Hua Xia Bank : 2023 Annual Report

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ANNUAL REPORT

IMPORTANT NOTICE

i. The Board of Directors, the Board of Supervisors, directors, supervisors and senior management members of Hua Xia Bank Co., Limited (the "Company") undertake that the information in this report is authentic, accurate and complete and contains no false record, misleading statement or material omission, and assume joint and several liability thereto.

1. The Annual Report 2023 of Hua Xia Bank Co., Limited and its Summary were reviewed and approved at the 43rd Meeting of the Eighth Board of Directors of the Company on 26 April 2024. 15 of the 16 directors that should attend the meeting were present actually. Non-executive Director Zeng Beichuan, absent from the meeting due to business engagement, authorized Non-executive Director Cai Zhiwei to exercise the voting right on his behalf. There were 16 valid votes. Directors and senior managers were present as non-voting attendees.
2. Profit distribution plan for the reporting period that was reviewed by the Board of Directors:

With 15,914,928,468 ordinary shares outstanding of the Company at the end of 2023 as the base number, cash dividends will be distributed to all of the shareholders at RMB3.84 (before tax) per 10 shares.

For details, please see "Section IV Corporate Governance".

1. The 2023 Financial Statements of the Company have been audited by Ernst & Young Hua Ming LLP in accordance with Chinese auditing standards, with standard unqualified auditor's report being issued.
2. Li Minji, Chairman of the Board of Directors and Wang Xingguo, Principal of Financial Affairs of the Company, hereby warrant that the Financial Statements contained in the Annual Report are authentic, accurate and complete.
3. Expressions related to the future business plan herein may constitute forward-looking statements, but they are not the Company's actual commitment to investors. Readers are cautioned not to place undue reliance on these forward-looking statements in making any investment decision, but should be fully aware of the risks and properly understand the differences between plan, forecast and commitment.
4. Important risk notice: The Company has described the risks that may adversely affect the fulfillment of the Company's future development strategies and business objectives. Please refer to risk-related part in "Section III Management Discussion and Analysis".

Should there be any discrepancy between the English version and the Chinese Version, the latter shall prevail.

HUA XIA BANK CO., LIMITED 2023 Annual Report 1

CONTENTS

目 录

IMPORTANT NOTICE……………………… 1

MESSAGE FROM CHAIRMAN…………… 4

7 SECTION I

9 SECTION II

20 SECTION III

70 SECTION IV

96 SECTION V

102 SECTION VI

114 SECTION VII

122 SECTION VIII

126 SECTION IX

DEFINITIONS

COMPANY PROFILE AND

KEY FINANCIAL INDICATORS

MANAGEMENT DISCUSSION AND ANALYSIS

CORPORATE GOVERNANCE

ENVIRONMENTAL AND SOCIAL RESPONSIBILITY

SIGNIFICANT EVENTS

DETAILS OF CHANGES IN ORDINARY SHARES AND SHAREHOLDERS

PREFERENCE SHARES

FINANCIAL STATEMENTS

WRITTEN CONFIRMATION OF 2023 ANNUAL REPORT BY

128 DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT MEMBERS OF HUA XIA BANK CO., LIMITED

131 AUDITOR'S REPORT

LIST OF DOCUMENTS FOR INSPECTION:

1. Accounting Statements Bearing Seals and Signatures of the Legal Representative, President, and Principal of Financial Affairs.
2. Original of the Auditor's Report Bearing Common Seal of the Accounting Firm and Seals and Signatures of CPAs.
3. Original of the Annual Report Bearing the Signature of Chairman of the Company.
4. Originals of All Documents and Announcements Disclosed by the Company on the China Securities Journal, Shanghai Securities News, Securities Times and Securities Daily during the Reporting Period.
5. Articles of Association of Hua Xia Bank Co., Limited.

MESSAGE FROM CHAIRMAN

Chairman: Li Minji

2023 was the first year to fully implement the guiding principles of the 20th CPC National Congress, and started a new chapter for the Chinese modernization drive. The Central Economic Work Conference held in the year charted the course and provided the fundamental guidelines for economic work. The Central Financial Work Conference in the year drew a grand blueprint for stepping up the drive to build China into a financial powerhouse. In the past year, Hua Xia Bank unswervingly followed the path of financial development with Chinese characteristics, kept in mind the political and people-oriented nature of financial work, better coordinated effective upgrading in quality with reasonable expansion in quantity and better harmonized development with security. We took solid steps on the path of high-quality development despite all the difficulties and challenges, and delivered good results in the year that showed stable progress and sound momentum. The total assets stood at RMB4,254.766 billion, an increase of 9.09% over the end of the previous year. The net profit attributable to shareholders of the listed company was RMB26.363 billion, a year-on-year increase of 5.30%. The Company was named a domestic systemically important bank in China for the third consecutive year, ranked among the world's top 50 banks for two years in a row, and took the 46th spot among global banks by tier- 1 capital.

All that we harvested in 2023 were from our unremitting

efforts to deliver.

Our original aspiration to serve the real economy has become further entrenched. With an in-depth understanding of the

relationship between functionality and profitability of financial services, the Company continued to provide higher-quality financial services for major strategies, key areas and weaker links, and allocated more financial resources for promoting sci-tech innovation, advanced manufacturing, green development and micro, small and medium-sized enterprises. We implemented the "Thousand, Hundred, Ten" program, securing steady growth in medium - and long-term loans to manufacturing and loans to strategic emerging industries. The balance of green loans increased by 9.00%, and the share of green loans continued to increase. The balance of "two no-less-than" MSE loans increased by 8.77%. The personal pension-related financial service system was comprehensively upgraded, with the financing customers and business activity growing rapidly in the elderly care industry. The full-stack industrial digital finance achieved innovative development and the digital financing business was fast-tracked.

We were more confident in fortifying the line of defense for financial security. With an in-depth understanding of

positive interaction between high-quality development and high-level security, the Company took the prevention and control of risks as the eternal theme of financial work, further enhanced the awareness of potential dangers, strengthened the philosophy of risk management and properly handled the relationship between power and responsibility, speed and stability as well as prevention and elimination. We continued to deepen the reform of the comprehensive risk management system, established and improved the risk appetite transmission mechanism and optimized the credit policy and strategy system. By improving the efficiency of professional approval management, centrally disposing of outstanding risks, refining the internal control and compliance management mechanism, stepping up risk management in key areas, accelerating the digital transition of risk control, promoting steady improvements in risk management, we have further enhanced the resilience of high-quality development. Allowance to NPLs was 160.06%, up 0.18 percentage points over the end of the previous year. The ratio of special mention loans and non-performing loans was down 0.04 percentage points and 0.08 percentage points, respectively. The ratio of loans overdue for more than 90 days to NPLs was 86.45%, which met the regulatory requirement.

We were more patient in enhancing the guiding role of development strategies. With a thorough understanding of

the complexity and uncertainty of the market environment and in the face of structural changes and changing trends, we combined strategic steadfastness and tactical flexibility. Taking the opportunity of comprehensive mid-term review of the planning, we accelerated the "four strategic transitions" and "eight key projects", further enhanced the systematicness and execution of strategy management and persistently strove for solid progress in plan implementation. We stepped up digital transition across the board, embracing cutting-edge technologies. Our IT investment grew by 4.79% year-on-year, accounting for 4.34% of operating income. More than 95% of the high-frequencylobby-based personal transactions were turned to be self-service. Corporate banking transitioned faster to the "commercial banking

• investment banking" model, registering a year-on-year growth of 4.10% in corporate customers and a year-on- year growth of 11.11% in the business scale of investment banking. Retail banking transition improved its quality and efficiency, with a 7.83% year-on-year increase in balance of personal deposits and a 12.33% year-on-year growth in cumulative number of credit cards issued. Financial market transition gained momentum. The RMB and foreign-currency treasury transactions grew by 33.48% from the previous year, and the balance of wealth management products rose by 15.30% over the previous year.

We were even more determined to accelerate reform, innovation and development. With an in-depth understanding

of the financial development pattern in the new era, we combined the Head Office's central push with branches' marginal revolution. The organizational structure of the Head Office was adjusted in a market-oriented,law-based and orderly manner. The strategic management system was improved, the asset and liability management system upgraded and the research system built. The mechanism for implementing economic and financial policies was improved, a group-wide collaboration incentive mechanism created and the performance assessment mechanism refined. We efficiently completed the restructuring of Beijing Daxing Hua Xia Rural Bank Co., Ltd. to further unleash the development potential, which was the first case of restructuring a rural banking subsidiary of a joint-stock bank. Putting value creation at the core, we upgraded our product and service capabilities, endeavored to build a diversified and professional system of financial products and services, innovatively launched the Hua Xia Treasury Cloud platform, and piloted the "Investment-linked Loan" and "Stock Option Loan", released the customized digital product "Shopping Basket Security Loan", successfully issued the Hua Xia- Luckin co-branded credit card and introduced the first batch of new energy REITs and the first photovoltaic infrastructure REIT in China.

The 2024 year will witness our continued efforts to strive for new progress on a new journey.

The year 2024 marks the 75th anniversary of the founding of the People's Republic of China, and is a crucial year for achieving the objectives and tasks laid down in the 14th Five-Year Plan. It is also a critical year to implementing Hua Xia Bank Bank's five-year development plan. We have critical battles to fight and win in the year ahead. Hua Xia Bank will adhere to the principle of pursuing progress while ensuring stability, promoting stability through progress, and establishing the new before abolishing the old, deeply practice the political and people-oriented nature and actively carry forward the financial culture with Chinese characteristics. We will keep to the main task of serving the real economy, put focus on further implementing strategies and structural adjustments and firmly follow the path of financial development with Chinese characteristics through enhancing group-wide management and sophisticated management while forestalling and defusing risks. We will strive for high-quality development

of Hua Xia Bank in support of the high-quality economic and social development, and play our part in driving the faster development of new quality productive forces and the Chinese modernization.

We will work hard to cement the foundation for "stability" . With an accurate understanding of the even more complex and severe situation of risk management and the stronger risk management necessitated by high-quality development, we will exert every effort to forestall systemic financial risks, keep to the right path while making innovations and solve problems in the course of development. We will, with a focus on creating a sound, robust, forward-looking and efficient system of Group-level comprehensive risk management and compliance governance, improve the Group-level risk control system, strictly control the risk costs and accelerate the digital transition of risk control. By creating synergies among the front, middle and back offices, as the three lines of defense, and among the Head Office, branches and sub- branches, we will ensure high-quality development with high- quality risk control at the Group level.

We will work hard to boost the momentum for "progress" . We will embrace the historic mission and major strategic opportunities of serving new quality productive forces and pushing ahead with the "Five Priorities" of technology finance, green finance, inclusive finance, pension finance and digital finance, and keep performing our original mission of financially serving the real economy. We will, in line with our own strengths and characteristics, explore new models and paths of serving new quality productive forces and developed special plans for the "Five Priorities". Resources within the Group will be further consolidated to improve the quality and efficiency of services. Technology finance will tackle the difficulties head on in a well-focused manner. Green finance will ride with tailwinds to establish the new before abolishing the old. Inclusive finance will serve the public wellbeing by addressing people's most urgent needs first. Pension finance will become full-fledged and deliver more benefits to the elderly. Digital finance will seize opportunities to expand with maintaining security. Overall, we will better accommodate economic and social development and meet the growing financial needs of the people with strong, sufficient and sustainable services in a sound structure and at a steady pace.

We will chart the right course for "establishing the new" . With an accurate understanding of the requirements of high- quality financial development, we will remain resolved to make "unremitting efforts on one blueprint" in pursuit of better quality, higher efficiency and stronger dynamics. Making full use of the existing institutions and licenses, we will comprehensively deepen the management model, strengthen the implementation of strategies and improve the quality and efficiency of management to improve the Group-wide governance structure and working mechanism at a faster pace, improve the strategic goal promotion, monitoring and evaluation mechanism, enhance the accuracy of resource allocation and the guiding role of the incentive and constraint mechanism, enhance the driving force of data, technological support and operational capacity and move forward faster to build a build a colossal, competitive, outstanding modern financial group with stable operations.

We will work harder toward "abolishing the old" . With an accurate understanding of the uneven, uncoordinated and inadequate development in the push for high-quality development, we will adhere to the three main tasks of seeking progress while ensuring stability, value creation and capital-light operation. We will fully implement the working mechanism for operations scheduling in accordance with the New Capital Regulation and strive for enhanced quality and efficiency through fine-grained work and all-out efforts. We will redouble efforts to adjust the customer mix, rebalance the assets, liabilities and profits and improve the performance of institutions and personnel, in an effort to harmonize the quality, structure, scale and efficiency of development and effectively upgrade and appropriately expand the output.

Constant effort brings success, just like how trees make a forest and trickles make a river. With the strong support from our shareholders and our friends from all sectors of society, we at Hua Xia Bank will maintain our resolve, shore up our confidence and capitalize on opportunities and tailwinds to pursue progress, create more value for customers and investors, and make greater contributions to building a great country and advancing national rejuvenation on all fronts through Chinese modernization.

Chairman: Li Minji

26 April 2024

6

SECTION I DEFINITIONS

In this Annual Report, unless the context otherwise requires, the following terms shall have the meanings set out below:

The Group	Hua Xia Bank Co., Limited and its subsidiaries
The Company, the Bank	Hua Xia Bank Co., Limited
CBRC, CBIRC	China Banking Regulatory Commission, China Banking and Insurance Regulatory Commission
CSRC	China Securities Regulatory Commission
MOF	Ministry of Finance of the People's Republic of China
RMB yuan	Renminbi, the lawful currency of PRC
Beijing-Tianjin-Hebei Region	Region where the Head Office and the following tier one branches of the Group are located:
	Beijing, Tianjin, Shijiazhuang, Tianjin FTZ and Beijing Municipal Administrative Center
Yangtze River Delta	Region where the following tier one branches of the Group are located: Nanjing, Hangzhou,
	Shanghai, Wenzhou, Ningbo, Shaoxing, Changzhou, Suzhou, Wuxi, Hefei and Shanghai FTZ
Guangdong-HongKong-Macao	Region where the following tier one branches of the Group are located: Shenzhen,
Greater Bay Area	Guangzhou, Hong Kong and Haikou
Central and Eastern China	Region where the following tier one branches of the Group are located: Jinan, Wuhan,
	Qingdao, Taiyuan, Fuzhou, Changsha, Xiamen, Zhengzhou and Nanchang
Western China	Region where the following tier one branches of the Group are located: Kunming, Chongqing,
	Chengdu, Xi'an, Urumqi, Hohhot, Nanning, Yinchuan, Guiyang, Xining and Lanzhou
Northeastern China	Region where the following tier one branches of the Group are located: Shenyang, Dalian,
	Changchun and Harbin
Subsidiaries	Huaxia Financial Leasing Co., Ltd., Huaxia Wealth Management Co., Ltd., Kunming
	Chenggong Hua Xia Rural Bank Co., Ltd., Sichuan Jiangyou Hua Xia Rural Bank Co., Ltd.,
Huaxia Wealth Management	Huaxia Wealth Management Co., Ltd.

HUA XIA BANK CO., LIMITED 2023 Annual Report 7

8

SECTION II COMPANY PROFILE AND KEY FINANCIAL INDICATORS

2.1 COMPANY PROFILE

1. Legal name in Chinese: 华夏银行股份有限公司

Chinese abbreviation: 华夏银行

Legal name in English: HUA XIA BANK CO., Limited

1. Legal representative: Li Minji
2. Secretary to the Board: Song Jiqing

Securities affairs representative: Wang Dawei

Address: Hua Xia Bank Mansion, 22 Jianguomennei Street, Dongcheng District, Beijing

Postal code: 100005

Investor relation contact number: 010-85238570, 85239938

Fax: [phone]

Email: [e-mail]

1. Registered place: 22 Jianguomennei Street, Dongcheng District, Beijing

Business address: Hua Xia Bank Mansion, 22 Jianguomennei Street, Dongcheng District, Beijing

Postal code: 100005

Website: http://www.hxb.com.cn

Email: [e-mail]

Historical change of registered address: In April 2005, the Company's registered address was changed from No. 111, Xidan Beidajie, Xicheng District, Beijing to 22 Jianguomennei Street, Dongcheng District, Beijing.

1. Newspapers and website for disclosure of the annual report: China Securities Journal (www.cs.com.cn) Shanghai Securities News (www.cnstock.com) Securities Times (www.stcn.com)
   Securities Daily (www.zqrb.cn)

Website of the stock exchange for disclosure of annual report: http://www.sse.com.cn

Locations where copies of the annual report are kept: Office of the Board of Directors of the Company

1. Place where share is listed: Shanghai Stock Exchange
   Stock name of ordinary A-share:华夏银行
   Stock code of ordinary A-share: 600015
2. Other relevant information:
   Name of depository of shares of the Company: Shanghai Branch of China Securities depository and Clearing Corporation Limited.
   Name of accounting firm the Company engaged: Ernst & Young Hua Ming LLP
   Business address: 19/F, Ernst & Young Tower, Oriental Plaza, No.1 East Chang An Avenue, Dongcheng District, Beijing, China
   Signed CPAs: Zhang Fan, Sun Lingling
   Sponsor institution for continuous supervision: CSC Financial Co. Ltd.
   Office address: F/11, Taikang Group Tower, Building 1, Courtyard 16, Jinghui Street, Chaoyang District, Beijing
   Signed sponsor representatives: Sui Yuyao, Lv Xiaofeng
   Period of continuous supervision: 18 October 2022 to 31 December 2023

HUA XIA BANK CO., LIMITED 2023 Annual Report 9