LETTER TO SHAREHOLDERS

CHAIRPERSON’S LETTER TO SHAREHOLDERS

Dear shareholders,

2019 is a remarkable year. It marks the 70th anniversary of the PRC and the 40th anniversary of CITIC Group, the substantial shareholder of the Bank. Driven by the dream and inspiration, the Bank continued to carry out reform and innovation, deepened strategic transformation, and endeavored to create values. It forged ahead on the journey of building CITIC Bank into an enterprise offering the best comprehensive financial services, and achieved high-quality annual development result. At this point, I would like to report to our shareholders that for the year 2019 the Group realized net operating income of RMB187.88 billion, up 13.3% year on year; and net profit attributable to the equity holders of RMB48.02 billion, 7.9% higher than last year, both seeing the highest rate of growth in recent years; assets of RMB6.75 trillion, up 11.3% over the end of the previous year; and ratio of non-performing loans (NPLs) of 1.65%, a decrease of 0.12 percentage point over the end of the previous year. Based on the favorable performance, the Board of Directors of the Bank recommended distributing dividends for ordinary shares in 2019 at RMB2.39 (before tax) per 10 shares, and submitted the proposal to the annual general meeting for approval.

Recently, the COVID-19 epidemic has been a great concern to everyone. The World Health Organization (WHO) has declared COVID-19 a pandemic. The epidemic, to some extent, has slowed the economic growth and exerted negative influence on corporate operation. Moreover its containment is of great importance to everyones health. In particular, the transportation, tourism, catering and trade sectors are among the severely-hit industries, and the global financial market is also experiencing sharp fluctuations recently. In my opinion, history often rhymes. Every time when a black swan incident appears, there is a process of cognition and absorption, and the only thing we shall fear is fear itself. Meanwhile, we are more aware than ever that the fortune of our country is the cornerstone of our success. The positive long-term growth outlook for Chinas economy remain unchanged. The remarkable institutional strengths, hugely resilient economy, enormous domestic demand, and adequate policy space provide sources of confidence for us, and also explain why the international community is optimistic about China. Risks are accompanied with potentialities. The Black Swan incident has brought not only challenges and pressure, but also opportunities and impetus. The epidemic will propel China to step up the pace of replacing old drivers of growth with new ones and industrial upgrading, and press ahead with the development of key sectors such as new-type infrastructure, mega consumption and mega health. Among them, the scientific and technological innovation represented by 5G, artificial intelligence (AI), data center and internet, and the improvements in the consumption pattern of education, medical care and social security are priorities for Chinas economy to avoid falling into the middle-income trap, and achieve high[1]quality development. Chinas economy in 2020 is still worth expecting.

In light of the Banks operations and management, what I have pondered over recently is how to coordinate the our work on two fronts, namely provide as much support as possible for the epidemic containment on the one hand, and ensure sound and steady development of the Bank on the other hand. It is undeniable that difficulties and challenges do exist, as the interest spread of banking industry narrows and the NPLs might increase. However, solutions are not out of our reach. We will further embrace the trend, respect the laws of development and return to the Banks original mission, namely, to serve the real economy, focus on customer services, and control operational risks. The more difficulties we are experiencing, the more confident and resilient we shall remain. We will forge ahead and concentrate on our goal with every determination, and endeavor to build CITIC Bank into an unique and responsible enterprise offering the best comprehensive financial services with dignity and a human touch. Whenever it is yesterday, today or tomorrow, we have always worked hard to press ahead and will continue the journey of value creation.

We are committed to becoming a responsible enterprise, as we embed our development to the fortune of our country, and endeavor to be a patriotic state-owned enterprise. Right after the outbreak of COVID-19, we donated RMB50 million to support the epidemic containment, patient treatment, and medical staff protection. We were the first financial institution of the nation that had donated money to fight against the epidemic through China Charity Federation. We took financial measures, such as improving payment settlement, increasing online financing, opening green channels, reducing related fees, and allocating special fund, to provide financial support for the epidemic prevention and control. In particular, we reinforced financial services and support for enterprises engaged in the fight against the epidemic and those that were severely hit by the epidemic so as to help them overcome difficulties. We proactively contacted enterprises producing medicine and medical supplies, provided financial resources for them, and reduced the financing interest rate to support the frontline enterprises in the battle against the epidemic. After knowing that Wangshunge and Haidilao, both catering enterprises, were temporarily in a financial predicament, we swiftly granted loans to support them within one week, hoping that our efforts would offer invisible wings to help them out and give a strong boost to their development.

All that we have done is not out of improvisation. Established during Chinas reform and opening[1]up policy, the Bank has prospered along with economic and social development of the state, and it has always been pursuing the right approach to principles and interests by serving the real economy and honoring its social responsibilities. In recent years, we have vigorously developed inclusive finance, gave full support to private enterprises and micro, small and medium-sized enterprises to help achieve high-quality development of the real economy. At the end of 2019, as per the CBIRCs assessment standards, the Banks balance of inclusive finance loans stood at RMB204.26 billion, an increase of RMB67.9 billion or nearly 50% year on year. Behind these figures lies our commitment to our mission. As the Chinese old saying goes, in spite of difficulties, we shall be open-minded and far-sighted. We do not limit our service to granting loans. Instead, we serve customers with the aim of meeting enterprises financial needs at various stages of development. A Chairman of a Shenzhen-based private enterprise engaging in electronic technology expressed his gratitude for us in this way: When we were in need, CITIC Bank helped us, which really encouraged me and other entrepreneurs around. In 2018 when this company encountered with the daunting challenges known as three huge mountains, namely, market as an iceberg, financing as a high mountain, and transformation as a volcano. At the time, we took measures quickly, worked out a comprehensive financial plan, and provided timely support on the precondition of ensuring risk control. With our help, the company has returned to the right trajectory, and now leads in many segmented fields. Firmly upholding the philosophy of growing together with enterprises instead of putting profit first when our corporate clients are in difficulties, we interpreted the commitments of a bank and the responsibilities of a state-owed enterprise with our actions. In the future, we will strive to create greater value by doing right things and doing things in a right way.

We are committed to becoming an enterprise with a human touch, closely link our development with serving customers and improving employees wellbeing, and endeavor to develop into a benevolent enterprise. The epidemic outbreak witnessed our commitment. We provided volunteer consultation and healthcare lectures jointly with online medical institutions, and tried our best to protect customers health and safety. In particular, we launched a dedicated telephone service line for elderly customers, developed an exclusive mobile banking system, and established the Happiness 1+6, a financial service system for the elderly, to take care of this group. We have always put ourselves into clients shoes. Suspecting the cash carrying the virus, an elderly customer in Nanjing put RMB3,000s cash into the microwave oven for sterilization and burned the cash in the end. Despite the fact that machine failed to identify the cash and the remained cash were vulnerable to secondary damage, one of our client managers overcame difficulties and manually cleaned and distinguished the cash, and changed the money in full amount, moving the elderly customer with patient and considerate services. We raised fund for enterprises related to the peoples livelihood through multiple channels. We launched the first epidemic containment bond at the entire market and in over ten provinces and cities. The fund raised therefrom was used in such areas as harmless disposal of virus-related special waste, spring agricultural production, hog raising, e-commerce logistics, and emergency reserves, widely acclaimed by bond issuers including Wumart Group and JD.com and governments at different levels. The list of such examples goes on and on, evidencing our core value of customer orientation. We give greater priority to improving customer experience and meeting their needs, and the Banks brand image of guarding the warmth of inheritance with good faith has gradually taken root among the public. In 2019, the retail customers of the Bank and the credit cards issued by the Bank exceeded the 100 million mark and the 80 million mark respectively. The Bank recorded 743,000 accounts of corporate customers, an increase of 3.2 times the previous years increment and the highest rate of growth in recent years. In the future, we will continue to build a more considerate, vigorous and convenient operation system for customers through online, intelligent and customized means.

While ensuring good services for customers, we have always kept in mind that employees are treasure for sustainable development. We are fully aware that the taste ocean is decided by each drop of water in it. We do our best to take care of our employees to ensure that every one of them can work with passion and joy and live with dignity and happiness so as to let our employees pass on this positive energy to customers and the society. During the epidemic period, some of our employees worked day and night and played an active and indispensable role in meeting the financial needs of enterprises engaged in the epidemic containment, and others, despite the dreadful windy and snowy weather, persisted in inspecting the workplace to eliminate the potential risks. One of our employees in Lhasa Branch has not taken a single day off since the Spring Festival. He expressed that since Lhasa is located in of high-altitude, cold and oxygen poor condition, catching a cold may be life-threatening; when he brought the protective gear to customers, and when he taught a Tibetan grandma how to wear a mask, he thought all his efforts were worthwhile. Such kind of sincerity and genuineness are being integrated into our corporate culture, encouraging more colleagues to provide considerate services.

We are committed to becoming a unique enterprise with differentiated competitive advantages, and endeavor to develop into a commercial bank with unique capability for value creation. Synergy is our wealth. We have given full play to CITIC Groups unique advantages in Finance + the Real Economy to provide customers with comprehensive cross-border and cross-market services by way of CITIC United Fleet. In 2019, the Bank implemented 557 collaborative projects in partnership with the affiliates under CITIC Group including CITIC Securities, China Securities, CITIC Trust, and CITIC Capital, with products covering bond underwriting, equity investment, trust plan, financial lease and other categories, co-financing RMB640 billion for corporate customers. The synergy strategy has inexhaustible potential. It is more than one point, we wish to extend it into a plane where we can build a scenario-based and platform-based ecosystem. Through it, we can transform our strengths in providing a basket of comprehensive financial solutions into greater value. For example, in the elderly care industry, the Bank has arranged three pillars: it is one of the major partner banks of the Ministry of Human Resources and Social Security in the national social security fund; it provides annuity services for near 1,000 enterprises nationwide and won the bid for the custodianship of the occupational annuity plans of the central state organs and institutions and 25 provinces, cities and autonomous regions; it actively worked on connecting its system with that of the Ministry of Human Resources and Social Security and joint product R&D. Once leveraging CITIC Groups comprehensive strengths in mega consumption, mega cultural tourism, mega health and real estate sectors, we are likely to develop both elderly care finance and non-financial services at the same time, and build an all-around elderly care eco-system to ensure the elderly enjoys access to a wide range of services in caring, medical care, learning, tourism and recreation. We sincerely welcome the elderly customers with open arms to join hands with us and pursue a higher-quality elderly life. We also hope that our insight and systematic operation will further boost the development of the elderly care industry and the building of the public health system.

Innovation is in the genes of Bank. We attach great importance to the new economy, new models and new trends as well as accompanied changes brought by the internet era, and spare no effort to increase investment in technology to empower business development. With such efforts, finance and technology spark up new achievements: The CITIC AI Brain, an AI platform independently developed by the Bank, has been launched and used for over 100 precision financial services; the real-time intelligent products brought in the sale of wealth management products of RMB160 billion, and drove the scale of asset management to increase by RMB41 billion. Within only two years after its opening, CITIC aiBank has been recognized as a state-level high-tech enterprise, recorded more than 32 million users, opened more than 350 APIs, and connected with more than 80 scenarios,

continuously enhancing its capability of ecosystem extension and improving its market influence. The Bank has taken a leading role in blockchain technology and application in the banking sector. More than 20 banks joined the blockchain trade finance platform led by the Bank, and the on[1]chain transaction volume exceeded RMB100 billion. All these epitomize the Banks achievements in increasing investment in technology, and also represent the hardcore fruits that the flowers of innovation have turned into. In the future, we will accelerate digital transformation in an all-around manner, and demonstrate the CITIC acceleration in the race of digital competition.

Internationalization is our aspiration. Through years of efforts, our layout for internationalized operation has taken initial shape, with institutions distributed in Hong Kong, Macao, New York, Los Angeles, London and Singapore. In recent years, we have intensified efforts to improve capability for integrated cross-border services, and became the first Chinese bank to acquire bank equity in the countries along the Belt and Road initiative. One year has passed since CITIC Bank completed the acquisition of a majority stake in JSC Altyn Bank of Kazakhstan. ROA and ROE of JSC Altyn Bank have increased from 2.5% and 24.1% in the first half of 2018 to 3.2% and 29.2% in 2019, respectively; the NPL ratio was the lowest among commercial banks of Kazakhstan; and JSC Altyn Bank has retained the highest credit rating throughout the country. More importantly, via this bridge, CITIC Bank is playing a more and more important role in promoting mutually beneficial cooperation between Chinese and Kazakhstani enterprises. In 2019, we co-sponsored the First Chinese-Kazakhstani Hi-tech Enterprises Summit with JSC Altyn Bank, and broke new ground by facilitating the signing of cooperation agreements by 10 enterprises. As result of such efforts, first batch of beef from Kazakhstan was imported into Beijing Xinfadi Market at the end of last year. In the future, we will see more and more cooperative programs carried out. Relying on the layout of cross-border institution layout, we are committed to building a well-structured globalized financial trade network. With the opening of London Branch of the Bank last year, a 24-hour transaction platform connecting Beijing-Hong Kong-London-New York financial markets has been established, marking a milestone for our building of a global financial service eco-system. Looking forward, as the two-way openness in Chinas capital market continuously advances, the international comprehensive service network built by us today will have its role to play like never before.

We are committed to becoming an enterprise with dignity, work hard to win recognition from market and customers and gain trust from shareholders and employees, and endeavor to build up a century-old brand image. In 2019, The Banker magazine of the United Kingdom ranked the Bank the 19th on its list of the Top 500 Global Bank Brands, five places higher than the previous year, and the 26th on its list of the Top 1,000 World Banks in terms of tier-one capital, one place higher than the previous year. In the face of such lists, while enjoying the excitement, we remain rational and sober-minded. We are fully aware that only after experiencing multiple ups and downs, can such century-old brands as Citibank and Wells Fargo be forged into what we see today and stand out of the world banking, and there were also some financial institutions, once remarkably competitive and highly-accomplished, went bankruptcy. In retrospect of all those successes and failures, right strategies, stable operation and management, compliant and effective risk control are critical factors, and all of these are decided by a banks ability of governance. To develop into a century-old brand and achieve high-quality development, the Bank shall focus on its own development and strengthen its resilience, which is particularly important under the extraordinary and unprecedented changes unfolding now.

In 2020, we will explicitly make strengthening governance a top priority of the work throughout the year, and pursue development through transformation, standardization and stability amidst the overall enhancement of our countrys governance system and capacity for governance. We will unwaveringly strengthen Party leadership, and promote in-depth integration of Party leadership into modern corporate system; we will maintain our orientation, ignite the impetus and tap the synergy for high-quality development of the Bank. We will work for advancing the risk management system reform, make proactive risk forestalling and mitigation our top priority, improve the accountability system and authorization system so as to extend our protective shield as much as possible and comprehensively raise the risk control level. We will constantly improve the internal control compliance work, hold on to the bottom line of compliant operations, and enhance oversight and accountability to advance the Safe CITIC initiative. We will intensify our efforts to strengthen the building of corporate culture, vigorously carry forward the spirits of loyalty, self-discipline, fighting, responsibility and pragmatism to foster a healthy business atmosphere of integrity and ensure that we will always take a lead in the competition.

Finally, let me quote a line from Chinese poet Ai Qing Go and ask the thawing land, go and ask the thawing river. This poem was composed in 1980 to depict the historic trend as China undertook the reform and opening-up policy then. As China further deepens reform and opening-up in the new era, we can still feel the inexhaustible energy and dynamism throughout the country. I believe as long as we continue to forge ahead towards our defined direction, we will accomplish greater achievements. Meanwhile, I hope our investors will, as always, give their support to us along this journey.

Li Qingping

Chairperson, Executive Director

26 March 2020