CCB CCB was founded on 1 October CCB is one of the 'big four' banks in China. In 2011 CCB was the second largest bank in the world and 13th largest company in the world.big four banks The bank has approximately 13,629 domestic branches. Its total assets reached 8.7 trillion RMB in CITIC CITIC is established in February By 2005, its network comprises 418 branches countrywide, and includes established correspondent relationships with 990 banks and their branches in 70 countries around the world. China CITIC’s assets reached RMB 576 billion (USD 71 billion). As of 2006, CITIC had a non-performing loan (NPL) ratio of 2.5% (RMB 11.1 billion). The bank’s capital adequacy ratio is 9.1%.

Assets structure Income structure Important indicators CONTENTS Liabilities structure

CCBCITIC itemsAmountpercenta ge Amountpercentage Net loans and advances to customers 5,057, %1,105, % Investment securities2,105, %238, % Cash and deposits with central banks 1,733, %263, % Deposits and placements with banks and non-bank financial institutions 121, %96, % Financial assets held under resale agreements 358, %73, % Other assets157, %35, % Total assets9,875, %1,985, % we can draw the conclusion that the size of CCB is larger than CITIC’s, because the amount of CCB’s total assets is far more than CITIC’s. From the chat:

we can know that CITIC and CCB mainly rely on loans to make profits.

CCBCITIC Loan by business line : ①housing price increasing, the need of personal housing loans has increased. ② personal consume attitude change

CCBCITIC ItemsAmountpercentageAmountpercentage Short-term loans 1,079, %609, % we can find the percentage of Medium to long-term loans is almost close to 50%. The longer maturity, the greater risk. So, the risk of loans for CCB is greater than CITIC. According to maturity:

itemsCCBCITIC Held-to-maturity debt securities 57.64%47.48% Available-for-sale debt securities 24.74%46.8% the maturity of investment securities is short as a whole. the capital liquidity of CCB is better than CITIC, and CCB’s operating cost is lower than CITIC. As to Investment securities, the percentage of CCB is higher than CITIC’s.

As to Cash and deposits with central banks, the percentage of CCB is higher than CITIC’s. The more cash and deposits with central banks, the better bank security is. So, the security of CCB is better than CITIC.

CCBCITIC ItemsAmountpercentageAmountPercentage Deposits from customers 8,360, %1,517, % Deposits and placement from banks and non- bank financial institutions 774, %269, % Amounts under repurchase agreements 4, %4, % Debt securities payable 103, %26, % Others189, %32,1011.7% Total liabilities9,431, %1,850, % We know the amount of CCB liabilities is larger than CITIC’s. From the chart:

Deposits from customers: the percentages of Deposits from customers take an important place. CCB is a State-controlled bank, depositor will have more faith to State- controlled banks, other small banks must increase its deposits rate to attract depositors, and it will increases banks’ operating cost.

Deposits and placement from banks and non-bank financial institutions: smaller banks are more dependent on Deposits and placement from banks and non-bank financial institutions. not only can help banks draw into funds, but also can reduce banks’ cost.

Debt securities payable: the percentages of CITIC’s Debt securities payable is higher than CCB’s. Because the cost of making deposits is high for CITIC.

demand deposits and time deposits ： CCBCITIC Demand deposits: increase capital fluidity,high cost and can increase bank’s operating cost Time deposits: poor fluidity,cost lower,reduce operating cost and make profit

The comparison of the two banks’ interest income and non-interest income: CCBCITIC the cost of non-interest service is lower than interest service. it is not subject to interest rate risk. there are many non-interest activities belong to off balance sheet activities.

(In millions of RMB, except percentages) CCBCITIC Amount Net interest income Net non-interest income Operating income Operating expense Assets impairment loss Share of profits less losses of associates and jointly controlled entities 22.75__ Profit before taxation Income tax Net profit ① After calculation, we can find that CCB’s net profit is about 6 times of CITIC’s. ② CCB’s net interest income accounts for the proportion of total revenues is 78.5% ， CITIC’s is 86.2%. ③ CCB’s net non-interest income proportion is 22.5%. CITIC’s is 13.8%.

As a big bank, CCB’s main income is from loans, its revenue from intermediary business is much more than small banks. CITIC Bank, interest income mainly relies on loans and its development of intermediary business can not keep up with CCB. The bank's net non-interest income is mainly from the consultants and advisory fees.

(In millions of RMB, except percentages) CCBCITIC AmountPercentageAmount Percenta ge Loans and advances to customers % % Investment in debt securities % % Due from Central Bank % % Due from banks and other financial institutions % % Buying back the sale of financial assets % % Others__ % Interest income % % interest income ： the small bank is mainly relying on loans to obtain interest income, so CITIC’s interest income from loans ratio is bigger than CCB’s. CCB tends to trade securities for short-term profits while small banks do not,so CITIC’s investment imcome is smaller than the CCB.

(In millions of RMB,except percentages) CCBCITIC AmountPercentageAmount Percenta ge Deposits from customers % % Deposits and placement from banks and non-bank financial institutions % % Amounts under repurchase agreements % % Others % % Interest expense % % interest expense ： Interest expense on customer deposits is a maximum proportion. CCB not only the total assets is more than CITIC, but also the annual net profit. the big banks’ commercial reputation is higher than small banks’. So people are willing to put money into the big banks.

Comparison of profitability: CCBCTICI ROA ROE NIM CIR37.31%34.55% ROA and ROE of CCB are greater than CITIC bank’s. ROE reflects the size of the Bank's equity capital efficiency and the amount of profits realized by the units of equity capital. Due to the larger ROE of CCB, the CCB shareholders’ income level is higher than the CITIC Bank.

CCBCTICI NIM CIR37.31%34.55% the NIM of CCB is less than the NIM of CITIC. In the fields of controlling earning assets and attract cheaper source of funding, CITIC Bank performed better than CCB. the figure of CIR shows that CCB need to pay more costs in order to obtain revenue. CCB does worse than CITIC Bank in reducing operating costs.

Comparison of risk:

loan to deposit ratio CCBCITIC Loan to Deposit Ratio61.82%74.10% According to the People's Bank of China, the commercial bank loan to deposit ratio can not exceed 75%. In order to improve their profitability, CITIC Bank made a choice to increase the risk.

provision coverage ratio CCBCITIC Provision Coverage Ratio192.48%192.82% Due to the smaller provision coverage of CITIC Bank, CITIC is much safer than CCB. the CCB and China CITIC bank's provision coverage ratio is roughly the same.

NPL CCBCITIC NPL1.49%0.91% Greater NPL indicates that possibility of the recovery of the principal and interest is smaller. The greater the risk is and the worse the bank ’ s security is. Compared with CITIC Bank, CCB faces larger risks from non-performing loans than CITIC.

Core capital adequacy ratio CCBCITIC Provision Coverage Ratio192.48%192.82% core capital adequacy ratio10.21%9.96% Capital adequacy ratio and core capital adequacy ratio is an indicator for measuring a bank soundness and ability to resist risks. The two commercial banks' capital adequacy ratio and core capital adequacy ratio reached the regulatory standards, which indicate that they have strong ability to resist risks.

Team member ： Wu Lingling Li Jishuang Lv Mengzhu Ye Xiaofei Wang Chenhui