1.In which capital market are shares of CMBC listed and what is its stock code

A: On December 19, 2000, A-shares of CMBC were listed at Shanghai Stock Exchange. The stock code is 600016.

On November 26, 2009, H-shares of CMBC were listed at the Stock Exchange of Hong Kong. The stock code is 01988.

2.What’s the address of CMBC head office

A:2 Fuxingmen Nei Avenue, Xicheng District, Beijing

3.What are the channels for investors to acquire the information on CMBC

A: For information, investors may visit the websites of the Shanghai Stock Exchange (www.sse.com.cn) or CMBC（www.cmbc.com.cn）, or consult relevant questions through our investors’ hotline or mailbox. Investors’ hotline: 010-68466790; Investors’ mailbox: E-mail address: cmbc@cmbc.com.cn

4.How often does CMBC disclose its financial infomraiton

A: We disclose our financial information through quarterly reports, interim report and annual report.

5.Who’s the external auditor of CMBC

A: According to the resolution of the general meeting of shareholders, KPMG Huazhen Certified Public Accountants and KPMG Certified Public Accountants were invited to be the auditor of financial statements and internal control auditor of the Company.

6. Give a brief introduction of CMBC branches (Except from 2011Annual Report of CMBC)

As at the end of 2011, the Company had set up 32 branches in 32 cities all over the country and one representative office in Hong Kong, and established 590 organizations in total.

At the end of the reporting period, major information about the outlets of CMBC is listed in the following table:

Note:
1. The quantity of organizations include headquarters, branches, banking departments, sub-branches, representative offices and so on.
2. The number of employees of the headquarters includes the employees of Real Estate Finance SBU, Energy Finance SBU, Transportation Finance SBU, Metallurgy Finance SBU, Trade Finance SBU, credit card center, financial market unit and other SBUs.
3. The adjustment among regions is caused by the netting among organizations within jurisdiction.
4. Shenyang Branch was approved for opening on December 22, 2011.
5. The Company obtained the banking license issued by Hong Kong Monetary Authority on January 5, 2012, so Hong Kong Representative Office was upgraded into Hong Kong Branch.

VII. Staffing structure of CMBC (Except from 2011Annual Report of CMBC)

A: The group has 40,820 in-service employees, including 39,885 persons from the Company and 935 persons from the subsidiary bodies. According to the professions, the Company has 3,771 employees in management, 19,237 in marketing and 16,877 professional technicians. The number of employees with education background above junior college diploma are 36,625, accounting for 92% of the total employees. In addition, there are 76 retired persons in the Company.

VIII. Main business operation of CMBC (Except from 2011Annual Report of CMBC)

(I) Business of the Company

In the reporting period, the Company took initiatives in corporate business operation to respond to changes in operating and regulatory environments. Targeting on building itself into a distinctive and efficient bank, the Company focused on the implementation of strategies of non-state-owned enterprises and promotion of the Financial Butler service and adopted intensive management under capital restraint, the Company continued to optimize the structures of its business, customer base and income sources in line with its development, while the effect of the strategic transformation has been seen gradually.

1. Customer base of corporate banking

In the reporting period, the Company adopted the strategy of positioning itself as a “bank for NSOEs” and expanded its customer base with the following measures: on the one hand, the Company took various means and measures to expand into new markets and develop new customers to further enhance the corporate customer base. On the other hand, while maintaining its traditional advantages of good relationship with large customers, leveraging the needs arising from the transformation of the national economy and the transformation of its business, the Company enhanced its “1+2+N” Financial Butler” services to speed up the development of a strategic customer base of NSOEs in an aim to cultivate future mainstream customer group for its corporate banking business.

As at the end of the reporting period, the Company had13,580 customers with outstanding loans, and 234,700 corporate deposit accounts with outstanding balance, representing a significant increase of 31.00% and 33.73% as compared with the end of the previous year, respectively. Due to the proper measures for customer cultivation, the average balance of outstanding loans per corporate loans customer decreased to RMB 59 million from RMB73 million as at the beginning of the period. Loan concentration was effectively reduced and the customer structure was further optimized.

In the reporting period, the Company continued to cooperate with All-China Federation of Industry and Commerce, local chambers of commerce and industry associations. NSOEs of sound financial strength, development vision and potential were selected as strategic customers of the Company. The Company set up dedicated financial butler team according to the “1+2+N” model for these customers. In line with customer development strategy and demands for financial services, the Company developed comprehensive financial service solutions that included financing and advisory services. The Company then entered into strategic cooperation agreements with these customers at appropriate times when conditions are ripe. Through our “Financial Butler” service team model, the Company has successfully expanded the service coverage of NSOEs and small and medium-sized enterprises (“SMEs”) and built up a core customer base of NSOEs as long-term strategic customers.

In the reporting period, the Company assisted All-China Federation of Industry and Commerce in holding “China Top 500 Private Enterprises Release Conference” again, and collectively released the formal list of China Top 500 Private Enterprises and Top 500 manufacturing sectors. It has planned and implemented industry chain financing, issuance of debt financial tools, structural financing, cash management and other comprehensive financial service solutions for a number of customers. As at the end of the reporting period, the Company had 11,353 customers of non-state-owned enterprises with outstanding balances, and outstanding general loans amounted to RMB484.162 billion, representing an increase of 38.59% and 38.59% as compared to the beginning of the reporting period respectively. In corporate banking business, the number of non-state-owned enterprises with outstanding general loans and the outstanding balances accounted for 83.60% and 60.14% respectively.

During the reporting period, the Company obtained the qualification of agency bank for the centralized treasury payment of the central government and became one of the four agency banks for direct payment of the central government. The capability and quality of the Company's financial services were recognized by the Ministry of Finance and the central budget unit of the State, laying a solid foundation for the Company to further optimize its liabilities management, expand institutional customer base and achieve the “Second take-off” in its development.

2. Corporate loans

In the reporting period, the Company developed its corporate loan business by focusing on control of the total lending amount, optimizing the structure, maintaining good quality of loan portfolio and improving efficiency. The Company regulated the growth of loans and the pace of loan extension on a rational basis to optimize the loan structure. The size of corporate loans recorded a steady growth and the asset quality remained stable with a significant increase in total revenue. The major business strategies and measures of the Company’s loan business include the following aspects:

Firstly, the Company adhered to the changes of relevant policies, and regulated the growth of loans and the pace of loan extension on a rational basis. The Company also strictly adhered to the Company’s needs of the Company’s strategic transformation, and focused on strategic customers including small and micro enterprises and SMEs.

As at the end of the reporting period, outstanding corporate loans (including discounted bills) of the Company amounted to RMB836.906 billion, representing an increase of RMB 60.719 billion, or 7.82%, as compared with the beginning of the period. Outstanding general corporate loans amounted to RMB 805.0.17 billion, representing an increase of7.26% as compared with the end of the previous year. Non-performing corporate loan ratio of the Company amounted to 0.78%, representing a decrease of 0.06 percentage point as compared with the end of the previous year.

Secondly, the Company utilized credit products including commercial bills, trade finance and comprehensive credit management measures in a flexible manner to satisfy the capital demands of customers. Based on this, the Company continued to optimize the credit structure as well as increase revenue.

In the reporting period, the Company carried out innovation on products and service of bills business and innovated the operation and management modes of bills whiling actively controlling all types of risk and continuously improving the business operation process, and satisfied various needs of customers with timely and accurate one-stop full function financial services based on its rich product portfolio and comprehensive bills financing solutions, which effectively met the demand of enterprises for working capital loans and alleviated the cost of fund occupation and financing cost of enterprises, especially SMEs. In the reporting period, the volume of discounted corporate bill business amounted to RMB 418.4 billion, including RMB 129.0 billion of discounted commercial bill business, representing an increase of 33.38% and 87.53% respectively as compared with the corresponding period of the previous year.

By virtue of the outstanding product and service features and the effective adjustment of business structure, the Company has effectively controlled the ratio of long-term corporate loans, and constantly improved the level of return of credits. At the end of the reporting period, the proportion of its medium and long-term corporate loans was 49.92%, a drop of 2.13% comparing with the beginning of the reporting period, and the average corporate loan rate was 7.15%, greatly up 1.33% comparing with the beginning of the period.

Thirdly, by seizing market opportunities arising from the steady and sound development of the economy, the Company implemented the state industrial financial policies and encouraged the provision of new funds to real economies, actively explored a business development model for green finance and emerging strategic industries, while strictly scrutinized the provision of loan facilities to industries characterized by heavy pollution, high energy consumption and excessive production capacity, government-guaranteed projects and redundant projects of low productivity to prevent credit risks.

3. Corporate deposits

During the reporting period, the Company abandoned the simple traditional approach of relying on financial inputs and period data and continued to implement the principle of “taking deposits as the key foundation of the bank” by responding to changes of monetary policy in a timely manner and strengthening the research on liability business models. In addition to enhancing the settlement platform, the Company encouraged strengthening deposit customer base by providing satisfying products and services and seeking for new channels to increase balance of deposits. The Company also improved the organic growth of the deposits portfolio, and achieved the sustainable growth in corporate deposits.

As at the end of the reporting period, the balance of the outstanding deposit of the Company was RMB1,345.258 billion, representing an increase of RMB 16, 4981 billion or 13.98% as compared with the end of the previous year. In the reporting period, the Company developed 56,552 new clients with pure corporate deposit, which brought RMB 145.767 billion of newly increased deposit to the Bank, accounting for 88.35% of the growth amount of corporate deposit, and these new clients lay a solid foundation for the increase of good-performing liability service.

The Company further set up trade financing as the key direction of future development of bank financing service, continuously strengthened the construction of ability of trade financing by means of developing the business under the guidance of featured planning, introducing mode innovation for structure adjustment, and expanding client groups through batch development and driving overall sales of big, medium and small clients and retail via industrial chains, therefore, its business gained good growth momentum. In the reporting period, the Company reached up RMB 675.198 billion originated in trade financing, stabilized 7,052 clients, who brought deposit balance of RMB 163.364 billion to the Company, a sharp rise of 94.68%, 72.16% and 51.32% respectively as compared with the corresponding period of the previous year. At the end of the reporting period, the balance of trade financing was 264.752 billion, and there was no bad performance, consequently, making the Company rank in the leading place of the market. On the Fifth China International Logistics and Supply Chain Development Summit Forum, the Company won the honor of “China International Logistics and Supply Chain Development Summit Forum”. The reputation of the Company as an “expert industrial financing service provider” among customers, banks and banking associations continues to grow.

4. Corporate non-interest income business

In the reporting period, the Company organically combined development of intermediary business with structural adjustment. On the one hand, it continued to strengthen trade financing, bill discounting business and other traditional practice, on the other hand, it l focused on the development of businesses with low capital coefficient and high return, including annuity custody and bills management., and actively established a system of financing products for emerging markets which mainly included issuance and underwriting of debt financing instruments, structural financing and asset management. The combined effect of innovative products and services and diversified business model boosted a significant increase in intermediary business of the corporate business segment in the reporting period, and the net fee and commission income amounted to RMB8.946 billion, representing an increase of 69.27%as compared with corresponding period of the previous year, which accounted for 61.91% of the net fee and commission income of the Company.

In respect of the investment banking business in emerging markets, the Company offered customers, particularly strategic non-state-owned enterprises, comprehensive financial services focusing on investment and financing, as well as continued to improve the system of structural financing products. Through broadening varieties of direct financing and asset management services, the Company provided more diversified consultation and financial advisory services, and expanded channels for intermediary business. In the reporting period, the Company enhanced the internal sponsor team for the investment banking business in emerging markets, and put more efforts in marketing and promoting the investment banking business, as well as further standardized business management and operation model. The Company accelerated the replication of well developed business models and relevant marketing efforts, and focused on the trial operation of “Listing Express” business to establish a new financial service model.

In respect of asset custody business, the Company implemented the development strategy of “diversification and specialization”, consolidated the business mode of “custody + comprehensive financial service”, strengthened cooperation with branded asset management organizations, emphasized the development of security investment funds, equity investment fund, insurance credit, financial management by bank and other custody business, and promoted the stable and rapid business development with excellent products. As at the end of the reporting period, the assets held by the Company as custodian (including safekeeping) amounted to RMB 381.155 billion, up 83.12% comparing with the end of the previous year, and the return of custody operation was RMB 0.393 billion, a rise of 104.69% as compared with the corresponding period of the previous year. For its rapid growth of custody scale and efficiency, the Company was elected to be “the Best Innovative Custody Bank of 2011” by the magazine, Financial Money.

In respect of corporate annuity business, the Company put strategic emphasis on the development of corporate annuity business and segmented target markets and encouraged product and marketing innovations. The Company also strengthened the cooperation with external trustees and put more efforts in the integration of resources of the Bank, so as to drive the growth of corporate annuity business through joint marketing and leveraging its leading businesses. As at the end of the reporting period, 106,693 individual annuity accounts were managed by the Company, representing an increase of 73.37% as compared with the end of the previous year. The annuity under custody amounted to RMB 4.652 billion, representing an increase of 45.88% as compared with the end of the previous year.

In respect of debt financing instruments, leveraging the advantages of the market expansion, the Company targeted on its medium-sized quality customers, particularly strategic non-state-owned enterprises, and exerted its effort to develop SME businesses including collective bonds, short-term bonds and medium-term notes. In the reporting period, a total of 81 short-term financing bonds and medium-term notes amounting to RMB57.237 billion were issued by the Company for 68 enterprises. The issuance of these debt and notes satisfied the financing demand of customers and also boosted the steady growth of the net non-interest income.

5. Operation of SBUS

In the reporting period, SBUs took proactive steps in response to the complicated and ever-changing external environment by enhancing risk prevention, exploring business opportunities in emerging markets, promoting the application of “Financial Butler” service model and implementing the strategies targeting on non-state-owned enterprise. All lines of business at SBUs achieved continuous growth and the asset quality kept being improved.

(1) Real Estate Finance SBU

In the reporting period, the Real Estate Finance SBU insisted on “solid foundation, risk prevention, innovation and transformation, and intensified reformation”, and strived to shift its operation models in response to market changes. Risk control, innovation and transformation were also well coordinated during the downturn of the industry. Addressing the financing demands of private real estate customers, the Company proactively provided “Financial Butler” services, which integrated internal and external financial resources, traditional credit facilities and investment banking business for emerging markets, and significantly improved comprehensive customer service capability. As at the end of the reporting period, customers of non-state-owned enterprises of the Real Estate Finance SBU which had deposits and general loan accounts accounted for 88.89% and 92.04% respectively.

As at the end of the reporting period, balance of deposits and outstanding general loans of the Real Estate Finance SBU amounted to RMB 46.943 billion and RMB 106.500 billion, , a drop of 12.25% and a rise of 5.92% as compared with beginning of the period, respectively, with non-performing loan ratio at 1.72%, and achieved return of intermediary business of RMB 1.063 billion, up 26.55% as compared with the corresponding period of the previous year.

(2) Energy Finance SBU

In the reporting period, the Energy Finance SBU firmly implemented the strategies of market transformation, product transformation and region transformation, conducted in-depth research on industrial development to explore business opportunities, and identified potential risks. It effectively forwarded adjustments on customer structure targeting at non-state-owned strategic customers, industry chain financing business structure represented by customers involved in coal mining industry, scale structure focusing on managerial assets and operational assets, and income structure taking investment banking for emerging markets as income growth point. In the reporting period, the Energy Finance SBU issued a total of 17 short-term financing bonds and medium-term financing notes of RMB 18.358 billion, and carried out the business of emerging market in the form of overseas finance guarantee, acquisition loan, annexation loan, trust, fund and so on, totaling RMB 14.21 billion. As at the end of the reporting period, the non-state-owned enterprises customers of the Energy Finance SBU who had deposit and general loans accounts accounted for 51.67% and 46.70% respectively.

As at the end of the reporting period, balance of deposits and outstanding general loans of the Energy Finance SBU amounted to RMB 62.559 billion and RMB 100.051 billion, representing increases of 48.35% and 7.43% as compared with the beginning of the reporting period, respectively. Non-performing loan ratio was 0.54%. The return of intermediary business amounted to RMB 0.98 billion, up 148.73% as compared with the corresponding period of the previous year.

(3) Transportation Finance SBU

In the reporting period, the Transportation Finance SBU continued to implement the comprehensive risk management and intensify the coordination, planning and management functions of the headquarters. The automobile segment has further expanded into transaction financing from merely providing “loans for opening auto stores”. The railway segment has further deepened the development of railway loading station and railway materials sectors on the basis of railway supply chain finance mode. In respect of shipping segment, the development of “loan packages for vessel building and leasing” and the “contract financing” has sped up, and obtained a good response from the market. Among which, the service mode of “Financial Butler” that aimed at non-state owned enterprise customers has been implemented and shown a positive effect. Comprehensive services including industry chain financing, group financing and investment banking business for emerging markets were highly recognized by the targeted customers. As at the end of the reporting period, the non-state-owned enterprises customers of the Transportation Finance SBU which had deposit and general loan accounts accounted for 52.10% and 36.42% respectively.

As at the end of the reporting period, balance of deposits of the Transportation Finance SBU amounted to RMB 40.826 billion and outstanding general loans amounted to RMB 46.082 billion, representing an increase of 5.39% and 2.24% compared with the beginning of the reporting period, respectively. The non-performing loan ratio was 0.26%. The return of intermediary business amounted to RMB 0.835 billion, up 72.52%as compared with the corresponding period of the previous year.

(4) Metallurgy Finance SBU
In the reporting period, the Metallurgy Finance SBU insisted to implement the “non-state-owned enterprises strategy” of the headquarters, set up professional teams to provide “Financial Butler” service for core customers, and established strategic cooperative relationships with a number of non-state-owned enterprises. Besides, it further developed core manufacturers and their industrial chains, innovated development modes, comprehensive employed various trade financing products to create deposit around the transactions of customers, consequently creating income. In addition, it actively expanded investment banking service, and vigorously developed mining financial service, bond issuance and financial planning to effectively improve the return of capital. As at the end of the reporting period, the non-state-owned enterprises customers of the Metallurgy Finance SBU which had deposit and general loan accounts accounted for 75.74% and 62.38% respectively.
As at the end of the reporting period, balance of deposits and outstanding general loans of the Metallurgy Finance SBU amounted to RMB 44.924 billion and RMB 40.821 billion, representing increases of 7.13% and 4.30% as compared with the beginning of the reporting period, respectively. The non-performing loan ratio was 0.20%. The return of intermediary business amounted to RMB 0.679 billion, up 16.87% as compared with the corresponding period of the previous year.

(5) SME Finance SBU

In the reporting period, the financial unit for medium and small enterprises continuously implemented the operation ideas of “regional features, development in batch, sales by the list” with a view to providing all-round financial service to medium and small enterprises with growth potential via bulk, differential and featured business modes and creating domestic leading financial service provider for medium and small enterprises. It successfully erected the implementation framework of “Host Bank” service to improve the comprehensive contribution to customers via all kinds of diversified service measures and realize the rapid growth of liability business accordingly. Meanwhile, it continuously promoted process optimization and business platform construction for medium and small enterprises. As at the end of the reporting period, balance of loans of the SME Finance SBU amounted to R RMB 105.217 billion, representing an increase of 32.3% as compared with the end of the previous year. Of which, 96.48% were short-term loans. The SME Finance SBU has 9,712customers, representing an increase of 43.9% as compared with the end of the previous year. Non-performing loan ratio was maintained at a low level of 0.69%.

(6) Trade Finance SBU
In the reporting period, the Trade Finance SBU continuously implemented the operation ideas of “taking a professional path and specializing in featured trade finance”, followed a policy of “professional, dedicated and specialized operations”, devoted to be a financial solution provider and a corporate financial resources integrator to expand room for its business development through distinctive management and product innovation. The Trade Finance SBU has established a stable customer base comprising strategic customers from the top 500 international enterprises and leading domestic non-state-owned enterprises, and basic customers from medium-sized non-state-owned enterprises. It has created complete product lines covering international settlement, international and domestic trade finance. It also boasted a correspondent bank network around the world and a smooth clearing channel to provide customers with comprehensive trade finance solutions which mainly included account receivables, import trade chain finance, letters of guarantee, value-added services and structural trade finance so as to satisfy customers’ needs at different stages of the whole procedure in import and export activities.

As at the end of the reporting period, the Trade Finance SBU has set up 27 branches in 27 cities all over the country, the balance of loans for trade financing was RMB 12.4 billion and USD 2.72 bill ion, the return of intermediary business was RMB 1.993 billion in the whole year. In the reporting period, the rapid growth of the Company’s trade finance business attracted wide attention of domestic and overseas financial media, and was awarded the “2011 Best Bank of Trade Finance Innovation” by the UK Financial Times, and “The World’s Best Factoring Market Development Award in 2011” in the 43rd Annual Meeting of FCI.

In the reporting period, the Trade Finance SBU fully implemented the strategy of “Host Bank” for target NSOE customers and had initially identified 85 customers. The Company established a “Trade Financier Club of China Minsheng Bank” to cultivate leading enterprises in different industries in the PRC. The Company was the first bank selected by the State Administration of Foreign Exchange for a pilot scheme to support overseas merger and acquisition by domestic NSOEs by providing funds out of the foreign exchange reserves., signed a cooperation agreement to support enterprises to go out with the special capital of exchange reserves, which earnestly reinforced the support to non-state-owned enterprises.

In the reporting period, its featured business including factoring and structural trade finance business of the Trade Finance SBU continued to take the leading position among domestic banks. In 2011, the volume of factoring business amounted to RMB86,100 million and a total of 211,800 transactions were recorded. The transaction volume of international dual factoring amounted to US$965 million and a total of 5,926 transactions were recorded, ranking the second among domestic banks. The Company further determined the markets segmentation and set up its targets for the structural trade finance business, which mainly focused on long-term order financing, shipping financing and “going international” financing, and demonstrated good development progress. The Trade Finance SBU also exerted its efforts to promote trade structured finance (“TSF”) product series solutions including “transfer of cross-border in RMB” and “cross-border RMB settlements + entrusted borrowing”, and satisfied the capital needs of 47 customers with an aggregated amount of RMB6,000 million in the year.

6.Team-building of Corporate Business

In the reporting period, following the principles of “reorganization with a focus on maintaining flexibility and effective utilization on major aspects”, the Company actively reformed its training methods by fully utilizing internal and external resources and enriching and improving the corporate training system to integrate the training with development strategies and operational management policies, with the major business skills intensification and marketing, with the analysis of typical cases and advanced experience, with the strengthening of the overall competency and cohesiveness of our business team. During the reporting period, the Company organized a total of 76 training programs with 7,712 participants, including 4 financial butler training programs for non-state-owned enterprises with 284participants were held to meet the requirements of the implementation of strategies for non-state-owned enterprises. According to the specific situation of different regions and the business development targets, the operating organizations held over 69 training programs in respect of major products with 900 participants. In addition, aiming to fully establish a core business team, the Company jointly organized the Selection of the Best Management Practices of Corporate Business with Harvard Business Review.

(II) Retail Business

1. Retail loans

The Company offered various loan products to retail banking customers. In the reporting period, the Shang Dai Tong business has continued to boost the rapid growth of retail loans and structural reorganization for the Company. As at December 31, 2011, total retail loans increased to RMB 361.449 billion, a rise of RMB 83.564 billion or 30.07% or 15.75% as compared with the end of the previous year. Out of this amount, the outstanding mortgage loans reached RMB 82.990 billion, which accounted for 22.96% of the total retail loans.

In the reporting period, the Shang Dai Tong business continued to grow rapidly. The outstanding loans of Shang Dai Tong exceeded the record high of RMB200 billion. The size and quality of the customer base were also improved.

As at December 31, 2011, outstanding loans of Shang Dai Tong amounted to RMB232.495 billion, representing an increase of RMB73.509 or 46.24 as compared with the end of the previous year.

As at 31 December, 2011, the total number of Shang Dai Tong customers was approximately 150,000, over 30% of which were VIP customers, reflecting an optimized customer structure. In respect of the return of loans, the interest rate structure of newly-issued loans has improved in 2011 with better loan quality than in the previous year. The average interest rate of newly-issued loans increased by 2.2 percentage points as compared with the previous year, representing a higher product profitability.

In 2011, the Company upgraded the financial services for small and micro enterprises and officially launched version 2.0 which achieved significant improvement in five aspects: Firstly, it broadened the scope of services by providing more choices in financing method, and launching various innovative functions in settlement, channel and wealth management that formed a diversified small and micro financial product system framework, marking the transformation from simple credit services to comprehensive financial services. Secondly, the Company further increased the proportion of loans without collateral in loan structure, such as guaranteed loans and credit facilities, to enable more access of small and micro enterprises and individual industrial and commercial customers who were not able to provide collateral to financial support. Thirdly, the Company improved the credit pricing system and realized the unification of customer value and risk identification to build long-term relationship with the customers. Fourthly, it enhanced its after-sale services and organized “Wealth Management Classes” to introduce knowledge on modern financial services to small and micro entrepreneurs and individual industrial and commercial customers. Fifthly, it optimized operation mode by adopting “factory method” to enhance operational efficiency and service quality.

In respect of risk control over Shang Dai Tong loan business, the Company persisted in following the principles of the “Law of Large Numbers ” to estimate the risk probabilities of specific industries. The Company selected industries suitable for launching Shang Dai Tong loan business to control risks. The core concept of MSE finance based on the “Law of Large Numbers” has proved to be practical after the launch of version 2.0. The NPL ratio remained low at 0.14% as at 31 December, 2011.

2. Retail deposits

Savings deposits from retail customers of the Company mainly included demand deposits, time deposits and notice deposits. Savings deposits from retail customers formed one of the important low-cost funding resources of the Company. In 2011, the Company’s balance of savings deposits from retail customers amounted to RMB286.356 billion, representing an increase of RMB55.954 billion, or 24.29%, as compared with the end of the previous year.

3. Debit card business

As at December 31, 2011, the Company had a total of27,986,600 debit cards in issue, including 2,964,400 cards newly issued in 2011. The “Snoopy” Co-Branded Card issued by the Company and Sino-US Metlife Insurance Co., Ltd. marked a good beginning for 2011. As of December 31, 2011,a total of 342,200 “Snoopy” Co-Branded Cards were issued.

In 2011, the Company continued to offer the VIP customers with the “5+N” VIP service system, covering services at airports, golf clubs, train stations, medical access and roadside rescue services.

4. Credit card business

In 2011, the profitability of credit card business further improved as the income from intermediate business, flexible/installment payment business and automobile purchase by installment business as well as annual fees and commission recorded significant increases as compared with the previous year. In 2011, the Credit Card Centre further improved the business model of “Operation Group of Three” to strengthen the cooperation among sales, merchants and collection units. The Company promoted the development of card issuance, merchant partnership and asset management, the three major business lines of the credit card business, through innovations on products and services, business model, sales channels and risk management.

As at the end of 2011, the total number of credit cards in issue was 11,530,000. Transaction volume of credit card business was RMB 177.520 billion, representing an increase of 64.91% as compared with the corresponding period in the previous year. The balance of receivables amounted to RMB 38.551billion, representing an increase of 134.61% as compared with the end of the previous year.

In 2011, the Credit Card Centre launched a dedicated credit card, Minsheng UnionPay In Card, for young customers. To promote the issuance of In Card, the Company organized online selection campaign of endorser and provided various privileges 7 days a week with the support from Starbucks, Pizza Hut, Alipay, VELO, SEPHORA and hundreds of cinemas in many cities. In addition to In Card, in order to satisfy the financial needs of student studying in Japan, the Company Centre issued RMB and JPY denominated credit cards to students studying aboard in September 2011. At present, multi-currency Minsheng credit cards for students studying aboard provide the most variety of currency choices in the PRC, including the combination of RMB with USD, EUR, GBP, AUD, CAD and JPY and provide all financial functions as other Minsheng credit cards as well as services for overseas study. The use of credit cards of local currency outside the PRC can save the costs of currency conversion and the difference between bid and offer exchange rates. On the other hand, overseas expenses can be settled by RMB without the fuss of currency conversion. The Company also launched Minsheng Sohu Loving Home cobranded credit cards and Minsheng Yintai (Hefei) cobranded credit cards according to the needs of market expansion. The brand of Minsheng Credit Card was widely recognized by the social community in 2011 and was honored with awards such as Excellent Model Bank by China's Banking Customer Service Centers, and was listed on the China's Leading Weibo Ranking in 201. It was also awarded the Best Marketing Practice in Financial Industry for 2010–2011, and won the Third Prize in the Assessment on Supervision and Management, 2010-2011 Best Performance Prize in Cases of Marketing, 2010-2011 Advanced Entity of Credit Investigation and Excellent IT Application Prize in China. Mr. Yang Ke, the President of the Credit Card Centre, was awarded The National Labor Medal for Financial Institution. As such, its core competitiveness was further enhanced.

5. Agency business

The Company offers services such as sales agent of wealth management products, funds and insurance. And the number of funds sold under its agency business reached 750, a leading number among its peers in the industry. The Company has also cooperated with 29 insurance companies to optimize the Company’s insurance selling platform.

6. Customers and relevant activities

As of December 31, 2011, the Company had 21,976,100 retail customers, with a savings deposit balance of RMB 286.356 billion. In 2011, the growth of financial assets of retail customers promoted the rapid increase of the financial assets of retail customers. As of December 31, 2011, 3the financial assets of retail customers reached RMB468.563 billion, representing an increase of 48.04% as compared with the end of previous year. Among the retail customers, 176,100 customers had individual financial assets of more than RMB500,000, and their total deposits amounted to RMB171.111billion, representing 59.75% of total retail deposits of the Company.

In 2011, the Company organized the Wealth Management Classes, golf tournaments and sales of luxury products exclusively for our VIP and MSE customers. Positive comments were received from our customers. Customers were offered more personal financial services. In 2011, the Company was awarded The Best MSE Service Bank of 2011 in The Financial Institutions Value Ranking by The First China Business Post, the Best MSE Financial Service Bank in the Outstanding Competitiveness Ranking by China Business Operation Bulletin, The Best Supporter for MSE in 2011 and The Most Innovative Financial Institution in 2011from Sohu.com and The Best Wealth Management Brand in The 9th China Finance and Economics Ranking in 2011.

7. Private banking business

As at the end of the reporting period, the Company had established private banking agencies in 29 branches nationwide and the size of financial assets managed amounted to RMB68,400 million. The number of private banking customers amounted to 4,650 with income from intermediary business amounting to RMB 289 million, up 51.33%, 76.54% and 110.95% respectively.

In the reporting period, a customer-oriented private banking team and a marketing model were established by the Company to cater to the needs of customers. To build a high-quality private banking service brand, the Company provided professional and comprehensive services for customers. The Company put great efforts in developing new businesses including private equity investment, integrated trust plan, selective placement, trust and securities funds by private placement, capital integration and financing for acquisitions and mergers. The Company launched the new large-amount credit business to offer credit facilities to major customers and continued to enrich our product portfolio to provide a diversified, open, personalized and specialized investment and financing platform for high-end customers, in order to enhance customer loyalty to our financial services. The Company provided financial consultation services for high-end customers by offering market analysis and suggestions, as well as regular reports. The Company also established a diversified consultation service system covering taxation, law, insurance plans and art investment.

The Company commenced the operations of private banking business in June 2011 based on the strategic positioning requirements of the Board in respect of high-end customers by adhering to the strategic target of “distinctive bank” and “efficient bank”. A task team of “Wealth Growth Storm 1.0 of Minsheng Banking” was established. The Company formulated the development plan of private banking for the coming three years, which clearly defined the strategy, positioning, responsibility, incentive system and working plan of business development of private banking, and further streamlined and consolidated the procedures, teams, platforms and products.

In the reporting period, the Company was awarded The Best Private Bank in Fund Raising for VC/PE in 2011 and the Best Private Banking Brand in the Golden Cauldron Award.

In the following three years, the Company will exert all efforts to integrate all resources to improve its wealth value-added services and distinctive non-financial services for customers, in order to achieve a remarkable development and win customers’ recognition for its private-banking business. Together with the non-state-owned enterprises business and small and micro enterprises business, the Company aims to develop three core profit streams for its business development.

(III) Treasury business

1. Transaction

In the reporting period, the transaction volume of RMB bonds of the Company amounted to RMB3,373.097 billion, representing an increase of 21.32% as compared with the corresponding period in the previous year, ranking the fifth in the market. The aggregate volume of forward settlement and selling exchange transaction volume amounted to US$6.89 billion, representing a significant increase of 214.32% as compared with the previous year, the total volume of settlement and sale of exchange swaps amounted to US$48.272 billion, representing a significant increase of 155.69% as compared with the previous year. The transaction volume of foreign exchange agent amounted to US$ 592 million, representing an increase of 128.57% as compared with the corresponding period in the previous year.

2. Investments

As at the end of the reporting period, the balances of investment in bank accounts of the Company amounted to RMB215.467million, representing an increase of 17.07% as compared with the end of the previous year. In 2011, the Company’s debt securities assets were on a stable growth track, and it raised the return on value difference from the investment of RMB bond via band operation in accordance with the accurate judgment on the development of domestic bond market. In addition, the Company sold part of its foreign currency denominated debt securities by taking advantage of the price hike of international debt securities, thus effectively mitigated potential investment risk.

3. Wealth management

In 2011, the wealth management business of the Company strictly complied with all the relevant regulatory requirements. It focused on promoting the brand value of “Apex Asset Management” by strengthening its asset management and positioning itself as “Financial Stewardship”. The Company strived to develop its business model as the “Smart Choice of Customer for Wealth Growth” and a system that established a win-win relationship between the Bank, customers and transaction counterparties. Through refining and reforming its system, procedures and management, the Company launched and implemented various cutting-edge strategies, such as the “integration of business processes”, “early risk control before business operation”, and “proactive marketing activities”, which enhanced its efficiency, management, services, teamwork and compliance.

In the reporting period, the number and size of wealth management products grew significantly. The number of new products launched amounted to 2,354, whilst the sales volume amounted to RMB764,300 million.

In the reporting period, the features of wealth management business of the Company include:
(i)Timely changes in the direction of business development. By closely tracking and studying policies, the Company was capable of capturing market trend accurately. By quickly responding and reacting, the Company was capable of grasping business opportunities promptly. The Company focused on the research and development of wealth management products in affordable housing and securities.
(ii) Reputable wealth management business. Apex Asset Management launched by the Company obtained various awards, the brand value of which continued to raise. The awards included The Best Asset Management Bank 2010-2011 by 21st Century Business Herald; The Best Asset Management Bank of Excellent Competitiveness by China Business; The Most Innovative Bank in Wealth Management by China Business News; The Golden Pixiu Award in Financial Wealth Management by Financial Money magazine; Golden Influence Brand in the Top 10 Financial Wealth Management in China in 2011and the Golden Wealth Management award for Excellent Wealth Management Brand in 2011 by Shanghai Securities News.
(iii) Efficient regulation of the wealth management business. Monitoring by types and by level ensured stable business operation and strengthened the management of the wealth management products, thus securing healthy development of the wealth management business.

4. Trading in gold and other precious metals

In 2011, the Company's trading volumes of gold and silver at the Shanghai Gold Exchange amounted to 103.38 tons and 10,103.9 tons, respectively, and the trading volume of gold in Shanghai Futures Exchange amounted to 48.04 tons. The total trading volume was RMB127,779 million. In terms of on-floor trading value, the Company was the tenth largest dealer at the Shanghai Gold Exchange and also one of the most active dealers at the Shanghai Futures Exchange. During the reporting period, the Company sold 1,200 kg gold bars of its own brand, representing an increase of 130% as compared with the previous year. The outlook of the market remained positive.

(IV) E-banking services

In the reporting period, the Company’s e-banking services remained its rapid growth and recorded a total transaction volume of RMB11,877.5 billion, a rise of 45.22% as compared with the corresponding period of the previous year. The replacement rate of online banking exceeded 80%, equaling to four times of over-the-counter transaction and becoming the main transaction channel for customers. The total number of corporate e-banking accounts and individual e-banking accounts were 182,000 and 4433,000, up 45.18% and 37.41% as compared with the end of the previous year respectively.

In the reporting period, the Company focused on settlement services for MSEs in the reporting period and introduced the online banking for merchants to offer MSEs featured services, such as centralized management of private accounts, partner accounts, SMS payments and remittance by email, so as to facilitate their payments and settlements. The Company also expanded e-banking into business circles to promote relevant products as well as facilitated the settlement of MSEs. The coverage of online banking for MSEs with loans reached 77.20%, representing a transaction replacement rate of 84.61%. The Company firstly launched cross-bank cash sweep business to provide customers an effective and convenient way to collect funds from other banks so as to enhance their utilization efficiency. As at the end of the reporting period, customers of the online cross-bank cash sweep transactions reached 44,000 and the amount of cash sweep transactions exceeded RMB30,000 million during the year. The Company actively developed the wealth management business and attracted customers to purchase wealth management products by offering online banking exclusive wealth management and night market wealth management. As a result, the sales volume of the wealth management under online banking exceeded RMB470,000 million, accounting for 75% of the sales volume of low-risk wealth management products of the Company. In addition, the Company cooperated with China UnionPay to establish third party cross-bank bulk collection and payment agency business, so as to automatically transfer settlement funds of corporate customers at other banks to their account in the Company. It also launched the Shang Dai Tong cross-bank online withheld payment service, which facilitating the settlement of MSE customers by permitting them to repay their balances in the Company with their funds at other banks automatically.

All indicators of customer services of the Company remained at high level during the reporting period, maintaining its leading position in the industry. The total incoming-calls through hotlines reached 31.799 million, among which “95568” hotline received 29.765 million in-coming calls while “4006895568” corporate customer hotline and “4006895568” MSE customer hotline received 1.873 million and 161,000 incoming calls, respectively. The Company recorded customer satisfaction rate of 99.42%, service level of 94.62%, call-in connection rate of 98.45% and VIP call-in connection rate of 99.44%.

During the reporting period, the Company introduced “95568' after-sale services to MSEs, and provided standardized services, including follow-up call upon first call, follow-up call, due notifications and collection reminder by phone, as well as customer services on an ongoing basis within the loan period. Targeting at the customers of “Happy Payment”, the Company launched online services for payment accounts, resulting in significant improvement in business efficiency by shortening handling time from three days to three minutes. The Company also introduced “95568” customer maintenance and upgrading services to general customers such as customer care services, wealth management product recommendation, prestige services for loyal customers, associated borrowings and loans and fund telemarketing. During the year, voluntary calls made to customers exceeded 5 million. In 2011, China Banking Association released its first report on the operating data of customer service centers of its 29 members. According to the report, the Company ranked the first in the industry in terms of the call-in connection rate and service quality and the fourth in terms of customer satisfaction rate.

During the reporting period, the e-banking business of the Company received various awards from third-party authoritative organizations in different contests and campaigns. The Company received the 2011 Award for the PRC Online Bank with Best Security from the China Financial Certification Authority (“CFCA”), the 2011 Best Online Bank from Money Weekly, the 2011 Best Bank in Electronic Banking and the 2011 Bank of Best Service from Eastmoney.com. The Minsheng U-key was selected as the 2011 Best Online Bank Safety Product while the Company was awarded the 2011 Best Banking Financial Service Centre in the 5th China Electronic Finance Development Annual Conference. The Company also received the honor of the Best Service Innovation in China in the 6th Best Customer Service Award.

(V) Performance of subsidiaries

1.Minsheng Financial Leasing Co., Ltd.

Minsheng Financial Leasing Co., Ltd. (hereinafter referred to as “Minsheng Leasing”), one of the first five financial leasing companies in the banking sector approved by the State Council, was established in April 2008. After the capital injection in December 2011, the registered capital increased from RMB3,200 million to RMB5,095 million whilst equity interest held by the Company in Minsheng Leasing changed from 81.25% to 51.03%. As at the end of the reporting period, the total assets of Minsheng Leasing amounted to RMB61,223 million, representing an increase of 47.59% as compared with the end of the previous year. The net profit during the reporting period amounted to RMB858 million, representing an increase of 73.33% as compared with the previous year. The weighted-average profit rate of net asset was 19.60%, representing an increase of 6.23 percentage points as compared with the previous year. There was no non-performing asset. Each operation indicator ranked top among domestic peers.

Minsheng Leasing adhered to professional and characterized development and set up a mode of development focusing on featured business such as aviation and shipping. In the business of leasing of business jets, it has boasted an international and domestic leading business jet fleet with 78 jets of Gulf Stream and Bombardier. In the business of ship leasing, it also took a lead in the domestic market in terms of domestic shipping with 133 ships of different types with a total deadweight capacity of 4.47 million tons. The businesses of Minsheng Leasing and the Company complemented each other, raising the competitiveness of the Group. The vigorous business development of Minsheng Leasing developed rapidly and received strong recognition from the industry. The awards it obtained included The Best Financial Leasing Company of the Year by Chinese Financial Institutions Gold Medal List 2011; The Financial Leasing Company of the Highest Brand Value in 2011by the 6th Asia Annual Finance Summit; The Marketing Award in 2011by the Marketing Ceremony of the First Financial Daily; and the Top 10 Excellent Financial Leasing Enterprises by the 2011 China Financial Leasing Annual Meeting.

2. Minsheng Royal Fund Management Co., Ltd.

Minsheng Royal Fund Management Co., Ltd. (hereinafter referred to as “Minsheng Royal Fund”) is a Sino-foreign fund management joint venture established under the approval of the China Securities Regulatory Commission (“CSRC”). It was established in November 2008 with a registered capital of RMB200 million. As at the end of the reporting period, 60% equity interest of Minsheng Royal Fund Management was held by the Company.

As at the end of the reporting period, the total assets and net assets of Minsheng Royal Fund Management were RMB72.99 million and RMB40.70 million, respectively. The operating income and loss were RMB50.58 million and RMB29.93 million, respectively. The asset managed by six open-ended funds under Minsheng Royal Fund Management amounted to RMB5,166 million, representing an increase of 96 % as compared with the end of the previous year. Among 66 fund companies in the PRC as at the end of November 2011, Minsheng Royal Fund was ranked the 55th in terms of asset scale, up from 58th as at the end of 2010.

To face the intensifying competition, Minsheng Royal Fund reorganized its operation teams by adding key members to its management. It strengthened its product research and development so as to diversify its products. Minsheng Royal Fund also improved its sales capability and introduced new funds to promote the overall development of its businesses. Supported by the main sales channel of Minsheng Bank, the initial issue of Minsheng Royal Prosperous Industry Fund, the sixth fund launched by Minsheng Royal Fund, raised RMB3,199 million, the highest record of a new product of Minsheng Royal Fund for three years since its establishment and was the largest equity fund launched in the second half of 2011.

3. Minsheng Township Banks

Minsheng township banks collectively refer to the township banks initiated and established by the Company. With centralized risk control and professional support of the Company, Minsheng township banks actively explored business models with local characteristics for SMEs (including micro enterprises) as well as financial business in rural areas. As an effective extension of the Company's business strategies for NSOEs and MSEs, it boosted the expansion of market shares of the Company in various counties and towns. The Company accelerated the establishment of township banks in the reporting period, with 9 township banks set up in Hubei, Shanghai, Shandong, Jiangsu, Hebei, and Fujian. As at the end of the reporting period, the Company established a total of 18 Minsheng township banks, outstanding deposits and outstanding loans of which in aggregate were RMB10,026 million and RMB6,866 million, respectively. Net profit after tax in aggregate amounted to RMB190 million. 9 township banks recorded profits after operation of more than a year. Shanghai Songjiang Township Bank ranked the top in terms of asset scale and profitability among the township banks in China, whereas Cixi Minsheng Township Bank was named the Top 10 Township Banks by the China Academy of Regional Finance. In the reporting period, the Company deepened the principle in developing township banks as “consolidated and standardized development, centralized risk control, sharing of resources and flexible operation with its own characteristics”, and prioritized risk control in township bank management. As at the end of the reporting period, assets quality of the township banks was satisfactory. No operation accident was recorded throughout the year.

IX. Equity interests of the Company in non-listed financial enterprises (Except from 2011Annual Report of CMBC)

Note: 1. During the reporting period, Shanghai Songjiang Minsheng Township Bank Co., Ltd. made share allotment in the ratio of 1:0.5 based on the outstanding 100 million shares to all shareholders at a price of RMB2 per share, and the registered capital after the allotment thus changed to RMB150 million. The Company participated in this allotment.
2. During the reporting period, Minsheng Financial Leasing Co., Ltd. increased its capital by issuing 1,895 million shares at a price of RMB 1.3 per share, raised RMB 2,463, 5 million of funds, and the registered capital after the capital increase changed to RMB 5,095.00million. The old shareholders of the Company didn’t participate in this capital increase.