China Huarong Asset Management : INSIDE INFORMATION

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

China Huarong Asset Management Co., Ltd.

(A joint stock limited liability company incorporated in the People's Republic of China)

(Stock Code: 2799)

INSIDE INFORMATION

This announcement is made by China Huarong Asset Management Co., Ltd. (the "Company") pursuant to Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

Huarong Xiangjiang Bank Corporation Limited ("Huarong Xiangjiang Bank"), a subsidiary of the Company, published its audited annual report for the year ended 31 December 2020 ("Annual Report of Huarong Xiangjiang Bank") on the ChinaBond.com.cn, chinamoney.com.cn and

the website of Huarong Xiangjiang Bank in accordance with the Guidelines on the Corporate Governance of Commercial Banks (《商業銀行公司治理指引》), the Measures for the Information Disclosure of Commercial Banks (《商業銀行信息披露辦法》) and other regulatory requirements

and institutional regulations; and it published its unaudited quarterly results for the three months ended 31 March 2021 ("Quarterly Results of Huarong Xiangjiang Bank") on the website of

Huarong Xiangjiang Bank in accordance with the Administrative Measures for Capital Management of Commercial Banks (Provisional) (《商業銀行資本管理辦法 ( 試行 )》), the Measures for the Disclosure of Information on Net Stable Funding Ratio by Commercial Banks (《商業銀行淨穩 定資金比例信息披露辦法》), the Administrative Measures for the Issuance of Financial Bonds in the National Interbank Bond Market (《全國銀行間債券市場金融債券發行管理辦法》), the

Operating Procedures for the Management of Issuance of Financial Bonds in the National Interbank Bond Market (《全國銀行間債券市場金融債券發行管理操作規程》) and other regulatory

provisions, and the contents thereof were attached to this announcement. For the avoidance of doubt, "the Company" or "the Bank" mentioned in the Annual Report of Huarong Xiangjiang Bank and Quarterly Results of Huarong Xiangjiang Bank refers to Huarong Xiangjiang Bank.

The Annual Report of Huarong Xiangjiang Bank and Quarterly Results of Huarong Xiangjiang Bank accompanying with this announcement were prepared in accordance with the generally accepted PRC accounting standards, of which the Annual Report of Huarong Xiangjiang Bank was audited by Ernst & Young Hua Ming LLP (the auditor of Huarong Xiangjiang Bank), and the Quarterly Results of Huarong Xiangjiang Bank has not been audited or reviewed by the auditor.

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The Company's shareholders and potential investors are advised to exercise caution when dealing in the shares of the Company.

By order of the Board

China Huarong Asset Management Co., Ltd.

WANG Zhanfeng

Chairman

Beijing, the PRC

12 April 2021

As at the date of this announcement, the Board comprises Mr. WANG Zhanfeng and Mr. WANG Wenjie as executive directors; Ms. ZHAO Jiangping, Mr. ZHENG Jiangping, Mr. XU Nuo and Mr. ZHOU Langlang as non-executive directors; Mr. TSE Hau Yin, Mr. SHAO Jingchun, Mr. ZHU Ning and Ms. CHEN Yuanling as independent non-executive directors.

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Huarong Xiangjiang Bank Corporation Limited

Annual Report 2020

April 2021

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	Contents
Important Notice.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Part I	Brief Introduction to Basic Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. 6.
Part II	Share Capital and Major Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Part III	Summary of Main Business Information and Data . . . . . . . . . . . . . . . . . . . . . . . . . .	.13
Part IV	Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19.
Part V	Capital Management.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	29
Part VI	Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31.
Part VII	Other Important Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	58.
Part VIII  Financial Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	62.

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Important Notice

The Board of Directors, Board of Supervisors and all Directors, Supervisors and senior management of the bank confirm that this Report does not contain any false information, misleading statements or material omissions, and collectively and individually accept responsibility for the truthfulness, accuracy and completeness of the contents of this report.

The Annual Report 2020 of Huarong Xiangjiang Bank Corporation Limited has been discussed

and adopted by the third session of Board of Directors at the 2nd meeting.

The Financial Statements of the bank for 2020 have been audited by Ernst & Young Hua Ming LLP, which has issued a standard and unqualified Audit Report.

Unless otherwise specified, the financial data and indicators provided in this Annual Report are all the data from consolidated statements.

The Chairman of the Board, Huang Weizhong, the Bank President, Jiang Junwen, and CFO

Tang Jun confirm the truthfulness and completeness of the Financial Statements contained in this

Annual Report.

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Part I Brief Introduction to Basic Information

I. Legal Name

Legal Chinese Name: 華融湘江銀行股份有限公司

Legal Chinese Abbreviation: 華融湘江銀行

Legal English Name: HUARONG XIANGJIANG BANK CORPORATION LIMITED

Legal English Abbreviation: HUARONG XIANGJIANG BANK

English Abbreviation: HXBC

1. Legal Representative Huang Weizhong
   III. Secretary of the Board Zhou Jibang
   Tel: [phone]
   E-mail: [e-mail]
   IV. Registered Capital RMB 7,750,431,375 yuan
   V. Date of Establishment October 8, 2010
   VI. Business Scope
   To take deposits from the public; release short-, medium- and long-term loans; handle

domestic and international settlement; handle acceptance and discounting of negotiable instruments; issue financial bonds; act as the agent of issuance and payment by acceptance and underwrite government bonds; trade government bonds and financial bonds; engage in interbank lending; trade foreign currencies and trade it as agent; engage in the bank card business; provide letters of credit and guarantees; act as the agent of receipts and payments and other insurance businesses; provide the safe deposit box service; engage in securities investment fund sales business and other businesses approved by the banking regulatory authority.

VII. Registered Address and Office Address

Registered Address: Jiezuo Building, No.828, South Furong Road (Section 1), Tianxin District, Changsha City, Hunan Province

Office Address: South Building, Wanjing Caizhi Center, No.208, East Xiangfu Road, Yuhua District, Changsha City, Hunan Province

Tel: [phone]

Fax: [phone]

Postal Code: 410007

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VIII. Information Disclosure and Filing Location of Annual Report

Website designated to release this Annual Report: official website of the bank, http://www.chinabond.com.cn and www.chinamoney.com.cn

This Annual Report is filed at: Office of the Board of Directors of the bank

IX. Other Related Information

Unified Social Credit Code: 914300005617419921

Internet Website: http://www.hrxjbank.com.cn

Customer Service and Complaint Tel: [phone]

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Part II Share Capital and Major Shareholders

I. Share Structure

At the end of the report period, the bank has total 7.750 billion shares, and total 7,661 shareholders, 6 shareholders fewer than those at the beginning of the report period. Including total 75 million shares for 17 state shareholders, total 6.028 billion shares for 25 state-owned legal person shareholders, total 1.507 billion shares for 251 social legal person shareholders, and total 140 million shares for 7,368 natural person shareholders. The shareholding structure and changes of the bank during the report period are shown in the following table.

				Number of			Number of shares			Shareholding ratio
				shareholders
	Nature of share
			Year 2020		Year 2019			Year 2020		Year 2019			Year 2020	Year 2019
	State share	17		18		74,940,269		84,566,184	0.97%	1.09%
	State-owned
	legal	person	25		23		6,028,076,762		6,018,449,547	77.78%	77.66%
	share
	Social	legal	251		252		1,506,946,296		1,506,986,486	19.44%	19.44%
	person share
	Natural	person	7368		7374		140,468,048		140,429,158	1.81%	1.81%
	share
	Total		7661		7667		7,750,431,375		7,750,431,375	100.00%	100.00%

II. Shareholdings and Changes of Top 10 Shareholders

In the report period, Hunan Caixin Investment Holding Co., Ltd. holds 20% shares after accepting transfer of the shares of its subsidiary Hunan Trust Co., Ltd. in the bank. Tianyuan Real Estate Co., Ltd. holds 4.9997% shares after accepting transfer of other shareholders' 450,000 shares in the bank. There is no change in shareholding of other top 10 shareholders in the bank. At the end of the report period, top 10 shareholders in the bank hold total 81.67% shares, i.e. 6.330 billion shares.

	No.			Shareholders			Number of shares			Proportion			Nature of
							(%)			shareholders
1			China Huarong Asset Management Co., Ltd.	3,141,250,000	40.53%		State-owned
			legal person
2			Hunan Caixin Investment Holding Co., Ltd.	1,550,031,668	20.00%		State-owned
			legal person
3			Tianyuan Real Estate Co., Ltd.	387,500,000	4.99%		Social legal
			person
4			Hengyang Urban Construction Investment Co.,	379,490,478	4.90%		State-owned
		Ltd.		legal person
5			Hunan Xiangxiang Investment Holding Group	233,700,000	3.02%		State-owned
		Co., Ltd.		legal person
6			Xiangtan Two-oriented Society Construction	165,388,372	2.13%		State-owned
		Financing& Investment Co., Ltd.		legal person

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7	Yueyang State-owned Assets Management Co.,	143,950,000	1.86%	State-owned
Ltd.	legal person
8	Xiangtan Xinhuang Resource Technology Co.,	129,002,188	1.66%	Social legal
Ltd. of Xinhuang Group	person
9	Zhuzhou State-owned Assets Investment Holding	100,000,000	1.29%	State-owned
Group Co., Ltd.	legal person
10	Hunan Publishing Investment Holding Group	100,000,000	1.29%	State-owned
Co., Ltd	legal person
	Total	6,330,312,706	81.67%

1. Major Shareholders and Their Controlling Shareholders, Actual Controllers, Related Parties, Persons Acting in Concert, and Ultimate Beneficiaries

At the end of the report period, the bank had 5 major shareholders, i.e. China Huarong Asset Management Co., Ltd., Hunan Caixin Investment Holding Co., Ltd., Hengyang Urban Construction Investment Co., Ltd. , Xiangtan Two-oriented Society Construction Financing& Investment Co., Ltd. and Yueyang State-owned Assets Management Co., Ltd. The five major shareholders have no persons acting in concert in the bank, and the ultimate beneficiaries are themselves. The basic information of major shareholders is shown as follows:

1. China Huarong Asset Management Co., Ltd. holds 40.53% shares of the bank and is the largest shareholder of the bank. The Company was formerly known as China Huarong Asset Management Company and restructured into a joint stock limited company with an approval by the State Council on September 28, 2012. China Huarong was listed on the Stock Exchange of Hong Kong on October 30, 2015. The registered capital of the Company reaches RMB 39.070 billion yuan, which is controlled by the Ministry of Finance. The direct equity ratio held by the Ministry of Finance is 57.02%. The registered address is at No. 8, Jinrong Street, Xicheng District, Beijing City, and the legal representative is Wang Zhanfeng. The Ministry of Finance is the controlling shareholder and actual controller of the Company. Related parties include Huarong Securities Co., Ltd., Huarong Financial Leasing Co., Ltd., Huarong International Trust Co., Ltd., Huarong Industrial Investment Management Co., Ltd., Huarong Rongde Asset Management Co., Ltd., Huarong Huitong Asset Management Co., Ltd., Huarong Zhiyuan Investment Management Co., Ltd., Huarong Consumer Finance Co., Ltd., China Huarong International Holding Co., Ltd., Huarong Futures Co., Ltd., and so on. Scope of business: acquire and manage non-performing assets of financial institutions and non-financial institutions as entrusted, manage, invest and dispose of non-performing assets; debt-for-equity swap, manage, invest and dispose of equity assets; receivership; foreign investment; buy and sell negotiable securities; issuance of financial bonds, inter-bank borrowing, commercial financing from other financial institutions; approved assets securitization business, trusteeship of financial institutions and closure & liquidation business; finance, investment, law and risk management consulting and advisory services; asset and project appraisal; absorbing public deposits and loan granting business; financial leasing business; securities and futures business; fund management business; asset management business; trust business; real estate development business and other business approved by the CBRC or other

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regulatory agencies, etc.

1. Hunan Caixin Investment Holding Co., Ltd. holds 20% shares of the bank, and is the second largest shareholder of the bank. The Company was founded on December 31, 2001 with the approval of Hunan Provincial People's Government. Unified Social Credit Code of Business License: 91430000743156460N, Registered Capital: RMB 3.744 billion yuan, Registered Address: No.1, West Chengnan Road, Tianxin District, Changsha City, Legal Representative: Hu Hebo. The sole shareholder and actual controller of the Company is Hunan Caixin Financial Holding Group Company. Related parties include Hunan Caixin Financial Holding Group Co., Ltd., Hunan Caixin Trust Co., Ltd., Hunan State-owned Investment Management Co., Ltd., Caixin Securities Co., Ltd., Caixin Jixiangren Life Insurance Co., Ltd., Hunan Caixin Asset Management Co., Ltd., Hunan Caixin Industry Fund Management Co., Ltd., Caixin Futures Co., Ltd., Hunan United Equity Exchange Co., Ltd., Hunan Equity Exchange Co., Ltd., Hunan Caixin Real Estate Development Co., Ltd., Hunan Xiangxi Caixin Investment Property Co., Ltd., Nanhua Bio-medicine Co., Ltd., Hunan Caixinl Financial Technology Service Co., Ltd., Hunan Caixin Yucai Insurance Agency Co., Ltd., Hunan Caixin Economic Investment Co., Ltd., Hunan Caixin Material and Trade Investment Co., Ltd., Hunan Caixin Hotel Management Co., Ltd., Hunan Caixin Energy Conservation and Environmental Protection Technology Co., Ltd., and so on. Scope of Business: assets investment, operation and management permitted by laws and regulations.
   (3)Hengyang Urban Construction Investment Co., Ltd. holds 4.90% shares of the bank. The Company was founded in 1999 in Hengyang City. Registered Capital: RMB 300 million yuan, Legal Representative: Qin Fangjin. The Company is a wholly state-owned company, and its controlling shareholder and actual controller is Hengyang State-owned Assets Supervision and Administration Committee. Related parties include Hengyang City Investment Building Materials Co., Ltd., Hengyang Xiangcheng Property Management Co., Ltd., Hengyang Huancheng Investment Co., Ltd., Hengyang Chengtong Pipeline Network Construction and Development Co., Ltd., Hengyang Hengshan Science City Investment and Development Co., Ltd., Hengyang Lingsheng Real Estate Co., Ltd. and so on. Scope of Business: operate state-owned assets authorized by the government; implement the construction investment projects designated by the government with the company as the owner; operate municipal resources such as garbage disposal, outdoor advertising and parking space authorized by the government; land acquisition and storage, land development, and real estate development.

1. Xiangtan Two-oriented Society Construction Financing & Investment Co., Ltd. holds
   2.13% shares of the bank. The Company was founded in 2009 in Xiangtan City. Registered Capital: RMB 1.1 billion yuan, Legal Representative: Li Xinmiao. The Company is a wholly state-owned company. The controlling shareholder is Xiangtan Urban and Rural Construction Development Group Co., Ltd., and the actual controller is Xiangtan State-owned Assets Supervision and Administration Committee. Related parties include Xiangtan Urban and Rural Construction and Development Group Co., Ltd., Kaiyuan Development (Xiangtan) Investment Co., Ltd., Xiangtan Xingcheng Property Co., Ltd., Xiangtan Urban and Rural Asset Operation and Management Co., Ltd., Xiangtan Urban and Rural Innovation Industrial Co., Ltd., Xiangtan Urban Construction

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Investment Management Co., Ltd., Xiangtan Urban Shantytowns Transformation Co., Ltd., Xiangtan Urban and Rural Traffic Construction Investment Co., Ltd., Xiangtan Urban and Rural Railway Investment Co., Ltd., Xiangtan Urban and Rural Innovation Concrete Co., Ltd., Xiangtan Urban and Rural Construction Development Water Conservancy Investment Co., Ltd., Xiangtan Affordable Housing Investment Co., Ltd., and so on. Scope of Business: undertake the investment, financing, construction, debt settlement management and land consolidation of Xiangtan urban infrastructure and transportation infrastructure construction projects; sales of building materials.

1. Yueyang State-owned Assets Management Co., Ltd. holds 1.86% shares of the bank. The Company was founded in 2007 in Yueyang City. Registered Capital: RMB 250 million yuan, Legal Representative: Li Xiaoqiang. The Company is a wholly state-owned company. Its controlling shareholder and actual controller is Yueyang State-owned Assets Supervision and Administration Committee. Related parties include Yueyang Guoyuan Assets Management Co., Ltd., Yueyang Property Rights Exchange Co., Ltd., Yueyang Liangdu Hotel Co., Ltd., Yueyang Shunhe New Energy Co., Ltd., Yueyang Guotong New Energy Automobile Service Co., Ltd., Hunan Jinye Zhongwang Science and Technology Co., Ltd., Yueyang Zhuchang Liaison Service Co., Ltd., Yueyang Guotai Sunshine Elderly Service Co., Ltd., Yueyang Guoxin Energy Management Co., Ltd., Yueyang Xincheng Energy Management Co., Ltd.., Yueyang Guorui Culture Media Co., Ltd., Yueyang Dongting Xincheng Investment Construction & Development Co., Ltd., Yueyang Kehuan Building Materials Co., Ltd., and so on. Scope of Business: engage in state-owned assets acquisition and asset trusteeship, asset disposal, state-owned equity management and operation, enterprise restructuring and merger advisory services, land management and development and related investment and financing, property rights brokerage, investment consulting, provide local railway special line freight forwarding services and freight line consulting services, housing maintenance, and property management services.

IV. Freezing of Equity Pledge and Restriction of Voting Rights

1. Equity pledge. At the end of the report period, there are 30 equity pledge shareholders, and 1.717 billion pledge shares accounting for 22.15% of total shares of the bank, with a increase of 1.58% compared with that at the end of the previous year. Among them, the number of shares pledged by major shareholders Hengyang Urban Construction Investment Co., Ltd., Xiangtan Two-oriented Society Construction Financing & Investment Co., Ltd. and Yueyang State-owned Assets Management Co., Ltd. in the bank exceeds 50% of their holdings in the bank, which are pledged in the previous year. The shareholders holding more than 2% shares, or the shareholders holding the posts of directors or supervisors who pledge their shares in the bank have all fulfilled the filing procedures of the Board of Directors of the bank. During the report period, 16,110,059 shares held by Hunan Yueyi Ecological Engineering Group Co., Ltd. in the bank were frozen after being pledged.
2. Restriction of voting rights of pledged equity. According to the provisions on restriction of voting rights of pledging the bank's equity in the systems such as the bank's articles of association, rules of procedure of the shareholders' general meeting, the rules of procedure of the board of

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directors, when the second session of the Board of Directors at the sixty-seventh meeting voted on the proposal Annual Business Plan 2020 of Huarong Xiangjiang Bank, the bank has limited the voting rights of directors nominated by the shareholders with 50% or more of their shares pledged. The First extraordinary general meeting in 2020 and the annual general meeting in 2019 have limited the voting rights of those participating shareholders who pledge 50% or more of the bank's equity, and their effective voting rights reach 70% of total shares. The number of shares restricted from exercising the voting right is not included in total number of valid votes at the shareholders' meeting.

V. Directors and Supervisors Nominated by Shareholders

At the end of the report period, 10 directors and 2 supervisors of the bank are nominated by the shareholders, shown as follows:

China Huarong Asset Management Co., Ltd. has nominated the following directors: Huang Weizhong, Jiang Junwen, Chen Jin, Wang Jin and Zhang Li.

Hengyang Urban Construction Investment Co., Ltd. and Finance Bureau of Hengyang City (shares transferred) have jointly nominated the following director: Luo Chunyao.

Xiangtan Two-oriented Society Construction Financing& Investment Co., Ltd., Xiangtan Electrochemical Scientific Ltd. and Xiangtan Xiangqiao Development Co., Ltd. (shares transferred) have jointly nominated the following director: Wang Jianjun.

Yueyang State-owned Assets Management Co., Ltd. and Yueyang Urban Construction & Investment Co., Ltd. have jointly nominated the following director: Chen Shiqing.

Xiangtan Xinhuang Resource Technology Co., Ltd. of Xinhuang Group, Zhuzhou Risheng Real Estate Development Co., Ltd. and Hunan Xiangzhou Trade Co., Ltd. (shares transferred) have jointly nominated the following director: Yuan Bo.

Hunan Shaodong Xinren Aluminum Co., Ltd., Hunan Yuxiang Industry & Trade Co., Ltd., Shaoyang Longteng Automobile Sales Service Co., Ltd., Hunan Dongxin Group Co., Ltd., Shaoyang Jianming Group Property Co., Ltd., Finance Bureau of Shaoyang City, Hunan Yige Pharmaceutical Co., Ltd., Shaoyang Urban Construction Investment & Management Group Co., Ltd. have jointly nominated the following director: Wang Hongwei.

Hunan Trust Co., Ltd. (shares transferred) has nominated the following supervisor: Li Lifang. Hunan Publishing Investment Holding Group Co., Ltd. has nominated the following supervisor:

Liu Xiaoxin.

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Part III Summary of Main Business Information and Data

At the end of the report period, according to the caliber of consolidated statements, total assets of the bank reached RMB 405.976 billion yuan, with an increase of RMB 39.199 billion yuan and increase of 10.69% compared with that at the beginning of the year; total liabilities reached RMB 374.973 billion yuan, with an increase of RMB 32.178 billion yuan and increase of 9.39% compared with that at the beginning of the year; shareholders' equity reached RMB 31.002 billion yuan, with an increase of RMB 7.021 billion yuan and increase of 29.28% compared with that at the beginning of the year; total profits reached RMB 3.671 billion yuan; and net profits reached RMB 2.869 billion yuan.

I. Major Accounting Data and Financial Indicators

		Unit: RMB _0,000 Yuan
Item	Year 2020	Year 2019
Operating income	1,046,082	934,552
Operating profit	368,346	376,201
Total profits	367,145	377,172
Investment income	69,362	89,752
Net profit	286,883	301,614
Total assets	40,597,561	36,677,684
Deposit taking	25,155,729	22,768,442
Loans	22,833,383	20,726,126
Shareholders' equity	3,100,230	2,398,104
Shareholders' equity attributable to the parent company	3,094,331	2,391,950
Basic earnings per share (yuan)	0.37	0.39
Net assets per share (yuan)	3.32	3.09
Return on total assets (%)	0.74	0.86
Weighted average return on net assets (%)	10.44	13.13
Cost-income ratio (%)	23.14	25.20
Asset liquidity ratio (%)	72.38	70.91
Non-performing loan ratio (%)	1.84	1.57
Provision coverage (%)	158.30	163.44

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Loan provision rate (%)	2.92	2.57
Net cash flow from operating activities	1,199,977	815,771
Net cash flow from operating activities per share (yuan)	1.55	1.05

Notes: In 2020, the bank has responded to the policy requirements of China on coping with COVID-19, adhered to serving real economy, further consolidated the foundation of asset quality, and increased the provision of reserves. Net profit reduced slightly compared with that in the previous year.

II. Leverage Ratio

		Unit: RMB _0,000 Yuan
Item	Year 2020	Year 2019
Net tier 1 capital	3,064,575	2,366,435
Adjusted assets balance on and off the balance sheet	42,595,353	38,289,626
Leverage ratio (%)	7.19	6.18

III. Net Stable Funding Ratio

		Unit: RMB _0,000 Yuan
Item	December 31, 2020	September 30, 2020
Stabilization funds available	23,984,864.36	22,932,145.22
Stabilization funds required	22,360,256.53	22,424,714.50
Net stable funding ratio (%)	107.27	102.26

IV. Liquidity Coverage Ratio

		Unit: RMB _0,000 Yuan
Item	Year 2020	Year 2019
Qualified high-quality liquid assets	6,371,310.07	5,124,705
Net cash outflows	3,831,814.29	3,129,516
Liquidity coverage ratio (%)	166.27	163.75

V. Deposit

		Unit: RMB _0,000 Yuan
Item	Year 2020	Year 2019

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Current deposit	10,041,687	8,681,087
Corporate client	7,742,947	6,758,114
Individual client	2,298,740	1,922,973
Fixed deposit	12,918,368	11,754,431
Corporate client	6,656,154	6,871,667
Individual client	6,262,215	4,882,765
Structural deposit	0	390,107
Corporate client	0	23,300
Individual client	0	366,807
Guarantee deposit received	740,895	780,249
Other deposits	1,061,977	799,849
Accrued interest	392,802	362,719
Total	25,155,729	22,768,442

VI. Loan

(1) Sector distribution of loan (top 10-industry)

										Unit: RMB___0,000 Yuan
	Industry			Year 2020			Year 2019
			Balance			Proportion			Balance			Proportion
	Water conservancy, environment and public facilities
			3,695,402	16.2%	3,450,454		16.7%
	management
	Real estate	1,790,442	7.8%	1,545,844		7.5%
	Construction	1,401,197	6.1%	1,555,386		7.5%
	Manufacturing	1,321,624	5.8%	1,010,445		4.9%
	Leasing and commercial services	1,123,391	4.9%	1,151,688		5.6%
	Wholesale and retail	1,067,337	4.7%	1,127,231		5.4%
	Health and social work	414,144	1.8%	247,372		1.2%
	Transportation, warehousing and postal services	327,080	1.4%	224,752		1.1%
	Education	320,300	1.4%	298,439		1.4%
	Production and supply of electricity, heat, gas and water	214,642	0.9%	150,049		0.7%
	Total	11,675,559	51.13%	10,761,660	51.97%

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(2) Loan guarantee mode

Unit: RMB___0,000 Yuan

				Item			Year 2020							Year 2019
						Balance			Proportion			Balance			Proportion
	Credit loan				6,102,869		26.73%		5,841,759		28.19%
	Guarantee loan	4,888,357		21.41%		3,089,743		14.91%
	Mortgage loan	8,991,637		39.38%		8,231,167		39.71%
	Pledge loan				2,850,520		12.48%		3,563,457		17.19%
	Total				22,833,383		100.00%		20,726,126		100.00%
	(3)Loan of top 10 clients
																	Unit: RMB_0,000 Yuan
	No.						Customer name			Loan balance		Proportion to the total
												loan amount
1			Hengyang Urban Construction Investment Co., Ltd.			125,000			0.55%
2			Xiangtan Development Investment Co., Ltd.			103,349			0.45%
3			Changsha Xiandao Hengding Real Estate Development Co., Ltd.		84,000			0.37%
4			Changsha Hengchengye Real Estate Development Co., Ltd.		79,196			0.35%
5			Better Life Investment Group Co., Ltd.			76,600			0.34%
6			Hunan Shengteluopei Real Estate Development Co., Ltd.		74,391			0.33%
7			Hunan Chuzhisheng Holding Industrial Group Co., Ltd.			74,160			0.32%
8			Zhuzhou Xiangjiang Investment Group Co., Ltd.			72,500			0.32%
9			China New Housing Group Co., Ltd.			71,844			0.31%
10			Qiyang Urban Construction Investment & Development Co., Ltd.		71,500			0.31%
							Total			832,540			3.64%

(4) Provision for loan impairment and write-off

		Unit: RMB___0,000 Yuan
Item	Year 2020	Year 2019
Balance at the beginning of the period	533,855	445,140
Withdrawal during the report period	367,011	295,815

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Write-off and transfer during the report period	289,486	246,297
Withdrawal of write-off of the previous year in current
	55,459	39,197
period
Ending balance	666,839	533,855

(5) Five classes of loan

Unit: RMB___0,000 Yuan

	Five classes			Year 2020				Year 2019
				Balance			Proportion			Balance			Proportion
	Normal class	21,584,973			94.54%		19,803,057			95.55%
	Concerned class	827,147			3.62%		597,082			2.88%
	Substandard class	210,118			0.92%		149,249			0.72%
	Doubtful class	159,947			0.70%		151,099			0.73%
	Loss class	51,199			0.22%		25,639			0.12%
	Total	22,833,383			100%		20,726,126			100.00%

VII. Financial Services for Small and Micro Enterprises

The bank actively fulfills its social responsibilities, while realizing its own steady development. The bank has comprehensively improved the financial service ability of small and micro enterprises by building a small and micro product innovation system, setting up a special credit line for small and micro enterprises, and establishing a professional team. At the end of 2020, the balance of small and micro loans of the bank reached RMB 55.903 billion yuan, with an increase of RMB 5.182 billion yuan compared with that at the beginning of the year, and the balance of Inclusive loans reached RMB 16.094 billion yuan, with an increase of RMB 2.322 billion yuan compared with that at the beginning of the year.The bank has met the requirements of targeted reduction of the required reserve ratio for Inclusive loans for two consecutive years, and met the regulatory requirements of "three not less than" or "two increases and two controls" for seven consecutive years. In the past three years, the bank has established more than 180 branches covering the whole province. The bank has served more than 600,000 local small and micro enterprise clients through small and micro finance whole product system represented by "Tax Lian E-Loan", "Yan Shang E-Loan", "Entrepreneurship Loan" and "Huinong Loan", and the loan interest rate is lower than the industry average. The bank has successively won the first prize of financing innovation assessment of provincial financial institution, the first prize of supporting local economic construction target

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assessment of Hunan provincial financial institution, the advanced unit of small and micro business financial service, the excellent team of small and micro business financial service of national banking financial institution, Hunan inclusive finance development contribution award and other honors.

VIII. Other provisions for assets impairment

		Unit: RMB___0,000 Yuan
Item	Year 2020	Year 2019
Bad debt provision for other accounts receivable	11,115.60	7,036.60
Impairment provisions for debt-offsetting assets	52,172.50	19,939.80
Provisions for impairment of other assets to be disposed of	392.90	1,024.80
Debt investment	57,234.00	43,045.40
Other debt investments	116.29	11.2
Off-balance sheet commitments【estimated liabilities】	15,831.70	15,034
Total	136,862.99	86,091.80

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Part IV Risk Management

I. Credit Risk

The Board of Directors of the bank is the highest decision-making body for credit risk management and bears the ultimate responsibility for credit risk management. The Board of Directors has a risk management committee which is responsible for establishing risk preferences and supervising the implementation of key credit risk indicators. Senior management execute board decisions to guarantee that credit risk management strategies, policies, procedures, risk preferences and risk limits are fully communicated and effectively implemented. Senior management has professional committees such as credit risk management and asset disposal committee, credit granting approval committee and so on. The credit risk management and asset disposal committee is the overall management, research, deliberation and decision-making body for credit risks of the whole bank, and responsible for deliberating credit risk management policies, risk control models, and disposal, activation and resolution plans for credit in question. The credit extension examination and approval committee is a professional credit risk decision-making body for the credit extension business and credit extension matters, and exercises decision-making power within the scope of its authority in accordance with the rules of procedure. The risk management department takes charge of credit risks of the bank, and the credit extension management department assists the bank in the management of credit risks. All business departments, branches and subsidiaries of the head office are the execution departments, which can effectively control credit risks through credit rating, risk pricing, risk mitigation, risk classification, impairment provision, limit management, structural adjustment and other management tools.

The bank implements five-level asset quality classification to realize full caliber coverage of asset classification on- and off-balance sheet. The classification of credit assets mainly takes the borrower's repayment ability as the core and the overdue days as the important reference indicator. The bank divides credit assets into five levels and twelve grades according to strict procedures and standards. The bank carries out risk classification of credit assets on a monthly basis, and strictly grasps the classification standards to realize asset quality. Non-credit assets can be divided into safe assets and risky assets according to the degree of risk and loss. Risk-basednon-credit assets can be divided into five categories, i.e. normal assets, concerned assets, substandard assets, doubtful assets and loss assets according to the degree of impairment and expected loss to reflect the quality of assets in a true, comprehensive and dynamic way. At the end of the report period, the balance of all loans in the Group's statements reached RMB 228.334 billion yuan, which was classified by five levels: normal loan of RMB 215.85 billion yuan, accounting for 94.54%; concerned loan of RMB 8.271 billion yuan, accounting for 3.62%; non-performing loan of RMB 4.213 billion yuan, with a non-performing loan ratio of 1.84%. The deviation of non-performing loans reached 85.79%, with a decrease of 4.45% compared with that at the end of the previous year. In accordance with the principle of substance over form, the bank is more prudent in the classification of assets, and the quality of assets is relatively stable.

The bank implements the full-caliber overdue loans management. Where the principal or interest is overdue, all the principal shall be deemed as overdue loan. If the installment repayment plan is overdue and has not reached final maturity date, all the balance of the loan under the IOU shall be deemed as overdue loan. At the end of the report period, the Group's full-caliber overdue loan balance reached RMB 5.864 billion yuan, with a full-caliber overdue loan rate of 2.57%.

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In order to standardize the management of credit extension business of the Group's customers and effectively prevent and control the systemic risk of the Group's customers, the bank implements unified credit extension management for the Group's customers. The bank shall reasonably determine the overall line of credit to the Group's customers in accordance with the magnitude of the risks and the bank's own risk-bearing capacity. The exposure of the bank to the Group's customers shall not exceed 25% of the bank's net tier one capital. The bank's loan balance to the largest member of the Group shall not exceed 10% of the bank's net capital to prevent the risk of excessive credit concentration. The bank has established a risk warning mechanism for the Group's customers to prevent and resolve credit risks of the Group's customers in time.

In 2020, the bank has focused on the goals and tasks set by the Board of Directors, actively responded to COVID-19 and the complex and severe situation, and vigorously supported the enterprises to resume work and production. Focusing on two main lines of "improving risk quality control and strictly governing bank", the bank has accelerated business transformation and quality improvement, strengthened the resolution and disposal of credit risks, and continuously improved the ability of internal risk control and management. The main credit rating of the bank has continuously maintained AAA.

1. Defining risk control target policy. The bank has formulated the Statement of Risk Preference of Huarong Xiangjiang Bank in 2020 and the Indicator Plan of Risk Limits of Huarong Xiangjiang Bank in 2020 to regularly monitor risk preference and the implementation of risk limits. The Bank has formulated credit policy guidelines to reasonably guide the orientation of credit. The bank strictly controls tnew credit risk, strictly controls the customer access standards, and adjusts the access policies of real estate and government affairs.
2. Strengthening credit risk prevention and control. The bank strictly checks loans, explores the head office's centralized lending model, and reevaluates the value of collateral. The bank implements parallel operation system of large loans to optimize the scope of parallel operation. The bank strengthens post-credit management and implements post-credit inspection on mobile IPAD. The bank has strengthened house-to-house inspection and tracking of customers in industries severely affected by the epidemic, organized and carried out self-inspection, investigation and special inspection of lending, post-credit management, real estate loan and other businesses. The bank has improved the risk liability system to achieve organic unity of strict accountability and duty exemption. The bank continues to carry out risk monitoring and early warning, and launches a risk early warning system to timely monitor the risks of industries, customers, products and regions.
3. Strengthening unified management of credit granting. The bank guarantees that the credit extension covers all kinds of businesses on and off the balance sheet to prevent the risk of concentration. The bank has developed a large risk exposure information system to improve the accuracy of customer relationship risk identification and risk exposure measurement.
4. Improving credit authorization management. The bank has made it clear that the approval authority of credit granting business in 2020 is delegated by the president, established a scientific differentiated authorization system, dynamically adjusted the authorization, implemented the examination and approval responsibility, and strictly checked the ethical risk.
5. Increasing efforts to prevent and handle risks. The head office sets up the first-level asset preservation department, while the branches carry out the risk control "president" responsibility system. The head office and the branches cooperate to accelerate reducing the risks of overdue

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loans and hidden loans, and improving the quality and efficiency of litigation settlement through the formulation of a three-year work plan for the disposal of risky assets. The Bank has intensified efforts to collect and dispose verified loans, raised the cash settlement ratio and non-performing recovery rate, defused stock risks and strictly adhered to the bottom line of asset quality.

1. Accelerating the development of financial technology and making solid progress in building a smart risk control system. The bank has formulated a three-year plan for the construction of online loan risk control system, promoted the construction of joint loan independent risk control ability, completed the optimization of retail internal evaluation monitoring report system and the launch of non-zero internal evaluation system, realized the layout and paperless centralized operation of the bank's personal loan center, centralized the approval of consumer finance credit factory projects in the head office, upgraded the second-generation credit investigation and inquiry system, enhanced the ability of technology to support business and operation, enriched credit risk management methods, enhanced the ability of risk control, and comprehensively promoted high-quality development.
   At the end of the report period, the bank continues to maintain a good momentum of steady development. Major credit risk regulatory indicators meet regulatory requirements. The "two rates" indicators are controlled within the risk preferences of the board. Overall asset quality is stable, and overall credit risk is controllable.
   II. Liquidity Risk
   In accordance with the Management Measures for Liquidity Risk of Commercial Banks and its own management practice, the bank has established a liquidity risk management system and organizational structure appropriate to the scale, nature and complexity of its business, including the Board of Directors and its subordinate risk management committee, Board of Supervisors, senior management and its subordinate asset liability management committee and relevant implementation departments. The bank adopts the chairman responsibility system for liquidity risk management. The Board of Directors assumes the ultimate responsibility for liquidity risk management, and the head office department and branches at all levels are subject to overall liquidity risk management policies of the head office.
   The liquidity risk management mode of the bank is unified management and hierarchical responsibility, so as to guarantee effective identification, measurement, monitoring and control of overall liquidity risk level and the liquidity level of its subsidiaries, branches and business lines, and to guarantee compliance with all relevant liquidity risk regulatory requirements. As the liquidity risk management department of the whole bank, the planning and finance department of the head office carries out daily liquidity risk management in accordance with regulatory requirements and prudent principles.

1. The bank has monitored various liquidity regulatory indicators and internal management indicators on a daily basis, prepared daily fund statements to timely reflect the sources and utilization of funds, established a communication mechanism among the head office's planning and finance department, financial market department and other relevant departments of liquidity management, and strengthened its daytime position management and related financing arrangements to guarantee meeting daytime payment requirements under policy and pressure in time.
2. The bank has strengthened cash flow management and liquidity risk limit management, and

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monitored changes in the maturity structure of assets and liabilities on a daily basis. Through forecasting and analyzing major cash flows of operations of on-andoff-balance sheet in the near and medium term, the bank has reasonably arranged the scale and term structure of assets and liabilities, improved the forward-looking liquidity management to guarantee that the term gap is controlled within a reasonable range, and effectively prevent the risk of maturity mismatch.

1. The bank has regularly conducted liquidity pressure tests and emergency drills, evaluated the results, and updated its liquidity risk emergency plan timely to effectively respond to liquidity strains under extreme pressure.
2. The bank has optimized the asset liability management system, including the liquidity risk management module, further enhanced the timeliness and accuracy of identification, measurement, monitoring and analysis of liquidity risks, and continuously improved the refinement level of the company's liquidity risk management. During the report period, the liquidity ratio at the end of each month reached more than 60%.

III. Market Risk

The objective of the bank's market risk management is to control negative impact of adverse changes in market price on the positions of financial instruments and related businesses within a reasonable range that the bank can tolerate by constantly improving the market risk governance framework, management process, management tools, management information system, and effectively measuring the market risk so as to guarantee that all market risk indicators meet regulatory requirements and the bank's risk preference, and to maximize risk-adjusted returns.

The bank's market risk management system takes the Board of Directors and its Risk Management Committee as the decision-making core, the bank's senior management which sets up Market Risk Management Committee as the implementation subject, the risk management department and the business department that bears market risk are the execution unit, technical support department of market risk management as the support, and consists of the market risk management decision-making and implementation system and the supervision system composed of the Board of Supervisors, audit and supervisory departments.

The bank's market risk management policy consists of market risk management measures, relevant systems of market risk management procedures and detailed rules for the implementation of market risk related businesses. Management procedures include identification, measurement, monitoring, control and reporting of market risks.

The bank's market risk capital has been measured in a standard way. The bank selects appropriate measures for different categories of market risks in its banking book and trading book according to the nature, size and complexity of its business. The bank measures all market risks assumed by the bank based on reasonable assumptions and parameters. Measurement methods include duration analysis, foreign exchange exposure analysis, sensitivity analysis, and so on. According to the advantages and limitations of different measurement methods, the bank uses pressure test and other analytical means for supplementation.

During the report period, the bank actively responds to the impact of market fluctuations and continuously strengthens market risk management. The bank sets preference and limit indicators for market risk management at the beginning of each year, which are set in terms of net foreign exchange exposure, duration of trading book, basis point value, loss rate, etc. to effectively evaluate and manage market risk.

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The bank's main market risks are interest rate risk and exchange rate risk. At the end of 2020, total foreign exchange risk exposure of the bank reached RMB 144 million yuan (converted into RMB), with an absolute value decrease of RMB 20 million yuan compared with that at the end of the previous year. Among them, the dollar exposure reached RMB 129.5713 million yuan, with an absolute value increase of RMB 13.8413 million yuan compared with that at the end of the previous year. The exposure to other currencies was small. The scale of RMB bond holdings in the trading book of the bank reached RMB 4.524 billion yuan, with a decrease of RMB 254 million yuan compared with that at the end of the previous year, and the average portfolio duration was 2.05 years, with a decrease of 0.5 year compared with that at the end of the previous year. The market risk is relatively controllable.

In 2020, the bank's occupation of market risk capital will gradually increase. At the end of 2020, the required total amount of the bank's market risk capital reached RMB 235 million yuan, with an increase of RMB 92 million yuan, and an increase rate of 64.34%, compared with that at the end of 2019. Specific risk capital reached RMB 95 million yuan, with an increase of RMB 69 million yuan, and an increase rate of 265%, compared with that at the end of 2019.

In terms of book division, the bank strictly follows the Administrative Measures for the Division of Banking Book and Trading Book of Huarong Xiangjiang Bank, and bases on the characteristics of different dimensions such as the trading purpose and valuation method of the product to divide books for the product, uniformly register the ledger, and conduct a re-inspection on the division of existing businesses throughout the year.

In terms of quota management, the bank conducts detailed quota monitoring and management according to the requirements of supervision and internal control management, designates a special person to monitor such indicators as the exposure scale of bonds and certificates of deposit, the profit and loss situation of single bonds, and the loss rate of investment in trading book on a daily basis, sets up an independent valuation post in the Risk Management Department to independently supervise and review the daily revaluation of products in the Financial Market Department. In response to fluctuations in the bond market, the bank will adjust the single bond stop-loss limit threshold once a year.

In terms of external consulting, in this year, the bank has launched the market risk management consulting project, improved the policy framework system of market risk management, improved the measurement level, enriched the measurement tools, formulated the counterparty credit risk management scheme, and sorted out the construction requirements of market risk system.

In terms of the construction of market risk management system, during the report period, the bank has communicated with a number of well-known system engine providers at home and abroad, and initiated the establishment of internal relevant system projects.

IV. Operation Risk

During the report period, the bank closely focuses on the work objective of "closely adhering to risk prevention and control, promoting risk improvement and effectively improving risk prevention and control ability" to constantly improve the construction of operation risk system, promote the application of management tools, effectively enhance the operation risk prevention and control ability, and further strengthen the operation risk management. The operation risk loss rate remains at a low level in 2020.

1. Further strengthening the promotion and application of management tools. The bank has

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continuously optimized and adjusted key risk indicators, monitored and analyzed them in accordance with the prescribed frequency, made risk reminders and improvements; paid close attention to loss event collection and risk analysis, constantly improved risk control and management; carried out operation risk self-assessment, achieved the goal of covering the whole process every two years, promoted the process optimization according to the evaluation situation, updated and maintained the risk control matrix, revised internal control manual; and completed operation risk pressure test. The test results show that the operation risk pressure bearing condition of the bank is good.

1. Further strengthening the prevention and control of outsourcing risk. The bank has completed the revision of outsourcing scope, realized dynamic adjustment of outsourcing scope; done a good job in risk assessment before implementation of outsourcing and the first step in outsourcing risk management; strengthened the following management, including legal review of outsourcing contracts, protection of consumers' rights and interests, due diligence of outsourcers, and strict prohibition of project subcontracting; organized and carried out the post-implementation risk assessment of outsourcing projects in 2020, and strengthened the post-implementation risk control of outsourcing.
2. Continuing to control legal risks. The bank has revised and improved the form contract, consolidated the basis for legal risk control; strengthened legal review of contract text, and controlled legal source risks.
3. Continuing to prevent and control risks from innovative businesses. The bank has done a good job in risk assessment of innovation projects, strictly reviewed and approved access, complied with innovation business regulations, and controlled risks.
4. Further strengthening fraud risk management. The bank has focused on strengthening fraud risk control in credit extension, bank cards, self-service devices, mobile banking and other business fields.
   6.Further strengthening supervision and inspection. The bank has paid great attention to the implementation of inspection opinions and the rectification of problems in credit granting, operation, security, compliance, finance, information technology and other aspects.

1. Other Risks

1. Compliance Risk

During the report period, the bank continuously strengthened compliance risk management and consequently no major compliance risk occurred throughout the year. First, comprehensively comb compliance key points concerning main businesses, supervise prohibitive provisions, organize to prepare compliance manual and distribute them to branches to further guide employees to reduce violation operation and prevent compliance risk. Then, revise System Development Methods to further improve system naming standards, level-to-level and classified management, requirements and deadline for establishment, revision and abolishment and procedure. According to the latest supervision laws and regulations and change of policies, timely carry out "internalization of external regulations", continuously promote system sorting and post evaluation, combine and integrate systems for similar matters and like products and optimize internal systems.

Third, strictly observe the bottom line of compliance for new business, timely organize to carry out compliance and admission review before launch of new business and new product and timely carry out evaluation after launch of new business and new product to ensure compliance.

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Fourth, thoroughly carry out compliance supervision and inspection, identify the responsibility, deadline and measure for rectifying problems, carry out cancelation management of major problems and continuously supervise to rectify them.

Last but not the least, develop compliance publicity program, organize to test important supervision laws and regulations in recent three years and further improve employee's compliance awareness with more than 4000 employees tested and pass rate of 100%.

(II) Reputational Risk

The bank focused on governance and took reputational risk management as an important part

of the comprehensive risk management system for all lines, branches, departments, posts, personnel

and products. Through continuously improving reputational risk management system, regularly

review reputational risk management situation and potential risk, actively and effectively prevent

reputational risk and deal with reputational risk events in order to minimize adverse effect of

reputational risk on the bank. The bank continuously strengthened reputational risk management,

further broadened public opinion monitoring surface and carried out 7×24h comprehensive public

opinion monitoring network to effectively eliminate potential reputational risk; organized

reputational risk management training and public opinion event emergency exercise and built

total-involved reputational risk management culture; improved contingency plan for reputational

risk event and developed multi-level and differential targeted and operable emergency measures

according to different business types and scenarios; actively carried out positive propaganda,

published news release on mainstream media in support of local economic development, epidemic

prevention and control and work resumption and built good enterprise brand image; improved crisis

management disposal mechanism together with publicity and administrative departments, network

communications department, regulatory bodies and mainstream media. During the report period, no

major reputational risk events and major negative public opinions occurred.

(III) Information Technology Risk

During the report period, the bank continuously carried out information technology risk management. First, strengthen employee information security education and elevator executive force of information technology risk management system; second, strengthen software development safety management and establish comprehensive information technology risk assessment mechanism; third, strengthen operation and maintenance management, check leaks and fill vacancies and effectively implement information technology risk prevention mechanism; fourth, strengthen outsourcing contract management, supervise outsourcing service provider dynamically and intensify information technology outsourcing management; fifth, effectively implement and improve management standard, operation procedure and contingency plan and continuously improve business continuity management system. As a result, no major information technology risk events occurred during the report period.

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(IV) Ledger Interest Rate Risk

In terms of ledger interest rate risk management, the bank, according to the requirements of Ledger Interest Rate Risk Management Guide of Commercial Bank (Revision), established and improved bank ledger interest rate risk management system suitable for business scale of the bank, developed Interim Measures for Bank Ledger Interest Rate Risk Management and Bank Ledger Interest Rate Risk Pressure Test Management Measure successively, built interest rate risk management architecture, identify responsibility of the Board of Directors and special committee, senior management and related departments for bank ledger interest rate risk management, relevant policies and procedures and requirements for internal control of bank ledger interest rate and establishment of information system. On one hand, regularly measure bank ledger interest rate risk based on economic value and income according to supervision regulations, timely report influence of interest rate change on economic value and net interest income, complete functional optimization and application of bank ledger interest rate risk management system with management function in the third quarter of 2020 and continuously improve the ability to identify, measure and control bank ledger interest rate risk through intensifying system support. On the other hand, through studying and judging macro-economy, policy trend and market interest rate trend and combined with index and actual situation of the bank, strengthen delicacy management of interest rate pricing, timely optimize pricing model parameters, formulate scientific and reasonable pricing strategy, carry out regulation and control and optimize asset-liabilityre-pricing gap by means of scenario analysis, gap management and asset-liability portfolio management in order to effectively control bank ledger interest rate risk.

(V) Concentration Risk

In the end of the report period, loan balance of the largest one's non-inter-bank single customer from the large amount risk exposure of non-inter-bank single customer (excluding customer of exemption, similarly hereinafter) was 1.25 billion Yuan, accounting for 3.25% of net capital of the bank; risk exposure of the largest one's non-inter-bank single customer was 1.950 billion Yuan, accounting for 6.36% of net tier I capital; risk exposure of the largest one's non-inter-bank group or economically independent customer was 2.411 billion Yuan, accounting for 7.87% of net tier I capital.

In the end of the report period, risk exposure of the largest one's inter-bank single customer was 1.892 billion Yuan, accounting for 6.17% of net tier I capital; risk exposure of the largest one's inter-bank group customer was 1.892 billion Yuan, accounting for 6.17% of net tier I capital. Large amount risk exposure indexes were consistent with the requirements of Large Amount Risk Exposure Management Measures of Commercial Bank.

VI. Consolidated Management

Xiangxiang Rural Bank is the only associated undertaking of consolidated management of the bank. In the end of 2020, the Rural Bank had a registered capital of 100 million Yuan and the bank held 66% of its shares. According to relevant supervision requirements, the bank carried out consolidated accounting, capital and risk of the Rural Bank, continuously controlled its corporate governance, capital, finance and risk and effectively identified, monitored and controlled the Group's overall risks.

First, strengthen guidance of corporate governance mechanism. Guide the Rural Bank to

26

further optimize the board structure, organize to improve management system of the Rural Bank, develop Management Measure for Subsidiaries of HUARONG XIANGJIANG BANK and Performance Assessment Guide of Rural Bank, optimized and simplify performance assessment indexes and improve pertinence and effectiveness of performance assessment, guide the Rural Bank to revise and improve relevant corporate governance systems according to supervision requirements, actively perform the duties of majority shareholder and major sponsor, draft Guiding Ideas about Supporting and Promoting Steady Development of Rural Bank through field research, circulate a notice quarterly and actively implement it. Select and assign capable and high-quality cadres to boost the board of directors and the leading group of the Rural Bank, adjust chairman and president of the Rural Bank and replace 1 director.

Second, strengthen guidance of planning and development. Supervise the Rural Bank to earnestly implement 2019-2021Strategic Plan of Rural Bank, decompose it to annual business plan and annual budget and ensure the implementation of strategic task and objective. Supervise the Rural Bank to carry out strategic planning assessment, summarize experience in implementing strategic plan, focus on evaluating market positioning of strategic plan, whether business transformation is consistent with actual situation of the Rural Bank and whether business objective is steady and scientific. Supervise the Rural Bank to manage changes in rules and systems according to the group's strategic plan, revise strategic plan management regulation and improve strategic plan management mechanism.

Third, strength accounting and capital consolidated management. Unify the group's accounting policies, prepare and release financial statements, including financial statements of the Rural Bank, and the group's financial information according to law, and prepare and submit statistical data and statements on the group's business management. Carry out consolidated management and assessment of budget of the Rural Bank. Implement capital adequacy ratio management plan and assess annual capital management, and strengthen assessment on capital management of the Rural Bank from capital composition, risk-weighted asset composition, risk assessment, capital adequacy ratio management and capital planning. Supervise and guide the Rural Bank to further improve capital management and revise capital management measure and risk preference. According to regulation requirements, issue a commitment letter on sustained capital complement to the Rural Bank and offer institutional guarantee for its urgent capital complement.

Fourth, strengthen risk consolidated management. Include risk indexes of the Rural Bank in 2020 Risk Preference Statement of the group and monitor them quarterly. Review and reapprove risk preference of the Rural Bank in 2020. Guide the Rural Bank to prepare Total Risk Management Framework Guide of Rural Bank of Xiangxiang City. Guide and supervise the Rural Bank to submit total risk management report and risk preference index implementation report, and financial statements and risk supervision core index implementation report to the parent company of the group quarterly. Strengthen guidance of credit risk control of the Rural Bank, supervise the Rural Bank to make statistics of overdue loans, prepare and implement credit risk control plans according to "one household one policy" principle, elevate asset quality and to improve risk resistance. Collect risk management statements and reports from the Rural Bank quarterly and strengthen credit risk monitoring and warning. Supervise the Rural Bank to continuously optimize credit expansion structure and orderly reduce loan concentration. Guide the Rural Bank to identify and investigate the responsibility for bad loans through reference to credit extension accountability system of the

27

parent company of the group.

Fifth, strengthen internal audit consolidated management. To implement supervision requirements, the parent company of the group signed an audit consignment agreement with the Rural Bank. Carry out routine audit of the Rural Bank and supervise the Rural Bank to effectively rectify problems observed monthly. Include internal auditors of the Rural Bank in the training range of the group and the group organized training and helped improve professional ability of internal auditors.

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Part V Capital Management

I. Capital Adequacy Ratio Index

Unit: Ten Thousand Yuan, %

Item	FY 2020	FY 2019
Net core tier I capital	2,534,385	2,365,872
Net tier I capital	3,064,575	2,366,435
Tier II capital	786,191	747,915
Net capital	3,850,766	3,114,350
Credit risk-weighted assets	27,313,880	22,860,448
Market risk-weighted assets	299,468	181,402
Operational risk-weighted assets	1,834,295	1,659,298
Total risk-weighted assets after application of capital bottom line	29,447,643	24,701,148
and calibration
Core tier I capital adequacy ratio	8.61%	9.58%
Tier I capital adequacy ratio	10.41%	9.58%
Capital adequacy ratio	13.08%	12.61%

For more detailed data of capital adequacy ratio, refer to supplementary information of Part VIII Financial Report of this Report.

II. Capital Management

During the report period, as stipulated by Capital Management Measure of Commercial Bank (Trial) and relevant capital management systems of the bank, make full use of various risk quantification results, establish economic capital-basedbank value management system, strengthen capital constraint and capital incentive mechanism, enhance product pricing and decision support ability and elevate capital allocation efficiency. Credit risk-weightedassets, market risk-weightedassets and operational risk-weightedassets are measured using weighting method, standard method and basic index method respectively. The company calculates capital adequacy ratio of unconsolidated and consolidated statements, in which consolidated statements included holding subsidiary Xiangxiang Rural Bank Co., Ltd. and had the same range of consolidated financial statements. In the end of the report period, capital adequacy ratio was 13.08%, tier I capital adequacy ratio was 10.41% and core tier I capital adequacy ratio was 8.61%. The bank mainly adopted the following measures to strengthen capital management:

First, actively supplement new capital tools and optimize the capital structure. In 2020, the

29

bank actively planned to issue perpetual bond, successfully issued perpetual bonds valued 5.3 billion Yuan, effectively supplemented other tier I capitals and further optimized the capital structure; the bank replaced tier II capital of 3 billion Yuan, supplemented tier II capital, effectively lowered the financing cost and further solidified the capital foundation.

Second, improve IT construction and elevate delicacy management level. Continuously improve economic capital management system to maintain business data and correct acquisition logic, further improve data integrity and accuracy, effectively support economic capital occupancy measurement from institution, line and product and to monitor the implementation of capital adequacy ratio plan monthly. When necessary, monitor it daily and publish the implementation situation of risk assets timely.

Third, make overall arrangements, plan and allocate risk assets. In overall consideration of such factors as risk preference, budget planning, scale expansion, increase in capital and share, profit growth or dividends distribution, plan scale of net capital and distributable risk assets quarterly and submit to the asset-liability management committee for deliberation. After passing the deliberation, all lines strictly carry out businesses within the limit of risk assets and the head office tracks and monitors the use of risk assets at critical moments such as in the end of month, quarter and year, establishes dynamic adjustment mechanism for risk assets limit and controls the use of risk assets to the limit.

Fourth, strengthen assessment and promote light capital transformation development. Comprehensively assess economic profit indexes. Assessment result and performance distribution of branches highlighted economic profit and return rate after risk adjustment so that branches established the awareness of economic capital, actively adjusted the structure and improved profitability and capital use efficiency under capital constraint. Meanwhile, link the implementation of risk assets limit to KPI of all lines, promote the transformation of management idea and development pattern and improve the implementation efficiency of capital adequacy ratio plan.

Fifth, strengthen propaganda and strengthen the awareness of capital constraint. Propagandize economic capital concept, carry out internal training of branches, strengthen measurement and analysis of time-point and daily average data of institution, line and product, deeply excavate logic and cause of data, convey capital saving management idea and continuously solidify capital management foundation.

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Part VI Corporate Governance

During the report period, the bank, according to laws and regulations such as Company Law of the People's Republic of China, Commercial Bank Law of the People's Republic of China and Corporate Governance Guide of Commercial Bank continuously improved the governance mechanism, established organ of power and decision-making organ, supervised organs and senior management to perform their duties and coordinated corporate governance structure and operation mechanism.

I. Shareholders' Meeting

During the report period, the bank convened shareholders' meeting as stipulated by Company Law of the People's Republic of China and Articles of Association in order that shareholders participated in the meeting and performed voting power legally. Lawyer witness system was implemented in shareholders' meeting and lawyers present at the meeting issued Legal Opinion.

On March 24, 2020, the bank released a notice about the first extraordinary general meeting of 2020 in the official website, which was called on schedule on April 10, 2020 in Changsha. A total of 23 shareholders and agents representing 6.743 billion shares, accounting for 87.51% of total shares of the bank, attended the meeting. Except shares, for which voting power is restricted, voting power was effectively exercised for 6.320 billion shares and A Proposal about Selecting Huang Weizhong as A Director of the Second Board of Directors of HUARONG XIANGJIANG BANK CO., LTD. was passed in the meeting.

On June 2, 2020, the bank released a notice about convening 2019 shareholders' meeting in the official website, which was called on schedule on June 23, 2020 in Changsha. A total of 44 shareholders and agents representing 7.094 billion shares, accounting for 91.54% of total shares of the bank, attended the meeting. Except shares, for which voting power is restricted, voting power was effectively exercised for 6.615 billion shares, and 2019 Work Report of the Board of Directors, 2019 Work Report of the Board of Supervisors, 2019 Annual Final Account Report of HUARONG XIANGJIANG BANK, 2019 Annual Profit Distribution Plan of HUARONG XIANGJIANG BANK and 2019 Financial Budget Report were passed in the meeting.

1. Board of Directors and Special Committee

1. Board Composition and Meeting

1. Board Composition

In the end of the report period, the Board of Directors of the bank consists of 15 directors, including 3 independent directors, 10 shareholder directors and 2 employee directors, as shown below:

No

Type of

Number

Where to

Whether to

Name

Gender

Age

Employer

Receive

Receive

.

Director

f Shares

Compensation

Allowance

Huang

HUARONG

Shareholder

1

Male

52

XIANGJIANG

director

None

Yes

No

Weizhong

BANK

(Chairman)

2

Jiang

Male

50

HUARONG

Shareholder

None

Yes

No

Junwen

XIANGJIANG

director

31

				BANK
				CHINA
				HUARONG	Shareholder
3	Chen Jin	Male	49	ASSET	None	No	No
director
				MANAGEMENT
				CO., LTD.
				HUARONG
4	Wang Jin	Male	46	INTERNATIONA	Shareholder	None	No	No
L TRUST CO.,	director
				LTD.
				CHINA
				HUARONG	Shareholder
5	Zhang Li	Female	46	ASSET	None	No	No
director
				MANAGEMENT
				CO., LTD.
				State Asset
6	Chen	Male	56	Regulatory	Shareholder	None	No	No
Shiqing	Commission of	director
				Yueyang City
	Wang			People's	Shareholder
7	Male	54	Government of	None	No	No
Jianjun	director
			Xiangtan City
				Science and
8	Luo	Male	59	Technology	Shareholder	None	No	No
Chunyao	Bureau of	director
				Hengyang City
				HUARONG	Shareholder
9	Yuan Bo	Male	56	XIANGJIANG	None	Yes	No
director
				BANK
	Wang			HUARONG	Shareholder
10	Male	58	XIANGJIANG	None	Yes	No
Hongwei	director
			BANK
				HUARONG	Employee
11	An Qingwei	Male	58	XIANGJIANG	None	Yes	No
director
				BANK
				HUARONG	Employee
12	Li Rui	Male	54	XIANGJIANG	None	Yes	No
director
				BANK
13	Zhu Daqi	Male	53	Renmin University	Independent	None	No	Yes
of China	director
				Southwestern
14	Yin	Male	65	University of	Independent	None	No	Yes
Mengbo	Finance and	director
				Economics
15	Liu Yi	Male	47	Hunan University	Independent	None	No	Yes
director

2. Change of Director

During the report period, Zhang Yonghong resigned from chairman of the second Board of Directors, Chairman of the strategic committee, member of the nomination and compensation committee and director. In the first extraordinary general meeting of 2020, Huang Weizhong elected as a director of the second Board of Directors. In the 65th meeting of the second Board of Directors, Huang Weizhong was elected as the Chairman of the second Board of Directors, chairman of the strategic committee and member of the nomination and compensation committee.

3. Resumption of Director

Director of the bank has specialized knowledge, work experience and basic quality necessary

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for performance of duties as well as good professional ethics, abides by the law, discharges their duties diligently and plays the role of director in deliberation and decision.

During the report period, director of the bank performed the obligation for loyalty and diligence in strict accordance with provisions and requirements of relevant laws and regulations, professionally and efficiently exercised their duties, attended board meetings, shareholders' meetings and meetings of relevant special committees in time, voiced independent and objective opinions about matters concerned and maintained interests of the bank and shareholders, especially public shareholders. While performing the duties, director can closely track national macro-economic situation and development status and trend of the financial industry, continuously understand and analyze operating status of the industry, and focus on development and implementation of strategic plan of the bank, recruitment and selection of top management, development and implementation of capital management and capital complement plan, development and implementation of risk management system, major foreign investments and assets disposal, development and implementation of compensation and performance appraisal system and resumption of senior management.

While performing their duties, independent director mainly concerned about legality and fairness of related transaction, integrity and truthfulness of annual profit distribution plan and information disclosure and matters that may cause great losses to the bank and voiced independent, objective and fair opinions about topics in order to maintain rights and interests of depositor and minority shareholders. Working time of independent director should be consistent with relevant regulations.

4. Board Meeting

During the report period, the Board of Directors called 12 meetings on discussing and deliberating 42 major issues.

1. On January 10, A Proposal about the Implementation of Development Plans of HUARONG XIANGJIANG BANK in 2019 and 2020 and A Proposal about Deliberating Credit Risk Management Measures of HUARONG XIANGJIANG BANK was passed in the 60th meeting of the second Board of Directors.
2. On February 5, A Proposal about Donating 2 Million Yuan to Hunan Province to Strike COVID-19was passed in the 61st meeting of the second Board of Directors.
3. On March 16, 2019 Internal Control Evaluation Report of HUARONG XIANGJIANG BANK and A Proposal about Donating 3 Million Yuan to Xuanhan County were passed in the 62nd meeting of the second Board of Directors.
4. On March 18, A Proposal about Transfer of Bad Credit Assets, Non-interest-bearing Assets and Debt-repaid Assets in 2020, 2019 Social Responsibility Report of HUARONG XIANGJIANG BANK CO., LTD., A Proposal about Recommending HUARONG XIANGJIANG BANK CO., LTD. as A Director Candidate of the Second Board of Directors of HUARONG XIANGJIANG BANK CO., LTD., A Proposal about Zhang Yonghong's Resignation from Chairman of the Second Board of Directors and Other Positions of HUARONG XIANGJIANG BANK CO., LTD., A Proposal about Authorizing Director Jiang Junwen to Perform Function and Power of Chairman and Legal Representative of HUARONG XIANGJIANG BANK CO., LTD. and A Proposal about Convening the First Extraordinary General Meeting of HUARONG XIANGJIANG BANK CO., LTD. in 2020 were passed in the 63rd meeting of the second Board of Directors.
5. On April 10, 2019 Financial Statements and Audit Reports of HUARONG XIANGJIANG BANK, 2019 Consolidated Management Report of HUARONG XIANGJIANG BANK, 2019 Assessment Report on Performance of Majority Shareholders of HUARONG XIANGJIANG BANK, 2019 Capital Management Assessment Report of HUARONG XIANGJIANG BANK and 2019

33

Capital Adequacy Ratio Plan Implementation Situation and 2020 Capital Adequacy Ratio Management Plan of HUARONG XIANGJIANG BANK were passed in the 64th meeting of the second Board of Directors.

1. On April 10, A Proposal about Selecting Chairman of the Second Board of Directors of HUARONG XIANGJIANG BANK CO., LTD. and A Proposal about Adjusting Members of Special Committees of the Second Board of Directors were passed in the 65th meeting of the second Board of Directors.
2. On April 20, 2019 Annual Report of HUARONG XIANGJIANG BANK was passed in the 66th meeting of the second Board of Directors.
3. On June 2, 2019 Work Report of the Board of Directors of HUARONG XIANGJIANG BANK, 2019 President's Work Report of HUARONG XIANGJIANG BANK, 2019 Annual Final Account Report of HUARONG XIANGJIANG BANK, 2019 Annual Profit Distribution Plan of HUARONG XIANGJIANG BANK, 2020 Annual Business Plan of HUARONG XIANGJIANG BANK, 2020 Annual Budget Report of HUARONG XIANGJIANG BANK, 2020 Risk Reference Statement of HUARONG XIANGJIANG BANK, 2020 Budget Report on Board Expenses of HUARONG XIANGJIANG BANK and A Proposal about Convening 2019 Shareholders' Meeting of HUARONG XIANGJIANG BANK CO., LTD. were passed in the 67th meeting of the second Board of Directors.
4. On July 13, A Proposal about Declaring Related Transaction Limit of HUNAN CHASING FINANCIAL HOLDING GROUP CO., LTD. and A Proposal about Declaring Related Transaction Limit of CHINA HUARONG ASSET MANAGEMENT CO., LTD. were passed in the 68th meeting of the second Board of Directors.
5. On August 27, A Proposal about Engaging Accounting Firms in 2020, A Proposal about Declaring Related Transaction Limit of XIANGTAN URBAN-RURAL DEVELOPMENT GROUP CO., LTD. and A Proposal about Declaring Related Transaction Limit of HENGYANG URBAN CONSTRUCTION INVESTMENT CO., LTD. were passed in the 69th meeting of the second Board of Directors.
6. On September 27, Improvement Program for the Transitional Period of New Regulations on Assets Management of Financial Services of HUARONG XIANGJIANG BANK and A Proposal about Revising Basic Management Measures for Information Technology of HUARONG XIANGJIANG BANK were passed in the 70th meeting of the second Board of Directors.
7. On December 28, A Proposal about Adjusting Return on Equity (ROE) and Return on Assets (ROA) Reference Objectives, A Proposal about Extension of Letter of Authorization on Legal Representative of HUARONG XIANGJIANG BANK CO., LTD., A Proposal about Revising Risk Report Management Measures of HUARONG XIANGJIANG BANK, A Proposal about Revising Related Transaction Management Measures of HUARONG XIANGJIANG BANK, A Proposal about Declaring Related Transaction Limit of CHINA HUARONG ASSET MANAGEMENT CO., LTD., A Proposal about Revising Strategic Planning Management Procedure of HUARONG XIANGJIANG BANK (2020 Edition) and A Proposal about Extension of Board Resolutions on Transfer of Bad Credit Assets, Non-interest-bearing Assets and Debt-repaid Assets in 2020 were passed in the 71st meeting of the second Board of Directors.

(II) Special Committee Composition and Meeting

The Board of Directors is furnished with strategic committee, risk management committee, audit and related transaction control committee, audit and related transaction control committee and nomination and compensation committee.

Chairman of strategic committee: Huang Weizhong; member: Jiang Junwen, Wang Jin, Zhang

34

Li, Wang Jianjun, Luo Chunyao, Chen Shiqing, An Qingwei, Wang Hongwei, Zhu Daqi, Yin Mengbo, Liu Yi.

Chairman of risk management committee: Jiang Junwen; member: Chen Shiqing, Chen Jin, Wang Hongwei, Yuan Bo, Li Rui, Liu Yi.

Chairman of audit and related transaction control committee: Yin Mengbo; member: Yuan Bo, Liu Yi.

Chairman of nomination and compensation committee: Zhu Daqi; member: Huang Weizhong, An Qingwei.

Chairman of consumer protection committee: Jiang Junwen; member: Wang Hongwei, An Qingwei.

During the report period, special committee of the Board called 27 meetings on discussing and deliberating 83 major issues, including 2 meetings of the strategic committee passing 5 proposals, 13 meetings of the risk management committee passing 46 proposals, 6 meetings of the audit and related transaction committee passing 18 proposals, 5 meetings of the nomination and compensation committee passing 13 proposals, and 1 meeting of the consumer protection committee passing 4 proposals about the implementation situation of consumer protection in 2019, consumer protection assessment, consumer protection self-assessment and consumer compliant.

(III) Main Duties of Board of Directors in 2020

2020 is an important year when the bank persisted in high-quality development and promoted transformation and upgrading. Facing sophisticated economic and financial environment and COVID-19 epidemic, the Board of Directors earnestly implemented economic and financial policies of the Party and the state, carefully organized to implement resolutions of the shareholders' meeting, planned and backed the real economy and business transformation, practically prevented risk, completed job objectives and tasks established in the shareholders' meeting, made remarkable achievements in operating management and further elevated the development quality. The bank was awarded credit rating AAA for consecutive three years and Class A Institutions of the Banking Industry of Hunan Province for consecutive five years and ranked 23rd and 6th among top 100 enterprises and top 50 service enterprises of Hunan Province.

1. Strengthen efficient decision and promote steady business development. First, scientifically demonstrate and effectively decide important matters concerning operating management and offer an effective guarantee for operating management. The Board of Directors called a regular meeting quarterly and a meeting timely in case of an emergency to deliberate important matters concerning operating management. 12 meetings were called throughout the year, deliberating 42 proposals and timely deciding important matters concerning operating management such as development strategy and internal risk control. Special committee of the Board called 27 meetings to deliberate 83 proposals, including 2 meetings of the strategic committee, 13 meetings of the risk management committee, 6 meetings of the audit and related transaction control committee, 5 meetings of the nomination and compensation committee and 1 meeting of the consumer protection committee. Next, earnestly implement the authorization of the shareholders' meeting to the Board of Directors and decide major issues about disposal of major assets and donation in strict accordance with authorization. With the authorization of the shareholders' meeting, the Board of Directors carefully deliberated and voted through plans for transfer of bad assets, non-interest-bearing assets and debt-repaid assets in 2020, engagement of accounting firm in 2020, donation of 3 million Yuan to Xuanhan County and donation of 2 million Yuan to Hunan Province to strike COVID-19. Third, energetically promote steady business development. The Board of Directors promoted steady

35

business development of the industry through timely and scientific decision on important matters concerning operating management and supervision over the implementation of board resolutions. By the end of the report period, the bank had total assets valued 405.976 billion Yuan with a growth rate of 10.69% compared with year-beginning balance, total liabilities valued 374.973 billion Yuan with a growth rate of 9.39% compared with year-beginning balance, deposits valued 251.557 billion Yuan with a growth rate of 10.49% compared with year-beginning balance, and loans and advance valued 222.234 billion Yuan with a growth rate of 10.26% compared with year-beginning balance, and achieved net profit of 2.869 billion based on a year-on-year growth rate of 38.25% of assets impairment.

1. Strengthen strategic guidance and promote business structure optimization. First, guide to strictly implement strategic plan and ensure direct business management direction. Organize to develop and supervise to implement annual business plan and annual budget plan, organize to resolve development planning strategy yearly and promote the implementation of strategic planning target. Organize to evaluate the annual implementation situation of strategic plan, supervise the implementation situation of annual budget, evaluate the implementation situation of annual business plan and supervise management to implement development strategic plan. Then, promote to develop technology-guidedthree-year development plan, start to build a new generation core system and new data center and strive to satisfy the need for business development in the coming decade. Increase and optimize more than 260 network financial service functions, break E-bank turnover of a trillion and continuously enhance mobile service ability. Accelerate to develop retail transformation consulting and three-year plan and promote transformation and development of retail business. Third, promote to continuously optimize the business structure through strategy. The bank abandoned and restricted short-term behavior bad for long-term development, pursued tangible performance and developed the market. Reduced high-cost liabilities of above 10 billion Yuan such as negotiated deposits and online smart deposits as well as low-income assets of 9.2 billion Yuan such as pledge of deposit and rediscount, and increase configuration of high-levelhigh-income assets and tax-saving products. Continuously optimize the liability structure: The ratio of retail deposit increased by 3.33%, that of inter-bank liability decreased by 4.91% and that of non-inter-bank deposit decreased by 3.22%. Continuously optimize the asset structure: The ratio of financial credit increased by 3.17% and that of retail loan increased by 4.81%. Small and micro inclusive finance and "two increases two controls" reached the standard.
2. Strengthen rick control and promote to enhance risk control ability. First, promote risk management, which is the lifeline of survival and development, set up a risk-oriented concept, initiate three-year plan for building total risk management system and smart risk control system, normalize risk management, strictly control new risk, vitalize stock and strive to realize whole-process management of credit risk. Second, organize to develop 2020 risk preference, set 40 key risk preference indexes of 10 categories and 54 risk limit indexes and draw the red line of operating management; supervise management to revise and improve risk management system and risk management evaluation rules and further improve risk control system; supervise classify assets, accurately reflect asset quality and intensify assessment of "ROE and ROI"; supervise to intensify provision, improve risk resistance and raise loan allocation ratio from 2.5% to 2.9%; supervise to introduce credit policy guidance and popularize loan pilot; supervise to strengthen internal control and compliance and case prevention management, eliminate case risk quarterly and strengthen operational risk control. Third, supervise to intensify disposal of bad assets and non-interest-bearing assets. Dispose bad assets valued 4.03 billion Yuan by means of recombination, liquidation, litigation and cancelation;
3. Strengthen capital management and promote capital adequacy ratio to reach the standard.

36

First, the Board of Director organized to draft and approve annual capital management plan, evaluate the implementation situation of annual capital management plan, comb and cover and improve shortcomings of capital management according to annual business plan so that capital adequacy level was consistent with supervision requirements. second, advocate capital-restricted capital management idea, give play to the leading role of capital, supervise management to allocate risk capital to strategic target and resource to capital-saving business according to strategic plan and business transformation objective, and promote capital saving and business transformation of the bank. Third, organize to accumulate internal capital and complement external capital so that capital adequacy level was consistent with supervision requirements. Give consideration to both shareholder's appeal to return and the bank's long-term development, prudently distribute cash dividends of profit and intensify complement of internal capital. Overcome the influence of COVID-19, successfully issue the first perpetual bonds valued 5.3 billion Yuan of city commercial banks in the middle region and greatly improve tier I capital adequacy level. organize to redeem tier

1. capital debentures valued 3.0 billion Yuan issued 5 years ago, issued tier II capital debentures valued 3.0 billion Yuan, optimize the term structure of tier II capital and reduce the cost of tier II capital debentures. In the end of the report period, capital adequacy ratio was 13.08%, tier I capital adequacy ratio was 10.41%, core tier I capital adequacy ratio was 8.61%, which were consistent with supervision requirements.
2. 1. Strengthen information disclosure and establish a good relationship among shareholders. First, according to supervision requirements, organize to disclose legal information timely, accurately, truthfully and completely, raise transparency and actively accept market supervision. The Board of Directors organized to draft annual information disclosure report and social responsibility report, which were disclosed through official website and other channels with the approval of the Board; organize to disclose business information, financial information and capital adequacy ratio information quarterly and disclose net stable capital ratio information semiannually. The bank disclosed temporary issues such as replacement of chairman and engagement of accounting firm within 10 days. 25 pieces of information were disclosed through official website and 8 pieces were disclosed through external website throughout the year. Then, strengthen equity management and provide shareholders with patient and delicate equity service timely. Continuously promote equity trusteeship and handle equity trusteeship and power determination of 32 shareholders. Households of equity trusteeship accounted for 90.54% in the end of year with a growth rate of 0.49% compared with that in the beginning of year and hosted shares accounted for 99.95％. Organize to handle 31 equity pledge services for 17 shareholders and equity change services for 131 shareholders. Carry out equity management legally and provide equity service patiently and delicately. Third, actively implement relevant requirements of Interim Measures for Equity Management of Commercial Bank, organize to collect data such as financial statements of majority shareholders, assess resumption and performance of majority shareholders, prepare assessment reports and submit them to supervision department with the Board's approval.
   2. Strengthen delicacy management and promote market reform. First, solidify the foundation of delicacy management, cover the shortcomings and consolidate the foundation for future development. Energetically advocate the concept of revitalizing the bank through science and technology, uphold technological resources and increase 13 scientific and technical staffs, accounting for 8.9% of new staffs of the bank. Generate 160 manual statements automatically to relieve the burden of grass-roots staffs. Strengthen internal audit, complete 32 audit programs and 58 economic responsibility audit programs, intensify rectification of internal and external problems and continuously standardize operation. Rectify work style of organ, greatly reduce approval time

37

of document, account and financial statement, raise service satisfaction of the head office by 15% and further contain formalism and bureaucratism. Deepen intelligent construction of outlets, popularize 75 high-class counters, simplify 61 counters, and reduce concentrated operation time by 2.67s and remote authorization by 7.62s. Second, practice personnel system reform and establish market operation mechanism. The Board of Directors highly valued human resource, which is the most competitive production factor, executed three-year action plan for state-owned enterprises of the central government, energetically promote to build "three possibilities" mechanism for cadre, income and personnel and set up market orientation. Promote the head office to optimize the structure of department and work room from 139 to 127. Promote reform of new branches, reduce internal departments by 37% and simplify administrative staffs by 11.6% to supplement front-line posts. Facilitate the head office to carry out competitive selection and employment, equally and openly select and use personnel, and assign person responsible for department and work room, 130 persons responsible for credit conferring examination and approval and 12 persons responsible for

longitudinal communication among staffs. Promote to improve assessment and build market-oriented salary distribution mechanism. Appraise performance according to contribution, reward the diligent and punish the lazy, help the good and limit the poor and resolutely break "indiscriminate egalitarianism" with performance range of branch manager up to 3 times, sub-branch manager up to 4 times and branch employee up to 2.4 times. Third, enhance the awareness of discipline and responsibility and practice strict discipline enforcement responsibility system. Introduce "24 prohibitions" and further identify the bottom line of work discipline. Severely punish violation of rules and disciplines, comprehensively investigate employees involved in case and business secret, etc.

7. Strengthen social responsibility and promote to enhance brand influence. First, offer strong support for poverty alleviation. Set 100 million Yuan credit program for financial targeted poverty alleviation such as grain, tea-oil tree, pig and tobacco planting. Year-end loan balance of financial targeted poverty alleviation was 4.261 billion Yuan, which helped more than 40,000 poverty-stricken households to start a business and obtain employment. Assign 23 poverty alleviation workers and offered poverty reduction funds of 4.3702 million Yuan to help 55 poor villages, 44 projects and 15665 persons. Consumed poverty alleviation funds of 2.9786 million Yuan and outperformed consumption poverty alleviation tasks. Second, strongly support epidemic prevention & control and work resumption. Deeply carry out "warm spring action" and support epidemic prevention & control and work resumption using special credit line of 20 billion Yuan.

Invested 3.942 billion Yuan in epidemic prevention and control of 78 households, make "epidemic fighting talent loans" of 353 billion Yuan to 34 households, and make epidemic prevention & control loans of the Development and Reform Commission of Changsha City of 289 million Yuan to 20 households. Earnestly implement national policies on cost relief and interest concession for epidemic prevention and control and reduce interest of 533 million Yuan throughout the year. Approve material donation of 2.80 million Yuan and encourage party members to donate 535,000 Yuan voluntarily. Encourage the bank to contribute to strike the epidemic and the bank was awarded advanced models supporting local economic development and fighting the epidemic of Hunan Province. Third, strengthen brand publicity and enhance brand reputation. Launch brand publicity campaigns "2020 be together" and "Good things happen whenever- Grow together with people who live in Hunan Province; carry out brand publicity campaigns such as "Fight the epidemic together" Himalaya free audio, "City awakening" plan, "Xiang River reading season" and "Show love to students attending the college entrance examination", build "Xiang River art+" brand image jointly with Meixihu International Culture Center, actively provide customer with intimate service and effectively improve customer cohesion.

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(IV )Main work arrangements of the board of directors in 2021

2021 is the first year of the 14th five-year plan, and it is also the "transformation year and breakthrough year" of the group. The board will promote the bank to be guided by Xi Jinping's socialist ideology with Chinese characteristics in the new era and the spirit of the Fifth Plenary Session of the 19th Central Committee of the CPC. We will conscientiously implement the decision making deployment and supervision requirements of higher Party committee, focus on "returning to the origin and consolidating the foundation", stress the "four always", namely, always persisting in seeking progress while maintaining stability and keeping pace with the trend, always giving full play to the political core role of the Party organization, always basing ourselves on the development of high quality to solve problems, and always adhering to the customer-centered business philosophy. In addition, we will focus on accelerating business transformation, strengthening risk management and control, deepening market-oriented reform, strengthening basic guarantee, and building an efficient, collaborative, innovative and agile system, so as to promote the sustainable and healthy development of the bank, and comprehensively complete all objectives and tasks.

1.We will adhere to the general development keynote of seeking progress while maintaining stability and strive to properly handle the five relationships. In addition, we will promote the bank to adhere to the general keynote of seeking progress while maintaining stability, consolidate the foundation of "stability", find the right direction of "progress", focus on the goal of "high", and handle the relationship in all aspects as a whole. The five relationships are as follows: 1. the relationship between the current and long-term. We will adhere to the long-term principle. Last year's practice has proved that the feasible and effective policies should maintain continuity, not only plan for the present, but also take into account the long-term. The most basic theme of 2021 is "returning to the origin and consolidating the foundation". Returning to the origin is to focus on the customer group, service and fine management. Consolidating the foundation is to optimize the system and mechanism and improve the management ability and level; 2. the relationship between strategy and tactics. We will make clear the market positioning and development strategy, implement the strategy in all aspects of the whole process of business development, and transform it into action plan, specific objectives and key work points, so as to organically connect strategic deployment and tactical layout, and focus on implementation; 3.the relationship between development and risk. We will solve problems on the basis of development. We will not only maintain a certain speed of development, but also pay attention to improving the "value" of development, strive to achieve the whole process control of all risks, and comprehensively improve fine management; 4. the relationship between scale and structure. We will conform to the general development trend of Hunan economy, deeply expand the market, optimize the business structure while maintaining the steady growth of scale, and highlight the development of light capital business; and 5.the relationship between the local and the overall. We will establish a sense of the overall situation, improve the executive power of the bank, and ensure that the decisions and arrangements of the general meeting of shareholders and the board of directors are implemented. At the same time, we will distinguish the priorities, strive to solve the key problems, and turn our attention to the work focus of the bank.

2. We will improve the corporate governance mechanism in the following three aspects, so as to further promote the level of corporate governance: 1.continuing to improve the corporate governance system. According to the new regulatory requirements and the actual development, we will organize and supervise the inspection of the current corporate governance system, and constantly perfect the corporate governance system through system cleaning and new construction; 2.standardizing and strengthening the work of information disclosure. In accordance with the

39

relevant laws, regulations and regulatory requirements, we will fulfill the obligation of information disclosure, and continuously improve the quality of information disclosure, so as to ensure that all shareholders and investors have equal access to information, and protect the shareholders and investors' right to know; and 3.completing the work of the new term of board of directors and the board of supervisors. We will strengthen the communication and coordination with major shareholders, regulatory authorities and other relevant units, and draw up the plan of new term of the board of directors and the board of supervisors, so as to ensure the completion of the election of the board of directors and the board of supervisors in the first quarter.

1. We will make scientific strategic planning from the following three aspects to accelerate the business transformation. 1.On the basis of summing up the implementation experience of the last three-year development plan, we will actively study and judge the macroeconomic situation and financial development trend at home and abroad, gather the wisdom of the bank, and formulate a new three-year development strategic plan, so as to guide and promote the business development and structural transformation of the bank; 2.we will firmly establish the "customer-centered" concept. Through a set of customer demand mechanism which can timely grasp, feed back, handle, respond and evaluate, we will customize products with the fastest speed and the most reasonable price to meet customers' financial needs and establish a win-win ecological environment with customers. At the same time, we will optimize and improve the online financial services, and enhance the ability to obtain customers in batches online, especially expand strategic customers and industrial financial customers. In addition, we will strengthen customer maintenance, mining and promotion, increase the total number of customers and effective customer assessment, and establish a digital sales management system with clear tasks, performance and pricing, so as to fully mobilize the staff's enthusiasm; and 3.we will focus on accelerating the quality and effective business transformation, continue to clean up and reduce the pledge of certificates of deposit, online wholesale deposits and joint loans, and resolutely abandon the deposit acquisition mode that relies solely on credit supply and high-yield products to drive growth. At the same time, we will continue to consolidate government finance and do a good job in government qualification acquisition and government special debt, central direct funds, and agency fund marketing of policy banks, accelerate the development of industrial finance, seize the opportunity of building "three highlands" and free trade zone in Hunan, take the initiative to dock with leading industries, and achieve breakthroughs and characteristics in the fields of people's livelihood transportation, intelligent manufacturing, and culture. In addition, we will implement the three-year plan of retail finance, promote the construction of retail ecosystem, develop new smart deposit products, accelerate the construction of common platform for smart projects, and focus on the construction of "one APP" to create minimalist customer experience.
2. We will focus on comprehensive risk management from the following four aspects to continuously improve the risk control: 1. strengthening the whole process of risk control. We will extend the thresholds of risk monitoring, measurement and control to normal and concerned categories. In particular, we will strengthen the management of the risk of new deterioration. For loans with major risk signals, we will quickly take measures, quickly adjust the credit policy, and strictly control the new non-performing loans. In addition, we will speed up the refinement of in-process management, continue to promote the reform of credit system, try out the lead examiner system, study and implement the risk manager system, and carry out post credit inspection and centralized loan management. The introduction and absorption of new business and new products shall be in line with the corresponding control ability. It shall strengthen the post evaluation, and adjust and optimize the product strategy and operation process in a timely manner; 2.implementing

40

the management principal responsibility system. The president of the branch bank is directly responsible for the risk exposure of large amount, rather than the management and leadership responsibility. It will be a necessary audit item of economic responsibility audit. The responsibility of credit risk prevention and control of the head of the business unit will be implemented. We will implement the centralized management of corporate account managers in urban branch banks and carry out the management of tolerance of non-performing loans. If the non-performing loan rates of new loans in one or three years exceeds the limits, due diligence will be started on the business departments of the head office and the branch banks. We will straighten out the accountability mechanism, organically combine the points of violation with the punishment of accountability, increase the intensity of accountability, and increase the cost of violation; 3.strengthening the collection and disposal. We will increase litigation clearance, and in principle, all non-performing loans or loans overdue more than two months will be sued. We will also strengthen the identification and investigation of the responsibility for write-off loans. Those that meet the conditions shall be checked and those that have been written off shall be collected. At the same time, we will speed up the disposal of the bank's top 20 risk customers, off-site debt paying assets and non-interest-bearing assets, implement specific projects, responsible persons and completion time, encourage cash collection, and strictly prevent secondary risks in risk disposal; and 4.strengthening the examination and restraint. We will classify the branch banks according to the substantive principles and risk conditions, and set up differentiated assessment weights, and the assessment results will be directly linked to the performance allocation. At the same time, we will solidify the stock risk base, set different assessment indicators for the clearance and disposal of stock non-performing loans and the new non-performing loans, and assess the stock "on-off balance sheet clearance" and "written off clearance". All clearance and disposal shall be calculated in cash or converted into cash for calculation. The indicator of new "non-performing loan rate" is assessed separately.

5. We will promote the construction of "three-able mechanism" from the following three aspects, so as to deepen the market-oriented reform of personnel assessment:1. strengthening the assessment of key minority. We will re-establish the assessment method for management personnel, and resolutely adjust the positions of the responsible persons whose assessment scores are lower than the standard and whose ranking is lower, so that those who do not take the responsibility, those who can not perform their duties, and those who exercise power wantonly will have no position. At the same time, we will optimize the evaluation and incentive system. According to the different characteristics, functional orientation and work nature of the three-level organizations of the general branch, as well as the value and contribution of the staff post, we will highlight the key points, comprehensively and truly reflect the achievements and work performance, so as to further realize the marketization and differentiation of the evaluation. In addition, we will optimize the evaluation mechanism, reasonably determine the performance evaluation method, and implement accurate qualitative and quantitative evaluation instead of 360 degree scoring, so as to pay attention to both the performance results and the performance management process; 2. deepening the reform of two-level organs. In accordance with the standard of "precise positioning and clear functions", we will continue to adjust and optimize the functions of the head office departments, clarify the boundaries and responsibilities, and strengthen the head office's strategic leading "brain" function. In addition, we will steadily complete the organ reform of the former branch banks, integrate the internal departments, guide the flow of personnel to the front line, reduce the organ personnel of the former branch banks by more than 25% in principle, and achieve the goal of "three reductions" in the numbers of departments, cadres and staff. At the same time, we will also improve the dynamic

41

exchange mechanism of the head office and branch banks, enhance the matching degree between people and posts, and stimulate the overall vitality of the team; and 3. strengthening the construction of the cadre team. We will redefine the system of selecting and appointing cadres, reduce the ranks of cadres, adhere to the standard of "20 words for good cadres" for selecting and appointing cadres, and make the cadre selection be transparent by adopting fair, open and just methods. In addition, we will strengthen the assessment of cadres, study and establish the evaluation mechanism of cadres' daily work, ability and quality, and moral cultivation, and regard it as an important standard for cadre selection. We will also open up the mutual transfer channel between technology sequence and management sequence, study and standardize the mutual transfer procedure, firmly establish the concept that talents are the core resources, strengthen the on-the-job training of employees, especially the cultivation and training of core backbones and professional talents, and reasonably determine the salary of the transferred personnel.

6. We will promote fine management from the following four aspects to strengthen the basic guarantee: 1. optimizing the system process. In accordance with the principles of standardization, timeliness and keeping pace with the times, we will further strengthen the "establishment, reform and abolishment" of the system, comprehensively sort out the optimization system of each line, and refine and improve the system. In accordance with the principle that the system is conducive to operation, we will focus on solving the problem of applicability and executive power of the system. The established system must be resolutely implemented, and any violation of the system will pay a price; 2. strengthening technological support. We will promote the concept of rising the bank by technology, so as to provide sufficient talents, technology and capital guarantee for financial technology. By combining with our own situation, focusing on the system architecture, development mode, implementation process, assessment and incentive, we will speed up the establishment of a complete financial technology development system, focus on promoting the "core-center" construction of the core system and data center, build a scientific and advanced system architecture, lay a solid foundation for the development of financial technology, accelerate the digital management and application, and make full use of technical means to improve yield and efficiency so as to liberate manpower from repetitive and tedious simple labor; 3. optimizing the allocation of resources with "precise drip irrigation". In principle, we will increase the overall expenses in line with the business development, ensure the investment in key areas, and give appropriate support to the branch banks with small scale, low cost to income ratio, strategic development area and tight expenses. We will allocate assets in accordance with the principle of "capital saving, tax saving, focusing on benefits and controllable risks", and focus on retail finance, trade financing and financial market business of low capital consumption to guide the light development of the bank. At the same time, we will monitor and adjust the structure of assets and liabilities in real time, improve the matching degree of assets and liabilities, promote the reform of treasurer, consider the short-term demand and long-term use of funds, maintain the allocation proportion of high liquidity assets, and maintain a better liquidity level; and 4. building an agile organization. We will break down the "barriers" among departments, business lines, head office and branch banks, and establish an internal connection, linkage and coordination mechanism of "vertical to the bottom, and horizontal to the end". The head office must manage the affairs of the branch banks, and the branch banks must listen to the command of the head office,so as to fully reflect "new, quick and smart". We will establish an agile organization in the network finance department and the financial technology department as soon as possible, explore the agile way of the financial market department and the asset management department, accelerate the construction of process banks and credit factories, continue to carry out special activities to improve the work style,

42

continue to rectify the work style of the two-level organs, strengthen the first question responsibility system and the time limit system, as well as establish the first transaction responsibility system, so as to continuously improve the service efficiency and work quality.

III.Board of supervisors and its special committees

(1) Members of the board of supervisors and its meetings 1.Members of the board of supervisors

At the end of the reporting period, the board of supervisors of the bank was composed of 6 supervisors, including 2 external supervisors and 4 employee supervisors.

No.

Name

Gende

Age

Working Organization

Type

Number of

r

shares held

1

Li

Male

56

Huarong Xiangjiang Bank

Employee supervisor

None

Shougeng

(Chief supervisor)

2

Liu

Femal

60

Nankai University

External supervisor

None

Xiaoxin

e

3

Li Lifang

Femal

51

Hunan Caixin Public Welfare

External supervisor

None

e

Foundation

4

Guo

Male

55

Huarong Xiangjiang Bank

Employee supervisor

None

Longjin

5

Liang

Male

55

Huarong Xiangjiang Bank

Employee supervisor

None

Zheng

6

Zou

Male

53

Huarong Consumption Finance

Employee supervisor

None

Xinliang

Co., Ltd.

2.Changes of supervisor

Xiong Wei resigned as an employee supervisor in June 2020.

3. Performance of supervisors

1. Performance of the duty of loyalty: the supervisors of the bank abided by the relevant laws and regulations and the articles of association, safeguard the interests of shareholders and the employees of the bank, and truthfully reported their personal information such as changes in their positions, held shares of the bank and related parties. No violation of the duty of loyalty was found, such as seeking illegal interests for themselves or others, interfering in the business activities of the management, divulging business secrets related to the bank, causing heavy losses to the bank, etc.
2. Performance of the duty of diligence: the supervisors of the bank took the interests of the bank and all shareholders as the priority, made use of their own professional knowledge, performed the duties entrusted by the articles of association, attended the meetings of the board of supervisors and the supervisory committee as required, attended the general meeting of shareholders, the meeting of the board of directors and any other important meeting of the bank, carefully examined and deliberated all kinds of motions and reports, paid close attention to the operation and management, internal control construction and risk management of the bank, clearly put forward their own opinions and suggestions, and well performed their duty of diligence.
3. Performance of external supervisors: the working hours of external supervisors in this bank were in line with the relevant regulations. They performed their duties in accordance with the regulations, focused on the fairness of related party transactions, the annual profit distribution plan, the authenticity and integrity of information disclosure, risk management and internal control construction, as well as matters that might cause significant losses to this bank, and expressed their independent opinions objectively and fairly, and made positive contributions to improving the corporate governance and strengthening the risk management and internal control construction of

43

the bank.

4.Meetings of board of supervisors

During the reporting period, the board of supervisors held 7 meetings, studied and deliberated 16 major issues, and listened to and reviewed 22 reports.

On March 17, 2020, the 36th meeting of the second board of supervisors deliberated and approved four motions, including the Motion on the Transfer of Non-performingCredit Assets, and Non-interestBearing and Debt Paying Assets in 2020, the Report on the Evaluation of Directors' Performance of Duties of Huarong Xiangjiang Bank in 2019, etc., and reviewed three reports, including the Report on the Evaluation of Internal Control of Huarong Xiangjiang Bank in 2019, the Report on Rectification and Implementation of the Minutes of the Half-yearSupervision Talk in 2019, etc.

On April 09, 2020, the 37th meeting of the second board of supervisors deliberated and approved two motions, namely, the Motion on Submitting for Deliberation of the Financial Statements and Audit Report of Huarong Xiangjiang bank in 2019 and the Comprehensive Risk Management Report of Huarong Xiangjiang Bank in 2019, and reviewed seven reports, including the Corporate Governance Evaluation Report of Huarong Xiangjiang Bank in 2019, the Capital Evaluation Report of Huarong Xiangjiang Bank in 2019, the Report on the Related Transactions of Huarong Xiangjiang Bank in 2019, etc.

On April 20, 2020, the 38th meeting of the second board of supervisors deliberated and approved the Annual Report of Huarong Xiangjiang Bank in 2019.

On June 03, 2020, the 39th meeting of the second board of supervisors deliberated and approved seven motions, including the Work Report of the Board of Supervisors of Huarong Xiangjiang Bank in 2019, the Final Financial Report of Huarong Xiangjiang Bank in 2019, the Profit Distribution Plan of Huarong Xiangjiang Bank in 2019, etc., and reviewed five reports, including the Evaluation Report on the Implementation of the Strategic Plan of Huarong Xiangjiang Bank in 2019, the Special Audit Report on Related Transactions of Huarong Xiangjiang Bank in 2019, the Report on Salary Management and Performance Evaluation of Huarong Xiangjiang Bank in 2019, etc.

On August 27, 2020, the 40th meeting of the second board of supervisors deliberated and approved the Motion on Employing Accounting Firms in 2020.

On September 28, 2020, the 41st meeting of the second board of supervisors reviewed three reports, namely, the Comprehensive Risk Management Report of Huarong Xiangjiang Bank in the First Half of 2020, the Centralized Procurement Report of Huarong Xiangjiang Bank in 2019, and the Special Audit Report on Human Resource Efficiency of Huarong Xiangjiang Bank.

On December 25, 2020, the 42nd meeting of the second board of supervisors deliberated and approved the Motion on Adjusting the Preference Targets of Return on Capital (ROE) and Return on Assets (ROA), and reviewed four reports, including the Report on the Management of Related Parties of Huarong Xiangjiang Bank, the Report on the Special Audit of Five-levelLoan Classification, etc.

(II) Composition of the special committee and meetings held

Under the Board of Supervisors, there is a Supervisory Committee with Chairman of Li Lifang and members of Guo Longjin, Liang Zheng and Zou Xinliang.

During the report period, the Supervisory Committee held 4 meetings and heard and reviewed 21 reports.

44

(III) Work of the Board of Supervisors

In 2020, the Board of Supervisors closely followed the central work of the Bank, highlighted the focus of supervision, comprehensively performed the statutory duties of financial management, risk management, internal control and performance supervision, organized 15 supervisory meetings, completed 8 special inspections, including 7 meetings of the Board of Supervisors, 4 meetings of the Supervisory Committee and 4 meetings of the General Office of the Supervisory Chairman, reviewed and considered 64 reports of various types, made 76 supervisory suggestions, and gave full play to its supervisory role.

1. Strengthen the supervision of financial management and promote the financial management compliance and soundness. The Board of Supervisors strengthened the supervision of financial quality and financial management, reviewed 15 relevant issues and put forward 17 financial supervision opinions. First, it strengthened the supervision of the scientificity and reasonableness of the financial budget and annual operation plan. It deliberated the annual financial budget and final accounts, annual operation plan, and the implementation of the development strategic plan to promote the annual financial budget and operation target to be more realistic and robust, and promote the strategic plan to be implemented. Second, strengthen the supervision of major financial matters. It deliberated important financial matters such as the profit distribution plan, the engagement and compensation of accounting firms, and capital expenditures for the construction of business premises of the head office, focused on the appropriateness of large capital expenditures and the compliance of decision-making. It organized review and deliberation on the annual financial statements and its audit report, focusing on the authenticity of the financial reports and the deficiencies in financial management. The accounting firm issued an unqualified audit report on the annual financial report. The Board of Supervisors considered that the annual financial report for 2019 reflected the financial position and operating results of the Bank in a true, accurate and complete manner. Thirdly, strengthen the supervision of capital management. It focused on the supervision of the perpetual bond issuance program and promoted the improvement of the program and the successful issuance of RMB 5.3 billion of perpetual bonds, which improved the Tier 1 capital adequacy ratio. Fourth, strengthen the supervision of performance and compensation management. It tracked the annual performance appraisal of the Bank, specifically reviewed the annual compensation management and performance appraisal report, and urged further improvement of the appraisal system to better play the incentive and guiding role of performance compensation.
2. Strengthen risk management supervision and promote the risk management capability. The Board of Supervisors continued to supervise the construction of comprehensive risk management mechanism, especially increased supervision of key risks such as credit risk, operational risk and liquidity risk, reviewed 15 reports of risk management category, and made 28 suggestions and recommendations on risk supervision. First, it strengthened the supervision of risk appetite formulation and implementation, timely reviewed the risk appetite execution assessment report for 2019, risk appetite statement for 2020, and comprehensive risk management report, etc., continuously tracked the implementation of risk limits, and paid close attention to the adjustment and optimization of risk management measures under COVID-19 epidemic. Second, highlight the supervision of key risks. It regularly monitored the situation of non-performing loans, overdue loans and risk offset indicators, paid close attention to the risk control of key areas such as government finance, real estate, online loans and credit cards, considered the disposal of non-performing loans and non-interest-bearing assets, supervised the "three checks" of loans to prevent credit risks at source, and provided innovative ways to accelerate the disposal of non-performing loans and

45

non-interest-bearing assets. It continuously supervised the control of operational risk, market risk and liquidity risk, reviewed 10 risk management reports including stress tests, and pushed the Bank to improve technical means and strengthen control in key risk measurement, monitoring and early warning. The bank-wide risk indicators met the regulatory requirements and the long-term mechanism of risk prevention and control was continuously improved. Third, it strengthened the supervision and inspection of comprehensive risk management, strengthened the linkage of "supervision and audit" and completed 8 inspection projects on business continuity, internal control evaluation and online loan risk management in collaboration with internal audit department.

1. Strengthen the supervision of internal control management and promote the effectiveness of internal control. It focused on the effectiveness of internal control, reviewed 14 topics on internal control compliance management and put forward 18 supervisory opinions and recommendations. First, strengthen the supervision of the construction of internal control system. It continuously tracked the bank-wide system cleaning and process optimization, and urged to further plug the loopholes and improve the internal control system. Secondly, strengthen the supervision of internal control compliance management. It reviewed 12 internal control inspection and evaluation reports on compliance review, case prevention management, anti-money laundering, operation management and data governance, focused on the review of the 2019 internal control evaluation report, promoted the linkage of evaluation results with credit authorization, evaluation of priorities and performance assessment, and further strengthened the responsibility for internal control compliance management at all levels. Third, supervise the rectification of problems and promote the Bank to make up for shortcomings. It listened to the report on the rectification of capital management and finance business, focused on tracking the implementation of the rectification of the regulatory opinions of Hunan Banking and Insurance Regulatory Bureau and the problems discovered in the internal and external inspections of the Bank, and urged to reflect on the root causes and further improve the level of internal control and management. Supervision increased accountability for non-compliance, and the Bank's compliance awareness and internal control management level has been steadily improved. Fourth, strengthen the supervision of connected transactions. It regularly reviewed the management of related transactions across the Bank, focusing on the dynamic update of the list of related parties, the standardization of related transaction procedures and fairness of pricing. At the end of 2020, the Bank had a balance of RMB 8.586 billion in connected credit, and the proportion of all connected transactions met regulatory requirements.
2. Strengthen the supervision of the performance of duties and promote the diligence and responsibility of directors and senior management. The Board of Supervisors continuously standardizes and strengthens the management of the performance files of directors and senior management, increases the supervision of the daily performance of the Board of Directors, senior management and their members, and carries out the annual evaluation of the performance of directors and senior management in a strict and standardized manner. First, strengthen the supervision of daily performance of duties. It improves the daily performance accounts of directors and senior management, tracks the performance of the board of directors, senior management and their members, and collects and organizes the performance files of directors, supervisors and senior management on a quarterly basis. Second, strictly carry out performance evaluation. The annual performance evaluation of directors, supervisors and senior management is completed in strict accordance with the regulatory requirements and the procedures stipulated in the internal system. The Board of Supervisors is of the opinion that the directors and senior management of the Bank are able to comply with the national laws and regulations and the Bank's system, perform their duties and responsibilities, and accomplish the annual objectives and tasks well, and no violation of laws and regulations, the Bank's Articles of Association, or acts that are detrimental to the interests

46

of the Bank and its shareholders are found in the execution of the duties of the directors and senior management. Thirdly, strengthen the application of the evaluation results of the performance of duties. The evaluation results of directors, supervisors and senior managers' performance are reported to the Party Committee, fed back to the directors, supervisors and senior managers themselves, and reported to the shareholders' meeting and the supervisory authorities on a special basis.

5. Strengthen supervision and coordination and continuously improve supervision capacity. The Board of Supervisors strengthens the coordination of supervision, strengthens fine supervision, and constantly improves the mechanisms of meeting supervision, appointment supervision, supervision and review linkage and feedback implementation of supervision opinions to enhance the quality and effectiveness of supervision. First, strengthen the follow-up supervision. Through the Supervision Feedback Implementation Form and Supervision Card, the Board of Supervisors' supervisory opinions and suggestions are followed up and supervised, and relevant departments have made timely rectification and implementation. Second, strengthen supervision and coordination. Through the office meeting of the chairman of the Board of Supervisors, it strengthens the coordination of supervision work, enhances the coordination and communication with all parties of corporate governance and relevant departments and exchanges information to ensure the completion of the annual supervision work. It regularly sorts out and verifies the compliance, procedural propriety and integrity of the Board of Supervisors' own supervision work to promote the Board of Supervisors' compliance operation in accordance with the law. Third, strengthen supervision capacity building. It comprehensively sorted out the laws, regulations and systems related to the supervisory work of the Board of Supervisors, compiled and printed the Workbook of Board of Supervisors to provide institutional tools for supervisors to effectively carry out their supervisory work and promote the supervisory capacity of supervisors; improved the task list of supervisory work of the Board of Supervisors to promote full coverage of supervisory work.

IV. Senior Management

(I) Members of Senior Management

At the end of the report period, the Bank's senior management consisted of the following 10 members, as detailed in the following table:

S/N

Name

Gender

Age

Title

Division of work

1

Jiang

Male

50

President

Preside over the operation level and take charge of the Risk

Junwen

Management Department.

2

Han

Male

50

Vice President

Take charge of the Financial Market Department and the Asset

Jingkao

Management Department.

Take charge of the General Management Department (Party

3

Li Xinhua

Male

54

Vice President

Committee Office and Party Propaganda Department) and the

Operations Management Department, and take charge of the

consumer rights protection work of the Bank.

4

Yang

Male

56

Vice President

Take charge of the Financial Technology Department and the

Yuanyu

Security Department.

Vice President,

Take charge of the

Credit Management Department, Asset

Yi

Chief Risk Officer,

5

Male

52

Protection Department and Infrastructure Office, and assists in

Chazhong

Chief Information

managing the Risk Management Department.

Officer

47

	Yin				Take charge	of Retail Finance Department, Private	Banking
6	Male	56	Vice President	Department,	Microfinance Department,	Consumer	Finance
Liurong
				Department, and Online Finance Department.
					Temporarily lead the work of the Discipline Inspection
	Guo			Assistant to	Commission, take charge of the Discipline Inspection Commission
7	Male	55	President, Audit	Office, the	Party Committee Inspection	Office, the	Human
Longjin
			Director	Resources Department, and assist in managing the Audit
					Department.
8	He	Male	48	Assistant to	Take charge of Corporate Business Management Department and
Shengtao	President	Transaction Banking Department.
9	Tang Jun	Male	48	CFO	Take charge of the Planning and Finance Department.
10	Tan	Male	46	Compliance	Take charge of the Internal Control and Compliance Department as
Shujun	Director	well as the bank-wide money laundering risk management.

(II) Board Secretary

Zhou Jibang, male, aged 56, is responsible for the affairs of the Board of Directors.

(III) Changes in senior management

During the report period, there was no change in the members of the Bank's senior management.

V. Organizational structure, branches and employees

(I) Organizational Structure and Branches

At the end of the report period, there were 32 internal departments in the head office, including 26 primary departments and 6 secondary departments.

For details of the organizational structure, please refer to the figure below.

48

49

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

At the end of the report period, the Bank had 192 business branches (including community sub-branches), including 1 head office business department and 15 branches, namely Changsha, Xiangjiang New Area, Zhuzhou, Xiangtan, Hengyang, Yueyang, Shaoyang, Huaihua, Changde, Chenzhou, Yiyang, Loudi, Yongzhou, Zhangjiajie and Xiangxi branches; and 176 sub-branches (including community sub-branches). For details of the branch directory, please refer to the table below.

S/N	Name	Tel.	Address
1	Huarong Xiangjiang Bank	0731-89828811	Xinyuan Jiezuo Building, No.828, South Furong Road (Section 1),
Tianxin District, Changsha City
2	Changsha Branch of Huarong Xiangjiang	0731-88781259	Room B (South Building), Wanjing Caizhi Center, No.208, Section II,
Bank	East Xiangfu Road, Yuhua District, Changsha City
3	Changsha Bayi Road Sub-branch of Huaroang	0731-88781272	1-3/F, Ancillary Office, Xianghe Building, Northeast Corner, Intersection of
Xiangjiang Bank	Bayi Road and Shaoshan Road, Furong District, Changsha City
4	Changsha Xiangzhang Road Sub-branch of	0731-88781300	Southeast Corner, 1-2/F, Xiangyu Yipin, No.55, East Xiangzhang Road,
Huaroang Xiangjiang Bank	Yuhua District, Changsha City
5	Liuyang Sub-branch of Huaroang Xiangjiang	0731-83687380	No.9, West Guizhai Road, Huaichuang Office, Liuyang City, Changsha
Bank
6	Changsha Wanjiali Road Sub-branch of	0731-88781294	1/F, Wangdefu Building, No.176, Section I, Wanjiali Middle Road, Furong
Huaroang Xiangjiang Bank	District, Changsha City
7	Changsha Gaoqiao Sub-branch of Huaroang	0731-88781217	Jiaxi Building, No.278, Changsha Ave., Yuhua District, Changsha City
Xiangjiang Bank
8	Xingsha Sub-branch of Huaroang Xiangjiang	0731-88781511	Frontage Store, No.102, Bldg. 2, Zhumeng Garden, West Kaiyuan Road,
Bank	Changsha County
9	Changsha Yuhuating Sub-branch of Huaroang	0731-88781565	No.107-112, Bldg. 2, Yangguang Jincheng, No.35, East Xinjian Road, Yuhua
Xiangjiang Bank	District, Changsha City
10	Changsha Xiangchun Road Sub-branch of	0731-88781573	Store#2, 3, 4, 1/F, Xiangrui Garden, No.43, Xiangchun Road, Kaifu District,
Huaroang Xiangjiang Bank	Changsha City
11	Changsha Furong Middle Road Sub-branch of	0731-88781598	No.380, Section III, Rurong Middle Road, Tianxin District, Changsha City
Huaroang Xiangjiang Bank
12	Changsha Jingwanzi Sub-branch of Huaroang	0731-88781393	No.219, Dongjing Middle Road, Yuhua District, Changsha City
Xiangjiang Bank
13	Changsha Dongcheng Sub-branch of Huaroang	0731-88781612	No.320, Section II, Dongerhua, Furong District, Changsha City
Xiangjiang Bank
14	Changsha Sifangping Sub-branch of Huaroang	0731-88781603	No.189, Sanyi Ave., Kaifu District, Changsha City
Xiangjiang Bank
15	Changsha Xiangjiang Middle Road Sub-branch	0731-88781622	No.109-113, Bldg. 3, Zone C, Kaifu Wanda Plaza, No.589, Zhongshan Road,
of Huaroang Xiangjiang Bank	Kaifu District, Changsha City
16	Changsha Dingwangtai Sub-branch of Huaroang	0731-88781298	East Side, 1/F, Xianghao Building, No.106, Section II, Furong Middle Road,
Xiangjiang Bank	Furong District, Changsha City
17	Changsha Furong Plaza Sub-branch of	0731-88781698	Room 103, 1/F, Manhattan Building, No.479, Jianxiang Road, Furong
Huaroang Xiangjiang Bank	District, Changsha City
18	Changsha Dongtang Sub-branch of Huaroang	0731-88781669	1F, 3/F, Art Complex Building, No.438, North Shaoshan Road, Yuhua
Xiangjiang Bank	District, Changsha City
19	Changsha Kaifu Sub-branch of Huaroang	0731-88781791	Store #110, Futian Xingye Complex Building, No.377, Jinma Road, Kaifu
Xiangjiang Bank	District, Changsha City
20	Xiangjiang New District Branch of Huarong	0731-89828299	1, 2, 5, 6/F, Bldg. A, Kailin International, No.53, Binjiang Road, Yuelu
Xiangjiang Bank	District, Changsha City
21	Changsha Jinxing Road Sub-branch of Huaroang	0731-88781308	B1 and Ground Floor, No.4, Xicheng Longting, No.355, Yuelu Ave., Yuelu
Xiangjiang Bank	District, Changsha City
22	Ningxiang Sub-branch of Huaroang Xiangjiang	0731-85851388	Zhongyuan Ningxiang Huadu, Xinkang Middle Road, Ningxiang City,
Bank	Changsha
23	Changsha Wangcheng Sub-branch of Huaroang	0731-88102768	Frontage Store, 1/F, Bldg.2, Liancheng Garden, Yingbin Ave., Wangcheng
Xiangjiang Bank	District, Changsha City
24	Changsha High-techSub-branch of Huaroang	0731-88781425	No.338, West Xianjiahu Road, Yuelu District, Changsha City
Xiangjiang Bank
25	Changsha Yanghu Sub-branch of Huaroang	0731-89828319	1/F, 2/F, Tower C, Zhongying Plaza, No.368, Section I, South Xiaoxiang
Xiangjiang Bank	Road, Yuelu District, Changsha City
26	Zhuzhou Branch of Huarong Xiangjiang Bank	0731-22210080	Guowang Building, No.60, Taishan Road, Tianyuan District, Zhuzhou
City
27	Zhuzhou Automobile Center Sub-branch of	0731-28456520	Store#6-8, Bldg. 1, Zone A, Automobile Center, Zhuzhou City
Huaroang Xiangjiang Bank
28	Zhuzhou Zuanshi Road Sub-branch of Huaroang	0731-28164434	Store #102, 103 & 104, 1/F, Complex Building, No.736, West Xinhua Road,
Xiangjiang Bank	Zhuzhou City
29	Zhuzhou Dongyi Sub-branch of Huaroang	0731-28416517	Gate of Dongqu Government, Zhuzhou City
Xiangjiang Bank
30	Zhuzhou Tianxin Sub-branch of Huaroang	0731-22432577	1/F, Tianxin Commercial Plaza, Shifeng District, Zhuzhou City
Xiangjiang Bank
31	Zhuzhou Plaza Sub-branch of Huaroang	0731-28230173	Store#21, B1, Chuangye Plaza, Tianyuan District, Zhuzhou City
Xiangjiang Bank
32	Zhuzhou Yunlong Sub-branch of Huaroang	0731-28868656	Store#3-5, 1/F, Xinjie Longtou Farmer's Market, Longtoupu Town, Yunlong
Xiangjiang Bank	Demonstration Area, Zhuzhou City
33	Zhuzhou Liyu Sub-branch of Huaroang	0731-28220746	Store #105, 106, 107, 205 & 206, Bldg. 2, Henghao Cuigu Town Community,
Xiangjiang Bank	No.299, Jiangshan Road, Tianyuan District, Zhuzhou City

50

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

34	Zhuzhou Fenghuang Sub-branch of Huaroang	0731-22211023	No.1, South Jianshe Road, Zhuzhou City
Xiangjiang Bank
35	Zhuzhou Shifu Road Sub-branch of Huaroang	0731-28220591	Shifu Road, Zhuzhou City
Xiangjiang Bank
36	Zhuzhou Jinshan Sub-branch of Huaroang	0731-28280489	Frontage Store #2-109-114, Jinbi Garden, Taizi Road, Lusong District,
Xiangjiang Bank	Zhuzhou City
37	Zhuzhou Supply & Marketing Sub-branch of	0731-28220930	No.103-105, No.31, Gongyuan Road, Lusong District, Zhuzhou City
Huaroang Xiangjiang Bank
38	Zhuzhou Jinhui Sub-branch of Huaroang	0731-22867605	Podium Building, Right Side, Zhuzhou Land and Resources Bureau
Xiangjiang Bank
39	Zhuzhou Jinjiang Sub-branch of Huaroang	0731-28227254	1/F, Complex Building, East Street, Jiangnan Shopping Mall, Lusong District,
Xiangjiang Bank	Zhuzhou City
40	Zhuzhou Shifeng Sub-branch of Huaroang	0731-28331791	No.73, North Jianshe Road, Zhuzhou City
Xiangjiang Bank
41	Zhuzhou Chengbei Sub-branch of Huaroang	0731-28632373	1/F, No.1926, North Jianshe Road, Zhuzhou City
Xiangjiang Bank
42	Zhuzhou Yongfa Sub-branch of Huaroang	0731-22491484	No.108, East Xinhua Road, Zhuzhou City
Xiangjiang Bank
43	Zhuzhou Lusong Sub-branch of Huaroang	0731-22280036	No.111, Lusong Road, Zhuzhou City
Xiangjiang Bank
44	Zhuzhou Guowang Sub-branch of Huaroang	0731-22202827	No.44, Jianshe Middle Road, Zhuzhou City
Xiangjiang Bank
45	Zhuzhou Changjiang Sub-branch of Huaroang	0731-22869850	1/F, Poly Building, Tianyuan District, Zhuzhou City
Xiangjiang Bank
46	Liling Sub-branch of Huaroang Xiangjiang Bank	0731-23244558	1/F, Commercial Zone G (Duhui Center), Wenhua Road, Liling City, Zhuzhou
47	Liling Guoci Sub-branch of Huaroang Xiangjiang	0731-23167200	Commercial Store #107 & 108, Bldg. 19, Ruihe New Town Community,
Bank	No.8, Liquan Road, Liling City, Zhuzhou
48	Zhuzhou Wuyi Sub-branch of Huaroang	0731-28834491	No.103-105, Bldg. B, North Side, Yandi Plaza, Tianyuan District, Zhuzhou
Xiangjiang Bank	City
49	Zhuzhou Tiansha Sub-branch of Huaroang	0731-22888043	Corner Store, 1/F, Complex Building of Animal Husbandry and Aquaculture
Xiangjiang Bank	Bureau, Taishan Road, Tianyuan District, Zhuzhou City
50	Zhuzhou Jinfeng Sub-branch of Huaroang	0731-22862174	1/F, Complex Building of Labor & Social Security Bureau, North Changjiang
Xiangjiang Bank	Road, Tianyuan District, Zhuzhou City
51	Chaling County Sub-branch of Huaroang	0731-25505088	1/F, Bauhinia Hotel, Chaling County, Zhuzhou City
Xiangjiang Bank
52	Youxian Sub-branch of Huaroang Xiangjiang	0731-24223188	Store #107-114, Bldg. 1, Meicheng International Plaza, Youxian, Zhuzhou
Bank	City
53	Zhuzhou Zhujiang Sub-branch of Huaroang	0731-22882935	Complex Building, No.10, Tiantai Community, South Zhujiang Road,
Xiangjiang Bank	Zhuzhou City
54	Zhuzhou Lukou Sub-branch of Huaroang	0731-27678399	1/F, Shengjin Town, Lupu Plaza, Lukou Town, Lukou District, Zhuzhou City
Xiangjiang Bank
55	Xiangtan Branch of Huarong Xiangjiang Bank	0731-58512091	No.45, Hedong Ave., Jianshe Road, Yuetang District, Xiangtan City
56	Xiangtan Huifeng Sub-branch of Huaroang	0731-58267234	No.7, Chezhan Road, Xiangtan City
Xiangjiang Bank
57	Xiangtan Hexi Sub-branch of Huaroang	0731-58276059	No.5, Yingbin Village, West Shaoshan Road, Yuhu District, Xiangtan City
Xiangjiang Bank
58	Xiangtan Jianshe Sub-branch of Huaroang	0731-58234074	No.192, Guangyun Road, Guangchang Street, Yuhu District, Xiangtan City
Xiangjiang Bank
59	Xiangtan South Jiefang Road Sub-branch of	0731-58236834	Store, 1/F, Bldg. 4, Daqing New Village, Zhongshan Street, Yuhu District,
Huaroang Xiangjiang Bank	Xiangtan City
60	Xiangtan Zhexiang Sub-branch of Huaroang	0731-58262733	No.32, South Jiefang Road, Pingzheng Street, Yuhu District, Xiangtan City
Xiangjiang Bank
61	Xiangan Jiuhua Sub-branch of Huaroang	0731-58629083	Jiuhua Building, No.98, Liancheng Ave., Yuhu District, Xiangtan City
Xiangjiang Bank
62	Xiangtan Jinxia Sub-branch of Huaroang	0731-58517206	No.010101, Bldg. 1, Yufeng New Town International, No.9, Jinfurong Road,
Xiangjiang Bank	Baota Street, Yuetang District, Xiangtan City
63	Xiangtan Liancheng Sub-branch of Huaroang	0731-58392924	1/F, Changsheng Building, Jijian Camp, Xiangtan City
Xiangjiang Bank
64	Xiangtan Xiangjiang Sub-branch of Huaroang	0731-52315084	No.201, West Shaoshan Road, Xiangtan City
Xiangjiang Bank
65	Xiangtan Fenghuang Sub-branch of Huaroang	0731-57779708	Kaixuan International Plaza, Fenghuang Middle Road, Yisuhe Town,
Xiangjiang Bank	Xiangtan County, Xiangtan City
66	Xiangtan Yuhu Sub-branch of Huaroang	0731-58264956	Xichun Road Junction, Xiangtan City
Xiangjiang Bank
67	Xiangtan Jindu Sub-branch of Huaroang	0731-52316564	No.389, West Shaoshan Road, Xiangtan City
Xiangjiang Bank
68	Xiangtan Jinqiao Sub-branch of Huaroang	0731-52327535	Changtang Building, No.85, East Xiaguang Road, Xiangtan City
Xiangjiang Bank
69	Xiangtan Bantang Sub-branch of Huaroang	0731-55571166	Store #0101003-0101005, No.1, Furong Century Phase III, Bantangpu,
Xiangjiang Bank	Jiancun Street, Yuetang District, Xiangtan City
70	Xiangtan Shaoshan Sub-branch of Huaroang	0731-53282514	Bldg. C9, Zhtan Market, Shaoshan Town, Yuetang District, Xiangtan City
Xiangjiang Bank
71	Xiangtan Furong Sub-branch of Huaroang	0731-58568178	Store#8-10, Unit 1, Bldg. B, Shanglinglong Community, No.1, West Huxiang
Xiangjiang Bank	Road, Baota Street, Yuetang District, Xiangtan City
72	Xiangtan Lanyuan Sub-branch of Huaroang	0731-58562916	Tower A, Xiangtan Center, No.4, Lanyuan Road, Yuetang District, Xiangtan
Xiangjiang Bank	City
73	Xiangtan Yuetang Sub-branch of Huaroang	0731-58521323	No.35, South Jianshe Road, Xiangtan City
Xiangjiang Bank
74	Xiangtan High-techSub-branch of Huaroang	0731-58561704	Store #0101001&0201001, Nanhai Building and No.1102, Tower A, Nanhai
Xiangjiang Bank	Building, South Jianshe Road, Shuyuan Street, Yuetang District, Xiangtan

51

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

				City
75	Xiangtan Diancheng Sub-branch of Huaroang	0731-58620940	No.1103-1108, Yuetang Yinxiang Zidong Pavilion, Yuetangling Community,
Xiangjiang Bank		Yuetang Street, Yuetang District, Xiangtan City
76	Xiangtan County Sub-branch of Huaroang	0731-57777008	1/F, Jinxiu Pavilion, No.39, Haisong 3rd Road, Yisuhe Town, Xiangtan
Xiangjiang Bank		County
	Shaoshan Sub-branch of Huaroang Xiangjiang		Store #0101013, 0101014, 0101015 & 0201004, New World Times Garden,
77	0731-55691828	Intersection of Shaoshan Ave., and Xinyan Road, Qingxi Town, Shaoshan
Bank
			City
78	Xiangxiang Sub-branch of Huaroang Xiangjiang	0731-56713010	Store# 108, 109 & 205, Bldg. 23, Dixiang Mansion, Renmin Road, Dongshan
Bank		Office, Xiangxiang City, Xiangtan
79	Hengyang Branch of Huarong Xiangjiang	0734-8221928	Yuyuan Wanxiang Shopping Mall, No.121, Jiefang Road, Yanfeng
Bank		District, Hengyang City
80	Hengyang Chuanshan Sub-branch of Huaroang	0734-8209623	1-F Store, Changhe Plaza, No.30, Chuanshan Ave., Hengyang City
Xiangjiang Bank
81	Hengyang Yanfeng Sub-branch of Huaroang	0734-8268135	No.69, South Zhongshan Road, Yanfeng District, Hengyang City
Xiangjiang Bank
82	Hengyang Zhuhui Sub-branch of Huaroang	0734-8345511	No.48, Shangxi Riverbank, Zhuhui District, Hengyang City
Xiangjiang Bank
83	Hengyang Hengzhou Sub-branch of Huaroang	0734-8227553	No.34, Jiefang Road, Shigu District, Hengyang City
Xiangjiang Bank
	Leiyang City Sub-branch of Huaroang		0201Store#0101& 0102, 1/F and Store #0201, 2/F, Zhenghao Xinhui,
84	0734-4311118	Intersection of Chengbei Road and Tiyu Road, Caizichi Sub-district Office,
Xiangjiang Bank
			Leiyang City, Hengyang
85	Hengdong County Sub-branch of Huaroang	0734-5219758	Store #110-114, Bldg. A, Chunchang Building, North Hengyue Road,
Xiangjiang Bank		Chengguan Town, Hengdong County, Hengyang City
86	Hengyang Development Sub-branch	of	0734-8894615	No.20, Guanghui Road, Hengyang High-tech Development Zone
Huaroang Xiangjiang Bank
87	Hengyang Fenghuang Sub-branch	of Huaroang	0734-8270083	No.9, Fenghuang Middle Road, Zhengxiang District, Hengyang City
Xiangjiang Bank
88	Hengyang Xianfeng Sub-branch of Huaroang	0734-8212147	No.166, South Huancheng Road, Yanfeng District, Hengyang City
Xiangjiang Bank
89	Hengyang County Sub-branch of Huaroang	0734-6858112	No.69, East Xinzheng Road, Xidu Town, Hengyang County, Hengyang City
Xiangjiang Bank
90	Hengyang Huayuan Sub-branch of Huaroang	0734-8586637	1/F, Bldg. D, Zone B, Yongxing Commercial Shopping Mall, No.223-228,
Xiangjiang Bank		North Zhengxiang Road, Shigu District, Hengyang City
91	Hengyang Lixin Sub-branch of Huaroang	0734-8564806	Store #105-106, Bldg. 28, Dushi Village, No.76, North Hongxiang Road,
Xiangjiang Bank		Zhengxiang District, Hengyang City
92	Hengshan County Sub-branch of Huaroang	0734-5998288	No.71, Renmin Middle Road, Kaiyun Town, Hengshan County, Hengyang
Xiangjiang Bank		City
93	Hengyang Jimao Sub-branch of Huaroang	0734-8332614	1/F, No.38, North Dongfeng Road, Zhuhui District, Hengyang City
Xiangjiang Bank
94	Hengyang Lianhe Sub-branch of Huaroang	0734-8163107	1/F Store, Bldg. 1, Junheng Garden Phase I, No.92, West Jiefang Road,
Xiangjiang Bank		Zhengxiang District, Hengyang City
95	Hengyang Hongyan Sub-branch of Huaroang	0734-8328684	Room 105, Kaixiang Silver Tower, No.33, Caixia Street, Huaxing Street,
Xiangjiang Bank		Hengyang High-tech District
96	Hengyang High-techSub-branch of Huaroang	0734-8853212	1/F Store, Commercial and Residential Bldg. 2-7, Changsheng Community,
Xiangjiang Bank		Hengyang High-tech District
97	Changning City Sub-branch of Huaroang	0734-2867208	No.11-14, Bldg. C1, Qingyang New District, Changning City, Hengyang
Xiangjiang Bank
98	Hengyang Laiyan Sub-branch of Huaroang	0734-8843589	No.1, West Chuanshan Road, Zhengxiang District, Hengyang City
Xiangjiang Bank
99	Qidong County Sub-branch of Huaroang	0734-6366599	No.75, Yongchang Ave., Hongqiao Town, Qidong County, Hengyang City
Xiangjiang Bank
100	Hengyang Jinqiao Sub-branch of Huaroang	0734-8242140	No.9, East Changsheng Road, Shigu District, Hengyang City
Xiangjiang Bank
101	Hengyang Changfeng Sub-branch of Huaroang	0734-8233597	No.37, Changfeng Ave., Hengyang High-tech District
Xiangjiang Bank
102	Hengyang Bisha Sub-branch of Huaroang	0734-8847300	1/F Store, Complex Building, Baishazhou Plaza, No.11, Tuling Village,
Xiangjiang Bank		Yanfeng District, Hengyang City
103	Hengyang Xiaoxiang Sub-branch of Huaroang	0734-8212329	No.38, Siqian Street, Shigu District, Hengyang City
Xiangjiang Bank
104	Hengnan County Sub-branch of Huaroang	0734-8099906	1/F and 2/F, Former Traffic Administration Office Building, Yunji Ave.,
Xiangjiang Bank		Yunji Town, Hengnan County, Hengyang City
105	Yueyang Branch of Huarong Xiangjiang Bank	0730-3292168	No.36, Yueyang Ave., Yueyang City
106	Yueyang Yunxi Sub-branch of Huaroang	0730-8417656	No.112, Xima Road, Yunxi Town, Yunxi District, Yueyang City
Xiangjiang Bank
107	Yueyang Daqiao Sub-branch of Huaroang	0730-8239103	Store #103-104, Baling Shangpin, West Zhanqian Road, Yueyanglou District,
Xiangjiang Bank		Yueyang City
108	Yueyang Nanhu Sub-branch of Huaroang	0730-8849123	No.157, Jin'e Middle Road, Yueyang City
Xiangjiang Bank
109	Yueyang Wulipai Sub-branch of Huaroang	0730-8249166	No.347, East Maoling Road, Yueyanglou District, Yueyang City
Xiangjiang Bank
110	Miluo City Sub-branch of Huaroang Xiangjiang	0730-5256567	1/F, Bldg. 14, Longzhou International Commercial Street, East Jianshe Road,
Bank		Miluo City, Yueyang
111	Yueyang Caiyuan Sub-branch of Huaroang	0730-8852870	Store #1-3, 1/F, Nanjun Caiyuan Building, East Qiusuo Road, Yueyang City
Xiangjiang Bank
112	Yueyang Zhongnan Sub-branch of Huaroang	0730-8603262	Chunhui Garden, South Baishiling Road, Yueyang Economic and
Xiangjiang Bank		Technological Development Zone
113	Yueyang Yueyanglou Sub-branch of Huaroang	0730-8319531	West Poly Street, Intersection of West Baling Road and North Dongting Road,
Xiangjiang Bank		Yueyang City

52

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

114	Yueyang Dongting Sub-branch of Huaroang	0730-8181978	Store, Gujing Community (No.208, Dongting Ave.), Wulipai Office,
Xiangjiang Bank	Yueyanglou District, Yueyang City
	Pingjiang County Sub-branch of Huaroang		Tianyue Bus Station Store, No.139, Taihuatai Middle Road, Tianyue
115	0730-6688881	Economic and Technological Development Zone, Pingjiang County, Yueyang
Xiangjiang Bank
		City
116	Yueyang Huabanqiao Sub-branch of Huaroang	0730-8622644	West Side, Bubugao Plaza, East Jin'e Road, Yueyang City
Xiangjiang Bank
117	Xiangyin County Sub-branch of Huaroang	0730-2155028	No.379, East Zhengjiang Road, Wenxing Town, Xiangyin County, Yueyang
Xiangjiang Bank	City
118	Yueyang East Baling Road Sub-branch of	0730-8963651	Store#1-4, 1/F, Yulong International Xitou, East Baling Road, Yueyang
Huaroang Xiangjiang Bank	Economic and Technological Development Zone
119	Huarong County Sub-branch of Huaroang	0730-4512668	Zone A1 (West Side to Entrance), Qiaocheng Plaza, Zhanghua Town,
Xiangjiang Bank	Huarong County, Yueyang City
120	Linxiang City Sub-branch of Huaroang	0730-3558005	Chang'an Middle Road, Chang'an Town, Linxiang City, Yueyang (1-2/F,
Xiangjiang Bank	Front Office Building of Linxiang Finance Bureau)
121	Yueyang County Sub-branch of Huaroang	0730-7659009	No.119, Dongfang Road, Rongjiawan Town, Yueyang County (1/F, Bldg. A,
Xiangjiang Bank	Fu'an Garden)
122	Yueyang New Harbor District Sub-branch of	0730-8417151	West Side to the Gate, 1/F, Yueyang New Harbor District Management
Huaroang Xiangjiang Bank	Committee Office Building
123	Yueyang Yunxi District Logistics Park	0730-8193091	Yunxi Government Affairs Service Hall, Yueyang City
Sub-branch of Huaroang Xiangjiang Bank
124	Shaoyang Branch of Huarong Xiangjiang	0739-5361221	Xicheng Building, No.1, Caopojing, Shaoyang City
Bank
125	Shaoyang Xicheng Sub-branch of Huaroang	0739-2354385	No.16, Complex Building, Jiujing Bay, Shaoyang City
Xiangjiang Bank
126	Shaoyang Jinxing Sub-branch of Huaroang	0739-5396809	Store#2-4,West-East, Bldg. 1, Hecheng Central Park, East Minzhou Road,
Xiangjiang Bank	Shaoyang City
127	Shaoyang Riheng Sub-branch of Huaroang	0739-5180650	No.57, Riheng Electric Appliance Center, East Shaoshui Road, Shaoyang City
Xiangjiang Bank
128	Shaoyang Dongcheng Sub-branch of Huaroang	0739-5231379	No.1460, Baoqing Middle Road, Shaoyang City
Xiangjiang Bank
129	Shaoyang Plaza Sub-branch of Huaroang	0739-5222230	No.22, Dongda Road, Shaoyang City
Xiangjiang Bank
130	Shaoyang Xihu Road Sub-branch of Huaroang	0739-5191033	Store #12, Xihu Road, Shaoyang City
Xiangjiang Bank
131	Shaoyang East Baoqing Sub-branch of Huaroang	0739-5271135	Store #1101, Bldg.1, Zhuosongyue Town, East Baoqing Road, Shuangqing
Xiangjiang Bank	District, Shaoyang City
132	Shaoyang Jiangbei Sub-branch of Huaroang	0739-5630091	Store #1006, 1/F, Bldg.11, Guangxia Mingdu Phase I, North Xihu Road, Beita
Xiangjiang Bank	District, Shaoyang City
133	Shaodong City Sub-branch of Huaroang	0739-2665238	Intersection of Xinghe Ave. and Hengbao Road (No.998, Hengbao Road),
Xiangjiang Bank	Liangshi Town, Shaodong County
134	Longhui County Sub-branch of Huaroang	0739-8181518	Xiangsheng Building Store, Taohua Road, Taohong Town, Longhui County,
Xiangjiang Bank	Shaoyang City
135	Wugang City Sub-branch of Huaroang	0739-4269556	No.1, North Tongbao Road, Wugang City, Shaoyang
Xiangjiang Bank
136	Shaoyang West Minzhou Road Sub-branch of	0739-5353635	Store #12-18, Bldg.1, Huaxiaxing Garden, West Minzhou Road, Shaoyang
Huaroang Xiangjiang Bank	City
137	Xining County Sub-branch of Huaroang	0739-4831188	Langshan Hongji Hotel, Chunfeng Road, Jinshi Town, Xinning County,
Xiangjiang Bank	Shaoyang City
138	Dongkou County Sub-branch of Huaroang	0739-7231198	No.124, Jicheng Road, Dongkou Town, Dongkou County, Shaoyang City
Xiangjiang Bank
139	Xinshao County Sub-branch of Huaroang	0739-3661805	No.12, Daxin Street, Xinshao County, Shaoyang City
Xiangjiang Bank
140	Shaoyang County Sub-branch of Huaroang	0739-6889666	Store#5-12, Jinghong Garden, Zhenyu New District, Tangdukou Town,
Xiangjiang Bank	Shaoyang County, Shaoyang City
141	Shaoyang Yongcui Garden Community	0739-5189150	Store #1-2, Block A, Yongcui Garden, South Shuangpo Road, Shuangqing
Sub-branch of Huaroang Xiangjiang Bank	District, Shaoyang City
142	Changde Branch of Huarong Xiangjiang Bank	0736-7291288	1-3/F, Bldg. 12, Dingfeng International Wealth Plaza, No.448, Baima
Community, Nanping Street, Wuling District, Changde City
143	Jinshi Sub-branch of Huaroang Xiangjiang Bank	0736-4220002	Jiuli Huadu Commercial and Residential Bldg.C (Store#107, 108 & 109), Jiuli
Ave., Wangjiaqiao Office New Village Community, Jinshi City, Changde
144	Hanshou County Sub-branch of Huaroang	0736-2192666	No.227, 1/F, Yulong Bay Phase II, Furong Middle Road, Xinjie Community,
Xiangjiang Bank	Longyang Street, Hanshou County, Changde City
	Changde Wuling Sub-branch of Huaroang		Intersection of Wuling Ave. and Sanxing Road (Store #101 & 102, Bldg. 11,
145	0736-7123001	Zeyun Plaza), Hongsheng Community, Chengxi Office, Wuling District,
Xiangjiang Bank
		Changde City
			1-2/F, Pujin International Plaza, Intersection of North Lipu Road and
146	Lixian Sub-branch of Huaroang Xiangjiang Bank	0736-3339076	Xiaozhong Street, Zhenzhu Neighborhood Committee, Lipu Subdistrict
			Office, Lixian, Changde City
147	Shimen County Sub-branch of Huaroang	0736-5335092	Room 105, Bldg. 001, Jinshan Building, Liyang Road, Laoximen Community,
Xiangjiang Bank	Chujiang Street, Shimen County, Changde City
148	Changde Binhu Sub-branch of Huaroang	0736-7799276	No.318, Langzhou Road, Beidi Community, Danyang Street, Wuling District,
Xiangjiang Bank	Changde City
149	Changde Dingcheng Sub-branch of Huaroang	0736-7667021	No.2790, Shanjuan Road, Changyuan Community, Yuxia Street, Dingcheng
Xiangjiang Bank	District, Changde City
150	Taoyuan County Sub-branch of Huaroang	0736-6660008	Store #113-122, 1/F, New Times Plaza, Zhangjiang Road, Huanghuajing
Xiangjiang Bank	Community, Zhangjiang Town, Taoyuan County, Changde City
151	Chenzhou Branch of Huarong Xiangjiang	0735-8333223	No.23, Wuling Ave., Beihu District, Chenzhou City
Bank
152	Rucheng County Sub-branch of Huaroang	0735-8222905	No.47, West Xinjian Road, Luyang Town, Rucheng County, Chenzhou City

53

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

	Xiangjiang Bank
153	Yongxing County Sub-branch of Huaroang	0735-5529868	No.248, Yongxing Ave., Bianjiang Town, Yongxing County, Chenzhou City
Xiangjiang Bank
154	Chenzhou Dongcheng Sub-branch of Huaroang	0735-8333927	Store #4, Zhujiang Mingdu Hotel, Beside Government of Bailu Town, Suxian
Xiangjiang Bank	District, Chenzhou City
155	Guiyang County Sub-branch of Huaroang	0735-2456566	No.96, Ouyanghai Ave.(Formerly known Yuanyi Road), Guiyang County,
Xiangjiang Bank	Chenzhou City
156	Chenzhou Baiyi Road Sub-branch of Huaroang	0735-8333583	Store #4-5, Shengyuan Times Plaza, Baiyi Road, Beihu District, Chenzhou
Xiangjiang Bank	City
157	Linwu County Sub-branch of Huaroang	0735-6327766	No.36, Dongyun Road, Shunfeng Town, Linwu County, Chenzhou City
Xiangjiang Bank
158	Zixing City Sub-branch of Huaroang Xiangjiang	0735-2390100	Ancillary Building, Right Side to Local Taxation Bureau, No.171, Yang'an
Bank	Road, Zixing City, Chenzhou
159	Huaihua Branch of Huarong Xiangjiang Bank	0745-2370206	1-3/F, Main Building, Hutian Qiaotou Century Garden, Hutian Ave.,
Huaihua City
	Huaihua Economic Development Zone		East Fengyuan Road, Huaihua Economic Development Zone (Store #1, 2, 55,
160	0745-8668821	56, 57 & 58, Complex Building, Agricultural and Sideline Products Trading
Sub-branch of Huaroang Xiangjiang Bank
		Center)
161	Chenxi County Sub-branch of Huaroang	0745-8698199	Dongfeng Road (Beside Yiyuantai), Chenxi Town, Chenxi County, Huaihua
Xiangjiang Bank	City
162	Xupu County Sub-branch of Huaroang	0745-3329996	No.4, Jingyu Road, Lufeng Town, Xupu County, Huaihua City
Xiangjiang Bank
163	Huaihua Yingfeng Sub-branch of Huaroang	0745-2370211	No.2, East Yingfeng Road, Hecheng District, Huaihua City
Xiangjiang Bank
164	Yuanling County Sub-branch of Huaroang	0745-4225550	1-2/F, Wejiaohua Building, Yuanling County, No.5, East Chenzhou Street,
Xiangjiang Bank	Yuanling County, Huaihua City
165	Mayang County Sub-branch of Huaroang	0745-2507711	Frontage Store, Mayang County Bureau of Industry and Commerce, East
Xiangjiang Bank	Wuyi Road, Gaocun Town, Mayang County, Huaihua City
166	Zhongfang Nanhu Community Sub-branch of	0745-2921190	No.459, Nanhu Middle Road, Zhongfang County, Huaihua City
Huaroang Xiangjiang Bank
167	Loudi Branch of Huarong Xiangjiang Bank	0738-8159885	1-4/F, Liuxing Building, No.45, Changqing Middle Street, Loudi City
168	Loudi Yuetang Sub-branch of Huaroang	0738-8159911	Tower A, Jitai Banchen Building, Yuetang Street, Louxing District, Loudi
Xiangjiang Bank	City
169	Shuangfeng County Sub-branch of Huaroang	0738-6890066	Southwest Corner, Intersection of Hesen Road and Guofan Road, Yongfeng
Xiangjiang Bank	Town, Shuangfeng County, Loudi City
170	Xinhua County Sub-branch of Huaroang	0738-3376596	Longdu International Building, South Meiyuan Road, Meiyuan Development
Xiangjiang Bank	Zone, Xinhua County, Loudi City
	Lengshuijiang City Sub-branch of Huaroang		Room 101-106, Bldg. 2, Jiatai Jiaxinhe International Commercial Plaza,
171	0738-5219991	Intersection of Tidu Middle Road and Jiankang Road, Lengshuijiang City,
Xiangjiang Bank
		Loudi
172	Yiyang Branch of Huarong Xiangjiang Bank	0737-6111960	"Silver Town No.1" Building, No.1, South Jinshan Road, Yiyang City
173	Anhua County Sub-branch of Huaroang	0737-7888950	No.31, Chenzhou Road, Dongpign Town, Anhua County, Yiyang City
Xiangjiang Bank
174	Taojiang County Sub-branch of Huaroang	0737-8820112	No.168, Furong Road, Taohuajiang Town, Taojiang County, Yiyang City
Xiangjiang Bank
175	Nanxian Sub-branch of Huaroang Xiangjiang	0737-5219301	Frontage Store, 1-2/F, Zhongshun Hotel, Xingsheng Ave., Nanzhou Town,
Bank	Nanxian, Yiyang City
176	Yiyang Ziyang Sub-branch of Huaroang	0737-6111885	Frontage Store, 1-2/F, No.1, East Zijiang Road, Ziyang District, Yiyang City
Xiangjiang Bank
177	Yuanjiang City Sub-branch of Huaroang	0737-2728123	Store #108-112, 1/F, Huifu Mingdu, Zhongliang Ave., Yuanjiang City,
Xiangjiang Bank	Yiyang
178	Heshan Sub-branch of Huaroang Xiangjiang	0737-3339555	Frontage Store, 1/F, Wangfu Commercial Hotel, No.178, Yiyang Ave.,
Bank	Yiyang City
179	Yongzhou Branch of Huarong Xiangjiang	0746-8522099	No.9, Cuizhu Road, Lengshuitan District, Yongzhou City
Bank
180	Jianghua Sub-branch of Huaroang Xiangjiang	0746-2899697	1-2/F, Aidu International Apartment, Bldg.20, Jinxiu Jianghua, Jianghua Ave.,
Bank	Jianghua Yao Autonomous County, Yongzhou City
181	Yongzhou Lingling Sub-branch of Huaroang	0746-2388802	No.39, Gushan Middle Road, Lingling District, Yongzhou City
Xiangjiang Bank
182	Yongzhou Lengshuitan Sub-branch of Huaroang	0746-8819377	No.868, Lingling Middle Road, Lengshuitan District, Yongzhou City
Xiangjiang Bank
183	Qiyang County Sub-branch of Huaroang	0746-3238201	Store #1-14 and Corresponding 2/F, Jinqiu Garden, West Jinpen Road, Qiyang
Xiangjiang Bank	County, Yongzhou City
184	Zhangjiajie Branch of Huarong Xiangjiang	0744-8889100	1-4/F, Tianmen Building, Intersection of Yingbin Road and East Jiefang
Bank	Road, Zhangjiajie City
185	Cili County Sub-branch of Huaroang Xiangjiang	0744-3330918	Frontage Store, 1/F and Southern Area to 2/F, Zixia Commercial Plaza,
Bank	Dongjie Street, Lingyang Town, Cili County, Zhangjiajie City
186	Sangzhi County Sub-branch of Huaroang	0744-6668621	Wenming Road (Frontage Store, 1/F and 2/F, Renhe Property), Liyuan Town,
Xiangjiang Bank	Sangzhi County, Zhangjiajie City
	Yongding Sub-branch of Huaroang Xiangjiang		Store#S10, S11 & S12, 1/F and Office #S08 & S09, 4/F, "Park No.1 Mansion"
187	0744-8833119	Project, Dayongqiao Neighborhood Committee, Dayongqiao Office,
Bank
		Yongding District, Zhangjiajie City
188	Xiangxi Branch of Huarong Xiangjiang Bank	0743-8752821	1/F, 8/F, & 9/F, Yili Longcheng Building, No.1, Renmin Middle Road,
Jishou City, XiangXi Autonomous Prefecture
	Xiangxi Wanrongjiang Sub-branch of Huaroang		No.5, Wulingshan Ave., Xiangxi Economic Development Zone, XiangXi
189	0743-8752812	Autonomous Prefecture (B1, South Auxiliary Building, Jifeng Investment
Xiangjiang Bank
		Service Center Office Building)
	Huayuan County Sub-branch of Huaroang		1/F, Shanty Area Transformation Complex Building (Huayuan County
190	0473-8752805	Government Affairs Center Building), North Zhongfoshan Road, Huayuan
Xiangjiang Bank
		County, XiangXi Autonomous Prefecture

54

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

	Fenghuang County Sub-branch of Huaroang		Store#A1-143,A1-144,A1-145,A1-146 & B1-130, 1/F, and Store#A2-058,
191	0743-3668982	A2-59, & A2-60, 2/F, Fenghuang International Modern Town, Chengbei Ave.,
Xiangjiang Bank
		Tuojiang Town, Fenghuang County, XiangXi Autonomous Prefecture
192	Longshan County Sub-branch of Huaroang	0743-6222668	No.103, Changsha Road (Longshan County Tobacco Company), Min'an
Xiangjiang Bank	Subdistrict Office, Longshan County, XiangXi Autonomous Prefecture

(II) Staff

At the end of the report period, the Bank had 3,861 employees on contract with an average age of 38.4.

From the academic structure, 502 people, or 13%, are postgraduates or above; 2,928 people, or 75.8%, are undergraduates; and 431 people, or 11.2%, are junior college students or below.

In terms of professional title structure, 59 people hold senior titles, accounting for 1.5%; 896 people hold intermediate titles, accounting for 23.2%; 652 people hold junior titles, accounting for 16.9%.

VI. Remuneration

The Bank has formulated a remuneration policy in line with its development strategy, business development and talent introduction. In accordance with the principles of matching income with risk, long-term and short-term coordination, a sound remuneration management system with market competitiveness, matching performance and taking into account internal equity is established.

The Bank implements a prudent remuneration policy in accordance with the Supervisory Guidelines on Prudent Remuneration for Commercial Banks issued by the CBRC, adheres to the principles of unifying the remuneration mechanism with the requirements of corporate governance, balancing remuneration incentives with competitiveness and sustainable development, adapting the remuneration level to risk and cost-adjusted operating performance, and coordinating short-term incentives with long-term incentives, and has established a remuneration mechanism that is conducive to the achievement of the company's development strategy and business objectives, competitiveness enhancement, talent training and introduction, and risk control.

(I) Compensation management structure and decision-making process

In accordance with the Articles of Association and other systems and the authorization of the Board of Directors by the General Meeting of Shareholders, the Board of Directors of the Bank is responsible for the design of the remuneration management system and policies of the Bank in accordance with the relevant national laws and policies, and is ultimately responsible for the remuneration management. The Nomination and Remuneration Committee of the Board of Directors is responsible for formulating the performance appraisal system for members of senior management, deliberating the remuneration management system and policies; deliberating the remuneration plan of directors and members of senior management, making recommendations to the Board of Directors and supervising the implementation of the remuneration plan, reviewing the performance appraisal opinions of members of senior management, special audit reports on performance appraisal and remuneration management and providing recommendations to the Board of Directors for improvement, etc.

The Management organizes the implementation of the resolutions of the Board of Directors on remuneration management, the Human Resources Department is responsible for the implementation of specific matters, and the Risk Control Department, Internal Control Compliance Department and Planning and Finance Department participate in and supervise the implementation and perfect

55

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

feedback of the remuneration mechanism. The Audit Department conducts special audits on the design and implementation of the remuneration system every year and reports to the Board of Directors.

(II) Total annual remuneration, beneficiaries and remuneration structure

The Board of Directors of the Bank, in accordance with the relevant national regulations, determines the total annual remuneration budget in accordance with the annual operating plan, taking into account the total number and structure of personnel for the year, as well as various factors such as financial position, operating results and risk control, with reference to the ratio of the total remuneration of the previous year to the business management fee of the previous year, and determines the total annual executive remuneration at the end of the year based on the annual performance appraisal. For details, refer to the notes to the financial statements in this annual report.

The Bank's employee compensation consists of a fixed portion of basic compensation, a variable portion of performance-based compensation and fringe benefits. Basic remuneration is the basic compensation paid to employees to secure their basic livelihood, including allowances, and is determined based on the employee's position and post, among other factors. Performance-based compensation is performance-based compensation and revenue-raising compensation paid to employees, and is determined based on factors such as performance-based remuneration grades and performance appraisal results.

(III) Performance Appraisal Standards

During the report period, the Bank followed the requirements of the CBRC's Supervisory Guidelines on Performance Evaluation of Banking Financial Institutions and Supervisory Guidelines on Sound Compensation of Commercial Banks and established an comprehensive performance evaluation index system suitable for operating efficiency and risk adjustment according to five categories: operating efficiency, development and transformation, risk management, compliance operation and social responsibility, which were decomposed and implemented to specific branches (departments) and posts at different levels. The specific performance remuneration of employees is determined according to the performance appraisal of branches (departments) and posts.

(IV) Deferred payment of salary

During the report period, in order to ensure that the level of remuneration is commensurate with the risk responsibilities and business performance, the Bank has formulated the Implementation Rules for the Management of Performance Remuneration Payments of Huarong Xiangjiang Bank, and deferred different percentages of performance remuneration for senior management and personnel in positions with significant impact on risk according to the rank of the positions and the degree of risk impact, and established a recourse and clawback mechanism. Among them: the proportion of deferred performance remuneration for senior management is no more than 50%, and the deferred performance remuneration for personnel in other positions with significant impact on risk is 40%. Deferred performance remuneration is deferred for three years after the completion of the appraisal.

1. Remuneration information for the Board of Directors, senior management and employees in positions that have a significant impact on the Bank's risk

56

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

Directors who serve full-time in the Bank receive compensation for their positions within the Company; shareholder directors who do not serve full-time in the Bank receive compensation in their respective offices; independent directors are granted allowances based on the performance appraisal results. The Board of Directors of the Bank assesses and evaluates the performance of directors and senior management in accordance with the Regulations on Remuneration Management of Huarong Xiangjiang Bank, the Regulations on Performance Evaluation of Directors of Huarong Xiangjiang Bank and the Regulations on Performance Evaluation of Senior Management of Huarong Xiangjiang Bank, and determines their remuneration based on the appraisal results.

During the report period, 9 members of the Board of Directors who received remuneration and allowances at the Bank have received a total of RMB 5,926,600, of which 3 independent directors received RMB 630,000; 10 members of senior management received a total of RMB 9,862,800; and 24 personnel of the head office department who had significant influence on risk received a total of RMB 13,880,700.

(VI) Compensation plan development, filing and annual performance appraisal

During the report period, the Bank formulated the 2020 Operational Performance Assessment Measures for Branches and Head Office Departments of Huarong Xiangjiang Bank and filed them with the regulator in a timely manner in accordance with the relevant regulatory requirements.

57

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

Part VII Other Important Matters

I. Increase or decrease in registered capital, division and merger

During the report period, the Company does not have any increase or decrease in registered capital, division and merger.

II. Related transactions

During the report period, the Bank strictly complies with the national laws, regulations and regulatory stipulations about related transaction management, further strengthens related transaction management, improves related party management system, strictly observes the related transaction examination and approval procedures, strengthens the centralized monitoring of credit related transactions, timely reports the relevant information of related transactions and further raises related transaction management level.

During the report period, the Bank strictly performs related transaction examination and approval procedures according to the regulatory requirements and relevant systems. General related transactions are examined and approved according to internal authorization and reported to audit and related transaction control committee of the board of directors for filing. Major related transactions are reported to the board of directors for examination and approval upon being examined by audit and related transaction control committee of the board of directors. During the report period, the board of directors examines and approves 5 major related transactions, and reports to the supervision department and supervisory board according to the supervision systems and requirements within ten working days after examination and approval. The specific contents are as follows:

Through the examination by the 3rd meeting of audit and related transaction control committee in 2020, and through the deliberation and adoption by the 68th meeting of the 2nd board of directors, the Bank agrees to grant Hunan Chasing Financial Holding Group Co., Ltd. RMB 2940000000 of group credit related transaction exposure limit and RMB 1900000000 of non-credit related transaction limit, and grant to China Huarong Asset Management Co., Ltd. RMB 2937200000 of group credit related transaction limit and RMB 1500000000 of non-credit related transaction limit.

Through the examination by the 4th meeting of audit and related transaction control committee in 2020, and through the deliberation and adoption by the 69th meeting of the 2nd board of directors, the Bank agrees to grant Xiangtan Chengfa Group Co., Ltd. RMB 288620 of group credit exposure limit and RMB 10000000 of service related transaction limit, and agrees to grant Hengyang Urban Construction Investment Co., Ltd. RMB 1632000000 of group credit exposure limit and RMB 10000000 of service related transaction limit.

Through the examination by the 6th meeting of audit and related transaction control committee in 2020, and through the deliberation and adoption by the 71th meeting of the 2nd board of directors, the Bank agrees to grant China Huarong Asset Management Co., Ltd. RMB 3890000000 of group

58

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

overall credit limit (credit exposure limit RMB 2940000000, low-risk limit RMB 950000000) and RMB 1300000000 of non-credit related transaction limit.

When the board of directors deliberates the aforesaid major related transactions, related directors dodge and independent directors express independent opinions.

During the report period, the pricing of the transactions between the Bank and related parties conforms to the price principles of market, and the pricing method is determined according to the reality of the type of the transactions with related parties, and corresponding examination and approval procedures are performed according to the business examination and approval and pricing systems of the Bank. In respect of credit related transactions, the Bank determines corresponding prices according to relevant credit pricing management regulations, and by combination with the rating and risk status of related party customers; in respect of non-credit related transactions, the Bank determines prices through open market pricing, bid and tender or inquiry, etc. During the report period, the related transactions between the Bank and related parties strictly conform to the aforesaid transaction pricing principles, and are conducted subject to the conditions that are no better than those of the similar transactions with non-related parties and according to the general commercial terms and normal business process, and do not prejudice the legitimate interest of other shareholders and are lawful and fair.

During the report period, the Bank takes the initiative to disclose the relevant information of related transaction strictly according to the relevant regulations of regulatory department. During the report period, the major related transactions of the Bank are reported to the supervision department and supervisory board according to the supervision systems and requirements within ten working days after examination and approval by the board of directors; and the related transactions are reported to the regulatory department by quarter.

(I) Credit related transaction

At the end of report period, the Bank has 391 credit related transactions in total, balance of limit (deducting bond deposit and pledged bank deposit certificate and national debts, same as below) is RMB 8585590200; overall correlation is 22.43%; correlation index is controlled within the scope as specified by the regulatory department. Thereinto: related natural person's credit 347 transactions, balance RMB 101030200; related legal person's credit 44 transactions, balance RMB 8484560000.

In respect of the balance of credit related transaction credit limit of related natural persons, the Bank's internal persons 221 transactions, balance of credit limit RMB 70790300; internal persons' relatives 113 transactions, balance of credit limit RMB 28117111; related legal person's directors and key management personnel 13 transactions, balance of credit limit RMB 2122800.

In respect of the balance of credit related transaction credit limit of related legal persons, the balance of credit limit of Xiangtan Chengfa Group Co., Ltd. and its affiliated enterprises is RMB 2881760000; the balance of credit limit of Hunan Chasing Financial Holding Group Co., Ltd. and its affiliated enterprises is RMB 1838800000; the balance of credit limit of Hengyang Urban Construction Investment Co., Ltd. and its affiliated enterprises is RMB 1585000000; the balance of credit limit of China Huarong Asset Management Co., Ltd. and its affiliated enterprises is RMB 1040000000; the balance of credit limit of Yueyang State-owned Asset Operation Co., Ltd. and

59

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

its affiliated enterprises is RMB 910000000; the balance of credit limit of Zhuzhou Smelter Group Co., Ltd. is RMB 180000000; the balance of credit limit of Xiangtan Real Estate Group Asset Operation Co., Ltd. is RMB 49000000.

During the report period, the Bank has 39 credit related transactions with 5 main shareholders and their controlling shareholder, actual controller and affiliates, with the credit amount of RMB 4665920700.

(II) Non-credit related transactions

During the report period, the Bank has 87 non-credit related transactions with 5 main shareholders and their controlling shareholder, actual controller and affiliates, with the transaction amount of RMB 175393200, involving 10 related legal persons, thereinto: providing 79 service related transactions, with the transaction amount of RMB 69185400; 1 asset transfer related transaction, with the transaction amount of RMB 100000000; 7 entrustment or entrusted sales and other related transactions, with the transaction amount of RMB 6207800. At the end of the report period, the Bank has 64 non-credit related transactions that have balance, with the transaction balance of RMB 207846000, involving 8 related legal persons, thereinto: 59 service-related transactions, with the transaction balance of RMB 177367500; 5 entrustment or entrusted sales and other related transactions, with transaction balance of RMB 30478500.

III. Annual dividends

On June 23, 2020, the Bank holds shareholders' meeting in 2019, and deliberates and adopts

2019 Profit Distribution Scheme of Huarong Xiangjiang Bank Co., Ltd., as follows:

In respect of 2019 audited net profit, after having picked up statutory surplus reserve, on December 31, 2019, and on the base of total shares of 7,750,431,375, and with July 27, 2020 as equity registration date, the Bank distributes cash bonus of RMB 1.42 (including tax) every 10 shares, and distributes cash bonus of RMB 1,100,561,255.25 (including tax) in total.

IV. Contingencies and Commitments

				Unit: RMB ten thousand
	Item	2020		2019
	Loan Commitment
	Thereinto: less than 1 year of original due	21,979	136,845
	date (including 1 year)
	More than 1 year of original due	330,618		350,742
	date
	Bank acceptance bill	1,715,441		1,291,154
	Unused credit card limit	778,881	738,692
	Issued letter of guarantee	48,542	44,063
	Issued credit card	242,826		149,965
	Total	3,138,287		2,711,460

60

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

V. Major Lawsuits or Major Arbitrations

At the end of the report period, the Bank has 1 accused case that amounts more than RMB 10000000 (including RMB 10000000), with the litigation subject matter amount RMB 15400000, which has been concluded. The Bank has 9 pending complaints that amount more than RMB 100,000,000 (including RMB 100,000,000), with the litigation subject matter amount RMB 2,695,000,000, which are credit complaint.

VI. Disposal of major assets

During the report period, the Bank disposes of the land use right of Zone 29, Tianyuan District, Zhuzhou by listing transfer, with the book amount of RMB 215471600, and disposal transaction price of RMB 730058800.

VII. Engagement/dismissal of accounting firm

During the report period, the Bank engages Ernst & Young Hua Ming Certified Public Accountants as the auditor of 2020 financial reports.

VIII. Main rewards earned in 2020

• Winning maintenance AAA from China Chengxin International Credit Rating Co., Ltd. in respect of subject credit rating;
• Winning 2020 Hunan top 50 service enterprises, ranking 6; 2020 Hunan top 100 enterprises, ranking 23;
• Winning 2019 financial consumers' rights and interest protection class-A bank of financial institutions of Hunan Province from the People's Bank of China Changsha Central Sub-branch;
• Winning 2019 comprehensive rating class-A bank of banking financial institutions of Hunan Province from the People's Bank of China Changsha Central Sub-branch;
• Winning 2019 credit rating A taxpayer from Hunan Provincial Tax Service, State Taxation
  Administration;
• Winning 2020 peace construction (comprehensive governance) advanced unit of Hunan
  Province, 2020 "Peace Unit".

61

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

Part VIII Financial Report

See the appendix for the financial report and audit report of the Bank in 2020.

62

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

Huarong Xiangjiang Bank Co., Ltd.

Audited financial statements.

December 31, 2020

63

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

Audit Report

A. Y. H. M. (2021) S. Zi No. 61346419_A01

Huarong Xiangjiang Bank Co., Ltd.

The board of directors of Huarong Xiangjiang Bank Co., Ltd.:

I. Audit Opinions

We have audited the financial statements of Huarong Xiangjiang Bank Co., Ltd., including consolidated and bank balance sheet as at December 31, 2020, and the consolidated and bank income statement, consolidated and bank statement of changes in owner's equity and cash flow statement and notes to financial statements for 2020.

In our opinion, the attached financial statements of Huarong Xiangjiang Bank Co., Ltd. are prepared in accordance with the provisions of the accounting standards for business enterprises in all major aspects and fairly reflect the consolidated and bank financial position of Huarong Xiangjiang Bank Co., Ltd.as of December 31, 2020, as well as the consolidated and bank operating results and cash flows in 2020.

II. Basis for audit opinions

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with China Standards on Auditing for Certified Public Accountants. The " CPA's responsibility for auditing financial statements" section of the audit report further elaborates our responsibilities under these standards. According to the code of professional ethics for certified public accountants in China, we are independent of Huarong Xiangjiang Bank Co., Ltd. and have fulfilled other responsibilities in terms of professional ethics. We believe that the audit evidences of us are sufficient and appropriate, and have provided a basis for our opinion.

III. Responsibilities of management and governance to financial statements

The management of Huarong Xiangjiang Bank Co., Ltd. is responsible for preparing financial statements in accordance with the provisions of the accounting standards for enterprises, ensuring fair reflection, and setting up, executing and maintaining necessary internal controls so that there are no major misstatement of the financial statements due to fraud or error.

When preparing the financial statements, the Management is responsible for evaluating the going-concern ability of Huarong Xiangjiang Bank Co., Ltd., disclosing matters related to going concern (if applicable), and applying the assumption of going concern, unless liquidation is planned, operation is terminated or there is no other realistic choice.

The Governance is responsible for supervising the financial reporting of Huarong Xiangjiang Bank Co., Ltd.

IV. Certified Public Accountant's Responsibilities for the Audit of the Financial Statements

Our goal is to obtain reasonable assurance of whether the financial statements as a whole are free of material misstatement due to fraud or error, and to issue audit reports containing audit opinions. Although reasonable assurance is high-level assurance, it is not guaranteed that audits carried out in accordance with auditing standards can always find existing major misstatements. Misstatement might be caused by fraud or errors. If it is reasonably anticipated that misstatement might independently or together affect the economic decisions made by the users of the financial statements based on the financial statements, then, it is generally assumed that the misstatement is material.

In the process of carrying out audits according to auditing standards, we use professional judgment and maintain professional doubts. Meanwhile, we also:

64

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

1. Identify and evaluate the material misstatement risks of the financial statements whether due to fraud or errors, design and implement the audit procedures to cope with these risks, and obtain sufficient and appropriate audit evidences as the basis for the audit opinions. As fraud might involve collusion, forging, intentional omission or false statement or overrides the internal control, the risk in failure to discover the material misstatement due to fraud is higher than the risk in failure to discover the material misstatement due to errors.
2. Understand the audit related internal control, in order to design appropriate procedures, but not for the purpose of expressing opinions on the effectiveness of the internal control.
3. Evaluate the appropriateness of the accounting policies used by the management, and the reasonableness of the accounting estimates and relevant disclosures made by the management.
4. Make conclusions on appropriateness of the going concern assumptions used by the management, At the same time, according to the audit evidences obtained, we can draw a conclusion as to whether there is significant uncertainty in the matter or situation that may lead to significant doubts about the going-concern ability of Huarong Xiangjiang Bank Co., Ltd. If we come to the conclusion that there is significant uncertainty, the auditing standards require us to draw the attention of the users of the statements to the relevant disclosures in the financial statements in the auditing report. If the disclosure is not sufficient, we should express non-unqualified opinions. Our conclusion is based on the information available as of the date of the audit report. However, future events or conditions may cause Huarong Xiangjiang Bank Co., Ltd. to cease to continue as a going concern.
5. Evaluate the overall presentation, structure and contents (including disclosures) of the financial statements, and evaluate whether the financial statements give fair view on the relevant transactions and matters.

In the process of carrying out audits according to auditing standards, we use professional judgment and maintain professional doubts. Meanwhile, we also: (continued)

1. - Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within Huarong Xiangjiang Bank Co., Ltd. to express audit opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit, and are fully responsible for audit opinion.

We communicate with the management on the scope, timing and major audit findings of the planned audit, including the internal control deficiencies meriting attention and identified by us in the audit.

Ernst & Young Hua Ming Certified Public	Chinese CPA: Sun Lingling
Accountants (Special General Partnership)

Chinese CPA: Zhao Xiaobai

Beijing. China

April 9, 2021

65

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

					Group		Bank
				Note VIII	December 31, 2020		December 31, 2019		December 31, 2020	December 31, 2019
	Assets
	Cash and deposits
	Deposits	in	the
	central bank			1	22,786,141	30,752,412	22,655,571			30,512,670
	Deposits in other banks	2	1,914,538	1,937,462	1,914,538			1,937,462
	Funds lent			3	2,937,503	209,677	2,937,503			209,677
	Redemptory	monetary
	capital for sale			4	6,214,666	8,227,417	6,214,666			8,227,417
	Loans and advances		5	222,233,752	202,705,383	220,961,320			201,310,595
	Financial investment			141,934,648	115,915,426	141,934,648			115,915,426
	Tradable	financial	6
	assets				21,161,151	15,121,531	21,161,151			15,121,531
	Debt investment		7	113,623,297	98,220,289	113,623,297			98,220,289
	Other	bond	8
	investments				7,150,200	2,573,606	7,150,200			2,573,606
	Long-term	equity
	investment				-	-	50,313			50,313
	fixed assets			9	1,619,978	1,564,764	1,605,880			1,549,615
	Use right assets		10	624,216	652,611	616,215			640,656
	Intangible assets		11	844,092	829,633	842,923			829,199
	Deferred income	tax	12
	assets				1,782,093	1,222,604	1,765,918			1,200,688
	Other assets			13	3,083,983		2,759,447		3,076,282			2,749,819
	Total assets				405,975,610		366,776,836		404,575,777			365,133,537

The attached notes to financial statements are a part of the financial statements

66

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Balance Sheet (Continued)

December 31, 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

					Group		Bank
			Note
			VIII	December 31, 2020	December 31, 2019		December 31, 2020	December 31, 2019
Liabilities
Loans from central bank	15		23,182,829		3,641,673	23,019,131			3,501,566
Deposits in other banks	16
and	financial
institutions					8,929,263		10,279,951	9,070,554			10,429,923
Borrowing funds		17		2,010,347		800,616	2,010,347			800,616
Financial	assets sold for	18
repurchase					5,864,738		12,747,431	5,864,738			12,747,431
Absorbed deposit		19		251,557,287		227,684,422	250,317,296			226,182,105
Payroll payable		20		714,120		727,222	709,622			723,419
Taxes payable		21		269,281		385,521	268,866			384,234
Bonds payable		22		80,567,722		84,744,394	80,567,722			84,744,394
Lease liabilities				628,261		636,199	620,259			623,626
Estimated liabilities		23		158,317		150,340	158,317			150,340
Other liabilities		24		1,091,146		998,025		1,089,817			995,536
Total liabilities				374,973,311		342,795,794	373,696,669			341,283,190
Shareholder's equity
Stock capital		25		7,750,431		7,750,431	7,750,431			7,750,431
Capital reserve		26		2,662,567		2,662,567	2,661,584			2,661,584
Other	comprehensive	27
income					(30,986)	13,823	(30,986)		13,823
Other equity instrument	28		5,297,799		-	5,297,799			-
Surplus reserve		29		2,117,607		1,829,974	2,117,607			1,829,974
General risks reserve	30		6,459,620		6,459,620	6,408,207			6,408,207
Undistributed profits	31		6,686,269		5,203,084	6,674,466			5,186,328
Total shareholder's	equity
attributable	to	parent
company					30,943,307		23,919,499	30,879,108			23,850,347
Minority equity				58,992		61,543		-			-
Total shareholder's equity			31,002,299		23,981,042	30,879,108			23,850,347
Total liabilities and
shareholder's equity				405,975,610		366,776,836		404,575,777			365,133,537

The financial statements are signed by the following persons:

Legal representative:	Personal in charge of accounting:	Person in charge of accounting firm:
Huang Weizhong	Tang Jun	Tang Jun

The attached notes to financial statements are a part of the financial statements

67

Huarong Xiangjiang Bank Co., Ltd. Consolidated and Bank Income Statement 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

		Group				Bank
	Note VIII	2020				2019		2020			2019
					(Restate)			(Restate)
I. Operating income		10,460,818			9,345,518		10,409,167		9,275,040
Net interest income	32	10,522,956			9,252,837		10,471,157		9,177,790
Interest income		19,691,543			17,949,123		19,618,473		17,856,594
Interest expenditures		(9,168,587)		(8,696,286)	(9,147,316)	(8,678,804)
Net expenditures of handling fee and	33
commission		(880,218)		(786,311)	(880,059)	(786,018)
Income from handling fee and commissions		624,096			418,911		624,000		418,780
Expenditures for handling fee and
commissions		(1,504,314)		(1,205,222)	(1,504,059)	(1,204,798)
Investment income	34	693,622			897,520		693,622		901,810
Thereinto: amount measured at amortized
costs Income from derecognition
of assets		-			126,681		-		126,681
Other income	35	10,392			1,238		10,381		1,224
Gains (losses) from change in fair value	36	100,771			(1,998)	100,771		(1,998)
Exchange gain		1,438			16,809		1,438		16,809
Other business income	37	9,619			15,452		9,619		15,452
Gains/losses from disposal of assets	38	2,238			(50,029)	2,238		(50,029)
II. Operating expenses		(6,777,357)		(5,583,513)	(6,727,475)	(5,484,053)
Taxes and surcharges	39	(112,829)		(101,749)	(112,407)	(101,334)
Business and management expenses	40	(2,420,253)		(2,354,665)	(2,390,897)	(2,323,490)
Asset impairment loss	41	(3,920,583)		(3,057,390)	(3,900,479)	(2,9)
Other assets impairment loss	42	(323,092)		(69,229)	(323,092)	(69,229)
Other business costs		(600)		(480)	(600)	(480)
III. Operating profits		3,683,461			3,762,005		3,681,692		3,790,987
Add: non-operating income		12,593			37,977		12,570		37,975
Less: non-operating expense		(24,600)		(28,266)	(24,496)	(28,055)
IV. Total profits		3,671,454			3,771,716		3,669,766		3,800,907
Less: income tax expenses	43	(802,626)		(755,577)	(793,434)	(761,121)
V. Net profits		2,868,828			3,016,139		2,876,332		3,039,786
(I) Classification by operation continuity
1. Net profit from continuing operation		2,868,828			3,016,139		2,876,332		3,039,786
(II) Classification by ownership
1. Net profit attributable to the shareholders
of parent company		2,871,379			3,022,720		2,876,332		3,039,786
2. Minority equity		(2,551)		(6,581)	-		-

The attached notes to financial statements are a part of the financial statements

68

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Income Statement (Continued) 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

VI. Net after-tax amount of other comprehensive income

Net after-tax amount of other comprehensive income attributable to the shareholder of parent company

Other comprehensive income that will be reclassified into gains or losses

1. Changes in the fair value of issued loans and advances measured at fair value with its changes included in other comprehensive income
2. Loss provision for the issued loans and advances measured at fair value with its changes included in other comprehensive income

3. Changes in fair value of other bond investments

4. Other bond investment credit loss provision

VII. Total Comprehensive income

1. Other comprehensive income attributable to the shareholder of parent

company

1. Total comprehensive losses attributable to minority shareholders

	Group			Bank
Note
VIII	2020			2019	2020			2019
				(Restate)					(Restate)
27	(44,809)		13,677	(44,809)		13,677
	(44,809)		13,677	(44,809)		13,677

2,795		(30)	2,795		(30)
(6,540)	7,407		(6,540)	7,407
(41,852)	6,319		(41,852)	6,319
788		(19)	788		(19)
2,824,020		3,029,816		2,831,523		3,053,463
2,826,571		3,036,397		2,831,523		3,053,463
(2,551)	(6,581)	-		-

The attached notes to financial statements are a part of the financial statements

69

Huarong Xiangjiang Bank Co., Ltd.

Consolidated Statement of Changes in Shareholder's Equity 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

Equity attributable to shareholders of parent company

Note

Other

VIII

Capital

comprehensi

Other equity

Surplus

General risks

Undistributed

Stock capital

reserve

ve income

instrument

reserve

reserve

profits

Subtotal

Minority equity

Total

I.

Balance as at January 1,

2020

7,750,431

2,662,567

13,823

-

1,829,974

6,459,620

5,203,084

23,919,499

61,543

23,981,042

1. Increase or decrease in current year

(I)	Net profit				-	-	-		-	-	-	2,871,379		2,871,379		(2,551)	2,868,828
(II)	Other	comprehensive
	income				27	-	-	(44,809)	-	-	-	-		(44,809)	-		(44,809)
(III)	Issuing	perpetual	capital
	securities				-		-		-		5,297,799		-		-		-		5,297,799		-		5,297,799
	Subtotal									(44,809)	5,297,799	-	-	2,871,379		8,124,369		(2,551)	8,121,818
(IV)	Profit distribution
		-		-		-		-		287,633		-		(1,388,194)	(1,100,561)	-		(1,100,561)
1． Withdrawal	of	surplus
	reserve				31	-	-	-		-	287,633	-	(287,633)	-		-		-
2． Withdrawal	of	general
	risk reserve			31	-	-	-		-	-	-	-		-		-		-
3． Allocation of dividends	31	-	-	-		-	-	-	(1,100,561)	(1,100,561)	-		(1,100,561)
III.	Balance	as	at December
	31, 2020				7,750,431		2,662,567		(30,986)	5,297,799	2,117,607	6,459,620	6,686,269		30,943,307		58,992		31,002,299

The attached notes to financial statements are a part of the financial statements

70

Huarong Xiangjiang Bank Co., Ltd.

Consolidated Statement of Changes in Shareholder's Equity (Continued) 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

Equity attributable to shareholders of parent company

Note

Other

VIII

Capital

comprehensi

Other equity

Surplus

General risks

Undistributed

Minority

Stock capital

reserve

ve income

instrument

reserve

reserve

profits

Subtotal

equity

Total

I.

Balance as at January 1,

2019

7,750,431

2,662,567

146

-

1,525,995

6,452,291

3,499,228

21,890,658

70,334

21,960,992

1. Increase or decrease in current year

(I)	Net profit				-	-	-	-	-	-	3,022,720		3,022,720		(6,581)	3,016,139
(II)	Other comprehensive
	income			27	-		-		13,677		-		-		-		-		13,677		-		13,677
	Subtotal				-		-		13,677		-		-		-		3,022,720		3,036,397		(6,581)	3,029,816
(III) Profit distribution
	-		-		-		-		303,979		7,329		(1,318,864)	(1,007,556)	(2,210)	(1,009,766)
1． Withdrawal	of	surplus
	reserve			31	-	-	-	-	303,979	-	(303,979)	-		-		-
2． Withdrawal	of	general
	risk reserve			31	-	-	-	-	-	7,329	(7,329)	-		-		-
3． Allocation of dividends	31	-	-	-	-	-	-	(1,007,556)	(1,007,556)	(2,210)	(1,009,766)
III.	Balance as at December
	31, 2019				7,750,431		2,662,567		13,823		-		1,829,974		6,459,620		5,203,084		23,919,499		61,543		23,981,042

The attached notes to financial statements are a part of the financial statements

71

Huarong Xiangjiang Bank Co., Ltd.

Bank Statement of Changes in Shareholder's Equity 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

1. Balance as at January 1, 2020

1. Increase or decrease in current year

1. Net profit

1. Other comprehensive income

1. Issuing perpetual capital securities
   Subtotal

(IV)	Profit distribution
1．	Withdrawal of surplus reserve
2．	Withdrawal of general risk reserve
3．	Allocation of dividends

1. Balance as at December 31, 2020

Stock capital		Capital reserve		er comprehensive		Other equity		Surplus reserve		General risks		Undistributed		Total
				income		instrument				reserve		profits
7,750,431		2,661,584		13,823		-		1,829,974		6,408,207		5,186,328		23,850,347

-	-	-		-	-	-	2,876,332		2,876,332
-	-	(44,809)	-	-	-	-		(44,809)
-		-		-		5,297,799		-		-		-		5,297,799
-		-		(44,809)	5,297,799	-	-	2,876,332		8,129,322
-		-		-		-		287,633		-		(1,388,194)	(1,100,561)
-	-	-		-	287,633	-	(287,633)	-
-	-	-		-	-	-	-		-
-		-		-		-		-		-		(1,100,561)	(1,100,561)
7,750,431		2,661,584		(30,986)	5,297,799	2,117,607	6,408,207	6,674,466		30,879,108

The attached notes to financial statements are a part of the financial statements

72

Huarong Xiangjiang Bank Co., Ltd.

Bank Statement of Changes in Shareholder's Equity (Continued) 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

1. Balance as at January 1, 2019

1. Increase or decrease in current

year

1. Net profit

1. Other comprehensive income
   Subtotal

(III) Profit distribution

1． Withdrawal of surplus reserve

2． Withdrawal of general risk reserve

3． Allocation of dividends

1. Balance as at December 31, 2019

Stock capital

Capital reserve

Other

Other equity

Surplus reserve

General risks

Undistributed

Total

comprehensive

instrument

reserve

profits

income

7,750,431

2,661,584

146

-

1,525,995

6,408,207

3,458,077

21,804,440

-	-	-	-	-	-	3,039,786		3,039,786
-		-		13,677		-		-		-		-		13,677
-		-		13,677		-		-		-		3,039,786		3,053,463
-	-	-	-	303,979	-	(1,311,535)	(1,007,556)
-	-	-	-	303,979	-	(303,979)	-
-	-	-	-	-	-	-		-
-		-		-		-		-		-		(1,007,556)	(1,007,556)
7,750,431		2,661,584		13,823		-		1,829,974		6,408,207		5,186,328		23,850,347

The attached notes to financial statements are a part of the financial statements

73

Huarong Xiangjiang Bank Co., Ltd. Consolidated and Bank Cash Flow Statement 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

			Group			Bank
	Note
	VIII	2020			2019		2020			2019
I. Cash flows from operating activities
Net increase in loans from central bank		19,402,510			1,240,000		19,378,919			1,220,000
Net increase in lending funds		1,209,059			500,000		1,209,059			500,000
Net increase in financial assets sold for
repurchase		-			1,244,660		-			1,244,660
Net increase in deposits from customers and
interbank		22,184,762			20,314,278		22,442,943			20,465,519
Net decrease in deposits in central bank and
other banks		3,344,761			3,018,904		3,296,599			2,991,782
Cash received from interest, service charges
and commissions		16,424,634			14,607,564		16,362,438			14,513,033
Other cash received from operating related
activities		1,755,267			4,997,495		1,221,578			5,002,580
Subtotal of cash inflows of operating
activities		64,320,993			45,922,901		63,911,536			45,937,574
Net increase in customer's loans and
advances		(24,645,826)		(27,810,128)	(24,206,259)		(27,708,135)
Net decrease in financial assets sold for
repurchase		(6,880,905)		-		(6,880,905)		-
Net increase in borrowing funds		(2,000,213)		-		(2,000,213)		-
Cash paid for interest, service charges and
commissions		(7,854,458)		(6,127,201)	(7,834,586)		(6,114,110)
Cash paid to and for employees		(1,268,499)		(1,248,633)	(1,257,481)		(1,234,798)
Taxes and fees paid		(2,332,340)		(1,575,966)	(2,322,662)		(1,563,542)
Other cash paid for operating related
activities		(7,338,986)		(1,003,266)	(7,354,492)		(991,485)
Subtotal of cash outflows of operating
activities		(52,321,227)		(37,765,194)	(51,856,598)		(37,612,070)
Net cash flows from operating activities	44	11,999,766			8,157,707		12,054,938			8,325,504
II. Cash flows from investment activities
Cash from investment withdrawal		16,203,120			48,166,115		16,203,120			48,166,115
Cash from investment income		4,423,368			4,419,758		4,423,368			4,424,048
Net cash from disposal of fixed assets,
intangible assets and other long-term
assets		4,371			5,765		4,371			5,765
Subtotal of cash inflows of investment
activities		20,630,859			52,591,638		20,630,859			52,595,928
Cash paid for investment		(35,671,518)		(52,422,559)	(35,671,518)		(52,422,559)
Cash paid for acquisition and construction
of fixed assets, intangible assets and other
long-term assets		(337,996)		(303,892)	(334,617)		(300,659)
Subtotal of cash outflows of investment
activities		(36,009,514)		(52,726,451)	(36,006,135)		(52,723,218)
Net amount of cash flow from investing
activities		(15,378,655)		(134,813)	(15,375,276)		(127,290)

The attached notes to financial statements are a part of the financial statements

74

Huarong Xiangjiang Bank Co., Ltd.

Consolidated and Bank Cash Flow Statement (Continued) 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

		Group			Bank
Note
VIII	2020			2019		2020			2019
III. Cash flow from financing activities
Cash received from issuing other equity
instrument	5,300,000			-		5,300,000			-
Cash received from issuing debentures	90,239,098			97,861,479		90,539,098			97,861,479
Subtotal cash inflow from financing
activities	95,539,098			97,861,479		95,539,098			97,861,479
Cash paid for repayment of debts	(96,110,000)		(95,770,000)	(96,110,000)		(95,770,000)
Cash paid for distributing dividends or
interest	(1,818,621)		(1,490,039)	(1,820,328)		(1,488,190)
Cash paid for repaying lease liabilities	(184,480)		(180,332)	(182,867)		(178,653)
Other cash paid for financing related
activities	(2,451)		(2,275)	(2,451)		(2,275)
Subtotal cash outflow from financing
activities	(98,115,552)		(97,442,646)	(98,113,095)		(97,439,118)
Net cash flows from financing activities	(2,576,454)		418,833		(2,573,997)		422,361
IV. Influence of exchange changes on cash
and cash equivalents	(8,751)		2,363		(8,751)		2,363
V. Net increase (decrease) in cash and cash
equivalents	(5,964,094)		8,444,090		(5,903,086)		8,622,938
Add: beginning balance of cash and cash
equivalents	19,161,315			10,717,225		19,048,027			10,425,089
VI. Ending balance of cash and cash 44
equivalents		13,197,221			19,161,315		13,144,941			19,048,027

The attached notes to financial statements are a part of the financial statements

75

Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements 2020

(Unless otherwise stated, the amounts are denominated in RMB ten thousand)

I. Basic Information

Huarong Xiangjiang Bank Co., Ltd. (hereinafter referred to as "Bank") is contributed and controlled by China Huarong Asset Management Co., Ltd., and is a joint stock commercial bank newly established according to law on the basis of restructuring orignal Zhuzhou Commercial Bank Co., Ltd., Xiangtan Commercial Bank Co., Ltd., Hengyang Commercial Bank Co., Ltd., Yueyang Commercial Bank Co., Ltd. and Shaoyang Urban Credit Cooperative of Hunan Province in October 2010.

The Bank is established through the approval of China Banking Regulatory Commission (hereinafter referred to as "CBRC"), and holds the financial permit of organizational code B1099H243010001, and receives the enterprise legal person business license (uniform social credit code: 914300005617419921) through the verification of Hunan Provincial Administration for Industry and Commerce. The registered address and HQ of the Bank are located in Changsha, Hunan Province. As of December 31, 2020, the registered capital of the Bank is RMB 7,750,000,000.

The main business scope of the Bank and subsidiaries (hereinafter referred to as "Group"): absorbing public deposits; issuing short-term,mid-term and long-term loans; handling domestic and overseas settlement; handling acceptance and discount of bills; issuing financial bonds; agency issuing, agency cashing, underwriting of governmental debts; buying and selling governmental debts and financial bonds; conducting interbank lending; buying and selling, agency buying and sales of foreign exchange; conducting bank card business; providing L/C service and guarantee; agency receipt and payment of amounts and agency insurance business; providing safe box service; securities investment fund sales business; other business approved by CBRC.

The parent company and final controller of the Group is China Huarong Asset Management Co., Ltd.

II. Preparation basis of financial statements

This financial statement is prepared in accordance with the Accounting Standards for Business Enterprises - Basic Standards promulgated by the Ministry of Finance and the specific accounting standards, application guidelines, interpretations and other relevant regulations as subsequently promulgated and amended (collectively referred to as "accounting standards for enterprises").

These financial statements are prepared under the assumption of going concern.

1. Statement on Compliance with the Accounting Standards for Business Enterprises

The financial statements conform to the requirements of the Accounting Standards for Business Enterprises, and truly and completely reflect the Group's consolidated and bank financial status as of December 31, 2020, as well as the consolidated and bank operating results and cash flows of 2020.

76

Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important accounting policies and accounting estimates

The financial information in 2020 financial statements of the Group is prepared according to the important accounting policies and accounting estimates as prepared according to Accounting Standards for Business Enterprises.

1. Accounting year

The accounting year of the Company is from calendar January 1 to December 31.

2. Bookkeeping base currency

The Group's bookkeeping base currency and the presentation currency of the financial statements are Chinese Renminbi (RMB).

3. Bookkeeping base and valuation principle

The Group's accounting is based on accrual system. Except certain financial instruments, the price is measured in accordance with historical cost principle. If assets are depreciated, the Company accrues corresponding depreciation provision according to the relevant provisions.

Under the measurement of historical costs, assets are measured according to the cash or amount of cash equivalents as paid at the time of purchase, or according to the fair value of the consideration as paid. Liabilities are measured according to the amount or the amount of assets as actually received for assuming present obligations, or the contract amount of assuming present obligations, or the cash or amount of cash equivalents that expect to be paid for repaying liabilities during daily activities.

Fair value is the price received for selling assets or paid for transferring liabilities during the orderly transaction conducted by market participants on the date of measurement. Whether the fair value is observable or is estimated through using valuation techniques, the fair value measured and/or disclosed in the financial statements is determined on this basis.

On the basis of the observability of input value of fair value and the importance of such input value to the measurement whole of fair value, the measurement of fair value is divided into three levels:

1. The first-hierarchy input values are the unadjusted quotations of the same asset or liability that can be obtained on the measurement date in the active market.
2. The second-hierarchy input values are those directly or indirectly observable for related assets or liabilities apart from the first-hierarchy input values.
3. The third-hierarchy input values are unobservable input values of related assets or liabilities.

4. Merger of enterprises

Business merger can be divided into two types: business merger under the same control and business merger under non-same control.

IV. Important accounting policies and accounting estimates (continued)

4 Merger of enterprises (continued)

4.1 Business combination under common control

Merger of enterprises under common control means that the enterprises participating in merger are finally controlled by the same one or more parties before and after merger and such control is not temporary. In respect of

77

Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

the merger of enterprises under common control, the party that obtains the right to control other parties participating in the merger on the date of merger is called as merging party, and other enterprises participating in the merger is called as merged party. Date of merger refers to the date when the merging party obtains the right to control the merged party.

The assets and liabilities obtained by the merging party from the merger of enterprises under common control (including the goodwill arising from the final controller acquiring the merged party) are treated on the basis of the book value in the financial statements of the final controller on the date of merger. The difference between the book value of the net assets acquired by the merging party and the book value of the combined consideration paid shall be adjusted to the capital reserve (capital premium); if the capital reserve (capital premium) is not sufficient to offset, the retained earnings shall be adjusted.

All directly related expenses incurred for the merger of enterprises are included in the current gains/losses at the time of occurrence.

The Group has no merger of enterprises under common control during the report period.

4.2 Merger of enterprises not under common control

If the enterprises participating in merger are not finally controlled by the same one or more parties before and after the merger, it is the merger of enterprises not under common control. In respect of the merger of enterprises not under common control, the party that obtains the right to control other parties participating in the merger on the date of purchase is called as purchasing party, and other enterprises participating in the merger is called as purchased party. Date of purchase refers to the date when the purchasing party obtains the right to control the purchasing party.

Merger cost comprises assets that acquirer paid on purchase date to obtain control power for acquiree, liabilities incurred or borne and fair value of issued equity instruments. The intermediary fees such as auditing, legal services, evaluation and consultation and other related management fees incurred by the purchaser for the merger of enterprises shall be included in current profits and losses on the date of occurrence.

Identifiable assets, liabilities and contingent liabilities of the acquiree obtained by the acquirer obtained during the merger of enterprises not under common control shall be measured at fair value on the date of purchase.

The difference between the sum of fair value of paid merger consideration plus fair value of equity held in the acquiree prior to date of purchase and the share in the fair value of identifiable net assets of the acquiree that is obtained during the merger is confirmed as goodwill, and is subsequently measured at losses minus accumulated impairment loss. If the sum of fair value of paid merger consideration plus fair value of equity held in the acquiree prior to date of purchase is less than the share in the fair value of identifiable net assets of the acquiree that is obtained during the merger, the Group checks the fair value of identifiable assets, liabilities and contingent liabilities obtained from the acquiree, and the fair value of paid merger consideration and the fair value of equity held in the acquiree prior to the date of purchase. If after such check, the sum of fair value of paid merger consideration plus fair value of equity held in the acquiree prior to date of purchase is still less than the share in the fair value of identifiable net assets of the acquiree that is obtained during the merger, the difference is included in current gains/losses.

IV. Important accounting policies and accounting estimates (continued)

5. Goodwill

Goodwill arising from business combinations is reported separately in the consolidated financial statements and is measured at cost subtracting accumulated impairment allowances. The Group conducts impairment test to goodwill at the end of every year at least.

The Group conducts impairment test to goodwill in combination with its relevant asset group or asset group combination. Namely, as from the date of purchase, the book value of goodwill is allocated by reasonable method to the asset group or asset group combination that can benefit from the synergy effects of the merger of enterprises; if the recoverable amount of the asset group or asset group combination of the goodwill that is included in the

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

allocation is less than book value, corresponding impairment loss is confirmed. The amount of the impairment loss is set off against the book value of goodwill allocated to the asset group or portfolio of asset groups, and then is set off against the book value of each other asset in proportion to the book value of each other asset other than goodwill in the asset group or portfolio of asset groups.

The recoverable amount is the fair value of the assets net of the disposal expenses and the present value of the estimated future cash flows of such assets, whichever is higher.

Goodwill impairment loss is included in current gains/losses at the time of occurrence, and will not be reversed in the future.

6. Preparation method of consolidated financial statements

The consolidation scope of consolidated financial statements is determined based on control, including the financial statements of the Bank and all subsidiaries. Subsidiary refers to the subject controlled by the Bank (including enterprise, divisible part of investee, and the structural subject controlled by the Bank, etc.) Control means that the investor has power over the investee, enjoys variable returns through participation in related activities of the investee, and has the ability to use its power over the investee to influence its return amount. If the changes in relevant facts and circumstances result in changing one or more controlling factors, the Group will reevaluate whether to control investee.

The merger of subsidiary starts from the time when the Group obtains the right to control such subsidiary to the time when the Group loses the right to control such subsidiary.

For subsidiaries disposed of by the Group, the operating results and cash flows prior to the disposal date (the date of loss of control) have been properly included in the consolidated income statement and consolidated cash flow statement.

In respect of the subsidiary obtained through the merger of the enterprises not under common control, the operating fruits and cash flow of the acquiree are included in consolidated financial statements as from the date when the Group obtains control right, until the Group loses the control right. At the time of preparing consolidated financial statements, the Group adjusts the financial statements of subsidiary on the basis of the fair value of identifiable assets, liabilities and contingent liabilities as determined on the date of purchase.

IV. Important accounting policies and accounting estimates (continued)

6. Preparation method of consolidated financial statements (continued)

In respect of the subsidiary obtained through the merger of the enterprises not under common control, the operating fruits and cash flow of the acquiree are included in consolidated financial statements as from the beginning of the merger. At the time of preparing comparative consolidated financial statements, the Group adjusts the relevant items of previous financial statements, and the report subject forming after merger will be deemed as existing all the time as from the time when the final controller starts to exercise control.

At the time of preparing consolidated financial statements, subsidiary adopts the accounting period and accounting policies that are as same as those of the Bank. The assets, liabilities, equity, income, expenses and cash flow arising from all transactions between the companies of the Group are fully offset at the time of merger.

Shares not attributable to the parent company in subsidiary's shareholder's equity shall be considered as "minority equity" and listed as item of "minority equity" under the item of "shareholder's equities'" in consolidated balance sheet. Shares attributable to minority equity in subsidiary's current profit or loss should be listed as item of "profit or loss for minor shareholders" under net profit item in consolidated income statement.

Where current losses that the Company's minority shareholder shares exceed the shares that minority shareholder enjoys in the Company, the balance amount should still be used to write down minority equity.

Transactions that purchase minority equity of a subsidiary or dispose of some equity investments but keep the control of the subsidiary shall be accounted for as equity transactions. The book value of the shareholder's equity

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

and minority shareholder's equity of the parent company shall be adjusted to reflect the changes of its related equity in the subsidiary. For the difference between the adjustment amount of minority shareholders' equity and the fair value of the consideration paid/received, the capital reserve shall be adjusted. If the capital reserve is insufficient to offset, the retained earnings shall be adjusted.

If the control of the original subsidiary is lost due to the disposal of some equity investments or other reasons, the remaining equity shall be remeasured according to its fair value at the date of loss of control. The difference between the sum of the consideration obtained for disposal of the equity and the fair value of the remaining equity and the share of the net assets of the original subsidiary calculated on the basis of the original shareholding ratio shall be included in the investment income of the current period when the control right is lost, and offsets goodwill at the same time. Other comprehensive income relating to the equity investment of original subsidiary is transferred as current investment income at the time of losing control right.

7. Cash and cash equivalents

Cash refers to the cash on hand and deposits available for payment of the Group; cash equivalents refer to the short-term and high-liquidity investments that are readily convertible into cash of known amount and bears insignificant risks of change in value.

IV. Important accounting policies and accounting estimates (continued)

8. Foreign currency transaction

As for the Group's transactions in foreign currencies, foreign currency amount shall be converted into amount of the bookkeeping base currency.

Upon initial recognition of a foreign currency transaction, the spot exchange rate on the transaction date is adopted to translate the foreign currency amount into the bookkeeping currency amount. On balance sheet date, the Group translates the foreign currency monetary items at spot exchange rate on balance sheet date, and the translation difference of settlement and monetary items arising therefrom is included in current gains/losses, except that (1) the difference arising from the foreign currency special loans relating to the purchase of the assets that meet capitalization conditions is treated according to the capitalization principles of loan expenses; (2) exchange difference of hedge instruments that are hedged for avoiding foreign exchange risks is treated by hedge accounting method; (3) the exchange difference arising from the changes in other book balance that are classified as the monetary items measured at fair value with changes included in other comprehensive income, except amortized costs.

The foreign currency non-monetary items that are measured at historical cost are still translated at the spot exchange rate on the occurrence date of transaction, but its amount in bookkeeping currency is unchanged. Non-monetary items in foreign currencies measured as per fair value shall be converted as per spot exchange rate at the date of determination of fair value. Difference incurred thereby shall be included into current profit and loss or other comprehensive income in accordance with nature of non-monetary items.

9. Financial instruments

The financial instruments refer to the contracts that form the financial assets of an enterprise and form the financial liabilities or equity instruments of other entities.

9.1 Recognition and derecognition of the financial instruments

The Group recognizes a financial asset or financial liability when it becomes a party to the financial instrument contract.

When the following conditions are met, the financial assets (or a part of financial assets, or a part of a group of similar financial assets) are derecognized, namely writing off from account and within balance sheet:

（1）The right to receive the cash flows of the financial assets expires;

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

（2） The Company has transferred the right to receive the cash flows of the financial assets, or assumed the obligations to pay the received cash flows to a third party in full under the "transfer" agreement; and (a) the Company has virtually transferred substantially all of the risks and rewards in the ownership of the financial assets; or (b) the Company has waived control over such financial assets even though the Company has virtually neither transferred nor retained substantially all of the risks and rewards in the ownership of the financial assets.

If the responsibilities of the financial liabilities have been fulfilled, withdrawn or expired, then, the financial liabilities are derecognized. If the existing financial liabilities are superseded by the same creditor with another financial liability that is subject to substantially different terms, or the terms of the existing liabilities are substantially modified, then, such substitution or modification is regarded as derecognition of the original liabilities and recognition of a new liability, and the difference is recorded in the current profit and loss.

IV. Important accounting policies and accounting estimates (continued)

9. Financial instruments (continued)

9.1 Recognition and derecognition of the financial instruments (continued)

The financial assets that are purchased and sold in the conventional manner are recognized and derecognized according the accounting on the transaction day. The financial assets that are purchased and sold in the conventional manner are recognized and derecognized according the accounting on the transaction day. The transaction date is the date when the Group promises to buy or sell the financial assets.

9.2 Classification and measurement of financial assets

At the time of preliminary recognition, according to the business mode of managing financial assets by the Group and the characteristics of contract cash flow of financial assets, the financial assets of the Group are classified as: the financial assets measured at amortized costs, financial assets measured at fair value with its changes included in current gains/losses, financial assets measured at fair value with its changes included in other comprehensive income.

At the time of preliminary recognition, financial assets are measured at fair value. However, if the accounts receivable or notes receivable arising from selling commodities or providing services do not contain major financing element or do not consider the financing element of more than one year, they are preliminarily measured at transaction price.

For financial assets measured at FVTPL, the related transaction costs incurred at the time of acquisition are directly included in the current profit or loss, and the related transaction costs of other financial assets are included in the initial recognition amount.

Subsequent measurement of financial assets depends on the following categories:

9.2.1 Financial assets measured at amortized cost.

The Bank classifies a financial asset as a financial asset measured at amortized cost if the following conditions are met: the Bank's business model for managing the financial asset is based on the collection of contractual cash flows; the contractual terms of the financial asset stipulate that the cash flows generated on a specific date are solely payments of principal and interest based on the amount of the principal outstanding. In respect of such financial assets, interest income is recognized by actual interest rate method, and the gains or losses arising from the derecognition, modification or impairment are included in current gains/losses. Such financial assets of the Group mainly include cash, deposits in central bank, deposits in banks, funds lent, redemptory monetary capital for sale, loans and advances measured at amortized costs, debt investment, etc.

In respect of the financial assets measured at amortized costs, the Group recognizes interest income by actual interest rate method. Besides, the Group calculates and recognizes interest income according to book balance of financial assets multiplied by actual interest rate;

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important Accounting Policies and Accounting Estimates (Continued)

9. Financial instruments (continued)

9.2 Classification and measurement of financial assets(continued)

9.2.1 Financial assets measured at amortized cost (continued)

• As to the financial assets that have been purchased or generated with credit impairment, since initial recognition, the Group calculates and determines the interest income at the amortized costs of such financial assets and the effective interest rate upon credit adjustment.
• As to the financial assets that have been purchased or generated without credit impairment but credit impairment has been accrued during the subsequent period, the Group will, during the subsequent period, calculate and determine the interest income at the amortized costs and effective interest rate of such financial assets. If such financial instruments do not have any credit impairment due to improvement of credit risks during the subsequent periods, and this improvement can be related to an event that occurs after the application of the above regulations, the Group calculates and determines the interest income by multiplying the book balance of such financial assets by the effective interest rate.

9.2.2 Financial assets at FVTOCI (Fair Value Through Other Comprehensive Income)

The Group classifies a financial asset as a financial asset at FVTOCI if the following conditions are met: the Group's business model for managing the financial asset aims at both collecting contractual cash flows and selling the financial asset; the contractual terms of the financial asset stipulate that the cash flows generated on a specific date are solely payments of principal and interest based on the amount of the principal outstanding. The Group recognizes the interest income for such financial assets using the effective interest method. Except that the interest income, the impairment losses and the exchange difference are recognized as the current profits and losses, and the remaining changes to the fair value are recorded in other comprehensive income. When such financial assets are derecognized, accumulated gains or losses that are previously recognized in other comprehensive income are carried over from other comprehensive income, and are recognized in the current profit and loss. Such financial assets of the Group include loans and advances and other debt investments that are measured at FVTOCI.

The Group irrevocably chooses to designate certain non-tradable equity instrument investments as financial assets measured at FVTOCI, and only the relevant dividend income (except for the dividend income that is explicitly recovered as part of the investment cost) is included in the current profits and losses. Subsequent changes in fair value are included in other comprehensive income, and no provision for impairment is required. When such financial assets are derecognized, accumulated gains or losses that are previously recognized in other comprehensive income are carried over from other comprehensive income, and are recognized in the retained earnings.

Changes in the fair value of non-tradable equity instrument investments designated at FVTOCI are recognized in other comprehensive income. When the financial asset is derecognized, the accumulated gains or losses previously included in other comprehensive income are transferred from other comprehensive income and then included in retained earnings. During the period when the Group holds these non-tradable equity instrument investments, the Group's right to receive dividends has been established, the economic benefits relevant to dividends are likely to flow into the Group, and the amount of dividends can be reliably measured, the dividend income is recognized and included in the current profits and losses.

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important Accounting Policies and Accounting Estimates (Continued)

9. Financial instruments (continued)

9.2 Classification and measurement of financial assets(continued)

9.2.3 Financial assets measured at FVTPL (Fair Value through Profit and Loss)

Except for financial assets measured at amortized cost and financial assets at FVTOCI, the Group classifies financial assets as financial assets at FVTPL. For this kind of financial assets, the Group makes subsequent measurement at fair value and includes changes in fair value in the current profit and loss.

Investments in equity instruments are the financial assets at FVTPL when one of the following conditions is met:

• Acquisition of such financial assets is mainly designed for sale in recent period.
• Such investments are a part of the identifiable financial asset instrument portfolio under centralized management on initial recognition, and there is objective evidence that it is probable to make profits in short term.
• Relevant financial assets are derivatives. excluding derivatives conform to the definition of financial guarantee contract and are designated as the effective hedging instruments.

Financial assets at FVTPL include financial assets at FVTPL and financial assets that designated at FVTPL:

• Except for financial assets measured at amortized cost and financial assets at FVTOCI, the Group classifies financial assets as financial assets at FVTPL.
• On initial recognition, the Group may irrecoverably designate the financial assets as the financial assets at FVTPL in order to eliminate or significantly reduce accounting mismatching.

The financial assets at FVTPL are listed in trading financial assets.

9.3 Impairment of the financial assets

The Group accounts for the impairment and recognizes the loss provisions of the financial assets classified at amortized cost, financial assets at FVTOCI and credit commitments (mainly including loan commitments, bank acceptance drafts, issuance of letters of credit and issuance of guarantees) based on the expected credit loss (ECL).

As to the accounts receivable and contract assets that do not contain significant financing components, the Group measures the loss provisions at an amount equal to life-time ECL using the simplified measurement method.

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important Accounting Policies and Accounting Estimates (Continued)

9. Financial instruments (continued)

9.3 Impairment of the financial assets(continued)

As to other financial assets and credit commitments than the above financial assets that are measured using the simplified measurement method, the Group evaluates whether the credit risks of the relevant financial instruments have been significantly increased since initial recognition on each balance sheet date. If the credit risks of such financial instruments have not been significantly increased since initial recognition, and are in the first stage, then, loss provisions are measured at the amount equal to 12-month ECL of such financial instruments, and the interest income is calculated based on the book balance and the effective interest rate. If the credit risks of such financial instruments have been significantly increased since initial recognition but no credit impairment has occurred, and are in the second stage, then, loss provisions are measured at the amount equal to life-time ECL of such financial instruments, and the interest income is calculated based on the book balance and the effective interest rate. If the financial instruments have been subject to credit impairment after initial recognition and are in the third stage, the Group shall measure their impairment reserves as the amount of their expected loss in the whole period of their existence, and calculate the interest income of such financial instruments based on their amortized cost and actual interest rate.

The Group assesses on each balance sheet date whether the credit risk of relevant financial instruments has increased significantly since the initial recognition. Based on a single financial instrument or a portfolio of financial instruments with similar credit risk characteristics, the Group compares the risk of default on the balance sheet date and the risk of default on the initial recognition date, so as to determine the changes in the risk of default during the expected duration of the financial instrument.

If the Group has measured the loss provisions at such amount equal to the life-time ECL during the previous accounting period, but on the current balance sheet date, the credit risks of such financial instruments have not been significantly increased since initial recognition, the Group will measure the loss provisions of such financial instruments at such amount equal to the future 12-month ECL on the balance sheet date during the current period, and the reversed amount of the loss provisions caused thereby is recognized as the impairment gains and is recorded in the current profits and losses.

Any increased or reversed amount of the credit loss provisions of the financial instruments are recognized in the current profit and loss as the impairment losses or gains, except for financial assets that are classified as FVTOCI. As to the financial assets as FVTOCI, the Group recognizes the credit loss provisions in other comprehensive income, and includes impairment losses or gains in the current profits and losses, but the book value of such financial assets presented in the balance sheet will not be reduced.

9.3.1 Significant increase in the credit risks

The Group will use the reasonable and justified forward-looking information that is available to determine whether the credit risks of the financial instruments have been significantly increased since initial recognition by comparing the default risks of the financial instruments on the balance sheet date and the default risks on the initial recognition date. As to the loan commitments and financial guarantee contracts, the Group regards the date when the Group becomes a party to the irrecoverable commitments as the initial recognition date while applying the regulations on impairment of financial instruments. This clause applies to the credit commitments of the Group.

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important Accounting Policies and Accounting Estimates (Continued)

9. Financial instruments (continued)

9.3 Impairment of the financial assets(continued)

9.3.1 Significant increase in the credit risks (continued)

The Group will consider the following factors while evaluating whether the credit risks are significantly increased:

1. Whether there are significant changes in internal price indicators caused by changes in credit risk.
2. If an existing financial instrument is generated or issued as a new financial instrument on the balance sheet date, whether the interest rate or other terms of the financial instrument have changed significantly (such as stricter contract terms, increased collaterals or guarantees, or higher rate of return, etc.).
3. Whether the external market indicators of the credit risk of the same financial instrument or similar financial instruments with the same expected duration have changed significantly. These indicators include credit spreads, the price of credit default swaps for borrowers, the length and extent of the fair value of financial assets lower than their amortized costs, and other market information relevant to borrowers (such as changes in the price of the borrowers' debt instruments or equity instruments).
4. Whether the actual or expected external credit rating of financial instruments has changed significantly.
5. Whether the actual or expected internal credit rating of the debtor is downgraded.
6. Whether the business, financial or economic positions that are expected to cause significant changes in the debtor's ability to perform its debt service obligations have any adverse changes.
7. Whether the operating results of the debtor are actually or expected to have significant changes;
8. Whether the credit risk of other financial instruments issued by the same debtor has increased significantly.
9. Whether there are significantly adverse changes in the regulatory, economic or technology environment of the debtor;
10. Where the value of the collateral as mortgage for debt or the guarantee or credit increment quality is significantly changed, and such changes are expected to reduce the economic motive of the debtor to make repayment within the stipulated time limit under the contract or affect the default probability;
11. Whether the economic motive expected to reduce the borrower's repayment within the contractually agreed period has changed significantly.
12. Anticipated changes to a loan contract, including the exemption or amendment of contractual obligations that are expected to be caused by the contract breach, the grant of interest-free periods, the rise in interest rates, the request for additional collaterals or guarantees, or other changes to the contractual framework of financial instruments.
13. Whether the expected performance and the repayment behaviors of the debtor are significantly changed;
14. Whether the Group's methods for credit management of the financial instruments are changed.

Regardless of whether the credit risk has increased significantly after the above assessment, when the payment of a financial instrument contract has been overdue for over 30 days, it indicates that the credit risk of the financial instrument has increased significantly.

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important Accounting Policies and Accounting Estimates (Continued)

9. Financial instruments (continued)

9.3 Impairment of the financial assets(continued)

9.3.2 Financial assets for which credit impairment has been accrued

When one or multiple events expected with adverse impact on the future cash flow of financial assets occur, the financial assets shall become financial assets under credit impairment. Evidence of credit impairment of financial assets shall include the following observable information:

1. The issuer or the debtor has significant financial difficulty;
2. The debtor has violated the contracts, such as default or delinquency in payment of interest or principal;
3. The creditor makes concession that it will never make under any other situations with the debtor who has the financial difficulty by taking into account economic or contract factors;
4. It is probable that the debtor will become bankrupt or otherwise enters financial restructuring;
5. The issuer or the debtor has significant financial difficulty, and the actual market of such financial assets disappears to this regard;
6. When a financial asset is purchased or originated at a steep discount, the discount reflects the fact that a credit loss has occurred.

Regardless of the above assessment results, if the payment of a financial instrument contract has been overdue for over 90 days, the Group presumes that the financial instrument has a contract breach.

9.3.3 Determination of ECL

For relevant financial instruments (mainly including loans and advances, debt investments, other debt investments and credit commitments), the Group recognizes their credit losses on a portfolio basis by taking the risk parameter model method. The Group divides the financial instruments into different portfolios and maps different risk parameters with common credit risk features as the basis. The common credit risk characteristics adopted by the Group include the types of financial instruments, credit risk ratings, types of guarantees, initial recognition date, remaining contract duration, debtor's industry, debtor's geographic location, and the value of guarantees relative to financial assets, etc.

The Group determines the ECL of the relevant financial instruments based on the following methods:

• The credit losses of the financial assets shall be the present value of the difference between the contractual cash flows receivable by the Group and the cash flows expected to be received.
• For undrawn loan commitments, the credit loss shall be the present value of the difference between the contractual cash flow that the Group shall receive and the expected cash flow when the loan commitment holder draws on the corresponding loan. The Group's estimate of expected credit losses on loan commitments is consistent with its expectations for the use of the loan commitments. This clause applies to the credit commitments of the Group.

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important Accounting Policies and Accounting Estimates (Continued)

9. Financial instruments (continued)

9.3 Impairment of the financial assets(continued)

9.3.3 Determination of ECL (continued)

• For a financial asset that has been credit-impaired on the balance sheet date but are not purchased or originated, the credit loss shall be the difference between the book balance of the financial asset and the present value of the estimated future cash flow discounted at the original effective interest rate.

Factors reflected in the methods used by the Group to measure the ECL of the financial instruments include: unbiased probability weighted average amount determined through a series of possible results; time value of money; information in relation to pass events, current status and future economic forecasts that is available on the balance sheet date without unnecessary additional costs or efforts.

9.3.4 Write down financial assets

When the Group does not reasonably expect that the contractual cash flows of the financial assets are recoverable in whole or part any longer, the book balance of such financial assets is written down directly. Such write-down constitutes derecognition of relevant financial assets.

9.4 Transfer of financial assets

If the Group has transferred substantially all of the risks and rewards in the ownership of the financial assets, such financial assets are derecognized. If the Group has retained substantially all of the risks and rewards in the ownership of the financial assets, such financial assets are not derecognized.

If a financial asset meets one of the following conditions, it shall be derecognized: (1) the contractual right to receive cash flow from the financial asset is terminated; (2) the financial asset has been transferred, and the Group transfers almost all the risks and rewards of ownership of the financial asset to the transferee; or (3) the financial asset has been transferred. Although the Group neither transferred nor retained almost all the risks and rewards of ownership of the financial asset, it gave up control of the financial asset.

If the Group has neither transferred nor retained substantially all the risks and rewards in the ownership of the financial assets, the following provisions shall apply as appropriate: if the Group has waived control over such financial assets, such financial assets are derecognized, and the resulting assets and liabilities are recognized; if the Group has not waived control over the financial assets, then, the Group shall, according to the extent of its continuous involvement in the transferred financial asset, recognize the related financial asset and recognize the relevant liability accordingly. The Group measures related liabilities in the following methods:

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important Accounting Policies and Accounting Estimates (Continued)

9. Financial instruments (continued)

9.4 Transfer of financial assets(continued)

• If the transferred financial assets are measured at amortized cost, the book value of the relevant liabilities is equal to the book value of the transferred financial assets minus the amortized cost of the rights reserved by the Group (provided that the Group retains relevant rights due to the transfer of financial assets) plus the amortized cost of the obligations assumed by the Group (provided that the Group assumes relevant obligations due to the transfer of financial assets). The relevant liabilities are not designated as financial liabilities measured at FVTPL.
• If the transferred financial assets are measured at fair value, the book value of the relevant liabilities is equal to the book value of the transferred financial assets minus the fair value of the rights reserved by the Group (provided that the Group retains relevant rights due to the transfer of financial assets) and plus the fair value of the obligations assumed by the Group (provided that the Group assumes relevant obligations due to the transfer of financial assets). The fair value of these rights and obligations shall be the fair value when measured on an independent basis.

For the financial assets continuously involved through the provision of financial guarantees for the transferred financial assets, the assets formed by the continuous involvement shall be recognized according to the lower of the book value of the financial assets and the amount of financial guarantees. The financial guarantee amount means the highest amount that will be required to be repaid among the consideration received.

If the overall transfer of financial assets meets the conditions for derecognition, the difference between the book value of the transferred financial assets on the date of derecognition and the sum of the consideration received as a result of the transfer and the amount originally included in the accumulated amount of fair value changes in other comprehensive income corresponding to the amount of the derecognition shall be included in the current profits and losses. If a financial asset transferred by the Group is designated as non-tradable equity instrument investments measured at FVTOCI, the accumulated gains or losses previously included in other comprehensive income shall be transferred out of other comprehensive income and included in retained earnings.

If the partial transfer of financial assets meets the conditions for derecognition, the entire book value of the financial assets before the transfer will be amortized between the part of derecognition and the part of continuous recognition according to their respective relative fair values on the transfer date, and the difference between the sum of the amount of consideration received by the part of derecognition and the amount originally included in the accumulated amount of fair value changes in other comprehensive income corresponding to the amount of the derecognition and the book value of the derecognized part on the date of derecognition shall be included in the current profits and losses. If a financial asset transferred by the Group is designated as non-tradable equity instrument investments measured at FVTOCI, the accumulated gains or losses previously included in other comprehensive income shall be transferred out of other comprehensive income and included in retained earnings.

If the overall transfer of financial assets does not meet the conditions for derecognition, the Group continues to recognize the entire transferred financial assets and recognizes the received consideration as a financial liability.

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important Accounting Policies and Accounting Estimates (Continued)

9. Financial instruments (continued)

9.5 Assets securitization business

As a part of its business activities, the Group securitizes part of its credit assets, generally by selling these assets to a structured entity, which then issues securities to investors. The equity of securitized financial assets is embodied in the form of priority asset-backed securities or subordinated asset-backed securities. For the conditions for derecognition of financial assets, please refer to Note IV. 9.4 Transfer of Financial Assets. When using the conditions for derecognition of financial assets, the Group has considered the transfer degree of risks and rewards of assets transferred to a structured entity, as well as the extent to which the Group exercises control over the structured entity. The Group did not have any new asset securitization business during the accounting period of these financial statements.

9.6 Classification of liabilities and equity

The Group classifies the issued financial instruments or a part thereof as financial liabilities or equity instruments on initial recognition based on the contract terms and conditions of such financial instruments, and their reflected economic essence in lien of merely legal form, by taking into account the definitions of financial liabilities and equity instruments.

9.6.1 Classification and measurement of financial liabilities

Financial liabilities are classified into financial liabilities at FVTPL and other financial liabilities upon initial recognition. For financial liabilities measured at FVTPL, the related transaction costs incurred at the time of acquisition are directly included in the current profit or loss, and the related transaction costs of other financial liabilities are included in the initial recognition amount.

Subsequent measurement of financial liabilities depends on the following categories:

9.6.1.1 Financial liabilities at FVTPL

Financial liabilities at FVTPL include trading financial liabilities (including derivative instruments belonging to financial liabilities) and financial liabilities that are designated at FVTPL on initial recognition. Trading financial liabilities (including derivatives that are financial liabilities) are subsequently measured at fair value, and all changes in fair value are included in the current profits and losses. The Group subsequently measures financial liabilities that are designated at FVTPL at fair value. Except that changes in fair value arising from changes to the Group's credit risks are recorded in other comprehensive income, other changes in fair value are recorded in the current profits and losses. Unless inclusion of changes in fair value arising from changes to the Group's own credit risks in other comprehensive income will cause or expand accounting mismatching in the gains or losses, the Group records all changes in fair value (including affected amount of changes to the own credit risks) in the current profits and losses.

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important Accounting Policies and Accounting Estimates (Continued)

9. Financial instruments (continued)

9.6 Classification of liabilities and equity(continued)

9.6.1 Classification and measurement of financial liabilities (continued)

9.6.1.1 Financial liabilities at FVTPL (continued)

A financial liability meeting one of the following conditions indicates that the purpose of the Group's assumption of the financial liability is transactional:

• The purpose of undertaking relevant financial liabilities is mainly for repurchase in the near future.
• Relevant financial liabilities are a part of the identifiable financial asset instrument portfolio under centralized management on initial recognition, and there is objective evidence that it is probable to make profits in short term.
• Relevant financial liabilities are derivatives. excluding derivatives conform to the definition of financial guarantee contract and are designated as the effective hedging instruments.

The Group designates a financial liability that meets any of the following conditions as the financial liability measured at FVTPL at the time of initial recognition: (1) The designation can eliminate or significantly reduce accounting mismatches; (2) The financial liability portfolio or the financial assets and financial liability portfolio is managed and evaluated on the basis of fair value in accordance with the risk management or investment strategy specified in the official written documents of the Group, and such management and performance evaluation are reported to key managers on this basis within the Group; (3) Eligible hybrid contracts containing embedded derivatives.

9.6.1.2 Other financial liabilities

Financial liabilities other than financial liabilities, financial guarantee contracts and loan commitments formed by the transfer of financial assets that do not meet the conditions for derecognition or continue to be involved in the transferred financial assets are classified as financial liabilities measured at amortized cost, and subsequently measured by taking the effective interest method. The gains or losses arising from derecognition or amortization shall be included in the current profits and losses.

The Group and the counterparty amend or re-negotiate a contract, but result in no derecognition of financial liabilities subsequently measured at amortized cost, and result in changes in the contract's cash flow, the Group shall recalculate the book value of the financial liabilities and include the relevant gains or losses in the current profits and losses. The recalculated book value of the financial liability is recognized by the Group based on the present value of the renegotiated or amended contractual cash flow discounted at the original effective interest rate of the financial liability. The Group adjusts the book value of the amended financial liabilities and amortizes all costs or expenses incurred in amending or re-negotiating the contract within the remaining period of the amended financial liabilities.

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important Accounting Policies and Accounting Estimates (Continued)

9. Financial instruments (continued)

9.6 Classification of liabilities and equity(continued)

9.6.1 Classification and measurement of financial liabilities (continued) 9.6.1.2 Other financial liabilities (continued)

Financial guarantee contracts and loan commitments

The financial guarantee contracts are the contracts under which the issuer is required to compensate specific amount to the contract holder who suffer from losses when the specific debtor is unable to pay the debts pursuant to the initial or amended debt instrument terms and conditions. A financial guarantee contract is measured at fair value at the time of initial recognition. Except for financial guarantee contracts designated as financial liabilities measured at FVTPL, the remaining financial guarantee contracts are subsequently measured at the higher between the expected credit loss reserve amount determined on the balance sheet date and the initial recognition amount minus the accumulated amortization amount determined as per the income recognition principle after the initial recognition.

9.6.2 Derecognition of financial liabilities

If all or parts of the current obligations of a financial liability have been discharged, the financial liability or part thereof shall be derecognized. If the Group (borrower) and the lender sign an agreement, in which, the existing financial liabilities are replaced by the new financial liabilities, and the contract terms and conditions of the new financial liabilities are substantially different from that of the existing financial liabilities, then, the original financial liabilities are derecognized, and a new financial liability is recognized at the same time.

When a financial liability or a portion thereof is derecognized, the Group includes the difference between its book value and the consideration paid (including non-cash assets transferred out or liabilities assumed) in the current profits and losses.

9.6.3 Equity instrument

An equity instrument is a contract that can prove the ownership of the residual interest in the Group's assets after deducting all liabilities. The Group issues (including refinancing), repurchases, sells or cancels equity instruments as changes in equity. The Group does not recognize changes in the fair value of equity instruments. Transaction costs related to equity transactions are deducted from equity.

The distribution of the Group to the holders of equity instruments is treated as profit distribution, and the stock dividends paid do not affect the total amount of the shareholder's equity.

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important Accounting Policies and Accounting Estimates (Continued)

9. Financial instruments (continued)

9.7 Offset of financial assets and financial liabilities

Whereas, when the Group has the legal right to offset the confirmed financial assets and financial liabilities and is currently able to implement such legal right, and at the same time it plans to settle the financial assets on a net basis or to liquidate the financial liabilities, the financial assets and financial liabilities will be listed on the balance sheet in the amount after mutual offset. Financial assets and financial liabilities shall be listed separately in the balance sheet and shall not be offset against each other.

10. Assets transferred under repurchase agreements

10.1 Redemptory monetary capital for sale

Financial assets that have been purchased under agreements with a commitment to resell at a specific future date are not recognized in the balance sheet. The cost of purchasing such assets is presented under "financial assets purchased under resale agreements" in the balance sheet. The difference between the purchasing price and reselling price is recognized as interest income during the term of the agreement using the effective interest method.

10.2 Financial assets sold for repurchase

Financial assets sold subject to agreements with a commitment to repurchase at a specific future date are not derecognized in the balance sheet. The proceeds from selling such assets are presented under "financial assets sold under repurchase agreements" in the balance sheet. The difference between the selling price and repurchasing price is recognized as interest expense during the term of the agreement using the effective interest method.

11. Long-term equity investment

11.1 Determination basis for the joint control over and the significant influence on the investee

The long-term equity investment that the Bank is able to exercise control over the investee is accounted for by the cost method in the Bank's individual financial statements. Control means that the Group has power over the investee, enjoys variable returns through participation in related activities of the investee, and has the ability to use its power over the investee to influence its return amount. Common control refers to the control that is common to an arrangement according to the relevant agreement, and the relevant activities of the arrangement can only be decided after the parties sharing control power reach a consensus. Significant influence refers to the power to participate in decision-making on the financial and operating policies of the investee, but it cannot control or jointly control the formulation of these policies with other parties. When determining whether to exercise control or exert significant influence on the investee, potential voting rights such as current convertible corporate bonds and current executable warrants held by the investing enterprise and other parties have been taken into consideration.

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important Accounting Policies and Accounting Estimates (Continued)

11. Long-term equity investment (continued)

11.2 Recognition of initial investment cost

In respect of the long-term equity investment obtained through the business merger under the same control, the merging party shall measure the initial investment cost of the long-term equity investment according to the share of the book value of the shareholder's equity of the merged party in the final controlling party's consolidated financial statement on the merger date. The difference between the initial investment costs of the long-term equity investment and the cash as paid, non-cash assets as transferred and the book value of debts as assumed shall be adjusted to the capital reserve; if the capital reserve is insufficient to offset, the retained earnings shall be adjusted. If taking issued equity securities as consideration of merger, the initial investment cost of the long-term equity investment shall be based on the share of the shareholder's equity of the merged party in the book value of the final controlling party's consolidated financial statements on the date of the merger; the total book value of issued stocks is taken as stock capital; capital reserve is adjusted according to the difference between the initial investment costs of long-term equity investment and total book value of issued stocks; if capital reserve is insufficient to offset, retained earnings are adjusted.

For a long-term equity investment obtained through a business merger not under the same control, the initial investment cost of the long-term equity investment is based on the merger cost on the purchase date.

The intermediary fees such as auditing, legal services, evaluation and consultation and other related management fees incurred by the merging party or the purchaser for the business merger shall be included in the current profits and losses at the time of occurrence.

Long-term equity investments obtained by other means other than long-term equity investment formed by business merger shall be initially measured at cost. If the Group can exert significant impact or common control on investee but not control, the costs of long-term equity investment shall be the fair value of originally held equity investment as determined under Accounting Standards for Business Enterprises No. 22-Confirmationand Measurement of Financial Tools plus the costs of increased investment.

11.3 Method of subsequent measurement and recognition of profit or loss

11.3.1 Long-term equity investment calculated as per cost

Long-term equity investments in subsidiaries are accounted for by taking the cost method in the Bank's financial statements. Subsidiary means the investee that the Group can exercise control over.

When the cost method is adopted, long-term equity investments are priced at the initial investment cost. The cost of long-term equity investment shall be adjusted when adding or recovering investment. Cash dividends or profits declared and distributed by the investee shall be recognized as current investment income.

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important Accounting Policies and Accounting Estimates (Continued)

11. Long-term equity investment (continued)

11.3 Method of subsequent measurement and recognition of profit or loss(continued)

11.3.2 Long-term equity investment accounted for by the equity method

The Group's investments in associated enterprises and joint ventures are accounted for by taking the equity method. Associated enterprises mean the investees to which the Group can exert significant influence, and joint ventures means the joint arrangements in which the Group only has rights to the net assets of the arrangement.

At the time of calculating by equity method, if the initial investment costs of long-term equity investment are greater than the fair value share of the identifiable net assets of the invested entity, the difference shall be included in the initial investment costs of long-term equity investment; if the initial investment costs of long-term equity investment are less than the fair value share of the identifiable net assets of the invested entity, the difference shall be included in the current profits and losses, and the costs of long-term equity investment are adjusted at the same time.

When accounting by taking the equity method, after obtaining a long-term equity investment, the investment profits and losses and other comprehensive income shall be recognized and the book value of the long-term equity investment shall be adjusted according to the share of the net profits and losses and other comprehensive income realized by the investee that shall be enjoyed or shared. When recognizing the share of the net profits and losses of the investee, based on the fair value of the investee's identifiable assets at the time of obtaining the investment, the part attributable to the investor is calculated according to the proportion that shall be enjoyed (but if the internal transaction loss is an asset impairment loss, it shall be recognized in full) after offsetting the internal transaction gains and losses that occur with associated enterprises and joint ventures in accordance with the Group's accounting policies and accounting period, and the net profit of the investee is adjusted and recognized, except where the invested or sold assets constitute a business. The Group calculates the share of profits or cash dividends declared by the investee, and reduces the book value of the long-term equity investment accordingly. The Group discontinues recognizing its share of net losses of the investee after the book value of the long-term equity investment together with any long-term interests that in substance form part of its net investment in the investee is reduced to zero, unless the Group is liable for additional losses. The Group adjusts the book value of long-term equity investments for other changes in owner's equity other than net profit and loss, other comprehensive income and profit distribution, and includes them in owner's equity. Besides, if the Group assumes the obligation to investee except the assumed amount, estimated liabilities are confirmed according to the obligation that expects to be assumed, and included in current investment loss. If the investee realizes net profit in the future, the Group resumes confirming the shared amount of income after the shared amount of income makes up the shared amount of unconfirmed loss.

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important Accounting Policies and Accounting Estimates (Continued)

11. Long-term equity investment (continued)

11.4 Disposal of long-termequity investment

When disposing of a long-term equity investment, the difference between the book value and the actual price obtained shall be included in current profits and losses. For long-term equity investments accounted for by taking the equity method, if the equity method is terminated due to disposal, the relevant other comprehensive income accounted for by the original equity method shall be accounted for on the same basis as the investee's direct disposal of relevant assets or liabilities. The owner's equity recognized by other owner's equity changes other than net profits and losses, other comprehensive income and profit distribution shall be transferred to the current profits and losses. If the equity method is still adopted, the relevant other comprehensive income accounted for by the original equity method shall be accounted for on the same basis for the direct disposal of relevant assets or liabilities by the investee, and then transferred to the current profits and losses on a pro rata basis. Owner's equity recognized due to changes in the investee's owner's equity other than net profits and losses, other comprehensive income and profit distribution shall be transferred to the current profits and losses according to the corresponding proportion.

12. Fixed assets

12.1 Recognition conditions and depreciation methods of fixed assets

Fixed assets refer to tangible assets held for producing goods, providing labor services, renting or operating and managing and whose service life exceeds one accounting year. Fixed assets are recognized only when the economic benefits related to them are likely to flow into the Group and the cost can be measured reliably. Fixed assets are initially measured at cost.

Subsequent expenditures related to fixed assets shall be included in cost of fixed assets if economic benefits related to the fixed assets are likely to flow into the Group and the cost can be reliably measured, and recognition for book value of replaced part shall be terminated. The subsequent expenditures other than the ones described above should be included in the current profits and losses upon the occurrence.

Fixed assets are initially measured at cost. The cost of purchasing fixed assets includes the purchase price, relevant taxes and other expenses that can be directly attributed to the fixed assets before they reach the intended usable state. The fixed assets shall be depreciated within their service life by using the average life method starting from the next month when they reach their intended usable status. The service life, estimated net residual value rates and annual depreciation rates of different fixed assets are as follows:

Category	Service life	Estimated net	Annual depreciation
	residual value ratio	ratio
Houses and buildings	5 to 30 years	3%-5%	3.17%-19.14%
Machinery equipment	3 to 10 years	3%	9.70%-32.33%
Electronic equipment and	3 to 10 years	3%-5%	9.70%-32.33%
office furniture
Transportation tools	4 to 5 years	3%-5%	19.40%-23.75%

Estimated net residual value refers to the amount obtained by the Group currently from the assets minus estimated disposal expenses when the useful period of fixed assets has expired and the fixed assets are in the expected state at the end of service life.

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important Accounting Policies and Accounting Estimates (Continued)

12. Fixed assets (continued)

12.1 Recognition conditions and depreciation methods of fixed assets(continued)

The fixed assets are derecognized when such fixed assets are disposed, or are expected not bring about economic benefits through use or disposal thereof. For disposal income of fixed assets from sales, transfer, scrap, damage, etc., the difference after deducting book value and relevant taxes and dues will be included in the current profits and losses.

The Group will recheck the service life, estimated net residual value and depreciation method of fixed assets at least at the end of year. Any change will be treated as per accounting estimate change.

12.2 Construction in process

The cost of construction in progress is recognized according to the actual project expenditure, including all necessary project expenditures incurred during the construction period, borrowing costs that shall be capitalized before the project reaches the intended usable state, and other related expenses, etc. No depreciation is provided in respect of construction in progress. The construction in progress is transferred to fixed asset or intangible assets when it reaches the scheduled usable state.

13. Intangible assets

The intangible assets include land use rights and software, etc. Intangible assets are recognized only when the economic benefits related to them are likely to flow into the Group and the cost can be measured reliably, and are initially measured at cost. However, the intangible assets obtained from the business merger under different control shall be separately recognized as intangible assets and measured at the fair value when they can be reliably measured.

The service life of intangible assets is determined according to the period when the intangible assets can bring economic benefits to the Group. If the period of bringing economic benefits to the Group cannot be foreseen, such intangible assets are regarded as intangible assets with uncertain service life.

Intangible assets are initially measured at cost. For intangible assets with limited service life, the accumulative amount obtained after deducting original value by estimated net residual value and provision for impairment already set aside shall be amortized averagely by stages as per straight-line method within the expected service life from the time when they are available for use. Intangible assets whose service life is uncertain shall not be amortized.

Land use rights acquired by the Group are usually accounted as intangible assets.

At least at the end of each year, the Group will review the service life and amortization method of intangible assets with limited service life, and make adjustments if necessary.

96

Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important Accounting Policies and Accounting Estimates (Continued)

14. Debt-repaid assets

When loans, advances and interest receivable are paid off with debt-repaid assets, the relevant accounting policies for the initial measurement of debt-repaid assets are more fully described in Note IV. 24 Debt Restructuring.

Debt-repaid assets other than debt-repaid equity are listed in the "Other assets" item, and no subsequent

depreciation or amortization will be accrued. On the balance sheet date, debt-repaid assets are measured at the lower of the book value and the net realizable value. When the net realizable value is lower than the book value, provision for impairment of the debt-repaid assets shall be made and included in the "Loss of impairment of other

assets" in the income statement.

For the relevant accounting policies of debt-repaid equity, please refer to Note IV. 9.2 Classification and Measurement of Financial Assets.

If the debt-repaid assets are transferred for personal use after they are obtained, they shall be carried forward according to the book balance of the debt-repaid assets on the conversion date. Where a provision for impairment of debt assets has been withdrawn, the provision for impairment shall be carried forward at the same time.

15. Long-term deferred expenses

Long-term deferred expenses are all expenses that have been incurred but shall be borne by the current period and subsequent periods with amortization period of more than one year. Long-term deferred expenses are amortized evenly in installments during the expected benefit period.

16. Impairment of non-financial assets other than goodwill

The Group's impairment of long-term equity investments, fixed assets, construction in progress, right-of-use assets, intangible assets with a definite service life, and other assets on each balance sheet date is recognized by taking the following methods:

The Group judges on the balance sheet date whether there are signs of possible impairment of assets. If there are signs of impairment, the Group will estimate its recoverable amount and perform impairment tests. For intangible assets that have not yet reached the usable state, the Group shall implement impairment test every year, regardless of an impairment sign.

The recoverable amount is the fair value of the assets net of the disposal expenses and the present value of the estimated future cash flows of such assets, whichever is higher. The Group estimates its recoverable amount on the basis of a single asset. If it is difficult to estimate the recoverable amount of a single asset, the recoverable amount of the asset group is recognized on the basis of the asset group to which the asset belongs. The identification of an asset group is based on whether the main cash inflow generated by the asset group is independent of the cash inflows of other assets or asset groups.

When the recoverable amount of an asset or asset group is lower than its book value, the Group writes down its book value to the recoverable amount. The write-down amount shall be included in the current profits and losses, and the corresponding asset impairment provision is made at the same time.

Once the aforementioned asset impairment loss is recognized, it will not be reversed in the subsequent accounting periods.

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important accounting policies and accounting estimates (continued)

17. Estimated liabilities

Except the contingent consideration and the contingent liabilities assumed in a business combination not under the same control, the Group shall recognize the liabilities as estimated liabilities when the obligations relating to the contingencies meet the following conditions at the same time:

（1） The obligation is the current obligation assumed by the Group;

（2） The performance of this obligation is likely to lead to the outflow of economic benefits from the Group;

（3） The amount of this obligation can be reliably measured.

Estimated liabilities are initially measured according to the best estimate of expenditure required to fulfill relevant current obligations, and factors such as risks, uncertainties and time value of currency related to contingencies are comprehensively considered. The book value of the estimated liabilities is reviewed on each balance sheet date. If there is conclusive evidence that the book value cannot reflect the current best estimate, the book value shall be adjusted according to the current best estimate.

18. Employee remuneration

Employee remuneration refers to various forms of remuneration or compensation given by the Group to obtain services rendered by employees or to terminate labor relations. Employee remuneration includes short-term compensation, early retirement benefits, dismissal benefits, etc.

18.1 Short-term remuneration

During the accounting period in which employees provide services, the Group shall recognize the actual short-term remuneration as a liability and include it in current losses and profits or related asset costs. The employee welfare expenses incurred by the Group shall be included in current profits and losses or related asset costs according to the actual amount incurred. If the employee welfare benefits are non-monetary benefits, they are measured at fair value.

The social insurance premiums and housing fund paid by the Group for employees, including medical insurance premiums, work-related injury insurance premiums and maternity insurance premiums, as well as the labor union expenditures and employee training funds withdrawn by the Group in accordance with the regulations, shall be calculated and determined according to the specified provision basis and provision proportion during the accounting period when the employees provide services for the Group. And the corresponding employee remuneration amount shall be confirmed as corresponding liabilities, and shall be included in current profits and losses or relevant asset costs.

18.2 Defined contribution plan

The Group shall pay the old-age insurance and the unemployment insurance for employees according to the relevant regulations of the local government. During the accounting period when employees provide services, the amount of deposit calculated according to the defined contribution plan shall be recognized as a liability and included in current profit or loss or related asset costs.

In addition to the basic old-age insurance, the employees of the Group participate in the pension plan established by the Group after being put on record by Hunan Bureau of Human Resources and Social Security. The Group shall make contributions to the pension plan according to a certain proportion of the employee salary for the previous year, which shall be recorded into the current profit and loss when the payment obligation occurs.

IV. Important accounting policies and accounting estimates (continued)

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

18. Employee remuneration (continued)

18.3 Termination benefits

Where the Group provides dismissal benefits to employees, the employee remuneration liabilities arising from dismissal benefits shall be recognized as soon as possible and included in current profit or loss: when the Group cannot unilaterally withdraw the dismissal benefits provided for the plan of terminating labor relations or the reduction proposal; when the Group recognizes the costs or expenses related to the reorganization involving the payment of dismissal benefits.

18.4 Early retirement

The early retirement benefit refers to the welfare benefit paid for employees who have not reached the retirement age specified by the government, but voluntarily quit their jobs upon approval of the Group's management. The Group shall pay the early retirement benefits to the employees accepting internal retirement arrangement from the date of early retirement until the employees reach the prescribed retirement age.

Such welfare benefits shall be discounted according to the expected future cash flow on the implementation date of the internal retirement plan, recognized as liabilities and included in the current profits and losses. The Group shall review the relevant liabilities on the balance sheet date, and the relevant changes shall be included in the current profits and losses.

19. Revenue recognition

19.1 Interest income

Interest income shall be calculated and recognized by the actual interest rate multiplied by the book balance of financial assets, except in the following circumstances:

• For initiative financial assets or financial assets of which credit impairment has occurred when being purchased, the interest income shall be calculated by multiplying the credit adjusted original real interest rate by the amortized cost of the financial asset.
• For financial assets which are not initiative financial assets, or of which credit impairment has occurred when being purchased, but credit impairment subsequently occurs, the interest income shall be calculated by multiplying the effective interest rate by the amortized cost (i.e., the net amount after deducting the provision for loss).

19.2 Service fee and commission revenue

The Group has fulfilled the performance obligation in the contract. That is, when the customer obtains the relevant services, the income shall be recognized according to the transaction price allocated to the performance obligation. Performance obligation refers to the commitment of the Group to transfer clearly distinguishable services to customers in the contract. The transaction price refers to the amount of consideration that the Group is expected to be entitled to receive due to the transfer of services to customers, excluding the amount collected on behalf of third parties and the amount that the Group expects to return to customers.

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Huarong Xiangjiang Bank Co., Ltd. Notes to Financial Statements (continued) 2020

(Amount shall be expressed at RMB, unless otherwise stated.)

IV. Important accounting policies and accounting estimates (continued)

19. Revenue recognition (continued)

19.2 Service fee and commission revenue (continued)

If the performance obligations meet one of the following conditions and shall be fulfilled within a certain period of time, the Group shall recognize the revenue within a certain period of time according to the performance schedule: (1) the customer will obtain and consume the economic benefits brought by the Group's performance at the same time; (2) the customer can control the services under construction during the performance of the Group;

1. the services produced during the performance of the Group have irreplaceable uses, and the Company has the right to collect amount for the performance part accumulated so far during the whole contract period. Otherwise, the Group shall recognize the revenue at the point when the customer receives the relevant services.

The Group charges the service fees and commissions by specifically providing various services to the customers. The service fee revenue is mainly classified into two categories:

（1） Service fee and commission charged by providing services at the specific time point or within a certain period of time

Such service fees shall be recognized on an accrual basis during the service period, mainly including commissions, asset management fees, trustee fees and other management consulting fees.

（2） Service fee and commission charged by specific transaction service

Service fees and commissions derived from negotiating and participating in negotiating third-party transactions, such as bond underwriting, shall be recognized upon completion of such transactions. Service fees and commissions related to the transaction benefits shall not be recognized until the actual agreed terms have been fulfilled.

20. Government subsidies

Government subsidies refer to monetary assets and non-monetary assets free of charge acquired by the Group from the government. The government subsidies shall be recognized when the Group meets the attached conditions for government subsidies and can receive them.

If the government subsidies are the monetary assets, the government subsidies shall be measured at the received or receivable amount. If the government subsidies are the non-monetary assets, the government subsidies shall be measured at the fair value; if the fair value is unavailable, the government subsidies shall be measured at the nominal amount.

The government subsidies related to the assets shall write down the book value of the relevant assets, or be recognized as the deferred income and included in the profits and losses within the service life of the related assets by installments in a reasonable and systematic way (but the government subsidies measured by nominal amount shall be directly included in the current profits and losses). If the relevant assets are sold, transferred, scraped or damaged before the end of the service life, the related deferred income balance which has not yet been allocated shall be transferred into the current profits and losses for asset disposal.

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