experts

Mgmt

Experts

Product

Experts

Emotion Recognition Biometrics Smart Voice NLP OCR AR, VR

Customer Bank

Product Bank

Staff Bank

Institution Bank

Model Bank

Channel

Bank

Dynamic input

Technology

Knowledge Bank

Marketing Experts Mgmt. Experts

Risk Experts

• Marketing robots • Smart lending

robot

• AI investment consultants

• AI customer service

•Kanban robots •Training accompany robots •……

• Risk control robot

• ……

Business

Front-end Application

AI Banker

AI Self-driven Capability

Standard Model

Use cases

AI wealth

manager

•Customer acquirement •Maturity •Compliant handling

•……

AI Assistance

Standard Model

Use cases AI

president assistant

•Morning/evening meetings •Business performance review •Salons •…… Strategy

Portfolios

Flexible Invoking

Others

• Voice robots • Quality review

robots

Different invoking capability based on different use cases

A I M

idd

le O

ffice

4 layers of top-bottom construction: to build the leading AI banker

• Establish 7/24 “AI customer service”system; As end-Jun, AI CS accounted for 82.9%, up 3.1 ppt YTD

• Intelligent recommendation function has been enabled in the Pocket app; conversion rate for partial use cases reached over 100%

• Personalized referrals of products, benefits and services based on the customer’s 360 profile after online interactions

• In 1H19, money stopped from fraudulent cases reached 338 million

• A new generation of intelligent risk control system: AI will be fully used in risk control during pre, interim and post-loan processes and customer management will be unified

AI + Customer Service

AI + Marketing

AI+ Risk Control

Partial results

Basic AI technology is in place, with AI customer

service, AI marketing and AI risk control applied

in multiple front-end use cases. Efficiency is

greatly improved and models can be replicated

across the board.

26

3.9 Greater Contribution From Integrated Finance

Retail New Customers (excl. credit card)

New Wealth Customers

38% 31%

Incremental AUM

37%

1.330 mn 49 k 125.8 bn

56%

37%

32%

Xinyidai issuance

29.2 bn

Auto loan issuance

Newly issued cards

25.1 bn

2.22 mn

Fee income of insurance agency service for PAG

1735 million up 34% YoY

1.4 Selective Corporate “3+2+1”Tactic

582.3 533.5

587.9

2017 2018 2019H1

+10%

bn

28

1.4.1 Optimized Structure Amid Deepening Selective Strategy

• Corporate deposits increased 135.4 bn YTD

• Corporate loans increased 13.5 bn YTD

16,59.4 16,67 1,765.4 1,802.4

855.2 843.5 860.9 857

2017 2018 2019Q1 2019Q2

Deposits Loans

bn

Noticeable Deposit Growth and Rebounded Loan Growth

Demand Deposit Balance

• Thanks to stronger payment and settlement capabilities, demand deposit balance for

corporate increased 10% by the end of Jun 2019

+54.4 -48.8

29

1.4.2 Corporate “3+2+1”Tactic

To be customer-centered and work on 3 Business Pillars, 2 Core Client Groups and 1 Lifeline of Asset Quality

“1”Lifeline “3”Business Pillars “2” Groups

Strategic Client Group

SME Client Group

2

1

Asset Quality

With the PAG’s resources and a focus on key industries, we are offering“1+N” comprehensive financial solutions and portfolios to strategic customers and their un/down stream companies.

1-Industry Bank

Driving the growth of demand deposits; intelligent supply chain financing; cross-border E offshore finance; case management and payment settlement

2-Transaction Bank

Breaking barriers among channel, product and sales to boost fee income growth; serving as an engine for the group’s integrated finance

3-Integrated Finance

bn bn

1

17

2018H1 2019H1

16 times

Supply Chain Receivables Platform

Transaction volume

1,270

1,750

2018H1 2019H1

+38%

Payment & Settlement Platform Transaction volume

360

392

2018H1 2019H1

bn

Cross-border E Platform Transaction volume

+9%

30

1.4.3 3 Business Pillars We take a customer-centered approach to grow the three major modules of industry banking, transaction banking and integrated finance with a focus on key customers and platform customers.

Industry Banking – All-around Upgrade • Government Finance: 77 new platforms have been

launched, adding the total to 520 • Car Ecosystem: a complete database of the auto industry

has been set up • Medical Health: unique business models like “ Medical

Health E Managers”and“Medical Health E Profit” have been launched

Integrated Finance – Model Innovation

• In 1H19, insurance premium sold by the bank stood

at 511 mn, 3.3 times than that of the same period last year; insurance agency fees also

increased by 7 times • Volume of bank-security cooperative project stood

at 92.6bn

Transaction Banking – Platform Construction

• In 1H19, cross-border financial service and arrangement fees shot up by 15 times YoY;

domestic letter of credit and forfaiting fees jumped by 12 times YoY.

01 03 02

• Optimized organizational structure • Stronger middle office for the industrial BUs to

support the front-line personnel

31

1.4.4 2 Client Groups

• Focusing on ten major industries that are sizeable, less cyclical and promising

• Cultivating key customers in the selected industries

• Key-industry customers accounted for 48% of the total

• Agile teams that consist of experts in industry research, product and risk control to provide in-depth study on top-name companies

• Tailor-made comprehensive financial solutions

• Leveraging on the group’s integrated finance to provide strategical clients all-around financial services

• Developing up/downstream clients and forming our own product and service system

•Customer development strategy: systematic, industry-focused, professional and PAG-based

Strategic Client Group SME Client Group

Systematic

Industry-focused

Professional

PAG-based

•We launched the Pocket Finance APP (for company clients) and SME digital Finance platform to expand the platform customer base.

Pocket Finance

APP

SME Digital Finance

33 94 225

486 642

772

2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2

Transaction Volume (bn)

301,000 registered users and 2.18 mn transactions in 1H19

3.0 3.7 4.0 4.2

4.8

2018Q2 2018Q3 2018Q4 2019Q1 2019Q2

21,638 customers, up 53.4% YTD Loan Issuance

(bn)

Note: SME digital finance was not launched in 1Q 2019

•Full range of assets •Risk full coverage •Asset structure optimization •Asset allocation optimization

Risk Evaluation Tools

•window dressing recognition system •Three specialized evaluation tools

Rating & Credit Models

•Customer rating model •Rating model for special projects •Customer credit limit Model

Asset & Portfolio Mgmt.

Exclude potential risky clients

4.5 1 Lifeline

Approval Lending Analyzing Control Collection Pre-warning Monitoring

Seven Drivers

One Engine

• Key industries and products

• Keeping optimizing the special asset mgmt. platform

Target-focused

Debt Collection

• Intensive supervision over the approval, lending and post-loan processes

Intensive Mgmt.

• 24H monitoring based on an information “sky-net”

Pre-warning & Monitoring

Customer access and quantitative evaluation

32

Double Decreases for Corporate NPL

22.6 22.3 21.5

2.68%

2.59%

2.51%

2018 End-Mar 2019 End-Jun 2019

bn

We will approach from “ Four Capabilities”, “ One Engine ” , “ Seven Drivers ” to improve risk control and support business growth; In 1H19, corporate NPLs kept going down, contributing to better asset quality.

Risk Control Platform

Four Capabilities

1.4.6 Premium Global Markets Business

33

• To boost profit contribution from the GM business line with stronger market-making and customer businesses; in 1H19, trading raked in 1.6bn of net income, up 131% YoY; we are one of the first five institutions that was granted with access to the two APIs of China Foreign Exchange Trade System (CFETS) : CNY market-making and X-bond platforms

• To transition into institutional sales and build a connector that links financial institutions in the ecosystem

• Bond transactions: 1,390 bn, jumped 207.9% YoY

• Interest rate swap : 1,451 bn, shot up 380.5% YoY

• Gold business: 482 bn, up 15.3% YoY • Standard bond forwards market-

making and interest rate swap both ranked the first in the market and among the top in the X-bond System

• The interbank platform “EtBank”recorded 2,134 clients accumulatively

• Business volume of institutional sales reached 232.4 bn, up 177.3% YoY

• Direct financing product distributing volume surged to 36.37 bn, an enormous YoY increase of 751.8%, ranking among the top in terms of issuance amount

2 Outlook

2.1 Key Work - Retail

Retail“3+2+1”tactic: 3 Business Modules, 2 Core Capabilities, and 1 Platform

Intelligent Retail Bank

Acquiring customers both via on/offline channels and providing customer-oriented services, so as to improve customer’s asset levels and cross selling rate 1. On/offline flows for integrated finance 2. Bulk customer acquisition via payroll

and merchant acquiring businesses 3. Focusing on both LUM and AUM 4. Seven AI robots to empower integrate

finance, customer and outlet management

Mass Retail Private Banking & Wealth Mgmt.

Consumer Finance

Applying the sophisticated SAT model into banking business and building an open product platform 1. Bringing in wider variety of products 2. Building a professional and digital-

powered investment and consultant team

3. Strengthening PB customer management capability and asset allocation capability

4. Three AI robots to empower PB business

Online and platform-based customer acquirement and management 1. Online process optimization for key

products 2. Growing the credit card E-mall 3. Building a car ecosystem and

developing second car loan business 4. Four AI robots to empower consumer

finance（ for cards direct selling flow acquiring, integrated finance flow acquiring, retail loan product sales and auto loan customer service

3 Business Modules

2 Core

Capabilities

Target

1 Platform

Fully AI-powered Middle Office

Empowerment & Sharing

35

Risk Control Enhancing selective power with technology upgrade; Improving the proportion of premium customer; Optimizing asset structure and customer channels

Cost Control Use integrated, automatic and digital ways to control human and operational costs

AI Bank Open Bank Embedding bank accounts, banking products and services into 3rd party’s use cases to bring more traffic flows

2.2 Key Work - Corporate

Corporate “3+2+1”tactic : 3 Business Pillars, 2 Core Client Groups and 1 Lifeline

“1”Lifeline “3”Business Pillars “2”Groups

• Providing unique“commercial banking + investment banking + investment” solutions

• Enhancing industry research capability • “ Dual System ” to propel business

transition

1 - Industry Banking

• Four product centers to build a strong

middle office

2 -Transaction Banking

• Systematic, industry-focused, professional and PAG-based

• To provide all-round services to key customers and their up/downstream companies

• To be an engine for the PAG’s institutional Finance “1+N”initiative

3 - Integrated Finance

Strategic Client Group

SME Client Group

Set agile teams to provide one-stop comprehensive financial services to strategic customers and their up/down stream companies

Reach SME customers via on/offline channels; use a hook-product to attract them and then offer solutions and portfolios based on use cases

• Enhancing risk control and pre-warning capability

• Building the Smart Risk Control Platform

• Improving the efficiency and level of risk management

Asset Quality

36

2.3 Key Work – Interbank Business

37

Interbank “3+2+1”tactic: 3 Battle Grounds, 2 Capabilities, and 1 System

Sales Capability Trading Capability 2

Capabilities

1 System Intelligent Quantitative Trading Mgmt. System

Integration into the ecosystem

Platform construction Product + strategy + solutions fund + asset

The strongest FICC, sales & trading and the most unique WM business

3 Battle

Grounds

Strong trading power Uniqueness

Infrastructure +

Debt Portfolios +

FOF/MOM

Strong sales skills

FICC +

Smart Trading Platform +

KYZ (Know your bond)

Direct Financing +

Investment Banking

+ Commercial

Banking

New Trading New Interbank New Wealth

Mgmt.

Target

38

2.4 Key Work - Technology

• Enhanced granular management and promoted agile models

• Promoted the CMMI3 (capability maturity model integration) and SDLC (system development life cycle) models；

• Kept promoting monitoring tools like CAT and Detector

Better Tech Governance and Stronger R&D

• A new generation of cores for financial market

• New cores for credit card business

• AI middle office • Smart risk control

platform • Inter-city disaster

recovery construction and pilot projects

Bank-wide Projects

• Restructuring the old systems • Constructing an open bank • Building a bank-wide middle office

system • Planning for the corporate business

Key Work Planning and Implementation

3 Appendixes

40

Key Metrics: Balance Sheet

Amount Growth %

1. Total Assets 35,908 34,186 1,722 5.0%

Total Loans 21,380 20,376 1,004 4.9%

Loans and Advances 20,819 19,975 844 4.2%

Corporate Loans 8,570 8,435 135 1.6%

Retail Loans 12,249 11,540 709 6.1%

2. Total Liabilities 33,342 31,786 1,556 4.9%

Total Deposits 26,052 25,051 1,001 4.0%

Deposit Principal 23,432 21,286 2,146 10.1%

Corporate Deposits 18,024 16,670 1,354 8.1%

Retail Deposits 5,408 4,616 792 17.2%

3. Shareholder Equity 2,566 2,400 166 6.9%

Jun 30th, 2019 Dec 31st, 2018 Changes YTD RMB100m

41

Key Metrics: Income And Expenses

Jan-Jun, 2019

Amount % Amount % growth% changes

1. Operating Income 678.29 100.00% 572.41 100.00% 18.5%

Interest Income 436.39 64.3% 374.36 65.4% 16.6% -1.1 ppt

Non-Interest Income 241.90 35.7% 198.05 34.6% 22.1% +1.1 ppt

2. Operating Expenses 205.88 175.41 17.4%

Business and Overhead 199.81 29.5% 169.80 29.7% 17.7% -0.2 ppt

3. PPOP 472.41 397.00 19.0%

4. Asset Impairment Loss (-) 272.04 222.98 22.0%

5. Net Profit 154.03 133.72 15.2%

6. Basic EPS (RMB) 0.85 0.73 16.4%

7. Diluted EPS (RMB) 0.78 0.73 6.8%

Jan-Jun, 2018 YoY Change RMB100m

Note: In Jan 25th, 2019, PAB issued 26 billion yuan A-share convertible bonds. The diluting effect of these CDs converting into common shares has been considered when we calculate the item “Diluted EPS (RMB)”.

42

Key Financials: Quality and Efficiency

1. Asset Quality

NPL Ratio 1.68% 1.75% -0.07 ppt

Provision to Loan Ratio 3.06% 2.71% +0.35 ppt

NPL Provision Coverage Ratio 183% 155% +28 ppt

Overdue 90+ Provision Coverage 194% 159% +35 ppt

NPL Deviation Ratio 94% 97% -3 ppt

2. Asset Yields

Average Return on Total Assets (annualized)

0.88% 0.81% +0.07 ppt

Weighted Average Return on Net Assets (annualized)

12.63% 12.36% +0.27 ppt

3. NIS 2.54 2.06 +0.48 ppt

4. NIM 2.62 2.26 +0.36 ppt

5. Cost Income Ratio 29.46% 29.66% -0.20 ppt

YoY/YTD Changes Jan-Jun, 2019

/End-Jun

Note: In Mar 7th, 2016, PAB issued 20 billion yuan non-cumulative preference shares on a private placement basis; when calculating EPS and Weighted Average Return on Net Assets, the numerators already exclude interests issued to preferred shares

Thank you