Proactive & Prudent Operating Approach Maintained

Solid Progress in All Lines of Business Made

21 August, 2009 - China Construction Bank Corporation (“CCB” or “the Bank”) announced its 2009 interim results today. In the first half of this year, CCB thoroughly implemented the Central Government overall policies of “Expanding Domestic Demand, Guaranteeing Growth and Adjusting Economic Structure”. In doing so, a proactive yet prudent operating approach was adopted, operational risk was strictly monitored, credit supply tempo was reasonably controlled, business structure adjustments were entrenched and integrated customer service standards were continuously raised. Thus, while contributing towards the stabilisation and revival of the national economy, the Bank was able to achieve its predetermined operational and management objectives.

Total assets exceed RMB9 trillion while operating results remain stable. As of 30 June 2009, CCB’s total assets reached RMB9,110.17[Ÿ] billion (unless otherwise stated, the Group’s data set forth herein are reported in RMB in accordance with the International Financial Reporting Standards on a consolidated basis), representing an increase of RMB1,554.72[Ÿ] billion or a 20.6[Ÿ]% growth over the end of the previous year. In the same period, total customer deposits bankwide rose by RMB1,234.11[Ÿ] billion or 19.4[Ÿ]% to RMB7,610.02[Ÿ] billion, laying a sound liquidity foundation for business development.

As a result of downward adjustments in benchmark deposit and lending interest rates, a relaxation of the floating minimum interest rates for residential mortgage loans and other non-comparable factors, an operating income of RMB131.47[Ÿ] billion was achieved for the first half of 2009, which was a decline of 3.15[Ÿ]% from the same period in the previous year. Profit before tax and net profit were RMB[Ÿ]72.47 billion and RMB55.84[Ÿ] billion, which were respectively a year-on-year decrease of 4.2[Ÿ]% and 4.9[Ÿ]%, and such profitability was in line with expectation. In the same period, CCB’s annualised return on average assets and annualised return on average equity were 1.34[Ÿ]% and 22.54[Ÿ]%, up 0.03[Ÿ] and 1.86[Ÿ] percentage points respectively over corresponding figures for the whole of last year. Thus the Bank’s overall profitability was trending upward. In the first half of 2009, comprehensive cost management in CCB was further intensified and every possible means of increasing revenues and minimising expenditures was employed. As a result, its cost-to-income ratio was maintained at a rather low level: there was a further drop of 1.64[Ÿ] percentage points from that of the whole last year to 35.13[Ÿ]%.

In view of new circumstances, CCB has quickened its pace of introducing new and innovative financial products and services and expanded its intermediary businesses vigorously. As of 30 June, a net fee and commission income of RMB23.42[Ÿ] billion was achieved, which was a year-on-year increase of RMB3.25[Ÿ] billion or a growth of 16.1[Ÿ]% over the same period in the previous year. The portion of net fee and commission income in operating income reached 17.82[Ÿ]%, representing an increase of 2.96[Ÿ] percentage points over the same period last year. Thus, the contribution of net fee and commission income to the overall profitability of the Bank was further increased. Concurrently, emerging products and services such as investment banking, asset custody, enterprise annuity and electronic banking all witnessed rapid development, leading to a significant strengthening of CCB’s market competitiveness.

Moderate total credit supply, but relentless business structure optimisation. In the first half of 2009, by strictly implementing a moderate easing of monetary policy, boosting initiatives in credit business operations, CCB ensured that total credit supply was moderate in its total amount, appropriate in structure, reasonable in tempo and sound in quality, and a full support was given to the real economy. As of 30 June, its total loans and advances to customers amounted to RMB4,525.36 [Ÿ] billion, an increase of RMB731.41 [Ÿ] billion or 19.3[Ÿ]% from the end of last year, a record high rate for years.

In the first half of 2009, CCB’s new loans were mainly used in infrastructure construction and other key industrial sectors involved in stimulating domestic demand and improving people’s livelihood. New loans extended to the infrastructure industry grew 24.3[Ÿ]% to RMB288.42[Ÿ] billion, accounting for 56.1% in the new corporate loans. The balance of personal loans increased by RMB126.92[Ÿ] billion from the end of last year to RMB948.45[Ÿ] billion, of which the balance of residential mortgage loans was RMB714.92[Ÿ] billion. CCB was the leader in the residential mortgage business in terms of balance amount and additional amount. CCB’s new loans of RMB226.5[Ÿ] billion in the first half of 2009 were involved in supporting 462[Ÿ] projects in the State’s RMB4 trillion stimulus package, while the balance of loans used in the stimulation of 10 key industries amounted to RMB804.3[Ÿ] billion. The top five sectors receiving the new loans were all contributors to stimulating domestic demand: leasing and commercial services; manufacturing; water, environment and public facility management; transportation, warehousing and postal services; and power, fuel gas and water generation and supply. Together, these five sectors accounted for 76.42[Ÿ]% of all new loans.

CCB has been adhering to the policy of “guaranteeing loans to some industries while suppressing loans for some others” by restricting new loans to “high pollution, high energy consumption, resource-dependent” and overcapacity industries and withdrawing from industries with high risks or high non-performing loan ratios while keeping the scale of its bill business under reasonable control. As of 30 June, CCB voluntarily retracted RMB29.43[Ÿ] billion in loans while its new discounted bills amounted to RMB88.57[Ÿ] billion, accounting for 12.1[Ÿ]% of all new loans—a relatively low level among major commercial banks in China.

Providing services to “Three Rurals” & small enterprises and fostering business development in livelihood sectors. By making financial services for small enterprises and the “Three Rurals” (farming industry, farmers and rural areas) the focus of its credit business, CCB has effectively met their credit demand. In the first half of 2009, progress was made in the specialised operating of CCB’s small-enterprise business. A small-enterprise financial services department was formed to take charge of all small enterprise financial services of the Bank. Furthermore, the number of small-enterprise business centres operating under “Credit Factory” mode was increased by 26 to 104—a one-third increase. New and innovative products such as small amount unsecured loans and loans for social security payments targeting small enterprises were also launched. In addition, promotion of the “e-Loan Channel”, an online-banking loan business, was intensified, and as much as 1,059[Ÿ] loans totalling RMB2.24[Ÿ] billion were extended to 921 enterprises. As of 30 June, new loans to small and medium enterprises grew 18.1[Ÿ]% to RMB186.3[Ÿ] billion, comprising 31[Ÿ]% of all new corporate loans.

In stepping up support for the “Three Rurals” clientele, CCB’s agriculture-related loans increased by 25.2[Ÿ]% or RMB107.38[Ÿ] billion as of 30 June 2009. Following the establishment of Hunan Taojiang Jianxin Rural Bank, a second one—Zhejiang Cangnan Jianxin Rural Bank—was set up in May. In addition, promotion of small amount loans for farming households was carried out in provinces such as Xinjiang and Heilongjiang, resulting in new loans of RMB1.71[Ÿ] billion and accounting for one-third of such loans in large-scale banks, in the first half of the year.

In accordance with policy orientation and market development, CCB has seized the moment for the development of livelihood sector business. A series of services under a new brand name with the “social welfare” theme were launched to provide financial support for the development of businesses in education, healthcare, social welfare and environmental protection, which were well received and recognized by the market. At the same time, support for infrastructure construction in disaster areas has been made a key direction for CCB to provide livelihood services. In the first half of 2009, the Bank issued a cumulative total of RMB11.9[Ÿ] billion in post-disaster reconstruction loans to earthquake-stricken areas.

Comprehensive strengthening of risk management & steady improvement of asset quality. In view of the new situation and new issues associated with credit operations in the first half of 2009, CCB has integrated its efforts in strengthening risk management and control with its focus on seizing opportunities for business development. Subsequently, it has succeeded in the prevention of various types of risk and achieved a switch from focusing on quantity and speed to focusing on quality and structure in its credit business, thereby further optimising its asset quality. As of 30 June, it had non-performing loans of RMB77.21[Ÿ] billion, a decrease of RMB6.67[Ÿ] billion from the end of last year. Since its non-performing loan ratio of 1.71[Ÿ]% was 0.50[Ÿ] percentage points lower than at the end of last year, CCB was able to maintain a “dual lowering” trend in these two indicators.

In supplying credit, CCB has been vigorous in carrying out its credit access and approval standards. In addition, in a bid to improve its credit structure and customer structure, risk investigations of key customers and key sectors have been stepped up. Special efforts have also been paid to intensify post-lending management. CCB’s monitoring and management system for corporate customers that have triggered early warning are fully operational while the self-assessment and workflow of post-lending management have been optimised for enhanced early warning and risk handling. At the same time, with particular focus on customers with large special-mention loans and large non-performing loans, the Bank has increased efforts in disposing of non-performing loans. During the first half of 2009, the amount of non-performing loans disposed was RMB19.6[Ÿ] billion, an increase of RMB6.3[Ÿ] billion compared to the same period last year.

While continuing to reduce its stake in high-risk foreign currency assets, CCB has been strengthening risk management in its overseas branches. In the first half of 2009, the carrying amount of the foreign currency debt securities investment portfolio held by CCB was reduced by US$5.99[Ÿ] billion compared to the end of last year, resulting in a drastic reduction in foreign currency exposure. There were also increased efforts to integrate the management of business operations and risk control in CCB’s overseas branches.

In order to enhance its risk mitigation capabilities, CCB insists on a balanced and steady charging of allowances for impairment losses on assets. As of 30 June 2009, CCB’s provision coverage was 150.51[Ÿ]%, which was 18.93[Ÿ] percentage points higher than at the end of last year and at a relatively high level in the domestic banking sector. During the same period, with a capital adequacy ratio of 11.97[Ÿ]% and core capital adequacy ratio of 9.30[Ÿ]%, capital adequacy was maintained at steady levels.

Breakthrough in overseas deployment; comprehensive advancement in channel construction. CCB’s internationalisation strategy saw a breakthrough in the first half of this year with the opening of a subsidiary bank in London and a branch in New York in June. Currently, with seven branches, two subsidiary banks and one investment bank set up in major financial markets around the world, CCB’s capability in providing global financial services is being continuously enhanced.

While CCB’s overseas business network is expanding, its domestic service channels have further improved and its service standards and market expansion capabilities have been raised. As the Bank continues with the execution of its branch transformation project, 12,333 or 92% of its branches have already undergone functional transformation. On top of this, more than 100 of the branches have completed a second generation of transformation, resulting in continued strengthening of their marketing service capability. The number of ATMs installed and in operation increased by 1,817 from the end of last year to 33,713. With 2,198 financial management centres, 109 wealth management centres and 3 private banking centres set up and in operation, CCB’s system of channels for providing differential services for high-end customers is taking shape gradually. Its electronic banking service portal has also witnessed rapid development. In the first half of 2009, the transaction amount for personal online banking was RMB1.11 trillion,[Ÿ] while the transaction amount for corporate online banking was RMB10.15 trillion[Ÿ]. With the number of customers reaching 8.87 million[Ÿ], CCB’s mobile phone banking business is developing in leaps and bounds. It is leading the domestic banking industry in terms of completed transaction amounts and transaction volume. During the period, the ratio of transaction volume through electronic banking to that through front desk reached 64%, an increase of 19[Ÿ] percentage points over the end of last year.

CCB’s operating and management performance is fully recognised by leading media outlets and institutions. It was awarded the “Best Bank in China” by Euromoney and the “Best Domestic Bank in China for 2009” by Asiamoney, both being authoritative international media. In addition, it was named the “Corporate Lending, Domestic Bank” ” by Global Finance magazine of the US, recipient of the “Achievement Award for Risk Management in China” from the Asian Banker magazine of Singapore, winner of the “Best Retail Bank in China” from Capital magazine of Hong Kong, rated the “Best Financial Management Brand” by Shanghai Securities News and honoured with the “Special Contribution Award of the 20^th anniversary” by the China Foundation for Poverty Alleviation.

In the second half of this year, CCB will continue with the thorough implementation of the State’s macroeconomic control policies and do a good job of supporting economic construction while serving the overall interests of the country. To this end, CCB will manage its credit focus, the magnitude and tempo of credit supply properly, further drive structural adjustments, maintain financial support to key areas such as infrastructure construction, small and medium enterprises and the “Three Rurals”; and intensify risk monitoring and control as well as post-lending management. By endeavouring to achieve all these bankwide objectives, CCB will be able to contribute more in gaining the momentum of the economic rebound and fostering the stable, yet brisk economic development.