Annual Report 2012

More documents

Recommendations

Info

5 MANAGEMENT DISCUSSION AND ANALYSISThe Bank persisted in its principle of balancing internal fairness and external competition, and pairing post responsibilities with risk-adjustedcontributions. It put greater emphasis on the value creation, frontline posts and sub-branch level staff when determining remuneration distribution,in order to increase the satisfaction level of its staff and better reflect their value to the Bank. When distributing the employees’ performancecompensation, the Bank encouraged behaviour that complied with the Bank’s risk framework and long term financial indicators, and tried to trulyreflect performance in terms of compensation. The Bank also established relevant compensation reduction measures for staff who were facingdisciplinary actions or other penalties due to violation of rules or breach of duty.The Bank continued to increase investment in training, and organised large-scale staff training. It not only provided general training programmesto all staff, but also organised specific training programmes for different levels of and groups of employees, including leadership enhancementtrainings for managerial staff, qualification certificate trainings for professional staff, and job-related post trainings for frontline employees. In 2012,the Bank conducted 43,220 domestic and overseas training sessions, with a total enrollment of 2,302 thousand.The subsidiaries determine their remuneration and human resources management rules independently in compliance with local legislations andregulatory requirements, based on the nature of their business. They make training plans for their staff in line with their own business needs.5.3 RISK MANAGEMENTIn 2012, the Bank refined its comprehensive risk management framework, strengthened control over key business lines and potential riskfields, proactively dealt with practical issues in market risk management and operational risk management, with remarkably improved initiative,prospectiveness and effectiveness in terms of risk management.Refining comprehensive risk management framework system. Based on regulatory requirements and business development needs, the Bankdeveloped a comprehensive risk management approach, and defined the processes of recognition and measurement, monitoring and control,as well as reporting on various kinds of risks. Based on risks sorted out in different business lines and fields, the Bank developed a plan to setup a comprehensive risk management responsibility mechanism covering all employees, whole processes, all institutions and all risk types. Thishelped to establish a good foundation for a sound comprehensive risk management system. The Bank explored to establish a system to monitorand analyse various risks, enrich the comprehensive risk report, and conduct view research on comprehensive risk management, to improve theoverall ability of risk warning and control.Optimising the foundation of risk management. The Bank studied and formulated risk management policies on off-balance sheet business, andclarified risk selection and access bottom line for off-balance sheet business. The Bank improved the organisational system of risk managementfor overseas entities, standardised their credit risk classification and post-lending management, and launched risk investigation and analysis ontheir material loans. The Bank refined the country-specific risk management system, and scientifically made provisions for country-specific risk. Itamended collateral management measures and completed the second phase of collateral system optimisation in order to support the revaluationand monitoring of the collaterals. The Bank developed risk management policies for wealth management business, clarified requirementson industries and customer selection standards, and integrated the wealth management business into the bank-wide unified credit approvalmanagement. It promoted the Group’s consolidation risk management system, conveyed the bank’s unified preference, policy, limit, standard andrating to all subsidiaries, and strengthened the risk management of cross-border and cross-industry institutions.Completing the regulatory inspection and evaluation of advanced measurement on capital management . While maintaining the operation andmaintenance and continuous monitoring of 27 corporate customer credit rating models, the Bank pertinently accomplished customer ratingoptimisation for wholesale and retail industry as well as newly established small businesses. It developed technology tools such as scorecards for small and micro business application and behaviour, and for anti-fraud management of credit card business. The optimisation oflaunching and application of the nine score cards for credit card and personal loans well supported automated approval and bulk monitoring.Currently, the Bank has the ability to independently develop risk measurement tools. The implementation level of advanced measurement oncapital management was basically in line with that of the world leading banks, which laid a solid foundation for the implementation of CapitalManagement Measures for Commercial Banks issued by the CBRC.5.3.1 Risk Management StructureThe Board of Directors of the Bank has established Risk Management Committee, responsible for making risk management strategies andpolicies, monitoring the implementation, and evaluating the overall risk profile on a regular basis.The Bank has established a centralised and vertical risk management organisation structure, with a vertical risk management line, consisting of“chief risk officer – risk supervisors – risk heads – risk managers”.At the head office level, the chief risk officer is responsible for comprehensive risk management under the direct leadership of the president. TheRisk Management Department is responsible for overall risk reporting, formulating risk management policies, developing risk measurement tools,monitoring and analysis and other issues. The market risk management department and the risk management team for overseas entities underthe Risk Management Department are responsible for the risk management of financial market business and overseas entities respectively. TheCredit Management Department is responsible for credit approval and credit risk monitoring. Other departments at the head office perform theirrisk management duties within their respective scopes of duty.China Construction Bank Corporation annual report 201243
5 MANAGEMENT DISCUSSION AND ANALYSISAt branch level, there are risk supervisors in tier-one branches, who report to the chief risk officer, and are responsible for organising riskmanagement and credit approval within the branch. There are risk heads at tier-two branches and risk managers at sub-branches, responsible forrisk management in their respective branch or sub-branch. The risk management personnel have two reporting lines: the first reporting line is torisk management officers at higher levels, and the second is to managers of their respective entities or business units.At subsidiary level, the Bank vigorously promotes the establishment of a comprehensive risk management framework. It strengthens prospectiverisk management and consolidation of risk management at group level, enhances internal control and internal audit system to lead and pushforward the subsidiaries to launch their risk self-examination and investigation in order to discover and improve internal control deficiencies andproblems in time.5.3.2 Credit Risk ManagementCredit risk represents the potential loss that may arise from the failure of a debtor or counterparty to meet its obligation or commitment to theBank.In 2012, by treating prevention of systematical and regional risks and maintaining the asset quality stable as its core tasks in credit riskmanagement, the Bank enhanced risk control and early warning for key industries, regions, and large credit customers, dealt with risks in a timelyand effective manner, and continued to promote credit structure adjustments. All these led to further improvement in the credit risk managementand the asset quality remained stable.Strengthening risk warning and precaution, as well as the prospectiveness of risk management. The Bank strengthened monitoring and analysisover the warning indicators of asset quality. For overdue loans, the Bank sent out respective reminders to involved branches, supervisedthe operation of each account, and circulated monthly notices, to effectively mitigate potential risks. Precautions were published, andcountermeasures were adopted in advance for areas of photovoltaic industry, steel trade, shipping, agency trust, commercial property mortgage,external fraud, private enterprise, private lending, and financial risks of non-financial companies.Performing proactive management over key points to prevent systematic and regional risks. The Bank conducted, by level and by category,on-site diagnosis and evaluations, and off-site investigation on key areas, made risk diagnosis of each large credit customer with potential risks,studied and judged over the key risk elements causing possible systematic risks, and established effective countermeasures to ensure proactivemanagement and precise strike against the risks.Accelerating response and handling of risks to ensure stable asset quality. According to the practical situation of risk exposures in the areas,the Bank carried out countermeasures, such as early recovery, transfer, restructuring, and strengthening the risk mitigation, to accelerate riskresolutions with improved efficiency.Optimising credit policies to promote structure adjustments and operating capabilities. The Bank established credit policies of 2012, accordingto the general risk preference of the whole bank, specified the focus of credit business, and carried out active credit exit. With a close watch onthe macroeconomic situation and market changes, the Bank made timely re-examination and adjustments to its credit policies. The Bank alsodifferentiated the credit policies between regions, profiting from the comparative location advantages. The Bank well implemented the policies onthe whole, and continuously optimised the structure adjustments, with a higher proportion of prime customers.Adjusting credit authorisation in time to optimise the credit approval management system. The Bank optimised the overall control ofcredit authorisation over customer aggregate risk exposures, including wealth management business and entrusted loans, enhanced thecomprehensive control of individual customer risk exposure, and standardised the sub-authorisation management of branches and sub-branches.In light of the development of business, the Bank timely revised the authorisation of branches and of credit operations. Differentiated creditapproval mode was created for group clients, in compliance with the management concept of “active credit authorisation” and by enhancingthe material risk judgement. The Bank published the Management Measures on Global Credit Authorisation of China Construction Bank, toencourage the sound development of cross-border financing activities between domestic and overseas branches, to promote the Bank’smanagement abilities and the related services around the world.Deepening the development and application of risk management tools to promote the portfolio risk management abilities. The Bank carried outthe unified measurement and management of economic capital of all on and off-balance sheet businesses, extended the management scope ofindustry limits, and explored sufficiently the use of economic capital and risk-adjusted return on capital (RAROC) in customer selection, productallocation, loan pricing, credit approval, resource allocation and performance appraisal. Corporate customer rating model and retail customerscorecards were developed and optimised to support the customer selection, credit authorisation and approval, product pricing, post-loanmanagement and retail transformation. The Bank launched its credit risk stress testing system, covering the Bank’s credit assets portfolio,with multi-functions leading the industry. It conducted stress tests in areas such as macro economy, real estate industry and local governmentfinancing vehicles, providing strong support to the decision-making in operation and management.44 China Construction Bank Corporation annual report 2012
Page 1 and 2: Annual Report 2012China Constructio
Page 3 and 4: DEFINITIONSIn this annual report, u
Page 5 and 6: INTRODUCTIONHeadquartered in Beijin
Page 7 and 8: 2 CORPORATE INFORMATIONLegal name a
Page 9 and 10: 2 CORPORATE INFORMATIONForbes Ranke
Page 11 and 12: 3 CHAIRMAN’S STATEMENTDear shareh
Page 13 and 14: 4 PRESIDENT’S REPORTDear sharehol
Page 15 and 16: 5 MANAGEMENT DISCUSSION AND ANALYSI
Page 43: 5 MANAGEMENT DISCUSSION AND ANALYSI
Page 53 and 54: 6 CHANGES IN SHARE CAPITAL AND PART
Page 55 and 56: 6 CHANGES IN SHARE CAPITAL AND PART
Page 57 and 58: 7 CORPORATE GOVERNANCE REPORT7.2 BO
Page 59 and 60: 7 CORPORATE GOVERNANCE REPORTBoard
Page 61 and 62: 7 CORPORATE GOVERNANCE REPORTImpact
Page 63 and 64: 7 CORPORATE GOVERNANCE REPORTAudit
Page 65 and 66: 7 CORPORATE GOVERNANCE REPORTNomina
Page 67 and 68: 7 CORPORATE GOVERNANCE REPORTCompos
Page 69 and 70: 7 CORPORATE GOVERNANCE REPORTIn 201
Page 71 and 72: 7 CORPORATE GOVERNANCE REPORTEffect
Page 73 and 74: 8 PROFILES OF DIRECTORS, SUPERVISOR
Page 83 and 84: 9 REPORT OF THE BOARD OF DIRECTORSP
Page 85 and 86: 9 REPORT OF THE BOARD OF DIRECTORSD
Page 87 and 88: 10 REPORT OF THE BOARD OF SUPERVISO
Page 89 and 90: 11 MAJOR ISSUESMaterial litigations
Page 91 and 92: 11 MAJOR ISSUESInterests in non-lis
Page 93 and 94: Consolidated statement of comprehen
Page 95 and 96:
Statement of financial positionAs a
Page 97 and 98:
Statement of changes in equityFor t
Page 99 and 100:
Consolidated statement of cash flow
Page 101 and 102:
Notes to the financial statements(E
Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
Page 109 and 110:
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
Page 117 and 118:
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
Page 163 and 164:
Page 165 and 166:
Page 167 and 168:
Page 169 and 170:
Page 171 and 172:
Page 173 and 174:
Page 175 and 176:
Page 177 and 178:
Page 179 and 180:
Page 181 and 182:
Page 183 and 184:
Page 185 and 186:
Page 187 and 188:
Page 189 and 190:
Page 191 and 192:
Page 193 and 194:
Page 195 and 196:
Page 197 and 198:
Page 199 and 200:
Page 201 and 202:
Page 203 and 204:
Page 205 and 206:
Page 207 and 208:
Page 209 and 210:
Page 211 and 212:
14 UNAUDITED SUPPLEMENTARY FINANCIA
Page 213 and 214:
15 ORGANISATIONAL STRUCTUREPublic R
Page 215 and 216:
16 BRANCHES AND SUBSIDIARIESTier-on
Page 217 and 218:
16 BRANCHES AND SUBSIDIARIESBranche
Page 219 and 220:
16 BRANCHES AND SUBSIDIARIESChongqi
Page 221:
16 BRANCHES AND SUBSIDIARIESZhejian
show all

Annual Report 2012

Create successful ePaper yourself

Delete template?

Save as template?