CCB was founded on 1 October 1954 . 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.

The bank has approximately 13,629 domestic branches. Its total assets reached 8.7 trillion RMB in 2009.

CITIC is established in February 1987. 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

CCB CITICitems Amount percenta

geAmount percentage

Net loans and advances to customers

5,057,085

50.06% 1,105,917

56.07%

Investment securities 2,105,279

26.05% 238,090 17.62%

Cash and deposits with central banks

1,733,484

17.04% 263,518 15.96%

Deposits and placements with banks andnon-bank financial institutions

121,528 1.95% 96,782 4.87%

Financial assets held under resale agreements

358,691 2.60% 73,460 3.70%

Other assets 157,200 1.58% 35,412 1.78%

Total assets 9,875,153

100.00% 1,985,760

100.00%

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:

Assets of CCB

50%

26%

17%

2%3%2%

Net l oans and advancesto customers

i nvestment secur i t i es

Cash and deposi t s wi thcent ral banks

Deposi t s and pl acementswi th banks and non- bankfi nanci al i nst i tut i ons

fi nanci al assets hel dunder resal e agreements

Other assets

Assets of CI TI C

56%

12%

13%

10%

7% 2%

Net l oans and advancesto customers

i nvestment securi t i es

Cash and deposi ts wi thcentral banks

Deposi ts and pl acementswi th banks and non-bankfi nanci al i nsti tuti onsfi nanci al assets hel dunder resal e agreements

Other assets

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

CCB CITIC

Loan by business line:

① housing price increasing , the need of personal housing loans has increased.

② personal consume attitude change

CCB CITICItems Amount percentage Amount percentageShort-term loans

1,079,068 20.83% 609,570 52.32%

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:

items CCB CITICHeld-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.

CCB CITICItems Amount percentage Amount PercentageDeposits from customers

8,360,014 88.78% 1,517,029 82.85%

Deposits and placement from banks and non-bank financial institutions

774,560 8.11% 269,721 13.65%

Amounts under repurchase agreements

4,061 0.04% 4,811 0.23%

Debt securities payable

103,520 1.06% 26,860 1.48%

Others 189,546 2.01% 32,101 1.7%Total liabilities 9,431,702 100.00% 1,850,523 100.00%

We know the amount of CCB liabilities is larger than CITIC’s.

From the chart:

CCB

88. 64%

8. 21%

0. 04%

1. 10%

2. 01%

Deposi t s f rom customers

Deposi t s and pl acementf rom banks and non- bankfi nanci al i nst i t ut i ons

Amounts underrepurchase agreements

Debt secur i t i es payabl e

Others

CI TI C

81. 98%

14. 58%

0. 26%

1. 45%

1. 73%

Deposi t s f rom customers

Deposi t s and pl acementf rom banks and non- bankfi nanci al i nst i t ut i ons

Amounts underrepurchase agreements

Debt secur i t i es payabl e

Others

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.

CCB

88. 64%

8. 21%

0. 04%

1. 10%

2. 01%

Deposi t s f rom customers

Deposi t s and pl acementf rom banks and non- bankfi nanci al i nst i t ut i ons

Amounts underrepurchase agreements

Debt secur i t i es payabl e

Others

CI TI C

81. 98%

14. 58%

0. 26%

1. 45%

1. 73%

Deposi t s f rom customers

Deposi t s and pl acementf rom banks and non- bankfi nanci al i nst i t ut i ons

Amounts underrepurchase agreements

Debt secur i t i es payabl e

Others

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.

CCB

88. 64%

8. 21%

0. 04%

1. 10%

2. 01%

Deposi t s f rom customers

Deposi t s and pl acementf rom banks and non- bankfi nanci al i nst i t ut i ons

Amounts underrepurchase agreements

Debt secur i t i es payabl e

Others

CI TI C

81. 98%

14. 58%

0. 26%

1. 45%

1. 73%

Deposi t s f rom customers

Deposi t s and pl acementf rom banks and non- bankfi nanci al i nst i t ut i ons

Amounts underrepurchase agreements

Debt secur i t i es payabl e

Others

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 ：CCB CITIC

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:

CCB CITIC

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)CCB CITICAmount Amount

Net interest income 248219.3 46644Net non-interest income 67841.75 7454.5Operating income 316061 54098.5Operating expense -117561 -21896.5Assets impairment loss -35341 -4373.6Share of profits less losses of associates and jointly controlled entities

22.75 __

Profit before taxation 163182.3 26815.5Income tax -37195.3 -6706.5Net profit 125987 20109

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)CCB CITIC

Amount Percentage Amount Percentage

Loans and advances to customers 276630.5 71.11% 58976.5 79.23%Investment in debt securities 80144 20.60% 7171.75 9.63%Due from Central Bank 22744.75 5.85% 3003.5 4.04%Due from banks and other financial institutions

2590.5 0.67% 2594.5 3.49%

Buying back the sale of financial assets 6888.5 1.77% 2658.5 3.57%

Others __ __ 30.25 0.04%

Interest income 388998.3 100.00% 74435 100.00%

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)CCB CITIC

Amount Percentage AmountPercentage

Deposits from customers 122076.8 86.72% 22718 81.75%Deposits and placement from banks and non-bank financial institutions

14769.5 10.49% 3752.5 13.50%

Amounts under repurchase agreements 497.75 0.35% 185.75 0.67%Others 3435 2.44% 1134.75 4.08%Interest expense 140779 100.00% 27791 100.00%

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:

CCB CTICI

ROA 1.335 1.1075

ROE 21.6675 16.58

NIM 2.71 2.825

CIR 37.31% 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.

CCB CTICI

NIM 2.71 2.825

CIR 37.31% 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:

0. 00%

50. 00%

100. 00%

150. 00%

200. 00%

250. 00%

Loan toDeposi tRat i o

NPL Provi si onCoverage

Rat i o

capi t aladequacy

rat i o

corecapi t aladequacy

rat i o

CCB

CI TI C

1 loan to deposit ratio

CCB CITICLoan to Deposit Ratio 61.82% 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 2

CCB CITIC

Provision Coverage Ratio 192.48% 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.

3 NPL

CCB CITICNPL 1.49% 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 ratio4

CCB CITICProvision Coverage Ratio 192.48% 192.82%core capital adequacy ratio 10.21% 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