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					2011 Annual Report   02
03   2011 Annual Report




     Introduction to Shanghai Pudong Development Bank Co., Ltd.



     The Shanghai Pudong Development Bank Co., Ltd. (SPDBank), headquartered in Shanghai, is a joint-stock bank
     that was founded on August 28, 1992, beginning operations on January 9 1993 and making its initial public offering
     on the Shanghai Stock Exchange on November 10, 1999 (stock code 600000). It currently has RMB18.653 billion in
     registered capital. Its outstanding achievements and trustworthy reputation have made it one of the most respected
     and well-known companies in China's stock market.

     Grounded in a business philosophy of “sticking to integrity and striving for excellence,” SPDBank actively explores
     financial innovation. The scale of its assets continues to grow, and its operating strength continues to increase.
     By the end of 2011, its overall assets had reached RMB2.6847 trillion, RMB1.3314 trillion in loans in foreign and
     domestic currency, RMB1.8511 trillion in total deposits, amounting to a profit of RMB27.286 billion after tax. It has
     established 37 branches and 741 business outlets in 29 provinces, municipalities and autonomous regions and 115
     cities in mainland China, and an overseas branch in Hong Kong. It has 31,231 employees, forming the essential
     business structure of a national commercial bank.

     Following its IPO, it has continued to rank among Asia Weekly's “Top 100 Chinese Publicly Listed Companies.”

     In 2011, SPDBank ranked the 64th based on Tier I capital in the British magazine Banker's Global Top 1000 World
     Banks List, up from 108 (the previous year). The company ranked the 63rd in terms of total assets, or 7th among
     Chinese domestic banks, an indication of good overall competitiveness and growth momentum. During the same
     year, the company ranked the 72nd among 500 publicly listed Chinese firms in the Fortune Magazine, and received
     the“most favored company award” in Stockstar's “Battle for Shanghai” in September 2011. Finally, in November 2011,
     it received the Shanghai Stock Exchange's “annual award for best of directors.”

     Alongside its deep and committed financial services, it also strives toward corporate social responsibility, aiming to
     establish itself as a first class corporate citizen. In September 2011, SPDBank received a grade of “A” in RepuTex's
     sustainability evaluation of publicly listed companies in Mainland China and Hong Kong. In November, it got an AA
     rating for CSR reporting among A-share listed companies with a “positive” rating outlook, ranking 5th among listed
     banks. The same year, it received a “Social Responsibility in Banking” award from www.eastmoney.com. .

     SPDBank strives for financial innovation, responding positively to new changes and trends. Guided by a philosophy
     of “New thinking, dedicated service” it works to establish itself as a competitive, modern financial services company.
     2011 Annual Report   04




      Ji Xiaohui
Chairman of the Board
05   2011 Annual Report




     Message from Chairman of the Board



     2011 marks the launch of our company's new five year strategic plan. In the face of complex changes in global
     finance, the continuing European debt crisis and slowing growth domestically, the company will maintain strategic
     command, strengthening client services, lay the foundations for sound management, drive innovation and
     development, thereby achieving coordinated development of the bank in terms of scale, quality, efficiency and
     structure. Here I represent the board in thanking the investors, clients and others who have supported the bank, and
     extend our sincere thanks to all of our employees, who have worked hard for the company's development.

     Through adhering to its “client-focused, innovation-driven, transformational development” guiding principle, the
     company made great achievements, addressing multiple challenges, including the uncertainty of its external
     environment, gaining firm grasp of the pace of credit investments, steadily driving forward our transformational
     development, accelerating financial innovation, improving comprehensive management and increasing sustainable
     development capacity. By the end of 2011, the company had RMB2.6847 trillion in overall assets, an increase of
     22.51%; RMB1.3314 trillion in total loans, an increase of 16.13%; RMB1.8511 trillion in total deposits in foreign and
     domestic currency, an increase of 12.84%, and a profit of 27.3 billion after tax, an increase of 42.48%. At the same
     time, non-performing loans dropped, according to a five-tier classification, falling to 0.44% at the end of the year,
     and the coverage for the reserve fund for non-performing loans reached 499.6%. In the November 2011 Moodys
     evaluation, the company rose from the “speculation” grade to the “investment” grade, a confirmation of the company's
     accelerated transformative development and integrated strengths.

     In response to intense market competition, and in order to reach our goal of being a competitive, modern financial
     services company, by building on more traditional banking activities, SPD has crossed boundaries and markets,
     improving its capacity in integrated banking services. One example is the solidification of its partnership with China
     Mobile, including signed MOUs between China Mobile and 35 of our local branches; the second is the successful
     launch of the Hong Kong branch and its smooth operation over the past six months; third is the increase in village
     and township and other forms of banking, within which 13 village and township banks have grown rapidly, with total
     assets at RMB12.1 billion, an increase of 115% and representing a profit of RMB193 million before tax; fourth is the
     smooth progress on the establishment of a financial leasing company and SPD Silicon valley bank following approval
     of their establishment.

     2012 marks the company's transition from a small and medium-sized bank to a medium and large-sized bank, from a
     more specialized bank to a comprehensive one. With customers remaining our center of focus, we strive to innovate,
     cross boundaries in our operations and, ultimately, march faster towards the establishment of a competitive, modern
     financial services company. All this is taking us into a new stage of development!




     Chairman of the Board, Shanghai Pudong Development Bank Co., Ltd.
Contents


9                                           12                                           17
Brief Introduction to                       Summary of Key Financial and                 Summary of Banking
the Company                                 Performance Indicators                       Business Performance


35                                          39                                           47
Share Capital Changes and                   Overview of the Company's Directors,         Corporate Governance Structure
Shareholders' Status                        Supervisors & Senior Management




Important Notice
1. The Board of Directors of the company, the Board of Supervisors and Directors, Supervisors and Senior Management
guarantee that the information presented in this report is free from any false record, misleading statement or material omission,
and accept, individually and collectively, liability for its truthfulness, accuracy and completeness.

2. This report was reviewed at the 25th Meeting of the 4th Board of Directors held in Shanghai on March 14, 2012. Director of
the company Sha Yuejia and Zhu Min were unable to attend the meeting due to official duties. However, they in writing entrusted
Director Chen Xin to vote on their behalf. All the other board members attended the meeting in person and executed their voting
rights.
55                                          57                                           76
General Shareholders' Meeting               Board Meeting Report                         Report by the Supervisory Board



79                                          88                                           90
Important Issues                            Financial Report                             Referential Documents




3. The domestic and overseas financial statements of the Company for the year have been audited by PricewaterhouseCoopers
Zhong Tian CPAs Co., Ltd. in accordance with PRC generally accepted accounting principles (GAAP) and international
accounting standards (IAS), and have obtained standard auditor's report without any reserved opinions.

4. None of the funds of the company has been used by its controlling shareholder and its related legal entities for non-operating
purposes.

5. The company has made no guarantee to any third party illegally.

6. Mr. JI Xiaohui Chairman of the Board of Directors, President of the bank, Mr. Liu Xinyi, Chief Financial Officer of the company
and Mr. Fu Neng, Financial Controller of the company guarantee the completeness and truthfulness of the information disclosed
in the financial report.
                                                                                                 2011 Annual Report   09



                                            Brief Introduction to the Company


1. Basic Information



                                     SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
            SPD Bank
                   Mr. JI Xiaohui

(2) Secretary of the Broad
                   Mr. SHEN Si
        No. 12, Zhongshan Dong Yi Road, Shanghai, China 200002
          021-63611226
    021-63230807
     Shens2@spdb.com.cn

(3) Representatives for Securities Affairs
       Mr. YANG Guoping, Ms. WU Rong
        No. 12, Zhongshan Dong Yi Road, Shanghai, China
          021-61618888-extention to the board office
    021-63230807
     Yanggp@spdb.com.cn;wur2@spdb.com.cn
                    No. 12, Zhongshan Dong Yi Road, Shanghai, China
              No. 12, Zhongshan Dong Yi Road, Shanghai, China
          200002
                 http://www.spdb.com.cn
               bdo@spdb.com.cn
                                                 “China Securities Daily”, “Shanghai Securities News”, “Securities
Times”
                                                                                                  http://www.sse.
com.cn
                                             General Office of the Board, SPDB

(4) Stock
Type          Place of Stock Listing:       Stock Abbreviation    Stock Code    Stock Abbreviation before change
A share       Shanghai Stock Exchange       Pu Fa Bank            600000

(5) Other Relevant Information
                          October 19th, 1992
                             No. 500 Pudong Nan Road, Pudong New Area, Shanghai, China
                            November 25th, 2011
                               No. 12, Zhongshan Dong Yi Road, Shanghai, China
                                                                 310000000013047
                               Guo Shui Hui Zi: 31004313221158X
                                 Di Shui Hui Zi: 31004313221158X
                               13221158-X
                               B0015H131000001
10   2011 Annual Report




     Brief Introduction to the Company




     (6) Engaged Accounting Firm
              PricewaterhouseCoopers Zhong Tian CPAs Co., Ltd.
                11th Floor, PricewaterhouseCoopers Center, No. 202 Hubin Road, Shanghai, China
                                              China Securities Depository and Clearing Corporation Limited Shanghai
     Branch
                                 The report is prepared in both Chinese and English. Should there exist any inconsistency
     between the two versions, the Chinese version shall prevail.




     2. Company Profile

     As approved by People's Bank of China and the Chinese Banking Regulatory Commission, the company is engaged
     in the following principal operating activities: absorbing deposits from the public, issuing short-term, mid-term and
     long-term loans, providing settlement, discounting commercial papers, issuing financial bonds, working as agent for
     issuing, discounting and underwriting government bonds, dealing with government bonds, inter-bank lending and
     borrowing, providing L/C services and guarantee services, working as agent for payment and insurance services,
     providing deposit boxes, dealing in foreign currency deposits, loans, remittance, exchange, international settlement,
     inter-bank lending and borrowing in foreign currency, accepting and discounting commercial papers in foreign
     currency, dealing in purchase and sale of foreign currency, providing guarantee in foreign currency, (working as
     agent) buying and selling foreign currency securities (except stocks), dealing in foreign currency trading either on
     the company's account or for clients, investigating the credit standing, consultancy and witness, off-shore banking,
     custody services for securities funds, custody services for national social pension funds, other services approved by
     the People's Bank of China and CBRC.
12   2011 Annual Report




     Summary of Key Financial and Performance Indicators
     Summary of Key Financial and Performance
     Indicators
     1. Key Profit Indicators for the Year

                                                                                                                                      Unit: RMB '000 Yuan
                                                                                                                 Domestic Audit            International Audit
     Net Profit                                                                                                      35,756,727
     Total Profit                                                                                                    35,839,287
     Net Profit Belonging to the Shareholders                                                                        27,285,981
     Net Profit Belonging to the Shareholders Excluding Extraordinary Items                                          27,051,004
     Total Assets                                                                                                2,684,693,689
     Total Liabilities                                                                                           2,535,150,909
     Net Cash Flow from Operating Activities                                                                       198,655,778

     2. Variance Between Domestic and International Accounting Standards

     There is no difference in the net profit, total assets and total liabilities in the reporting period between the company's
     domestic financial report prepared in accordance with the Accounting Standards for Enterprises and its international
     financial report prepared in accordance with International Financial Reporting Standards.

     3. Extraordinary Items

                                                                                                                                      Unit: RMB '000 Yuan
     Extraordinary Items                                                                                 2011                    2010                       2009
     Gains/losses as Result from Disposal of Non-current Assets                                       -22,748                185,622                    127,896
     Collection of Written-off Loans that Haven't Paid Taxes                                         230,743                   36,219                      3,131
     Net Gains/losses of Non-operation Activities                                                    105,308                   23,232                   -10,246
     Change in Income Taxes of Extraordinary Items                                                    -78,326                 -61,268                   -30,195
     Sub-total                                                                                       234,977                 183,805                     90,586

     3-year Key Financial and Performance Indicator Comparison

     80,000,000                                          40,000,000                              35,756,727     30,000,000                             27,285,981
     70,000,000                             67,917,672   35,000,000
                                                                                                                25,000,000
     60,000,000                                          30,000,000
                               49,855,851                                           25,072,052                                            19,177,209
     50,000,000                                                                                                 20,000,000
                                                         25,000,000
     40,000,000   36,823,932                             20,000,000                                             15,000,000   13,216,581
                                                                       17,178,374
     30,000,000                                          15,000,000
                                                                                                                10,000,000
     20,000,000                                          10,000,000
     10,000,000                                                                                                 5,000,000
                                                         5,000,000
            0                                                   0                                                      0
                    2009         2010         2011                       2009          2010       2011                         2009         2010          2011

                  Principal Operating Income                          Principal Operating Profit                  Net Profit Belonging to Shareholders
                                                                                                                               2011 Annual Report   13



                                                        Summary of Key Financial and Performance Indicators




4. 3-year Key Financial and Performance Indicator Comparison

                                                                                                                       Unit: RMB '000 Yuan
                                                      2011                     2011           2010                                        2009
Key Accounting Data                          Domestic Audit              Int'l Audit Domestic Audit           y-o-y +/-(       ) Domestic Audit
Principal Operating Income                          67,917,672                              49,855,851               36.23            36,823,932
Principal Operating Profit                          35,756,727                              25,072,052               42.62            17,178,374
Total Profit                                        35,839,287                              25,280,906               41.76            17,296,025
Net Profit Belonging to Shareholders                27,285,981                              19,177,209               42.28            13,216,581
Net Profit Excl. Extraordinary Items                27,051,004                              18,993,404               42.42            13,125,995
Belongingto Shareholders
Net Cash Flow from Operating                      198,655,778                                -5,507,004                        -     103,481,890
Activities
Total Assets                                    2,684,693,689                             2,191,410,774              22.51 1,622,717,960
Total Liabilities                               2,535,150,909                             2,068,130,924              22.58 1,554,630,515
Shareholders' Equity                              148,891,235                              122,996,336               21.05            67,953,026
Total Equity (in thousands)                         18,653,471                              14,348,824                     30          8,830,046


                                                            2011                 2011                 2010       y-o-y +/-                  2009
Key Accounting Indicators                          Domestic Audit           Int'lAudit       Domestic Audit           ( )          Domestic Audit
EPS (Yuan)                                                    1.463                                   1.234         18.56                  0.959
Diluted EPS (Yuan)                                            1.463                                   1.234         18.56                  0.959
EPS Excl. Extraordinary Items(Yuan)                           1.450                                   1.222         18.66                  0.953
Weighted Average ROE (%)                                      20.07                                   23.27    -3.20 pps                   25.86
ROE (Weighted and Excl.                                       19.90                                   23.05    -3.15 pps                   25.68
Extraordinary items) (%)
Net Cash Flow Per Share from Operating                       10.650                                  -0.384                -              11.719
Activities (Yuan)
                                                            2011                  2011                2010       y-o-y +/-                  2009
                                                   Domestic Audit           Int'l Audit      Domestic Audit           ( )          Domestic Audit
Net Book Value Per Share That Belongs                         7.982                                   8.572         -6.88                  7.696
to Shareholders (Yuan)
Note: (1) In accordance with the provisions of the China Securities Regulatory Commission Public Company's Disclosure Rules Compilation
      No. 9 - Calculation and Disclosure of Return on Net assets and Earnings" (revised in 2010), the EPS, EPS Excl. Extraordinary Items
      and Diluted EPS of the reporting period were recalculated using the adjusted number of shares because in the profit allocation for 2010,
      three gift shares were given for every 10 shares. Accordingly, the EPS for the previous year was calculated based on the weighted
      average number of outstanding common shares, 15,544,559,512 shares, that of 2009, on 13,776,755,431 shares.
      (2) Extraordinary Items Gains and Losses were calculated based on the definition outlined in the China Securities Regulatory
      Commission Announcement No. 43 in 2008 - Public Company's Information Disclosure Explanatory Notice No. 1 – Extraordinary Items
      Gains and Losses"
      (3) Net Cash Flow Per Share from Operating Activities and Net Book Value Per Share That Belongs to
      Shareholders were calculated based on a total of 18,653,471,415 (diluted) shares at the end of the period.
      (4) The YoY growth of EPS was lower than that of Net Profit because we implemented a non-public offering of shares to expand our
      equity last October.
      (5) Net assets per share at the end of the reporting period was lower YoY because of the capital expansion in the 2010 profit distribution
      where 3 gift shares were given for every 10 shares.
14   2011 Annual Report




     Summary of Key Financial and Performance Indicators




     Supplementary Financial Ratio
     Financial Ratio(     )                                        2011                 2010                    Y-o-y +/- (%)                2009


     Average Returns on Assets                                      1.12                 1.01                       +0.11pps                  0.90
     Fully-diluted ROE                                            18.33                 15.59                     + 2.74 pps                 19.45
     Fully-diluted ROE Excl. Extraordinary Items                  18.17                 15.44                     + 2.73 pps                 19.32
     Spread                                                         2.42                 2.40                      +0.02 pps                  2.10
     Net Interest Margin                                            2.60                 2.49                       +0.11pps                  2.19
     Cost/Income Ratio                                            28.79                 33.06                       -4.27 pps                35.99
     Cash Dividend Ratio                                          20.57                 11.97                      +8.60 pps                 10.02


     Net Interest Income to Total                                 90.46                 90.67                        -0.2 pps                91.08
     Non Interest Income to Total                                   9.54                 9.33                      +0.21 pps                  8.92
     Net Income of Fee and commission to Total                      9.89                 8.12                      +1.77 pps                  5.99


     NPL Ratio                                                      0.44                 0.51                       -0.07 pps                 0.80
     Provision / NPL Ratio                                       499.60               380.56                    +119.04 pps                 245.93
     Provision/ Total Loan Ratio                                    2.19                 1.95                      +0.24 pps                  1.98
     Note: (1) Spread = the difference between average return ratio of total interest bearing asset and average cost ratio of total interest bearing
               liability.
           (2) Net Interest Income ratio = net interest income/ outstanding average balance of total interest bearing liability.
           (3) Cost/Income Ratio = business and management cost/ operation income.


     5. Changes of the Shareholders' Equity and Reasons

     1) Financial Statements Audited by Domestic Auditors
                                                                                                                           Unit: RMB '000 Yuan
                                                                                                                                       Total Equity
                                                                                                                                      Belonging to
                                     Share          Capital         Surplus          Common                                       Parent Company
     Item                           Capital        Reserve          Reserve        Preparation      Undistributed Profit             Shareholders
     Beginning Amount          14,348,824       58,639,173       15,249,813          9,500,000               25,258,526               122,996,336

     Increasing                 4,304,647          913,808        6,555,931          9,200,000               27,285,981                48,260,367

     Decreasing                            -          -9,079                 -                  -           -22,356,389               -22,365,468

     Ending Amount             18,653,471       59,543,902       21,805,744        18,700,000                30,188,118               148,891,235

     Main reason: The net benefit during this period increased insignificantly and the total share and capital surplus increased.
                                                                                                                             2011 Annual Report   15



                                                        Summary of Key Financial and Performance Indicators




2). Financial Statements Audited by International Auditors
                                                                                                                       Unit: RMB '000 Yuan
                                                                                                                                 Total Equity
                                                                                                                                Belonging to
                                                                                                                                      Parent
                              Share          Capital        Surplus         Common Revaluation Undistributed                       Company
Item                         Capital        Reserve         Reserve       Preparation Reserve          Profit                   shareholders
Beginning Amount 14,348,824             60,573,266       15,249,813         9,500,000      -1,934,093      25,258,526            122,996,336


Increasing               4,304,647                  -     6,555,931         9,200,000         913,808      27,285,981              48,260,367
Decreasing                          -         -9,079                 -                -               -    -22,356,389             -22,365,468
Ending Amount           18,653,471      60,564,187       21,805,744        18,700,000      -1,020,285       30,188,118           148,891,235
Main reason: The net benefit during this period increased insignificantly and the total share and capital surplus increased.


6. Changes in credit rating in the reporting period
Rating agency                  2011                                                   2010
                               bank financial strength      D                         bank financial strength      D
                               long-term bank deposit(forex)        Baa3              long-term bank deposit(forex)          Ba1
Moody's                        long-term bank deposit(RMB)          Baa3              short-term bank deposit(forex)          Non-Prime
                               short-term bank deposit(forex)        Prime-3
                               short-term bank deposit(RMB)          Prime-3
Note: Previously, Moody's unsolicited credit rating for SPBD's long-term and short-term deposit was Ba1/NP, or non-investment grade;
      in September 2011 the company formally invited Moody's for credit rating. The upgraded rating not only reflects the company's
      restructuring development and capital strength enhancement, but also reflects the positive move of engaging China Mobile in strategic
      cooperation. According to Moody's rating requirement: whether a rating is solicited or unsolicited doesn't affect its independent and
      objective risk assessment.
                                                                                                                                                         2011 Annual Report      17



                                               Summary of Banking Performance
                                 Summary of Banking BusinessBusiness Performance


1. 3-year Financial Indicator Comparison

                                                                                                                                                      Unit: RMB '000 Yuan
 Item                                                  Data for this Reporting period                                            2010                                     2009
 Total Assets                                                             2,684,693,689                               2,191,410,774                          1,622,717,960
 Total Liabilities                                                        2,535,150,909                               2,068,130,924                          1,554,630,515
 Total Deposits                                                           1,851,055,121                               1,640,459,532                          1,295,342,342
 Incl: Corporate Demand Deposit                                             582,969,466                                623,228,016                              523,106,254
        Corporate Time Deposit                                              647,712,370                                573,012,546                              420,268,506
        Demand Deposit                                                       86,572,289                                    83,035,127                              62,140,148
        Time Deposit                                                        236,345,787                                193,086,894                              154,596,942
 Total Loan                                                               1,331,436,044                               1,146,489,301                             928,854,750
 Incl: Normal Loan                                                        1,325,608,926                               1,140,609,417                             921,394,697
        NPL                                                                   5,827,118                                     5,879,884                               7,460,053
 Inter-bank Borrowing                                                        66,970,025                                    14,415,145                               3,774,450
 Loan Loss Reserves                                                          29,112,094                                    22,376,311                              18,346,725
Note: (1) Total loan includes short-term deposits, short-term savings deposits, short-term cash margin, remittance outstanding and temporary
      deposits, long-term deposits, long-term savings deposits, long-term cash margin, outward remittances and treasury time deposits;
      (2) Total loan includes short-term loans, import and export financing, discounting, long-term loans, overdue loans, idle loans and
      doubtful loans, overdrafts and advances, factoring business.
      (3) According to the “People's Bank of China notice on matters related to the financial statistical system for Chinese domestic financial
      institutions in 2011"(Yin Fa [2011] 7), outward remittance will be classified as deposits from 2011 onwards, data for previous years
      should be adjusted accordingly.

                                                                                                                                                      Unit: RMB '000 Yuan
 Item                                                          Data for this reporting period                                            2010                             2009
 Net Share Capital                                                                            199,764                             153,846                              97,580
 Incl: Tier I Share Capital                                                                   146,005                             120,675                              65,902
 Tier II Share Capital                                                                          56,153                             34,876                              33,112
 Decrease                                                                                        2,394                                  1,705                            1,434
 Net Core Capital                                                                             144,808                             119,823                              65,184
 Net risk-weighted Assets                                                                  1,560,180                           1,278,361                             943,705


3-year Financial Indicator Comparison
2,000,000,000                               1,851,055,121   1,400,000,000                                  1,331,436,044     8,000,000    7,460,053
1,800,000,000               1,640,459,532                                                  1,146,489,301                     7,000,000
                                                            1,200,000,000
1,600,000,000                                                                                                                                          5,879,884     5,827,118
                                                            1,000,000,000    928,854,750                                     6,000,000
1,400,000,000   1,295,342,342
1,200,000,000                                                                                                                5,000,000
                                                             800,000,000
1,000,000,000                                                                                                                4,000,000
 800,000,000                                                 600,000,000
                                                                                                                             3,000,000
 600,000,000                                                 400,000,000
                                                                                                                             2,000,000
 400,000,000
                                                             200,000,000                                                     1,000,000
 200,000,000
          0                                                           0                                                             0
                  2009          2010            2011                          2009            2010             2011                          2009        2010          2011

                           Total deposits                                             Total loans                                                     NPLS
18   2011 Annual Report




     Summary of Banking Business Performance




     2. 3-year Key Performance Indicator Comparison
                                                                                               2011                2010                2009
     Item                                                                      Standard
                                                                                          Year-end average Year-end     average Year-end Average
     Returns on Total Assets %                                                               1.02       1.12     0.88      1.01       0.81     0.90
     Capital Adequacy Ratio %                                                        ≥8     12.70      11.83    12.02     10.59      10.34     9.28
     Tier I Capital Adequacy Ratio %                                                 ≥4      9.20       9.17     9.37      7.45       6.90     5.64
     NPL Ratio %                                                                     ≤5      0.44       0.44     0.51      0.65       0.80     0.96
     Liquidity Ratio %                                           RMB               ≥25      42.80      44.12    40.28     43.78      48.71    47.95
     Liquidity Ratio %                                           FX                ≥25      68.07      55.99    54.54     52.70      55.32    80.90
     Loans to Deposits %                                         RMB               ≤75      71.48      70.83    69.76     72.08      71.60    74.42
     Loans to Deposits %                                         FX                ≤85      74.86      81.18    78.17     66.05      56.27    43.89
     Inter-bank Lending and Borrowing Ratio %                    Borrowing           ≤4      3.64       1.57     0.88      0.50       0.29     0.61
     Inter-bank Lending and Borrowing Ratio %                    Lending             ≤8      6.03       2.82     1.91      1.79       1.85     1.43
     Single Largest Customer Lending to Total Loans %                              ≤10       2.65       3.09     3.30      3.97       3.35     3.49
     Top 10 Customers' Loans to Total                                              ≤50      16.50      18.70    19.55     24.32      25.04    26.00
     Provision Coverage Ratio                                                              499.60     448.76   380.56   302.03    245.93     217.12
     Notes: (1) The indicators of Capital Adequacy Ratio, Tier I Capital Adequacy Ratio, Liquidity Ratio, Loans to Deposits, Inter-banking Lending
           and Borrowing Ratio, Single Largest Customer Lending to Total Loans, Top 10 Customers' Loans to Total in the above table have been
           calculated according to the data reported to the regulatory agencies.
           (2) NPL ratio is calculated according to the 5-category classification of loans. NPL ratio = (Substandard loans + Suspicious loans + Loan
           losses) / total loans.
           (3) Provision coverage ratio = outstanding balance of loan loss reserves / the outstanding balance of NPLs.

     Loan Retrieval Ratio:
                                                                      2011                          2010                          2009
     Item(%)
                                                             Year-end        Average       Year-end        Average        Year-end       Average
     Retrieval Ratio of Normal Loan                               0.76           0.73           0.71            1.32          1.93            3.00
     Retrieval Ratio of Specially mentioned Loan                  7.83           6.02           4.21           12.31         20.41           21.32
     Retrieval Ratio of Sub-standard                             51.94          46.84          41.75           30.99         20.24           25.75
     Retrieval Ratio of Doubtful Loan                            35.63          36.51          37.39           30.86         24.32           28.09

     3-year Key Performance Indicator Comparison
       14.0                                                                   14.0
                                                             12.70
                                         12.02
       12.0                                                                   12.0
                     10.34
       10.0                                                                   10.0                              9.37                 9.20

        8.0                                                                    8.0          6.90

        6.0                                                                    6.0

        4.0                                                                    4.0

        2.0                                                                    2.0

        0.0                                                                    0.0
                     2009                 2010                2011                          2009                2010                 2011
                             Capital Adequacy Ratio %                                         Tier I Capital Adequacy Ratio %
                                                                                                   2011 Annual Report   19



                                                              Summary of Banking Business Performance




3. Level-to-level Administration and Branches Geographical Distribution
The company is a one-layer legal entity and has one head-office and multiple branches. Under the principle of
economic benefits and segmentation, to develop a national footprint, SPDB has set up branches/outlets in big and
medium-sized cities as well as key cities in the coastal region, and Northern, Central and Western China. By the end
of the reporting period, the company had 741 banking outlets all over China. Following is an overview of the branch
network:

                                                                                              Assets
No.   Name                Address                                                 Staff    (RMB'000) Subordinated
1     Head-office         No. 12, Zhongshan Dong Yi Road, Shanghai                2327    668,505,199           740
2     Shanghai Branch     No. 588, Pudong Nan Road, Shanghai                      3441    375,828,633           126
3     Hangzhou Branch     No. 129, Yanan Road, Hangzhou                           1641    126,080,073            39
4     Ningbo Branch       No. 21, Jiangxia Street, Ningbo                         1131     82,100,644            25
5     Nanjing Branch      No. 90, Zhongshan Dong Road, Nanjing                    2208    161,446,233            56
6     Beijing Branch      No. 18, Taipingqiao Street, Xicheng District, Beijing   1369    136,154,388            41
7     Wenzhou Branch      Floors 1-3, Gaolian Building, Chezhan Street,            778     50,171,310            18
                          Wenzhou
8     Suzhou Branch       No. 1478, Renmin Road, Suzhou                            563     51,357,458            14
9     Chongqing Branch    No. 78, Xingguang Street, Hitech Park, Beibu New         588     51,535,638            20
                          District, Chongqing
10    Guangzhou Branch No. 12, Zhujiangxi Road, Tianhe District, Guangzhou         961    107,076,404            27
11    Shenzhen Branch     International Commerce Centre, Fuhua Road No.3,          928     98,714,108            25
                          Shenzhen
12    Kunming Branch      No. 156, Dongfeng Xi Road, Kunming                       438     33,141,416            14
13    Wuhu Branch         No. 39-2, Wenhua Road, Wuhu                              260     10,511,527             9
14    Tianjin Branch      Suite D, 9 Binshui Avenue, Hexi District, Tianjin        861    131,437,551            20
15    Zhengzhou Branch    No. 299, Jinshui Road, Zhengzhou                        1243    129,479,148            27
16    Dalian Branch       No. 3 Zhongshan Square, Zhongshan District, Dalian      819      83,065,909            22
17    Jinan Branch        No. 139, Heihu Spring Xi Road ,Ji'nan                    907     65,309,223            21
18    Chengdu Branch      No. 6, South Section No.1 Ring Road, Chengdu            490      84,871,763            19
19    Xi'an Branch        No. 29, Bei Da Jie, Xi'an                                651     86,071,849            13
20    Shenyang Branch     No. 326, Fengtian Street, Shenyang                       662     46,511,363            19
21    Wuhan Branch        No. 218, Xinhua Road, Jianghan District, Wuhan           597     46,430,963            18
22    Qingdao Branch      No. 53, Hong Kong Xi Road, Qingdao                       470     23,035,954            13
23    Taiyuan Branch      No. 333, Yingze Street, Taiyuan                          785     58,105,241            15
24    Changsha Branch     No. 478, Furongzhong Road, Changsha                     595      60,186,482            15
25    Harbin Branch       No. 226, Hongqi Street, Harbin                           368     35,122,239            12
26    Nanchang Branch     No. 15, Yongshu Road, Nanchang                           415     39,384,302            10
27    Nanning Branch      No. 22, Jinpu Road, Nanning                              332     31,260,872             7
28    Urumchi Branch      No.87, Minzhu Road, Urumchi                              314     18,337,361             8
29    Changchun Branch No. 3518, Renmin Street, Changchun                          290     32,177,142             8
20   2011 Annual Report




     Summary of Banking Business Performance




                                                                                                                         Assets
     No.    Name                     Address                                                            Staff         (RMB'000) Subordinated
     30     Hohhot Branch            No. 28, Dahue Xi Street, Hohhot                                     319         23,866,153           11
     31     Hefei Branch             No. 3, Changjiang Xi Road, Hefei                                    433         30,610,143           11
     32     Lanzhou Branch           No. 101, Guangchang road(south)                                     236         21,022,950           7
     33     Shijiazhuang             No.35 Ziqiang road, Shijiazhuang                                    352         46,327,120           7
            Branch

     34     Fuzhou Branch            No. 222, Hudong Road, Fuzhou                                        291         28,759,367           5
     35     Guiyang Branch           No.20,Yan'an Zhong Road, Guiyang                                    132         33,476,262           2
     36     Xiamen Branch            No. 666, Xiahe Road, Xiamen                                         100           9,647,226          0
     37     Hong Kong Branch         15th Floor, Bank of America Building, No. 12 Harcourt                 55          5,392,402          0
                                     Road, Central, Hong Kong
     38     Xining Branch            1-7 Yanan Building, No. 1, Weibogang, Xining                           9                    -        0
            Operating Agencies                                                                          2872         10,576,956          38
            Directly Under the
            Head Office
            Adjustment                                                                                             -457,373,451
            Total                                                                                      31231     2,675,715,521          741
     Notes: 1. Xining Branch got its license from CBRB Qinghai on 28 Dec, 2011;
            2. The total number of staff, total assets and subordinated outlets were calculating excluding township/village banks.
                                                                                                            2011 Annual Report   21



                                                               Summary of Banking Business Performance




4. Assets Quality During the Reporting Period

1) 5-category Classification of Loans
                                                                                                         Unit: RMB '000 Yuan
5-category Classification of Loans                          Amount              Percentage(     )               Y-o-y +/- ( )
Normal                                                 1,315,186,484                       98.78                      15.97
Specially Mentioned                                      10,422,442                         0.78                      59.79
Sub-standard                                              2,227,679                         0.17                        2.63
Doubtful                                                  1,923,348                         0.14                       -7.98
Loss                                                      1,676,091                         0.13                        3.52
Total                                                  1,331,436,044                         100                       16.13


Classification                                    Opening Balance               Ending Balance               Percentage(    )
Restructured Loans                                          103,920                        83,785                       0.01
Loans Overdue                                             5,797,174                  6,790,056                          0.51



2) Classification based on Products
                                                                                                         Unit: RMB '000 Yuan
                                 As of Dec. 31, 2011                                  As of Dec. 31, 2010
                        Total Loan   Total NPL      NPL to Total(      )      Total Loan     Total NPL      NPL to Total(   )
Corporate Loan       1,046,136,632   4,968,138                   0.47       906,732,175      5,115,846                  0.56
Bill Discount          23,994,515             -                        -     21,888,569              -                      -
Retail Loan           261,304,897      858,980                   0.33       217,868,557        764,038                  0.35
Total                1,331,436,044   5,827,118                   0.44      1,146,489,301     5,879,884                  0.51
22   2011 Annual Report




     Summary of Banking Business Performance




     3) Classification based on Industry
                                                                                                                     Unit: RMB '000 Yuan
                                                                   As of Dec. 31, 2011                      As of Dec. 31, 2010

                                                                  Loan         to Total     NPL             Loan         to Total    NPL
                                                            Outstanding       Loan( )         (   )   Outstanding       Loan( )        ( )



     Agriculture, forestry, farming and fishery               8,012,922             0.60          -     5,653,125            0.49     0.15
     Mining                                                  32,493,241             2.44          -    26,491,676            2.31     0.17
     Manufacturing                                          301,013,060           22.60      0.98     239,344,458           20.89     1.29
     Electricity, gas and water Supply                       50,809,298             3.82     0.29      45,688,323            3.99     0.42
     Construction                                            69,554,536             5.22     0.35      55,872,464            4.87     0.31
     Geological survey, irrigation                           96,352,526             7.24          -   109,944,003            9.59         -
     Transportation, warehouse and postal service            92,241,356             6.93     0.01      88,620,161            7.73     0.04
     Wholesale and Retail, Catering                         154,511,923            11.60     0.78     111,587,341            9.73     1.10
     Real Estate                                            115,118,113             8.65     0.16     116,295,395           10.14     0.16
     Social Services                                         81,128,873             6.09     0.13      71,617,633            6.25     0.20
     Sanitation, Social welfare                               4,873,488             0.37          -     6,665,036            0.58         -
     Education, Culture, Broadcasting                        18,764,174             1.41     0.55      19,300,140            1.68     0.15
     Scientific Research and Comprehensive                    3,566,969             0.27     0.24       1,613,786            0.14         -
     Technological Services
     Other                                                   17,696,153             1.33          -     8,038,634            0.70         -


     Transfer Discount                                       11,204,646             0.84          -     8,789,559            0.77         -
     Bank's Acceptance Bill Discount                         11,833,184             0.89          -    10,937,264            0.95         -
     Commercial Acceptance Bill Discount                        956,685             0.07          -     2,161,746            0.19         -




     Note: Note discount is now taken from corporate loan and treated separately, and adjustment has been made accordingly for the bank loan
           distribution data by the end of 2010.

     4.) On the management of loans granted to the investment and fund-raising arms of various local
        governments

     Within this reporting period, in response to CBRC's requirement, the company carried out full-round inspections
     and risk evaluation of loans granted to the investment and fund-raising arms of various local governments and took
     relevant risk alleviation measures such as requiring additional materials, improving procedures, increasing collaterals,
     adjusting credit line and taking back loans. At the same time, the company further improved credit line approval
     process to strictly regulate review and approval authority, and further classified loans to local government financing
     platform according to the source of cash flow coverage and loan classification, and corresponding developed risk
     prevention measures for different borrowers.
                                                                                                        2011 Annual Report   23



                                                               Summary of Banking Business Performance




SPDB strengthened the management of loans to the financing platform: First, it created a loan name list management
system and centralized credit approval authority. Second, it strictly controlled incremental loans and actively digested
outstanding loan. In accordance with regulatory requirement “to safeguard on-going ones, curb re-building ones and
ban new ones”, it strictly controlled new lending to the platform and achieved the overall target of "reducing old loans
and controlling new loans”. Third, it required all branches to decide the terms of loans granted to the investment and
fundraising arms of local governments in a more reasonable way, taking into consideration the fiscal income and
cash flow of the borrower and change the repayment method from “lump-sum borrowing and lump sum

repayment” to installment repayment, modified the loan contracts accordingly, signed gap pay-up agreements,
improved collateral and pledge systems. Fourth, it continued to strengthen the monitoring of the accuracy of the risk
classification of such loans, so as to accurately classify loan with big potential risks and prevent those risks from
occurring. Fifth, it strengthened on-site inspections and scrutiny of such loans and conducted on-site checks on the
transformation schemes and the accuracy of loan classification to objectively and promptly reflect the true nature of
risks. Current, customers of such loans as a whole are in good conditions, with no major potential risks identified.

5) Period-end NPL and measures taken

According to the 5-category loan classification method, by the end of the reporting period, the NPL accounted for
0.44% of the company's total loans, down by 7 bps on a year-on-year basis. The Company has taken the following
measures to manage NPLs, firstly, to achieve a stable and efficient loan growth according to the requirement of the
national macro-economic control measures. Secondly, by formulating all kinds of credit policies, to make portfolio
management requirements on industries, regions, customers and products policies so as to accomplish the effective
adjustment of the credit structure. Thirdly, by making full use of the customers risk monitoring and reporting system
and strict after-loan inspection system, to identify, control and diffuse potential risks as early as possible. Fourthly,
by increasingly enhance the capability of defusing the NPL efficiently, to make active effort to get rid of NPL by
various means. Fifthly, by making asset preservation more front-loaded, to enhance early intervention for loans with
big potential risks; Sixthly, to further develop asset preservation system and its basic management, to continuously
strengthen research on risk control and diffusion for new business areas.

5. An overview of Provisions for NPLs

                                                                                                     Unit: RMB'000 Yuan
                                                                  Domestic audit (PRC GAAP)      International audit (IAS)
Loan Provisions as of Jan. 1, 2011                                                 22,376,311                 22,376,311
Loan Provisions Charged during the Reporting Period                                 7,159,118                  7,159,118
Loan Provisions Written-off during the Reporting Period                              -508,707                   -508,707
Reversal due to Recovery of the Written off Loan and Advance                          230,743                    230,743
Converted Back to Loan Provisions for Loan Interests Impaired                        -145,371                   -145,371
Loan Provisions as of Dec. 31, 2011                                                29,112,094                 29,112,094



Notes on the withdrawal of loan depreciation preserves: the par value of the balance sheet is evaluated. In
case there is evidence that any loan has depreciated and the event will exert incalculatable impact on the
future cash flow, the par value shall be decreased to the estimated future cash flow. The present value of the
estimated future cash flow shall be determined according to the actual interest rate of the financial assets and
the value of the collateral shall be taken into consideration. Once the depreciation value is determined, if there
is evidence that the value of the financial asset has been restored, the original depreciated value shall be
converted into losses and gains for the current reporting period.
24   2011 Annual Report




     Summary of Banking Business Performance




     6. An Overview of Interests Receivable

                                                                                                                         Unit: RMB'000 Yuan
      Item                                                         As of Jan. 1, 2011       Increase        Decrease As of Dec. 31, 2010
     Interests Receivable for Balance Sheet Items                           6,492,715 99,682,521         -95,104,162              11,071,074
     Interests Receivable for Off-balance Sheet items                       1,724,473        575,065         -474,587              1,824,951
     Note: during this reporting period, the company's interest bearing assets and interest income increased considerably, with some growth in
           interest receivable for balance sheet items.


     7. Operating Income

                                                                                                                         Unit: RMB'000 Yuan
     Item                                                                        Amount            Percentage(     )             Y-o-y +/-(   )
     Loans                                                                   76,953,204                       60.02                     39.31
     Inter-bank Lending and borrowing                                          2,378,272                       1.86                    557.68
     Placement with the Central Bank and Other Banks                         10,614,302                        8.28                    108.50
     Bonds Investment                                                          9,456,400                       7.38                     38.70
     Financial Assets Sold for Repurchase                                    21,722,485                       16.95                    305.29
     Fees and Commissions                                                      7,204,809                       5.62                     61.49
     Other items                                                                -143,042                       -0.11                  -120.40
     Total                                                                  128,186,430                      100.00                     64.27
     Note: During this reporting period, loan income made up the bulk of total operating income, accounting for 60.02%, or a 39.31% YoY increase
           thanks to increased loan size and growing spread. The company adopted dynamic asset allocation strategy and flexible adjustment of
           investment structure, with a rapid growth of interbank business and big increase of revenue from it. Income from other items declined
           during the reporting period mainly because of changes in the fair value of derivative financial instruments caused by fluctuations in
           market interest rates.


     8. An Overview of the Company's Lending Businesses

     1) Lending Analyses by Industry (Top 10 industries/sectors)
                                                                                                                         Unit: RMB'000 Yuan
                                                                     As of Dec. 31, 2011                        As of Jan. 1, 2011
                                                                 Outstanding                               Outstanding
     Industry                                                       Balance       Percentage(      )          Balance        Percentage(      )
     Manufacturing                                               301,013,060                 22.60        239,344,458                   20.89
     Wholesale, Retail, Catering                                 154,511,923                 11.60         111,587,341                    9.73
     Real Estate                                                 115,118,113                   8.65        116,295,395                  10.14
     Geological Survey, Irrigation                                96,352,526                   7.24       109,944,003                     9.59
     Transportation, Warehouse and Postal Service                 92,241,356                   6.93         88,620,161                    7.73
     Social Service                                               81,128,873                   6.09         71,617,633                    6.25
     Construction                                                 69,554,536                   5.22         55,872,464                    4.87
     Electricity, gas and water Supply                            50,809,298                   3.82         45,688,323                    3.99
     Mining                                                       32,493,241                   2.44         26,491,676                    2.31
     Education, Culture, Broadcasting                             18,764,174                   1.41         19,300,140                    1.68
                                                                                                         2011 Annual Report     25



                                                               Summary of Banking Business Performance




2) Lending Analyses by Region
                                                                                                       Unit: RMB'000 Yuan
                                 As of Dec. 31, 2011                                     As of Jan. 1, 2011
Region
                         Outstanding Balance            Percentage(          )   Outstanding Balance      Percentage(       )
Shanghai                           173,384,367                      13.02               152,930,683                  13.34
Beijing                              66,064,834                       4.96               58,556,895                   5.11
Sichuang                             53,700,099                       4.03               45,931,965                   4.01
Tianjin                              47,046,428                       3.53               40,968,273                   3.57
Shandong                             63,021,874                       4.73               52,494,860                   4.58
Guangdong                            81,448,454                       6.12               69,686,953                   6.08
Jiangsu                            146,616,104                       11.01              126,454,323                  11.03
Henan                                69,194,164                       5.20               62,806,757                   5.48
Zhejiang                           211,264,823                      15.87               186,167,353                  16.24
Liaoning                             77,438,050                       5.82               68,555,352                   5.98
Other                              342,256,847                      25.71               281,935,887                  24.58

Top 10 Borrowers by Industry/Sector                                              Borrower by Region

                                                                                                          Shanghai 13.02%
                        Manufacturing 22.6%
                                                                                                          Beijing 4.96%
                        Wholesale, Retail, Catering 11.6%
                        Real Estate 8.65%                                                                 Sichuan 4.03%
                        Geological Survey, Irrigation 7.24%                                               Tianjin 3.53%
                        Transportation, Warehouse and Postal Service 6.93%                                Shandong 4.73%
                        Social Service 6.09%
                                                                                                          Guangdong 6.12%
                        Construction 5.22%
                        Electricity, gas and water Supply 3.82%                                           Jiangsu 11.01%
                        Mining 2.44%                                                                      Henan 5.20%
                        Education, Culture, Broadcasting 1.41%                                            Zhejiang 15.87%
                                                                                                          Liaoning 5.82%
                                                                                                          Other 25.71%



3) Top 10 Borrowers
                                                                                                       Unit: RMB'000 Yuan
Name of Borrower                                              Outstanding Balance of Loans             % in Total Loans
Customer A                                                                        5,295,000                           0.40
Customer B                                                                        5,000,000                           0.38
Customer C                                                                        4,009,500                           0.30
Customer D                                                                        3,580,000                           0.27
Customer E                                                                        3,500,000                           0.26
Customer F                                                                        2,500,000                           0.19
Customer G                                                                        2,406,192                           0.18
Customer H                                                                        2,250,000                           0.17
Customer I                                                                        2,231,500                           0.17
Customer J                                                                        2,191,000                           0.16
Total                                                                            32,963,192                           2.48
26   2011 Annual Report




     Summary of Banking Business Performance




     4) Method of Guarantee:
                                                                                                               Unit: RMB'000 Yuan
     Method of Guarantee                                     Outstanding Balance of Loan                          % in Total Loans
     Clean Loan                                                               282,388,294                                   21.21
     Secured Loan                                                             400,149,867                                   30.05
     Collateral Loan                                                          522,317,829                                   39.23
     Pledged Loan                                                             126,580,054                                    9.51
     Total                                                                  1,331,436,044                                     100

     5) Credit Granting Business Risk Management for Group Clients:

     According to the Group client credit granting management method, the company has adhered to the principle of
     unified credit, total control, solid credit, risk precaution, hierarchical management: Firstly, to complete the Group
     client management system construction, further standardize the credit granting management regulations, clarify the
     Group clients' identification, affirmation, credit approval and post-loan management requirements, enhancing its
     customer identification and management capabilities. Secondly, the company has put in place Group Credit Approval
     and Management systems, providing effective technology support for centralized credit management. Thirdly, the
     company is actively implementing the lead-branch-and-assisting-branch rule, the three-check system and the risk
     precaution system. Fourthly, the company strengthened Group clients' entry control and established the credit
     granting amount approval system in order to prevent and control the credit granting business risk for Group clients.

     9. Debt Assets

                                                                                                               Unit: RMB'000 Yuan
                                                     As of Dec. 31, 2011                             As of Jan. 1, 2011
       Type
                                          Amount        Impairment Reserve charged       Amount Impairment Reserve charged
     Real Estate                          907,259                            623,438     850,392                          539,119
     Shares Owned by Legal Entity           67,110                            41,249        35,383                         18,149
     Other                                       -                                 -        13,303                         13,303
     Total                                974,369                            664,687     899,078                          570,571

     10. An Overview of the Company's Deposit Structure and Loan Structure

     1) Major Deposit Structure
                                                                                                               Unit: RMB'000 Yuan
     Type                                                Average Outstanding Balance                 Average Interest Rate (%)
     Current Deposit by Corporate Client                                   557,881,431                                       0.61
     Fixed Deposit by Corporate Client                                     633,691,611                                       3.05
     Current Deposit by Individual Client                                   71,757,047                                       0.49
     Fixed Deposit by Individual Client                                    211,738,727                                       2.26

     2) Major Loan Structure
                                                                                                               Unit: RMB'000 Yuan
     Type                                                Average Outstanding Balance                    Average Interest Rate (%)
     Short-term Loan                                                       707,506,509                                       5.99
     Medium and Long-term Loan                                             650,687,017                                       5.97
                                                                                                         2011 Annual Report    27



                                                           Summary of Banking Business Performance




11. Financial Bonds Held by the Company

                                                                                                       Unit: RMB'000 Yuan
Type                                                                                                               Amount
Sellable Financial Assets                                                                                      35,203,914
Investment Classified as Loans and Receivables                                                                  4,675,956
Held to Maturity Investment                                                                                    44,713,807

In particular, major financial bonds held by the company include:

                                                                                                       Unit: RMB'000 Yuan
                                                                                                    Maturity   Provision for
Type of Bond                                            Par Value                        APR
                                                                                                      Date      Impairment
China Import & Export Bank 2010 No. 6 Financial Bonds 2,750,000     1-year deposit rate+0.25%     2015-8-25                -
State Development Bank 2007 No. 16 Financial Bonds     2,720,000                       4.35%      2014-8-30                -
State Development Bank 2007 No. 28 Financial Bonds     2,220,000    1-year deposit rate +0.61%    2013-2-19                -
State Development Bank 2010 No. 22 Financial Bonds     2,080,000    1-year deposit rate +0.45%    2020-8-11                -
Agriculture Bank of China 2009 No. 3 Financial Bonds   2,000,000                       1.81%      2012-3-19                -

Derivatives Held by the Company

                                                                                                       Unit: RMB'000 Yuan
                                                                                                 Fair Value
Type                                  Contract/Nominal Value
                                                                                    Assets                       Liabilities
Interest Rate Swap                                39,453,623                        42,971                      1,068,997
FX Futures                                        46,044,831                       150,181                        132,030
Currency Swap                                     55,961,106                       355,635                        301,356
Precious Metal Futures                             3,712,055                              -                         12,646
Total                                                       -                      548,787                      1,515,029


12. Entrusted Wealth Management, Asset securitization, Agent and Custody Business

1) Entrusted wealth management

During the reporting period, the company issued a total of 844 individual special financial products and structured
financial products, with the total sale of 338.5 billion yuan. 225.4 billion yuan worth of wealth management products
were sold to 3500 corporate customers.

2) Asset securitization

At the end of this reporting period, the company's first credit securitization project was successfully completed. The
“Puyuan Phase 1” created 40.024 million yuan in stable and risk-free loan service income.

3) Agent Business

At the end of the reporting period, agency sales of wholesale funds and aggregate securities account products was
up 294% YoY; agency sales of wholesale insurance was up 563% YoY; agency sales of aggregate trust plans was
4.2 times that of the previous year; agency wholesale transaction volume of precious metal for 2011 was 5.609 billion
28   2011 Annual Report




     Summary of Banking Business Performance




     yuan, up 237% YoY; agency sales of retail funds and aggregate securities account products increased 68% YoY;
     agency sales retail insurance was up 60% YoY; agency sales of retail aggregate trust plans increased 266% YoY;
     agency retail transaction volume of precious metal increased 36 fold YoY.

     4). Custody Business

     By the end the reporting period, the total custody scale amounted to 271.025 billion yuan with a fee income of 330
     million yuan, up by 35% and 60% respectively comparing with the numbers at the end of 2009.

     13. Major Off-balance Sheet Items

                                                                                                                               Unit: RMB'000 Yuan
     Item                                                                     As of Dec. 31, 2011                                As of Jan. 1, 2011
     Credit Commitment                                                                 685,625,869                                      437,548,545
     Incl.: Banker's Acceptance Bills                                                  370,981,123                                      311,660,235
            L/G issued                                                                  47,854,363                                       39,465,175
            L/C issued                                                                 198,422,064                                       46,317,238
            Acceptance Bills under L/C                                                  25,615,734                                       11,668,317
            Unused Credit Line of Credit cards                                          42,752,585                                       28,437,580
     Lease and Rental Commitment                                                          5,817,070                                        4,506,880
     Capital Investment Commitment                                                          414,912                                          200,153
     Description: Unused credit line of credit cards is the line after deduction of the sleeping unused credit line. The above off-balance sheet items
                 may exert certain impacts on the company's financial strength and results, which depends on the occurrence or non-occurrence
                 of certain events in the future. Under certain conditions, based on relevant principles, such potential liabilities may convert to real
                 liabilities of the company.


     14. The Various Risks and Relevant Risk Management

     As one dealing with currency and credit, the company mainly had to confront the following risks during its operation:
     credit risk, liquidity risk, market risk (including interest rate risk and foreign exchange rate risk), operation risk (including
     settlement risk, technology risk, system risk etc.), legal risk and strategy risk, country specific risk, etc.

     1) Credit Risk

     On policy formulation, the company has formulated and promulgated the annual business risk preference strategy
     and annual credit policy, setting portfolio management requirements on industry, region, customer and product
     policies to ensure orderly development of business. While maintaining the overall stability of asset quality, the
     company slightly increased risk tolerance for innovative new business, to improve business structure and achieve
     transformation. The company established risk preference and credit policy execution reporting system to monitor and
     report on the execution of relevant policies and make adjustment if things went wrong.

     On the credit granting management, the company continued to optimize credit review & approval process,
     standardize approval criteria to ensure approval quality. By setting up industry and product approval standards,
     unifying and improving credit approval template, the company continued to develop standardization for credit
     approval management, promote the establishment of interbank credit management system. In the credit assessment
     process, the company opened green-path for “green” corporations to enhance efficiency. For enterprises with high
     pollution, high resource consumption or overcapacity, the company adopted more strict control on overall credit
     limit. As per regulatory requirements, it also strictly controlled new loans to local government financing platforms,
     increased the ratio of medium and long-term loan while controlling that of real estate sector, so as to enhance
     structural adjustment from the source.
                                                                                                      2011 Annual Report   29



                                                            Summary of Banking Business Performance




On the risk precaution, the company set up risk identification, reporting, disposal, early warning processes, improved
customer risk precaution system, established risk precaution rapid response mechanisms and strict after-loan
inspection system, to identify, control and diffuse risks as early as possible. On-site inspection and checks were put
in place for key risk areas such as loans to local government financing platforms, real estate loans, medium and long-
term loans, and for the implementation of new rules for loans, individual mortgage loans, funding flow of loans, and
the accuracy of 5-category classification. It also enhanced the risk management reporting system and its coverage. It
established a dynamic stress testing working mechanism and conducted on-going stress test for real-estate and local
government loans, so as to enhance the guiding role of the results to the practical work.

In terms of special assets management, the company made intensified efforts to diffuse, collect and reduce the stock
NPLs and new NPLs. As to large non-performing assets, it set up full responsibility mechanism including the program
formulation, the implementation of security measures and dynamic asset tracking and feedback. The company
established risk diffusion early intervention mechanism for special mention loans and improved NPL collection work
and got positive results. The clearance and assessment of written off loans have been strengthened, the supervision
of the implementation of the daily deposit account and case management measures also achieved good results.
It further strengthened asset protection system and its basic management, promoted risk control system module
upgrading and go-live, and continued to strengthen research on new business risk management and alleviation.

2) Liquidity Risk

During the reporting period, the company maintained a reason level of asset liability liquidity, but due to policy
influence, the market liquidity fluctuated quite a lot. The company targeted at the cash flow management, managing
the bank's liquidity by capital budgets, cumulative cash flow gap and other tools. Actively paying attention to the
macro monetary policy changes, it grasped the control rhythm of the credit and monetary policy. It promptly adjusted
the direction, size and structure of the cash flow gap by combining assets liabilities structure with the overall funds
balance, to actively prevent liquidity risk. The business operation was generally stable with reasonable level of
liquidity.

By the end of 2011, the liquidity ratio for RMB stood at 42.80%, up by 2.52 pps on a year-on-year base and the
liquidity ratio of FX stood at 68.07%, up by 13.53 pps YoY. The RMB deposit-loan ratio was 71.48%, up by 1.72 pps
YoY; the foreign currency loan ratio was 74.86%, down by 3.31 pps. The ratio of RMB long-term loans was 50.30%,
down by 5.36 pps YoY; the ratio of foreign currency long-term loans was 17.97%, down by 2.01 pps. The company's
excess reserve ratio in the PBoC was around 3.21%.

3) Market Risk

Market risk refers to the risks of loss for the bank's balance sheet and off balance sheet business due to adverse
changes in market prices (interest rates, exchange rates, stock prices and commodity prices). The market risks
facing the company mainly exist in the company's trading accounts and bank accounts, including interest rate risk
and exchange rate risks.

During the reporting period, the company faced complex market conditions with increased difficulty and requirements
for market risk management. In 2011, in the first quarter and third quarter, market liquidity was first tight then loose,
with highly fluctuated money market rates. The inter-bank Treasury yield curve was steep and moving downward;
the cumulative appreciation of RMB against the U.S. dollar throughout the year was 5.11%; exchange rate volatility
increased and overseas market had alternating expectation for RMB appreciation or depreciation; precious metals
and commodity prices were very volatile throughout the year.

In the report period, the company closely tracked the market risk exposure and market trends, strengthened dynamic
monitoring and risk anticipation; promoted centralized management of market risks for its overseas branches and
30   2011 Annual Report




     Summary of Banking Business Performance




     outlets within the consolidated balance sheet; continued to improve the market risk identification, measurement,
     monitoring and reporting system; enhanced research and review to ensure the smooth operation for new asset-type
     products and business; included the counterparty credit risks that may be caused by the market risk in the routine
     monitoring system to ensure an overall control of market risks and a strong support for business innovation and
     transformation. The company's New Basel Capital Accord was in orderly implementation, and the internal market risk
     model successfully went live, with the New Basel Capital Accord compliance pre-assessment application submitted
     to the regulator.

     Separate monitoring of market risks was conducted for the trading account portfolio and non-trading account
     portfolio. The trading account portfolio includes derivative financial instruments such as exchange rates, interest
     rates, and bonds held for trading; and all off-balance-sheet assets not included in the trading accounts but recorded
     in the bank accounts.

     The company has established market risk management system, and continuously improved its market risk
     management and market risk identification, measurement, monitoring and controlling capabilities. The company
     managed the market risks for trading accounts mainly through daily value at risk measurement, back testing, stress
     testing, sensitivity analysis, quota management and so on; it used a combination of interest rate swaps, forwards and
     other financial derivatives instruments to achieve the transfer and hedging of market risks, so as to effectively control
     the market risks for the whole bank; through sensitivity analysis, quota management and the use of foreign currency
     derivatives for risk hedging and other control measures, the company kept exchange rate risks within an acceptable
     range.

     The company has established policy framework to support its internal market risk model; improved the counterparty
     credit risk monitoring and measurement system to achieve off-balance sheet risk exposure measurement for
     particular risks and derivative products. It conducted quota management for all types of exposure, sensitivity,
     including stop-loss limit, strengthened risk management for innovative business, promptly followed up innovative
     businesses such as bond transactions and market making, Shanghai Clearing House business, and RMB foreign
     exchange options, strengthening policy guidance, carrying out risk assessments, and actively support innovative
     funding products.

     Value at Risk ("VaR") model is an important tool for measuring and monitoring market risk. Value at Risk is a way to
     predict the maximum possible position losses due to adverse changes in market interest rates or stock prices or other
     risk factors in a given time interval and confidence level. With the confidence level set at 99% (i.e., the statistical
     probability of losses in excess of the risk value is 1%), the historical simulation method was used to calculate Value
     at Risk. The value at risk measurement uses the actual 10-day holding period VaR, with the observation period of 1
     year (250 trading days).

     VaR in this reporting period
                                                                       2011(unit: 10,000 yuan)
     VaR (10-day holding)
                                                   Year-end            yearly average                max                min
     Interest Rate Risk                             6286.04                  2876.79              6286.04           1235.03
     Exchange Rate Risk                            10722.48                 12712.21             20256.86           8751.99
     Overall VaR                                   12532.91                 13163.09             21392.63         10430.35

     VaR for each risk factor refers to the maximum potential loss due to fluctuations of this risk factor under a certain
     holding period and confidence level. Since there will be some risk diversification effect between the various risk
     factors, total VaR at any given point does not equal to the sum of all VaR for each risk factor.
                                                                                                        2011 Annual Report   31



                                                              Summary of Banking Business Performance




4) Operational Risk

The company is actively engaged in the construction of operational risk management mechanism. Based on risk
management needs and advanced international experience, it developed systematic and comprehensive operational
risk management policies, clarifying the overall systematic framework for operational risk management, operational
mechanism, quantitative assessment methods, reporting procedures and early warning mechanisms. For areas with
high frequency of operational risks, it conducted timely research and analysis on the business forms, causes of those
risks and proposed specific measures and released prompt risk hints. It carried out frontier research and exploration
of operational risk management, established and implemented the operational risk identification assessment and
monitoring reporting system.

The company set specific loss event collection requirements and key risk indicators, strengthened the monitoring
of operational risk loss events and key risk indicators, promoted the New Basel Capital Accord operational risk
standards, promptly turned consultation results into internal measures, promoted the implementation of operational
risk management tools such as regulatory capital measurement, business continuity, stress testing and operational
risk reporting. The “small front office, large back office” basic operation mode has been basically completed, and the
operation centralization system and internal operation control system have gone live with increasing operational risk
management ability.

By drawing on good international experience of internal management for commercial banks, sorting out operations
and management procedures, identifying and assessing various types of risks, the company has established a
“systematic, transparent, documented” internal control system. By constantly updating the internal control system
documentation and expanding the documentation coverage, it ensured the effectiveness, suitability and integrity of
the whole internal control system in the bank, to achieve continuous improvement to the internal control system, and
lay a foundation for the establishment of a long-term improvement mechanism for the internal control system. The
development of the internal control self-assessment work enforced the implementation rectification mechanism.

5) Other Risks

On compliance risk: The company continued to promote the compliance management mechanism, implement the
regulatory policies, and optimize management processes in a bid to further enhance compliance risk management's
support for business development. The company actively implemented regulatory requirements, improved the
management tools to enhance the efficiency of the compliance management. Overall, compliance risk management
was in good shape, with no significant loss or major illegal cases.

On legal risk: The company has established an overall legal risk management framework and has basically
established an internal legal operational platform and process control so as to effectively control legal risks in various
business areas. It also promoted standardization of legal work processes, formulated basic rules on legal risk
management, making legal work more orderly and standardized.

On information technology risk: Overall, the information system was secure and stable, with information technology
risk in a controllable range. The security scheme and control measures were in good condition. The core system and
online banking system were upgraded and expanded, with significantly improved overall performance which provides
strong IT system support to the company's strategic development for the next five years.

On strategic risk: Under the strategic vision of building a modern financial services firm with core competitive
advantages, given the changes to internal and external environment during the "12th Five-Year" period, the
company established a "customer-centric, innovation-driven, restructuring development” new five-year development
strategy. As per the "strategy - planning - budget - evaluation" strategic management model, SPDB enhanced the
commanding role of strategies in the development of the company. Through strategic planning, promoting strategy
implementation and execution evaluation, improving strategic management mechanism, it had good response to
systemic risks due to the complex and changing environment. The overall strategic risk was controllable.
32   2011 Annual Report




     Summary of Banking Business Performance




     On Reputation risk: The company has put the reputation risk within the overall risk management framework and
     established a sound reputation risk management mechanism, focusing on developing media relations, monitoring
     public opinions and branding. The awareness, methods and capability of guarding against and confronting reputation
     risk continued to improve, with reputational risk under good control. During the reporting period, no event causing
     significant risk of reputation loss occurred in the company.

     Country specific risk: Country specific risk management system was initially established with the formulation of
     "Country specific risk management policies", "Country specific risk management approach”. Country risk reporting
     platform Phase One was completed, with the initial establishment of country risk identification, measurement,
     monitoring and control methods and procedures.

     15. Completeness, Reasonability and Effectiveness of the Company's Internal Control
        System

     During the reporting period, as per Basic Rules on Corporate Internal Control, the company identified and
     consolidated its main business activities and management activities by focusing on the five factors of internal control
     -- internal environment, risk assessment, information and communication, internal oversight and control measures. It
     also matched current rules and regulations with internal control factors, achieving a convergence of the two. On top
     of that, the company further improved the internal control system in terms of completeness and rationality, optimized
     the internal control measures, and strengthened execution of the internal control system, to ensure that business
     processes and risks are within a controlled range.

     The company implemented internal control self-evaluation, which found no significant deficiencies in internal control
     design and implementation. Business and risks were under control. Still enforcement of control measures for credit
     and commercial bill business need to be further strengthened. The above-mentioned problems didn't constitute
     serious impact or potential negative impact on the company's internal control objectives, but the company still
     attached great importance to them and took measures to strengthen implementation.

     Board of Directors believes that in the reporting period, the company's internal control system is basically sound
     and improving, with effective implementation. Based on internal and external environmental changes and business
     development needs, SPDB will continue to improve its internal control management, enhancing its effectiveness and
     make it more standardized.

     16. Company's Innovation, New Types of Products and Derivative Financial Services

     SPDB continued to promote product innovation and channel integration, achieved breakthroughs in direct equity
     fund business, and conducted pilot project for investment and loan linkage business. Settlement volume for its
     innovative cross-border RMB services increased nearly 10 fold. It took the lead in offering ‘green finance', which was
     successfully marketed to Baosteel Group and other important clients. It successfully completed the first credit asset
     securitization project, piloted self-repaying trade finance, innovative online finance, and built a supply chain electronic
     platform. "Easy loans", "purchasing loans" and other products were launched for SMEs. Innovative "HQ to HQ
     Cooperation" model was launched for retail loan business. New consumer loan products were developed leveraging
     on bank cards. The company increased channel integration and innovation efforts, improved online banking and
     mobile banking, added bank and enterprise direct connection and other services to promote funding precipitation. It
     also enhanced the performance of online banking service, added real-time exchange settlement and sales and online
     wealth management functions, accelerated the development of "air bank" full-service support, personalized care
     service model, in a bid to build an all-weather electronic trading platform. Moreover, it promoted product innovation,
     expanded the agency business for precious metals, RMB interest rate swaps, foreign central bank agency RMB
     bond trading, beneficiary transfer of investment trust, and other funding business.
                                                                                                     2011 Annual Report   33



                                                            Summary of Banking Business Performance




17. Changes in Interest Rate, Foreign Exchange Rate, Taxation Rate and Whether Such
   New Policies Exert Important Impact on Commercial Bank Business Operation and
   Profitability

In the first half of 2011, the central bank hiked RMB deposit RRR for 6 consecutive times, so RRR for large financial
institutions reached 21.5%, that of small and medium-sized financial institutions reached 19.5%. The increasing RRR
raised higher requirements for commercial banks' liquidity management. With tight monetary policy, money supply
growth continued to decline. With tightening liquidity, easing inflation and slowing economic growth, there was ‘timely
and appropriate fine-tuning' for monetary policy since the fourth quarter of last year. On December 5, 2011, the
PBoC lowered RRR by 0.5 percentage points, alleviating liquidity management pressure to some extent. In addition,
on February 9, April 6 and July 7, the central bank raised the benchmark deposit and lending rates for financial
institutions, raising the one-year benchmark deposit and lending interest rates to 3.50% and 6.56% respectively.
Given the overall tight monetary policy, the bargaining power of commercial bank improved, and credit tilted more
toward higher yielding SMEs, which increased the profitability of commercial banks.

In 2011, the RMB exchange rate formation mechanism reform deepened, with a 4.86% annual appreciation of RMB
against USD. RMB appreciated faster against USD in 2011 than 2010. The two-way floating of RMB exchange rate
became more prominent, with significantly enhanced exchange rate flexibility. With narrowing trade surplus and
changing expectation for the Chinese economy, RMB's appreciation momentum diminished for the first time since
the exchange rate reform started. Given the increased market risk due to exchange rate fluctuations, the company
further improved the capital market risk management mechanism, established a supporting policy system for market
risk internal models, and constantly improved market risk monitoring, measurement and control system in a bid to
effectively control market risks.

On April 27, 2011, the China Banking Regulatory Commission Guidance on Implementing New Regulatory Standards
for China's Banking Sector (Yin Jian Fa [2010] No. 44) was officially released. Drawing on Basel III, it set rules
on regulatory tools such as capital requirements, leverage ratio, provision ratio and liquidity. Detailed rules were
subsequently released. CBRC openly solicited the public views on the Commercial Bank Leverage Administrative
Rules, Capital Adequacy Ratio Administrative Rules, and Commercial Bank Liquidity Risk Administrative Rules.
Implementation of the new regulatory standards exerted some pressure on commercial banks' capital management
and asset liability management. However, thanks to a reasonable transition period, the business operations and
profitability of commercial banks were not be much affected.

To ease the financing difficulty of SMEs, the relevant departments under the State Council introduced a new micro
enterprise support policies in October 2011 to improve the business environment for small and micro enterprises
and to create a better policy environment for commercial banks' business transition. This will encourage commercial
banks to step up support for small and micro-enterprises, shifting from simple credit service to integrated financial
services. It will speed up the development of SME business franchise mechanism, regulate financial services for
small and micro enterprises, and develop high end retail customers on top of small and micro enterprises, thus
promoting the strategic transformation of commercial banks.
                                                                                                      2011 Annual Report    35



                                 Share and Shareholders' Status
               Share Capital ChangesCapital Changes and Shareholders’ Status


1. Share Capital Change

1) Share Transfer

                                                                                                           Unit: Share
                                                Current Before            Change (+,-) Gift        Current After
                                              Total Shares       (    )    shares (June 7)      Total Shares       (    )


1   State-owned
2   Legal entity held
3   Other domestic legal entities            2,869,764,833           20       860,929,450      3,730,694,283           20
Incl: domestic legal entities                2,869,764,833           20       860,929,450      3,730,694,283           20
     Domestic natural persons
4   Foreign stock-holders
Incl: Foreign legal entities
     Foreign natural persons


1   RMB common shares                       11,479,059,332           80     3,443,717,800     14,922,777,132           80
2   Domestically-listed foreign companies
3   Oversea-listed foreign companies
4   Other
Total shares                                14,348,824,165       100        4,304,647,250     18,653,471,415       100


2. New Share Issuance

1) An overview of New Issuance during the Past Three Years

The non-public offering of stocks in 2009: China Securities Regulatory Commission Approval Document [2009] No.
950 approved the offering of the company's non-public A-shares on September 18th, 2009, with the actual issue
price of 16.59 yuan / share, placing 904,159,132 shares, the actual net proceeds RMB 14,826,659,583.97 yuan after
the deduction of issuance fee etc..

The non-public offering of stocks in 2010: China Securities Regulatory Commission Approval Document [2010] No.
1278 approved the offering of the company's non-public A-shares on September 26th, 2010, with the actual issue
price of 13.75 yuan / share, placing 2,869,764,833 shares, the actual net proceeds of RMB 39,199,464,245.32 yuan
after the deduction of issuance fee etc..

2) Shares Owned by Staff

There are no staff-owned shares during the reporting period.
36   2011 Annual Report




     Share Capital Changes and Shareholders’ Status




     3. Shareholders

     1) The Shareholders Number and Share Holdings Status
     Total number of shareholders at the end                         Total number of shareholders at the end of the
                                                       437,294                                                                 430,414
     of this reporting period                                        month before the release of this annual report
     Top 10 Shareholders
                                                           Increase or        Total shares % of the Number of locked- Shares pledged
     Shareholder name                                        decrease                 held    total   up shares held        or frozen
     China Mobile Group Guangdong Co., Ltd.            +860,929,450        3,730,694,283           20       3,730,694,283                   -
     Shanghai International Group, Ltd.                +728,657,058        3,157,513,917      16.927                       -                -
     Shanghai International Trust Co., Ltd.            +225,213,183           975,923,794      5.232                       -                -
     CITIBANK OVERSEAS INVESTMENT                       +116,807,125          506,164,207      2.714                       -                -
     CORPORATION
     Shanghai Guoxin Investment &                         +87,023,538         377,101,999      2.022                       -                -
     Development Corp, Ltd
     Xingya Group Co.,Ltd                                 +20,675,186         200,694,074      1.076                       -      187,672,309
     China Life Insurance Company Limited                 +87,290,379         190,543,024      1.021                       -                -
     Par Lifepar 005L FH002 Shanghai
     Brilliance Group, Ltd                                +43,865,427         190,083,517      1.019                       -                -
     Bank of Communications – E Fund 50                   +35,916,812         182,134,902      0.976                       -                -
     Index Securities Investment Fund
     Youngor Group Co,.Ltd.                               +41,350,814         179,186,859      0.961                       -      179,140,000
     Note: During the report period, the company implemented the 2010 profit distribution plan of” 3 bonus shares for every 10 shares”

     An Overview of the Top 10 Shareholders of Non-lock-up Shares
                                                                                                     Non-locked-up
     Shareholder name                                                                                  shares held Share Type
     Shanghai International Group, Ltd.                                                                 3,157,513,917 RMB common share
     Shanghai International Trust Co.,Ltd.                                                               975,923,794 RMB common shares
     CITIBANK OVERSEAS INVESTMENT CORPORATION                                                            506,164,207 RMB common shares
     Shanghai Guoxin Investment & Development Corp, Ltd                                                  377,101,999 RMB common shares
     Xingya Group Co.,Ltd                                                                                200,694,074 RMB common shares
     China Life Insurance Company Limited           Par    Lifepar     005L    FH002                     190,543,024 RMB common shares
     Shanghai
     Brilliance Group, Ltd                                                                               190,083,517 RMB common shares
     Bank of Communications – E Fund 50 Index Securities Investment Fund                                 182,134,902 RMB common shares
     Youngor Group Co,.Ltd.                                                                              179,186,859 RMB common shares
     China Tobacco & Cigarette Group Jiangsu Branch                                                      160,880,407 RMB common shares
     (Jiangsu Provincial Tobacco & Cigarette Corp.)
     Notes on the affiliation between the shareholders mentioned above and               Shanghai International Group is the holding
     the possibility of taking joint actions                                             company of Shanghai International Investment &
                                                                                         Trust Corp. and Shanghai Guoxin Investment &
                                                                                         Development Corp.
                                                                                                                       2011 Annual Report   37



                                                            Share Capital Changes and Shareholders’ Status




Holder of restricted shares and the restrictions
Shareholder Name                            No. of restricted shares Tradable by            Restrictions
China Mobile Group Guangdong Co.,                    3,730,694,283 2015-10-14               private placement, not tradable within
                                                                                            five years


2) Information on the No. 1 Shareholder
(1) There is no change to the No. 1 shareholder of the company during the reporting period.
(2) A diagram to illustrate the equity and control relationship between the company and the No. 1 shareholder

The company's No. 1 shareholder is Shanghai International Group, founded on April 20, 2000. With a registered
capital of RMB 10.55884 billion yuan, Shanghai International Group has a registered address at No. 511, Weihai
Road, Shanghai. The legal representative is Mr. Ji Xiaohui. It's a limited liability company (100% owned by the state).
Its business operation scope is: financial and non-financial investment, capital operation and assets management,
financial research and consultancy, etc.

The equity relation between the company and its largest shareholder and its affiliated companies may be illustrated
as following:

                                                 Shanghai State-owned Assets Supervision
                                                 and Administration Commission

                                                                         100% stake

                                                      Shanghai International Group


            100% stake                                                    66.33% stake                     100% stake

              Shanghai State-owned Assets                                                   Shanghai International Group
              Management Co., Ltd                  Shanghai International Trust Co., Ltd.
                                                                                            Asset Management Limited
            100% stake

               Shanghai Guoxin Investment        16.927% stake           5.232% stake                   0.138% stake
               & Development


                  2.022% stake
                                                                 SPD Bank


                                                                        100% stake

3) Corporate Shareholders Who Hold More Than Ten Percentage By the End of This Reporting
  Period

China Mobile Group Guangdong Co., Ltd. Currently holds 3,730,694,283 company shares, representing 20% of total
share capital. Registered capital: RMB 559,484 million, Registered Address: Guangzhou. The legal representative:
Xu Long. Company Type: Limited Liability Company. Business scope: mobile communications business in
Guangdong province (including voice, data, multimedia, etc.); IP telephone and Internet access services; mobile
communications, IP telephone and the Internet network design, investment and construction; mobile communication,
IP Facilities such as telephone and internet installation, construction and maintenance; systems integration,
roaming settlement, technology development, technical services and equipment sales that are related to mobile
communications, IP telephone and Internet services, selling and renting of mobile telephone terminal equipment, IP
Telephone equipment, Internet equipment and spare parts, and after-sales services.
                                                                                                2011 Annual Report   39



                Overview the Company's Supervisors & Supervisors
           Overview ofoftheCompany’s Directors,Directors, Senior Management
                                              & Senior Management

1. Basic Information
                                                                                  Compensation Paid Whether
                                                Date                                 by the Company Got Payroll
                                                of                         shares   (Unit: RMB 0,000 from other
Title                  Name              Sex    Birth Tenure               held    Yuan, before Tax) companies
Chairman of the Board Ji Xiaohui         Male   1955 2008.11.20-present                    1,500,000
Vice Chairman,         Fu Jianhua        Male   1951 2008.11.20-                           1,500,000
President                                            2012.01.10(Note)
Vice Chairman          Chen Xin          Male   1955 2008.11.20- present                   1,500,000
Director               Yang Dehong       Male   1966 2008.11.20- present                                 Yes
Director               Pang Weidong      Male   1966 2008.11.20- present                                 Yes
Director               Sha Yuejia        Male   1958 2010.09.20-present    -                       -     Yes
Director               Zhu Min           Female 1964 2010.09.20-present    -                       -     Yes
Director               Stephen Bird      Male   1967 2008.11.20- present                                 Yes
Director               Ma Xinsheng       Male   1954 2008.11.20- present                                 Yes
Director               Wei Pengcheng     Male   1953 2008.11.20- present                                 Yes
Director               Wang Guanchang Male      1949 2008.11.20- present                           -     Yes
Director & Corporate   Shen Si           Male   1953 2008.11.20- present                   1,999,992
Secretary
Independent Director   Sun Zheng         Male   1957 2008.11.20- present                    200,000
Independent Director   Liu Tinghuan      Male   1942 2008.11.20- present                    200,000
Independent Director   Chen Xuebin       Male   1953 2008.11.20- present                    200,000
Independent Director   Xu Qiang          Male   1951 2008.11.20- present                           -
Independent Director   Zhao Jiusu        Male   1954 2009.05.05- present -                  200,000        -
Independent Director   Zhang Weiying     Male   1959 2010.09.20- present -                  200,000        -
Independent Director   Guowei            Male   1963 2010.09.20- present -                  200,000        -
Chairman of the        Liu Haibin        Male   1952 2008.11.20- present                   1,500,000
Supervisory Board
Supervisor             Zhang Linde       Male   1950 2008.11.20- present                                 Yes
Supervisor             Zhang Baohua      Male   1951 2008.11.20- present                                 Yes
Supervisor             Li Qingfeng       Male   1971 2010.09.20- present                                 Yes
External Supervisor    Hu Zuliu          Male   1963 2008.11.20- present                    200,000
External Supervisor    Xia Dawei         Male   1953 2008.11.20- present                    200,000
Supervisor             Feng Shurong      Male   1952 2008.11.20- present                   1,500,000
Supervisor             Yang Shaohong     Male   1950 2008.11.20- present                   1,900,000
Supervisor             Li Wanjun         Male   1951 2008.11.20- present                   1,900,000
EVP                    Shang Hongbo      Male   1959 2008.11.20- present                   1,999,992
EVP&CFO                Liu Xinyi         Male   1965 2008.11.20- present                   1,999,992
EVP                    Jiang Mingsheng   Male   1960 2008.11.20- present                   1,999,992
EVP                    Ji Guangheng      Male   1968 2009.04.28- present                   1,999,992
40   2011 Annual Report




     Overview of the Company’s Directors, Supervisors & Senior Management




                                                                                                      Compensation Paid Whether
                                                                Date                                     by the Company Got Payroll
                                                                of                             shares   (Unit: RMB 0,000 from other
     Title                      Name                  Sex       Birth Tenure                   held    Yuan, before Tax) companies
     EVP                        Mu Shi                Male      1961 2009.04.28- present                            1,999,992
     EVP                        Xu Haiyan             Female 1960 2009.04.28- present                               1,999,992
     Note: 1. The remuneration packages for directors, supervisors and senior management on the company payroll are being confirmed by the
              regulators, with remaining parts to be disclosed after confirmation.
           2. Mr. FU Jianhua, will no longer serve as Vice Chairman and President of SPDB starting from January 11, 2012 due to reasons of his
               age; Mr. JI Xiaohui, Chairman of SPDB will take over as the President of the Company.


     Main Working Experience of Active Directors, Supervisors and Senior Management:

     (1)Directors

     JI Xiaohui, male, born in 1955, MBA with senior economist title. Once worked as General Manager and CPC
     Committee Secretary of ICBC Shanghai Pudong Branch; Deputy GM of ICBC Shanghai Branch and Deputy CPC
     Committee Secretary; GM and CPC Committee Secretary of ICBC Shanghai Branch; Deputy Director General of
     Shanghai Municipal Government, Deputy CPC Committee Secretary of Shanghai Financial Committee, Director
     General Of Shanghai Financial Service Office. Currently, Chairman of the board of directors, CPC Committee
     Secretary of Shanghai Pudong Development Bank and Chairman of the board of directors, CPC Committee
     Secretary of Shanghai International Group. Mr. JI is also a member of the 10th and 11th National Committee of
     CPPCC and candidate member of 9th Communist Party of China's Shanghai Committee.

     FU Jianhua, male, born in 1951, master's degree with a senior economist professional title. Once worked as
     Deputy GM of China Construction Bank Jiangxi Branch, Director General of the General Office, CCB Shanghai
     Branch; Deputy GM of CCB Shanghai Branch, GM of Credit Management, CCB Head-office, CPC Party Committee
     Secretary, President, Vice Chairman and Chairman of Bank of Shanghai. Currently, Mr. FU works as the Vice
     Chairman, President and Deputy CPC Committee Secretary of SPDB. He retired in January 2012.

     CHEN Xin, male, born in 1955, master's degree with a senior economic professional title. Once worked as Deputy
     GM of ICBC Shanghai Branch Jing'an Sub-branch, GM of SPDB Credit Department, Board Member and EVP of
     SPDB; Chairman, CPC Party Committee Secretary and President of Bank of Shanghai. Currently, Deputy Chairman
     of Shanghai International Group, Deputy Chairman and Deputy CPC Party Committee Secretary of SPDB.

     YANG Dehong, male, born in 1966, master's degree with a professional title of economist. Once worked as GM of
     Investment Banking Dept., Shanghai International Trust & Investment Co., GM of Shanghai Investment Consultancy
     Co., GM of SIG Assets Operations Corp., Director General of the Administrative Office, Board Office and IT Center
     of SIG, Deputy GM of Shanghai International Trust & Investment Co., Assistant GM of SIG. Currently, he works as
     Deputy GM of Shanghai International Group and GM of Shanghai Aijiang Corporation.

     PAN Weidong, male, born in October 1966, master's degree with a professional title of senior economist. Once
     worked as Deputy GM of BD Dept. Ningbo Securities, GM of Treasury Dept. SPDB Ningbo Branch, GM of SPDB
     Ningbo Beilun Sub-branch, Deputy GM of SDPB Ningbo Branch, GM of Product Innovation & Development Dept.,
     SPDB Head-office, GM of SDPB Kunming Branch. From June 2005 to March 2008, worked as Director General
     of Finantial Institutions Dept., Shanghai Financial Service Office. Currently, he works as Assistant GM of Shanghai
     International Group, CPC Party Committee Secretary and Chairman of Shanghai International Trust & Investment
     Co., Ltd.
                                                                                                 2011 Annual Report   41



                     Overview of the Company’s Directors, Supervisors & Senior Management




SHA Yuejia, male, born in March 1958, PhD, professor level senior engineer. Once worked as Director of
Department four of Beijing Construction Section of Beijing Telecommunications Administration. President of Beijing
Telecommunications Planning Design Institute, Deputy Secretary of Beijing Telecommunications Administration,
Deputy GM and Party Committee member of Beijing Mobile Communications Company, Director, GM and Party
secretary of Beijing Mobile Communication Co., Ltd. He currently works as vice president /deputy GM and Party
members of China Mobile Communications Corporation, executive director and vice GM of China Mobile Limited.

ZHU Min, female, born in October 1964, Ph.D. ,senior accountant., She once worked as GM of Finance Department
of China Telecom (Hong Kong) Limited, GM of China Mobile (Hong Kong) Group Co., Ltd., Minister and Director
of the centre capital allocation of Finance Department of China Mobile Communications Corporation. She works
currently as GM of China Mobile Communications Corporation, Deputy Chief Financial Officer of China Mobile Ltd.,
and General Manager of the Finance Department.

Stephen Bird, Male, British, MBA, born in 1967. Once worked as President of Operation Dept of GE; Principal of
Operation and IT Dept of Citi Asia; Principal of Operation and IT Dept of Citi Latin America; CEO for Credit Card
and Consumer Banking of Citi Japan; CEO for Citi North Asia, President of Global Consumer Banking and credit
card business for Citi Asia Pacific.He currently is CEO of Citi Asia Pacific as well as member of the management
committee.

MA Xinsheng, male, born in March 1954, master's degree with a professional title of senior economist. Once worked
as CPC Party Committee and GM of Shanghai Converter Plant, Deputy GM of Electronics, CPC Party Committee
Secretary and GM of Shanghai Electronics & Machinery Trading Building, Deputy CPC Party Committee Secretary
and Deputy Chairman and President of Electronics & Machinery Group, Deputy CPC Party Committee Secretary of
Shanghai State-owned Assets Commission. Currently he works as CPC Party Committee Secretary and Chairman of
Brilliance Group.

WEI Pengcheng, male, born in 1953, a postgraduate with a senior economist's title. Once worked as the General
Manager of Xuzhou Cigarettes Plant, Director of Xuzhou Cigarette Bureau, Deputy General Manager, Party
Committee member and Party Secretary of Xuzhou of Jiangsu Cigarette Bureau, Deputy Director of Jiangsu
Cigarette Bureau. At present, he is the Director of Jiangsu Cigarette Bureau, General Manager and Party Secretary.

WANG Guanchang, male, born in 1949, bachelor's degree with a professional title of senior economist. Once worked
as Director General of the Postal Transportation Bureau of Shanghai, Assistant Director General of Shanghai Postal
Management Bureau and Director General and CPC Party Committee Secretary of Shanghai Posatl Service Bureau,
CPC Party Committee and GM of Shanghai Postal Service Corp. He currently serves as the Chairman of Shanghai
Post Express Logistics Co., Ltd. He is also a member of the Shanghai Municipal People's Congress Standing
Committee, and the Army Reserve Divisions Party Standing Committee. He is also a member of the 10th Committee
of the People's Congress of China, a Delegate of 8th and 9th CPC Party Committee and 12th and 13th Committee of
the People's Congress of Shanghai.

SHEN Si, male, born in 1953, master's degree, EMBA, senior economist. Once worked as deputy director general
and section chief of Investigation and Statistics Bureau in People's Bank of China Zhejiang Branch, deputy manager
of Investigation and Statistics Bureau in People's Bank of China Head Office, deputy president and commissary
of Party Committee Hangzhou branch SPDB, Corporate Secretary and Director of the Board Office of SPDB. He's
currently Board Member and Corporate Secretary of SPDB.

SUN Zheng, male, born in 1957, PhD, Professor, tutor of doctorate degree candidate, CPA, ASCPA. Once worked
as Vice Dean, Dean and Assistant President of Shanghai Finance and Economics University. He is currently
Vice President of Shanghai Finance and Economics University, Vice President of China Accounting Academy,
committeeman of China Accounting Rule Committee under Ministry of Finance, member of Committee of Experts
for listing company in Shanghai Stock Exchange, member of Financial Budget Management Committee of Shanghai
state owned assets as well as independent Chairman of Shanghai Wangye Corporation.
42   2011 Annual Report




     Overview of the Company’s Directors, Supervisors & Senior Management




     LIU Tinghuan, male, born in 1942, bachelor's degree with a professional title of researcher. Once worked as GM and
     CPC Party Committee Secretary of PBOC Dalian Branch, Deputy GM, GM and CPC Party Committee Secretary of
     ICBC, Deputy CPC Party Committee Secretary and EVP of PBOC, Chairman of China Union Pay Co., Ltd., He is
     now retired. He was a committee member of 10th National Political Consultative Conference, Vice Dean of economic
     committee, candidate committee member of 15th CPC committee.

     CHEN Xuebin, male, born in 1953, doctorate degree and professor and tutor of doctorate degree candidates. Once
     worked as Director General of Financial Research Center, Shanghai University of Finance and Economics, Deputy
     Chancellor of Financial Research Institute, Fudan University. Currently, he works as Acting Deputy Chancellor of
     Financial Research Center, Fudan University. He is also a member of the Chinese Financial Institution and a member
     of the China International Financial Institution.

     XU Qiang, male, born in 1951, master's degree with a professional title of researcher. Once worked as Deputy
     Section Director and Deputy Director General of Research Center, Director General of Legal System Construction
     Office, Shanghai Municipal Government. Currently, he works as Director General of Shanghai Arbitration Committee.

     ZHAO Jiusu, male, born in November, 1954, doctor of law from Duke University, USA. Once worked as a lawyer in
     Coudert, USA, partner in Clifford Chance, UK. He is currently partner in Jones Day Shanghai Representative Office.

     ZHANG Weiying, male, born in October 1959, Han, began to work in December 1984, joined the CPC in 1981,
     graduated from Oxford University, Ph.D. in Economics, Professor, worked as Associate researcher in State
     System Restructuring Commission China Economic System Reform Research, Director of the Institute of Business
     Administration, Peking University, Associate Dean and Dean of Guanghua Management School of Peking University.
     Currently works as the Assistant President of Peking University.

     GUO Wei, male, born in February 1963, Han. Began to work in 1988, joined the CPC in 1984, Master Degree in
     China Technology University, Senior Engineer, once worked as Director, Senior Vice President of Lenovo Group,
     CEO of Digital China (China) Co., Ltd.won the “Ten Outstanding Young Persons” in 2002, won the “China Young
     Entrepreneur Management Innovation Award.” In 2005, currently works as CEO of Digital China (China) Ltd.

     (2)Supervisors

     LIU Haibin, male, born in 1952, master's degree, MBA. Once worked as journalist of Anhui Daily, dean of national
     audit press no.2 editing department, the special commissioner of the State Audit Bureau to Nanjing, the special
     commissioner to Shanghai from the State Audit Bureau etc. Currently, he works as the Chairman of the Supervisory
     Board of SPDB, party construction supervisor of SPDB and a board member of Shanghai International Group.

     ZHANG Linde, male, born in 1950, MBA. Once worked as Deputy GM of Shanghai Guomai Telecommunications
     Corp., GM and deputy secretary of Shanghai Photo Image Data Corp., Director General of Administrative Office,
     Shanghai Postal Management Bureau, GM of Shanghai Information Industry Co., Ltd, Deputy Director General,
     Shanghai Postal Management Bureau. Currently, he works as Deputy GM of Shanghai Telecommunications Corp.

     ZHANG Baohua, male, born in 1951, master's degree & MBA. Once worked as Director General, Administrative
     Office of New Asia Group, GM of New Asia (Rotterdam), Deputy GM and Vice Chairman of Shanghai New Asia Co.,
     Ltd. Currently, he works as Assistant GM of Jinjiang International (Group) Co., Ltd and Chairman of the Financial
     Division.

     LI Qingfeng, male, born in 1971, Master degree. Worked as GM of Hang Futures Brokerage Co., Ltd. Chief
     economist, Deputy GM and deputy secretary of Party branch Shanghai Jiulian Group. Currently works as GM,
     secretary of Party branch of Shanghai Jiulian Group, President of Hang Futures Brokerage Co., Ltd., and Research
     Committee member of the Shanghai Futures Exchange
                                                                                                    2011 Annual Report   43



                     Overview of the Company’s Directors, Supervisors & Senior Management




Fred Hu, male, born in 1963, doctor's degree. Once worked as an advisor for World Bank, an official in IMF, Chief
Economist and Managing Director of Research Department in Genever-Davost World Economy Forum, Managing
Director of Goldman & Sachs (Asia) Co., Ltd., He is now President of Primavera Capital Group, Professor in
Tsinghua University, committee member of Hong Kong government strategy committee and counselor of Hong Kong
CSRC.

XIA Dawei, male, born in 1953, professor, tutor for doctoral degree. Once worked as Section Chief, Assistant
President and Executive Vice President in Shanghai Finance and Economics University. He is currently President
of Shanghai National Accounting Institute, commissary of expert committee for listing company in Shanghai Stock
Exchange, Chairman of Chinese Industry Research and Development Promotion Committee, director of industrial
expert committee in Shanghai Economics Institute. Obtained the State Department experts special allowance,
the academic leader of Century Arts Department of Ministry, and academic leader of Century Arts Department of
Education.

FENG Shurong, male, born in 1952, college graduate, senior economist. Once worked as senior secretary of
Shanghai Municipal Agency, deputy director of Trade Bureau of Pudong New Area, general secretary and party
secretary of Economic and Finance Committee of Chinese Communist Party Shanghai Committee Agency, member
of discipline committee of Chinese Communist Party Shanghai Committee. He is currently the Deputy Party
Secretary of SPDB, secretary of Party discipline committee of SPDB and president of labor union of SPDB.

YANG Shaohong, male, born in 1950, master's graduate, senior economist. Once worked as Section Chief of
People's Bank of China Zhejiang Branch, Team Leader of Department of Discipline Inspection in Zhejiang Financial
Community, Supervisor of Supervisory Agency, vice-president of People's Bank of China Zhejiang Branch, GM and
Secretary of Party Committee of SPDB Hangzhou Branch. He now works as Lead of the No. 1 Inspection Team of
SPDB Headquarters.

LI Wanjun, male, born in 1951, master's degree with a professional title of senior economist. Once worked with
PBOC Yichuan Sub-branch, then, PBOC Henan Provincial Branch as Deputy Section Chief, Section Chief and then,
Assisant President and Vice President. Currently, he works as GM and CPC Party Committee Secretary of SPDB
Zhengzhou Branch.

(3)Other Senior Management

SHANG Hongbo, male, born in 1959, master's degree, EMBA. Once worked as Deputy Director of Administrative
Office, Executive Deputy Director of Treasury Department and Deputy President in People's Bank of China Ningbo
Branch, General Manager and CPC Party Committee Secretary of Shanghai Pudong Development Bank Ningbo
Branch, Board Member of SPDB. He's currently Executive Vice President of SPDB.

Liu Xinyi, male, born in 1965, master's degree with a senior economist title. Once worked as Deputy GM of SPDB
Airport Sub-branch, Deputy GM of SPDB Shanghai Branch and member of the CPC Party Committee. From Oct.
2002, worked in Shanghai Financial Service Office as Director of Financial Institutions Department, Assistant Director
General of the Financial Office. Currently, Mr. LIU is Executive Vice President and CFO of SPDB.

JIANG Mingsheng, male, born in 1960, bachelor's degree. Once worked as Deputy GM of China Merchants Bank
Guangzhou Branch, GM of Corporate Banking, CMB Head-office, CPC Party Committee Secretary and Deputy GM
of CMB Shanghai Branch, and later on, GM of CMB Shanghai Branch. Currently, Mr. JIANG works as Executive Vice
President of SPDB, GM and CPC Party Committee Secretary of SPDB Shanghai Branch.
44   2011 Annual Report




     Overview of the Company’s Directors, Supervisors & Senior Management




     JI Guangheng, male, born in 1968, master's degree with senior economist title. Once worked as Chairman of
     the board of directors and GM of Shanghai Yingong Real-estate Development Corporation, Vice section chief of
     housing credit department market developing section and vice president secretary of ICBC Head-office, Director of
     general office and Party office, committee member of CPP committee and vice president of ICBC Beijing Branch
     and President of ICBC Chang'an sub-branch. He now works as EVP of SPDB and GM and CPC Party Committee
     Secretary of SPDB Beijing Branch.

     MU Shi, Male, born in 1961, master's degree with senior economist title. Once worked as Vice dean of Financial and
     Economic Committee of Tianjin People's Congress and assistant to President of Tianjin Trust Co., President, Vice
     President and CPC Party Committee Secretary of SPDB Tianjin Branch and CCO of Risk Management Department
     of SPDB Head Office. He currently is Vice President of SPDB.

     XU Haiyan, Female, born in 1960, EMBA with senior economist title. Once worked as China Investment Bank Ningbo
     Branch Construction Principal and Chief of Planning Office of CCB Ningbo Branch, Vice President of SPDB Ningbo
     branch, GM of Finance Department and Investment Bank of SPDB Head Office. She is currently vice president of
     SPDB.

     2. Posts Held in Shareholder Companies
     Name                 Shareholder Company                            Post Held
     JI Xiaohui           Shanghai International Group, Ltd              Chairman, CPC Party Committee Secretary
     CHEN Xin             Shanghai International Group, Ltd              Vice Chairman
     YANG Dehong          Shanghai International Group, Ltd              Deputy GM
     PANG Weidong         Shanghai International Group, Ltd              Chairman, CPC Party Committee Secretary
     Stephen Bird         Citi Group                                     CEO, Citi Group Asia Pacific
     MA Xinsheng          Brilliance Group, Ltd                          Chairman, CPC Party Committee Secretary
     WEI Pengcheng        China Tobacco & Cigarette Group Jiangsu Branch GM & CPC Party Committee Secretary
     WANG Guanchang Shanghai Postal Service Co.                          GM & CPC Party Committee Secretary
     ZHANG Linde          Shanghai Telecommunications Co.                Deputy GM
     ZHANG Baohua         Jinjiang International Group                   Assistant GM & Chairman of Financial Division
     LI Qingfeng          Shanghai Long-Alliance Group Co., Ltd.         GM


     3. Compensation Package for Directors, Supervisors and Senior Management

     1). Decision-making procedure to decide the compensation package of directors, supervisors and senior
     management: For directors, supervisors and senior management members on the payroll of the company, their
     compensation package shall be reported to the Compensation & Performance Assessment Committee under the
     Board for check and approval and once approved, shall be submitted to the board meeting for approval.

     2). Principles to decide the compensation package for directors, supervisors and senior management: The
     compensation package policy of the company applies to all staff. The actual compensation package is reported to the
     Compensation & Performance Assessment Committee under the Board. The compensation package for directors,
     supervisors and senior management is also decided according to the above procedure.
                                                                                                                 2011 Annual Report   45



                          Overview of the Company’s Directors, Supervisors & Senior Management




4. Change in directors, supervisors, senior management

Mr. FU Jianhua, will no longer serve as Vice Chairman and President of SPDB starting from
January 11, 2012 due to reasons of his age; Mr. JI Xiaohui, Chairman of SPDB will take over
as the President of the Company.
5. An Overview of the Company's Staff
                                                                                               Total Population of Resigned
Total Population of Current staff                  31231                                       staff Paid by the Company      291
                               Management Staff                                                                287
Structure of the Staff         Business Staff                                                                30325
                               Technology Staff                                                               619
                               College Diploma or Graduate from Secondary School                              6606
                               Bachelor's Degree                                                             20941
                               Master's degree and above                                                      3684
Note: the total number of current staff does not include those at township or village banks.
                                                                                                      2011 Annual Report   47



                                                Corporate Governance Structure
                                                           Corporate Governance Structure




1. Corporate Governance

During the reporting period, the company further improved the corporate governance structure, drew on mature
international experience on corporate governance, to build and form a reasonable share structure. By clarifying each
main border's responsibilities, it achieved the interest maximization & equalization to all stakeholders. Protecting
the interests of depositors, winning return for shareholders, creating value for the society, it will be built into a
modern financial services enterprise with strong core competitiveness, adequate capital, strict internal control, safe
operations, and good benefits.

During the reporting period, according to the requirements under the regulatory supervision, the company timely
made and amended relevant regulations to perfect governance structure system. The Board considered and adopted
the “Interim Administration Measures for Consolidated Statements” “Internal Control Standards Implementation Plan
and Evaluation Project”, “Internal Capital Adequacy Assessment Management Approach” and revised the “Directors
Duty Evaluation System”, etc.

1) Shareholders and General Meeting of Shareholders

The company was able to strictly follow the stipulations of “Articles of Association”, and “Rules of Procedures for
Shareholders' Meeting” and convene shareholders' meetings accordingly. In 2011, the company has convened
one general shareholders' meetings and passed 6 resolutions so as to ensure all shareholders the right to know, to
participate and to vote and were given equal and fair treatment and that all shareholders may fully exert their rights.

2) Directors and Board of Directors

At present, the board of directors is made up of 19 members, among whom 4 are senior executives from the
company, 8 are representatives from shareholders, 7 are independent directors. All independent directors are
experts or professionals in finance, legal service or strategy management. During the reporting period, the
company convened 10 board sessions and passed 47 resolutions. Under the board, there are 6 committees,
namely, the Strategy Committee, the Nomination Committee, the Risk Control & Related Transaction Committee,
the Compensation & Performance Assessment Committee, the Audit Committee and the Capital & Operation
Management Committee, all with clear roles and responsibilities and good efficiency. During the reporting period,
the committees in total convened 13 sessions and passed 34 resolutions. All board members are able to fulfill their
duties conscientiously, professionally and efficiently. They effectively exercise Board's decision making power,
assume ultimate responsibility for commercial bank's capital adequacy ratio and operation management, helping
the Company build a good corporate culture that values integrity, protecting the legal rights of shareholders and the
interest of depositors and other stakeholders, and ensuring that SPDB abides by relevant laws, rules and regulations.
SPDB's Board of Directors won the “2011 Board of the Year Award” in the listed company's annual corporate
governance contest organized by the Shanghai Stock Exchange.

3) Supervisors and the Supervisory Board

The 4th supervisory board was made up of 9 supervisors, among whom 2 are external and 3 are staff
representatives. Under the supervisory board, there is a Nomination Committee. The supervisors supervised on
the compliance, risk, internal regulation construction and authenticity of business operations. During the reporting
period, the supervisory board convened 10 sessions and passed 48 resolutions. Being responsible for shareholders,
the supervisors fulfilled their duties seriously and supervised on the compliance and performance of the company's
financial accounting practice and the directors, the president and other senior management.
48   2011 Annual Report




     Corporate Governance Structure




     4) Senior Management

     Among the senior management of the bank, there are one President, 6 Executive Vice Presidents, 1 Corporate
     Secretary and 1 CFO. Under the board of directors, senior management implemented the scientific concept
     of development, actively coped with financial crisis, improved management capabilities, seized the significant
     development opportunity brought by “sustain economic growth” national strategy and “ Two Centers” construction
     in Shanghai, strived to broaden business and client base, speeded up innovation and strategic transformation,
     reinforced risk management and internal control work. As a result, the asset effect and investment returns were
     improved; the quality of the asset withstood the initial trials of economic fluctuations and won recognition of
     international credit rating agencies. The Company's market competitiveness, society influence and corporation
     solidarity had been strengthened, contributing to its sustained, stable and healthy development. Under the senior
     management, there are asset and liability management committee, marketing improvement committee, risk
     management committee and information construction committee and so forth.

     5) Information Disclosure and Transparency

     The company has been able to strictly comply with the relevant laws, regulations, Articles of Association, and the
     information disclosure regulations and the company has disclosed the relevant information truthfully, accurately,
     completely and in a timely manner, and has ensured equal access to information for all shareholders. During this
     reporting period, the company had issued 28 provisionary notices and 4 regular reports, while focusing on

     enhancing the quality of information disclosure, ensuring the completeness, adequacy and timeliness of information
     disclosure, improving corporate transparency, drawing on format and content requirements for disclosure of overseas
     listed companies to enrich the contents of the regular reports. SPDB also strengthens management of inside
     information, ensures the legal compliance of information disclosure, and creates conditions for investors to fully
     understand the company operations and to prevent insider trading.
                                                                                                      2011 Annual Report   49



                                                                           Corporate Governance Structure




2. Duty Performance of the Directors

1) Attendance of the Board meetings
                      Indepen          Supposed      Personal       Attendance by  Attendance        Absen        Absen
                        -dent        Attendance        Attend      Communication by authorized          -ce          -ce
                      Director   (Total times this      -ance            Methods        deputy      (Times)        Twice
Name                   or Not               year)    (Times )             (Times)      (Times)                 in a Row
JI Xiaohui              No                     10          10                    7              -          -           -
Fu Jianhua              No                     10          10                    7              -          -           -
Chen Xin                No                     10          10                    7              -          -           -
Yang Dehong             No                     10            9                   7              1          -           -
Pan Weidong             No                     10          10                    7                         -           -
Sha Yuejia              No                     10            8                   7              2          -           -
Zhu Min                 No                     10            9                   7              1          -           -
Stephen Bird            No                     10            9                   7              1          -           -
Ma Xinsheng             No                     10            9                   7              1          -           -
Wei Pengcheng           No                     10            7                   7              3          -           -
Wang Guanchang          No                     10            8                   7              2          -           -
Shen Si                 No                     10          10                    7                         -           -
Sun Zheng               Yes                    10          10                    7                         -           -
Liu Tinghuan            Yes                    10            9                   7              1          -           -
Chen Xuebin             Yes                    10          10                    7              -          -           -
Xu Qiang                Yes                    10          10                    7              -          -           -
Zhao Jiusu              Yes                    10          10                    7              -          -           -
Zhang Weiying           Yes                    10          10                    7              -          -           -
Guo Wei                 Yes                    10            9                   7              1          -           -
The Number of Board meetings Held During the Year                                              10
Of which: on-site Meetings                                                                     3
Communication meetings held                                                                    7
On-site meetings with the communication                                                         -

2) Independent Directors' Objection to Motions Submitted by the Company

During the reporting period, the independent directors had not submitted any objection to any motion submitted by
the board meeting or non-board meeting.

3) The Completeness of Independent Directors' Work System and their performance

There are 7 independent directors in 4th board of directors, making up 1/3 of board members and satisfying
the rules that independent directors participating should be more than 1/3 of the total population of board. The
independent directors take charge of board risk management and related party transaction control committee,
nomination committee, salary and assessment committee, audit committee. All independent directors are experts or
professionals in accounting, finance and legal service with international reputation. In 2011, the independent directors
strived to advance the interest of the whole SPDB and its small and medium-sized shareholders with integrity and
meticulousness, playing an active role in the effective and objective decision making of the Board.
50   2011 Annual Report




     Corporate Governance Structure




     3. Independence from the Controlling Shareholder in Terms of Business, Personnel,
       Assets, Organization and Finance

     The company doesn't have any controlling shareholder. The largest shareholder, Shanghai International Group Co.,
     Ltd., together with its controlling subsidiaries Shanghai International Trust Co., Ltd., Shanghai Guoxin Investment
     Development Co., Ltd, Shanghai International Group Asset Management Limited holds a combined total of 24.319%
     shares. The company is independent from the largest shareholder in the assets, personnel, financial, institutional
     and operational aspects. Major decisions are to be made and implemented independently by the company. No large
     shareholder would take the company funds in any form or require the company to provide guarantee for others.

                                     Independent                                                      Influence
                                        or not   Description                                          on SPDB Improvement
                                                 the company's businesses are independent
     In terms of business               Yes                                                           -       -
                                                 from those of its No. 1 shareholder.

                                                 the company is independent in terms of
                                                 personnel management, human resources and
                                                 compensation. The President, the EVPs, the
     In terms of personnel              Yes                                                        -          -
                                                 Corporate Secretary, the CFO and other senior
                                                 management are all on the payroll of the company,
                                                 and not on the payroll of the No. 1 shareholder.

                                                 the company has its own business offices and
     In terms of assets                 Yes                                                           -       -
                                                 infrastructure.
                                                 the company has set up a complete set of
                                                 organization and the board of directors, the
                                                 supervisory board and the various functions of the
     In terms of organization           Yes                                                           -       -
                                                 company work on their own. There is no affiliation
                                                 between them and the functions of the No. 1
                                                 shareholder.
                                                 the company has its own financial control
                                                 department and has set up a complete and
     In terms of financial control      Yes                                                         -         -
                                                 independent set of accounting system and financial
                                                 control system.


     4. There is no intra-industry competition and related party transactions for SPDB due
       to partial restructuring, industry characteristics, national policies or mergers and
       acquisitions

     5. Performance Evaluation of Senior Management and Incentive Mechanism

     To further improve the corporate governance structure, promote the establishment of a sound incentive and restrictive
     mechanism linked to shareholder value, to effectively mobilize the initiative and creativity of senior management,
     continuously enhance the company's efficiency, scale and quality, ensure the development of strategic objectives, the
     Board of Directors passed the “Senior Management Interim Evaluation and Duty Performance Examination Approach
     ”. The general principles: First, as per the scientific development concept, to encourage the banks to enhance
                                                                                                                           2011 Annual Report      51



                                                                                           Corporate Governance Structure




strategic management, innovation, capital conservation and environmental protection, and continue to enhance
the core competitiveness and sustainable development; Second, according to the stakeholders interests balancing
principles and sustainable development requirements, to evaluate senior management's performance in a compliant
way; Third, to do comprehensive assessment in terms of bank efficiency, size, quality, at the same time according
to different business requirements and management features, to realistically Implement the scientific classification
assessment; comprehensive assessment and categorized evaluation should be made in both quantitative and
qualitative ways, with quantitative assessment as the main method. Four, in accordance with the requirements of
unity of interests, powers and responsibilities, to strengthen performance evaluation for senior management with both
rewards and punishments, both incentives and constraints, and the evaluation result will be used as an important
basis for senior management's remuneration, appointment and dismissal.

6. Company's Social Responsibility Report

As the first commercial bank to release Corporate Social Responsibility Reports in China's banking sector, during this
reporting period, the company further clarified the philosophy, objectives, standards and scope of CSR in the new
era. SPDB is committed to integrate both commercial value and social value into strategy, processes and business
models, regard major social and environmental issues as part of its missions, sees itself as an organic part of society.
It is committed to growing with various stakeholders and contributing to the whole society's harmony and common
development. In 2011, the company enhanced financial services for SMEs, effectively contributing to their growth and
development. At the same time, SME loans grew faster than other corporate loans, thus providing strong support for
the bank's efficiency enhancement and structure optimization. The company also stepped up green financial services
and became the first bank to launch a series of innovative products such as building energy efficiency financing,
international carbon (CDM) factoring, contract energy management and factoring financing. It not only provided a
strong support to China's low-carbon economic development but also expanded the blue ocean for green bank credit
sector.

The social contribution in this reporting period:
Time(Year)                                                                                                       2010                    2011
Social contribution per share (based on the weighted average number of shares)                             4.21 yuan               5.95 yuan
Note: 1. social contribution per share = earnings per share + (the amount of paid tax + staff remuneration + Interest payment + total expense
      on public welfare) / total share capital. Since 3 shares were given as gift for every 10 shares in the 2010 profit distribution, the social
      contribution per share in 2012 was calculated based on the adjusted number of shares.


7. Internal Control Self-assessment Report and Audit Agency Verification Opinion by
  Company Disclosure Board

To further enhance the preparation of regular reports and disclosure management, the company made the
"Regular report preparation and information disclosure management rules" to clarify the responsibilities of relevant
departments in the preparation of regular reports and to ensure the accuracy, authenticity and integrity of the
disclosed information.

According to the company's Information disclosure management rules, in case of major errors in the disclosed
information (including annual reports, semi-annual reports, quarterly reports and other temporary announcements),
the departments and personnel directly responsible for that will be criticized, warned, demoted or even dismissed,
and will be subject to damages and if necessary legal liability. The company's directors, supervisors and senior
management is responsible for the authenticity, accuracy, completeness and timeliness of the disclosed information
unless there is sufficient evidence showing he/she has fulfilled its due diligence obligations. The chairman, president,
chief financial officer bear the primary responsibility for the authenticity, accuracy, completeness and timeliness
of the disclosed information in the company's financial statements; the company would record and document the
52   2011 Annual Report




     Corporate Governance Structure




     fulfillment of relevant bodies' information disclosure duties and in accordance with the latest regulatory requirements
     and practical experience, continue to strengthen and implement the accountability system for significant errors of
     disclosure in the annual reports, so as to ensure the disclosure quality of annual reports.

     During the reporting period, there was no significant disclosure error in the company.

     8. Internal Control Self-assessment Report and Audit Agency Verification Opinion

     The Company has set up an internal control system. The Audit Department, Risk Management Department and
     Compliance Department have been set up for internal control monitoring and review purposes. The Audit Department
     is to deliver internal control review report to the Board on a regular basis.

     The Self-assessment Report:

     Board of Directors is responsible for establishing and maintaining financial report related internal control system. Its
     objective is to ensure that the information in financial reports is true and complete and reliable, and to prevent the
     risk of material misstatement. Due to the inherent limitations of internal control, the above objectives can only be
     reasonably guaranteed. In accordance with the Corporate Internal Control Basic Rules, the Board of Directors has
     evaluated the internal control of financial reporting and deemed it effective on December 31, 2011 (benchmark date).

     No significant non-financial reporting related internal control deficiencies were found in the internal control self-
     evaluation process, but there are room for improvement for certain products and business operations.

     (1) Problems and improvements identified in the internal control design: the consumer credit business process design
     needs further optimization of loan issuance and funding supervision, better implementation of payment management
     requirements, better compliance management and follow-up monitoring measures for funding usage, and enhanced
     design of regulatory process management.

     In view of this, the company systematically revised and improved its consumer credit business regulatory framework,
     developed supporting rules for consumer credit products in the field of individual housing, private commercial
     buildings, individual consumption, personal overseas study, and personal automobile consumption. At the same time,
     it optimized the risk review, warning and monitoring for consumer credit business, and developed entry management
     and post-loan management rules, with detailed regulations on entry management, basic requirements, procedures,
     post-loan management and risk monitoring. It set a clear framework for consumer credit products, increasing its
     efficiency while maintaining effective control.

     (2) Problems and improvements identified in the internal control execution: risk management and control for
     commercial bill business, and the enforcement of the new regulations for loans still need to be strengthened.

     The company took measures to improve the execution of internal control, including: First, to step up risk management
     efforts, strictly implement business review and approval requirements, strengthen reviewing the trading background
     authenticity of commercial bills with a strict ban on commercial bill business without real underlying trade. Second,
     to strengthen the review of the loan issuance and payment management under the principle of ‘loan based on actual
     payment'. The authenticity and rationality of the borrower's payment will be checked and analyzed, thus shifting from
     "nominal review" to "substantive review" in a bid to prevent loans from being diverted. Third, continue to improve the
     internal control system and strengthen the enforcement of internal control measures to guard against the risks arising
     from operational risk events, and ensure the implementation of the internal control system. Fourth, to further improve
     the internal assessment mechanism, increase accountability management, expand compliance training and publicity
     coverage, strengthen behavior management of managers and staff, continue to improve the compliance and sound
     operation awareness.
                                                                                                         2011 Annual Report   53



                                                                              Corporate Governance Structure




2) Verification Opinion of Auditor

All shareholders of Shanghai Pudong Development Bank Co., Ltd:

We have audited the effectiveness of the internal control for the financial report of Shanghai Pudong Development
Bank Co., Ltd. (hereinafter referred to as the "Company") dated December 31, 2011 in accordance with the relevant
requirements of the Internal Control Audit Guidelines and the Certified Public Accountant Practice Guidelines.

(1) the company's responsibility of internal control: according to the Internal Control Basic Rules, Internal Control
Application Guidelines and Internal Control Evaluation Guidelines, the establishment of a sound and effective internal
control system and evaluation of its effectiveness are the responsibility of the Company's Board of Directors.

(2) The Auditor's Responsibility: Our responsibility is, on top of the audit, to express an audit opinion on the
effectiveness of internal control for financial reporting, and disclosed major non-financial reporting internal control
deficiencies identified.

(3) the inherent limitations of internal control: due to internal control's inherent limitations, it's sometimes impossible
to prevent or detect misstatements. In addition, changes in circumstances may render internal control inappropriate,
or lower degree of compliance to control policies and procedures. Using the internal control audit results to predict
the future effectiveness of internal control contains some risk.

(4) the financial reporting internal control audit opinion: We believe that your company maintained effective financial
reporting internal control in all material aspects in accordance with the Internal Control Basic Rules and other
relevant provisions on December 31, 2011.



PricewaterhouseCoopers Zhong Tian CPAs Co., Ltd.                    Certified Public Accountants: Hu Liang, Zhou Zhang
                                                                                                2011 Annual Report   55



                                                General Shareholders' Meeting
                                                           General Shareholders’ Meeting




1. General Shareholders' Meeting

On April 28th, 2011, the company held the 2010 Annual General Shareholders Meeting. 171 shareholders or their
proxies casted their vote, which represented 7,979,553,469 shares, or 55.6112% of total shares. The meeting
adopted on-the-spot open ballot. It reviewed and approved the “2010 Directors Annual Report ”, “2010 Supervisory
Committee Annual Report”, “2010 Company Financial Statements and 2011 Annual Financial Budget Report” “2010
Profit Distribution Plan”, “the company's motion on the reappointment of Certified Public Accountants” , “Motion
to Issue Subordinated Bonds” etc, and formed resolutions. The meeting resolutions were disclosed in “Shanghai
Securities News”, “China Securities News” and “Securities Times” on April 29, 2011.
                                                                                                      2011 Annual Report   57




                                                                       Board Meeting Report
                                                                              Board Meeting Report




1. Management Discussion and Analysis

1) An overview of the Company's Business Operation

The reporting period is the first year of the company's new five-year strategic development. Facing a complex
economic and financial environment, the company conscientiously implemented the regulatory requirements from
national macro-control policies and regulatory authorities and actively supported the country's overall economic
development. With ‘customer-focused, innovation-driven and restructuring development' as the overarching principle,
SPDB maintained a steady pace of credit issuance, steadily pushed forward restructuring development, accelerated
innovation, improved management and the capacity for sustainable development, and achieved good operating
results.

——During the reporting period, the company's yearly operating revenue was RMB 67.918 billion, up by RMB 18.062
billion or 36.23% YoY. The company's before-tax profit reached RMB 35.839 billion, up by RMB 10.558 billion, or
41.76% YoY. Shareholders' before-tax profit reached to RMB 27.286 billion, up by RMB 8.109 billion, or 42.28% YoY.
During the reporting period, the company steadily expanded the scale of deposits and loans, net interest margin
increased gradually, intermediate business income increased YoY. Efficient cost control was the main drivers of
earnings growth. With increased earnings, the company's ROA is 1.12%, 0.11 pps higher than the previous year. As
the company complemented the private placement of capital on October 10, the return on equity had been diluted.
The fully diluted ROE was 18.33%, up by 2.74 pps YoY. During the reporting period, the company continued to cut
costs, with the cost to income ratio at 28.79%, 4.27 pps lower than 2010's 33.06%.

——By the end of the reporting period, the company's total assets stood at RMB 2684.694 billion, up by RMB
493.283 billion or 22.51%.The outstanding balance of general loans (both RMB and foreign exchange) stood at RMB
1331.436 billion, up by RMB 184.947 billion or 16.13%. The total debt stood at RMB 2535.151 billion, among which,
the outstanding balance of general deposits (both RMB and foreign exchange) stood at RMB 1851.055 billion, up
by RMB 210.596 billion or 12.84%. The outstanding balance of deposit stood in the middle and upper range among
joint-stock commercial banks. The ratio of deposit and loans for RMB and foreign exchange is 71.48% and 74.86%
respectively, strictly within regulatory range.

——During the reporting period, the company's credit business maintained steady growth with quite good assets
quality. Asset preservation work proceeded smoothly, with a reduction in the outstanding balance of NPL and NPL
ratio. As of Dec. 31, 2011, the NPL loans of the company (based on the 5-category classification of loans) stood
at RMB 5.827 billion, down by RMB 53 million and the NPL ratio was 0.44%, down by 0.07 pps YoY. The provision
coverage ratio of NPL reached 499.60%, up by 119.04 pps YoY. The company led the Chinese banking industry both
in terms of NPL ratio and provision coverage of NPL.

——By the year-end of 2011, the company's shareholders' equity was RMB 148.891 billion, 21.05% higher YoY.
Weighted risk assets totaled RMB 1560.180 billion, up by RMB 281.819 billion or 22.05%. Since weighted risk assets
rose faster than core net capital, the CAR ratio decreased from 9.37% to 9.20%. In October 2011, the company
successfully issued 18.4 billion yuan of subordinated debt, effectively adding to supplementary capital. Its Tier I CAR
increased from 12.02% in 2010 to 12.70%.

——New progress was made in its internationalized and integrated management of the Group as a whole. First,
the Hong Kong Branch was off to a good start. Within six months, the branch's operation became increasingly
smooth, with total assets of 5.392 billion yuan, issued loans of 3.175 billion yuan, a total deposit of 4.578 billion
yuan. It was actively expanding its customer base (including mainland companies doing business in Hong Kong and
Hong Kong local companies). More than 20 mainland institutions started cooperation with the Hong Kong Branch,
with coordinated assets at 2.624 billion yuan and initial cross-border synergy. Second, Management of rural banks
58   2011 Annual Report




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     and other investment institutions was strengthened. As of the end of 2011, the 13 rural banks saw huge business
     growth, total assets reaching 12.1 billion yuan, a 115% increase YoY; the pre-tax book profit was 193 million yuan,
     an increase of 1,768 %. Third, the financial leasing company and the Shanghai Pudong Development Silicon Valley
     Bank initiated by the company have been approved. The preparatory work is progressing smoothly.

     ——The company maintained its excellent reputation at home and abroad. In February, the company was ranked by
     Brand Finance (released by British Banker Magazine) at No. 92 among the Global Top 500 Financial Brands, or 18th
     among banks in Asia. In June, SPDB made The Bank Global 100 Bank List by core capital for the first time, ranking
     No. 64, 44 spots higher than the previous year, or 7th among Chinese banks. In July, it was named by “Forbes”
     magazine as a Global 2000 company, ranking No. 224, or 16th among Chinese companies and 7th among Chinese
     banks on the list. The company won the 2011 Board of the Year Award from the Shanghai Stock Exchange in its
     listed company's annual corporate governance initiative. SPDB was also voted by hexun.com as 2010 Top Ten Brand
     Bank, the Best List Company in CSR for 2010; it was voted by Money Weekly as the Main Board Listed Company
     with the Best Board of Directors in 2010. It also won the Best CSR Report Award for 2010 from the China Banking
     Association.

     2) An Overview of the Company's Financial Statement and Operating Income

     A. Increase in principal operating income, principal operating profit, net profit, cash and cash equivalent:
                                                                                                     Unit: RMB '000 Yuan
     Item                                           As at Dec. 31, 2011       As at Dec. 31, 2010        Up or down (%)
     Principal operating income                             67,917,672                 49,855,851                 36.23
     Principal operating profit                             35,756,727                 25,072,052                 42.62
     Net profit belonging to shareholders                   27,285,981                 19,177,209                 42.28
     Increase in cash and cash Equivalent                 145,031,549                  33,473,264                333.28

     Main Reasons for the Changes:
     (1) The increase in principal operating income was mainly due to the increase in assets scale, loan interest income,
         commission and fee income.
     (2) The increase in principal operating profit was mainly due to the growth in principal operating income, and cost
         control.
     (3) The increase in net profit was mainly due to the continued year-on-year growth in principal operating profit.
     (4) The increase in cash and cash equivalent was mainly due to the significant increase in asset allocation in other
         banks, who saw a big growth in deposits and loans with maturity shorter than 3 months.
     B. Principle operating income
     The company registered an operating income of RMB 67.918 billion, up by 36.23% YoY%, mainly due to the growth
     in assets scale, loan interest income, income reconstructing and rapid rise in commission and fees. Among which,
     loan interest income accounts for 90.46%, down by 0.21 pps from 2010, commission and fee income accounts for
     9.89%, up by 1.77 pps YoY.

                                                                                                     Unit: RMB '000 Yuan
                                                                               2011                                2010
     Loan interest income                                                 61,441,562                         45,203,510
     Commission and fee income                                             6,715,726                          4,048,546
     Other income                                                           -239,616                            603,795
     Operating income                                                     67,917,672                         49,855,851
                                                                                                2011 Annual Report      59



                                                                                     Board Meeting Report




Operating income by region:

    Operating income                                              Operating profit
                               Shanghai                                                    Shanghai
                               Beijing                                                     Beijing
                               Sichuan                                                     Sichuan
                               Tianjin                                                     Tianjin
                               Shandong                                                    Shandong
                               Guangdong                                                   Guangdong
                               Jiangsu                                                     Jiangsu
                               Henan                                                       Henan
                               Zhejiang                                                    Zhejiang
                               Liaoning                                                    Liaoning
                               Other regions                                               Other regions


Operating income by region:
                                                                                            Unit: RMB '000 Yuan
Region                                                   Operating income                            Operating profit
Shanghai                                                       10,831,878                                 2,708,450
Beijing                                                         3,224,894                                 1,609,492
Sichuan                                                         2,351,837                                 1,485,130
Tianjin                                                         2,802,989                                 1,807,385
Shandong                                                        2,772,088                                 1,551,215
Guangdong                                                       4,708,967                                 2,571,040
Jiangsu                                                         6,377,231                                 3,576,842
Henan                                                           3,626,818                                 2,136,982
Zhejiang                                                        9,903,178                                 5,581,792
Liaoning                                                        3,553,954                                 1,951,853
Other regions                                                  17,763,838                                10,776,546
Total                                                          67,917,672                                35,756,727


C. Shareholders' Equity

By the end of the reporting period, the listed company shareholder's equity stood at RMB 148.891 billion, up by
25.895 billion or 21.05% YoY. The company supplied the bank capital on time and the Capital Supplement Condition
was improved. Through its own net profit accumulation, the company's capital adequacy was improved.
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                                                                                                                         Unit: RMB '000 Yuan
                                                                               2011                        2010                          +-%
     Shareholder's equity                                                 18,653,471                 14,348,824                         30.00
     Capital Reserve                                                      59,543,902                 58,639,173                          1.54
     Surplus Reserve                                                      21,805,744                 15,249,813                         42.99
     General Risk Provision                                               18,700,000                  9,500,000                         96.84
     Undivided Profit                                                     30,188,118                 25,258,526                         19.52
     Parent Company's Shareholders Total Equity                       148,891,235                   122,996,336                         21.05
     Minority Shareholder's Equity                                          651,545                     283,514                       129.81
     Shareholder's Total Equity                                       149,542,780                   123,279,850                         21.30


     D. Internal Control for Items Related with Fair Value

     For financial instruments that can be traded on active markets, the company uses the active market quote to
     determine its fair value. For financial instruments for which no active markets exist, the company uses valuation
     model or third party quote to determine the fair value. Valuation technique includes reference to prices used in recent
     market trading by the voluntary institutions who are familiar with the instruments, reference to the current fair value or
     cash flow discount for other financial instruments with the same substance. The valuation technique will use market
     parameters as much as possible. However, for lack of market parameters, estimations have to be made in terms of
     credit spread of counterparty, market volatility and correlation, etc. These assumptions will have an impact on the fair
     value of financial instruments.

     Items related to fair value
                                                                                                                        Unit: RMB '000 Yuan
                                                                                 Fair value Accumulated fair    Loss provision
                                                                             change in the value change in     in the reporting
     Item                                             2010-12-31           reporting period          equity              period    2011-12-31
     Financial assets
     1. Financial assets calculated by                                -                5,272               -                  -     5,866,841
     fair value and whose change
     is included in equity(derivative
     financial asset not included)
     2. Derivative financial asset                      1,033,349                -484,562                  -                  -      548,787
     3. Financial asset available for sale           104,142,632                           -     -1,360,380                   -   147,929,131
     Subtotal of financial assets                    105,175,981                 -479,290        -1,360,380                   -   154,344,759
     Financial liabilities
     Derivative financial liabilities                   1,172,083                -342,946                  -                  -     1,515,029
     Subtotal of financial liabilities                  1,172,083                -342,946                  -                  -     1,515,029
     Note: there is no absolute articulation relation in this table
                                                                                                                  2011 Annual Report   61



                                                                                                  Board Meeting Report




Foreign Financial assets and liabilities held by the company
                                                                                                          Unit: RMB '000 Yuan
                                                                 fair value   Accumulated fair Loss provision
                                                            change in the      value change in in the reporting
Item                                           2010-12-31 reporting period              equity           period        2011-12-31


1. Cash, deposits in central bank               15,723,120                -                  -                -        24,413,267
and other banks
2. Placements with banks and                    12,179,465                -                  -                -          6,692,361
financial assets purchased under
resale agreements
3. Derivative financial asset                       507,213       -393,903                   -                -            113,310
4. Loans and advances                           38,043,187                -                  -        -166,297         50,280,470
5. Available for sale financial assets              268,804               -            14,610                 -          1,229,640
6. Held to maturity investments                     328,512               -                  -                -            314,444
Subtotal of financial assets                    67,050,301        -393,903             14,610         -166,297         83,043,492


1. Deposits with banks and other                 7,650,221                -                  -                -          5,046,397
financial institutions
2.Borrowed funds                                 3,345,145                -                  -                -          7,985,280
3. Derivative financial liabilities                 684,172       -807,525                   -                -          1,491,697
4. Deposits                                     49,656,122                -                  -                -        58,592,380
Subtotal of financial liabilities               61,335,660        -807,525                   -                -         73,115,754
Note: there is no absolute articulation relation in this table

3) Performance of Various Business Lines

A. Corporate Finance Business: In 2011, the company strengthened financial innovation with the enforcement of
the basic business by grasping the opportunities, advanced financial institution business transformation, promoted
the rapid and coordinated development of various businesses. Putting customer first, it offered comprehensive
financial service such as financing, wealth management, investment banking, cash management, electronic banking,
asset custody, etc. At the end of 2011, the company had over 740,000 corporate clients, up by 120,000 YoY. The
company's customer base continues to expand, with improved client structure, steady improvement in business
profitability, and continuous optimization of business and revenue structure.

——Corporate deposit/loan business: by the end of 2011, total corporate deposits stood at RMB 1528.137 billion, up
by 163.800 billion or 12.01% YoY. Total corporate loans were RMB 1070.131 billion, up by RMB 141.510 billion or
15.24%. Corporate NPL ratio was 0.47%, down by 0.09% from the beginning of 2011.

——Small & Medium Enterprises business: In this reporting period, the total credit line for small and medium-sized
enterprises (as per regulatory caliber) was 981.045 billion yuan to a total of 35,692 credit customers, with BS loans
totaling 541.686 billion: or an increase of 31.46%, 28.87% and 13.55% YoY respectively.

——Investment Banking Business: A total of 61.4 billion yuan of corporate debt financing instruments were
underwritten in the year, up 16% YoY; syndicated loan balance by the end of the year stood at 84.4 billion yuan, an
increase of 22% YoY, ranking high among joint-stock banks. 5.866 billion yuan in M&A loans were issued. SPDB also
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     actively developed Green Finance. By the end of 2011, the company's energy saving and environmental protection
     class loans totaled 25.5 billion yuan, an increase of 18% compared to the beginning of the year.

     ——Trade settlement business: The accumulated International Settlements (BIS) volume was $ 181.7 billion, an
     increase of 35% over the same period in 2010; factoring business volume was 100.4 billion yuan, up 124% YoY.

     ——Asset custody business: By the end of the reporting period, the size of the asset custody business was 271.025
     billion yuan, an increase of 35% YoY; the yearly custody fee income was 330 million yuan, up 60% YoY.

     ——Pay settlement business: a new integrated depository system with third-party securities depository, trading
     market depository and provision depository functions was launched, with annual depository fee income of 180 million
     yuan. The new Yinguantong System was successfully developed and launched. By the end of the reporting period, it
     had acquired 1,930 contract customers.

     ——Pension business: by the end of the reporting period, there were 302,300 individual accounts for enterprise
     annuity, with actual annuity balance of 18.768 billion yuan. It launched company mandate and trust benefit products,
     providing benefit plan management services for more than 80 enterprises.

     B. Personal Financing Service: Under the principle of “customer-centric and market-oriented”, the company
     accelerated business restructuring, enhanced system development, implemented customer segmentation and
     category-specific management, and improve the product system. It also focused on channel development, optimized
     business processes, improved service efficiency and brand influence, enhanced overall marketing capability and
     market competitiveness, and continued to maintain a rapid development of personal financial services, with main
     operation indicators ranking high among joint-stock banks. By the end of the reporting period, the number of
     individual customers increased by 2.416 million from that at the beginning of the year, with high-quality individual
     customers exceeding 1.5 million.

     ——Individual deposits: Stressing the basic role of savings deposits for individual financial business, it continued
     to improve the growth mode of savings deposits and promote the rapid growth of savings deposits, with individual
     deposit-taking business hitting new highs. By the end of 2011, the new individual deposits were 46.796 billion yuan,
     or an increase of 16.95%, individual deposit balance reaching 322.918 billion yuan.

     ——Individual loans: mortgage loans continued a good momentum, and business loans made new breakthrough. In
     late 2011, the company's individual loan balance was 261.305 billion yuan, up by 43.436 billion yuan, or 19.94%. Its
     share increased by 0.63 percentage points YoY. With growth in scale and efficiency, individual loans saw a decline in
     NPL ratio, at 0.33% at the end of 2011, down 0.02 percentage points YoY.

     ——Personal financial Services: Focusing on customer needs, the company continued to enrich basic product line
     and made many breakthroughs in wealth management business via product innovation. It launched innovative
     financial products such as Tiantianying Phase One, Zhouzhouxiangying Phase one. During the year, it independently
     developed 844 financial products, introduced 200 fund and securities aggregate account products and 74 insurance
     products while further strengthening the ‘one-to-many' fund accounts, aggregate capital trust scheme and other
     high-end customer products to enhance customer satisfaction. The sales of wealth management products increased
     146% YoY.

     ——Electronic banking: It continued to improve the "Six in One" channel system and channel service functions. The
     TV banking business was officially launched in Shanghai. Also launched were a new mobile banking client software
     and new functions on ATMs (for example, using cards from other banks to repay SPDB's credit card; making
     deposits without a bank card). The shift to no-contact IC card reader on ATMs was completed, making SPDB the first
     bank to use no-contact IC card readers on all ATMs. With increasing BD ability, the online banking had 3,249,800
                                                                                                      2011 Annual Report   63



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active customers, with 204,800 mobile banking customers. It also had 5,183 self-service machines in 3,069 self-
service outlets. The service capabilities electronic banking were further enhanced, which accounted for 78% of total
transaction.

——Bank card business: Giving full play to the bank card's value as personal financial services platform, it enhanced
payment and settlement services, cross-industry value-added services innovation and bundled marketing efforts,
and launched PBOC2.0 Financial IC cards, further enriching co-branded cards and theme cards. By the end of the
reporting period, 24.72 million Orient Card and Easy Financial Management were issued, with 2,944,200 new cards
for the year. Card deposits amounted to 199.4 billion yuan, accounting for 62% of the total individual deposits, with
an average card deposit of 8068 yuan, up 5 % YoY. Card consumption amounted to 149.4 billion yuan, up 55% YoY.

——Credit card business: It accelerated product innovation and function integration, improved service quality and
expanded brand influence. The credit card issuance, consumption and overdraft increased steadily, with significantly
improved profitability. Based on customer demand, it introduced a variety of theme cards, feature cards and co-
branded cards to enrich the product line and improve customer service. Working with Citibank, it issued 1.49 million
new co-branded credit cards this year, making the cumulative number over 6.11 million by the end of the reporting
period; POS consumption exceeded 53.5 billion yuan, with 1.24477 billion in operating income, up 45% YoY, among
which interest income was 577.76, credit card middle income (including fees, etc.) was 667.01 million yuan.

C. Asset Business:

By the end of 2010, capital assets of the whole bank reached RMB 1.3399 trillion, accounting for 49.8% of total
assets, up by 2.9 pps YoY, among which, bond investment stood at RMB 316.0 billion, up 86.1% YoY. And the funds
for short-term investment amounted to RMB 461.35 billion. Interest income was 37.636 billion yuan, up 85.2% YoY;
non-interest income was 438 million yuan, up by 302 million yuan or 291% YoY. In 2011 SPDB issued a total of 572.8
billion yuan worth of financial products, and the accumulated volume of proxy and proprietary foreign exchange
transaction was USD 486.4 billion.

D. Network Expansion: In the reporting period, the company enhances network expansion and innovation-driven
development, and opened Xiamen Branch and Hong Kong Branch and 86 new business outlets. So in total the
company had 37 branches and 741 outlets in 159 cities across China. At the same time, it continued to boost
outlets' efficiency and explore their potential in a bid to improve outlets' comprehensive service functions. It released
Guidance on Accelerating the Development City Sub-branches to regulate the management capacity and improve
services and efficiency across all outlets. In addition, the Shanghai Pudong Development Silicon Valley Bank and the
financial leasing company have been approved by the CBRC, laying the foundation for integrated financial business.

E. Operations Support and Information Technology: Continuing to promote service integration and encourage
branches to use window resources to carry out passive sales. It fully implemented the next-generation outlet network
platform, with a go-live rate of 87%; it orderly developed the second-generation payment systems, supporting
branches to offer unique local business. Shifting from manual to system monitoring of risks, the comprehensive
reconciliation rate by account balance was 99.5%; in the reporting period, the head office's core system and 18
branches' front-end system were successfully upgraded, completing a new generation of information systems
architecture blueprint and implementation road map. The second phase of the temporary disaster recovery 119
Project was successfully concluded, ranking high among joint-stock banks in terms of disaster recovery. The
availability of critical systems all reached 99.9%, the medium-term planning goals.
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     2. Long-term investment made by the company

                                                                                                               Unit: RMB '000 Yuan
     Investment amount in the reporting period                                                                          1,856,861
     Increase or decrease of investment amount in the reporting period                                                   420,387
     Percentage of investment amount change in the reporting period                                                         29.27


                                                                                                               Unit: RMB '000 Yuan
                                                                                     Equity held
     Investee                                          Major operating activities            (%) Notes
     Shanghai United International Investment Co. Investment                              16.50 Cost-based accounting method
     China Union Pay                                   Bank card settlement               3.715 Cost-based accounting method
     First Sino Bank                                   Banking business                       30 Equity-based accounting method
     AXA SPDB Investment Mangers                       Fund investment                        51 Equity-based accounting method
     LAI SHANG Bank                                    Banking business                       18 Cost-based accounting method


     By Dec 31, 2011, outstanding balance of long-term investment was RMB 1.857 billion, up by RMB 0.421 billion YoY,
     mainly from investment in LaiShang Bank and the increased investment return under equity-based method

                                                                                                               Unit: RMB '000 Yuan
                                                                                      2011                                  2010
     Investment on cooperative enterprise                                            18,502                                39,036
     Investment on affiliated enterprise                                            710,739                              629,818
     Other long-term equity investment                                         1,127,620                                 767,620
     Total                                                                     1,856,861                                1,436,474
     Notes: Cooperative enterprise includes AXA SPDB Investment Mangers

         Affiliated enterprise includes: First Sino Bank. Other long-term equity investment includes: Shanghai
     United International Investment Co., China Union Pay, LAI SHANG Bank

     3. Utilization of Funds Raised

     On Sep. 23, 1999, the company issued 400 million common shares in the capital market at an offer price of RMB
     10 yuan and raised a total of RMB 3.955 billion capital. On Jan. 8, 2003, the company issued another 300 million
     new shares at an offer price of RMB 8.45 yuan and raised a total of RMB 2.494 billion capital. On Nov. 16, 2006, the
     company issued another 439,882,697 new shares at an offer price of RMB 13.64 yuan and raised a total of RMB 5.91
     billion capital. On Sep. 21, 2009, the company issued privately 904,159,132 shares at an offer price of RMB 16.59
     yuan and raised a total of RMB 14.826 billion capital. On October 14, 2010, the company issued 2,869,764,833 non-
     public shares at a price of 13.75 yuan/share and raised total of RMB 39.199 billion after deducting the issuing cost.
     The raised funds have been approved by the Chinese Banking Regulatory Commission and the People's Bank of
     China; all were used to replenish the company's asset capital and improve the company's capital adequacy ratio,
     significantly enhancing shareholders' equity and the anti-risk ability, paving the way for the company's development.
     By strictly following usage plans for raised funds, the company effectively used them and achieved remarkable
     results.
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4. Changes to the company's accounting policies and accounting estimates, significant
  accounting errors

During the reporting period, there were no changes to the company's accounting policies and accounting estimates,
or any significant accounting error

5. Analyses of the Financial Strength and Performance

1) Key Performance Indicator Change and Reasons
                                                                                                          Unit: RMB '000 Yuan
Item                       As of Dec. 31, 2011 As of Dec. 31, 2010       +-% Main Reasons
Total assets                   2,684,693,689          2,191,410,774    22.51 Loan issuance and increase in relevant
                                                                             banks
Equity investment                     1,856,861           1,436,474    29.27 Increased investment in LaiShang Bank
Fixed assets                          8,137,072           7,433,139      9.47 Increase in investment in fixed assets
Total liabilities              2,535,150,909          2,068,130,924    22.58 Increase in deposit and liabilities of relevant
                                                                             banks
Investment return                      194,415               22,212   775.27 Growth in investment return from precious
                                                                             metals
Shareholders' equity             148,891,235            122,996,336    21.05 Accumulation of operating profits


2) Changes over 30% and Reasons
                                                                                                          Unit: RMB '000 Yuan
Item                                    End of 2011 End of 2010       +-% Reasons for change
Placement in other banks               267,876,482    69,539,713   285.21 Increase allocation in banking sector assets
Capital lent out                        111,415,298   31,253,465   256.49 Increase capital lent out to domestic banks
Precious Metal                             683,246        2,090 32,591.2 Increased investment in gold
Derivative financial assets                548,787     1,033,349   -46.89 Changes in fair value of derivative financial
                                                                          assets
Interest receivable                      11,071,074    6,492,715    70.52 Rise in interest bearing assets and interest rate
                                                                          hikes
Available-for-sale financial assets    147,929,131 104,142,632      42.04 Increase in position of central bank bills
Divided into loans and                   8,759,536     3,707,122   136.29 Increase in renminbi financial bonds position
receivables, investment
Construction in progress                   457,178       85,525    434.55 Building new offices, increased investment in
                                                                          ongoing projects
Other assets                             4,833,068     8,129,289   -40.55 Some guaranteed financial products reaching
                                                                          maturity
Deposits with banks and other          440,908,269 337,818,819      30.52 Increase in relevant banks' liabilities
financial institutions
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     Item                                End of 2011 End of 2010         +-% Reasons for change
     Capital borrowed                     66,970,025    14,415,145     364.58 Increase in capital borrowed from domestic banks
     Sell under agreement to              86,019,569    16,963,471     407.09 Increase in this type of asset
     repurchase financial assets
     Tax payable                           6,509,666     4,178,533      55.79 Increase in operating profit and income tax
     Interest payable                     20,278,588    11,753,812      72.53 Increase in interest bearing liabilities and rate
                                                                              hikes
     Bonds payable                        32,600,000    16,800,000      94.05 18.4 billion in subordinated debt was released
     Share capital                        18,653,471    14,348,824      30.00 Dividend payment and increase in share capital
     Surplus reserve                      21,805,744    15,249,813      42.99 Implementation of the profit distribution plan,
                                                                              increase in surplus reserve
     General risk provisions              18,700,000     9,500,000      96.84 Implementation of the profit distribution plan,
                                                                              increase in general risk reserve


     Item                       Jan-Dec, 2011 Jan-Dec, 2010            +-% Reasons for change
     Net interest income           61,441,562    45,203,510           35.92 Increase in deposit and lending and investment
                                                                            business; higher spread
     Fee and commission             6,715,726      4,048,546          65.88 Improved income mix, increase in fee and
     income                                                                 commission income
     Investment Income               194,415            22,212       775.27 Better return from precious metal investment
     Losses due to fair value        -859,837          -87,630       881.21 Changes in fair value of derivative instrument due
     changes                                                                to market interest rate fluctuation
     Exchange gains                  242,996           540,420       -55.04 Big rise in RMB exchange rate, lower FX return
     Other operating income          182,810           128,793        41.94 Increase in rental and other income
     Business tax and               4,898,888      3,395,394          44.28 Increase in income, tax and surcharges
     surcharges
     Impairment of assets           7,499,975      4,587,419          63.49 Increase in total loans
     Other business costs            208,499           320,865       -35.02 Decrease in other business costs
     Non-operating income            157,357           247,829       -36.51 Reduction in income from disposal of non-current
                                                                            assets
     Non-operating expense            74,796            38,975        91.91 Increase in losses from disposal of non-current
                                                                            assets
     Income tax                     8,484,175      6,102,319          39.03 Increased profits
     Net profit attributable       27,285,981    19,177,209           42.28 Steady growth in deposits and loans, higher spread
     to shareholders of the                                                 and commission and fee income, effective cost
     parent companies                                                       control
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7. No major asset loss due to joint liability from offering external guarantee

8. Prospects of Future Development

1) the development trend of the banking sector and market competition landscape and their impact
on the company

At present, China's economy is moving in the expected direction of macro control, with increasing efforts for
economic structural adjustment, accelerating change of the mode of development, which created favorable
conditions for the restructuring and development of commercial banks. The central government's economic work
conference and the national financial work conference in 2012 set the tone of maintaining stability while achieving
progress. Focus will be on boosting domestic demand and developing the real economy. This will encourage banks
to put more resources inconsumption-oriented, service-oriented and innovation-based sectors, to increase efforts to
support small and medium-sized enterprises, services and high-tech industries, and to optimize the basic structure of
financial services.

Social financing structure will be further optimized, development of direct financing, especially the bond market
will accelerate, and commercial banks are facing more pressure of financial disintermediation. This will encourage
commercial banks to step up innovation efforts, dig deeper into customer needs, and foster new business growth
spot. Meanwhile, the pace of interest rate marketisation and internationalization of the RMB is accelerating; exchange
rate is getting more flexible. These pose challenges for commercial banks in the traditional profit model and risk
management model. Commercial banks need to take the initiative to deal with it by optimizing customer structure
and income structure, vigorously develop low capital consumption business, reduce dependence on spread income,
strengthen overall risk management, and enhance overall ability to resist risks, in order to protect the stability of the
bank's sustainable growth.

2) Future Development Opportunities and Challenges that the Top Management Concerns

In 2012 with increased efforts to adjust economy development model, commercial banks will have an important
opportunity for restructuring and development. First, the country's strategic focus will be to boost domestic demand
and develop the real economy and promote the continuous optimization of the basic structure of financial services.
Second, the state is stepping up efforts to support small and medium enterprises and rural finance, which helps
commercial banks to foster new business growth engines. Third, household income is growing, income distribution
structure is improving and consumption is making significantly more contribution toward economic growth. All these
create more favorable conditions for commercial banks to accelerate the development of retail business. Fourth, the
proactive fiscal policy, structural tax cuts, reduction in the cost of doing business, regulation for local government
financing behavior help commercial banks to support economic development. Fifth, accelerated upgrading industry
structure, new financial needs expanded the blue ocean for commercial banks. Sixth, accelerated financial industry
reform encouraged innovation from various types of financial institutions, bringing financial institutions and financial
business to a new stage.

At the same time, complex and volatile economic and financial situation brought severe challenges for commercial
banks. First, the transformative capacity of commercial banks faces a new test. With increasing downward pressure
on economic growth, the shift to market-based interest rate keeps accelerating; banks' business model is facing
rising pressure for change and transition. Second, it's getting hard for commercial banks to maintain a momentum of
rapid development. With continued implementation of prudent monetary policy, the scale of credit will continue to be
controlled, declining interest rates will repress enhancement of capital asset class gains, posing pressure for bank
business development and revenue increase. Third, superposition of many types of risk leads to new challenges
for risk management, especially potential risks associated with continued regulation for real estate, government
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     financing platform clean-up, slowdown of foreign trade, etc. It means big risk control pressure for commercial
     banks. Fourth, there is also pressure for sophisticated management capabilities. With complex and volatile external
     environment and sustained economic structure adjustment and transformation, it's hard for commercial banks to
     grasp the directions for credit issuance, with new challenges for refined management and allocation of resources in
     specific segments

     3) Business Development strategy for the New Year

     The guiding principle in 2012: fully implement the spirit of the Central Economic Work Conference and the national
     financial work conference, carry out the general requirements of the Bank Conference on Strategic Management,
     take the new five-year plan strategy as guideline, adhering to scientific development mode, keep steady growth,
     increase debt management capacity, and effectively strengthen market position; improve strategy execution, put
     customer first, strengthen innovation, speed up restructuring and development, optimize business structure, enhance
     revenue; improve processes and efficiency, have more robust, prudent and effective risk management in a bid to
     maintain and expand the good momentum of comprehensive, coordinated and sustainable development.

     4) Business Goals for the New Year

     ——Total assets reach 3.04 trillion yuan, or up by nearly 14 percent YoY;
     ——Total loan balance reaches 1.49 trillion yuan, up by 12.5%;
     ——Total deposit balance reaches 2.08 trillion yuan, an increase of 13%;
     ——After-tax profit growth of more than 17%, faster than that of total assets;
     ——Non-performing loan ratio (according to “five category” method) can be controlled at 1 % or less by the end of
       the year.
     5) New Measures in the New Year

     In 2012, the company will continue to implement the five-year development strategic planning and customer-centric
     strategy by paying more attention to the co-ordination, execution improvement, and strive to achieve a coordinated
     development of the size, structure, effectiveness and quality. The main measures are as follows:

     ——Enhance client management, promote the steady growth of the main business and income. First, deepen
     customer system development, strengthen customer base, expand the size of various customer segments, build a
     unified customer view, and deepen classified management of customer segmentation. Second, effectively broaden
     the sources of liabilities, enhance the financial strength of the bank, adhere to the development of basic deposit,
     attract more and more stable liabilities via customer management and product management, and take timely
     and proper active liabilities while controlling its share in total liabilities. Third, effectively serve the real economy,
     strengthen sophisticated allocation of credit resources, implement the "combining support with constraint" principle,
     support key ongoing construction projects, screen customers in traditional sectors, actively support emerging
     industries, accelerate the development of business transformation, and focus on improving revenue.

     ——Strengthen the effectiveness of innovation, and continue to enhance customer service capabilities. First, to
     accelerate the pace of product innovation, enhance the scope and contribution of intermediary business, continue
     to enhance innovation for emerging business areas, turn existing innovations to greater economic benefits, conduct
     pilot projects for key innovative business, and institutionalize innovation and its promotion. Second, to strengthen
     channels and business model innovation, improve service efficiency, unify electronic channel customer view, improve
     bank card payment and settlement system, speed up the cooperation project with China Mobile, strengthen online
     banking sales and service capabilities, and promote the "credit factory" business model.
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——Adhere to the bottom line of risk management, strengthen internal compliance management. First, guard
against risks in key areas, enhance the forward-looking nature of risk management, focus on systemic problems in
key regions, industries, and varieties, and guard against credit risk, compliance risk and reputation risk. Second,
to broaden the scope of risk management, strengthen comprehensive risk management, conduct consolidated
risk management, expand non-credit business management, and strengthen the management of emerging areas
such as information technology and country specific risk. Third, to optimize risk management models, promote the
implementation of the new Capital Accord, change the implementation of the new Basel Capital Accord from project-
driven to management-driven. Fourth, continue to strengthen the compliance internal control and audit management
and pay close attention to case prevention and control.

——Improve overall operating system and basic management. First, optimize institutional mechanisms, match rights
and responsibilities, build customer sharing system, integrating various types of processes, improve the efficiency
of bank operations and customer service, and strengthen strategic coordination with various investment institutions.
Second, to enhance operational efficiency, promote outlet transformation, enhance outlet passive sales capability,
strive to play up the advantage of centralized operation. Third, to speed up the development of key systems, optimize
marketing data analysis applications, strengthen information technology management, promote the construction
of a new generation information systems and enhance the level of information support. Fourth, to strengthen the
management of assets and liabilities, strive to grasp the rhythm of development, improve financial management
system and internal pricing, follow regulatory policy adjustment and make good capital planning and supplement.
Fifth, to deepen human resources management, strengthen personnel training, improve allocation of human
resources to meet development needs.

6) Risk Factors that may impact on the company's future development strategies and business
  objectives

First of all, the uncertainty of volatile economic fundamentals has some influence on the company's operation. The
overall world economic situation is grim, with stagnant growth in developed economies. Emerging markets are in
a period of adjustment, and the overall inflationary pressure is still high. European debt crisis continued to spread,
which accelerated the flow of risk-averse funds and intensified international financial market turmoil. Although the
overall domestic economy remained stable, there was downward pressure on economic growth. With high prices and
potential risks in the economy, some industries and enterprises facing funding pressure. Risks and spillover in some
key sectors pose pressure on banks' operation.

Second, changes in regulatory policy also have some impact. In accordance with the general idea of achieving
progress while maintaining stability, the state continues to implement proactive fiscal policy and prudent monetary
policy with increased focus, flexibility and forward-lookingness. Monetary policy will be fine tuned in a timely manner
depending on economic growth. And in accordance with the principle of "combining support with constraint", it
focuses on financial support for the real economy, and guides and promotes credit structure optimization. Counter-
cyclical macro-prudential framework was further improved with strengthened prevention of systematic, regional risks
and risks in key areas. Adjustments and changes of the policy environment will have an important impact on banking
business activities.

Peer competition also poses pressure on the company. Financial sector reform is expected to accelerate, social
financing structure will continue to optimize, direct financing, and especially the bond market will accelerate its
development. The nation will constantly promote the interest rate marketization and the internationalization of
the RMB, increasing the disintermediation pressure for commercial banks and posing greater challenges for
the traditional profitability mode and risk management and control model. At the same time, domestic banks are
accelerating the pace of strategic transformation with a focus on customer, and have introduced new competitive
initiatives. Some banks have formed distinguished mode of service and market brands, forming initial comparative
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     advantage in specific areas. Pattern of development in the financial industry and changes in competition within the
     industry will impact bank operation.

     9. The Daily Work of the Board

     1) The Board Meeting and the Resolutions

     A. On January 31, 2011, the 14 session of the 4th Board of Directors was held by way of correspondence voting. It
     adopted the following resolutions: "Motion on organization setting in 2011", "Motion on granting credit to First Sino
     Bank, "Motion on interim rules for consolidated BS administration". The relevant resolutions of the meeting were
     disclosed in the China Securities Journal, Shanghai Securities News and Securities Times on February 1, 2011

     B. On March 28, 2011, the Fifteenth Session of the Fourth Board was held in Shanghai which voted on and adopted
     the following documents: "the Board of Directors annual report in 2010," “2010 annual operating report”, “Independent
     directors annual work report in 2010”, "2010 annual report and its summary”, “2010 annual financial statements and
     2011 financial budget report”, “Motion on the company's 2010 profit distribution”, “Director performance evaluation
     report in 2010”, “Appraisal and remuneration of senior management in 2010”, "Annual internal control evaluation
     report in 2010”, “2010 CSR Report", “2010 affiliated transactions motion”, “Motion on engaging new accounting firm”,
     “Motion on redemption of subordinated bonds in 2006", “Motion on the issuance of subordinated bonds”, "Director
     performance evaluation rules (2011 Amendment)", "Internal control implementation program and evaluation”,
     “Internal Capital Adequacy assessment Procedures", " Motion on 2010 business risk appetite policy implementation
     and 2011 risk appetite business strategy”, “Country specific risk management policies”, “Board of Directors report
     on the placement and usage of raised funds in 2010”, “Motion on convening a general meeting of shareholders".
     Resolutions of the meeting were published in the China Securities Journal, Shanghai Securities News, and Securities
     Times on March 30, 2011.

     C. On April 28, 2011, the Sixteenth Meeting of the 4th Board of Directors was held by way of correspondence vote,
     and adopted SPDB 2011 First Quarter Report. Resolutions of the meeting were published in the China Securities
     Journal, Shanghai Securities News and Securities Times on April 28, 2011.

     D. On May 25, 2011, the 17th Meeting of the 4th Board of Directors was held by way of correspondence vote and
     adopted the following resolutions: "2011-2014 Shanghai Pudong Development Village Bank Development Plan",
     "Motion on new investment in Shanghai Pudong Development Village Bank. Resolutions of the meeting were
     published in the China Securities Journal, Shanghai Securities News and Securities Times on May 26, 2011.

     E. On July 15, 2011, the 18th Meeting of the 4th Board of Directors was held by way of correspondence vote and
     adopted the following resolutions: "Motion on the establishment of Investment Management Dept.”, “Company
     strategic planning and management rules". Resolutions of the meeting were published in the China Securities
     Journal, Shanghai Securities News and Securities Times on July 19, 2011.

     F. On July 29, 2011, the 19th Meeting of the 4th Board of Directors was held by way of correspondence vote and
     adopted the following resolutions: Motion on adding two indicators in the 2011 budget report”, “Motion on outsourcing
     risk management policies”. Resolutions of the meeting were published in the China Securities Journal, Shanghai
     Securities News and Securities Times on July 30, 2011.

     G. On August 12, 2011, the 20th meeting of the 4th Board of Directors was held in Changsha and adopted the
     following resolutions: "2011 semi-annual report and its summary”, “2011-2015 strategic development plan", “Motion
     on write-off of credit asset loss", “Motion on write-off of credit card loss”. Resolutions of the meeting were published
     in the China Securities Journal, Shanghai Securities News and Securities Times on August 16, 2011.
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H. On August 30, 2011, the 21st Meeting of the 4th Board of Directors was held by way of correspondence vote and
adopted the following resolutions: “Motion on supplementary regulations on mid-long-term loan repayment and
repayment period”, “Motion on the revision of the ‘2011 business risk appetite strategies' for market risk regulatory
capital limits”. Resolutions of the meeting were published in the China Securities Journal, Shanghai Securities News
and Securities Times on August 31, 2011.

I. On October 28, 2011, the 22nd Meeting of the 4th Board of Directors was held by way of correspondence vote. 19
directors participated and voted and adopted the following resolutions: "2011 third quarter report", “Fair value of
financial instruments valuation policies” and “Motion on outsourcing scope and relevant arrangements”. Resolutions
of the meeting were published in the China Securities Journal, Shanghai Securities News and Securities Times on
October 29, 2011.

J. On 25 November 10, 2011, the 23rd Meeting of the 4th Board of Directors was held in Nanjing, and unanimously
adopted the following resolutions: " Motion on pre-assessment application of the implementation of the new Capital
Accord", "Motion on the implementation of new-generation information system construction project”, “Motion on
regional adjustment of village bank”, “Motion on extending the validity of the resolution on issuance of financial
bonds”, “Motion on senior management compensation in 2010”, “Motion on write-off of the second batch credit asset
loss in 2011”, “Motion on write-off of the second batch credit card loss in 2011”. Resolutions of the meeting were
published in the China Securities Journal, Shanghai Securities News and Securities Times on November 29, 2011.

2) Board of Directors' implementation of the resolutions of the shareholders' meeting

The company's 2010 profit distribution plan was adopted by the 2010 Annual General Meeting, namely 1.60 yuan
in dividend distribution (including tax) for every 10 common shares and 3 bonus shares for every 10 shares. Share
registration date was June 2, 2011, ex-dividend date was June 3, 2011, bonus shares listing date was June 7,
2011, and cash dividend payment date was on 2011 June 13. Notice was published in the China Securities News,
Shanghai Securities News and Securities Times on May 30, 2011. The distribution plan has been implemented.

3) Summary report of Board Audit Committee performance

During the reporting period, the Board of Directors Audit Committee held four meetings to review 17 motions such as
the 2010 business report, Notes to 2010 financial report, 2010 annual report and its summary, 2010 profit distribution
plan, 2010 annual financial statements, 2011 annual financial budget report, Board self-assessment report on internal
control in 2010, Motion to engage an accounting firm.

Board of Directors Audit Committee reviewed the financial statements prepared by the company before the arrival
of the CPAs and believed that the financial statements shall be submitted to the CPAs for audit. After CPA auditors
arrived, the Audit Committee worked with the accounting firm to determine the timeline of this year's financial report
audit work. During the audit process, the Audit Committee maintained continuous communication with auditors on
relevant issues, and urged the auditors to deliver the audit report within the timeline while ensuring the quality of
audit work.

After CPA auditors issued preliminary audit opinions, the Audit Committee once again reviewed the company's
financial statements and thought it truly, accurately and completely reflected the company's overall situation and
formed a written opinion.
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     4) Board Remuneration and Appraisal Committee Summary Report

     During the reporting period, the Board Remuneration and Appraisal Committee held two meetings to review
     the “Motion on senior management performance and remuneration in 2010”, “2010 remuneration distribution
     implementation”, and “Directors performance of their duties and evaluation system”.

     Remuneration and Appraisal Committee carefully studied and reviewed the company's remuneration management
     system and the assessment criteria, remuneration policies and programs for directors (salaried directors) and
     senior management, and oversaw the implementation of the remuneration package. Remuneration and Appraisal
     Committee believes that in 2011, as per relevant laws, regulations and terms of reference set in the articles of
     association, under the direction and mandate of the Board, the company's management actively fulfilled their duties
     with integrity and diligence, comprehensively promoting the company's operation and management. Adhering to
     scientific development outlook, promoting performance, innovation and transformation, focusing on compliance and
     institution-building, they completed the 2011 business objectives and plans issued by the Board of Directors, further
     enhanced corporate value and shareholder value. The Board Remuneration and Appraisal Committee expressed
     satisfaction with the senior management's performance in 2011.

     5) Insiders and External Information User Management

     The company has made the Insider Information Management System and External Information User System as
     per the China Securities Regulatory Commission Insiders Registration and Management System Rules, which
     clearly stipulated that reporting and disclosure procedures must be followed and relevant laws and regulations must
     be obeyed if documents sent to shareholders and other external information users contain undisclosed material
     information. Before statutory disclosure of information is publicly disclosed, any department or individual shall not
     leak it out in any form. The directors, supervisors, senior management and other insiders shall strive to minimize the
     number of people privy to the material information before its disclosure. They must not leak out insider information,
     nor engage in insider trading or help others manipulate the prices of securities and derivatives. The company had
     effective insider registration and administration based on flow of insider information.

     During the reporting period, through self-examination and the special inspection from the CSRB Shanghai, insider
     information holders didn't use insider information to trade shares of the company before sensitive material information
     affecting the company's stock price was disclosed. The company will continue to meet regulatory requirements and
     draw on practical experience to standardize and strengthen the management for insider information holder and
     external information transmission, and further improve management system.

     10. Distribution of Profits

     1   2011 Profit Distribution Plan

     As per the company's audited Annual Report 2010, the company made a total profit of RMB 27.208 billion in 2011.
     With the un-distributed profit of RMB 25.259 billion as at the beginning of 2011 and minus the distributed profit RMB
     19.636 billion for 2010, the total distributable profit amounted to RMB 32.831 billion. In accordance with the Ministry
     of Finance's financial enterprises NPL provision management rules, financial institutions engaged in deposit and loan
     business should make provision for general risk reserve at a certain percentage of net profit after tax. Therefore, the
     company shall charge general risk provisions of RMB 0.35 billion, with the sum of general risk provision totaling RMB
     23.05 billion, no less than 1% of the risk-weighted assets.
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So the company puts forward the following proposal for profit distribution for 2011

       (1) To charge 10% out of the profit as regulatory surplus reserve, totaling RMB 2.721 billion;
       (2) To charge 20% out of the profit as discretionary surplus reserve, involving a total amount of RMB 5.442
           billion;
       (3) To charge a total amount of RMB 4.350 billion as general risk reserve;
       (4) To distribute 3 yuan for each 10 shares for common share holders with a distribution base of 18,653,471,415
           total shares by the end of 2011. The total dividend distribution amounted to RMB 5.596 billion.
       After the execution of the above profit distribution plan, the non-distributed profit will stand at RMB 14.722 billion
       and shall be brought forward to the next year.
2. Dividends in the Previous Three Years:
                                                                                                            Unit: RMB '000 Yuan
                           The amount of        Number of gift         Actual cash
                           cash dividends     shares for every            dividend    Net profit for that        Cash dividend
Year                        (including tax)         10 shares       (including tax)                 year              ratio (%)
2008                                   2.3                   4          1,302,109           12,516,135                    10.40
2009                                   1.5                   3          1,324,507           13,218,351                    10.02
2010                                   1.6                   3          2,295,811           19,175,675                    11.97

3. The company's cash dividend policy formulation and implementation

Articles of association Article 245 provides that "The Bank may distribute profits in the form of cash or stock
dividends. The profit distribution policy of SPDB should maintain a certain degree of continuity and stability. The
cumulative cash dividends in the last 3 years should not be less than 30 per cent of the average annual distributable
profits in the last three years ".

As per the last three years' (2008 -2010) profit distribution plans prepared by the Board of Directors and reviewed
and approved by the shareholders' meeting, the cumulative distribution of the profits in the form of cash dividends
accounted for 32.43% of the average annual distributable profits realized in the last three years, in line with the
Articles of Association requirements.

11. The work plan and implementation program to establish a sound internal control
   system

To establish a sound internal control system, based on external regulatory requirements and realities of the company,
SPDB carried out the internal control standard implementation and evaluation project during the reporting period,
which set up a project leadership team and working groups responsible for the overall advancement of work. It hired
an external advisory firm to assist in developing internal control and self-evaluation; it also hires external auditors to
audit the effectiveness of its internal control for the financial statements.
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     Based on the principle of risk-orientation, the company focused on the internal environment, risk assessment,
     control activities, information and communication and internal oversight in a bid to refine critical business processes,
     establish and improve the internal control system and protect the integrity of the internal control activities. Drawing
     on industry-leading practice, taking full account of the credit risk faced, market risk, operational risk, compliance
     risk, legal risk facing the banking sector, in line with banking industry practice, and giving full consideration to the
     company's products and operational characteristics, the bank positioned existing rules and regulations, clarified
     relevant rules and regulations for specific operation and management activities, effectively reduced overlapping,
     repetition, contradiction, dispersion, omissions and conflicts between different rules. At the same time, taking
     full account of the management situation, focusing on process efficiency and internal control effectiveness, the
     company reviewed major business processes, identified key risk points, integrated corresponding control measures,
     clarified the distribution of main risk points in the various management activities and business processes. In
     addition, the company implemented the 2011 annual self-evaluation, clarifying evaluation criteria and methods to
     identify internal control weaknesses. The company found no significant internal control deficiencies in the internal
     control self-evaluation process, and only general internal control deficiencies that may result in manageable risks,
     with no substantial impact on the company's financial targets. The company has taken measures to address
     these deficiencies. In 2012 it will further improve the system of internal control, continue with internal control self-
     assessment, promote process optimization, and consider the establishment of internal control management system
     via IT development to achieve a gradual transition from "people control" to "system control". So internal control
     concepts and methods will be implemented with improved efficiency and effectiveness of internal control.

     12. Investor Relations Management

     During the reporting period, the company's management paid close attention to market trends, engaged in active
     communication with investors and analysts, especially after the release of regular reports via various channels
     and with good results. In 2011 the company held one large institutional investor conference which was attended by
     more than 40 domestic and foreign institutional investors to discuss the company's strategy, financial, operational
     and other conditions. The feedback was very good. Throughout the year more than 80 domestic and foreign
     investors visited the company; including 4 delegation visits of institutional investors; it also participated in 5 strategic
     conferences organized by domestic and foreign institutions. The company is also actively creating conditions for
     more communication with investors, for example via telephone, Internet, etc.
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     Report by the Supervisory Board
     Report by the Supervisory Board




     1. Meetings of the Supervisory Board

     1). On 30January, 2011, the company held the twelfth meeting of the Fourth Board of Supervisors by way of
     correspondence voting, considered and unanimously adopted: “Motion on institution planning in 2011”, “Motion on
     granting credit to First Sino Bank”, “Motion on interim administration rules for consolidated balance sheet”. The
     resolutions of the meeting were published in the Shanghai Securities News, China Securities Journal and Securities
     Times on February 1, 2011.

     2). On March 28, 2011, the thirteenth meeting of the fourth Board of Supervisors was held in Shanghai. It considered
     and unanimously adopted: "2010 annual report on the work of the Board of Supervisors” “2010 directors, supervisors
     and senior management's performance report”, "Motion on changing the name of Nomination Committee to
     Nomination and Evaluation Committee under the Board of Supervisors", “Director performance evaluation
     implementation detailed rules", "2010 annual operating report”, “2010 annual report and its summary”, “2010 annual
     financial statements and 2011 annual financial budget report”, “Motion on the 2010 profit distribution”, “Motion on
     senior executives' performance appraisal and remuneration”, "Motion on 2010 annual internal control evaluation
     report”, “2010 Corporate Social Responsibility Report”, “2010 annual report of the related party transactions", "Motion
     on engaging a new accounting firm”, "Motion on redemption of 2006 subordinated bonds”, “Motion on the issuance
     of subordinated bonds”, “Internal control practices implementation and evaluation work program”, " Internal capital
     adequacy assessment management rules", "2010 business risk appetite strategy implementation and motion on
     the 2011 business risk appetite policy”, “Country specific risk management policies”, “Motion on the placement and
     usage of raised funds in 2010”. Resolutions of the meeting were published in the Shanghai Securities News, China
     Securities Journal and Securities Times on March 30, 2011.

     3). On April 28, 2011, the company held the fourteenth meeting of the Fourth Board of Supervisors by way of
     correspondence voting, considered and unanimously adopted: “the company's 2011 Q1 report”, "2010 director
     performance evaluation report”, "2010 supervisor performance evaluation report”. Resolutions of the meeting were
     published in the Shanghai Securities News, China Securities Journal and Securities Times on April 28, 2011.

     4). On May 25, 2011, the company held the Fifteenth Meeting of the Fourth Board of Supervisors by way of
     correspondence voting, considered and unanimously adopted: “2011-2014 SPD village bank development plan",
     "Motion on additional investment in SPD village bank". Resolutions of the meeting were published in the Shanghai
     Securities News, China Securities Journal and Securities Times on May 26, 2011.

     5). On 15 July, 2011, the company held the Sixteenth Meeting of the fourth Board of Supervisors by way of
     correspondence voting. Nine supervisors or their authorized representatives attended the meeting, considered and
     unanimously adopted: Motion on the establishment of an Investment Management Dept.”, “Strategic planning and
     management rules". Resolutions of the meeting were published in the Shanghai Securities News, China Securities
     Journal and Securities Times on July 19, 2011.

     6). On 29 July 2011, the company held the Seventeenth Meeting of the Fourth Board of Supervisors by way of
     correspondence voting, considered and unanimously adopted: "Motion on adding two indicators into the 2011
     budget report", “Motion on outsourcing risk management policies”. Resolutions of the meeting were published in the
     Shanghai Securities News, China Securities Journal and Securities Times on July 30, 2011.

     7). On 12 Aug 2011, the 18th Meeting of the Fourth Board of Supervisors was held in Changsha; the meeting
     considered and unanimously adopted: "2011 semi-annual report and its summary," “2011-2015 strategic development
     plan", “Motion on write-off of credit asset loss”, "Motion on write-off of credit card loss". Resolutions of the meeting
     were published in the Shanghai Securities News, China Securities Journal and Securities Times on August 16, 2011.

     8). On 30 August 2011, the company held the 19 th Meeting of the Fourth Board of Supervisors by way of
     correspondence voting. Nine supervisors or their authorized representatives attended the meeting, considered and
     unanimously adopted: Motion on supplementary rules on medium-and long-term loan repayment and repayment
     period”, “Motion on market risk regulatory capital limits relating to the revised 2011 business risk appetite policy".
                                                                                                      2011 Annual Report   77



                                                                            Report by the Supervisory Board




Resolutions of the meeting were published in the Shanghai Securities News, China Securities Journal and Securities
Times on August 31, 2011.

9). On 28 October 2011, the 20th meeting of the Fourth Board of Supervisors was held by way of correspondence
voting. It considered and unanimously adopted: “2011 Q3 Report”, "Financial instruments fair value valuation policy”,
"Motion on outsourcing scope and arrangement”. Resolutions of the meeting were published in the Shanghai
Securities News, China Securities Journal and Securities Times on October 29, 2011.

10). On 25 November 2011, the twentieth Meeting of the fourth Board of Supervisors on was held in Nanjing, which
considered and unanimously adopted: “Motion on application for pre-assessment of implementation of the new Capital
Accord", "Motion on the implementation of a new generation of information system construction project”, "Motion on the
adjustment of rural bank zoning”, “Motion on extending the validity of the financial bond issuance resolution”, Motion on
2010 senior management compensation", “Motion of write-off of the second batch of credit asset loss in 2011”, “Motion
of write-off of the second batch of credit card loss in 2011”. Resolutions of the meeting were published in the Shanghai
Securities News, China Securities Journal and Securities Times on November 29, 2011.

2. Independent opinions from the Supervisory Board
1). The company's operation in compliance with the law: During the reporting period the company operated in
compliance with the law and standardized management. Its operating results were objective and real, the depth
and breadth of internal control management was greatly enhanced. With legitimate company decision-making
procedures, the directors and other senior management were cautious, conscientious and diligent in the business
and management process. Not acts were found that harmed the interests of the shareholders.

2). Authenticity of financial reports: After careful review of the 2011 financial conditions and the audit reports issued
by the accounting firm, it believed that: during the reporting period the company's financial statements gave a true,
objective and accurately account of the company's financial position and operating results.

3). Usage of the raised funds: the finds raised via listing were used to increase the company's share capital and the
scale of bank assets as approved by the People's Bank of China, and China Banking Regulatory Commission. Raise
funds were used in strict accordance with the prospectus. Strictly following the funds usage plan, the company made
rational use of the funds raised.

4). Acquisition and sale of assets: During the reporting period, there was no acquisition, disposals, or merger of
assets.

5). Related party transactions: the company's related party transactions were fair and reasonable, and were not done
at the expense of the shareholders' rights and interests.

6). Internal control system: Board of Supervisors had reviewed the Company's internal control self-evaluation report,
the Board self-evaluation report without objection, and held that the company had developed a complete, rational
and effective internal control system.

7). Audit report: PricewaterhouseCoopers issued a standard unqualified audit report.

8). Implementation of the resolutions of the shareholders' meeting: Members of the Supervisory Committee attended
the Board Meetings and the shareholders' meetings and had no objection to the reports and motions presented at
those meetings. Board of Supervisors monitored the implementation of the resolutions of the shareholders' meeting
and believed that the Board of Directors earnestly fulfilled relevant resolutions of the shareholders' meeting.

9). independent opinion on the gap between company profit and its forecast: there is no big difference between
realized profit and profit prediction.
                                                                                                      2011 Annual Report   79



                                                                                  Important Issues
                                                                                        Important Issues




1. Issuance of subordinated bonds

Approved by the China Banking Regulatory Commission and the People's Bank of China, on October 11, 2011,
SPDB successfully issued RMB 18.4 billion of subordinated bonds in the national inter-bank bond market. It's a 15-
year fixed-rate bond, with a coupon rate of 6.15% and conditional issuer redemption rights by the end of the 10th
year. The funds raised via the subordinated bonds will be used to supplement the company's capital in accordance
with applicable laws and regulatory approvals.

2. Cooperation with strategic investors

During the reporting period, the cooperation between SPDB and its strategic investor China Mobile entered a
substantive stage, with a focus on promoting branch to branch cooperation and agreement signing between 35 SPDB
branches and the local China Mobile companies. The debit and credit co-branded cards will be officially launched in
two batches in 18 branches in early September, with a total of issuance of 53000 cards. China Mobile Group's total
corporate deposit balance at SPDB was about 18 billion yuan. With ‘bank and enterprise direct linkage', ‘1 + N supply
chain financing' services, the two sides intended to achieve equipment interoperability in 197 business offices and
116 outlets, jointly organized 72 VIP lectures, began initial customer sharing, issued a total of 11 exclusive wealth
management products totaling nearly $ 700 million yuan.

3. Standardized implementation of Basel Accord

Substantial progress was made in the implementation of the New Basel Capital Accord by the end of the reporting
period since it was launched in 2007: First, the company comprehensively promoted the implementation of the
new Capital Accord. Under the first pillar, credit, market, operating risk measurement and supporting systems were
basically completed, with corresponding development of the second pillar. Second, regarding compliance standards,
in accordance with the CBRC capital measurement method implementation application and approval requirements,
in December 2011, SPDB submitted to the CBRC the New Basel Capital Accord implementation pre-assessment
application and started the application process to implement the new Capital Accord. Third, the New Basel Capital
Accord was widely implemented; tools like corporate rating, rating of financial institutions, retail scorecard,
measurement system of risk-weighted assets, market risk management systems, operating risk management
were put into use across the bank, effectively enhancing risk identification, measurement, monitoring and control
capabilities, reinforcing the basis of a comprehensive risk management.

4. Major litigation and arbitration

By the end of the reporting period, there were 285 pending litigations where SPDB was the plaintiff, with a total value
of 1.121 billion yuan, and 20 pending litigations where SPDB was the defendant, with a total value of 151 million
yuan.

5. Bankruptcy and restructuring-related matters

The Company had no bankruptcy and restructuring matters.

6. Analysis of other significant events, their impact and solutions

1). Securities investment:In 2011, the company made no security investment.
2). Holding of shares of non-listed financial enterprises
80   2011 Annual Report




     Important Issues




                                                                                                                     Unit: '000 yuan-'000 shares
                                                Initial                                P-L for the
                                          investment Number of            % of total    reporting      Equity Accounting          Share
     Name                                    amount shares held             shares         period     change item                 source
     China Union pay Co., Ltd                104,200          90,000          3.715         2,520             - Long-term         investment
                                                                                                                investment
     First Sino Bank                         710,739                 -           30       93,000       -9,079 Long-term           investment
                                                                                                              investment
     AXA SPDB Fund Managers                    18,502                -           51      -20,534              - Long-term         investment
                                                                                                                investment
     Laishang Bank                           738,000                 -           18       21,600              - Long-term         investment
                                                                                                                investment
     Total                                 1,571,441                 -             -      96,586              - -                 -
     Note: Profit-loss for the reporting period refers to the impact of the investment on the parent company's net profits.

     7. Major purchase, sales or disposal of assets or M&A

     During the reporting period, the company didn't conduct any major acquisition, sale or disposal of assets or M&A
     deals.

     8. Independent opinions by independent directors on external guarantee

     Pursuant to relevant regulations of No. 56 [2003] Document by CSRC, we reviewed the company's external
     guarantees in a fair, equitable and objective manner. We hold, by the end of 2011, the external guarantee conducted
     by the company was approved by PBOC and CBRC and was one of the company's normal businesses. Articles
     of Association set clear rules on its examination and approval authorization, and internal management also made
     specific measures, operation procedures and review-approval procedures.

     External guarantee conducted by the company is off-balance-sheet business. Off-balance-sheet liabilities are as
     follows:

                                                                                                                            Unit: RMB '000 Yuan
     Item                                                                Balance as of 2011-12-31                     Balance as of 2010-12-31
     Banker's acceptance bills                                                         370,981,123                                 311,660,235
     Acceptance bills under Letter of credit                                            25,615,734                                    11,668,317
     Letter of guarantee issued                                                         47,854,363                                    39,465,175
     Letter of credit issued                                                           198,422,064                                    46,317,238
     Unused credit line of credit card                                                  42,752,585                                    28,437,580
     The company has no special guarantee for related parties.

     During the reporting period, the company strictly complied with relevant regulations of CSRC (No.56 [2003]
     Document), and had no illegal guarantee.

     9. Transactions with Related Parties

     According to the relevant stipulations of CBRC's Rules on Commercial Banks' Related Transactions with Insiders
     and Shareholders, the company formulated SPDB's Rules on the Management of Related Transactions. Pursuant to
     such rules, the company doesn't have any related parties that have a controlling stake in the company.
                                                                                                       2011 Annual Report   81



                                                                                                  Important Issues




During the reporting period, the transactions conducted by the company with related parties were mainly loans to
shareholders and related parties. All such loans were granted according to the relevant regulatory requirements
and SPDB's loan issuance standards and approval process. The principal and interest on those loans were repaid
normally, exerting no negative impact on the company's businesses or profit.

1. Related parties

1) Legal entity shareholders who directly, indirectly, or jointly hold or control 5% stake-voting rights or above in the
company. To be more specific, they are Shanghai International Group (16.927%) and Shanghai International Trust
and Investment Corp (5.232%) and China Mobile Group Guangdong Limited (20%).

2) Any legal entity or organization for which SPDB's board member, supervisor, senior management or their close
relatives directly or indirectly or jointly controls or may exert major impact on. To be more specific, they include China
Mobile Communications Corporation, China Mobile Ltd., Shanghai AJ Co., Ltd., Brilliance Group Co., Ltd., Shanghai
Brilliance Group Co., Ltd., Brilliance (Hong Kong) Limited, China National Tobacco Corporation, Jiangsu Province,
Shanghai Post company, Digital China Holdings Limited.

3) Any financial enterprise that the company has invested in and may exert major impact on. To be more specific,
they include First Sino Bank, AXA SPDB Fund Managers and SPD Rural Banks sponsored by the company.

Related parties that have no controlling stake in the company and transactions with them:

1) transactions with related parties that have no controlling stake in the company
                                                                                                    Unit: RMB '000 Yuan
                                                                                  Interest       Interest       Interest
                                                                                  income        expense        expense
Name                                                         Interest income     for 2010       for 2011       for 2010
Shanghai International Group                                               -        9,279               -              -
First Sino Bank                                                         540           159          1,433            110
Brilliance Group Co.,                                                 3,943         8,840               -              -
Shanghai Brilliance Group Co., Ltd                                    3,364         4,430               -              -
AXA SPDB Fund Managers                                                     -             -           778             50
Shanghai International Trust and Investment                                -             -           781          2,289
China Mobile Group                                                         -             -      222,717           8,801
Among which: China Mobile Group Guangdong                                  -             -        26,986          4,741
82   2011 Annual Report




     Important Issues




     2) loans-lending balance of related parties that have no controlling stake in the company
                                                                                                                Unit: RMB '000 Yuan
     Name                                                                                2011-12-31                    2010-12-31
     Brilliance Group Co.,                                                                    60,000                      130,000
     Shanghai Brilliance Group Co., Ltd                                                               -                   100,000
     First Sino Bank                                                                          94,514                             -
     Note: loans and lending mentioned above is granted according to loan and lending rate regulated by PBOC.


     3) Placement balance of related parties that have no controlling stake in the company
                                                                                                                Unit: RMB '000 Yuan
     Name                                                                                2011-12-31                    2010-12-31
     First Sino Bank                                                                        129,702                         14,580
     AXA SPDB Fund Managers                                                                   27,931                        40,862
     Shanghai International Trust and Investment Corp                                         19,252                        62,540
     China Mobile Group                                                                  17,319,224                      1,998,790
     Among which: China Mobile Group Guangdong Limited.                                   1,447,283                       761,738

     4) Outstanding guarantees and banker's acceptance bills with related parties that have no
     controlling stake in the company
                                                                                                                Unit: RMB '000 Yuan
     Name                                                                             2011-12-31                       2010-12-31
     Brilliance Group Co.,( Guarantee)                                                    408,850                         329,500
     China Mobile Group(banker's acceptance bill)                                                 -                         20,000

     2. Related natural person

     It mainly refers to natural persons such as the company's directors, supervisors, senior management personnel in
     the head office and branch, or those who can participate in decision making regarding credit and asset transfer.

     By the end of the reporting period, the company had not received related party transaction declaration from related
     natural persons.

     10. Major contracts and their implementation

     1) Major trusteeship, contract and lease issues: there were no major trusteeship, contract or lease issues during the
     reporting period.

     2) Major guarantees: apart from the financial guarantee business which falls within the Company's business scope
     as approved by the People's Bank of China within the reporting period, the Company had no other major guarantee
     issues requiring disclosure.
                                                                                                        2011 Annual Report   83



                                                                                                  Important Issues




3) Assets management entrusted to other parties: during the reporting period, the Company had not entrusted any
party to manage any of its assets.

4) Other major contracts (including guarantees) and their implementation: the Company's various business contracts
were implemented normally during the reporting period, and no disputes over any major contracts occurred.

11. The Company or any shareholder with more than 5% stake made disclosure of
   commitments in the designated newspapers or websites.

Shareholder China Mobile Group Guangdong Company Limited (abbre."Guangdong Mobile", holding 20% of the
total share capital) made a commitment that its subscription of non-public offering of shares in October 2010 had a
lock-up period of 36 months. According to the qualification requirements by China Banking Regulatory Commission
related to the major shareholder of Bank supervision, Guangdong Mobile's parent holding company of China Mobile
Limited announced at the Hong Kong Stock Exchange on August 31, 2010 its commitment to the China Banking
Regulatory Commission: from the date of the delivery of this non-public offering of shares, they will not sell or transfer
those shares within 5 years (to the extent permitted by applicable laws and regulations, transfers between affiliates
of Guangdong Mobile will not be subject to this restriction); transfer of shares after 5 years and the eligibility of the
transferee to become a shareholder of SPDB should be approved by the regulators in accordance with relevant laws
and regulations.

12. Appointment and Dismissal of Accounting Firms

In accordance with the resolution of 2010 Annual General Meeting of Shareholders, the
company hired PricewaterhouseCoopers as the company's 2011 annual auditor. The
company's 2011 financial reports prepared as per PRC GAAP and IFRS were audited by
PricewaterhouseCoopers Zhong Tian CPAs Limited. The audit fees was 5.6 million (including
audit for the interim financial report and annual financial report).
13. Regulatory inspection and administrative penalty

None of the Company's directors, supervisors, senior management, shareholders and actual controllers was
investigated or criticized by or received administrative penalties from China Securities Regulatory Commission, or
publicly condemned by the Stock Exchanges during the reporting period.

14. Write-off of loan loss in the reporting period

In the reporting period, according to the “Shanghai Pudong Development Bank credit asset loss write-off
management rules", a total of 509 million yuan in loan loss was written off as approved by the Board of Directors.
According to the principle of keeping the right and the case after the write-off, the company continues to maintain the
external right of recourse so as to reduce the losses to a minimum.
84   2011 Annual Report




     Important Issues




     15. Honors and awards won by the company
                Awarded by                                              Name of the award
                hexun.com                                               2010 Listed Company with the best CSR
                China Banking Association 2010 China Banking Sector Annual Best CSR Award
                CSR Evaluation
                Shanghai Child Health Foundation                        Care for Child Health Social Welfare Award
                Eastmoney.com; 2011 Eastmoney List                      2011 CSR Award for Bank
                China banking sector excellent call center contest        Best service award      SPDB credit card service
                                                                        center, Best innovation award      SPDB service
                                                                        center
                Shanghai Municipal Government, "2010 Annual             2010 Shanghai financial innovation second prize
                Financial Innovation Awards Ceremony                      Yinyuanbao cooperation model
                "Banker" magazine 2010 China Financial Marketing        2010 Shanghai financial innovation nomination
                Award Ceremony                                          award green finance comprehensive service solution
                Trade Finance magazine, www.sinotf.com                    SME credit cultivation marketing case study won
                                                                        top ten financial product award, best international
                                                                        business bank award
                Asian Banker magazine, 2011 awards program              Best green finance bank
                the 13th China listed companies Taurus Award,           Chinese bank with the best outlet development, Best
                organized by the China Securities Journal               e-banking-mobile bank, best risk and analysis system
                China Banking Association 2010 syndicated loan          2010 syndicated loan best performance award'.
                business appraisal                                        best development award
                2011 Chinese commercial bank's competitiveness          1.Top 100 Chinese listed company Taurus award
                evaluation published by the "Banker" magazine           2. Taurus evergreen company award
                21st Century Business Review, sponsored by 21st         2010 best risk management bank
                Century Business Herald
                "2011 most trusted bank by China's CFOs      sponsored 2011 best commercial model innovation award for the
                by Chief Financial Officer magazine                    21 century
                award ceremony for top ten commercial banks             Most respected bank, best retail bank, best wealth
                supporting Chinese SMEs                                 management brand, most convenient credit card
                2011 listed company's corporate governance special        Top ten commercial banks supporting SMEs
                award by the Shanghai Stock Exchange annual al
                Awards
                Eastmoney.com      2011 Eastmoney List                  2011 Best Board Award
                China Financial Certification Center - 2011 Chinese       SPD Chuangfu –top 10 most satisfactory e-finance
                electronic banking annual party                         brand, 2011 best cash management brand
                International Business Daily - the 2011 trade and       Best e-bank award
                financial development seminars organizing committee
                21st Century Economic Report, Competitiveness           outstanding contribution in cross-border RMB
                ranking of Asian banks in 2011                          settlement in 2011
                And information networks
                                                                                             2011 Annual Report   85



                                                                                       Important Issues




Awarded by                                            Name of the award
www.hexun.com                                           2011 top 100 banks with good customer service
BrandFinance    by Banker magazine                    No. 92 among global 500 brands, 18th among Asia
                                                      banks, with brand value at USD 1.836 billion.
The Banker magazine                                   By core capital, ranking 64th globally, up by 44 spots,
                                                      7th among Chinese banks
2011 listed company's corporate governance special    2011 Board of the Year Award
award by the Shanghai Stock Exchange annual al
Awards
Money Weekly                                          2010 best Board for mainboard listed companies
"Forbes" magazine                                     No. 234 among Global 2000, 16th among Chinese
                                                      companies on the list, 7th among banks
"Fortune" magazine                                    No. 72 among top 500 listed companies in China in
                                                      2011
China Banking Association                             No.9 in competitiveness among Asian banks, seventh
                                                      among Chinese banks, "Best Risk Management Bank
                                                      in Asia"
Securities Times                                      2010 100 most valuable Chinese mainboard-listed
                                                      companies
Securities Star battle for Shanghai                   2010 most liked institution
listing company ranking
Securities Times - 12th financial IT innovation and   2011 best financial innovation bank
excellent Chinese Financial website contest
86   2011 Annual Report




     Important Issues




     16. Information Disclosure Index

     Company information disclosure was published in China Securities Journal, Shanghai Securities News and
     Securities Times"

     To go to the website or make inquiry, please go to: http:--www.sse.com.cn

     Item                                                                                                             Release date
     Company's 2010 annual results briefing                                                                            2011-01-05
     Announcement of the resolutions by correspondence voting of the12th meeting of the fourth board of supervisors   2011-02-01
     Annoucement of the resolutions by correspondence voting of the 14th meeting of the 4th Board of Directors        2011-02-01
     2010 CSR report                                                                                                  2011-03-30
     Internal control review report                                                                                   2011-03-30
     Annoucement of the resolutions of the 15th meeting of the 4th Board                                              2011-03-30
     2010 Annual report and its summary                                                                               2011-03-30
     Annoucement of the resolutions of the 13th meeting of the 4th board of supervisors                               2011-03-30
     Funding transfer between the company and related parties and external guarantees                                 2011-03-30
     Notice on convening 2010 annual general meeting                                                                  2011-04-06
     Resolutions of the 16th meeting of the 4th Board                                                                 2011-04-28
     Resolutions of the 14th meeting of the 4th board of supervisors                                                  2011-04-28
     2011 Q1 Report                                                                                                   2011-04-28
     Resolutions of the 2010 annual general meeting                                                                   2011-04-29
     Annoucement on obtaining a bank license for Hong Kong regulators                                                 2011-05-18
     Resolutions of the 17th meeting of the 4th Board                                                                 2011-05-26
     Resolutions of the 15th meeting of the 4th board of directors                                                    2011-05-26
     2010 profit distribution announcement                                                                             2011-05-30
     Resolutions by correspondence voting of the 16th meeting of the 4th board of supervisors                         2011-07-19
     Resolutions by correspondence voting of the 18th meeting of the 4th board                                        2011-07-19
     Resolutions by correspondence voting of the 17th meeting of the 4th board of supervisors                         2011-07-30
     Resolutions by correspondence voting of the 19th meeting of the 4th board                                        2011-07-30
     Resolutions of the 20th meeting of the 4th board                                                                 2011-08-16
     Resolutions of the 18th meeting of the 4th board of supervisors                                                  2011-08-16
     2011 semi-annual report and its summary                                                                          2011-08-16
     Resolutions by correspondence voting of the 21st meeting of the 4th board                                        2011-08-31
     Resolutions by correspondence voting of the 19th meeting of the 4th board of supervisors                         2011-08-31
     Announcement on obtaining approval to issue subordinated bonds                                                   2011-09-27
     Announcement on completion of subordinated bond issuance                                                         2011-10-14
     Announcement on obtaining approval to set up a financial leasing company                                          2011-10-15
     Announcement on obtaining approval to set up SPD silicon valley bank                                             2011-10-21
     Resolutions by correspondence voting of the 22nd meeting of the 4th board of supervisors                         2011-10-29
     Resolutions by correspondence voting of the 22nd meeting of the 4th board                                        2011-10-29
     2011 Q3 report                                                                                                   2011-10-29
     Resolutions of the 21st meeting of the 4th board of supervisors                                                  2011-11-29
     Resolutions of the 23rd meeting of the 4th board                                                                 2011-11-29
88   2011 Annual Report




     Financial Report
     Financial Report




     1. Audited Report (Attachment)

     2. Financial Report (attachment)

     3. Major Accounting Policies, Accounting Estimations and Accounting Mistakes:

     1) Accounting year: starting from Jan. 1, 2011 and ending on Dec 31, 2011.

     2) Book-keeping Currency: RMB

     3) There is neither major change in the accounting principle nor material accounting mistakes or the rectification of
     such mistake during the reporting period.

     4. Consolidated Financial Reports

     During this reporting period, with approval from the regulatory authorities, the company sponsored Pingyang SPD
     Rural Bank and Xinchang SPD Rural Bank in Zhejiang Province. The company invested RMB 51 million in each of
     the two rural banks, accounting for 51% of its stake. Pingyang SPD Rural Bank and Xinchang SPD Rural Bank shall
     be brought into the consolidated accounting of the company.

     5. Additional information

     ROE and EPS calculated according to CSRC's Rules on Information Disclosure for

     Publicly Listed Companies:

                                                                     ROE (%)                      EPS yuan
     Profits
                                                         Fully diluted   Weighted average   Basic EPS       Fully diluted
     Net profit belonging to the common shareholders           18.33                20.07       1.463             1.463
     Net profit excl. extraordinary items belonging to         18.17                19.90       1.450             1.450
     the common shareholders
90   2011 Annual Report




     Reference Documents
     Reference Documents




     1. Financial statements endorsed with the signatures and seals of the Company's legal representative and finance
     controller.

     2. The original Annual Report endorsed with the signature of the Company's Chairman of the Board.

     3. The texts and original copies of all documents and announcements released in “China Securities Journal” “Shanghai
     Securities News” and “Securities Times” by the Company within the reporting period.

     4. “Articles of Association of the Shanghai Pudong Development Bank Co., Ltd.”.

     5. 2011 Annual Internal Control Evaluation Report, 2011 CSR Report




                                                                                       Chairman of the Board: JI Xiaohui

                                                            The Board of Shanghai Pudong Development Bank Co., Ltd.

                                                                                                       March 14th, 2012
                                                                                                     2011 Annual Report   91



                                                                                        Reference Documents




Written Affirmation of the Board Members and Top Management on the 2011 Annual Report
Pursuant to “Security Law” and related regulations of “Public Issuing Company's Disclosure Content and Format
Guideline No. 2 (Annual Report Content and Format)(revised version 2007), the board members and senior
management have obtained a comprehensive understanding of the company and examined the 2011 annual report
and its abstract, thus provide the following opinion:

1) The company operates strictly according to accounting principles; the 2011 Annual Report truthfully reflects the
company's financial position and management.

2) All the data in the report are verified under the principle of prudence, objectivity, authenticity and completeness.
We believe that the information presented in this 2011 Annual Report is free from any false record, misleading
statement or material omission, and is in compliance with the regulatory requirements of CSRC and actual operation
of the Bank.

3) The financial statements of the Company for the 2010 were audited by PricewaterhouseCoopers Zhong Tian CPAs
Co., Ltd. in accordance with PRC generally accepted accounting principles (GAAP) and international accounting
standards (IAS), and have obtained standard auditor's report without any reserved opinions

Signatures of directors and senior executives:

Ji Xiaohui                                    signature     Fu Jianhua                                signature


Chen Xin                                      signature     Yang Dehong                               signature


Pan Weidong                                   signature     Sha Yuejia                                signature


Zhu Min                                       signature     Stephen Bird                              signature


Ma Xinsheng                                   signature     Wei Pengcheng                             signature


Wang Guanchang                                signature     Shen Si                                   signature


Sun Zheng                                     signature     Liu Tinghuan                              signature


Chen Xuebin                                   signature     Xu Qiang                                  signature


Zhao Jiusu                                    signature     Zhang Weiying                             signature


Guo Wei                                       signature     Shang Hongbo                              signature


Liu Xinyi                                     signature     Jiang Mingsheng                           signature


Ji Guangheng                                  signature     Mu Shi                                    signature


Xu Haiyan                                     signature
                                                                                                      2011 Annual Report   93



                                                                     (English translation for reference only)




                                         AUDITOR’S REPORT
                                                                                    PwC ZT Shen Zi (2012) No. 10020


TO THE SHARHOLDERS OF SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.:

We have audited the accompanying consolidated financial statements of Shanghai Pudong Development Bank
Co.,Ltd.(“the Bank”) and its subsidiaries (collectively “the Group”), which comprise the Bank’s and consolidated
balance sheets as at 31 December 2011, income statements, cash flow statements and statements of changes in
equity for the year then ended, and the notes to the financial statements.

Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements. This responsibility
includes:

(1) preparing and fairly presenting the financial statements in accordance with China Accounting Standards for
Business Enterprises;

(2) designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the
financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit
in accordance with the China Auditing Standards issued by the Chinese Institute of Certified Public Accountants.
Those standards require that we comply with ethical requirements and plan and perform the audit to obtain
reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.

Opinion
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial positions of
the Bank and the Group as of 31 December 2011, and their financial performances and cash flows for the year then
ended in accordance with the requirements of China Accounting Standards for Business Enterprises.


PricewaterhouseCoopers Zhong Tian
CPAs Limited Company


Shanghai, the People’s Republic of China
14, March 2012
94   2011 Annual Report




     SHANGHAI PUDONG DEVELOPMENT BANK
     CONSOLIDATED AND BANK’S BALANCE SHEETS
     FOR THE YEAR ENDED 31 DECEMBER 2011
     (All amounts expressed in thousands of RMB unless otherwise stated.)
     [English translation for reference only]
                                                                         Group                          Bank
                                                        Note    31 December   31 December      31 December     31 December
                                                                       2011          2010             2011            2010


     Cash and balances with central bank                5.1     366,957,099      293,248,760   365,310,102     292,610,145
     Due from other banks and financial institutions    5.2     267,876,482       69,539,713   266,562,818      69,230,713
     Interbank placements                               5.3     111,415,298       31,253,465   111,405,298      31,253,465
     Precious metals                                                683,246            2,090       683,246           2,090
     Financial assets held for trading                  5.4       5,866,841                -     5,866,841               -
     Derivative financial assets                        5.5         548,787        1,033,349       548,787       1,033,349
     Financial assets purchased under resale            5.6     281,509,782      391,932,144   281,509,782     391,932,144
     agreements
     Interests receivable                               5.7      11,071,074        6,492,715    11,063,132       6,489,785
     Loans and advances to customers                    5.8    1,302,323,950 1,124,112,990 1,295,763,717     1,121,019,539
     Available-for-sale financial assets ("AFS")        5.9     147,929,131      104,142,632   147,929,131     104,142,632
     Investment securities - held-to-maturity ("HTM")   5.10    158,535,453      143,556,636   158,535,453     143,556,636
     Investment securities - loans and receivables      5.11      8,759,536        3,707,122     8,759,536       3,707,122
     Long-term equity investments                       5.12      1,856,861        1,436,474     2,484,961       1,753,474
     Fixed assets                                       5.13      8,137,072        7,433,139     8,115,898       7,417,962
     Constructions in progress                                      457,178          85,525        457,178          85,525
     Intangible assets                                  5.14        457,034         405,283        456,972         405,254
     Long-term deferred charges                         5.15      1,205,938        1,126,725     1,169,904       1,100,111
     Deferred income tax assets                         5.16      4,269,859        3,772,723     4,268,466       3,772,723
                                                                                                             2011 Annual Report   95



                                                          SHANGHAI PUDONG DEVELOPMENT BANK
                                                      CONSOLIDATED AND BANK’S BALANCE SHEETS
                                                         FOR THE YEAR ENDED 31 DECEMBER 2011
                                                (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                                [English translation for reference only]
                                                                            Group                          Bank
                                                       Note    31 December      31 December      31 December    31 December
                                                                      2011             2010             2011           2010


Due to central bank                                                   50,000           50,000               -                -
Due to other banks and financial institutions          5.19     440,908,269     337,818,819       443,114,951     339,309,909
Interbank borrowings                                    5.20     66,970,025         14,415,145     66,970,025      14,415,145
Derivative financial liabilities                         5.5      1,515,029          1,172,083      1,515,029       1,172,083
Financial assets sold under repurchase agreements 5.21           86,019,569         16,963,471     85,954,448      16,912,471
Due to customers                                        5.22 1,851,055,121 1,640,459,532         1,840,832,529 1,635,623,369
Employee benefits payable                               5.23      6,853,628          6,856,610      6,817,140       6,836,227
Income tax payable                                      5.24      6,509,666          4,178,533      6,492,059       4,176,738
Interests payable                                       5.25     20,278,588         11,753,812     20,245,022      11,745,295
Dividends payable                                                     12,139           12,139          12,139         12,139
Debts issued                                            5.26     32,600,000         16,800,000     32,600,000      16,800,000
Other liabilities                                       5.27     22,378,875         17,650,780     22,349,318      17,637,914
Total liabilities                                              2,535,150,909 2,068,130,924       2,526,902,660 2,064,641,290


Share capital                                           5.28     18,653,471         14,348,824     18,653,471      14,348,824
Capital surplus                                         5.29     59,543,902         58,639,173     59,543,154      58,638,425
Surplus reserves                                        5.30     21,805,744         15,249,813     21,805,744      15,249,813
General risk reserves                                   5.31     18,700,000          9,500,000     18,700,000       9,500,000
Retained earnings                                       5.32     30,188,118         25,258,526     30,110,492      25,258,928
Equity attributable to the Bank's shareholders                  148,891,235     122,996,336       148,812,861     122,995,990
Minority interests                                      5.33        651,545           283,514               -                -




The accompanying notes form an integral part of these financial statements.



These financial statements were approved for issue by the Board of Directors on 14 March 2012 and signed on its
behalf by:

Ji Xiaohui                         Fu Jianhua     Liu Xinyi                    Fu Neng
Chairman of Board                  President      Chief Financial Officer      Head of finance and accounting department
96   2011 Annual Report




     SHANGHAI PUDONG DEVELOPMENT BANK
     CONSOLIDATED AND BANK’S INCOME STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2011
     (All amounts expressed in thousands of RMB unless otherwise stated.)
     [English translation for reference only]
                                                                            Group                         Bank
                                                            Note
                                                                          2011           2010          2011          2010


     Interest income                                               121,221,237      72,966,932 120,061,677     72,822,042
     Interest expense                                              (59,779,675)   (27,763,422) (58,989,027) (27,728,908)
     Net interest income                                    5.34    61,441,562      45,203,510   61,072,650    45,093,134
     Fee and commission income                                       7,204,809       4,461,471    7,181,091      4,452,700
     Fee and commission expense                                      (489,083)       (412,925)    (486,789)      (412,855)
     Net fee and commission income                          5.35     6,715,726       4,048,546    6,694,302      4,039,845
     Investment income                                      5.36       194,415         22,212       194,415        22,212
     Including: Income from joint ventures and associates               72,466         75,666        72,466        75,666
     Loss from fair value change                            5.37     (859,837)        (87,630)    (859,837)       (87,630)
     Foreign exchange gain                                             242,996        540,420       242,996       540,420
     Other operating income                                            182,810        128,793       182,763       128,164


     Business tax and surcharges                            5.38    (4,898,888)    (3,395,394)   (4,883,630)   (3,390,815)
     Business and administrative expenses                   5.39   (19,553,583)   (16,480,121) (19,399,409) (16,398,362)
     Impairment charges                                     5.40    (7,499,975)    (4,587,419)   (7,430,299)   (4,559,216)
     Other operating expense                                         (208,499)       (320,865)    (208,494)      (320,853)


     Add: non-operating income                                         157,357        247,829       108,020       243,841
     Less: non-operating expenses                                      (74,797)       (38,975)     (67,364)       (38,644)


     Less: income tax expense                               5.41    (8,484,175)    (6,102,319)   (8,438,160)   (6,096,421)


     Net profit attributable to:
       -Shareholders of the Bank                                    27,285,981      19,177,209
       -Minority interests                                              69,131           1,378
                                                                    27,355,112      19,178,587


     Basic and diluted earnings per share for profit        5.42          1.46            1.23
     attributable to the shareholders of the Bank(in RMB)




     Total comprehensive income attribute to:
     -Shareholders of the Bank                                      28,190,710      17,167,603
     -Minority interest                                                 69,131           1,378
                                                                    28,259,841      17,168,981
     The accompanying notes form an integral part of these consolidated financial statements.
                                                                                                        2011 Annual Report   97



                                                  SHANGHAI PUDONG DEVELOPMENT BANK
                                        CONSOLIDATED AND BANK’S CASH FLOW STATEMENTS
                                                  FOR THE YEAR ENDED 31 DECEMBER 2011
                                             (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                             [English translation for reference only]
                                                                      Group                            Bank
                                                              Year ended 31 December          Year ended 31 December
                                                                    2011            2010            2011             2010


Net increase of due to customers and due to banks            313,685,039    475,220,655      309,014,203      472,731,334
Net increase of amounts due to central bank                             -          2,000                -                -
Net decrease of amounts due from central bank, due from                 -     12,047,969                -      12,040,735
  other banks and financial institutions
Net increase of amounts due to and placements from           143,674,666                -    143,670,544                 -
  other banks and financial institutions
Cash received from interests                                 116,873,622      75,785,707     115,709,687       75,099,593
Cash received from fee and commission income                   6,997,736       4,461,471       6,974,018        4,452,699
Cash received relating to other operating activities           9,659,027       6,533,366       9,597,047        6,520,984


Net increase of loans and advances to customers            (185,455,450) (217,921,452) (181,909,606) (215,272,904)
Net decrease of amounts due to central bank                             -               -               -         (48,000)
Net increase of amounts due from central bank, due from    (118,816,718)                -   (117,777,163)                -
  other banks and financial institutions
Net decrease of amounts due to and placements from                      - (312,356,596)                 - (312,407,596)
  other banks and financial institutions
Net increase of financial assets held for trading             (5,861,569)               -     (5,861,569)                -
Interest paid                                               (50,546,000)    (24,112,217)     (49,780,400)     (23,543,528)
Cash paid for fee and commission                               (489,083)       (412,925)       (486,789)        (412,855)
Cash paid to and for staff                                  (12,181,022)    (10,470,125)     (12,126,189)     (10,449,587)
Cash paid for business tax and surcharges                    (11,850,867)     (8,357,678)    (11,804,012)      (8,348,302)
Cash paid relating to other operating activities              (7,033,603)     (5,927,179)     (6,959,584)      (5,871,540)
98   2011 Annual Report




     SHANGHAI PUDONG DEVELOPMENT BANK
     CONSOLIDATED AND BANK’S CASH FLOW STATEMENTS
     FOR THE YEAR ENDED 31 DECEMBER 2011
     (All amounts expressed in thousands of RMB unless otherwise stated.)
     [English translation for reference only]
                                                                                  Group                          Bank
                                                                 Note     Year ended 31 December        Year ended 31 December
                                                                                2011            2010          2011            2010


     Cash received from investment withdrawal                            233,593,148    474,297,500     233,593,148   473,917,500
     Cash received from investment income                                     49,510          48,726        49,510          48,726
     Cash received from relating to other investing activities                70,671          35,579        70,663          33,830


     Cash paid for investment                                           (296,387,027) (469,083,544) (296,698,127) (469,236,544)
     Cash paid to purchase fixed assets, intangible assets                (2,682,867)     (1,578,543)   (2,650,759)     (1,566,077)
      and other long-term assets




     Cash received from investors                                            298,900      39,346,464              -     39,199,464

     Including: Cash received from minority shareholders                     298,900        147,000               -              -
     Cash received from debts issued                                      18,400,000                -    18,400,000               -


     Cash paid for mature debts                                           (2,600,000)     (2,000,000)   (2,600,000)     (2,000,000)
     Cash paid for dividends and interest of bond issued                  (3,004,712)     (2,085,914)   (3,004,712)     (2,085,914)




     Add: Cash and cash equivalents at the                       5.44    167,595,679    134,122,415     166,804,726   134,002,708
          beginning of the period
     Cash and cash equivalents at the end of the period          5.44    312,627,228    167,595,679     310,862,784   166,804,726

     The accompanying notes form an integral part of these financial statements.
                                                                                                                         2011 Annual Report    99



                                                          SHANGHAI PUDONG DEVELOPMENT BANK
                                                  CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                                          FOR THE YEAR ENDED 31 DECEMBER 2011
                                                  (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                                  [English translation for reference only]
                                                   Equity attributable to the Bank’s shareholders
                                        Share      Capital      Surplus General risk      Retained                    Minority
                                        capital    surplus     reserves   reserves        earnings        Subtotal    interest         Total
Note                                      5.28        5.29         5.30          5.31          5.32                      5.33




Net profit                                    -          -             -             - 27,285,981       27,285,981     69,131    27,355,112
Other comprehensive income                    -    904,729             -             -              -      904,729           -      904,729
Capital injection
  Issue of new shares                         -          -             -             -              -             - 200,900         200,900
  Increase of minority interests              -          -             -             -              -             -    98,000        98,000
     from newly setup subsidiaries
Profit appropriation
  Surplus reserves                            -          -   6,555,931               - (6,555,931)                -          -             -
  General risk reserves                       -          -             -   9,200,000 (9,200,000)                  -          -             -
  Dividends                                   -          -             -             - (2,295,811)      (2,295,811)          -   (2,295,811)
Internal transfer of
   shareholders'equity
  Stock dividend                     4,304,647           -             -             - (4,304,647)                -          -             -
100   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]
                                                                  Equity attributable to the Bank’s shareholders
                                                      Share       Capital      Surplus General risk       Retained                 Minority
                                                      capital     surplus     reserves   reserves         earnings        Subtotal interest         Total
      Note                                              5.28         5.29         5.30          5.31          5.32                    5.33




      Net profit                                            -           -             -             - 19,177,209       19,177,209    1,378    19,178,587
      Other comprehensive income                            - (2,009,606)             -             -              -   (2,009,606)        -   (2,009,606)
      Capital injection
        Issue of new shares                        2,869,765 36,329,700               -             -              -   39,199,465         -   39,199,465
        Increase of minority nterests from newly            -           -             -             -              -             - 147,000       147,000
           setup subsidiaries
      Profit appropriation
        Surplus reserves                                    -           -   4,561,237               - (4,561,237)                -        -             -
        General risk reserves                               -           -             -   2,600,000 (2,600,000)                  -        -             -
        Dividends                                           -           -             -             - (1,324,507)      (1,324,507)        -   (1,324,507)
      Internal transfer of shareholders' equity
        Stock dividend                             2,649,013            -             -             - (2,649,013)                -        -             -
      Others                                                -        748              -             -              -          748      717         1,465


      The accompanying notes form an integral part of these financial statements.
                                                                                                       2011 Annual Report   101



                                                           SHANGHAI PUDONG DEVELOPMENT BANK
                                                         BANK’S STATEMENT OF CHANGES IN EQUITY
                                                           FOR THE YEAR ENDED 31 DECEMBER 2011
                                             (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                             [English translation for reference only]
                                                                                   General
                                               Share       Capital     Surplus         risk     Retained
                                               capital     surplus    reserves    reserves      earnings    Total equity
Note                                             5.28        5.29         5.30        5.31          5.32




Net profit                                           -           -           -            -   27,207,953    27,207,953
Other comprehensive income                           -    904,729            -            -             -      904,729
Profit appropriation
 Surplus reserves                                    -           -   6,555,931            -   (6,555,931)              -
 General risk reserves                               -           -           -   9,200,000    (9,200,000)              -
 Dividends                                           -           -           -            -   (2,295,811)   (2,295,811)
Internal transfer of shareholders' equity
 Stock dividend                             4,304,647            -           -            -   (4,304,647)              -
102   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      BANK’S STATEMENT OF CHANGES IN EQUITY
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]
                                                                    Capital     Surplus General risk   Retained
                                                  Share capital     surplus    reserves   reserves     earnings    Total equity
      Note                                                5.28        5.29         5.30        5.31        5.32




      Net profit                                              -           -           -            - 19,175,675    19,175,675
      Other comprehensive income                              - (2,009,606)           -            -           -   (2,009,606)
      Issues of new shares                           2,869,765 36,329,700             -            -           -   39,199,465
      Profit appropriation
        Surplus reserves                                      -           -   4,561,237            - (4,561,237)              -
        General risk reserves                                 -           -           -   2,600,000 (2,600,000)               -
        Dividend                                              -           -           -            - (1,324,507)   (1,324,507)
      Internal transfer of shareholders' equity
        Stock dividend                               2,649,013            -           -            - (2,649,013)              -


      The accompanying notes form an integral part of these financial statements.
                                                                                                            2011 Annual Report   103



                                                            SHANGHAI PUDONG DEVELOPMENT BANK
                                                              NOTES TO THE FINANCIAL STATEMENTS
                                             (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                             [English translation for reference only]


1 GENERAL INFORMATION

Shanghai Pudong Development Bank Co., Ltd. (“the Bank” or “Pufa Bank”) is a joint-stock commercial bank
registered in Shanghai on 28 August 1992 with the approval from the People’s Bank of China (“PBOC”) via YinFu
[1992] No.350. The Bank obtained business licence from Shanghai Municipal Administration of Industry and
Commerce (“SMAIC”) in on October 1992 and commenced business on 9 January 1993. On 10 November 1999, the
Bank was listed and traded in Shanghai Stock Exchange.

The business license number of the Bank is 310000000013047, and the licence number for conducting financial
services is B11512900H0001.

As at 31 December 2011, the Bank’s share capital was RMB18.653 billion, including an amount of RMB 3.731 billion
shares which were restricted for trading.

The Bank and its subsidiaries (collectively “the Group”) are all engaged in financial industry. Their scopes of business
are commercial banking services approved by PBOC and the China Banking Regulatory Commission (“CBRC”).
The main scopes of business include drawing public deposits; granting loans of short-term, mid-term and long-term;
performing settlements; discounting bills and notes; issuing financial debentures; issuing, underwriting and cashing
securities on behalf of governmental authorities; trading of governmental bonds and debentures; interbank loans
and deposits; providing services relating to letters of credit and letters of guarantee; factoring and assignment of
receivables and payables; providing safe deposit services; accepting deposit in foreign currencies; granting loans
in foreign currencies; remittance of foreign currencies; exchange of foreign currencies; international settlements;
interbank placements and deposits in foreign currencies; accepting and discounting of bills and notes expressed
in foreign currencies; lending in foreign currencies; guarantees in foreign currencies; purchase and sale of foreign
currencies; purchase and sale of marketable securities expressed in foreign currencies (excluding stocks), either
for itself or on behalf of clients; purchase and sale of foreign currencies, either for itself or on behalf of clients; credit
investigation, consultancy and testimonial services; offshore banking and other services as approved by PBOC.

The financial statements were authorized for issue by Board of Directors on 14 March 2012.

2 SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

2.1Basis of presentation and statement of compliance

The financial statements have been prepared in accordance with the China Accounting Standards for Business
Enterprises (including basic standards, specific standards, implementation guidance and other relevant provisions)
promulgated by Ministry of Finance of the People’s Republic of China on 15 February 2006 and financial statement
disclosure requirments of public issued company by China Securities Regulatory Commission.

The financial statements present fairly, in all material respects, the financial positions of the Bank and the Group as
of 31 December 2011, and its financial performances and cash flows for the year then ended in accordance with the
requirements of Accounting Standards for Business Enterprises.

2.2Accounting year

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

2.3Functional currency

The Group’s subsidiaries and branches in Mainland China use Renminbi (“RMB”) as function currency. Hong Kong
branch uses Hong Kong dollar (“HKD”) as its function currency and translates the amount into RMB when preparing
the financial statements. The financial statements have been prepared in RMB.
104   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      2.4Business Combinations

      Business combination under common control

      The consideration paid and the assets and liabilities acquired by the acquirer shall be measured at their carrying
      amounts. The difference between the carrying amounts of assets and liabilities acquired and the consideration paid
      shall be recorded in capital surplus. If capital surplus is not sufficient to be deducted, any excess shall be adjusted
      against retained earnings. Transaction expenses for business combination are recorded in profit or loss for the
      current period. Transaction cost of issuing equity securities or debt securities for business combination should be
      recorded as initial recognition cost of the securities.

      Business combination not under common control

      The consideration paid and the identifiable net assets acquired by the acquired shall be measured at their fair
      values on the acquisition date. Goodwill is initially measured at cost being the excess of the aggregate fair value of
      the consideration paid and the acquirer’s interest in the fair value of the acquiree’s net identifiable assets. If the fair
      value of consideration is lower than the fair value of the net assets acquired, the difference is, after reassessment,
      recognized in profit or loss for the current period. Transaction expenses for business combination should be recorded
      into the profit or loss for the current period. Transaction cost of issuing equity securities or debt securities for
      business combination should be recorded as initial recognition cost of the securities.

      2.5 Consolidated financial statements

      The scope of consolidation of the consolidated financial statements is determined based on control, and includes the
      financial statements of the Bank and its subsidiaries.

      Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
      adopted by the Group. All significant inter-company transactions, balances, income and expenses on transactions
      between group companies are eliminated. Subsidiaries’ equities and profits which are not attributable to the Bank are
      respectively presented as Minority interests in the consolidated financial statements.

      Where the amount of losses of a subsidiary attributable to the minority shareholders exceeds their shares in the
      opening balance of shareholder’s equity, the excess shall be allocated against minority interests.

      With respect to subsidiaries acquired through business combinations involving entities not under common control,
      the financial performances and cash flows of the acquiree shall be consolidated into the financial statements, from
      the day that the Bank obtains control, and till the Bank loses the control of it. While preparing the consolidated
      financial statements, the acquirer should adjust the subsidiary’s financial statements, on the basis of the fair values
      of the identifiable assets, liabilities and contingent liabilities recognized on the acquisition date.

      With respect to subsidiaries acquired through business combinations involving entities under common control, the
      financial performances and cash flows of the acquiree should be consolidated into the financial statements from
      the beginning of the period when the acquisition occurs. While preparing the comparative financial statements,
      adjustments are made to related items in the financial statements for the prior period as if the reporting entity
      established through acquisition had been existed since the ultimate controller began to excise control.

      2.6 Foreign currency transactions

      Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
      dates of the transactions.
                                                                                                          2011 Annual Report   105



                                                           SHANGHAI PUDONG DEVELOPMENT BANK
                                                             NOTES TO THE FINANCIAL STATEMENTS
                                            (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                            [English translation for reference only]

Foreign currency monetary items are translated using the exchange rate at year end. Except for monetary securities
classified as available-for-sale, translation differences are recognized in profit or loss for the reporting period.
Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale
are analyzed between translation differences resulting from changes in the amortized cost of the security and other
changes in the carrying amount of the security. Translation differences related to changes in amortized cost are
recognized in profit or loss, and other changes in carrying amount are recognized in other capital surplus in capital
surplus.

Non-monetary foreign currency items measured at historical cost are translated at the spot exchange rates prevailing
on the transaction dates, and the amount denominated in the functional currency should not be changed. Non-
monetary foreign currency items measured at fair value should be translated at the spot exchange rates prevailing
at the date of valuation. Translation differences should be recognized in other capital surplus in equity for available-
for-sale financial assets and in gain/loss from fair value change in profit and loss of current period for financial assets
and liabilities at fair value through profit or loss.

2.7 Cash and cash equivalents

Cash and cash equivalents are cash, deposit available to pay at any time and investments with short maturity, high
liquidity, easily change to certain amount of cash and low risk in valuation variation. Cash and cash equivalents
include cash, non-statutory reserve deposits in central banks and due from and placements with other banks and
financial institutions within three months since acquisition date.

2.8 Precious metals

Precious metals held by the Group are gold traded in domestic markets. They are initially recognized at cost and
subsequently measured at fair value at the balance sheet date. Gains or losses arising from fair value variances are
recognized in profit and loss.

2.9Financial instruments

Recognition and derecognition

The Group recognises a financial asset or a financial liability when the Group becomes a party to the contractual
provision of financial instrument.

A financial asset is derecognized when one of the following conditions is satisfied:

(i) The rights to receive cash flows from the financial asset expire; or

(ii) The financial asset has been transferred and Group has transferred substantially all the risks and rewards of the
asset; or

(iii) The Group has neither transferred nor retained substantially all the risks and rewards of ownership of the financial
asset, but it has relinquished transferred control of the asset.

Once financial assets are derecognized, the difference between book value and the sum of considerations received
and the accumulated change of fair value recorded in equity before should be recognized in profit or loss.

If the obligation relating to a financial liability has been discharged or cancelled or has expired, the financial liability
is derecognised. If the existing financial liability is replaced by the same creditor with another financial liability that
has terms with an almost completely different nature, or if almost all the terms of the existing liability are substantially
revised, such replacement or revision is accounted for as derecognition of the original liability and recognition of a
106   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]

      new liability, and the difference is recognised in profit or loss of current period.

      All financial assets in “regular way trades” are initially recognised and derecognised on the trade date. Regular way
      trades means purchasing or selling of financial assets that require delivery of assets within the time frame generally
      established by regulation or convention in the market place. Trade date is the date that the Group promises to
      purchase or sale the financial assets.

      Classification and measurement of financial assets

      Financial assets are, on initial recognition, classified into the following categories: financial assets at fair value
      through profit or loss, held-to-maturity investments, loans and receivables, available-for-sale financial assets. The
      Group determines the classification of the financial assets on initial recognition. When financial assets are recognised
      initially, they are measured at fair value. In the case of financial assets at fair value through profit or loss, relevant
      transaction costs are directly charged to the profit and loss of the current period; transaction costs relating to financial
      assets of other categories are included in the amounts initially recognised.

      Financial assets at fair value through profit or loss

      Financial assets at fair value through profit or loss include financial assets held for trading and financial assets
      designated at fair value through profit or loss upon initial recognition. A financial asset held for trading is the financial
      asset that meets one of the following conditions: 1) the financial asset is acquired for the purpose of selling in a short
      term; 2) the financial asset is a part of a portfolio of identifiable financial instruments that are collectively managed,
      and there is objective evidence indicating that the enterprise recently manages this portfolio for the purpose of
      short-term profits; 3) the financial asset is a derivative financial instrument except for a derivative that is a financial
      guarantee contract or a designated and effective hedging instrument or linked with investments in equity instruments
      that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured. These
      financial assets are subsequently measured at fair value. Changes of fair value are recognised in gain/loss from
      changes of fair value in profit or loss of current period. Dividend received and interest accrued during the assets hold
      period and gains or loss arising from disposal are recognised in profit and loss of current period.

      During this year, the Group does not have financial assets designated at fair value through profit or loss upon initial
      recognition.

      Held-to-maturity investments

      Held-to-maturity securities are non-derivative financial assets with fixed or determinable payments and fixed
      maturities that management has both the positive intention and the ability to hold to maturity. Held-to-maturity
      investments shall be measured at amortised cost using the effective interest method.

      Except for specific situations such as disposal of insignificant amount of held-to-maturity investments at a date
      sufficiently close to maturity date, if the Group fails to hold such investments through their maturities or reclassifies
      a portion of held-to-maturity investments into available-for-sale prior to their maturities, the Group shall reclassify the
      entire held-to-maturity portfolio into available-for-sale investments at fair value and the Group is further prohibited to
      designate any investments as held-to-maturity during the following two fiscal years.

      Loan and receivables

      Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
      in an active market. When the Group provides funds or services directly to customers and does not intend to sell
      the receivables, the Group classifies such financial assets as loans and receivables. Subsequently, such assets are
      measured at amortised cost using effective interest method.
                                                                                                             2011 Annual Report    107



                                                             SHANGHAI PUDONG DEVELOPMENT BANK
                                                               NOTES TO THE FINANCIAL STATEMENTS
                                              (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                              [English translation for reference only]

Available-for-sale financial assets

Available-for-sale financial assets are those non-derivative financial assets that are designated as available for
sale or are not classified as (a) loans and receivables, (b) held-to-maturity investments or (c) financial assets at fair
value through profit or loss. After initial recognition, available-for-sale financial assets are measured at fair value. For
available-for-sale debt instruments, premium or discount is amortised using effective interest method and recognised
as interest income or expense. A gain or loss arising from a change in the fair value of an available-for-sale financial
asset is recognised in a separate component of capital surplus, except for impairment losses and foreign exchange
gains and losses resulted from monetary financial assets, until the financial asset is derecognised or determined
to be impaired, at which time the cumulative gain or loss previously recognised in capital surplus shall be removed
and recognised in the income statement. Interests and dividend relating to an available-for-sale financial asset are
recognised in the income statement for the period they relate to.

Classification and measurement of financial liabilities

The financial liabilities of the Group are, upon initial recognition, classified as financial liabilities at fair value through
profit or loss and other financial liabilities. The Group determines the classification of financial liabilities on initial
recognition. For financial liabilities at fair value through profit or loss, transaction costs are directly recognised in the
income statement of the current period, and transaction costs relating to other financial liabilities are included in the
initially recognised amount.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated at fair value through profit or loss upon initial recognition. A financial liability held for trading is the
financial liability that meets one of the following conditions: 1) the financial liability is acquired for the purpose of
repurchasing in a short term; 2) the financial liability is a part of a portfolio of identifiable financial instruments that are
collectively managed, and there is objective evidence indicating that the enterprise recently manages this portfolio
for the purpose of short-term profits; 3) the financial liability is a derivative financial instrument except for a derivative
that is a financial guarantee contract or a designated and effective hedging instrument or linked with investments
in equity instruments that do not have a quoted market price in an active market, and whose fair value cannot be
reliably measured. Such kind of financial liabilities are measured at fair value subsequently. All realized or unrealized
gains or losses on these financial liabilities are recognised in the income statement of the current period.

During this year, the Group doesn’t have financial liabilities designated at fair value through profit or loss upon initial
recognition.

Other financial liabilities

After initial recognition, such financial liabilities shall be measured at amortised costs using effective interest rate
method.

Fair value of financial instruments

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing
parties in an arm’s length transaction. The fair values of quoted investments in active markets are based on current
bid prices. The fair value of a financial instrument for which the market is not active is determined by using a valuation
technique. Valuation techniques include using recent arm’s length market transactions between knowledgeable,
willing parties, if available, reference to the current fair value of another instrument that is substantially the same,
discounted cash flow analysis and option pricing models. When a valuation technique is used to establish the fair
108   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]

      value of a financial instrument, use market data as much as possible and avoid use of data that is particularly related
      to the Group.

      Impairment of financial assets

      Except for financial assets at fair value through profit or loss, the Group assesses at each balance sheet date
      whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or
      a group of financial assets is impaired and impairment losses are incurred if, and only if, there is objective evidence
      of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”)
      and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of
      financial assets that can be reliably estimated. The major criteria that the Group uses to determine that there is
      objective evidence of an impairment loss include:

      •   Overdue of principle or interest;

      •   Significant financial difficulty of the obligor (i.e.: deterioration of equity ratios, net income ratio);

      •   A breach of contract;

      •   Start bankruptcy procedure;

      •   The borrower market competition status deteriorated, etc.

      Financial assets carried at amortised cost

      If objective evidence shows that the financial assets carried at amortised cost are impaired, the carrying amount of
      the financial asset shall be reduced to the present value of the estimated future cash flows (excluding future credit
      losses that have not been incurred). The amount of reduction is recognised as an impairment loss in the income
      statement. Present value of estimated future cash flows is discounted at the financial asset’s original effective interest
      rate and includes the value of any related collateral. If a financial asset has a variable interest rate, the discount rate
      for measuring any impairment loss is the current effective interest rate.

      If a financial asset is individually significant, the Group assesses the asset individually for impairment, and recognises
      the amount of impairment in the income statement if there is objective evidence of impairment. For a financial asset
      that is not individually significant, the Group includes the asset in a group of financial assets with similar credit risk
      characteristics and collectively assess them for impairment. For financial assets that are not impaired upon individual
      tests (including financial assets that are individually significant or insignificant), impairment tests should be conducted
      on them again by including them in the group of financial assets. Assets for which an impairment loss is individually
      recognised will not be included in a collective assessment of impairment.

      When a financial asset is uncollectible, it is written off against the related allowance on impairment losses. Such
      financial assets are written off after all the necessary procedures have been completed and the amount of the loss
      has been determined.

      If, subsequent to the recognition of an impairment loss on a financial asset carried at amortised cost, there is
      objective evidence of a recovery in value of the financial asset which can be related objectively to an event occurring
      after the impairment was recognised, the previously recognised impairment loss is reversed and recognised in the
      income statement.

      Available-for-sale financial assets

      When there is objective evidence that the asset is impaired, the cumulative loss from declines in fair value that
      had been recognised directly in revaluation reserve of equity are transferred out, then recognised in the income
                                                                                                          2011 Annual Report   109



                                                                SHANGHAI PUDONG DEVELOPMENT BANK
                                                                  NOTES TO THE FINANCIAL STATEMENTS
                                             (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                             [English translation for reference only]

statement. The amount of the cumulative loss that is transferred out and recognised in the income statement equals
to the difference between its initial cost (net of any principal repayment and amortization) and current fair value, less
any impairment loss on that financial asset previously recognised in the income statement.

If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the
increase can be related objectively to an event occurring after the impairment was recognised in the income
statement, the previously recognised impairment loss shall be reversed with the amount of the reversal recognised
in the income statement. Impairment losses recognised in the income statement for an equity instrument investment
shall be reversed through other comprehensive income rather than profit or loss.

Offsetting financial instruments

Financial assets and financial liabilities are presented separately in the statement of financial position, and they shall
not be offset against each other; except for the followings:

(i) The Group has the legal right to offset the amount, and the legal right is enforceable;

(ii) The Group has the intention to settle on a net basis or realize the asset and settle the liability simultaneously.

2.10 Assets purchased under resale agreements (                       Reverse repos         ) and assets sold under
repurchase agreements ( Repos )

Reverse repo refers to the agreement under which the Group purchases an asset with an obligation to resell it to the
same counterparty at a pre-determined price at a specified date. Reverse repo are recorded at the actual amount
paid and presented in “assets purchased under resale agreements”.

Repo refers to the agreement under which the Group sells an asset with an obligation to repurchase it from the same
counterparty at a pre-determined price at a specified date. Repos are recorded at the actual amounts received and
presented in “assets sold under repurchase agreements”.

The difference between resale and repurchase price is treated as interest income or expense and recognized in the
agreement period with effective interest method.

2.11       Derivative financial instruments

Derivative financial instruments are initially recognised at fair value on the date at which a derivative contract is
sighed and are subsequently re-measured at fair value. Any gains or losses arising from changes in fair value on
derivatives are taken to gain/loss from changes of fair value in profit or loss.

Certain derivatives embedded in other financial instrument, they together become compound derivative financial
instruments. When the related compound derivative financial instruments are not financial assets or liabilities
designated as fair value through profit or loss, those derivatives embedded in other financial instruments should be
treated as separated derivatives, when:

(i) their risks and economic characteristics are not closely related to those of the host contract;

(ii) the separate financial instrument is a derivative itself.

While certain derivative transactions are intended to provide effective economic hedges of specific interest rate and
foreign exchange risks, they do not qualify for hedge accounting under the specific rules of Accounting Standards for
Business Enterprises 24 and are therefore treated as derivatives held for trading, with changes in fair value reported
as trading income. The Group has no derivative positions that are accounted for as hedges during this reporting
period.
110   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      2.12      Long-term equity investments

      Long-term equity investments include investments in subsidiaries, joint ventures, associates and equity investment
      with no control, jointly control or exercise significant influence over investee enterprise, which do not have a quoted
      market price in an active market and whose fair value cannot be reliably measured.

      Subsidiaries refer to the enterprises can be controlled by the Bank, joint ventures refer to the investee enterprise
      under Group’s joint control, and associates refer to the Group has significant influence on the investee enterprise.

      The Group adopt the cost method to the subsidiaries, present the cost amount in Bank’s financial statement, and
      adjust amount according to equity method in the consolidated financial statement. The Group adopt the equity
      method to the associates and joint ventures, and adopt the cost method to the equity investment with no control,
      jointly control or exercise significant influence over investee enterprise, which do not have a quoted market price in
      an active market and whose fair value cannot be reliably measured.

      2.12.1    Initial recognition

      Long-term equity investments through business combinations: With respect to long-term equity investments
      acquired through business combinations involving entities under common control, the initial investment cost shall be
      recognized at their carrying amounts at the combination date as recorded by the party being absorbed. With respect
      to long-term equity investments acquired through business combinations involving entities not under common
      control, the initial investment cost shall be recognized at the cost of business combination.

      Long-term equity investments without through business combinations: With respect to long-term equity investments
      acquired through cash paid, the initial investment cost shall be recognized at the amount paid. With respect to long-
      term investments acquired through equity securities issued, the initial investment cost shall be recognized at the fair
      value of the equity securities.

      2.12.2    Subsequent measurement

      When the cost method is adopted, the investment income is recognised in the income statement of the period to the
      extent that the Group’s share of the profit or cash dividend declared to be distributed by the investee enterprise (except
      for the dividend included in the initial cost).

      When the equity method is adopted, where the initial investment cost of a long-term equity investment exceeds the
      investing enterprise’s interest in the fair values of the investee’s identifiable net assets at the acquisition date, the
      difference is accounted for as an initial cost. Where the initial investment cost is less than the investing enterprise’s
      interest in the fair values of the investee’s identifiable net assets at the acquisition date, the difference shall be
      charged to the income statement for the current period, and the cost of the long-term equity investment shall be
      adjusted accordingly.

      With respect to long-term equity investments adopted equity method, the Group recognises its share of post-
      acquisition result in the investee enterprise for the current period as gain or loss on investment in the current period.
      However, the share of net loss is only recognised to the extent that the book value of the investment is reduced
      to zero, except to the extent that the Group has incurred obligations to assume additional losses which should be
      recognised as estimated debts. The Group shall adjust the carrying amount of the long-term equity investment based
      on pro-rata basis of shareholding for other changes in owner’s equity of the investee enterprise (other than net profits
      or losses), and include in capital reserve. The book value of the investment is reduced to the extent of the Group’s
      share of the profit or cash dividend declared to be distributed by the investee enterprise. Unrealized income arising
      from related party transactions between the Group and investing entity, which is allocated to the Group based on pro-
                                                                                                      2011 Annual Report   111



                                                          SHANGHAI PUDONG DEVELOPMENT BANK
                                                            NOTES TO THE FINANCIAL STATEMENTS
                                           (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                           [English translation for reference only]

rata basis of shareholding, is cancelled out and investment income is recognized on the same basis. Loss arising
from related party transactions between the Group and investing entity, which is related to asset impairment, is
cancelled out and such unrealized loss is not cancelled out.

2.12.3   Definition of control, jointly control or significant influence

Control is the power to decide the financial and operating policy of the investee company, and benefit from the
operation of the investee. Potential voting rights in current period like convertible bonds, executable warrants should
be considered when decide whether can be treated as control.

Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the
strategic financial and operating decisions relating to the activity require the unanimous consent of the parties
sharing control.

Significant influence is the power to participate in the financial and operating policy decision process but does not
control or jointly control those policy decisions.

2.12.4   Impairment of long-term equity investment

With respect to the subsidiaries, associates and joint venture investments, when the recoverable amount is lower
than its carrying amount, book value should be reduced to the recoverable amount (Note 2.18).

With respect to equity investment with no control, jointly control or exercise significant influence over investee
enterprise, which do not have a quoted market price in an active market and whose fair value cannot be reliably
measured, when the recoverable amount is lower than its carrying amount, book value should be reduced to the
present value of future cash flow using market yield of similar financial assets. The difference between carrying
amount and present value recorded into impairment loss. Once the impairment loss is recognised, it cannot be
recovered in subsequent periods.

2.13     Fixed assets

2.13.1   Recognition and initial measurement

Fixed assets include buildings, constructions, motor vehicles, mainframe computers, computers, electrical
equipments and office equipments, etc.

Fixed assets shall be recognised only when the economic benefits associated with the asset will flow to the Group
and the cost of the asset can be measured reliably. Subsequent expenditure incurred for fixed assets that meet the
recognition criteria shall be included in the cost of the asset, and carrying amount of the component of the asset that
is replaced shall be derecognised. Otherwise, such expenditure shall be recognised in the income statement in the
period in which it is incurred.

Fixed assets are initially measured at cost, comprising purchase price, relevant taxes and any directly attributable
expenditure for bringing the asset to working condition for its intended use, such as delivery and handling costs,
installation costs and other surcharge.

2.13.2   Depreciation

Depreciation is calculated on the straight-line method to write down the cost of such assets to their residual values
over their estimated useful lives. For the impaired property, plant and equipment, the annual depreciation amount
should be calculated on the basis of carrying amount less impairment and estimated useful life. The estimated useful
lives, residual values and annual depreciation rates are as follows:
112   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      Category                                     Estimated useful life   Estimated residual value    Annual depreciation rate
      Buildings and constructions                             30 years                       3-5%                  3.17-3.23%
      Vehicles                                                  5 years                      3-5%                19.00-19.40%
      Mainframe computers                                       5 years                      3-5%                19.00-19.40%
      Computers                                               3-5 years                      3-5%                19.00-32.33%
      Electronic equipments                                     5 years                      3-5%                19.00-19.40%
      Office equipments                                         5 years                      3-5%                19.00-19.40%


      Residual values, useful lives and depreciation method are reviewed, and adjusted if appropriate, at each period end.

      When the recoverable amount is lower than its carrying amount, it should be reduced to the recoverable amount (Note 2.18).

      2.14       Constructions in progress

      Construction in progress is stated at cost. Cost comprises equipment cost, cost of construction, installation and
      other direct costs. Items classified as construction in progress are transferred to other categories of property, plant
      and equipment when such assets are ready for their intended use, and the depreciation charge commences from
      the following month after such assets are transferred to fixed assets. When the recoverable amount is lower than its
      carrying amount, it should be reduced to the recoverable amount (Note 2.18).

      2.15       Intangible assets

      Intangible assets mainly include land use right and software.

      (1) Intangible assets are initially recorded at the actual cost on acquisition.

      (2) The amortization method and estimated useful lives are as follows:

          A: The amortization charge commences from the month the land use right are bought in, and the amortization is
             calculated on the straight-line method to write down the cost of such assets to their residual values over their
             statutory use right length.

          B: The amortization charge commences from the month the software are bought in, and the amortization is
             calculated on the straight-line method to write down the cost of such assets to their residual values over their
             estimated useful lives.

      (3) The cost of a finite useful life intangible asset is amortised using the straight-line method during the estimated
          useful life. For an intangible asset with a finite useful life, the Group reviews the useful life and amortisation
          method at least at the end of each year end and adjusts it if necessary.

      (4) When the recoverable amount is lower than its carrying amount, book value should be reduced to the
          recoverable amount (Note 2.18).

      2.16       Long-term deferred charges

      Long-term deferred assets are the expenditures which need to be amortised over 1.

      (1) Operating leases are amortised on a straight-line basis over the lease term.

      (2) Leasehold improvements are amortised on a straight-line basis over estimated useful lives.
                                                                                                      2011 Annual Report   113



                                                            SHANGHAI PUDONG DEVELOPMENT BANK
                                                              NOTES TO THE FINANCIAL STATEMENTS
                                            (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                            [English translation for reference only]


2.17      Foreclosed assets

When the Group’s obligor use foreclosed asset to compensate the principal and interest of loan, foreclosed asset
was initially recognised and measured at fair value and acquisition cost, then it was subsequently measured at lower
of carrying amount or recoverable amount.

Each balance sheet date, the Group will assess if a foreclosed asset has been impaired individually. If recoverable
amount of foreclosed asset is lower than carrying amount, the difference should be charged into current period
income statement.

The difference that consideration received on disposal less related expenses with carrying amount was charged
to non-operating income/expense. Provision which has been made for foreclosed asset should be reversed once
disposed.

2.18      Impairment of Long-term assets

Assets such as fixed assets, construction in progress, intangible assets with limited useful lives and long-term equity
investments in subsidiaries, joint ventures and affiliates, are undertaking impairment tests based on the impairment
indicators on the balance sheet date. If the impairment test shows that the recoverable amount of such assets will fall
below carrying value, the difference will be charged into current period income statement. The recoverable amount is
the higher, of the fair value of the asset less related disposal cost and present value of expected future cash inflows
of such asset. Asset impairment is measured and recognized on each individual asset. If it is difficult to estimate
the recoverable amount of each individual asset, then cash generating unit (CGU) in which such individual assets
belongs to will be used to estimate the recoverable amount of CGU. A CGU is a minimum asset portfolio that can
independently generate cash inflow. Once the impairment loss is recognised, it cannot be recovered in subsequent
periods.

2.19      Debts issued

Debt issued is initially measured at fair value less directly transaction cost, then subsequently measured at amortised
cost, using the effective interest rate method.

2.20      Provision

Except for provision arising from business combination, provisions are recognised when:

(i) The Group has a present legal or constructive obligation as a result of past events;

(ii) It is probable that an outflow of resources will be required to settle the obligation; and

(iii) The amount has been reliably estimated.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation
using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific
to the obligation. The Group will review the carrying amount at each balance sheet date. If there are evidences
showing that the carrying amount cannot reflect the present best estimates, the carrying amount should be adjusted
accordingly.

2.21      Fiduciary activities

Where the Group acts in a fiduciary capacity such as nominee, trustee or agent, for example, entrusted loan and
fund fiduciary, assets arising thereon together with related undertakings to return such assets to customers are
114   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]

      excluded from the financial statements of the Group.

      2.22      Financial guarantee contract

      Financial guarantee contract refers to an agreement made by a guarantor and an obligee that the guarantor shall
      perform the obligation according to the contract, when the obligor fails to perform his obligations as agreed. Financial
      guarantee contract is initially measured at fair value. Financial guarantee contracts which are not measured at fair
      value through profit or loss, are subsequently measured at higher of, the best estimation of obligation that needs
      to be settled at balance sheet date and the difference between the amount of initial recognition less accumulated
      amortization based on revenue recognition principle, upon initial recognition.

      2.23      Revenue and expense recognition

      2.23.1    Interest income and interest expense

      Interest income and expense are recognised in profits and losses of the current period on an accrual basis using the
      effective interest rate method.

      Effective interest rate method is a method used to calculate amortized cost and interest income or expense of
      financial assets or financial liabilities (include a set of financial assets or financial liabilities) by effective interest rate.

      The effective interest rate is the interest rate at which the estimated cash flows of financial assets in the expected
      duration should be discounted to the present value. The computation of interest income takes consideration of
      contractual terms of the financial assets as well as expenses and transaction costs comprising the effective interest
      rate, but excluding future credit losses.

      2.23.2    Fee and commission income

      Commission income is recognised when the services have been rendered and the proceeds can be reasonably
      estimated.

      2.24      Employee benefits

      Employee benefits are all forms of consideration given and other relevant expenditures incurred by the Group in
      exchange for service rendered by employees. In the accounting period in which an employee has rendered service
      to the Group, the Group will recognise the employee benefits payable as a liability.

      The Group have security plan set up by government agent including pension and medical insurance, housing
      accumulation fund and other social security plan according to regulations. According to the relevant regulations
      and contracts, insurance and housing fund should be paid to the social security agencies or insurance company
      according to a certain proportion of the total salary and no more than the limit, the spending should be included
      in the current profits and losses. In addition to social basic pension insurance, the staff can also volunteer to join
      the supplementary pension plans set up by the Bank. The Bank pays according to a certain proportion of the total
      amount of the employee salary to the supplementary pension plans and records it into the profits and losses of the
      current period.

      Except for the social security described above, the Group has no other major employee benefits promises.

      2.25      Income taxes

      Income tax comprises current and deferred tax. Income tax is recognised as income or an expense and include in
      the income statement for the current period, except to the extent that the tax arises from a business combination or if
                                                                                                       2011 Annual Report   115



                                                            SHANGHAI PUDONG DEVELOPMENT BANK
                                                              NOTES TO THE FINANCIAL STATEMENTS
                                            (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                            [English translation for reference only]

it relates to a transaction or event which is recognised directly in equity.

Current tax is the amount of income taxes payable in respect of the taxable profit for the current period. Taxable
profit (tax loss) is the profit (loss) for current period, determined in accordance with rules established by the taxation
authorities. At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are
measured at the amount expected to be paid to (or recovered from) the tax authorities according to the requirements
of the tax laws.

The deferred tax assets and deferred tax liabilities are recognized according to the differences (temporary
differences) between the tax bases of assets and liabilities and their book values at the balance sheet date. A
deferred tax asset is recognized if it can be offset with the amount of taxable loss in future years according to the tax
law. No deferred tax liabilities should be recognised for the temporary differences raised from initial recognition of
goodwill. The temporary differences from initial recognition of assets or liabilities which are not arise from a business
combination, and neither affects the accounting profits nor affects the taxable income, should not be recognized
as deferred tax assets and deferred tax liabilities. At the balance sheet date, deferred tax assets and liabilities are
measured at the tax rates that are expected to be applied to the period when the asset is realized or the liability is
settled, according to the requirements of tax laws.

The amount of deferred tax assets is limited to the amount that is probably can be used to offset deductible
temporary differences and deductible loss.

In respect of taxable temporary differences associated with investments in subsidiaries, associates and joint
ventures, deferred tax liabilities are recognised unless that the Group can control the timing of the reversal of
temporary differences and it is probable that the temporary difference will not reverse in the foreseeable future.

In respect of deductible temporary differences associated with investments in subsidiaries, associates and joint
ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will
be reversed in the foreseeable future and taxable profit will be available against which the temporary differences can
be utilized.

The deferred tax assets and deferred tax liabilities should be stated as net amount when satisfy the following
conditions at the same time:

(i) The deferred tax assets and deferred tax liabilities are related to the same tax collection taxed by the same
    administration within the Group;

(ii) The tax subject in the Group has legal right to net off the current income tax assets and current income tax
     liabilities.

2.26      Leases

A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset. An
operating lease is a lease other than a finance lease.

Lease payments under an operating lease are recognised by a lessee on a straight-line basis over the lease term,
and either included in the cost of another related asset or charged to the income statement for the current period.

2.27      Segment reporting

The Group identifies operating segment on the basis of internal organization structure, management requirement
and internal report system, and forms the segment report and discloses the segment information based on operating
116   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]

      segment.

      Operating segment represents the segment satisfying the following conditions at the same time:

      (i) The segment produces income and expenses in daily activities;

      (ii) The Group’s management regularly evaluates the performance of the segment, and decides to allocate resources
           to the segment;

      (iii) The Group can obtain financial position, operation performance, cash flow and other relevant accounting
           information of the segment.

      2.28       Critical accounting estimates and judgments in applying accounting policies

      The Group makes estimates and assumptions based on historical experience and other factors, including
      expectations of future events that are believed to be reasonable under the circumstances. Areas susceptible to
      significant changes in estimates and judgments, which affect the carrying value of assets and liabilities of next
      accounting period, are set out below. It is possible that actual results may require material adjustments to the
      estimates referred below.

      2.28.1     Allowance for impairment losses on loans and advances

      The Group reviews its loan portfolios to assess impairment regularly. In determining whether an impairment loss
      should be recorded in the income statement, the Group makes judgments as to whether there is any observable
      evidence indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of loans
      before the decrease can be identified with an individual loan in that portfolio. This evidence may include observable
      data indicating that there has been an adverse change in the payment status of borrowers (e.g. payment delinquency
      or default), or national or local economic conditions that correlate with defaults on assets. Management makes
      estimation based on historical loss experience for assets with credit risk characteristics and objective evidence of
      impairment similar to those in the portfolio when scheduling its future cash flows.

      2.28.2     Fair value of financial instruments

      The fair values of financial instruments that are not quoted in active markets are determined by using valuation
      technique. Valuation technique includes using recent arm’s length market transactions between knowledgeable,
      willing parties, if available, reference to the current fair value of another instrument that is substantially the same,
      discounted cash flow analysis and option pricing models. The Group uses market information in maximum extent.
      However, if market information is not available, management might estimate the credit risk, market fluctuations and
      relevance of the Group and its counterpart. Changes in assumptions about these factors could affect reported fair
      value of financial instruments.
                                                                                                          2011 Annual Report   117



                                                           SHANGHAI PUDONG DEVELOPMENT BANK
                                                             NOTES TO THE FINANCIAL STATEMENTS
                                            (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                            [English translation for reference only]

2.28.3    Income taxes

Significant estimates are required in determining the provision for income tax. There are many transactions and
calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group
recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. In
particular, the deductibility of certain items is subject to tax authority’s approval. Where the final tax outcome of these
matters is different from the amounts that were initially recorded, such differences will impact the income tax and
deferred tax provisions in the period in which such determination is made.

2.28.4    Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturity date that the Group has the positive intention and ability to hold to maturity. This classification requires
significant judgment. In making this judgment, the Group evaluates its intention and ability to hold such investments
to maturity. If the Group fails to keep these investments to maturity, it will be required to reclassify the entire class as
available-for-sale.

3 TAXATION

The applicable taxes/surcharges categories and tax/surcharge rate for the Group are the followings:

                                                                                                        Tax and surcharge
Taxes/surcharges                                     Tax/surcharge base                                               rate
Business tax (the Bank)                              Operating income                                                  5%
Business tax (the subsidiaries)                      Operating income                                                  3%
City maintenance and construction tax                Business tax                                                      7%
Educational surcharge                                Business tax                                                      3%
Corporate income tax                                 Taxable income                                                   25%


4 CONSOLIDATION SCOPE OF CONSOLIDATED REPORT

4.1The Bank        s significant subsidiary is showed as follows
118   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


                                                                                                  Minority
                                                                                               interest in
                                                                                             profit or loss
                                                                                                for offset
                                                                                              against the
                                                                                               amount of
                                         Registered Amount of Direct               Minority       minority
      Name of               Registration     capital investment Equity Voting      interest shareholders                The legal    Organization
      subsidiaries           address (RMB'0000) (RMB'0000)          %      %    (RMB'0000) (RMB'0000) Enterprise type representative        code
      Mianzhu Pufa Rural     Mianzhu,        5,000       2,750   55%     55%         3,355             - Limited liability   Bing, Wang     68239414-9
      Bank Co., Ltd.         Sichuan                                                                     company
      Liyang Pufa Rural      Liyang,        23,000      11,730   51%     51%        12,237             - Shares              Guoyuan,Wu     69130715-8
      Bank Co., Ltd.         Jiangsu                                                                     limited liability
                                                                                                         company
      Gongyi Pufa Rural      Gongyi,         5,000       2,550   51%     51%         3,883             - Shares              Wanjun, Lii    69488186-8
      Bank Co., Ltd.         Henan                                                                       limited liability
                                                                                                         company
      Fengxian Pufa Rural Fengxian,          5,000       3,450   69%     69%         2,005             - Shares               Jianqiang,    69297537-7
      Bank Co., Ltd.      Shanghai                                                                       limited liability      Huang
                                                                                                         company
      Zixing Pufa Rural       Zixing,       15,800       8,058   51%     51%         8,890             - Shares              Rongjun, Li    69623035-6
      Bank Co., Ltd.          Hunan                                                                      limited liability
                                                                                                         company
      Banan Pufa Rural       Banan,          5,000       2,550   51%     51%         3,157             - Shares              Xiaozhong,     69925976-0
      Bank Co., Ltd.        Chongqing                                                                    limited liability      Wang
                                                                                                         company
      Zouping Pufa Rural     Zouping,       17,200       8,772   51%     51%         8,852             - Shares               Guangxin,     55522573-X
      Bank Co., Ltd.        Shandong                                                                     limited liability      Gen
                                                                                                         company
      Zezhou Pufa Rural      Jincheng,       5,000       2,550   51%     51%         3,062             - Shares                Jian, Li     55657751-8
      Bank Co., Ltd.           Shanxi                                                                    limited liability
                                                                                                         company
      Ganjingzi Pufa Rural Ganjingzi,        5,000       2,550   51%     51%         2,402           48 Shares            Xinhao, Wang      55981311-7
      Bank Co., Ltd.       Liaoning                                                                     limited liability
                                                                                                        company
      Hancheng Pufa        Hancheng,         5,000       2,550   51%     51%         2,290          160 Shares               Zhihui, Yang   56294304-3
      Rural Bank Co., Ltd. Shaanxi                                                                      limited liability
                                                                                                        company
      Jiangyin Pufa Rural    Jiangyin,      10,000       5,100   51%     51%         5,000             - Shares              Yongming, Ji   56379954-9
      Bank Co., Ltd.         Jiangsu                                                                     limited liability
                                                                                                         company
      Pingyang Pufa Rural Pingyang,         10,000       5,100   51%     51%         4,907             - Shares               Mingming,     56938660-6
      Bank Co., Ltd.      Zhejiang                                                                       limited liability     Zhong
                                                                                                         company
      Xinchang Pufa Rural Xinchang,         10,000       5,100   51%     51%         5,115             - Shares              Zhengrong,     57650005-9
      Bank Co., Ltd.      Zhejiang                                                                       limited liability     Zhao
                                                                                                         company
                                                        62,810                      65,155          208
                                                                                                        2011 Annual Report   119



                                                         SHANGHAI PUDONG DEVELOPMENT BANK
                                                           NOTES TO THE FINANCIAL STATEMENTS
                                          (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                          [English translation for reference only]

All subsidiaries are acquired through initial establishment, and included in the consolidated financial statements.

All subsidiaries are commercial banks, whose operation scopes are the following: drawing public deposits; granting
loans of short-term, mid-term and long-term nature; performing settlements; discounting bills and notes; performing
interbank loans and deposits; bank card business; issuing, underwriting and cashing securities on behalf of
governmental authorities; factoring and assignment of receivables and payables and other services as approved by
PBOC.

4.2Subsidiaries newly consolidated by the Group in the current year
                                                                             Net assets                      Net gain for
                                                                as at 31 December 2011                   the current year
Pingyang Pufa Rural Bank Co., Ltd.                                              100,149                              149
Xinchang Pufa Rural Bank Co., Ltd.                                              104,367                            4,367


5 NOTES TO THE FINANCIAL STATEMENTS

5.1 Cash and balances with central bank
                                                                Group                              Bank
                                                        2011-12-31       2010-12-31        2011-12-31        2010-12-31
Cash                                                     5,648,021        4,924,527         5,603,272          4,897,736
Mandatory reserve deposits                            307,862,296       220,013,816       306,666,511       219,857,154
Balances with central bank other than mandatory
                                                        52,978,762       68,156,410        52,572,730        67,701,248
  reserve deposits
Fiscal deposit in central bank                             468,020          154,007          467,589             154,007
Total                                                 366,957,099       293,248,760       365,310,102       292,610,145


The Group is required to place reserve deposits with the PBOC, which is forbidden to be used in the Group’s
ordinary business. The reserve rate for deposits denominated in RMB of the Bank is 19% at 31 December 2011 (31
December 2010: 16.5%). The reserve rate for deposits denominated in foreign currencies of the Group is 5% at 31
December 2011 (31 December 2010: 5%).

5.2 Due from other banks and financial institutions
                                                                Group                              Bank
                                                        2011-12-31       2010-12-31        2011-12-31        2010-12-31
Due from domestic banks                               257,163,843        66,190,867       255,850,179        65,881,867
Due from overseas banks                                 10,712,639        3,348,846        10,712,639         3,348,846
Total                                                 267,876,482        69,539,713       266,562,818        69,230,713
120   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      5.3 Interbank placements
                                                                              Group                             Bank
                                                                     2011-12-31     2010-12-31        2011-12-31       2010-12-31
      Placements with domestic banks                               104,746,813        26,527,931     104,736,813       26,527,931
      Placements with overseas banks                                  5,734,485        2,486,534        5,734,485       2,486,534
      Placements with domestic other financial institutions             934,000        2,239,000          934,000       2,239,000
      Total                                                         111,415,298       31,253,465      111,405,298      31,253,465


      5.4 Financial assets held for trading
                                                                                            Group and Bank
                                                                                          2011-12-31                   2010-12-31
      RMB corporate bonds                                                                  3,347,336                               -
      RMB bonds issued by policy banks                                                     1,799,974                               -
      RMB treasury bonds                                                                    371,410                                -
      PBOC bills                                                                            348,121                                -
      Total                                                                                5,866,841                               -


      There is no restriction in the Group’s financial assets held for trading to be turned into cash.

      5.5 Derivative financial instruments
                                                                                       Group and Bank
                                                                                         2011-12-31
                                                                                                      Fair Values
                                                                 Notional Amount                    Assets               Liabilities
      Derivative financial instruments held for trading:
      Currency swap contracts                                         55,961,106                   355,635              (301,356)
      Foreign-exchange forward contracts                              46,044,831                   150,181              (132,030)
      Interest-rate swap contracts                                    39,453,623                    42,971             (1,068,997)
      Precious-metal forward contracts                                 3,712,055                          -               (12,646)
      Total                                                                                        548,787             (1,515,029)


                                                                                       Group and Bank
                                                                                         2010-12-31
                                                                                                       Fair Values
                                                                 Notional Amount                    Assets               Liabilities
      Derivative financial instruments held for trading:
      Currency swap contracts                                         40,670,134                   344,209              (308,888)
      Foreign-exchange forward contracts                              18,826,125                   135,025              (141,208)
      Interest-rate swap contracts                                    27,801,244                   548,524              (721,987)
      Precious-metal forward contracts                                    936,520                     5,591                        -
      Total                                                                                    1,033,349               (1,172,083)
                                                                                                         2011 Annual Report   121



                                                          SHANGHAI PUDONG DEVELOPMENT BANK
                                                            NOTES TO THE FINANCIAL STATEMENTS
                                           (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                           [English translation for reference only]

Notional amount of derivative financial instruments just represents the amount of underlying asset or reference index
upon which changes in the value of derivatives are measured. It doesn’t represent the future cash flow or the current
fair value, and therefore could not reflect the credit risk and market risk faced by the Group. With the fluctuating
price of foreign exchange rates, interest rates, and the stock or futures fair value of derivatives may bring advantage
(recognized as assets) or disadvantage (recognized as liabilities) impact to the Group, and the influence could
fluctuate largely in different period.

5.6 Financial assets purchased under resale agreements
                                                                                   Group and Bank
                                                                                   2011-12-31                   2010-12-31
Bills under resale agreements                                                    271,599,582                    354,336,426
Bonds under resale agreements                                                       9,910,200                    37,445,718
Loans under resale agreements                                                                 -                    150,000
Total                                                                            281,509,782                    391,932,144


5.7Interests receivable
Group                                                              2010-12-31      Increase         Decrease 2011-12-31
Interests receivable on bonds                                        3,919,567 16,887,413 (16,224,448)            4,582,532
Interests receivable on loans                                        2,495,548 74,527,941 (73,311,636)            3,711,853

Interests receivable on due from/placement with other banks and         62,403    7,669,050       (5,027,071)     2,704,382
   financial institutions

Interests receivable on financial assets under resale agreements        14,586      476,311         (449,534)       41,363

Others                                                                     611     121,806           (91,473)       30,944

Total                                                                6,492,715 99,682,521 (95,104,162) 11,071,074

Bank                                                               2010-12-31     Increase         Decrease      2011-12-31
Interests receivable on bonds                                        3,919,567 16,887,413 (16,224,448)            4,582,532
Interests receivable on loans                                        2,494,358 74,203,705 (72,993,578)            3,704,485
Interests receivable on due from/placement with other banks             60,663   7,633,207        (4,990,062)     2,703,808
  and financial institutions
Interests receivable on financial assets under resale agreements        14,586     476,311         (449,534)        41,363
Others                                                                     611     121,806          (91,473)        30,944
Total                                                                6,489,785 99,322,442 (94,749,095)           11,063,132
122   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      5.8 Loans and advances to customers
                                                                Group                                         Bank
                                                     2011-12-31            2010-12-31                2011-12-31         2010-12-31
      Corporate loans
         Normal loans                             1,023,791,007            897,143,950         1,019,334,920           894,992,785
         Trade finance                               22,345,625              9,588,225               22,345,625          9,588,225
         Discount bills                              23,994,515             21,888,569               23,244,759         21,562,245
      Individual loans
         Real estate mortgage                       225,690,380            191,290,882           225,071,302           191,120,786
         Credit card and overdraw                    11,826,372              7,766,546               11,826,372          7,766,546
         Others                                      23,788,145             18,811,129               22,940,778         18,332,270
      Total loans and advances to customers       1,331,436,044          1,146,489,301         1,324,763,756          1,143,362,857
      Individual impairment allowances               (2,222,442)           (2,783,597)               (2,222,442)        (2,779,677)
      Collective impairment allowances             (26,889,652)           (19,592,714)           (26,777,597)          (19,563,641)
      Total impairment allowances                   (29,112,094)          (22,376,311)           (29,000,039)          (22,343,318)
      Loans and advances to customers ,net        1,302,323,950          1,124,112,990         1,295,763,717          1,121,019,539


      5.8.1 Loans and advances to customers listed by way of impairment assessment

                                                                                  Impairment loans

      Group                                      Collectively
                                              assessed non-        Collectively       Individually
                                              impaired loans        assessed            assessed           Subtotal           Total
      As at 31 December 2011
      Corporate loans                         1,065,163,009         1,600,918          3,367,220         4,968,138 1,070,131,147
      Individual loans                          260,445,917             858,980                  -         858,980     261,304,897
      Impairment allowances                    (25,309,972)        (1,579,680)        (2,222,442)       (3,802,122)    (29,112,094)
      Net                                     1,300,298,954             880,218        1,144,778         2,024,996 1,302,323,950
      As at 31 December 2010
      Corporate loans                           923,504,898         1,225,635          3,890,211         5,115,846     928,620,744
      Individual loans                          217,104,519             764,038                  -         764,038     217,868,557
      Impairment allowances                    (18,530,259)        (1,062,455)        (2,783,597)       (3,846,052)    (22,376,311)
      Net                                     1,122,079,158             927,218        1,106,614         2,033,832    1,124,112,990
                                                                                                              2011 Annual Report   123



                                                           SHANGHAI PUDONG DEVELOPMENT BANK
                                                             NOTES TO THE FINANCIAL STATEMENTS
                                              (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                              [English translation for reference only]


                                                                       Impairment loans
                                       Collectively
Bank
                                    assessed non-       Collectively       Individually
                                    impaired loans       assessed            assessed           Subtotal                  Total
As at 31 December 2011
Corporate loans                     1,059,957,166        1,600,918          3,367,220         4,968,138         1,064,925,304
Individual loans                       258,979,472         858,980                    -         858,980           259,838,452
Impairment allowances                  (25,197,917)     (1,579,680)       (2,222,442)        (3,802,122)         (29,000,039)
Net                                 1,293,738,721          880,218          1,144,778         2,024,996         1,295,763,717
As at 31 December 2010
Corporate loans                        921,027,609       1,225,635          3,890,011         5,115,646           926,143,255
Individual loans                       216,455,564         764,038                    -         764,038           217,219,602
Impairment allowances                  (18,501,186)     (1,062,455)       (2,779,677)        (3,842,132)         (22,343,318)
Net                                 1,118,981,987          927,218          1,110,334         2,037,552         1,121,019,539

5.8.2 Loans and advances to customers listed by industry

Group                                                                        31 December 2011          31 December 2010
                                                                                   Amount       (%)           Amount       (%)
Corporate loans
Manufacturing                                                                 301,013,060    22.60     239,344,458       20.89
Wholesale and retail, catering                                                154,511,923    11.60     111,587,341        9.73
Real estate                                                                   115,118,113     8.65     116,295,395       10.14
Geological survey, irrigation                                                  96,352,526     7.24     109,944,003        9.59
Transportation, warehouse and postal service                                   92,241,356     6.93         88,620,161     7.73
Social services                                                                81,128,873     6.09         71,617,633     6.25
Construction                                                                   69,554,536     5.22         55,872,464     4.87
Electricity, gas and water supply                                              50,809,298     3.82         45,688,323     3.99
Mining                                                                         32,493,241     2.44         26,491,676     2.31
Education, culture, broadcasting                                               18,764,174     1.41         19,300,140     1.68
Agriculture, forestry, farming and fishery                                       8,012,922    0.60          5,653,125     0.49
Sanitation, sport and social welfare                                             4,873,488    0.37          6,665,036     0.58
Scientific research and comprehensive technological services                     3,566,969    0.27          1,613,786     0.14
Others                                                                         17,696,153     1.33          8,038,634     0.70
                                                                            1,046,136,632    78.57     906,732,175       79.09
Bank acceptance bills discount                                                 11,833,184     0.89         10,937,264     0.95
Re-discount                                                                    11,204,646     0.84          8,789,559     0.77
Commercial acceptance bills discount                                               956,685    0.07          2,161,746     0.19
                                                                               23,994,515     1.80         21,888,569     1.91
Individual loans                                                              261,304,897    19.63     217,868,557       19.00
Total                                                                       1,331,436,044 100.00      1,146,489,301     100.00
124   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      Bank                                             31 December 2011             31 December 2010
                                                           Amount            (%)         Amount          (%)
      Corporate loans
      Manufacturing                                    298,746,314         22.55     238,163,863        20.83
      Wholesale and retail, catering                   153,977,401         11.62     111,369,423         9.74
      Real estate                                       115,118,113          8.69    116,290,609        10.17
      Geological survey, irrigation                     96,337,526           7.27    109,916,592         9.61
      Transportation, warehouse and postal service      92,192,256           6.96     88,567,967         7.75

      Social services                                   81,031,554           6.12     71,565,422         6.26
      Construction                                      69,373,886           5.24     55,769,521         4.88
      Electricity, gas and water supply                 50,709,763           3.83     45,634,198         3.99
      Mining                                            32,408,641           2.45     26,412,924         2.31
      Education, culture, broadcasting                  18,633,774           1.41     19,203,637         1.68
      Agriculture, forestry, farming and fishery         7,590,472           0.57      5,405,331         0.47
      Sanitation, sport and social welfare               4,747,088           0.36      6,629,103         0.58
      Scientific research and comprehensive              3,528,269           0.27      1,613,786         0.14
      technological services
      Others                                            17,285,488           1.30      8,038,634         0.70
                                                     1,041,680,545         78.64     904,581,010        79.11


      Bank acceptance bills discount                    11,123,328           0.84     10,774,206         0.94
      Re-discount                                       11,164,746           0.84      8,658,521         0.76
      Commercial acceptance bills discount                 956,685           0.07      2,129,518         0.19
                                                        23,244,759           1.75     21,562,245         1.89
      Individual loans                                 259,838,452         19.61     217,219,602        19.00
      Total                                          1,324,763,756        100.00    1,143,362,857      100.00
                                                                                                    2011 Annual Report   125



                                                      SHANGHAI PUDONG DEVELOPMENT BANK
                                                        NOTES TO THE FINANCIAL STATEMENTS
                                       (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                       [English translation for reference only]

5.8.3 Loans and advances to customers listed by geography

Group                                      31 December 2011                            31 December 2010
                                                  Amount             (%)                       Amount            (%)
Shanghai                                      173,384,367        13.02                   152,930,683            13.34
Beijing                                        66,064,834            4.96                  58,556,895            5.11
Sichuan Province                               53,700,099            4.03                  45,931,965            4.01
Tianjin                                        47,046,428            3.53                  40,968,273            3.57
Shandong Province                              63,021,874            4.73                  52,494,860            4.58
Guangdong Province                             81,448,454            6.12                  69,686,953            6.08
Jiangsu Province                              146,616,104        11.01                   126,454,323            11.03
Henan Province                                 69,194,164            5.20                  62,806,757            5.48
Zhejiang Province                             211,264,823        15.87                   186,167,353            16.24
Liaoning Province                              77,438,050            5.82                  68,555,352            5.98
Other districts                               342,256,847        25.71                   281,935,887            24.58
Total                                     1,331,436,044         100.00                  1,146,489,301         100.00

Bank                                       31 December 2011                            31 December 2010
                                                  Amount             (%)                       Amount            (%)
Shanghai                                      172,796,094        13.04                   152,527,964            13.34
Beijing                                        66,064,834            4.99                  58,556,895            5.12
Sichuan Province                               53,414,936            4.03                  45,729,792            4.00
Tianjin                                        47,046,428            3.55                  40,968,273            3.58
Shandong Province                              62,291,854            4.70                  52,185,760            4.56
Guangdong Province                             81,448,454            6.15                  69,686,953            6.09
Jiangsu Province                              145,344,509        10.97                   125,700,708            10.99
Henan Province                                 68,297,527            5.16                  62,219,357            5.44
Zhejiang Province                             210,325,239        15.88                   186,167,353            16.28
Liaoning Province                              77,238,108            5.83                  68,555,352            6.00
Other districts                               340,495,773        25.70                   281,064,450            24.60
Total                                     1,324,763,756         100.00                  1,143,362,857         100.00

5.8.4 Loans and advances to customers listed by guarantee

                                         Group                                             Bank
                          31 December 2011       31 December 2010           31 December 2011      31 December 2010
Collateral loans               522,317,829             463,988,746               520,934,594             463,440,967
Secured loans                  400,149,867             317,123,313               396,426,218             315,254,125
Clean loans                    282,388,294             248,571,242               281,391,615             248,235,291
Pledged loans                  126,580,054             116,806,000               126,011,329              116,432,474
Total                         1,331,436,044          1,146,489,301             1,324,763,756            1,143,362,857
126   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]

      5.8.5 Loans and advances to customers past due

                                                                       31 December 2011

       Group and Bank              Past due up to      Past due 90 days        Past due 1 year
                                          90 days               to1 year             to 3 years          Past due over
                               (90 days included)      (1 year included)     (3 years included)                3 years          Total
      Collateral loans                    667,840               791,890                1,061,273              547,150      3,068,153
      Secured loans                       399,600               185,997                  911,257              934,335      2,431,189
      Clean loans                         695,453                53,605                 184,242                23,020        956,320
      Pledged loans                        33,210                97,170                   14,349              189,665        334,394
      Total                              1,796,103            1,128,662                2,171,121            1,694,170      6,790,056


                                                                       31 December 2010

       Group                       Past due up to     Past due 90 days        Past due 1 year
                                          90 days              to1 year             to 3 years           Past due over
                               (90 days included)     (1 year included)     (3 years included)                 3 years         Total
      Collateral loans                    111,798               640,773                1,176,931              452,710      2,382,212
      Secured loans                        19,424               415,377                1,209,638              815,696      2,460,135
      Clean loans                         410,977                21,444                 193,525                10,834       636,780
      Pledged loans                         8,137                    674                 70,252               238,984       318,047
      Total                               550,336             1,078,268                2,650,346            1,518,224      5,797,174


                                                                       31 December 2010

       Bank                        Past due up to     Past due 90 days        Past due 1 year
                                          90 days              to1 year             to 3 years           Past due over
                               (90 days included)     (1 year included)     (3 years included)                 3 years         Total
      Collateral loans                    111,598               640,773                1,176,931              452,710      2,382,012
      Secured loans                        19,424               415,377                1,209,638              815,696      2,460,135
      Clean loans                         410,977                21,444                 193,525                10,834       636,780
      Pledged loans                         8,137                    674                 70,252               238,984       318,047
      Total                               550,136             1,078,268                2,650,346            1,518,224      5,796,974


      5.8.6 Allowance on impairment losses for loans and advances to customers

                                                              2011                                             2010
      Group                                  Individually   Collectively                  Individually     Collectively
                                               assessed      assessed          Total        assessed        assessed           Total
      Balance at beginning of the year        2,783,597     19,592,714 22,376,311          2,967,528       15,379,197     18,346,725
      Accrual/reversal of impairment
                                              (380,426)      7,539,544     7,159,118         141,655         4,391,746     4,533,401
        allowances for loans(Note 5.40)
      Loans written off                       (186,180)      (322,527)     (508,707)       (309,603)         (110,125)     (419,728)
      Recovery after written off                 95,569        135,174      230,743          134,708               955      135,663
      Unwind of discount on allowances          (90,118)       (55,253)    (145,371)       (150,691)          (69,059)     (219,750)
      Balance at end of the year              2,222,442     26,889,652 29,112,094          2,783,597       19,592,714     22,376,311
                                                                                                             2011 Annual Report   127



                                                            SHANGHAI PUDONG DEVELOPMENT BANK
                                                              NOTES TO THE FINANCIAL STATEMENTS
                                              (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                              [English translation for reference only]


                                                          2011                                        2010
Bank                                    Individually Collectively                  Individually   Collectively
                                          assessed    assessed           Total       assessed      assessed              Total
Balance at beginning of the year         2,779,677 19,563,641 22,343,318            2,963,608     15,378,327      18,341,935
Accrual/reversal of impairment               (376,506)   7,465,948   7,089,442        141,655      4,363,543       4,505,198
  allowances for loans(Note 5.40)
Loans written off                            (186,180)   (322,527)   (508,707)      (309,603)       (110,125)       (419,728)
Recovery after written off                     95,569     125,788     221,357         134,708             955        135,663
Unwind of discount on allowances              (90,118)    (55,253)   (145,371)      (150,691)        (69,059)       (219,750)
Balance at end of the year               2,222,442 26,777,597 29,000,039            2,779,677     19,563,641      22,343,318


5.9 Available-for-sale financial assets
                                                                                   Group and Bank

                                                                       31 December 2011                    31 December 2010

RMB corporate bonds                                                              46,599,867                       33,904,631

PBOC bills                                                                       43,148,040                       18,234,584

RMB bonds issued by policy banks                                                 34,217,723                       27,758,425

RMB treasury bonds                                                               12,795,495                        14,932,112

Local government bonds                                                            8,952,175                         7,379,789

Foreign currency treasury bonds                                                   1,020,351                           178,985

RMB bonds issued by financial institutions                                         986,191                          1,656,587

Other foreign currency bonds                                                       209,289                             97,519

Total                                                                        147,929,131                         104,142,632


5.10 Investment securities-Held-to-maturity
                                                                                    Group and Bank
                                                                      31 December 2011                    31 December 2010
RMB treasury bonds                                                           70,531,903                           48,522,336
RMB bonds issued by policy banks                                             42,848,894                           38,822,617
Local government bonds                                                       26,493,856                           15,170,043
RMB corporate bonds                                                          16,392,908                           10,526,109
RMB bonds issued by financial institutions                                       1,864,913                         5,059,312
Foreign currency corporate bonds                                                   314,444                           328,512
PBOC bills                                                                          88,535                        25,127,707
Total                                                                       158,535,453                          143,556,636
128   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      5.11 Investment securities-Loans and receivables
                                                                                                                     Group and Bank
                                                                                                          31 December 2011                   31 December 2010
      Bonds
      RMB bonds issued by financial institutions                                                                         4,675,956                       1,660,478
      RMB treasury bonds                                                                                                 1,685,111                       2,046,644
      RMB corporate bonds                                                                                                 429,819                                    -
      PBOC bills                                                                                                          965,242                                    -
                                                                                                                         7,756,128                       3,707,122
      Entrusted product                                                                                                  1,003,408                                   -
      Total                                                                                                              8,759,536                       3,707,122


      5.12         Long-term equity investments
                                                                                     Group                                                  Bank
                                                                        2011-12-31                2010-12-31                 2011-12-31                2010-12-31
      Joint ventures                                                           18,502                     39,036                      18,502                  39,036
      Associates
         No open quotation                                                    710,739                    629,818                 710,739                     629,818
      Subsidiaries (Note4.1)                                                         -                           -               628,100                     317,000
      Others                                                             1,127,620                       767,620               1,127,620                     767,620
      Total                                                              1,856,861                      1,436,474              2,484,961                 1,753,474


      The Group does not have significant restrictions in long-term equity investments realization.

      The ability of funds transfer from subsidiaries to the Bank is not restricted. General information of the Bank’s
      subsidiaries refers to Note 4.

      5.12.1Equity method
                                                                                             Group and Bank
                                                                                         Movement
                                                                   Increase/      Net profit Cash                      Exchange
                                       Investment                decrease in   adjusted by dividend       Other equity      rate                      Share     Voting
                                             cost 2010-12-31 investment cost equity method declared        movement adjustment         2011-12-31 proportion proportion
      First Sino Bank     Associates     363,414    629,818               -         93,000          -         (9,079)       (3,000)      710,739       30%        30%

      AXA SPDB Investment Joint          102,000     39,036               -       (20,534)          -                -            -        18,502      51%        51%
       Managers Co., Ltd. ventures


      According to the articles of association of AXA SPDB Investment Managers Co., Ltd., when 2/3 of the voting rights
      held by the shareholders' representatives passed then the special resolution can be passed, the special resolution
      including company’s strategic plan, investment plan using owner’s capital, annual financial budget plan and final
      financial statement plan authorized to the board of directors, the profit distribution plan and loss compensation plans,
                                                                                                            2011 Annual Report   129



                                                                 SHANGHAI PUDONG DEVELOPMENT BANK
                                                                   NOTES TO THE FINANCIAL STATEMENTS
                                              (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                              [English translation for reference only]

equity transfer and articles of association’s revision. Thus the Group holds AXA SPDB Investment Managers Co.,
Ltd. 51% of the voting shares, but the Group together with the other shareholders control the company.

5.12.2   Cost method

                                                                            Group and Bank
                                                                                                                         Cash
                                                                                           Share        Voting       dividend
                                          2010-12-31       Increase     2011-12-31     proportion    proportion      declared
Shenlian Investment Co., Ltd.               285,420                -      285,420          16.50%      16.50%          25,390
China Unionpay Co., Ltd.                    104,200                -      104,200          3.72%        3.72%           2,520
Laishang Bank                               378,000        360,000        738,000          18.00%      18.00%          21,600
                                            767,620        360,000       1,127,620                                     49,510


5.12.3   Main financial information of associates and joint ventures

Joint ventures

                        Business Place of              Legal                                                       Registered
Name                    nature   incorporation         representative    Operation scope                               capital
AXA SPDB                                                                 Securities investment funding, sales            RMB
                                                       Jiang
Investment              Fund       Shanghai                              of fund, asset management and other      200,000,000
                                                       Mingsheng
Managers Co.,Ltd.                                                        business approved by CSRC.

Assets as at
31 December             Liabilities as at Net assets as at 2011 operating 2011 net
2011                31 December 2011 31 December 2011             income      loss                                Organization
('000)                             ('000)           ('000)          ('000)  ('000) Relationship                          code
50,816                          14,452                  36,364           21,644   (40,279) Common control         71788059-4


Associates

                   Business   Place of       Legal                                                                Registered
     Name           nature incorporation representative                      Operation scope                       capital
                                                              Drawing public deposits; granting loans of short-
                                                              term, mid-term and long-term nature; discounting
                                                              bills and notes; buying government securities,
                                                              financial securities, buying foreign currency
                    Joint                                     securities other than shares; providing letters   RMB
 First Sino Bank   venture     Shanghai        Liu Xinyi      of credit and guarantee, handling domestic and 1,100,000,000
                    bank                                      foreign settlements; trading foreign currencies,
                                                              agency insurance, engaging in placement and
                                                              bank card business; providing safe deposit box
                                                              services; providing credit rating and consulting
                                                              services; other business approved by CBRC.
130   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


           Assets as at      Liabilities as at   Net assets as at
          31 December         31 December          31 December 2011 operating 2011 net
                  2011                   2011               2011      income      loss                              Organization
                 ('000)                 ('000)             ('000)       ('000)  ('000)              Relationship           code
             40,572,729          38,112,791           2,459,938          916,471     312,224          Significant    60736846-9
                                                                                                       influence


      Note: The ability of the transfer of funds from invested enterprises to the Group is not restricted.

      5.13       Fixed assets
                                                            31 December                                             31 December
      Group                                                        2010            Additions     Disposals                 2011
      Cost                                                    11,314,501           1,666,704     (492,768)            12,488,437
      Land and buildings                                       7,405,438            650,196        (51,873)            8,003,761
      Vehicles                                                    312,257            62,246        (22,960)             351,543
      Electronic computers and other equipments                3,596,806            954,262      (417,935)             4,133,133
      Accumulated depreciation                                 3,881,362            882,761      (412,758)             4,351,365
      Land and buildings                                       1,585,232            270,606        (14,170)            1,841,668
      Vehicles                                                    186,388            39,769        (22,228)             203,929
      Electronic computers and other equipments                2,109,742            572,386      (376,360)             2,305,768
      Net book value                                           7,433,139                                               8,137,072
      Land and buildings                                       5,820,206                                               6,162,093
      Vehicles                                                    125,869                                               147,614
      Electronic computers and other equipments                1,487,064                                               1,827,365

      The depreciation accrued during this year of the Group is RMB 882,761,000.

      Buildings and constructions, with the cost of 348,196 thousand RMB and net book value of 323,122 thousand RMB
      as at 31 December 2011 (31 December 2010: cost 391,844 thousand RMB, net book value 374,918 thousand RMB),
      which are in use while the property right registration certificate of them are in progress

                                                         31 December                                                31 December
      Bank                                                      2010           Additions          Disposals                2011
      Cost                                                 11,296,356         1,655,187           (492,768)          12,458,775
      Land and buildings                                    7,405,438           650,196             (51,873)          8,003,761
      Vehicles                                                307,957              58,036           (22,960)            343,033
      Electronic computers and other equipments             3,582,961           946,955           (417,935)            4,111,981
      Accumulated depreciation                              3,878,394           877,242           (412,759)           4,342,877
      Land and buildings                                    1,585,232           270,606             (14,170)          1,841,668
      Vehicles                                                186,022              38,530           (22,225)            202,327
      Electronic computers and other equipments             2,107,140           568,106           (376,364)           2,298,882
      Net book value                                        7,417,962                                                 8,115,898
      Land and buildings                                    5,820,206                                                 6,162,093
      Vehicles                                                121,935                                                   140,706
      Electronic computers and other equipments             1,475,821                                                 1,813,099

      The depreciation accrued during this year of the Group is RMB 877,242,000.
                                                                                                 2011 Annual Report   131



                                                           SHANGHAI PUDONG DEVELOPMENT BANK
                                                             NOTES TO THE FINANCIAL STATEMENTS
                                          (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                          [English translation for reference only]


5.14       Intangible assets
Group                              31 December 2010               Increase        Decrease      31 December 2011
Cost                                          858,612              151,731          (8,620)             1,001,723
Land use right                                198,654               24,046                -              222,700
Software                                      478,452              127,206          (8,620)              597,038
Others                                        181,506                  479                -              181,985
Accumulated amortisation                      453,329               99,980          (8,620)              544,689
Land use right                                 10,823                5,773                -                16,596
Software                                      333,334               89,207          (8,620)              413,921
Others                                        109,172                5,000                -               114,172
Net book value                                405,283                                                    457,034
Land use right                                187,831                                                    206,104
Software                                      145,118                                                     183,117
Others                                         72,334                                                      67,813


The amortization accrued during this year of the Group is RMB 99,990,000.

Bank                               31 December 2010               Increase       Decrease       31 December 2011
Cost                                          858,579             151,694           (8,620)             1,001,653
Land use right                                198,654               24,046                -              222,700
Software                                      478,419             127,169           (8,620)              596,968
Others                                        181,506                  479                -              181,985
Accumulated amortisation                      453,325               99,976          (8,620)              544,681
Land use right                                 10,823                5,773                -                16,596
Software                                      333,330               89,203          (8,620)              413,913
Others                                        109,172                5,000                -               114,172
Net book value                                405,254                                                    456,972
Land use right                                187,831                                                    206,104
Software                                      145,089                                                    183,055
Others                                         72,334                                                      67,813


The amortization accrued during this year of the Bank is RMB 99,976,000.

5.15       Long-term deferred charges
Group                                 31 December 2010                Increase      Decrease    31 December 2011
Leasehold improvements                           968,068              473,874       (364,584)           1,077,358
Leasing expense                                  153,221                20,035       (49,075)            124,181
Others                                             5,436                 3,652        (4,689)               4,399
Total                                          1,126,725              497,561       (418,348)           1,205,938

The amortization accrued during this year of the Group is RMB 409,616,000.
132   2011 Annual Report




      Board Meeting Report




      Bank                          31 December 2010               Increase              Decrease            31 December 2011
      Leasehold                                941,896             461,049               (356,012)                    1,046,933
      improvements
      Leasing fee                              152,779              13,038                (46,654)                      119,163
      Others                                      5,436              2,921                  (4,549)                        3,808
      Total                                  1,100,111             477,008               (407,215)                    1,169,904


      The amortization accrued during this year of the Bank is RMB 398,483,000.

      5.16      Deferred tax assets
      The Group's movement in deferred tax assets is as follows:
                                                                                                                            2011
      Balance at beginning of the year                                                                                3,772,723
      Deferred tax credited to profit or loss (note 5.41)                                                              798,937
      Deferred tax charged to equity                                                                                  (301,801)
      Balance at end of the year                                                                                      4,269,859

                                                                              31 December 2011            31 December 2010
                                                                        Deductible                      Deductible     Deferred
                                                                         temporary         Deferred      temporary          tax
                                                                        differences      tax assets     differences      assets
      Impairment allowances for loans and other assets                  14,169,546       3,542,387       9,969,522    2,492,381
      Amortisation for long-term assets                                        22,620         5,655         19,917         4,979
      Salaries payable                                                        525,516     131,379        2,564,250     641,063
      Fair value changes for available-for-sale financial assets         1,371,585        342,896        2,578,790     644,697
      Fair value changes for precious metals                                   37,601         9,400               -              -
      Fair value changes for derivative financial instruments                 966,242     241,561                 -              -
      Non-offset deferred tax assets                                    17,093,110       4,273,278 15,132,479         3,783,120

                                                                            Taxable       Deferred          Taxable    Deferred
                                                                         temporary                tax    temporary             tax
                                                                        differences       liabilities   differences    liabilities
      Fair value changes for financial assets hold for trading                (13,676)      (3,419)               -              -
      Fair value changes for derivative financial instruments                        -              -     (41,586)     (10,397)
      Non-offset deferred tax liabilities                                     (13,676)      (3,419)       (41,586)     (10,397)
      Net deferred tax assets after offset                              17,079,434       4,269,859 15,090,893         3,772,723
                                                                                                     2011 Annual Report    133



                                                                                        Board Meeting Report




The amount the Group offsets deferred tax assets and liabilities is 3,419 thousand as at 31 December 2011.( 31
December 2010: 10,397 thousand)

The Group     s movement in deferred tax assets is as follows:
                                                                                                                 2011
Balance at beginning of the year                                                                            3,772,723
Deferred tax credited to profit or loss (note 5.41)                                                          797,544
Deferred tax charged to equity                                                                              (301,801)
Balance at end of the year                                                                                  4,268,466


                                                                       2011-12-31                   2010-12-31
                                                                 Deductible                   Deductible     Deferred
                                                                  temporary      Deferred      temporary          tax
                                                                 differences   tax assets     differences      assets
Impairment allowances for loans        and other assets          14,169,546    3,542,387      9,969,522     2,492,381
Amortisation for long-term assets                                    22,620          5,655        19,917         4,979
Salaries payable                                                   519,944      129,986       2,564,250      641,063
Fair value changes for available-for-sale financial assets        1,371,585     342,896       2,578,790      644,697
Fair value changes for precious metals                               37,601          9,400              -             -
Fair value changes for derivative financial instruments            966,242      241,561                 -             -
Non-offset deferred tax assets                                   17,087,538    4,271,885 15,132,479         3,783,120

                                                                     Taxable    Deferred          Taxable    Deferred
                                                                  temporary             tax    temporary             tax
                                                                 differences    liabilities   differences    liabilities
Fair value changes for financial assets hold for trading           (13,676)         (3,419)             -              -
Fair value changes for derivative financial instruments                    -              -     (41,586)     (10,397)
Non-offset deferred tax liabilities                                (13,676)         (3,419)     (41,586)     (10,397)
Net deferred tax assets after offset                             17,073,862    4,268,466 15,090,893         3,772,723


The amount the Group offsets deferred tax assets and liabilities is 3,419 thousand as at 31 December 2011.( 31
December 2010: 10,397 thousand)
134   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      5.17       Other assets
                                                                             Group                            Bank
                                                                       31 December                         31 December
                                                                     2011                2010              2011              2010
      Settlement and clearing accounts                           1,646,205            843,455         1,646,205           843,410
      Deposit for gold trading guaranty                           900,882             203,589           900,882           203,589
      Prepaid for constructions                                  1,163,743           1,141,782        1,163,743          1,139,398
      Wealth management products (Note 1)                                -           2,100,000                -          2,100,000
      Foreclosed assets (Note 2)                                  309,682             328,507           309,682           328,507
      Sub-prime asset-based security                                     -            153,414                 -           153,414
      Continuing involved assets                                         -            153,414                 -           153,414
      Trading finance receivables                                        -           1,945,775                -          1,945,775
      Other receivable (Note 3)                                   812,556            1,259,353          803,787          1,257,104
      Total                                                      4,833,068           8,129,289        4,824,299          8,124,611
      Note 1   Wealth management products

      The Group records cash received from issuing wealth management products which the Group guarantees the
      safety of principal and related assets obtained from the investment of these cash in the financial statements. The
      Group records received cash as other liabilities, and assets obtained according to its nature. If assets obtained are
      investments in trust products, they are recorded as other assets.

      Note 2: Foreclosed assets

      Group and Bank
                                              31 December 2011                                     31 December 2010
                                                                                        Original
                                  Original value     Provision       Net value            value          Provision       Net value
      Real estate                      907,259       (623,438)        283,821           850,392          (539,119)        311,273
      Equity share                       67,110       (41,249)         25,861            35,383           (18,149)         17,234
      Others                                   -             -                 -         13,303           (13,303)               -
      Total                            974,369       (664,687)        309,682           899,078          (570,571)        328,507


      The foreclosed assets will be disposed once conditions are met after balance sheet date.
                                                                                                         2011 Annual Report   135



                                                     SHANGHAI PUDONG DEVELOPMENT BANK
                                                       NOTES TO THE FINANCIAL STATEMENTS
                                     (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                     [English translation for reference only]

Note 3: Other receivable

                                               Group                                              Bank
                                            31 December                                    31 December
                                            2011                  2010                     2011                      2010
Within 1 year                           848,930               1,274,479                 840,161                 1,272,230
1 to 2 years                            429,857                379,084                  429,857                   379,084
2 to 3 years                            143,475                213,032                  143,475                   213,032
Over 3 years                            245,650                 64,498                  245,650                    64,498
                                      1,667,912               1,931,093               1,659,143                 1,928,844
Less: Impairment                      (855,356)               (671,740)               (855,356)                 (671,740)
Net                                     812,556               1,259,353                 803,787                 1,257,104


5.18       Impairment provision of assets
                                                                                                             31 December
Group                                31 December 2010        Addition     Reclass Written off     Others
                                                                                                                    2011
Provision for loans and advances             22,376,311     7,159,118            -   (508,707)    85,372      29,112,094
Bad debt for other assets                       671,740      204,636      (11,710)     (9,310)           -       855,356
Provision for foreclosed assets                 570,571       82,927       11,710        (521)           -       664,687
Provision for interests receivable                 44,301     53,294             -           -           -         97,595
Total                                        23,662,923 7,499,975                -   (518,538)    85,372      30,729,732

                                                                                                             31 December
Bank                                 31 December 2010        Addition     Reclass Written off     Others
                                                                                                                    2011
Provision for loans and advances             22,343,318 7,089,442                -   (508,707)    75,986      29,000,039
Bad debt for other assets                       671,740      204,636      (11,710)     (9,310)           -       855,356
Provision for oreclosed assets                  570,571       82,927       11,710        (521)           -       664,687
Provision for interests receivable                 44,301     53,294             -           -           -         97,595
Total                                        23,629,930 7,430,299                -   (518,538)    75,986      30,617,677
136   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      5.19      Due to other banks and financial institutions
                                                                Group                                   Bank
                                                            31 December                              31 December
                                                             2011               2010                 2011               2010
      Due to domestic banks                           328,062,870        287,312,706       330,270,542          288,834,329
      Due to other domestic financial institutions    109,074,407         50,326,041       109,073,417             50,295,508
      Due to overseas banks                             2,275,948            180,072          2,275,948              180,072
      Due to other overseas financial institutions      1,495,044                   -         1,495,044                     -
      Total                                           440,908,269        337,818,819        443,114,951         339,309,909


      5.20      Interbank borrowings
                                                                                            Group and Bank
                                                                                             31 December
                                                                                             2011                       2010
      Placements from domestic banks                                                    66,970,025                 14,118,450
      Placements from overseas banks                                                             -                   296,695
      Total                                                                             66,970,025                 14,415,145


      5.21      Financial assets sold under repurchase agreements
                                                                Group                                   Bank
                                                            31 December                              31 December
                                                             2011               2010                 2011               2010
      Bills sold under repurchase agreements            9,997,894          2,136,846          9,932,773             2,085,846
      Bonds sold under repurchase agreements           76,021,675         14,826,625         76,021,675            14,826,625
      Total                                            86,019,569         16,963,471         85,954,448            16,912,471


      5.22      Due to customers
                                                                Group                                   Bank
                                                            31 December                              31 December
                                                             2011               2010                 2011               2010
      Current deposits
      -Corporate                                      582,969,466        623,228,016       578,201,045          620,676,119
      -Individual                                      86,572,289         83,035,127         85,829,141            82,657,535
      Time deposits
      -Corporate                                      647,712,370        573,012,546       645,307,940          571,923,436
      -Individual                                     236,345,787        193,086,894       235,523,781          192,714,631
      Pledged deposits                                264,050,073        154,860,831       262,603,866          154,418,033
      Treasury deposits                                30,780,000         10,000,000         30,780,000            10,000,000
      Other deposits                                    2,625,136           3,236,118         2,586,756             3,233,615
      Total                                          1,851,055,121      1,640,459,532     1,840,832,529        1,635,623,369
                                                                                                      2011 Annual Report   137



                                                       SHANGHAI PUDONG DEVELOPMENT BANK
                                                         NOTES TO THE FINANCIAL STATEMENTS
                                          (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                          [English translation for reference only]


5.23     Employee benefits payable
                                                                                Group
                                                  31 December 2010       Addition        Payment     31 December 2011
Salaries and bonuses                                      6,786,820     9,814,685    (9,939,391)             6,662,114
Welfare funds                                                      -     233,739        (233,739)                     -
Social insurance                                             45,380     1,194,758    (1,172,782)                67,356
Housing funds                                                20,904      462,530        (469,665)               13,769
Labor union funds and staff education funds                   3,506      472,328        (365,445)              110,389
Total                                                     6,856,610 12,178,040      (12,181,022)             6,853,628


                                                                                Bank
                                                 31 December 2010        Addition        Payment     31 December 2011
Salaries and bonuses                                      6,766,437     9,750,349    (9,891,160)            6,625,626
Welfare funds                                                      -     233,739        (233,739)                     -
Social insurance                                             45,380     1,191,495    (1,169,519)                67,356
Housing funds                                                20,904      460,649        (467,784)               13,769
Labor union funds and staff education funds                   3,506      470,870        (363,987)              110,389
Total                                                     6,836,227 12,107,102      (12,126,189)            6,817,140


According to the requirements of the authorities and the relevant regulations of the Bank, the deferred payment part
of the employee benefits payable will be paid within three years.

5.24     Taxes payable
                                                             Group                                  Bank
                                                          31 December                         31 December
                                                               2011         2010            2011                  2010
Business tax                                              1,463,853     1,052,625       1,458,911           1,051,128
City maintenance and construction tax                        94,610       67,693          94,305                67,601
Corporate income tax                                      4,038,632     2,780,138       4,026,908           2,780,157
Education surcharge                                          49,796       36,697          49,628                36,644
Withholding personal income tax                             836,932      209,766         836,526              209,617
Others                                                       25,843       31,614          25,781                31,591
Total                                                     6,509,666     4,178,533       6,492,059           4,176,738
138   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      5.25       Interests payable
                                                                                              Group                                Bank
                                                                                          31 December                           31 December
                                                                                           2011               2010              2011           2010
      Interests payable for customer deposits                                       15,261,116       10,356,439        15,229,818         10,347,777
      Interests payable for due to/ placements from other banks and
                                                                                     4,314,886        1,301,147          4,314,519         1,301,818
         financial institutions
      Interests payable for debts issued                                               256,497            57,893          256,497             57,893
      Interests payable for financial assets sold under repurchase
                                                                                       412,964            26,230          412,964             26,230
         agreements
      Others                                                                             33,125           12,103            31,224            11,577
      Total                                                                         20,278,588       11,753,812        20,245,022         11,745,295


      5.26       Debts issued
      Group and Bank
                                                                                     31 December 2011                            31 December 2010
      06 SPDB subordinated bond (note 1)                                                                  -                                2,600,000
      07 SPDB subordinated bond (note 2)                                                       6,000,000                                   6,000,000
      08 SPDB subordinated bond (note 3)                                                       8,200,000                                   8,200,000
      11 SPDB subordinated bond (note 4)                                                      18,400,000                                            -
      Total                                                                                   32,600,000                                  16,800,000

      Accrued interests payable of debts issued:
                                                                                    Interests movement
                                            31 December 2010           Accrued interests payable Interests payment 31 December 2011
      06 subordinated bond                                49,418                             48,082                  (97,500)                       -
      07 subordinated bond                                  3,151                           287,500              (287,500)                     3,151
      08 subordinated bond                                  5,324                           323,900              (323,900)                     5,324
      11 subordinated bond                                        -                         248,022                         -                248,022
      Total                                               57,893                            907,504              (708,900)                   256,497

      Note 1: On 15 June 2006, the Bank issued subordinated debts of RMB2.6 billion in the interbank bonds market. The tenor of the debts is 10
            years and the Bank has an option to early redeem part of or all the debts at the end of the fifth year at par. The Bank redeemed all the
            subordinated debts on 30 June 2011.

      Note 2: On 28 December 2007, the Bank issued RMB6 billion subordinated debts via public market, including RMB1 billion fixed rate
           subordinated debts and RMB5 billion floating rate subordinated debts. Fixed rate subordinated debts have a tenor of ten years and the
           Bank has an option to early redeem part of or all the bonds at the end of the fifth year at par. The fixed rate is 6.0% during the first 5
           years, and the rate change to 9% for the next 5 years. Floating rate subordinated debts have a tenor of ten years and the Bank has an
           option to early redeem part of or all the bonds at the end of the fifth year at par. The coupon rate is basic rate plus basic spread. Basic
           rate equals to one-year lump sum time deposit rate issued by PBOC on the date of interest calculation. The basic spread rate during
           the first 5 years is 1.8% and the rate will change to 4.8% in the next 5 years.
                                                                                                                            2011 Annual Report      139



                                                                     SHANGHAI PUDONG DEVELOPMENT BANK
                                                                       NOTES TO THE FINANCIAL STATEMENTS
                                                   (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                                   [English translation for reference only]

Note 3: On 26 December 2008, the Bank issued RMB8.2 billion subordinated debts in the interbank bonds market. The subordinated debts
      have a tenor of ten years and the Bank has an option to early redeem part of or all the bonds at the end of the fifth year at par. The rate
      of the subordinated debts in the first 5 years is 3.95%, and the rate will change to 6.95% in the next 5 years.

Note 4: On 11 October 2011, the Bank issued RMB18.4 billion subordinated debts in the interbank bonds market. The subordinated debts
      have a tenor of fifteen years and the Bank has an option to early redeem part of or all the bonds at the end of the tenth year at par. The
      coupon rate is 6.15%.


5.27       Other liabilities
                                                                         Group                                         Bank
                                                                     31 December                                  31 December
                                                                      2011                  2010                  2011                    2010
Wealth management products (Note 5.17)                        15,713,540              6,752,100            15,713,540               6,752,100
Settlement and clearing accounts                                4,649,723             2,585,500             4,649,723               2,585,130
Re-credit funds                                                   456,389               281,293               456,389                 281,293
Deferred revenue                                                  207,074             3,720,808               207,074               3,720,808
Fiscal account suspense                                           118,964               796,141               118,964                 796,141
Dormant account balance                                           102,954               104,762               102,954                 104,762
Prepaid expense                                                     26,006                67,231                26,006                 67,231
Promissory notes (Note 1)                                                  -          1,631,426                        -            1,631,426
Continuing involved liabilities                                            -            153,414                        -              153,414
Others                                                          1,104,225             1,558,105             1,074,668               1,545,609
Total                                                         22,378,875             17,650,780            22,349,318             17,637,914
Note 1: The promissory notes are reclassified to due to customers in order to meet the requirement change from CBRC in 2011.
140   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      5.28       Share capital
                                                                                               Share
                                                                                         transferred
                                                                                                from
                                                                                        restricted in
                                                                                           trading to
                                             Opening                    Share Increase non-restrict-     Closing
      2011                                   balance    Percentage   dividend   issues ed in trading     balance    Percentage
      Shares with trading restrictions
      - Shares with trading restrictions            -            -          -         -             -           -            -

      - Shares owned by                             -            -          -         -             -           -            -
      State-owned legal persons
      - Other domestic-owned shares         2,869,765      20.00%    860,930          -             -   3,730,695      20.00%

      Including:
      Shares owned by                       2,869,765      20.00%    860,930          -             -   3,730,695      20.00%
        domestic legal persons
      Shares owned by                               -            -          -         -             -           -            -
        domestic natural persons
      - Shares owned by                             -            -          -         -             -           -            -
      Foreign investments
      Including:
      Shares owned by                               -            -          -         -             -           -            -
       foreign legal persons
      Shares owned by                               -            -          -         -             -           -            -
       foreign natural persons
      Total shares with                     2,869,765      20.00%    860,930          -             -   3,730,695      20.00%
       trading restrictions
      Shares without trading
      restrictions
      - Ordinary shares quoted in          11,479,059      80.00% 3,443,717           -             - 14,922,776       80.00%
         RMB
      - Domestic listed foreign shares              -            -          -         -             -           -            -

      - Overseas listed foreign shares              -            -          -         -             -           -            -

      - Others                                      -            -          -         -             -           -            -

      Total shares without                 11,479,059      80.00% 3,443,717           -             - 14,922,776       80.00%
        trading restrictions
      Total shares                         14,348,824     100.00% 4,304,647           -             - 18,653,471      100.00%


      Pursuant to the resolution passed on the 2010 annual general meeting of shareholders, a dividend consisting of three
      shares per 10 shares was proposed with the number of total shares being 14,348,824,000. After the appropriation,
      the total number of shares summed up to 18,653,471,000. The capital has been verified by Ernst & Young Hua Ming
      CPAs with the issuance of report of Ernst & Young Hua Ming (2011) Yan Zi 60468058_B01.
                                                                                                          2011 Annual Report   141



                                                             SHANGHAI PUDONG DEVELOPMENT BANK
                                                               NOTES TO THE FINANCIAL STATEMENTS
                                                (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                                [English translation for reference only]


                                                                                    Share
                                                                                    transferred
                                                                                    from restricted
                                                                                    in trading to
                                      Opening            Share          Increase    non-restricted Closing
2010                                  balance Percentage dividend       issues      in trading      balance     Percentage
Shares with trading restrictions
- Shares with trading restrictions    -           -           -         -           -              -            -
- Shares owned by                     211,247     2.39%       63,374    -           (274,621)      -            -
  State-owned legal persons
- Other domestic-owned shares         692,912     7.85%       207,874   2,869,765   (900,786)      2,869,765    20.00%
Including:
Shares owned by                       601,192     6.81%       180,358   2,869,765   (781,550)      2,869,765    20.00%
 domestic legal persons
Shares owned by                       91,720      1.04%       27,516    -           (119,236)      -            -
  domestic natural persons
- Shares owned by
  Foreign investments
Including:
Shares owned by                       -           -           -         -           -              -            -
 foreign legal persons
Shares owned by                       -           -           -         -           -              -            -
  foreign natural persons
Total shares with                     904,159     10.24%      271,248   2,869,765   (1,175,407)    2,869,765    20.00%
 trading restrictions
Shares without trading restrictions
- Ordinary shares quoted in RMB       7,925,887 89.76%        2,377,765 -           1,175,407      11,479,059   80.00%
- Domestic listed foreign shares      -           -           -         -           -              -            -
- Overseas listed foreign shares      -           -           -         -           -              -            -
- Others                              -           -           -         -           -              -            -
Total shares without                  7,925,887 89.76%        2,377,765 -           1,175,407      11,479,059   80.00%
 trading restrictions
Total shares                          8,830,046 100.00%       2,649,013 2,869,765   -              14,348,824 100.00%
142   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      5.29      Capital surplus

      Group

                                                                     31 December                               31 December
                                                                                      Increase    Decrease
                                                                            2010                                      2011
      Excess of contributed capital                                   60,568,141             -             -     60,568,141
      Other capital surplus                                           (1,928,968)     913,808        (9,079)    (1,024,239)
      Changes of invested companies' equity under equity method          (17,194)            -       (9,079)       (26,273)
      Changes of fair value of available-for-sale financial assets    (1,934,093)     913,808              -    (1,020,285)
      Others                                                              22,319             -             -        22,319
      Total                                                           58,639,173      913,808        (9,079)     59,543,902


      Group

                                                                     31 December                               31 December
                                                                                      Increase    Decrease
                                                                            2009                                      2010
      Excess of contributed capital                                   24,238,441    36,329,700             -    60,568,141
      Other capital surplus                                               79,890       34,659    (2,043,517)    (1,928,968)
      Changes of invested companies' equity under equity method           (9,501)            -       (7,693)       (17,194)
      Changes of fair value of available-for-sale financial assets        67,820        33,911   (2,035,824)    (1,934,093)
      Others                                                              21,571          748              -        22,319
      Total                                                           24,318,331    36,364,359   (2,043,517)    58,639,173


      Bank

                                                                     31 December                               31 December
                                                                                      Increase    Decrease
                                                                            2010                                      2011
      Excess of contributed capital                                   60,568,141             -             -    60,568,141
      Other capital surplus                                           (1,929,716)     913,808        (9,079)    (1,024,987)
      Changes of invested companies' equity under equity method          (17,194)            -       (9,079)       (26,273)
      Changes of fair value of available-for-sale financial assets    (1,934,093)     913,808              -    (1,020,285)
      Others                                                              21,571             -             -        21,571
      Total                                                           58,638,425      913,808        (9,079)    59,543,154
                                                                                                           2011 Annual Report   143



                                                               SHANGHAI PUDONG DEVELOPMENT BANK
                                                                 NOTES TO THE FINANCIAL STATEMENTS
                                             (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                             [English translation for reference only]

Bank

                                                                   31 December                                  31 December
                                                                                    Increase       Decrease
                                                                          2009                                         2010
Excess of contributed capital                                       24,238,441    36,329,700                -    60,568,141
Other capital surplus                                                   79,890        33,911      (2,043,517)    (1,929,716)
Changes of invested companies' equity under equity method               (9,501)               -       (7,693)       (17,194)
Changes of fair value of available-for-sale financial assets            67,820        33,911      (2,035,824)    (1,934,093)
Others                                                                  21,571                -             -        21,571
Total                                                               24,318,331    36,363,611      (2,043,517)    58,638,425


5.30     Surplus reserves
The Group and the Bank
                                                 31 December 2010                    Increase            31 December 2011
Statutory surplus reserve                                  7,350,244               2,720,795                     10,071,039
Discretionary surplus reserve                              7,899,569               3,835,136                     11,734,705
Total                                                     15,249,813               6,555,931                     21,805,744

                                                 31 December 2009                    Increase            31 December 2010
Statutory surplus reserve                                  5,432,677               1,917,567                      7,350,244
Discretionary surplus reserve                              5,255,899               2,643,670                      7,899,569
Total                                                     10,688,576               4,561,237                     15,249,813


Pursuant to related regulations, the Bank shall make for statutory surplus reserve amounting to 10% of net profit
until accumulated statutory surplus reserve reaches 50% of share capital. After appropriation is made to the statutory
surplus reserve, the Bank can appropriate the discretionary surplus reserve.

5.31     General risk reserve
Group and Bank
                                             31 December 2010                      Increase              31 December 2011
General risk reserve                                   9,500,000                  9,200,000                      18,700,000

                                             31 December 2009                      Increase              31 December 2010
General risk reserve                                   6,900,000                  2,600,000                       9,500,000


Pursuant to Circulars No.49 and No.90 issued by MOF in 2005 (the “MOF Circulars”), effective from 17 May, 2005
and 5 September 2005 respectively, banks and certain other financial institutions in the PRC, are required to maintain
adequate allowances for impairment losses against their risk assets. In addition, a general risk reserve should be
established through the appropriation of retained earnings. This general reserve should form part of the shareholders’
equity of financial institutions. As a guiding principle, the balance of general risk reserve should not be less than 1%
of the aggregate amount of all risk assets.
144   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      5.32      Retained earnings

      Group

                                                                         2011                           2010
                                                                   Amount       Percentage        Amount       Percentage
      Opening balance of retained earnings                      25,258,526                     17,216,074
      Plus: Net profit attributed to the Bank' s shareholders   27,285,981                     19,177,209
      Less: Appropriations to statutory surplus reserve         (2,720,795)        10.00%      (1,917,567)         10.00%
           Appropriations to discretionary surplus reserve      (3,835,136)        20.00%      (2,643,670)         20.00%
           Appropriations to general risk reserve               (9,200,000)                    (2,600,000)
           Dividends on ordinary shares                         (2,295,811)                    (1,324,507)
           Dividends transferred to share capital               (4,304,647)                    (2,649,013)
      Closing balance of retained earnings                      30,188,118                     25,258,526


      As at 31 December 2011, retained earnings of the Group include 1.14 million of subsidiaries' statutory reserve
      attributed to parent company (31 December 2010: 0), of which the amount accrued in 2011 is 1.14 million (2010:0).

      Bank

                                                                         2011                           2010
                                                                   Amount       Percentage        Amount       Percentage
      Opening balance of retained earnings                      25,258,928                     17,218,010
      Plus: Net profit attributed to the Bank' s shareholders   27,207,953                     19,175,675
      Less: Appropriations to statutory surplus reserve         (2,720,795)        10.00%      (1,917,567)         10.00%
          Appropriations to discretionary surplus reserve       (3,835,136)        20.00%      (2,643,670)         20.00%
          Appropriations to general risk reserve                (9,200,000)                    (2,600,000)
          Dividends on ordinary shares                          (2,295,811)                    (1,324,507)
          Dividends transferred to share capital                (4,304,647)                    (2,649,013)
      Closing balance of retained earnings                      30,110,492                     25,258,928


      Pursuant to the resolution of 2010 annual general meeting of shareholders’ on 28 April 2011, besides made 10%
      of statutory reserve from net profit, the Bank made 20% of discretionary surplus reserve from net profit of RMB
      3,835,136 thousands, made general risk reserve of RMB 9.2 billion, and distributes 3 shares and cash dividend of
      RMB 1.6 (before tax) for each 10 shares to all shareholders. The total distributed dividend amounted to RMB 4,304,647
      thousands.

      Besides made 10% of statutory reserve from net profit for 2011, the resolution on 2011 board of directors’ meeting on
      14 March 2012 proposes that the Bank made 20% of discretionary surplus reserve from net profit of RMB 5,441,590
      thousands, made general risk reserve of RMB 4.35 billion, and distributed cash dividend of RMB 3 (before tax) for
      each 10 shares to all shareholders. The total distributed dividend amounted to RMB 5,596,041 thousands. Above
      resolution is pending for approval of shareholders’ meeting.

      5.33      Minority interest

      Minority interest of the Group is as follows:
                                                                                                   2011 Annual Report   145



                                                         SHANGHAI PUDONG DEVELOPMENT BANK
                                                           NOTES TO THE FINANCIAL STATEMENTS
                                            (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                            [English translation for reference only]


                                                                           2011-12-31                   2010-12-31
Mianzhu SPD Rural Bank Co., Ltd.                                               33,552                        27,681
Liyang SPD Rural Bank Co., Ltd.                                               122,369                        26,315
Gongyi SPD Rural Bank Co., Ltd.                                                38,835                        26,327
Fengxian SPD Rural Bank Co., Ltd.                                              20,049                        15,821
Zixing SPD Rural Bank Co., Ltd.                                                88,899                        26,262
Banan Chongqing SPD Rural Bank Co., Ltd.                                       31,571                        26,206
Zouping SPD Rural Bank Co., Ltd.                                               88,518                        22,070
Zezhou SPD Rural Bank Co., Ltd.                                                30,623                        22,483
Ganjingzi Dalian SPD Rural Bank Co., Ltd.                                      24,018                        21,992
Hancheng SPD Rural Bank Co., Ltd.                                              22,903                        22,870
Jiangyin SPD Rural Bank Co., Ltd.                                              49,996                        45,487
Pingyang SPD Rural Bank Co., Ltd.                                              49,073                              -
Xinchang SPD Rural Bank Co., Ltd.                                              51,139                              -
Total                                                                         651,545                      283,514
146   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      5.34       Net interest income
                                                                          Group                           Bank
                                                                        2011            2010           2011             2010
      Interest income
      Due from banks and other financial institutions              5,697,253       1,753,191      5,658,999        1,742,758
      Balance with central banks                                   4,917,049       3,337,599      4,904,355        3,333,096
      Interbank placements                                         2,378,272         361,618      2,374,149          361,618
      Loans and advances to customers
         Corporate loans                                          60,817,590      44,501,672     60,567,030       44,435,152
         Individual loans                                         13,710,351       9,139,058     13,636,675        9,118,991
         Discounted bills                                          2,425,263       1,598,809      2,170,067        1,561,982
      Financial assets purchased under resale agreements          21,722,485       5,359,799     21,197,428        5,353,259
      Bond investments                                             9,540,866       6,914,112      9,540,866        6,914,112
      Others                                                          12,108           1,074         12,108            1,074
      Subtotal                                                   121,221,237      72,966,932    120,061,677       72,822,042
      Included: interest income from impaired financial assets       145,371         219,750        145,371          219,750
      Interest expense
      Due to and placements from banks and other financial
                                                                 (20,632,562)     (6,318,362)   (20,463,578)      (6,314,020)
       institutions
      Due to central banks                                            (7,355)         (1,350)        (5,760)          (1,210)
      Due to customers                                           (33,712,828)   (20,446,898)    (33,615,640)     (20,421,433)
      Financial assets sold under repurchase agreements           (4,519,426)      (241,230)     (3,996,545)       (236,663)
      Debts issued                                                 (907,504)       (755,582)      (907,504)        (755,582)
      Subtotal                                                   (59,779,675)   (27,763,422)    (58,989,027)     (27,728,908)
      Net interest income                                         61,441,562      45,203,510     61,072,650       45,093,134
                                                                                                           2011 Annual Report   147



                                                                SHANGHAI PUDONG DEVELOPMENT BANK
                                                                  NOTES TO THE FINANCIAL STATEMENTS
                                                (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                                [English translation for reference only]


5.35       Net fee and commission income
                                                             Group                                  Bank
                                                         2011             2010                   2011                  2010
Fee and commission income
Settlement and clearing fees                       1,042,418           480,634               1,037,078             479,717
Agency commissions                                 1,107,177           698,935               1,096,606             698,910
Credit commitment fees                             2,071,998           944,139               2,064,308             943,796
Bank card fees                                       960,725           664,273                960,725              664,273
Consulting and advisory fees                       1,150,740         1,280,731               1,150,740           1,273,273
Others                                               871,751           392,759                871,634              392,731
Subtotal                                           7,204,809         4,461,471               7,181,091           4,452,700
                                                   (489,083)         (412,925)               (486,789)            (412,855)
                                                   6,715,726         4,048,546               6,694,302           4,039,845


5.36       Investment income
Group and Bank
                                                                                      2011                             2010
Income from equity investments under cost method                                    49,510                           48,726
Income from equity investments under equity method                                  72,466                           75,666
Income/(loss) from bond trading
  Financial assets held for trading                                                (19,326)                                -
  Available-for-sale financial assets                                              (65,140)                        (96,404)
Gain/(loss) on gold trading                                                        154,868                          (5,776)
Other investment income                                                              2,037                                 -
Total                                                                              194,415                           22,212


There were no major restrictions on remitting from investments income in 2011.

5.37       Income from fair value change
Group and Bank
                                                                                     2011                              2010
Precious metals                                                                   (37,601)                              359
Financial assets held for trading                                                   5,272                                  -
Financial liabilities at fair value through profit or loss                               -                            9,681
Financial derivatives                                                            (827,508)                         (97,670)
Total                                                                            (859,837)                         (87,630)
148   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      5.38      Business tax and surcharges
                                                                   Group                        Bank
                                                                2011            2010         2011           2010
      Business tax                                          4,365,870       3,070,926    4,352,007      3,066,763
      City maintenance and construction tax                  303,384         208,172      302,536        207,908
      Education surcharge                                    229,634         116,296      229,087        116,144
      Total                                                 4,898,888       3,395,394    4,883,630      3,390,815


      5.39      Business and administrative expenses
                                                                   Group                        Bank
                                                                2011            2010         2011           2010
      Salaries and bonuses                                  9,814,685       8,441,619    9,750,349      8,433,426
      Welfare funds                                          233,739         255,098      233,739        255,098
      Social insurance                                      1,194,758        676,429     1,191,495       673,001
      Housing funds                                          462,530         632,870      460,649        606,288
      Labor union funds and staff education funds            472,328         118,270      470,870        117,264
      Lease fee                                             1,266,959       1,029,407    1,255,676      1,020,240
      Depreciation and amortization                         1,392,357       1,250,009    1,375,701      1,241,364
      Electronic equipment operation and maintenance fee     434,908         296,153      432,794        295,213
      Taxes                                                  144,871         162,178      144,109        161,929
      Other business expenses                               4,136,448       3,618,088    4,084,027      3,594,539
      Total                                                19,553,583      16,480,121   19,399,409     16,398,362


      5.40      Impairment loss
                                                                   Group                        Bank
                                                                2011            2010         2011           2010
      Provision for loans and advances                      7,159,118       4,533,401    7,089,442      4,505,198
      Provision for other receivables                        204,636           3,961      204,636          3,961
      Provision for financial assets available-for-sale             -         (4,629)            -        (4,629)
      Provision for foreclosed assets                         82,927           11,146      82,927          11,146
      Provision for interests receivable                      53,294          44,301       53,294         44,301
      Others                                                        -           (761)            -          (761)
      Total                                                 7,499,975       4,587,419    7,430,299      4,559,216
                                                                                                                         2011 Annual Report     149



                                                                   SHANGHAI PUDONG DEVELOPMENT BANK
                                                                     NOTES TO THE FINANCIAL STATEMENTS
                                                  (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                                  [English translation for reference only]


5.41         Income tax expense
                                                                                  Group                                  Bank
                                                                               2011              2010               2011              2010
Current year income tax expense                                          9,283,112         6,099,232         9,235,704           6,093,334
Deferred tax (income)/expense                                            (798,937)              3,087         (797,544)              3,087
Total                                                                    8,484,175         6,102,319         8,438,160           6,096,421


The major reconciliation items between the Group’s theoretical income tax expense and actual amount are as
follows:

                                                                                  Group                                  Bank
                                                                               2011              2010               2011              2010
Profit before tax                                                      35,839,287         25,280,906        35,646,113          25,272,096
Tax calculated at a tax rate of 25%                                      8,959,822         6,320,226         8,911,528           6,318,024
Difference from tax clearance in prior years                               (14,403)          (56,730)          (14,403)           (56,730)
Tax effect of expenses that are not deductible for tax                     325,962           407,154           323,947             353,648
Tax effect arising from income not subject to tax                        (787,433)         (572,447)          (782,912)          (518,521)
Unrecognized tax loss from subsidiaries                                         227             4,116                -                      -
Income tax expense                                                       8,484,175         6,102,319         8,438,160           6,096,421


5.42         Earnings per share

Basic earnings per share(EPS) amount is calculated by dividing consolidated net profit attributable to shareholders
of the Bank by the weighted average number of ordinary shares outstanding during the year. There are no potential
diluted ordinary shares in the Bank, so the basic EPS equals to the diluted figure.

                                                                                                             2011                        2010
                                                                                                                                    Note 1
Net profit                                                                                            27,285,981                19,177,209
Weighted average number of outstanding ordinary shares (thousand)                                     18,653,471                15,544,559
Basic and diluted EPS (RMB)                                                                                  1.46                        1.23
Note 1: The Bank distributed share dividend in June 2011, and therefore the earnings per share for 2010 has been restated accordingly.

5.43         Other comprehensive income
Group and bank
                                                                                                             2011                     2010
1.Unrealized gain or loss of available-for-sale financial assets                                        1,218,411               (2,669,061)
  Minus: Income tax effect on available-for-sale financial assets                                       (304,603)                  667,148
Subtotal                                                                                                 913,808                (2,001,913)
2.Changes of the invested company' s equity under equity method                                           (9,079)                   (7,693)
Total                                                                                                    904,729                (2,009,606)
150   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      5.44         Cash and cash equivalents
                                                                            Group                            Bank
                                                                         31 December                     31 December
                                                                          2011            2010            2011            2010
      Cash                                                           5,648,021        4,924,527      5,603,272        4,897,736
      Non- statutory reserve deposits in central banks              52,978,762       68,156,410     52,572,730       67,701,248
      The original maturity less than three months:
        - Due from other banks and financial institutions          233,182,821       65,500,277    231,869,158       65,191,277
        - Placement with other banks and financial institutions     20,817,624       29,014,465     20,817,624       29,014,465
      Total                                                        312,627,228      167,595,679    310,862,784      166,804,726


      5.45         Cash flows from operating activities (supplementary information)

      Reconciliation of net profit to cash flows from operating activities:

                                                                            Group                            Bank
                                                                          2011            2010            2011            2010
      Net profit                                                    27,355,112       19,178,587     27,207,953       19,175,675
      Add:Impairment loss                                            7,499,975        4,587,419      7,430,299        4,559,216
       Depreciation of fixed assets                                    882,761         835,523         877,242         832,867
      Amortization of intangible assets                                 99,980           80,891         99,976           78,416
      Amortization of long-term deferred assets                        409,616         326,385         398,483         321,842
      Gains and losses on disposal of long-term assets                  13,290         (17,260)         13,297         (17,260)
      Gains and losses on change of fair value                         859,837          87,630         859,837           87,630
      Interest payable for debts issued                                907,504         755,582         907,504         755,582
      Investment income                                                (56,836)        (27,988)        (56,836)        (27,988)
      Increase in deferred tax (assets)/liabilities                   (798,937)           3,087       (797,544)           3,087
      Increase in operating receivables                           (294,488,331)   (537,452,314)   (289,897,307)   (533,401,720)
      Increase in operating payables                               455,971,807      506,135,454    451,217,283      502,123,686
      Net cash flows from operating activities                     198,655,778      (5,507,004)    198,260,187      (5,508,967)


      Material investing and financing activities that do not involve cash receipts and payments do not exist in the Group in
      2011. (2010: 0).

      Movement of cash and cash equivalents
                                                                            Group                            Bank
                                                                          2011            2010            2011            2010
      Cash and cash equivalents at the closing of the period       312,627,228      167,595,679    310,862,784      166,804,726
      Minus: Cash and cash equivalents at the beginning of        (167,595,679)   (134,122,415)   (166,804,726)   (134,002,708)
        the period
      Net increase of Cash and cash equivalents                    145,031,549       33,473,264    144,058,058       32,802,018
                                                                                                                                                                         2011 Annual Report           151



                                                                                             SHANGHAI PUDONG DEVELOPMENT BANK
                                                                                               NOTES TO THE FINANCIAL STATEMENTS
                                                                      (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                                                      [English translation for reference only]


6 SEGMENT REPORTING

Management reviews the performance of the Group based on the branches and subsidiaries in different economic
region. The branches mainly provide service for the local customers and a few clients in other region, so business
division are distinguished based on the location of the assets.

The operating segments’ principle business is providing customers with various commercial banking services and
investment business, including accepting public deposits and granting commercial loans, discounting bills, trade
financing, lending and borrowing in interbank money market and securities investment, etc. Shanghai segment in this
segment report includes head office, offshore department and Shanghai branch.

                                                                                                                                                               Other
                                                   Sichuan                 Shandong Guangdong          Jiangsu       Henan       Zhejiang    Liaoning        districts    Inter branch
2011                     Shanghai       Beijing    Province      Tianjin    Province     Province      Province     Province     Province    Province        of PRC             offset        Total
Operating Income        10,831,878   3,224,894    2,351,837   2,802,989    2,772,088     4,708,967    6,377,231    3,626,818    9,903,178    3,553,954    17,763,838                 -   67,917,672
Interest income        135,637,813 10,960,132     6,935,752 10,408,086     7,286,810   16,840,001    26,014,504    9,571,556   31,936,827   11,777,927    62,707,406 (208,855,577) 121,221,237
including               25,432,185   4,341,680    3,741,250   6,914,981    4,139,651    8,474,303     7,974,811    4,771,847   13,339,000   7,522,252    34,569,277                 - 121,221,237
 External
   interestincome
Internal               110,205,628   6,618,452    3,194,502   3,493,105    3,147,159    8,365,698    18,039,693    4,799,709   18,597,827   4,255,675    28,138,129 (208,855,577)                -
 interestincome
Interest expense      (125,583,163) (8,022,353) (4,864,604) (7,809,523) (4,877,034)    (12,776,668) (20,121,185) (6,241,621) (23,129,132) (8,524,916)    (46,685,053)     208,855,577 (59,779,675)
including              (15,626,494) (3,081,775) (2,001,180) (2,296,507) (1,501,185)    (5,071,341)   (3,048,762) (2,150,012)   (5,275,713) (3,310,250) (16,416,456)                 - (59,779,675)
 External
 Interestexpense
Internal              (109,956,669) (4,940,578) (2,863,424) (5,513,016) (3,375,849)    (7,705,327) (17,072,423) (4,091,609) (17,853,419) (5,214,666) (30,268,597)        208,855,577             -
   interestincome
Net fee and              1,468,452     229,749     276,928     180,354       332,432      617,144       424,918     286,751       967,300     268,387      1,663,311                 -    6,715,726
   commission
        income
Investment                 194,410            -           -           -            -             -            -            -            -            -             5                 -     194,415
income
Gain/loss from fair      (862,319)            -           -           -            -             -            -            -            -            -         2,482                 -    (859,837)
 value change
Foreign exchange         (128,955)      26,034        3,484      22,956       28,116       26,133        52,423        9,008      111,401      30,864         61,532                 -     242,996
 gain
Other operating            105,640      31,332         277        1,116        1,764        2,357         6,571        1,124       16,782       1,692         14,155                 -     182,810
income
                                                                                                                                                                                                                                                                                                             152


                                                                                                                                                                          Other       Inter
                                                     Sichuan                   Shandong Guangdong           Jiangsu         Henan     Zhejiang       Liaoning           districts   branch
2011                    Shanghai          Beijing    Province      Tianjin      Province  Province         Province       Province    Province       Province           of PRC       offset           Total
Operating Expense      (8,123,428)    (1,615,402)   (866,707) (995,604) (1,220,873) (2,137,927) (2,800,389) (1,489,836) (4,321,386) (1,602,101) (6,987,292)                               -   (32,160,945)
                                                                                                                                                                                                                                                                                                             2011 Annual Report




Business tax and        (644,176)       (222,062)   (237,033) (168,546)        (236,053)    (293,606)     (503,562)      (244,800)   (840,740)      (275,843) (1,232,467)                 -    (4,898,888)
 surcharges
Business and           (6,256,472)    (1,020,088)   (389,616) (532,787)        (647,284) (1,276,350) (1,498,203)         (778,388) (2,191,436)      (890,756) (4,072,203)                 -   (19,553,583)
 administrative
   expenses
Impairment charges     (1,045,110)      (371,293)   (238,471) (294,271)        (335,812)    (563,872)     (798,050)      (464,290) (1,288,351)      (421,839) (1,678,616)                 -    (7,499,975)
Other operating         (177,670)         (1,959)      (1,587)           -       (1,724)      (4,099)         (574)        (2,358)         (859)     (13,663)           (4,006)           -      (208,499)
                                                                                                                                                                                                              [English translation for reference only]




 expense


Operating profit        2,708,450      1,609,492 1,485,130 1,807,385           1,551,215    2,571,040     3,576,842      2,136,982   5,581,792      1,951,853 10,776,546                  -     35,756,727
Add:                       31,106          8,914        4,779       2,309         6,517        6,715         9,639          3,509          6,989          5,264         71,616            -       157,357
 non-operating
                                                                                                                                                                                                                                                                         NOTES TO THE FINANCIAL STATEMENTS




   income
                                                                                                                                                                                                                                                                         SHANGHAI PUDONG DEVELOPMENT BANK




Less:                    (22,747)         (2,804)          (2)     (3,211)       (1,613)      (3,924)       (7,015)        (3,285)       (11,535)     (2,690)          (15,971)           -       (74,797)
 non-operating
   expenses
Profit before income    2,716,809      1,615,602 1,489,907 1,806,483           1,556,119    2,573,831     3,579,466      2,137,206   5,577,246      1,954,427 10,832,191                  -     35,839,287
                                                                                                                                                                                                              (All amounts expressed in thousands of RMB unless otherwise stated.)




 tax

31 December                                          Sichuan                    Shandong    Guangdong          Jiangsu          Henan          Zhejiang           Liaoning Other districts
2011                   Shanghai          Beijing     Province        Tianjin     Province     Province        Province        Province         Province           Province       of PRC               Total
Loans and           161,330,675       65,234,643 52,716,899      46,288,179 61,360,320       80,029,502    143,190,658      67,036,498     206,531,772       76,102,296       342,502,508     1,302,323,950
 advances
    to customers
Total Assets        597,827,086      136,225,662 84,876,353 130,867,953 88,376,536 205,466,885             212,877,512     129,515,154     258,443,618     129,250,157        710,966,773     2,684,693,689
Due to customers    361,223,612      118,536,628 76,102,207      65,093,236 74,646,601 119,278,660         185,958,164     108,694,047     231,338,290       96,836,082       413,347,594     1,851,055,121
Total liabilities   486,582,147      134,385,942 83,269,803 128,842,605 86,742,471 202,605,335             208,998,682     127,246,532     252,662,004     127,144,579        696,670,809     2,535,150,909
Total Equity        111,244,939        1,839,720    1,606,550     2,025,348     1,634,065     2,861,550      3,878,830       2,268,622        5,781,614       2,105,578        14,295,964      149,542,780
                                                                                                                                                                  Other
                                                    Sichuan                  Shandong Guangdong             Jiangsu       Henan      Zhejiang    Liaoning       districts    Inter branch
2010                    Shanghai         Beijing    Province       Tianjin    Province  Province           Province     Province     Province    Province       of PRC               offset         Total
Operating               9,739,329     2,343,262     1,795,288    1,927,304    1,802,571     3,167,541      4,900,097   2,794,546    7,634,031    2,512,551   11,239,331                  -    49,855,851
 Income
Interest income        89,935,198     7,636,469     4,111,347    5,509,548    4,583,314     9,558,422     17,989,051   6,307,106   22,595,745    6,855,149   31,734,864     (133,849,281)     72,966,932
including              17,324,498    2,590,886     2,081,349    3,351,696     2,634,126     3,700,601     5,786,607    3,223,466    9,918,769    3,863,615   18,491,319                  -    72,966,932
  External
    interest income
Internal               72,610,700    5,045,583     2,029,998    2,157,852     1,949,188     5,857,821    12,202,444    3,083,640   12,676,976    2,991,534   13,243,545     (133,849,281)              -
  interest income
Interest expense      (81,487,767)   (5,484,229)   (2,488,434) (3,762,335)   (2,972,706)   (6,747,675)   (13,395,772) (3,722,402) (15,659,499) (4,564,364) (21,327,520)      133,849,281 (27,763,422)
including              (5,139,967) (2,055,604)      (614,063) (1,104,123)    (1,071,828)   (2,685,030)   (2,041,645) (1,096,808)   (4,121,352) (1,654,161)   (6,178,841)                 - (27,763,422)
  External
  Interest expense
Internal              (76,347,800) (3,428,625) (1,874,371) (2,658,212)       (1,900,878)   (4,062,645) (11,354,127) (2,625,594) (11,538,147) (2,910,203) (15,148,679)        133,849,281               -
  interest income
Net fee and             1,281,613      140,916       166,396      141,521       158,644       319,351       227,945     196,340       515,340     162,536       737,944                  -     4,048,546
 commission
   income
Investment                 22,212              -            -            -             -             -             -           -             -           -             -                 -        22,212
 income
Gain/loss from fair       (87,630)             -            -            -             -             -             -           -             -           -             -                 -       (87,630)
 value change
Foreign                   (10,262)       46,666        5,727       37,067        31,737        34,963        72,723       12,661      166,002       56,229       86,907                  -       540,420
 exchange gain
Other operating            85,965         3,440          252        1,503         1,582         2,480          6,150        841        16,443        3,001        7,136                  -       128,793
 income
                                                                                                                                                                                                                                            [English translation for reference only]
                                                                                                                                                                                                            (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                                                                                                                                                                                                                                                                 2011 Annual Report




                                                                                                                                                                                                                                                                           SHANGHAI PUDONG DEVELOPMENT BANK
                                                                                                                                                                                                                                                                             NOTES TO THE FINANCIAL STATEMENTS
                                                                                                                                                                                                                                                                                                                 153
                                                                                                                                                                                                                                                                                                                     154


                                                                                                                                                                                 Other      Inter
                                                            Sichuan                     Shandong      Guangdong        Jiangsu      Henan        Zhejiang      Liaoning        districts branch
2010                            Shanghai          Beijing   Province          Tianjin    Province       Province      Province     Province      Province      Province        of PRC offset                  Total
Operating Expense              (6,957,285)   (1,345,036)    (816,273) (701,911)          (867,662)    (1,569,162) (2,317,516) (1,065,859) (2,941,800) (1,135,063) (5,066,232)                     - (24,783,799)
                                                                                                                                                                                                                                                                                                                     2011 Annual Report




Business tax and                (472,500)      (161,269)    (138,754) (121,418)          (155,736)      (197,046)    (364,432)    (174,295)     (621,600)      (199,956)   (788,388)              -     (3,395,394)
 surcharges
Business and                   (5,483,985)     (948,883)    (535,921) (364,654)          (512,870)    (1,020,192) (1,423,538)     (591,910) (1,610,271)        (678,226) (3,309,671)              - (16,480,121)
 administrative
   expenses
Impairment charges              (691,222)      (234,513)    (141,500) (215,834)          (197,188)      (348,295)    (529,487)    (299,654)     (709,352)      (255,031)   (965,343)              -     (4,587,419)
Other operating                 (309,578)          (371)           (98)           (5)      (1,868)        (3,629)         (59)            -         (577)        (1,850)       (2,830)            -       (320,865)
                                                                                                                                                                                                                      [English translation for reference only]




 expense
Operating profit                2,782,044       998,226      979,015 1,225,393            934,909      1,598,379     2,582,581    1,728,687     4,692,231   1,377,488      6,173,099              -     25,072,052
Add:                               61,194          7,234       1,510           1,519        13,254         4,578        19,332       1,048         9,964          3,919        124,277            -        247,829
 non-operating income
Less:                             (14,351)         (566)       (406)         (1,527)         (744)          (638)       (2,830)     (1,289)       (9,474)          (664)       (6,486)            -        (38,975)
                                                                                                                                                                                                                                                                                 NOTES TO THE FINANCIAL STATEMENTS




 non-operating
                                                                                                                                                                                                                                                                                 SHANGHAI PUDONG DEVELOPMENT BANK




   expenses
Profit before income tax        2,828,887     1,004,894      980,119 1,225,385            947,419      1,602,319     2,599,083    1,728,446     4,692,721   1,380,743      6,290,890              -     25,280,906
                                                                                                                                                                                                                      (All amounts expressed in thousands of RMB unless otherwise stated.)




                                                                                                                                                                                        Other
                                                        Sichuan                         Shandong     Guangdong          Jiangsu        Henan        Zhejiang        Liaoning          districts
31 December 2011            Shanghai         Beijing    Province             Tianjin     Province      Province        Province      Province       Province        Province          of PRC                  Total
Loans and               146,254,823     57,753,818 45,133,135         40,217,441 51,479,813           68,924,045    123,814,861    61,202,450    183,455,408      69,183,523     276,693,673          1,124,112,990
 advances
   to customers
Total Assets            568,010,792 105,460,019 67,226,710            99,961,641 68,388,253          152,956,090    173,440,645   104,009,631    219,409,809     107,313,710     525,233,474          2,191,410,774
Due to customers        309,089,814 103,890,295 64,915,130            64,188,398 63,501,707          107,419,459    163,343,719    98,716,057    209,308,156      93,988,228     362,098,569          1,640,459,532
Total liabilities       468,839,430 104,232,012 65,982,578            98,654,845 67,450,678          151,055,467    170,387,541   102,252,054    214,645,780     105,832,586     518,797,953          2,068,130,924
Total Equity               99,171,362    1,228,007     1,244,132          1,306,796      937,575       1,900,623      3,053,104     1,757,577      4,764,029       1,481,124       6,435,521           123,279,850
                                                                                                 2011 Annual Report   155



                                                      SHANGHAI PUDONG DEVELOPMENT BANK
                                                        NOTES TO THE FINANCIAL STATEMENTS
                                        (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                        [English translation for reference only]


7 CONTINGENCIES AND COMMITMENTS

7.1 Credit commitment
Item                                                            31 December 2011               31 December 2010
Bank acceptance                                                       370,981,123                    311,660,235
Acceptance under letter of credit                                      25,615,734                      11,668,317
Guarantee issued                                                       47,854,363                     39,465,175
Letters of credit issued                                              198,422,064                     46,317,238
Un-utilised credit card limit                                          42,752,585                     28,437,580
Total                                                                 685,625,869                    437,548,545


7.2 Commitment of certificate bond

The Group is entrusted by State Bureau of Finance to issue certificate bond. Bondholders are eligible to claim cash
in exchange for their bonds at any time before the maturity date and the Group is obliged to fulfill bondholder's
claims. As at 31 December 2011, the Group has total obligation of RMB 2,713,032 thousands to fulfill cash claims of
the certificate bonds. (31 December 2010: RMB 3,265,495 thousands)

7.3 Operating leases commitment

According to the lease contract signed with the lessor, the minimum payable amount of operating leases commitment
by the Group is the following:

                                                                31 December 2011               31 December 2010
Within 1 year                                                           1,151,157                        945,021
1 to 5 years                                                            3,248,764                       2,538,741
Over 5 years                                                            1,417,149                       1,023,118
Total                                                                   5,817,070                       4,506,880


7.4 Capital commitment

As at 31 December 2011, the major capital commitments of the Group which had been approved but not paid
amounted to RMB 414,912 thousand (31 December 2010: RMB 200,153 thousand).

7.5 Fulfill of earlier commitment

The Group has fulfilled the earlier commitments such as capital expenditure commitment and operating lease
commitment as at 31 December 2010.

7.6 Pending litigation

As at 31 December 2011, the number of litigations the Group was charged as defendant and hadn’t adjudicated yet
was 20, and the amount involved was about RMB 151 million. The possibility of expected compensation was low, so
the Group didn’t recognize any provision (December 31, 2010: no provision recognized).
156   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      7.7 Equity investment commitment

      As at 31 December, 2011, the Group has signed contract with Silicon Valley Bank, about investing RMB 500 million
      to Pudong Development Silicon Valley Bank Co., LTD., which was under construction. The Group accounts for 50%
      of the registered capital of the company. (As at 31 December 2010: none).

      8 CUSTODY BUSINESS

      The Group provide safe-keeping, trust and entrusted loan business. The assets arose from these kinds of custody
      business weren’t recorded in the financial statement. As at 31 December 2011, the balance of entrusted loan
      business was RMB 98.595 billion. (As at 31 December 2010: RMB 162.371 billion).

      9 RELATED PARTIES

      9.1 Related parties relationship

      If a party has the ability to control the other party or significant impact on the other party's financial and business
      decisions, or a party and other party under same control or common control, they shall be deemed as related parties.
      Individual or enterprise could all be related parties.

      9.2 Subsidiary companies

      For information of subsidiaries, please refer to Note 4 “Scope of consolidated financial statements”.

      9.3 Associates and joint ventures

      For information of associates and joint ventures, please refer to Note 5.12 “Long-term equity investments”.

      9.4 Others

      The other related parties of the Group include the key management personal (including directors, supervisors
      and senior management) and their close family members, companies controlled, common controlled or significant
      influenced by key management personal and their close family members, principle shareholder who holds above 5%
      shares of the Bank.

      As at 31 December, 2011, the principle shareholders who hold above 5% shares of the Bank include:

                                                                            Ownership             Main Business
      China Mobile Group Guangdong Company Limited                            20.000%             Mobil Communication
      Shanghai International Group Co., Ltd.                                  16.927%             Financial Service
      Shanghai International Trust Investment Company                          5.232%             Trust Business


      9.5 Transaction between related parties

      The major transactions between the Group and related parties are loans and deposits. They are performed under the
      similar commercial terms as third parties. The amount of transaction with related parties is immaterial.
                                                                                                   2011 Annual Report   157



                                                         SHANGHAI PUDONG DEVELOPMENT BANK
                                                           NOTES TO THE FINANCIAL STATEMENTS
                                            (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                            [English translation for reference only]

9.5.1 Loan to related parties

                                                                       31 December 2011          31 December 2010
Company significantly influenced by key management personal
Bailian Group Co., Ltd.                                                           60,000                   130,000
Shanghai Bailian Group Co., Ltd.                                                       -                   100,000
Total                                                                             60,000                   230,000
                                                                                    2011                       2010
Interest income                                                                    7,307                     22,549


9.5.2 Due from related parties

                                                                       31 December 2011          31 December 2010
First Sino Bank                                                                  129,702                     14,580
AXA SPDB Investment Managers Co., Ltd.                                            27,931                     40,862
Shanghai International Trust Investment Company                                   19,252                     62,540
Total                                                                            176,885                    117,982
                                                                                    2011                       2010
Interest expense                                                                   2,992                      2,449


9.5.3 Deposit from related parties

                                                                       31 December 2011          31 December 2010
China mobile Ltd.                                                             17,319,224                 1,998,790
Including: China Mobile Group Guangdong Company Limited                        1,447,283                   761,738
                                                                                    2011                      2010
Interest expense of deposit from related parties                                 222,717                      8,801


9.5.4 Guarantee to related parties

                                                                                    2011                       2010
Bailian Group Co., Ltd.                                                          408,850                   329,500


As at December 31, 2011, the Group provided 2 guarantees for Bailian Group, and these guarantees will be matured
in 2012 and 2013 respectively.

9.5.5 Bank acceptance to related parties

                                                                       31 December 2011          31 December 2010
China mobile Ltd.                                                                      -                     20,000
158   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]

      9.5.6 Lending to related parties

                                                                         31 December 2011                31 December 2010
      First Sino Bank                                                              94,514                                 -
                                                                                    2011                            2010
      Interest income                                                                540                              159


      9.5.7 Derivative transactions with related parties

                                                                              31 December 2011
                                                                                                 Fair Value
                                                           Notional amount
                                                                                            Asset                  Liability
      First Sino Bank
        Currency Swap Contracts                                 1,446,700                         -               (11,909)
        Forward Exchange Contract                                 332,761                   2,661                    (246)
      Total                                                                                 2,661                 (12,155)
                                                                              31 December 2010
                                                                                                 Fair Value
                                                           Notional amount                  Asset                  Liability
      First Sino Bank
        Currency Swap Contracts                                   147,569                    798                   (1,810)
        Forward Exchange Contract                                 319,008                   1,035                  (2,001)
      Total                                                                                 1,833                  (3,811)


      9.5.8 Commission income from related parties

                                                                                     2011                             2010
      China mobile Ltd.                                                               298                              340
      AXA SPDB Investment Managers Co., Ltd.                                        2,870                            2,400
      First Sino Bank                                                                   -                              680
      Total                                                                         3,168                            3,420


      9.5.9 Operation expenses to related parties

                                                                                     2011                            2010
      China mobile Ltd.                                                            47,175                          28,236


      9.5.10 Compensation of key management personal

      According to the regulations of the relevant authorities, the 2011 annual compensation of Bank’s directors,
      supervisors and other senior management persons is pending for approval. The Bank will formally implement and
      disclose it once it’s approved. The accrued compensation of key management personal does not have significant
      impact on the financial statements of 2011. (The approved annual compensation of Bank’s directors, supervisors and
      other senior management in 2010 is RMB 36,382 thousands.)
                                                                                                    2011 Annual Report   159



                                                          SHANGHAI PUDONG DEVELOPMENT BANK
                                                            NOTES TO THE FINANCIAL STATEMENTS
                                           (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                           [English translation for reference only]


10 FINANCIAL RISK MANAGEMENT

The Group exposes to a variety of financial risks. The Group analyses, evaluates, accepts and manages some
degree of risks or risk portfolios. Managing risk is core to the financial institution, and the inherent risks are an
inevitable consequence of business operation. The Group’s aim is therefore to achieve an appropriate balance
between risk and return and minimize potential adverse effects on the Group’s financial performance.

The Group designs risk management policies to identify and analyze these risks, set appropriate risk limits and
control procedures, and monitor the risks and limits through information systems.

The Group mainly exposes to financial risks such as credit risk, market risk and liquidity risk. Market risk includes
currency risk and interest rate risk.

The board of directors of the Bank decides the Group’s risk preference, then senior management of the Bank design
risk management policy and procedures in the areas such as credit risk, market risk and liquidity risk accordingly.
After the policies and procedures being approved by the board of directors, they will be followed by related
departments of the Bank.

10.1 Credit risk

Credit risk represents the potential loss that may arise from the failure of a debtor to meet its obligation or
commitment to the Bank. Credit risk is greater when counterparties are concentrated in one industry or geographic
region, because a group of otherwise unrelated counterparties could be adversely affected in their ability to repay
their obligations due to economic developments affecting their common industry or region.

The Group has established relevant mechanism, and set limit of individual borrower’s tolerable credit risk. The Group
regularly monitors and reviews above credit risk limit.

The Group conducts credit evaluation before granting facilities to individual customer, and regularly examines the
credit limit. The means of credit risk management include obtaining collateral and guarantee. For credit commitments,
the Group generally requires for guarantee deposits to mitigate credit risk.

10.1.1 Credit risk measurement

Loans and credit risk measurement

The Group uses a five-grade classification system to manage the quality of its loan portfolio. Such classification
system is based on “the Guidance on Credit Risk Classification” (the Guidance”) issued by CBRC. Under the Group’s
own system and CBRC guidance, the Group classifies its credit assets and off-balance sheet credit exposures into
five categories, which are namely pass, special mention, substandard, doubtful and loss. The last three categories
are also classified as “non-performing” assets.

The core definition of the credit asset classification is as follows:
160   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      Rating                  Description of the rating

                              The borrower is able to fulfill the contractual obligations, and there is no uncertainty that principal
      Pass
                              and interest can be paid on time.
                              The borrower is able to make current due payments, but there exist some potential factors that may
      Special Mention
                              have negative impact on the borrower s future payments.
                              The borrower's repayment ability has been impaired and its normal income cannot repay the loan
      Substandard             principles and interest in full. Losses may be incurred to the Bank, even with the execution of
                              guarantee.
                              The borrower cannot repay the principal and the interest in full. Significant losses will be incurred
      Doubtful
                              even with the execution of guarantees.
                              After taking into consideration all possible recovery actions and necessary legal proceedings, the
      Loss                    principal and interest are unable to be collected, or only a very small portion of principal and interest
                              can be collected.


      Bonds and other bills

      The Bank manages the risk of bonds and other bills through controlling the scale, setting the access by issuer
      and rating and post management. For foreign currency securities, only those with rating (by Standard & Poor or
      equivalent agencies) equivalent to or higher than BBB can be invested. Investments in RMB debt securities are
      limited to those bonds with credit rating equivalent to or above AA- assigned by rating agencies recognised by
      PBOC.

      Due from and placements with banks and other financial institutions

      Head office reviews and monitors the credit risk of individual financial institutions on regularly basis. Limits are placed
      for each individual bank or non-banking financial institution which has business relationship with the Bank.

      10.1.2 Risk limit management and mitigation policies

      The Bank manages and controls concentrations of credit risk wherever they are identified in particular, to individual
      counterparty and group, and to industry and region.

      The Bank manages the credit risk by setting limit on one borrower, or groups of borrowers, and to geographical and
      industry segments. Such risks are monitored on a revolving basis and subject to an annual or more frequent review,
      when considered necessary.

      Exposure to credit risk is also managed through regular analysis of the ability of borrowers and potential borrowers to
      meet interest and capital repayment obligations and by changing these lending limits where appropriate.

      Some other specific control and mitigation measures are outlined below:

      Collateral

      The Bank employs a range of policies and practices to mitigate credit risk. The most traditional of these is taking
      of guarantee, including collateral, guarantee deposit and guarantor. The Bank implements guidelines on the
      acceptability of specific classes of collateral. The principal collateral for loans and advances are:

      •   Housing, land use right;
      •   Commercial assets, including premises, inventory and account receivables
                                                                                                         2011 Annual Report   161



                                                           SHANGHAI PUDONG DEVELOPMENT BANK
                                                             NOTES TO THE FINANCIAL STATEMENTS
                                            (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                            [English translation for reference only]

•   Financial instruments such as debt securities and stocks.

Value of collateral is usually required to be assessed by professional valuer designated by the Group. When there is
a sign indicating that the value of collateral impaired, the Group will review whether the collateral can cover the credit
risk again. To mitigate the credit risk, the Group set limit on the loan-to-value ratio for difference types of collateral.
The principal collateral types for corporate loans and retail loans are as follows:

Collateral                                             Maximum loan-to-value ratio
Time deposit                                           95%-100%
PRC treasury bonds                                     90%-100%
PRC financial institution bonds                        90%
Rights to collect fees                                 70%
Rights to operate                                      60%
Commercial building and factory                        60%
House                                                  70%
Land use rights                                        60%


For loans guaranteed by third parties, the Group will evaluate the financial condition, credit history and ability to meet
obligations of the guarantor on regular basis.

Guarantee of financial assets other than loans and advances is determined by the nature of the instruments. Debt
securities, treasury and other eligible bills are generally unsecured, with the exception of asset-backed securities and
similar instruments, which are secured by portfolios of financial instruments.

Derivative instruments

The Group maintains strict credit limits on derivative transactions with counterparties. The Group mitigates credit risk
associated with derivative instruments by requiring margin deposits from counterparties.

Credit commitments

The primary purpose of these instruments is to ensure that funds are available to a customer as required.
Guarantees, acceptances and letters of credit, which represent irrevocable commitment that the Group will make
payments in event that a customer cannot meet its obligations to third parties, carry the same credit risk as loans.
In some cases, such as those situations where the amount of credit commitment exceeds the original credit limit,
margin deposits are required to mitigate the credit risks. The Group’s potential amount of credit risk is equivalent to
the total amount of credit commitments.
162   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]

      10.1.3 Maximum exposure to credit risk without considering collateral or other credit enhancements

                                                                                     2011-12-31               2010-12-31
      Credit risk exposures relating to balance sheet items:
      Balance with central bank                                                     361,309,078              288,324,233
      Due from other banks and financial institutions                               267,876,482               69,539,713
      Interbank placements                                                          111,415,298               31,253,465
      Financial assets held for trading                                               5,866,841                         -
      Derivative financial assets                                                       548,787                1,033,349
      Financial assets purchased under resale agreements                            281,509,782              391,932,144
      Interest receivable                                                            11,071,074                6,492,715
      Loans and advances to customers                                             1,302,323,950            1,124,112,990
      Available-for-sale financial assets                                           147,929,131              104,142,632
      Investment securities-held-to-maturity                                        158,535,453              143,556,636
      Investment securities-loans and receivables                                     8,759,536                3,707,122
      Other financial assets                                                          2,458,761                 6,455,411
      Subtotal                                                                    2,659,604,173            2,170,550,410
      Credit risk exposures relating to off-balance sheet items:
      Letter of credit                                                              198,422,064               46,317,238
      Acceptance under letter of credit                                              25,615,734               11,668,317
      Guarantee issued                                                               47,854,363               39,465,175
      Acceptance                                                                    370,981,123              311,660,235
      Un-utilised balances of credit card                                            42,752,585               28,437,580
      Subtotal                                                                      685,625,869              437,548,545
      Total                                                                       3,345,230,042            2,608,098,955

      Table above represents the credit risk exposure to the Group, without taking account of any collateral held or other
      credit enhancements attached. For on-balance-sheet assets, the exposures set out above are based on carrying
      amounts as reported in the balance sheet.

      10.1.4 Due from and placements with banks and other financial institutions and financial assets purchased
      under resale agreements

      Due from and placements with banks and other financial institutions and financial assets purchased under resale
      agreements are neither past due nor impaired. The credit risk can be evaluated referencing to counterpart’s nature.

      Due from and placements with banks and financial institutions                     2011-12-31            2010-12-31
      Domestic commercial bank                                                         361,910,656            92,718,798
      Overseas commercial bank                                                          16,447,124              5,835,380
      Domestic other financial institutions                                                934,000              2,239,000
                                                                                       379,291,780           100,793,178


      Sufficient acceptance bills and bonds have been pledged for financial assets purchased under resale agreements,
      thus they were not exposed to significant credit risk.
                                                                                                              2011 Annual Report   163



                                                             SHANGHAI PUDONG DEVELOPMENT BANK
                                                               NOTES TO THE FINANCIAL STATEMENTS
                                             (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                             [English translation for reference only]

10.1.5 Loans and advances

                                                                                     2011-12-31                    2010-12-31
Neither past due nor impaired                                                     1,322,814,002                 1,139,007,668
Past due but not impaired                                                                2,794,924                  1,601,749
Impaired                                                                                 5,827,118                  5,879,884
Gross                                                                             1,331,436,044                 1,146,489,301
Less: provision                                                                     (29,112,094)                  (22,376,311)
Net                                                                               1,302,323,950                 1,124,112,990


Neither past due nor impaired

The Group classifies credit assets according to related regulations, including those promulgated by CBRC. Please
refer to Note 10.1.1 for more information. Loans and advances neither past due nor impaired are classified as
following:

                                                 Corporate loans                 Individual loans                         Total
2011-12-31
Pass                                               1,056,776,980                    258,260,891                 1,315,037,871
Special mention                                        7,642,172                          133,959                   7,776,131
                                                   1,064,419,152                    258,394,850                 1,322,814,002
2010-12-31
Pass                                                 918,482,787                    215,596,435                 1,134,079,222
Special mention                                        4,853,677                           74,769                   4,928,446
                                                     923,336,464                    215,671,204                 1,139,007,668


Past due but not impaired

                                                                        2011-12-31
                              Past due up        Past due 30 -       Past due 60-90        Past due over
                               to 30 days             60 days                  days              90 days                  Total
Corporate loans                   375,564              118,622                  26,203           223,468               743,857
Individual loans                1,565,577              296,208                 160,332               28,950          2,051,067
                                1,941,141              414,830                 186,535           252,418             2,794,924
                                                                        2010-12-31
                              Past due up        Past due 30 -       Past due 60-90        Past due over
                               to 30 days             60 days                  days              90 days                  Total
Corporate loans                    15,153                  219                  17,712           135,379               168,463
Individual loans                1,055,681              239,765                 130,089                7,751          1,433,286
                                1,070,834              239,984                 147,801           143,130             1,601,749

The Group concludes these past due loans can be compensated through the operation of borrower, the payment of
guarantor or disposal of collateral, so they are not recognized as impaired.
164   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]

      Impaired

                                                                              31 December 2011                31 December 2010
      Corporate loans                                                                4,968,138                       5,115,846
      Individual loans                                                                 858,980                         764,038
                                                                                      5,827,118                      5,879,884


      Fair value of collateral was estimated by management based on the latest available external valuations and adjusted
      by taking into account the current experience and market situation. Valuation of the collateral will be considered when
      assessing the impairment of loans and advances.

      Loans and advances renegotiated

      Renegotiated loans represent the loans whose original contract repayment terms have been modified as a result of
      the deterioration of borrowers’ financial conditions or inability to repay the loans according to contractual terms. At
      31 December 2011, net value of the renegotiated loans held by the Group amounted to RMB 83,785 thousands (31
      December 2010: RMB 103,920 thousands).

      10.1.6 Investment securities

      The tables below analyze the Group’s investment securities by external rating agencies, including S&P or equivalent
      agencies recognised by the PBOC.

                                                           Available-     Investment securities-
      Foreign currency securities           for-sale financial assets           held-to-maturity                          Total


      AAA                                                  1,214,332                     314,444                     1,528,776
      Not rated                                              15,308                               -                     15,308
                                                           1,229,640                     314,444                     1,544,084


      AAA                                                   247,774                      328,512                       576,286
      Not rated                                              21,030                               -                     21,030
                                                            268,804                      328,512                       597,316

      RMB securities
                                                                                   Investment
                                                                Available-          securities-     Investment
                                        Financial assets for-sale financial            held-to securities- loans
                                         held for trading           assets           -maturity and receivables            Total


      Mid and long term:
      AAA                                       483,520        36,944,513         14,050,788           329,862      51,808,683
      AA-to AA+                                  19,852         5,799,774          1,804,316             99,957      7,723,899
      A-to A                                           -                  -             1,620                  -         1,620
      Short-term:
                                                                                                                    2011 Annual Report   165



                                                              SHANGHAI PUDONG DEVELOPMENT BANK
                                                                NOTES TO THE FINANCIAL STATEMENTS
                                           (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                           [English translation for reference only]


RMB securities
                                                                                   Investment
                                                           Available-               securities-     Investment
                                   Financial assets for-sale financial                 held-to securities- loans
                                    held for trading           assets                -maturity and receivables                  Total
A-1                                      2,843,964            4,841,770             2,401,097                   -        10,086,831
Not rated:
Treasury bonds                             371,410           12,795,495            70,531,903         1,685,111          85,383,919
PBOC bills                                 348,121           43,148,040                88,535           965,242          44,549,938
Bonds issued by policy                   1,799,974           34,217,723            42,848,894                   -        78,866,591
 banks
Bonds issued by financial                          -                   -                     -       4,675,956            4,675,956
 institutions
Local government bonds                             -          8,952,176            26,493,856                   -        35,446,032
Entrusted product (Note1)                          -                   -                     -       1,003,408            1,003,408
                                         5,866,841       146,699,491          158,221,009            8,759,536          319,546,877


Note 1: It represents beneficial right of the entrusted product, which invests in entrusted loans, acquired by the
Group.

RMB securities
                                                                                      Investment       Investment
                                                Financial            Available-        securities-      securities-
                                                    assets    for-sale financial          held-to       loans and
                                          held for trading                assets        -maturity     receivables               Total
31 December 2010
Mid and long term:
AAA                                                      -         29,120,242         12,035,686                    -    41,155,928
AA-to AA+                                                -           2,742,545         3,489,528                    -     6,232,073
A-to A                                                   -                     -          89,752                    -         89,752
Short-term:
A-1                                                      -           3,441,896                   -                  -     3,441,896
Not rated:
Treasury bonds                                           -         14,932,112         45,473,000       2,046,644         62,451,756
PBOC bills central bank                                  -         18,234,584         25,127,708                    -    43,362,292
Bonds issued by policy banks                             -         28,022,660         41,842,408                    -    69,865,068
Bonds issued by financial institutions                   -                     -                 -     1,660,478          1,660,478
Local government bonds                                   -          7,379,789         15,170,042                    -    22,549,831
                                                         -        103,873,828 143,228,124              3,707,122        250,809,074
166   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      10.2 Market risk

      Market risk is the risk of loss arising from movements in observable market variables such as interest rates,
      exchange rates and equity markets. The Group exposes to market risk in both trading account and bank account
      items, includes interest rate risk and currency risk.

      Market risk management department formulates universal policies and procedures under a consolidated framework
      and supervises the implementation of such policies and procedures. Treasury department is in charge of Head
      Office’s investment portfolios management, trading of treasury business and executing the relevant policies of
      market risk. Audit department audits independently on whether market risk management system works reliably and
      effectively regularly.

      The Group measured market risk with consideration of the established benchmarks and management ability, main
      methods include stress tests, analysis on valuation at risk, gap analysis and sensitivity analysis. The market risk of
      new products and businesses should be recognised before its commencement in compliance with relevant policies.

      10.2.1 Currency risk

      The Group was established and operates in PRC, and conducts the majority of its businesses in RMB, with foreign
      transactions mainly in US dollar.

      The table below summarizes the Group’s exposure to foreign exchange rate risk, assets and liabilities categorized by
      original currency having been measured in RMB.

                                                                                31 December 2011
                                                                RMB          USD         HKD         Others           Total
                                                                        Into RMB    Into RMB       Into RMB       Into RMB
      Cash and balances with central bank                364,398,438    2,175,502    203,862        179,297    366,957,099
      Due from other banks and financial institutions    246,021,876 18,300,332     1,567,605      1,986,669   267,876,482
      Interbank placements                               104,722,937    5,112,888           -      1,579,473   111,415,298
      Financial assets held for trading                    5,866,841            -           -              -     5,866,841
      Derivative financial assets                            435,477       25,658      10,282        77,370        548,787
      Financial assets purchased under resale
                                                         281,509,782            -           -              -   281,509,782
        agreements
      Interests receivable                                10,575,024     466,992        7,364        21,694     11,071,074
      Loans and advances to customers                   1,252,043,480 47,262,266    2,200,612       817,592 1,302,323,950
      Available-for-sale financial assets                146,699,491     298,789     930,851               -   147,929,131
      Investment securities - held-to-maturity           158,221,009     314,444            -              -   158,535,453
      Investment securities – loans and receivables        8,759,536            -           -              -     8,759,536
      Other financial assets                               2,458,761            -           -              -     2,458,761


      Due to central bank                                     50,000            -           -              -        50,000
      Due to other banks and financial institutions      435,861,872    3,434,537    847,269        764,591    440,908,269
      Interbank borrowings                                58,984,745    6,365,480   1,619,800              -    66,970,025
      Derivative financial liabilities                        23,332    1,459,336           -        32,361      1,515,029
                                                                                                         2011 Annual Report   167



                                                          SHANGHAI PUDONG DEVELOPMENT BANK
                                                            NOTES TO THE FINANCIAL STATEMENTS
                                            (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                            [English translation for reference only]


                                                                            31 December 2011
                                                            RMB          USD         HKD           Others            Total
                                                                     Into RMB    Into RMB        Into RMB       Into RMB
Financial assets sold under repurchase agreements     86,019,569            -            -               -    86,019,569
Due to customers                                    1,792,462,741 49,564,078     3,324,097       5,704,205 1,851,055,121
Interests payable                                     20,125,602      129,522       9,297          14,167     20,278,588
Debts issued                                          32,600,000            -            -               -    32,600,000
Other financial liabilities                           21,041,570            -            -               -    21,041,570




                                                                            31 December 2010
                                                            RMB          USD           HKD          Others           Total
                                                                     Into RMB      Into RMB      Into RMB       Into RMB
Cash                                                    4,579,933     118,098        52,702       173,794       4,924,527
Balances with central bank, due from banks and       342,485,420    11,230,800    2,709,886      1,437,840   357,863,946
  other financial institutions
Interbank placements and financial assets             411,006,144   10,411,992      314,497      1,452,976   423,185,609
   purchased under resale agreements
Derivative financial assets                              526,136      368,489                -    138,724       1,033,349
Loans and advances to customers                     1,086,069,803   36,266,462      979,407       797,318 1,124,112,990
Available-for-sale financial assets                  103,873,828      268,804                -           -   104,142,632
Investment securities - held-to-maturity             143,228,124      328,512                -           -   143,556,636
Investment securities – loans and receivables           3,707,122            -               -           -      3,707,122
Other financial assets                                  6,455,411            -               -           -      6,455,411


Due to central bank                                       50,000             -               -           -         50,000
Due to other banks and financial institutions        330,168,598     6,064,533      960,302       625,386    337,818,819
Interbank borrowings                                   11,070,000    2,967,477      296,695        80,973     14,415,145
Derivative financial liabilities                         487,911      447,968                -    236,204       1,172,083
Financial assets sold under repurchase agreements     16,963,471             -               -           -    16,963,471
Due to customers                                    1,590,803,410   39,347,013    5,298,336      5,010,773 1,640,459,532
Debts issued                                          16,800,000             -               -           -    16,800,000
Other financial liabilities                           12,304,636             -               -           -    12,304,636
168   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]

      The Group measured the possible effect on net profit which caused by foreign exchange rate fluctuation through the
      sensitivity analysis. The table below shows the result of sensitivity analysis on the balance sheet date.

      Net Profit                                                       2011-12-31                                        2010-12-31
      Increase/(decrease)                                      Exchange rate fluctuation %                      Exchange rate fluctuation %
                                                                        -1%                  1%                          -1%                      1%
      USD against RMB                                             (102,003)            102,003                    (172,572)                  172,572
      Other currencies against RMB                                   22,081           (22,081)                            925                   (925)


      The sensitivity analysis was based on all assets and liabilities, characteristics of static currency risk structure. The
      hypothesis is shown as below: (1) exchange rate sensitivity represents the exchange gain or loss caused by the 1%
      fluctuation in absolute value of relevant currency exchange rates (middle) on the balance sheet date; (2) different
      currency rates’ fluctuation was simultaneous and in the same direction; (3) foreign currency position contains spot
      exchange position and forward exchange position.

      Based on the above-mentioned hypothesis, the actual exchange gain or loss may differ from the sensitivity analysis
      result.

      10.2.2 Interest rate risk

      Interest rate risk refers to adverse movements in interest rates, resulting in potential losses to the Group, including
      interest rate risk of bank book and trading book.

      Since interest rates for most assets and liabilities are controlled by PBOC benchmark interest rate, the Group’s
      interest rate risk mainly results from re-pricing risk of bank book. The Group has established a relatively perfect
      system of internal transfer pricing, through which, the Group’s interest rate risk of bank book is managed in a
      centralized way. The Group measured and monitored interest rate risk with the main methods such as value-at-risk
      analysis and sensitivity analysis.

      The table below summarizes the Group’s exposures to interest rate risks. The table presents the Group’s assets and
      liabilities at carrying amounts, categorized by the earlier of contractual re-pricing or maturity dates.

                                                                                           2011-12-31
                                                                               3 months-                                 non-interest-
                                                   <1 month      1-3 months                  1-5 years        >5 years                           Total
                                                                                 1 years                                      bearing


      Cash and balances with central bank        361,309,078              -            -                -            -    5,648,021       366,957,099
      Due from other banks and financial         214,423,156     45,631,500    7,073,230      700,000                -       48,596       267,876,482
        institutions
      Interbank placements                        20,418,362     44,505,475   46,491,461                -            -               -     111,415,298
      Financial assets held for trading             189,919       1,404,058    2,914,895      842,732         515,237                -      5,866,841
      Derivative financial assets                          -              -            -                -            -      548,787           548,787
      Financial assets purchased under            55,497,238 150,256,828      75,755,716                -            -               -    281,509,782
         resale agreements
      Interests receivable                                 -              -            -                -            - 11,071,074          11,071,074
      Loans and advances to customers            383,301,288 261,235,277 607,504,190        28,422,092      21,861,103               -   1,302,323,950
      Available-for-sale financial assets          4,556,851     14,294,591   37,699,551    71,019,599      20,358,539               -    147,929,131
      Investment securities - held-to-maturity     2,207,857     11,700,705   32,483,501    79,227,255      32,916,135               -    158,535,453
                                                                                                                                           2011 Annual Report    169



                                                                          SHANGHAI PUDONG DEVELOPMENT BANK
                                                                            NOTES TO THE FINANCIAL STATEMENTS
                                                      (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                                      [English translation for reference only]


Investment securities –
                                                      953          483,238       2,694,020        1,295,288        4,286,037                 -      8,759,536
  loans and receivables
Other financial assets                                    -               -                -                 -                -     2,458,761       2,458,761



                                                                                           2011-12-31
                                                                              3 months-1                                          non-interest-
                                          <1 month         1-3 months                           1-5 years          >5 years                             Total
                                                                                   years                                               bearing


Due to central bank                               -                   -          50,000                 -                 -                   -       50,000
Due to other banks and financial       156,420,200        129,692,829     154,792,154                   -                 -              3,086    440,908,269
 institutions
Interbank borrowings                    63,000,870            2,429,161        1,539,994                -                 -                   -    66,970,025
Derivative financial liabilities                  -                   -                -                -                 -         1,515,029       1,515,029
Financial assets sold under             65,336,720            6,273,035       14,409,814                -                 -                   -    86,019,569
 repurchase agreements
Due to customers                      1,012,856,951       244,297,572     431,363,209 157,950,632                 2,000,000         2,586,757 1,851,055,121
Interests payable                                 -                   -                -                -                 -        20,278,588      20,278,588
Debts issued                                      -                   -        6,000,000        8,200,000        18,400,000                   -    32,600,000
Other financial liabilities              8,900,790            4,994,750        1,818,000                -                 -         5,328,030      21,041,570




                                                                                               2010-12-31
                                                                              3 months-1                                          non-interest-
                                           <1 month        1-3 months                            1-5 years        >5 years                               Total
                                                                                   years                                               bearing


Cash and balances with central bank 288,324,233                       -                -                 -                -         4,924,527     293,248,760
Due from and placements with banks       84,784,785        14,455,633          1,543,760                 -                -              9,000    100,793,178
  and other financial institutions
Derivative financial assets                           -               -                -                 -                -         1,033,349       1,033,349
Financial assets purchased under        158,405,476        76,125,396     157,401,272                    -                -                   -   391,932,144
 resale agreements
Loans and advances to customers         293,932,437 309,904,498           480,177,847          26,906,039 13,192,169                          - 1,124,112,990
Available-for-sale financial assets        3,127,806          8,083,215       13,613,565       59,340,586 19,977,460                          -   104,142,632
Investment securities –                    4,818,255       18,436,364         41,114,655       58,607,250 20,580,112                          -   143,556,636
  held-to-maturity
Investment securities –                         459            113,007           476,340        1,456,838        1,660,478                    -     3,707,122
  loans and receivables
Other financial assets                                -        500,000         1,600,000                 -                -         4,355,411       6,455,411
170   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


                                                                                     2010-12-31
                                                                      3 months-1                                   non-interest-
                                           <1 month     1-3 months         years        1-5 years     >5 years          bearing          Total


      Due to central bank                          -             -       50,000                 -            -                 -        50,000
      Due to and placements from         117,701,913    92,557,001   120,094,517      21,880,000             -               533   352,233,964
        banks and other financial
        institutions
      Derivative financial liabilities             -             -               -              -            -       1,172,083       1,172,083
      Financial assets sold under          4,911,600     5,565,585     6,486,286                -            -                 -    16,963,471
       repurchase agreements
      Due to customers                   945,828,618   230,835,240   276,877,179 181,662,789        1,477,661        3,778,045 1,640,459,532
      Debts issued                                 -             -     7,600,000       9,200,000             -                 -    16,800,000
      Other financial liabilities                  -             -               -              -            -      12,304,636      12,304,636




      The Group measured the possible effect on net profit and equity which caused by interest rate fluctuation through the
      sensitivity analysis. The table below shows the results of the sensitivity analysis on the balance sheet date.

                                                                                Interest rate fluctuation (Basis points)
                                                                              31 December 2011                            31 December 2010
                                                                      -100                   +100                     -100               +100
      Net profit increases/(decreases)                          (2,359,825)            2,359,825             (2,000,703)            2,000,703
      Revaluation reserve in equity                              2,384,413            (2,315,606)                2,413,926         (2,279,952)
       increases/(decreases)


      The sensitivity analysis was performed on the basis of static characteristics of the interest risk of the assets and
      liabilities. In the relevant analysis, the fluctuation was only measured during one year, which reflected the effect on
      the annualized interest income given re-pricing the assets and liabilities.

      The hypothesis was shown as below:

          (1) Except for current deposit, all assets and liabilities re-priced or matured at the middle of the period for
              maturity within 3 months and 3-12 months;

          (2) The interest rates of current deposit and statutory deposit reserve in central bank remain the same;

          (3) The yield curve moved in parallel with interest rate;

          (4) There were no other changes for the portfolio of assets and liabilities.

      Due to the hypothesis mentioned above, the actual interest income may be different from the sensitivity analysis
      results.

      Based on the assumption of the parallel movement of the yield curve with interest rate change, the sensitivity
                                                                                                               2011 Annual Report   171



                                                               SHANGHAI PUDONG DEVELOPMENT BANK
                                                                 NOTES TO THE FINANCIAL STATEMENTS
                                               (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                               [English translation for reference only]

analysis of the equity is derived by revaluating the ending balance of the available-for-sale financial assets as a result
of certain percentage of interest rate changes.

10.3 Liquidity risk

Liquidity risk is the risk that the Group will not meet liabilities as they fall due, and it results from amount and maturity
mismatches of assets and liabilities. The liquidity risk management system of the Group includes planning before-
event, managing during-event, and adjusting after-event and emergency plan. In accordance with the Group’s
situation, according to the regulatory index systems, the series of the daily liquidity system was designed to monitor
the implement of the relevant ratio limits, manage the index system’s grading, and adjust the different levels in
different ways.

The table below presents the cash flows payable by the Group under non-derivative financial assets and liabilities by
remaining contractual maturities at the balance sheet date. The amounts disclosed in the table are the contractual
undiscounted cash flows.

10.3.1 Non-derivative financial assets and liabilities cash flow

                                                                         2011-12-31
                                                                        Due within
                                            Repayable     Due within     3 and 12     Due between       Due after
                                Overdue     on demand      3 months       months      1 and 5 years      5 years            Total


Cash and balances with                 -   366,957,099             -             -                -             -    366,957,099
  central bank
Due from banks and other               -    16,370,589   245,736,576     7,324,765         729,726              -    270,161,656
  financial institutions
Interbank placements                   -             -    65,957,111    46,995,145                -             -    112,952,256
Financial assets held for              -             -      502,491      3,092,403       2,281,652       842,127       6,718,673
 trading
Financial assets under                 -             -   207,725,324    77,800,792                -             -    285,526,116
 resale agreements
Loans and advances to          6,216,914    10,993,447   201,861,477   649,540,653     342,700,599    424,046,233   1,635,359,323
 customers
Available-for-sale financial           -             -     7,521,641    37,609,506      91,760,628     31,942,600    168,834,375
  assets
Investment securities-                 -             -     5,269,085    33,778,986     101,764,371     41,366,819    182,179,261
  held-to-maturity
Investment securities-                 -             -      296,089      3,210,377       2,477,591      5,483,378     11,467,435
  loans and receivables
Other financial assets                 -     2,458,761             -             -                -             -      2,458,761
172   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


                                                                                    2011-12-31
                                                                                        Due within
                                                       Repayable      Due within         3 and 12 Due between             Due after
                                        Overdue        on demand       3 months           months 1 and 5 years             5 years                Total


      Due to central bank                     -                 -              -           50,000                -                -             50,000
      Due to banks and other                  -        42,958,099   248,607,524    159,875,779                   -                -        451,441,402
        financial institutions
      Interbank borrowings                    -                 -    65,583,679         1,568,230                -                -         67,151,909
      Financial assets sold under             -                 -    71,873,106     14,605,162                   -                -         86,478,268
         repurchase agreements
      Due to customers                        -       742,793,153   530,036,824    444,406,546      181,040,895           2,088,128       1,900,365,546
      Debts issued                            -                 -              -        7,780,500       13,050,300       24,058,000         44,888,800
      Other financial liabilities             -         5,328,030    13,895,540         1,818,000                -                -         21,041,570




                                                                                           2010-12-31
                                                                                                                Due
                                                      Repayable           Due within      Due within        between
                                                             on                    3       3 and 12          1 and 5 Due after 5
                                              Overdue   demand              months          months             years      years                   Total


      Cash and balances with central bank                 - 293,248,760             -               -                -                -    293,248,760
      Due from and placements with banks             9,000    6,929,698    89,569,459       4,285,021                -                -    100,793,178
        and other financial institutions
      Financial assets purchased under                    -           -   234,530,872 157,401,272                    -                -    391,932,144
        resale agreements
      Loans and advances to                       1,203,632           -   147,816,258 428,019,495 272,770,618 274,302,987 1,124,112,990
       customers
      Available-for-sale financial assets                 -           -     3,357,393       8,447,466      65,286,438    27,051,335        104,142,632
      Investment securities-                              -           -    15,927,052      36,296,912      67,578,154    23,754,518        143,556,636
        held-to-maturities
      Investment securities-                              -           -      113,466         476,340        1,456,838     1,660,478           3,707,122
        loans and receivables
      Other financial assets                              -   4,355,411      500,000        1,600,000                -                -       6,455,411
                                                                                                                    2011 Annual Report       173



                                                              SHANGHAI PUDONG DEVELOPMENT BANK
                                                                NOTES TO THE FINANCIAL STATEMENTS
                                               (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                               [English translation for reference only]


                                                                              2010-12-31
                                                  Repayable   Due within      Due within Due between         Due after
                                                        on                     3 and 12       1 and 5
                                     Overdue        demand     3 months         months          years          5 years               Total


Due to central bank                        -              -            -         50,000                  -           -             50,000
Due to and placements from banks           -     73,547,936 141,185,248 110,734,951          23,866,767      2,899,062        352,233,964
  and other financial institutions
Financial assets sold under                -              -   10,477,185      6,486,286                  -           -         16,963,471
 repurchase agreements
Due to customers                           -    743,784,141 193,153,454 506,518,522         187,341,999      9,661,416       1,640,459,532
Debts issued                               -              -            -      2,600,000      14,200,000              -         16,800,000
Other financial liabilities                -     12,304,636            -               -                 -           -         12,304,636




10.3.2 Derivatives cash flow

Derivatives settled on a net basis

The Group’s derivatives that will be settled on a net basis include interest rate swaps and precious metal derivatives.

The table below analyses the Group derivative financial instruments that will be settled on a net basis into relevant
maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash flows.

                                           Within 1                                                           Above 5
                                            month      1-3 months 3-12 months                1-5 years          years               Total


Interest rate swaps                       (159,849)            957         (148,118)       (1,236,746)         10,883        (1,532,873)
Precious metals derivatives                (12,657)               -                -                 -                   -       (12,657)
Total                                     (172,506)            957         (148,118)       (1,236,746)         10,883        (1,545,530)


Interest rate swaps                            (409)              -                -        (130,560)         (48,851)         (179,820)
Precious metals derivatives                    5,598              -                -                 -                   -          5,598
Total                                          5,189              -                -        (130,560)         (48,851)         (174,222)

Derivatives settled on a gross basis

The Group’s derivatives that will be settled on a gross basis are foreign exchange derivatives include currency
forward and currency swaps.

The table below analyses the Group’s derivative financial instruments that will be settled on a gross basis into
relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows.
174   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


                                                  Within 1                                                       Above 5
                                                   month      1-3 months 3-12 months              1-5 years        years                   Total


      Foreign exchange derivatives
      -Outflow                               (45,450,075) (22,374,629) (32,698,422)             (1,417,807)                -       (101,940,933)
      -Inflow                                   45,455,964    22,439,566      32,693,856         1,416,551                 -        102,005,937



      Foreign exchange derivatives
      -Outflow                               (18,123,939)     (11,117,011) (29,917,589)          (314,179)                     - (59,472,718)
      -Inflow                                   18,108,758     11,107,463     29,965,482             314,555                   -     59,496,258


      10.3.3 Off-balance sheet items

                                                    No later than 1 year         1-5 years           Over 5 years                          Total


      Acceptance                                             370,981,123                    -                     -                 370,981,123
      Acceptance under letter of credit                       25,615,734                    -                     -                  25,615,734
      Guarantee issued                                        26,774,625       20,761,714                318,024                     47,854,363
      Letter of credit                                       196,828,146        1,593,918                         -                 198,422,064
      Un-utilised balances of credit cards                    42,752,585                    -                     -                  42,752,585
      Total                                                  662,952,213       22,355,632                318,024                    685,625,869


      10.4 Fair Value of financial instruments

      10.4.1 Financial instruments not measured at fair value

      The financial assets and financial liabilities not measured at fair value in the financial statement include: balances
      with central banks, due from and placements with banks and other financial institutions, financial assets purchased
      under resale agreements, loans and advances to customers, investment securities- held-to-maturity, investment
      securities-loans and receivables, due to and placements from banks and other financial institutions, financial assets
      sold under repurchase agreements, due to customers, interest payable and debts issued.

      The table below summarizes the carrying amount and fair value of investment securities classified as held-to-maturity
      and loans and receivable, debts issued of the Group as at balance sheet date.

                                                                           2011-12-31                                 2010-12-31
                                                                   Carrying                                     Carrying
                                                                    amount              Fair value               amount               Fair value
      Financial assets:
      Investment securities -held-to-maturity                  158,535,453        159,088,021             143,556,636               138,602,082
      Investment securities - loans and receivables               8,759,536             8,872,568              3,707,122              3,717,046
      Financial liabilities:
      Debts issued                                               32,600,000         32,630,030             16,800,000                16,342,990
                                                                                                           2011 Annual Report   175



                                                             SHANGHAI PUDONG DEVELOPMENT BANK
                                                               NOTES TO THE FINANCIAL STATEMENTS
                                            (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                            [English translation for reference only]

Investment securities classified as held-to-maturity and loans and receivables

Fair value of investment securities-held-to-maturity is based on quoted market price. If market information is not
available, the fair values of investments securities classified as held-to-maturity and loans and receivables are
calculated using discounted cash flow model, and if it is applicable, fair value can be estimated based on the financial
instruments’ price of similar credit risk, maturity and yield rate.

Debts issued

Fair value of debts is based on market price. If market information is not available, the fair value of debts is calculated
using a discounted cash flow model which is based on a current yield curve appropriate for the remaining term to
maturity.

Other than the financial instruments above, the fair value of financial assets and financial liabilities is calculated with
discounted cash flow model, and the carrying amount is not significantly different with the fair value.

10.4.2 Fair value hierarchy

The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs
used in making the measurements:

• Level 1 – Quoted prices in active markets for identical assets or liabilities. This level includes listed equity securities
 and debts instruments.

• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
 directly (that is, as prices) or indirectly (that is, derived from prices). This level includes the majority of the OTC
 derivative contracts and RMB debt instruments traded in interbank market. The sources of input parameters like
 LIBOR yield curve or counterparty credit risk are Bloomberg and China Bond.

• Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs). This
 level includes equity investments and debt instruments with significant unobservable inputs.

                                                   Level 1               Level 2        Level 3                        Total


Financial assets held for trading                     -               5,866,841            -                      5,866,841
Available-for-sale financial assets                   -            147,929,131             -                   147,929,131
Derivative financial Assets                           -                 548,787            -                       548,787


Derivative financial Liabilities                      -               1,515,029            -                      1,515,029




Available-for-sale financial assets                   -            104,142,632             -                   104,142,632
Derivative financial Assets                           -               1,033,349            -                      1,033,349


Derivative financial Liabilities                      -               1,172,083            -                      1,172,083
176   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]

      No financial instruments are classified as level 1 or level 3 in the Group.

      10.5 Capital management

      The Bank takes sufficient measures of capital management, fully in accordance with the requirements of the
      authorities, to cover the inherent risks in its business. The primary objectives of the Bank’s capital management are
      to ensure that the Bank not only complies with imposed regulatory capital requirements, but also maintains healthy
      ratios to maximize shareholders’ value. Given the change of the economic environment and risk characteristics, the
      Bank will actively adjust the capital structure. Generally, the measures of adjusting the capital structure contain the
      change of the allocation of dividend, capital issue and issuance of subordinate bonds. There is no material change
      from the previous year with respect to the objectives and measures of the Bank’s capital management.

      The Bank calculated the capital adequacy ratio and core capital adequacy ratio in accordance with the “Capital
      Adequacy Ratio of Commercial Banks Management Policy” and the calculation methods agreed by the regulatory
      authorities.

      The core capital included the capital, capital reserve, surplus reserve and retained earnings. The affiliated capital
      included general reserve and long-term subordinated debts. Pursuant to relevant regulations, the deducted items
      mainly include the capital investment in unconsolidated financial institution.

                                                                             2011-12-31                          2010-12-31
      Total capital base before deductions                                  202,157,870                         155,551,760
      Including: Core capital                                               146,005,110                         120,676,000
        Supplementary capital                                                56,152,760                          34,875,760
      Deductions:
                                                                             (2,393,590)                         (1,705,420)
       Unconsolidated investments and others
      Total capital – net                                                   199,764,280                         153,846,340
      Core capital – net                                                    144,808,315                         119,823,290
      On balance sheet risk-weighted assets                               1,328,919,126                       1,127,395,810
      Off balance sheet risk-weighted assets                                231,260,892                         150,964,930
      Market risk capital adjustment                                         13,127,875                           1,027,500
                                                                          1,573,307,893                       1,279,388,240
      Capital adequacy ratio                                                      12.70%                            12.02%
      Core capital adequacy ratio                                                 9.20%                               9.37%
                                                                                                               2011 Annual Report   177



                                                               SHANGHAI PUDONG DEVELOPMENT BANK
                                                                 NOTES TO THE FINANCIAL STATEMENTS
                                               (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                               [English translation for reference only]


10.6      Financial assets and financial liabilities measured at fair value
                                                                                  Accumulated
                                                                                     fair value
                                                             Income/(loss)             change
                                                            from fair value        recorded in
                                              2010-12-31           change                equity       Impairment    2011-12-31
Financial assets
Financial assets held for trading                       -            5,272                    -                -      5,866,841
Derivative financial assets                     1,033,349        (484,562)                    -                -        548,787
Available-for-sale financial assets           104,142,632                 -        (1,360,380)                 -   147,929,131
                                              105,175,981        (479,290)         (1,360,380)                 -   154,344,759
Financial liabilities
Derivative financial liabilities                1,172,083        (342,946)                    -                -      1,515,029
                                                1,172,083        (342,946)                    -                -      1,515,029


The data in this table didn’t always have articulation.

10.7      Financial assets and financial liabilities in foreign currencies
                                                                                   Accumulated
                                                                                      fair value
                                                              Income/(loss)             change
                                                             from fair value        recorded in
                                                  2010-12-31        change                equity      Impairment    2011-12-31
Financial assets
Cash and balances with central bank, due
                                                  15,723,120                  -                   -            -    24,413,267
from other banks and financial institutions
Interbank placements and financial assets
                                                  12,179,465                  -                   -            -     6,692,361
under resale agreements
Derivative financial assets                          507,213       (393,903)                      -            -        113,310
Loans and advances to customers                   38,043,187                  -                   -    (166,297)    50,280,470
Available-for-sale financial assets                  268,804                  -          14,610                -     1,229,640
Investment securities held-to-maturity               328,512                  -                   -            -       314,444
                                                  67,050,301       (393,903)             14,610        (166,297)    83,043,492
Financial liabilities
Due to other banks and financial institutions      7,650,221                  -                   -            -     5,046,397
Interbank borrowings                               3,345,145                  -                   -            -     7,985,280
Derivative financial liabilities                     684,172       (807,525)                      -            -     1,491,697
Due to customers                                  49,656,122                  -                   -            -    58,592,380
                                                  61,335,660       (807,525)                      -            -    73,115,754


The data in this table didn’t always have articulation.
178   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      NOTES TO THE FINANCIAL STATEMENTS
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]


      11 ASSETS PLEDGED

      These assets of the Group are pledged as collateral under repurchase agreements and treasury deposits.

                                                                               2011-12-31                     2010-12-31
      Discount bills and rediscount bills                                      10,076,043                       2,136,846
      Available-for-sale financial assets                                      45,845,734                      12,788,425
      Investment securities-held-to-maturities                                 69,572,056                      15,518,220
      Total                                                                   125,493,833                      30,443,491


      12 EVENTS AFTER THE BALANCE SHEET DATE

      Approved by CBRC and PBOC, the Bank issued RMB 30 billion bonds in the interbank bonds market during 24
      February 2012 to 28 February 2012. The bonds have a tenor of five years and the coupon rate is 4.2%. It will be
      used to increase source of fund, optimize maturity structure of liabilities, and support loans to medium-sized and
      small enterprises.




      [English translation for reference only. Should there be any inconsistency between the Chinese and English versions,
      the Chinese version shall prevail.]
                                                                                                            2011 Annual Report    179



                                           SHANGHAI PUDONG DEVELOPMENT BANK
                       SUPPLEMENTARY TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                               (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                               [English translation for reference only]


1 RETURN ON EQUITY AND EARNINGS PER SHARE
                                                                  Weighted average return on      Earnings per share (RMB:
2011                                                                        equity                         Yuan)
                                                                                                    Basic             Diluted
Net profit attributable to the Bank   s ordinary                           20.07%                   1.463                 1.463
 shareholders
Net profit attributable to the Bank s ordinary shareholders                19.90%                   1.450                 1.450
after deducting non-recurring profit or loss


                                                                  Weighted average return on         Earnings per share
2010                                                                        equity                        (Note1)
                                                                                                    Basic             Diluted
Net profit attributable to the Bank   s ordinary                           23.27%                   1.234                 1.234
 shareholders
Net profit attributable to the Bank s ordinary shareholders                23.05%                   1.222                 1.222
after deducting non-recurring profit or loss


Note1: The Bank distributed stock dividend in June 2011. The amount of earnings per share is calculated based on
the adjusted number of shares.

The Bank has no dilutive potential ordinary share.

2 NET PROFIT AFTER DEDUCTING THE MINORITY PROFIT OR LOSS
Item                                                                                                2011                  2010
Net profit attributable to the Bank   s ordinary shareholders                                  27,285,981        19,177,209
Plus/(less): Non-recurring profit or loss items
       Profit or loss arising from the disposal of non-current assets                             22,748           (185,622)
       Loans recovery after written off previous year                                           (230,743)           (36,219)
       Other non-operating expense/income                                                       (105,308)           (23,232)
       Effect of the non-recurring profit or loss on income tax                                   78,326              61,268
                                                                                                (234,977)          (183,805)
Net profit attributable to the Bank   s ordinary shareholders after deducting the              27,051,004        18,993,404
non-recurring profit or loss


The Group recognizes non-recurring profit or loss items, according to the Explanatory Notice No.1 for information
disclosure of listed company non-recurring profit or loss (CSRC Accounting, No.43, [2008]). The Group doesn’t
recognize normal operating income/loss from fair value change of financial assets and liabilities held for trading and
investment income from disposal of such assets as well as Investment securities available-for-sale as non-recurring
profit or loss items.
                                                                                                      2011 Annual Report   181



                                                                     (English translation for reference only)




                           INDEPENDENT AUDITOR’S REPORT
                                                                                             2012/SH-003/MHL/AZWU



TO THE SHAREHOLDERS OF SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.:

We have audited the financial statements of Shanghai Pudong Development Bank Co., Ltd. (“the Bank”) and
its subsidiaries (collectively “the Group”) set out on pages 3 to 99, which comprise the consolidated and bank’s
statements of financial positions as at 31 December 2011, and the consolidated and bank’s statements of
comprehensive income, the consolidated and bank’s statements of changes in equity, the consolidated and bank’s
statements of cash flows for the year then ended, and a summary of significant accounting policies and other
explanatory notes.

Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
International Financial Reporting Standards, and for such internal control as management determines is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are
free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made by management,
as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial positions of the Bank and
the Group as of 31 December 2011, and of their financial performances and cash flows for the year then ended in
accordance with International Financial Reporting Standards.

PricewaterhouseCoopers Zhong Tian CPAs Limited Company

Shanghai, the People’s Republic of China

14 March, 2012
182   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      CONSOLIDATED AND BANK’S STATEMENTS OF COMPREHENSIVE INCOME
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated.)
      [English translation for reference only]
                                                                               Group                         Bank
                                                               Note         2011           2010           2011            2010
      Interest income                                           5.1 121,221,237      72,966,932    120,061,677      72,822,042
      Interest expense                                          5.1 (59,779,675)    (27,763,422)   (58,989,027)   (27,728,908)
                                                                      61,441,562     45,203,510     61,072,650      45,093,134
      Fee and commission income                                 5.2    7,204,809       4,461,471     7,181,091       4,452,700
      Fee and commission expense                                5.2    (489,083)       (412,925)     (486,789)       (412,855)
                                                                       6,715,726       4,048,546     6,694,302       4,039,845
      Dividend income                                                     49,510         48,726         49,510          48,726
      Net trading income                                        5.3    (722,258)        (93,406)     (722,258)        (93,406)
      Net losses on disposal of investment securities                   (65,140)        (96,404)       (65,140)       (96,404)
      Other operating income                                    5.4      583,163        917,042        533,779         912,425
      Employee benefit expenses                                 5.5 (12,178,040)    (10,124,286)   (12,107,102)   (10,085,077)
      Operating expenses                                        5.6   (6,331,019)    (5,517,485)    (6,254,440)     (5,481,685)
      Depreciation expenses for property and equipment                (1,327,820)    (1,198,190)    (1,313,725)     (1,191,097)
      Business tax and surcharges                               5.7   (4,898,888)    (3,395,394)    (4,883,630)     (3,390,815)
      Impairment charges                                        5.8   (7,499,975)    (4,587,419)    (7,430,299)     (4,559,216)
      Share of profits of associates                                      93,000         93,529         93,000          93,529
      Share of profits of joint ventures                                (20,534)        (17,863)       (20,534)       (17,863)
                                                                      35,839,287     25,280,906     35,646,113      25,272,096
      Income tax expense                                        5.9   (8,484,175)    (6,102,319)    (8,438,160)     (6,096,421)
                                                                      27,355,112     19,178,587     27,207,953      19,175,675


        - Shareholders of the Bank                                    27,285,981     19,177,209
        - Non-controlling interests                                       69,131          1,378
                                                                      27,355,112     19,178,587
       Basic and diluted earnings per share for profit         5.10        1.46           1.23
       attributable to the shareholders of the Bank (in RMB)
                                                                                                         2011 Annual Report   183



                                     SHANGHAI PUDONG DEVELOPMENT BANK
            CONSOLIDATED AND BANK’S STATEMENTS OF COMPREHENSIVE INCOME
                                     FOR THE YEAR ENDED 31 DECEMBER 2011
                                             (All amounts expressed in thousands of RMB unless otherwise stated.)
                                                                             [English translation for reference only]
                                                                                    Group                  Bank
                                                                      Note        2011       2010       2011         2010


Other comprehensive loss on joint ventures for the year, net of tax             (9,079)     (7,693)   (9,079)      (7,693)
Unrealized net gains or loss on available-for-sale financial assets            913,808 (2,001,913)    913,808 (2,001,913)
                                                                               904,729 (2,009,606)    904,729 (2,009,606)
                                                                             28,259,841 17,168,981 28,112,682 17,166,069


 - Shareholders of the Bank                                                  28,190,710 17,167,603
 - Non-controlling interests                                                    69,131       1,378
                                                                             28,259,841 17,168,981


The notes presented on pages 11 to 99 form an integral part of these financial statements.
184   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      CONSOLIDATED AND BANK’S STATEMENTS OF FINANCIAL POSITION
      AS AT 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
                                                                            Group                         Bank
                                                                  31 December    31 December     31 December   31 December
                                                           Note           2011           2010           2011           2010


      Cash and balances with central bank                  5.11    366,957,099   293,248,760     365,310,102     292,610,145
      Due from and placements with banks and other
                                                           5.12    379,291,780   100,793,178     377,968,116     100,484,178
      financial institutions
      Precious metals                                                  683,246           2,090       683,246           2,090
      Financial assets held for trading                    5.13      5,866,841               -     5,866,841               -
      Derivative financial assets                          5.14        548,787       1,033,349       548,787       1,033,349
      Financial assets purchased under resale
                                                           5.15    281,509,782   391,932,144     281,509,782     391,932,144
      agreements
      Loans and advances to customers                      5.16   1,302,323,950 1,124,112,990 1,295,763,717 1,121,019,539
      Available-for-sale financial assets (   AFS )        5.17    149,056,751   104,910,252     149,056,751     104,910,252
      Investment securities - held-to-maturity (   HTM   ) 5.18    158,535,453   143,556,636     158,535,453     143,556,636
      Investment securities - loans and receivables        5.19      8,759,536       3,707,122     8,759,536       3,707,122
      Investments in associates                            5.20        710,739        629,818        710,739        629,818
      Investments in joint ventures                        5.21         18,502         39,036         18,502         39,036
      Investments in subsidiaries                          4                 -               -       628,100        317,000
      Property, plant and equipment                        5.22      9,397,547       8,546,325     9,345,886       8,504,947
      Constructions in progress                                        457,178         85,525        457,178         85,525
      Deferred income tax assets                           5.23      4,269,859       3,772,723     4,268,466       3,772,723
      Other assets                                         5.24     16,306,639      15,040,826    16,284,319      15,032,776
                                                                                                                        2011 Annual Report   185



                                SHANGHAI PUDONG DEVELOPMENT BANK
CONSOLIDATED AND BANK’S STATEMENTS OF FINANCIAL POSITION (CONTINUED)
                                              AS AT 31 DECEMBER 2011
                                                (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                               [English translation for reference only]
                                                                            Group                                  Bank
                                                              31 December       31 December       31 December              31 December
                                                     Note             2011                2010               2011                   2010


Due to central banks                                                50,000              50,000                      -                   -
Due to and placements from banks and other            5.25     507,878,294          352,233,964   510,084,976               353,725,054
financial institutions
                                                                                                    Consolidated
Derivative financial liabilities                      5.14       1,515,029            1,172,083     1,515,029
                                                                                                    statement of changes      1,172,083
                                                                                                    in equity
Financial assets sold under repurchase agreements     5.26      86,019,569           16,963,471    85,954,448                16,912,471
Due to customers                                      5.27 1,851,055,121       1,640,459,532 1,840,832,529                 1,635,623,369
Income tax payable                                               4,038,632            2,780,138     4,026,908                 2,780,157
Debts issued                                          5.28      32,600,000           16,800,000    32,600,000                16,800,000
Other liabilities                                     5.29      51,994,264             CONSOLIDATED AND 37,628,156
                                                                                     37,671,736 51,888,770
                                                              2,535,150,909         BANK’S STATEMENTS
                                                                               2,068,130,924 2,526,902,660 2,064,641,290
                                                                                       OF FINANCIAL POSITION
                                                                                       (CONTINUED)
Share capital                                         5.30      18,653,471           14,348,824    18,653,471                14,348,824
Capital surplus                                       5.31      60,564,187           60,573,266    60,563,439                60,572,518
Surplus reserves                                      5.32      21,805,744           15,249,813    21,805,744                15,249,813
General risk reserves                                 5.33      18,700,000            9,500,000    18,700,000                 9,500,000
Revaluation reserve                                             (1,020,285)         (1,934,093)    (1,020,285)               (1,934,093)
Retained earnings                                     5.34      30,188,118           25,258,526    30,110,492                25,258,928
Equity attributable to the Bank' s shareholders                148,891,235          122,996,336   148,812,861               122,995,990
Non-controlling interests                             5.35         651,545             283,514                      -                   -
                                                               149,542,780          123,279,850   148,812,861               122,995,990
                                                              2,684,693,689    2,191,410,774 2,675,715,521                 2,187,637,280


These consolidated financial statements were approved for issue by the Board of Directors on 14 March 2012 and
signed on its behalf by:



Ji Xiaohui                         Fu Jianhua     Liu Xinyi                     Fu Neng
Chairman of Board                  President      Chief Financial Officer       Head of finance and accounting department




The notes presented on pages 11 to 99 form an integral part of these financial statements.
                                                                                                                                                                                                                                                                              186


                                                         Equity attributable to the Bank   s shareholders
                                   Share       Capital         Surplus    General risk Revaluation          Retained                  Non-controlling
                                   capital     surplus        reserves      provision     reserve           earnings       Subtotal        interests          Total
                                Note 5.30    Note 5.31       Note 5.32      Note 5.33                       Note 5.34                      Note 5.35
                                                                                                                                                                                                                                                                              2011 Annual Report




                               14,348,824 60,573,266        15,249,813      9,500,000      (1,934,093)    25,258,526 122,996,336            283,514 123,279,850
Net profit                               -           -                -              -               -    27,285,981    27,285,981            69,131    27,355,112
Other comprehensive income               -     (9,079)                -              -        913,808               -      904,729                  -      904,729
Total comprehensive income               -     (9,079)                -              -        913,808     27,285,981    28,190,710            69,131    28,259,841
Issue of new shares                      -           -                -              -               -              -             -         200,900        200,900
Increase of non-controlling              -           -                -              -               -              -             -           98,000        98,000
                                                                                                                                                                      [English translation for reference only]




interests from new setup
subsidiaries
Provide surplus reserves and             -           -       6,555,931      9,200,000                -   (15,755,931)             -                 -             -
general risk reserve
Dividends                       4,304,647            -                -              -               -    (6,600,458)   (2,295,811)                 -   (2,295,811)
                               18,653,471 60,564,187        21,805,744     18,700,000      (1,020,285)    30,188,118 148,891,235            651,545 149,542,780
                                                                                                                                                                                                                                SHANGHAI PUDONG DEVELOPMENT BANK

                                                                                                                                                                                                                                FOR THE YEAR ENDED 31 DECEMBER 2011




                                8,830,046 24,250,511        10,688,576      6,900,000          67,820     17,216,074    67,953,027          134,419     68,087,446
Net profit                               -           -                -              -               -    19,177,209    19,177,209             1,378    19,178,587
Other comprehensive income               -     (7,693)                -              -     (2,001,913)              -   (2,009,606)                 -   (2,009,606)
                                                                                                                                                                      (All amounts expressed in thousands of RMB unless otherwise stated)




Total comprehensive income               -     (7,693)                -              -     (2,001,913)    19,177,209    17,167,603             1,378    17,168,981
                                                                                                                                                                                                                                CONSOLIDATED STATEMENT OF CHANGES IN EQUITY




Issue of new shares             2,869,765 36,329,700                  -              -               -              -   39,199,465                  -   39,199,465
Increase of non-controlling              -           -                -              -               -              -             -         147,000        147,000
interests from new setup
subsidiaries
Provide surplus reserves and             -           -       4,561,237      2,600,000                -    (7,161,237)             -                 -             -
general risk reserve
Dividends                       2,649,013            -                -              -               -    (3,973,520)   (1,324,507)                 -   (1,324,507)
Others                                   -        748                 -              -               -              -          748               717         1,465
                               14,348,824 60,573,266        15,249,813      9,500,000      (1,934,093)    25,258,526 122,996,336            283,514 123,279,850
                                                                                                                  2011 Annual Report       187



                                               SHANGHAI PUDONG DEVELOPMENT BANK
                                       CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                               FOR THE YEAR ENDED 31 DECEMBER 2011
                                            (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                           [English translation for reference only]
                                  Share        Capital         Surplus General risk Revaluation             Retained
                                  capital      surplus        reserves    reserve      reserve              earnings              Total
                                Note 5.30    Note 5.31        Note 5.32        Note 5.33                    Note 5.34
                               14,348,824 60,572,518         15,249,813        9,500,000    (1,934,093)    25,258,928       122,995,990
Net profit                              -            -                -                -              -    27,207,953        27,207,953
Other comprehensive income              -      (9,079)                -                -       913,808                  -       904,729
Total comprehensive income              -      (9,079)                -                -       913,808     27,207,953        28,112,682
Provide surplus reserves and            -            -        6,555,931        9,200,000              - (15,755,931)                   -
general risk reserve
Dividends                       4,304,647            -                -                -              -    (6,600,458)       (2,295,811)
                               18,653,471 60,563,439         21,805,744       18,700,000    (1,020,285)    30,110,492       148,812,861


                                8,830,046    24,250,511       10,688,576 6,900,000             67,820     17,218,010         67,954,963
Net profit                              -                -                -           -              -    19,175,675         19,175,675
Other comprehensive income              -       (7,693)                   -           -    (2,001,913)              -       (2,009,606)
Total comprehensive income              -       (7,693)                   -           -    (2,001,913)    19,175,675         17,166,069
Issues of new shares            2,869,765 36,329,700                      -           -              -              -        39,199,465
Provide surplus reserves and            -                -     4,561,237 2,600,000                   -    (7,161,237)                  -
general risk reserve
Dividends                       2,649,013                -                -           -              -    (3,973,520)       (1,324,507)
                               14,348,824 60,572,518          15,249,813 9,500,000         (1,934,093)    25,258,928        122,995,990


The notes presented on pages 11 to 99 form an integral part of these financial statements.
188   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK
      CONSOLIDATED AND BANK’S STATEMENTS OF CASH FLOWS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
                                                                                  Group                            Bank
                                                                         Year ended 31 December           Year ended 31 December
                                                                               2011            2010            2011             2010


      Profit before taxation:                                             35,839,287      25,280,906      35,646,113       25,272,096
      Adjusted by:
        Depreciation and amortization                                      1,338,593       1,209,391       1,324,498        1,197,853
        Impairment of loans and advances to customers                      7,159,118       4,533,401       7,089,442        4,505,198
        Impairment of other assets                                           340,857          54,018         340,857           54,018
        Interest expense                                                  59,779,675      27,763,422      58,989,027       27,728,908
        Interest income                                                 (121,221,237)   (72,966,932)    (120,061,677)     (72,822,042)
        Gains and losses on disposal of property, plant and equipment         13,290        (17,260)          13,297          (17,260)
        Dividends income                                                     (49,510)       (48,726)         (49,510)         (48,726)
        Share of profits of associates                                       (93,000)       (93,529)         (93,000)         (93,529)
        Share of profits of joint ventures                                    20,534          17,863          20,534           17,863
        Unrealized losses on derivative financial instruments                827,508          97,670         827,508           97,670
        Losses arising from disposal of investment securities                 65,140          96,404          65,140           96,404
        Exchange losses from investing and financing activities                3,000         116,264           3,000          116,263
      Net (increase) /decrease in operating assets:
        Statutory reserve deposits in central banks                      (88,162,494)   (74,472,374)     (87,122,939)     (74,479,608)
        Due from and placements with other banks and financial
                                                                        (119,012,899)     86,699,111    (119,002,898)      86,699,111
      institutions
        Financial assets held for trading                                 (5,866,841)               -     (5,866,841)                -
        Financial assets purchased under resale agreements               110,422,362 (338,874,647)       110,422,362    (338,874,647)
        Precious metals                                                     (681,156)        211,122        (681,156)         211,122
        Loans and advances to customers                                 (184,946,743) (216,120,690)     (181,400,899)   (213,471,058)
        Other assets                                                      (1,265,813)     (2,290,607)     (1,251,543)      (2,269,991)
      Net increase/(decrease) in operating liabilities:
        Due to central banks                                                        -          2,000                -         (48,000)
        Due to and placements from other banks and financial
                                                                         155,644,330    142,522,101      156,359,922      142,902,148
      institutions
        Financial assets sold under repurchase agreements                 69,056,098      15,698,589      69,041,977       15,647,589
        Due to customers                                                 210,595,589    343,339,250      205,209,160      340,469,882
        Financial liabilities at fair value through profit or loss                  -      (237,326)                -       (237,326)
        Other liabilities                                                 10,547,086       8,946,099      10,497,479        8,905,512
      Cash generated from /(used in) operating activities                140,352,774    (48,534,480)     140,319,853      (48,440,550)
      Interest received                                                  116,873,622      72,172,340     115,709,687       71,758,253
      Interest paid                                                      (50,546,000)   (23,826,483)     (49,780,400)     (23,529,194)
      Payment of income tax                                               (8,024,618)     (5,046,540)     (7,988,953)      (5,040,623)
      Net cash generated from /(used in) operating activities            198,655,778      (5,235,163)    198,260,187       (5,252,114)
                                                                                                        2011 Annual Report   189



                                               SHANGHAI PUDONG DEVELOPMENT BANK
                                 CONSOLIDATED AND BANK’S STATEMENTS OF CASH FLOWS
                                               FOR THE YEAR ENDED 31 DECEMBER 2011
                                               (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                              [English translation for reference only]
                                                                       Group                           Bank
                                                                 Year ended 31 December         Year ended 31 December
                                                                    2011             2010           2011            2010


Dividends received                                                49,510           48,726         49,510          48,726
Disposal of property and equipment                                70,671           66,917         70,663          65,166
Purchase of property and equipment                            (2,263,002)      (1,796,196)    (2,238,622)     (1,768,740)
Purchase of other long-term assets                              (419,865)        (85,525)      (412,137)         (85,525)
Payment for equity investments                                  (360,000)        (51,000)      (671,100)        (204,000)
Purchase of investment securities                           (296,027,027)   (469,032,545) (296,027,027)     (469,032,545)
Redemption of investment securities                          233,593,148     474,297,500     233,593,148      473,917,500
Net cash (used in)/ generated from investing activities      (65,356,565)       3,447,877    (65,635,565)       2,940,582


Cash received from issues of new shares                          298,900       39,346,464               -      39,199,464
Cash received from issued debts                               18,400,000                 -    18,400,000                -
Payment of mature debts                                       (2,600,000)      (2,000,000)    (2,600,000)     (2,000,000)
Interest paid on issued debts                                   (708,900)       (755,626)      (708,900)        (755,626)
Dividends paid to shareholders                                (2,295,812)      (1,330,288)    (2,295,812)     (1,330,288)
Net cash generated from financing activities                  13,094,188       35,260,550     12,795,288       35,113,550
                                                              (1,361,852)                -    (1,361,852)               -


                                                             145,031,549       33,473,264    144,058,058       32,802,018
Cash and cash equivalents at the beginning of the year       167,595,679     134,122,415     166,804,726      134,002,708
Cash and cash equivalents at the end of the year             312,627,228     167,595,679     310,862,784      166,804,726


Cash                                                            5,648,021       4,924,527      5,603,272        4,897,736
Non-statutory reserve deposits in central banks               52,978,762       68,156,410     52,572,730       67,701,248
Due from other banks and financial institutions within 3     233,182,821       65,500,277    231,869,158       65,191,277
  months
Placements with other banks and financial institutions        20,817,624       29,014,465     20,817,624       29,014,465
  within 3 months
                                                             312,627,228     167,595,679     310,862,784      166,804,726


The notes presented on pages 11 to 99 form an integral part of these financial statements.
190   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      1 GENERAL INFORMATION

      Shanghai Pudong Development Bank Co., Ltd. (“the Bank” or “Pufa Bank”) is a joint-stock commercial bank
      registered in Shanghai on 28 August 1992 with the approval from the People’s Bank of China (“PBOC”) via YinFu
      [1992] No.350. The Bank obtained business licence from Shanghai Municipal Administration of Industry and
      Commerce (“SMAIC”) in on October 1992 and commenced business on 9 January 1993. On 10 November 1999, the
      Bank was listed and traded in Shanghai Stock Exchange.

      The business license number of the Bank is 310000000013047, and the licence number for conducting financial
      services is B11512900H0001.

      As at 31 December 2011, the Bank’s share capital was RMB18.653 billion, including an amount of RMB 3.731 billion
      shares which were restricted for trading.

      The Bank and its subsidiaries (collectively “the Group”) are all engaged in financial industry. Their scopes of business
      are commercial banking services approved by PBOC and the China Banking Regulatory Commission (“CBRC”).
      The main scopes of business include drawing public deposits; granting loans of short-term, mid-term and long-term;
      performing settlements; discounting bills and notes; issuing financial debentures; issuing, underwriting and cashing
      securities on behalf of governmental authorities; trading of governmental bonds and debentures; interbank loans
      and deposits; providing services relating to letters of credit and letters of guarantee; factoring and assignment of
      receivables and payables; providing safe deposit services; accepting deposit in foreign currencies; granting loans
      in foreign currencies; remittance of foreign currencies; exchange of foreign currencies; international settlements;
      interbank placements and deposits in foreign currencies; accepting and discounting of bills and notes expressed
      in foreign currencies; lending in foreign currencies; guarantees in foreign currencies; purchase and sale of foreign
      currencies; purchase and sale of marketable securities expressed in foreign currencies (excluding stocks), either
      for itself or on behalf of clients; purchase and sale of foreign currencies, either for itself or on behalf of clients; credit
      investigation, consultancy and testimonial services; offshore banking and other services as approved by PBOC.

      The financial statements were authorized for issue by Board of Directors on 14 March 2012.

      2 PRINCIPAL ACCOUNTING POLICIES

      The principal accounting policies adopted in the preparation of the financial statements are set out below. These
      policies have been consistently applied to the periods presented unless otherwise stated.

      2.1 Basis of presentation

      The financial statements have been prepared in accordance with the International Financial Reporting Standards
      (“IFRS”) and under the going concern hypothesis. The financial statements have been prepared on a historical cost
      basis except for available-for-sale financial assets, financial assets and financial liabilities at fair value through profit
      or loss that have been measured at fair value.

      The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
      estimates. It also requires management to exercise its judgment in the process of applying these accounting policies.
      The areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.

      (i) There is no material impact to the Group’s financial performance and financial position as a result of standards,
      amendments and interpretations which became effective for financial years beginning on 1 January 2011.
                                                                                                        2011 Annual Report   191



                                            SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                     NOTES TO THE FINANCIAL STATEMENTS
                                                  FOR THE YEAR ENDED 31 DECEMBER 2011
                                            (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                           [English translation for reference only]
2 PRINCIPAL ACCOUNTING POLICIES (CONTINUED)

2.1 Basis of presentation (Continued)

(ii) The Group has not chosen to early adopt the following standards, amendments and interpretations that were
issued but not yet effective:

IFRS 9, ‘Financial instruments’ (effective on 1 January 2015) and its amendments address the classification,
measurement and recognition of financial assets and financial liabilities. It replaces the parts of IAS 39 that relate
to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified
into two measurement categories: those measured as at fair value and those measured at amortised cost. The
determination is made at initial recognition. The classification depends on the entity's business model for managing
its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the
standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option
is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other
comprehensive income rather than the income statement, unless this creates an accounting mismatch.

IFRS 10 ‘Consolidated financial statements’ (effective on 1 January 2013) builds on existing principles by identifying
the concept of control as the determining factor in whether an entity should be included within the consolidated
financial statements of the Group. The standard provides additional guidance to assist in the determination of control
where this is difficult to assess.

IFRS 13 ‘Fair value measurement’ (effective on 1 January 2013) aims to improve consistency and reduce complexity
by providing a precise definition of fair value and a single source of fair value measurement and disclosure
requirements for use across IFRS. The requirements do not extend the use of fair value accounting but provide
guidance on how it should be applied where its use is already required or permitted by other standards within IFRS.

The Group is evaluating the impact of application of IFRS 9, IFRS 10 and IFRS 13. Except for standards mentioned
above, the adoption of other standards, amendments and interpretations is not expected to have material effect on
the Group’s financial statements.

2.2 Business Combinations

Business combination under common control

The consideration paid and the assets and liabilities acquired by the acquirer shall be measured at their carrying
amounts. The difference between the carrying amounts of assets and liabilities acquired and the consideration paid
shall be recorded in capital surplus. If capital surplus is not sufficient to be deducted, any excess shall be adjusted
against retained earnings. Transaction expenses for business combination are recorded in profit or loss for the
current period. Transaction cost of issuing equity securities or debt securities for business combination should be
recorded as initial recognition cost of the securities.

The consideration paid and the identifiable net assets acquired by the acquired shall be measured at their fair
values on the acquisition date. Goodwill is initially measured at cost being the excess of the aggregate fair value of
the consideration paid and the acquirer’s interest in the fair value of the acquiree’s net identifiable assets. If the fair
value of consideration is lower than the fair value of the net assets acquired, the difference is, after reassessment,
recognised in profit or loss for the current period. Transaction expenses for business combination should be recorded
into the profit or loss for the current period. Transaction cost of issuing equity securities or debt securities for
business combination should be recorded as initial recognition cost of the securities.
192   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      2.3 Consolidated financial statements

      The scope of consolidation of the consolidated financial statements is determined based on control, and includes the
      financial statements of the Bank and its subsidiaries.

      Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
      adopted by the Group. All significant inter-company transactions, balances, income and expenses on transactions
      between group companies are eliminated. Subsidiaries’ equities and profits which are not attributable to the Bank are
      respectively presented as non-controlling interests in the consolidated financial statements.

      Where the amount of losses of a subsidiary attributable to the non-controlling shareholders exceeds their shares in
      the opening balance of shareholder’s equity, the excess shall be allocated against non-controlling interests.

      With respect to subsidiaries acquired through business combinations involving entities not under common control,
      the financial performances and cash flows of the acquiree shall be consolidated into the financial statements, from
      the day that the Bank obtains control, and till the Bank loses the control of it. While preparing the consolidated
      financial statements, the acquirer should adjust the subsidiary’s financial statements, on the basis of the fair values
      of the identifiable assets, liabilities and contingent liabilities recognized on the acquisition date.

      With respect to subsidiaries acquired through business combinations involving entities under common control, the
      financial performances and cash flows of the acquiree should be consolidated into the financial statements from
      the beginning of the period when the acquisition occurs. While preparing the comparative financial statements,
      adjustments are made to related items in the financial statements for the prior period as if the reporting entity
      established through acquisition had been existed since the ultimate controller began to excise control.

      2.4 Foreign currency transactions

      The Group’s operating entities in Mainland China all use Renminbi (“RMB”) as functional currency. Hong Kong
      branch of the Bank uses Hong Kong dollar (“HKD”) as its functional currency and translates into RMB when
      preparing the financial statements. The consolidated financial statements are presented in RMB.

      Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
      dates of the transactions.

      Foreign currency monetary items are translated using the exchange rate at year end. Except for monetary securities
      classified as available-for-sale, translation differences are recognised in profit or loss for the reporting period.
      Changes in the fair value of monetary securities denominated in foreign currency classified as available for sale
      are analysed between translation differences resulting from changes in the amortised cost of the security and other
      changes in the carrying amount of the security. Translation differences related to changes in amortised cost are
      recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.

      Non-monetary foreign currency items measured at historical cost are translated at the spot exchange rates prevailing
      on the transaction dates, and the amount denominated in the functional currency should not be changed. Non-
      monetary foreign currency items measured at fair value should be translated at the spot exchange rates prevailing
      at the date of valuation. Translation differences should be recognized in revaluation reserve in equity for available-
      for-sale financial assets and in profit and loss of current period for financial assets and liabilities at fair value through
      profit or loss.
                                                                                                          2011 Annual Report   193



                                             SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                      NOTES TO THE FINANCIAL STATEMENTS
                                                   FOR THE YEAR ENDED 31 DECEMBER 2011
                                             (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                            [English translation for reference only]
2.5 Cash and cash equivalents

Cash and cash equivalents are cash, deposit available to pay at any time and investments with short maturity, high
liquidity, easily change to certain amount of cash and low risk in valuation variation. Cash and cash equivalents
include cash, non-statutory reserve deposits in central banks and due from and placements with other banks and
financial institutions within three months since acquisition date.

2.6 Precious metals

Precious metals held by the Group are gold traded in domestic markets. They are initially recognized at cost and
subsequently measured at fair value at the balance sheet date. Gains or losses arising from fair value variances are
recognized in profit and loss.

2.7 Financial instruments

Recognition and derecognition

The Group recognises a financial asset or a financial liability when the Group becomes a party to the contractual
provision of financial instrument.

A financial asset is derecognized when one of the following conditions is satisfied:

(i) The rights to receive cash flows from the financial asset expire; or

(ii) The financial asset has been transferred and Group has transferred substantially all the risks and rewards of the
asset; or

(iii) The Group has neither transferred nor retained substantially all the risks and rewards of ownership of the financial
asset, but it has relinquished transferred control of the asset.

Once financial assets are derecognized, the difference between book value and the sum of considerations received
and the accumulated change of fair value recorded in equity before should be recognized in profit or loss.

If the obligation relating to a financial liability has been discharged or cancelled or has expired, the financial liability
is derecognised. If the existing financial liability is replaced by the same creditor with another financial liability that
has terms with an almost completely different nature, or if almost all the terms of the existing liability are substantially
revised, such replacement or revision is accounted for as derecognition of the original liability and recognition of a
new liability, and the difference is recognised in profit or loss of current period.

All financial assets in “regular way trades” are initially recognised and derecognised on the trade date. Regular way
trades means purchasing or selling of financial assets that require delivery of assets within the time frame generally
established by regulation or convention in the market place. Trade date is the date that the Group promises to
purchase or sale the financial assets.

Classification and measurement of financial assets

Financial assets are, on initial recognition, classified into the following categories: financial assets at fair value
through profit or loss, held-to-maturity investments, loans and receivables, available-for-sale financial assets. The
Group determines the classification of the financial assets on initial recognition. When financial assets are recognised
initially, they are measured at fair value. In the case of financial assets at fair value through profit or loss, relevant
transaction costs are directly charged to the profit and loss of the current period; transaction costs relating to financial
assets of other categories are included in the amounts initially recognised.
194   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      Financial assets at fair value through profit or loss

      Financial assets at fair value through profit or loss include financial assets held for trading and financial assets
      designated at fair value through profit or loss upon initial recognition. A financial asset held for trading is the financial
      asset that meets one of the following conditions: 1) the financial asset is acquired for the purpose of selling in a short
      term; 2) the financial asset is a part of a portfolio of identifiable financial instruments that are collectively managed,
      and there is objective evidence indicating that the enterprise recently manages this portfolio for the purpose of
      short-term profits; 3) the financial asset is a derivative financial instrument except for a derivative that is a financial
      guarantee contract or a designated and effective hedging instrument or linked with investments in equity instruments
      that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured. These
      financial assets are subsequently measured at fair value. Changes of fair value are recognised in profit or loss of
      current period. Dividend received and interest accrued during the assets hold period and gains or loss arising from
      disposal are recognised in profit and loss of current period.

      During this year, the Group does not have financial assets designated at fair value through profit or loss upon initial
      recognition.

      Classification and measurement of financial assets (continued)

      Held-to-maturity investments

      Held-to-maturity securities are non-derivative financial assets with fixed or determinable payments and fixed
      maturities that management has both the positive intention and the ability to hold to maturity. Held-to-maturity
      investments shall be measured at amortised cost using the effective interest method.

      Except for specific situations such as disposal of insignificant amount of held-to-maturity investments at a date
      sufficiently close to maturity date, if the Group fails to hold such investments through their maturities or reclassifies
      a portion of held-to-maturity investments into available-for-sale prior to their maturities, the Group shall reclassify the
      entire held-to-maturity portfolio into available-for-sale investments at fair value and the Group is further prohibited to
      designate any investments as held-to-maturity during the following two fiscal years.

      Loan and receivables

      Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
      in an active market. When the Group provides funds or services directly to customers and does not intend to sell
      the receivables, the Group classifies such financial assets as loans and receivables. Subsequently, such assets are
      measured at amortised cost using effective interest method.

      Available-for-sale financial assets

      Available-for-sale financial assets are those non-derivative financial assets that are designated as available for
      sale or are not classified as (a) loans and receivables, (b) held-to-maturity investments or (c) financial assets at fair
      value through profit or loss. After initial recognition, available-for-sale financial assets are measured at fair value. For
      available-for-sale debt instruments, premium or discount is amortised using effective interest method and recognised
      as interest income or expense. A gain or loss arising from a change in the fair value of an available-for-sale financial
      asset is recognised in a separate component of capital reserve, except for impairment losses and foreign exchange
      gains and losses resulted from monetary financial assets, until the financial asset is derecognised or determined to
      be impaired, at which time the cumulative gain or loss previously recognised in equity shall be removed from equity
      and recognised in the income statement. Interests and dividend relating to an available-for-sale financial asset are
      recognised in the income statement for the period they relate to.
                                                                                                             2011 Annual Report    195



                                               SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                        NOTES TO THE FINANCIAL STATEMENTS
                                                     FOR THE YEAR ENDED 31 DECEMBER 2011
                                               (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                              [English translation for reference only]
Equity instrument without quote price in an active market and whose fair value cannot be reliably measured, along
with financial instruments embedded and settled in such equity instrument, are measured at historical cost.

Classification and measurement of financial liabilities

The financial liabilities of the Group are, upon initial recognition, classified as financial liabilities at fair value through
profit or loss and other financial liabilities. The Group determines the classification of financial liabilities on initial
recognition. For financial liabilities at fair value through profit or loss, transaction costs are directly recognised in the
income statement of the current period, and transaction costs relating to other financial liabilities are included in the
initially recognised amount.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities
designated at fair value through profit or loss upon initial recognition. A financial liability held for trading is the
financial liability that meets one of the following conditions: 1) the financial liability is acquired for the purpose of
repurchasing in a short term; 2) the financial liability is a part of a portfolio of identifiable financial instruments that are
collectively managed, and there is objective evidence indicating that the enterprise recently manages this portfolio
for the purpose of short-term profits; 3) the financial liability is a derivative financial instrument except for a derivative
that is a financial guarantee contract or a designated and effective hedging instrument or linked with investments
in equity instruments that do not have a quoted market price in an active market, and whose fair value cannot be
reliably measured. Such kind of financial liabilities are measured at fair value subsequently. All realised or unrealised
gains or losses on these financial liabilities are recognised in the income statement of the current period.

During this year, the Group doesn't have financial liabilities designated at fair value through profit or loss upon initial
recognition.

Other financial liabilities

After initial recognition, such financial liabilities shall be measured at amortised costs using effective interest rate
method.

Fair value of financial instruments

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing
parties in an arm's length transaction. The fair values of quoted investments in active markets are based on current
bid prices. The fair value of a financial instrument for which the market is not active is determined by using a valuation
technique. Valuation techniques include using recent arm's length market transactions between knowledgeable,
willing parties, if available, reference to the current fair value of another instrument that is substantially the same,
discounted cash flow analysis and option pricing models. When a valuation technique is used to establish the fair
value of a financial instrument, use market data as much as possible and avoid use of data that is particularly related
to the Group.

Impairment of financial assets

Except for financial assets at fair value through profit or loss, the Group assesses at each balance sheet date
whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or
a group of financial assets is impaired and impairment losses are incurred if, and only if, there is objective evidence
of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”)
and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of
financial assets that can be reliably estimated. The major criteria that the Group uses to determine that there is
objective evidence of an impairment loss include:
196   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      •   Overdue of principle or interest;

      •   Significant financial difficulty of the obligor (i.e.: deterioration of equity ratios, net income ratio);

      • A breach of contract;

      •   Start bankruptcy procedure;

      • The borrower market competition status deteriorated, etc.

      Financial assets carried at amortised cost

      If objective evidence shows that the financial assets carried at amortised cost are impaired, the carrying amount of
      the financial asset shall be reduced to the present value of the estimated future cash flows (excluding future credit
      losses that have not been incurred). The amount of reduction is recognised as an impairment loss in the income
      statement. Present value of estimated future cash flows is discounted at the financial asset’s original effective interest
      rate and includes the value of any related collateral. If a financial asset has a variable interest rate, the discount rate
      for measuring any impairment loss is the current effective interest rate.

      If a financial asset is individually significant, the Group assesses the asset individually for impairment, and recognises
      the amount of impairment in the income statement if there is objective evidence of impairment. For a financial asset
      that is not individually significant, the Group includes the asset in a group of financial assets with similar credit risk
      characteristics and collectively assess them for impairment. For financial assets that are not impaired upon individual
      tests (including financial assets that are individually significant or insignificant), impairment tests should be conducted
      on them again by including them in the group of financial assets. Assets for which an impairment loss is individually
      recognised will not be included in a collective assessment of impairment.

      When a financial asset is uncollectible, it is written off against the related allowance on impairment losses. Such
      financial assets are written off after all the necessary procedures have been completed and the amount of the loss
      has been determined.

      If, subsequent to the recognition of an impairment loss on a financial asset carried at amortised cost, there is
      objective evidence of a recovery in value of the financial asset which can be related objectively to an event occurring
      after the impairment was recognised, the previously recognised impairment loss is reversed and recognised in the
      income statement.

      Available-for-sale financial assets

      When there is objective evidence that the asset is impaired, the cumulative loss from declines in fair value that
      had been recognised directly in revaluation reserve of equity are transferred out, then recognised in the income
      statement. The amount of the cumulative loss that is transferred out and recognised in the income statement equals
      to the difference between its initial cost (net of any principal repayment and amortization) and current fair value, less
      any impairment loss on that financial asset previously recognised in the income statement.

      If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the
      increase can be related objectively to an event occurring after the impairment was recognised in the income
      statement, the previously recognised impairment loss shall be reversed with the amount of the reversal recognised
      in the income statement. Impairment losses recognised in the income statement for an equity instrument investment
      shall be reversed through other comprehensive income rather than profit or loss.
                                                                                                          2011 Annual Report   197



                                              SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                       NOTES TO THE FINANCIAL STATEMENTS
                                                    FOR THE YEAR ENDED 31 DECEMBER 2011
                                              (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                             [English translation for reference only]
Offsetting financial instruments

Financial assets and financial liabilities are presented separately in the statement of financial position, and they shall
not be offset against each other; except for the followings:

(i) The Group has the legal right to offset the amount, and the legal right is enforceable;

(ii) The Group has the intention to settle on a net basis or realise the asset and settle the liability simultaneously.

2.8 Assets purchased under resale agreements (                       Reverse repos         ) and assets sold under
   repurchase agreements ( Repos )

Reverse repo refers to the agreement under which the Group purchases an asset with an obligation to resell it to the
same counterparty at a pre-determined price at a specified date. Reverse repo are recorded at the actual amount
paid and presented in “assets purchased under resale agreements”.

Repo refers to the agreement under which the Group sells an asset with an obligation to repurchase it from the same
counterparty at a pre-determined price at a specified date. Repos are recorded at the actual amounts received and
presented in “assets sold under repurchase agreements”.

The difference between resale and repurchase price is treated as interest income or expense and recognized in the
agreement period with effective interest method.

2.9 Derivative financial instruments

Derivative financial instruments are initially recognised at fair value on the date at which a derivative contract is
sighed and are subsequently re-measured at fair value. Any gains or losses arising from changes in fair value on
derivatives are taken to profit or loss.

Certain derivatives embedded in other financial instrument, they together become compound derivative financial
instruments. When the related compound derivative financial instruments are not financial assets or liabilities
designated as fair value through profit or loss, those derivatives embedded in other financial instruments should be
treated as separated derivatives, when:

(i) their risks and economic characteristics are not closely related to those of the host contract;

(ii) the separate financial instrument is a derivative itself.

While certain derivative transactions are intended to provide effective economic hedges of specific interest rate and
foreign exchange risks, they do not qualify for hedge accounting under the specific rules of IAS 39 and are therefore
treated as derivatives held for trading, with changes in fair value reported as trading income. The Group has no
derivative positions that are accounted for as hedges during this reporting period.

2.10 Investment in associates and joint ventures

Associates refer to the Group has significant influence on the investee enterprise, and joint ventures refer to the
investee enterprise under Group’s joint control. Joint control is the contractually agreed sharing of control over an
economic activity, and exists only when the strategic financial and operating decisions relating to the activity require
the unanimous consent of the parties sharing control. Significant influence is the power to participate in the financial
and operating policy decision process but does not control or jointly control those policy decisions.
198   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      For investment in associates and joint ventures, where the initial investment cost exceeds the interests in the fair
      values of the investee’s identifiable net assets at the acquisition date, the difference is accounted for as initial cost.
      Where the initial investment cost is less than the interests in the fair values of the investee’s identifiable net assets at
      the acquisition date, the difference shall be charged to the income statement for the current period, and the cost of
      investment shall be adjusted accordingly.

      The Group measures investment in associates and joint ventures at equity method. The Group's share of post-
      acquisition profit or loss is recognised in the income statement, and its share of post-acquisition movements in
      other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the
      carrying amount of the investment. When the Group's share of losses in an associate equals or exceeds its interest
      in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it
      has incurred legal or constructive obligations or made payments on behalf of the associate.

      Carrying amount of investment in associates and joint ventures is reduced to the extent of the Group’s share of the
      profit or cash dividend declared to be distributed by the investee enterprise. Unrealized gain or loss other than assets
      impairment, from transactions between the Group and the investee enterprise, which is allocated to the Group based
      on pro-rata basis of shareholding, should be eliminated.

      On disposal of investment in associates and joint ventures, the difference between the proceeds and carrying amount
      shall be recognised in the income statement for the current period, and those that recorded in shareholder’s equity
      shall be recognised in profit or loss on a pro-rata basis.

      For investment in associates and joint ventures, when the recoverable amount is lower than its carrying amount, it
      should be reduced to the recoverable amount (Note 2.14).

      2.11 Property, plant and equipment

      Recognition and initial measurement

      Property, plant and equipment include buildings, constructions, motor vehicles, mainframe computers, computers,
      electrical equipments, office equipments, software and leasehold improvement, etc.

      Property, plant and equipment shall be recognised only when the economic benefits associated with the asset will
      flow to the Group and the cost of the asset can be measured reliably. Subsequent expenditure incurred for property,
      plant and equipment that meet the recognition criteria shall be included in the cost of the asset, and carrying
      amount of the component of the asset that is replaced shall be derecognised. Otherwise, such expenditure shall be
      recognised in the income statement in the period in which it is incurred.

      Property, plant and equipment are initially measured at cost, comprising purchase price, relevant taxes and any
      directly attributable expenditure for bringing the asset to working condition for its intended use, such as delivery and
      handling costs, installation costs and other surcharge.

      Depreciation

      Depreciation is calculated on the straight-line method to write down the cost of such assets to their residual values
      over their estimated useful lives.

      For the impaired property, plant and equipment, the annual depreciation amount should be calculated on the basis of
      carrying amount less impairment and estimated useful life.

      The estimated useful lives, residual values and annual depreciation rates are as follows:
                                                                                                      2011 Annual Report   199



                                           SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                    NOTES TO THE FINANCIAL STATEMENTS
                                                 FOR THE YEAR ENDED 31 DECEMBER 2011
                                           (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                          [English translation for reference only]
Category                                   Estimated useful life    Estimated residual value   Annual depreciation rate
Buildings and constructions                           30 years                        3-5%                 3.17-3.23%
Vehicles                                                5 years                       3-5%               19.00-19.40%
Mainframe computers                                     5 years                       3-5%               19.00-19.40%
Computers                                             3-5 years                       3-5%               19.00-32.33%
Electronic equipments                                   5 years                       3-5%               19.00-19.40%
Office equipments                                       5 years                       3-5%               19.00-19.40%
Software                                                5 years                         0%                        20%
Expenditures incurred on major                          5 years                         0%                        20%
  repairment and improvement of the
  rented fixed assets


Residual values, useful lives and depreciation method are reviewed, and adjusted if appropriate, at each period end.

When the recoverable amount is lower than its carrying amount, it should be reduced to the recoverable amount (Note
2.14).

2.12 Constructions in progress

Construction in progress is stated at cost. Cost comprises equipment cost, cost of construction, installation and other
direct costs. Items classified as construction in progress are transferred to other categories of property, plant and
equipment when such assets are ready for their intended use, and the depreciation charge commences from the
following month after such assets are transferred to property, plant and equipment. When the recoverable amount is
lower than its carrying amount, it should be reduced to the recoverable amount (Note 2.14).

2.13 Foreclosed asset

When the Group’s obligor use foreclosed asset to compensate the principal and interest of loan, foreclosed asset
was initially recognised and measured at fair value and acquisition cost, then it was subsequently measured at lower
of carrying amount or recoverable amount.

Each balance sheet date, the Group will assess if a foreclosed asset has been impaired individually. If recoverable
amount of foreclosed asset is lower than carrying amount, the difference should be charged into current period
income statement.

The difference that consideration received on disposal less related expenses with carrying amount was charged
to current period income statement. Provision which has been made for foreclosed asset should be reversed once
disposed.

2.14 Impairment of long term assets

Assets such as property, plant and equipment, construction in progress, intangible assets with limited useful lives and
investments in subsidiaries, joint ventures and affiliates, are undertaking impairment tests based on the impairment
indicators on the balance sheet date. If the impairment test shows that the recoverable amount of such assets will fall
below carrying value, the difference will be charged into current period income statement. The recoverable amount is
the higher, of the fair value of the asset less related disposal cost and present value of expected future cash inflows
of such asset. Asset impairment is measured and recognized on each individual asset. If it is difficult to estimate
the recoverable amount of each individual asset, then cash generating unit (CGU) in which such individual assets
belongs to will be used to estimate the recoverable amount of CGU. A CGU is a minimum asset portfolio that can
independently generate cash inflow.
200   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      2.15 Debts issued

      Debt issued is initially measured at fair value less directly transaction cost, then subsequently measured at amortised
      cost, using the effective interest rate method.

      2.16 Provision

      Except for provision arising from business combination, provisions are recognised when:

      (i) The Group has a present legal or constructive obligation as a result of past events;

      (ii) It is probable that an outflow of resources will be required to settle the obligation; and

      (iii) The amount has been reliably estimated.

      Provisions are measured at the present value of the expenditures expected to be required to settle the obligation
      using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific
      to the obligation. The Group will review the carrying amount at each balance sheet date. If there are evidences
      showing that the carrying amount cannot reflect the present best estimates, the carrying amount should be adjusted
      accordingly.

      2.17 Fiduciary activities

      Where the Group acts in a fiduciary capacity such as nominee, trustee or agent, for example, entrusted loan and
      fund fiduciary, assets arising thereon together with related undertakings to return such assets to customers are
      excluded from the financial statements of the Group.

      2.18 Financial guarantee contract

      Financial guarantee contract refers to an agreement made by a guarantor and an obligee that the guarantor shall
      perform the obligation according to the contract, when the obligor fails to perform his obligations as agreed. Financial
      guarantee contract is initially measured at fair value. Financial guarantee contracts which are not measured at fair
      value through profit or loss, are subsequently measured at higher of, the best estimation of obligation that needs
      to be settled at balance sheet date and the difference between the amount of initial recognition less accumulated
      amortization based on revenue recognition principle, upon initial recognition.

      2.19 Revenue and expense recognition

      Interest income and interest expense

      Interest income and expense are recognised in profits and losses of the current period on an accrual basis using the
      effective interest rate method.

      Effective interest rate method is a method used to calculate amortized cost and interest income or expense of
      financial assets or financial liabilities (include a set of financial assets or financial liabilities) by effective interest rate.

      The effective interest rate is the interest rate at which the estimated cash flows of financial assets in the expected
      duration should be discounted to the present value. The computation of interest income takes consideration of
      contractual terms of the financial assets as well as expenses and transaction costs comprising the effective interest
      rate, but excluding future credit losses.

      Fee and commission income

      Commission income is recognised when the services have been rendered and the proceeds can be reasonably
      estimated.
                                                                                                       2011 Annual Report   201



                                           SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                    NOTES TO THE FINANCIAL STATEMENTS
                                                 FOR THE YEAR ENDED 31 DECEMBER 2011
                                           (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                          [English translation for reference only]
2.20 Employee benefits

Employee benefits are all forms of consideration given and other relevant expenditures incurred by the Group in
exchange for service rendered by employees. In the accounting period in which an employee has rendered service
to the Group, the Group will recognise the employee benefits payable as a liability.

The Group have security plan set up by government agent including pension and medical insurance, housing
accumulation fund and other social security plan according to regulations. According to the relevant regulations
and contracts, insurance and housing fund should be paid to the social security agencies or insurance company
according to a certain proportion of the total salary and no more than the limit, the spending should be included
in the current profits and losses. In addition to social basic pension insurance, the staff can also volunteer to join
the supplementary pension plans set up by the Bank. The Bank pays according to a certain proportion of the total
amount of the employee salary to the supplementary pension plans and records it into the profits and losses of the
current period.

Except for the social security described above, the Group has no other major employee benefits promises.

2.21 Income taxes

Income tax comprises current and deferred tax. Income tax is recognised as income or an expense and include in
the income statement for the current period, except to the extent that the tax arises from a business combination or if
it relates to a transaction or event which is recognised directly in equity.

Current tax is the amount of income taxes payable in respect of the taxable profit for the current period. Taxable
profit (tax loss) is the profit (loss) for current period, determined in accordance with rules established by the taxation
authorities. At the balance sheet date, current income tax liabilities (or assets) for the current and prior periods are
measured at the amount expected to be paid to (or recovered from) the tax authorities according to the requirements
of the tax laws.

The deferred tax assets and deferred tax liabilities are recognized according to the differences (temporary
differences) between the tax bases of assets and liabilities and their book values at the balance sheet date. A
deferred tax asset is recognized if it can be offset with the amount of taxable loss in future years according to the tax
law. No deferred tax liabilities should be recognised for the temporary differences raised from initial recognition of
goodwill. The temporary differences from initial recognition of assets or liabilities which are not arise from a business
combination, and neither affects the accounting profits nor affects the taxable income, should not be recognized
as deferred tax assets and deferred tax liabilities. At the balance sheet date, deferred tax assets and liabilities are
measured at the tax rates that are expected to be applied to the period when the asset is realized or the liability is
settled, according to the requirements of tax laws.

The amount of deferred tax assets is limited to the amount that is probably can be used to offset deductible
temporary differences and deductible loss.

In respect of taxable temporary differences associated with investments in subsidiaries, associates and joint
ventures, deferred tax liabilities are recognised unless that the Group can control the timing of the reversal of
temporary differences and it is probable that the temporary difference will not reverse in the foreseeable future.

In respect of deductible temporary differences associated with investments in subsidiaries, associates and joint
ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will
be reversed in the foreseeable future and taxable profit will be available against which the temporary differences can
be utilized.
202   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      The deferred tax assets and deferred tax liabilities should be stated as net amount when satisfy the following
      conditions at the same time:

      (i)The deferred tax assets and deferred tax liabilities are related to the same tax collection taxed by the same
      administration within the Group;

      (ii)The tax subject in the Group has legal right to net off the current income tax assets and current income tax
      liabilities.

      2.22 Leases

      A finance lease is a lease that transfers in substance all the risks and rewards incident to ownership of an asset. An
      operating lease is a lease other than a finance lease.

      Lease payments under an operating lease are recognised by a lessee on a straight-line basis over the lease term,
      and either included in the cost of another related asset or charged to the income statement for the current period.

      2.23 Segment reporting

      The Group identifies operating segment on the basis of internal organization structure, management requirement
      and internal report system, and forms the segment report and discloses the segment information based on operating
      segment.

      Operating segment represents the segment satisfying the following conditions at the same time:

      (i) The segment produces income and expenses in daily activities;

      (ii) The Group’s management regularly evaluates the performance of the segment, and decides to allocate resources
          to the segment;

      (iii) The Group can obtain financial position, operation performance, cash flow and other relevant accounting
           information of the segment.

      3 Critical accounting estimates and judgements

      The Group makes estimates and assumptions based on historical experience and other factors, including
      expectations of future events that are believed to be reasonable under the circumstances. Areas susceptible to
      significant changes in estimates and judgments, which affect the carrying value of assets and liabilities of next
      accounting period, are set out below. It is possible that actual results may require material adjustments to the
      estimates referred below.

      3.1 Allowance for impairment losses on loans and advances

      The Group reviews its loan portfolios to assess impairment regularly. In determining whether an impairment loss
      should be recorded in the income statement, the Group makes judgments as to whether there is any observable
      evidence indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of loans
      before the decrease can be identified with an individual loan in that portfolio. This evidence may include observable
      data indicating that there has been an adverse change in the payment status of borrowers (e.g. payment delinquency
      or default), or national or local economic conditions that correlate with defaults on assets. Management makes
      estimation based on historical loss experience for assets with credit risk characteristics and objective evidence of
      impairment similar to those in the portfolio when scheduling its future cash flows.
                                                                                                          2011 Annual Report   203



                                             SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                      NOTES TO THE FINANCIAL STATEMENTS
                                                   FOR THE YEAR ENDED 31 DECEMBER 2011
                                             (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                            [English translation for reference only]
3.2 Fair value of financial instruments

The fair values of financial instruments that are not quoted in active markets are determined by using valuation
technique. Valuation technique includes using recent arm's length market transactions between knowledgeable,
willing parties, if available, reference to the current fair value of another instrument that is substantially the same,
discounted cash flow analysis and option pricing models. The Group uses market information in maximum extent.
However, if market information is not available, management might estimate the credit risk, market fluctuations and
relevance of the Group and its counterpart. Changes in assumptions about these factors could affect reported fair
value of financial instruments.

3.3 Income taxes

Significant estimates are required in determining the provision for income tax. There are many transactions and
calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group
recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. In
particular, the deductibility of certain items is subject to tax authority’s approval. Where the final tax outcome of these
matters is different from the amounts that were initially recorded, such differences will impact the income tax and
deferred tax provisions in the period in which such determination is made.

3.4 Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturity date that the Group has the positive intention and ability to hold to maturity. This classification requires
significant judgment. In making this judgment, the Group evaluates its intention and ability to hold such investments
to maturity. If the Group fails to keep these investments to maturity, it will be required to reclassify the entire class as
available-for-sale.
204   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      4 SCOPE OF CONSOLIDATED financial statements

      4.1 The Bank           s significant subsidiary is showed as follows
                                                                                              Non-
                                              Registered        Amount of Direct         controlling
      Name of                Registration         capital      investment Equity Voting    interest               The legal
      subsidiaries           address         (RMB'0000)     (RMB 0000)        %      % (RMB'0000) Enterprise type representative Organization code
      Mianzhu Pufa Rural     Mianzhu,              5,000           2,750   55%    55%         3,355 Limited liability   Bing, Wang     68239414-9
      Bank Co., Ltd.         Sichuan                                                                company
      Liyang Pufa Rural Bank Liyang,              23,000          11,730   51%    51%        12,237 Shares              Guoyuan,Wu     69130715-8
      Co., Ltd.              Jiangsu                                                                limited liability
                                                                                                    company
      Gongyi Pufa Rural      Gongyi,               5,000           2,550   51%    51%         3,883 Shares              Wanjun, Lii    69488186-8
      Bank Co., Ltd.         Henan                                                                  limited liability
                                                                                                    company
      Fengxian Pufa Rural    Fengxian,             5,000           3,450   69%    69%         2,005 Shares              Jianqiang,     69297537-7
      Bank Co., Ltd.         Shanghai                                                               limited liability   Huang
                                                                                                    company
      Zixing Pufa Rural Bank Zixing, Hunan        15,800           8,058   51%    51%         8,890 Shares              Rongjun, Li    69623035-6
      Co., Ltd.                                                                                     limited liability
                                                                                                    company
      Banan Pufa Rural Bank Banan,                 5,000           2,550   51%    51%         3,157 Shares              Xiaozhong,     69925976-0
      Co., Ltd.             Chongqing                                                               limited liability   Wang
                                                                                                    company
      Zouping Pufa Rural     Zouping,             17,200           8,772   51%    51%         8,852 Shares              Guangxin,      55522573-X
      Bank Co., Ltd.         Shandong                                                               limited liability   Gen
                                                                                                    company
      Zezhou Pufa Rural      Jincheng,             5,000           2,550   51%    51%         3,062 Shares              Jian, Li       55657751-8
      Bank Co., Ltd.         Shanxi                                                                 limited liability
                                                                                                    company
      Ganjingzi Pufa Rural   Ganjingzi,            5,000           2,550   51%    51%         2,402 Shares              Xinhao, Wang 55981311-7
      Bank Co., Ltd.         Liaoning                                                               limited liability
                                                                                                    company
      Hancheng Pufa Rural    Hancheng,             5,000           2,550   51%    51%         2,290 Shares              Zhihui, Yang   56294304-3
      Bank Co., Ltd.         Shaanxi                                                                limited liability
                                                                                                    company
      Jiangyin Pufa Rural    Jiangyin,            10,000           5,100   51%    51%         5,000 Shares              Yongming, Ji   56379954-9
      Bank Co., Ltd.         Jiangsu                                                                limited liability
                                                                                                    company
      Pingyang Pufa Rural    Pingyang,            10,000           5,100   51%    51%         4,907 Shares              Mingming,      56938660-6
      Bank Co., Ltd.         Zhejiang                                                               limited liability   Zhong
                                                                                                    company
      Xinchang Pufa Rural    Xinchang,            10,000           5,100   51%    51%         5,115 Shares              Zhengrong,     57650005-9
      Bank Co., Ltd.         Zhejiang                                                               limited liability   Zhao
                                                                                                    company
                                                                  62,810                     65,155
                                                                                                      2011 Annual Report    205



                                            SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                     NOTES TO THE FINANCIAL STATEMENTS
                                                  FOR THE YEAR ENDED 31 DECEMBER 2011
                                            (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                           [English translation for reference only]
All subsidiaries are acquired through initial establishment, and included in the consolidated financial statements.

All subsidiaries are commercial banks, whose operation scopes are the following: drawing public deposits; granting
loans of short-term, mid-term and long-term nature; performing settlements; discounting bills and notes; performing
interbank loans and deposits; bank card business; issuing, underwriting and cashing securities on behalf of
governmental authorities; factoring and assignment of receivables and payables and other services as approved by
PBOC.

4.2 New subsidiaries in current year
                                                                           Net assets                        Net gain for
                                                              as at 31 December 2011                               2011
Pingyang Pufa Rural Bank Co., Ltd.                                            100,149                                149
Xinchang Pufa Rural Bank Co., Ltd.                                            104,367                              4,367


5 NOTES TO THE FINANCIAL STATEMENTS

5.1 Net interest income
                                                                        Group                         Bank
                                                                Year ended 31 December        Year ended 31 December
                                                                     2011           2010           2011            2010


Balance with central banks                                      4,917,049       3,337,599     4,904,355       3,333,096
Due from and placements with banks and other financial          8,075,525       2,114,809     8,033,148       2,104,376
institutions
Loans and advances to customers
Corporate loans                                                60,817,590     44,501,672     60,567,030      44,435,152
Individual loans                                               13,710,351       9,139,058    13,636,675       9,118,991
Discounted bills                                                2,425,263       1,598,809     2,170,067       1,561,982
Financial assets purchased under resale agreements             21,722,485       5,359,799    21,197,428       5,353,259
Bond investments                                                9,540,866       6,914,112     9,540,866       6,914,112
Others                                                             12,108          1,074         12,108            1,074
Subtotal                                                      121,221,237     72,966,932    120,061,677      72,822,042
Included: interest income from impaired financial assets          145,371        219,750        145,371         219,750


Due to and placements from banks and other financial          (20,632,562)    (6,318,362)   (20,463,578)     (6,314,020)
  institutions
Due to central banks                                               (7,355)        (1,350)        (5,760)         (1,210)
Due to customers                                              (33,712,828)   (20,446,898)   (33,615,640)   (20,421,433)
Financial assets sold under repurchase agreements              (4,519,426)      (241,230)    (3,996,545)      (236,663)
Debts issued                                                     (907,504)      (755,582)     (907,504)       (755,582)
Subtotal                                                      (59,779,675)   (27,763,422)   (58,989,027)   (27,728,908)
                                                               61,441,562     45,203,510     61,072,650      45,093,134
206   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      5 NOTES TO THE FINANCIAL STATEMENTS (Continued)

      5.2 Net fee and commission income
                                                             Group                                   Bank
                                                       Year ended 31 December                Year ended 31 December
                                                       2011               2010                     2011         2010


      Settlement and clearing fees                 1,042,418           480,634               1,037,078       479,717
      Agency commissions                           1,107,177           698,935               1,096,606       698,910
      Credit commitment fees                       2,071,998           944,139               2,064,308       943,796
      Bank card fees                                960,725            664,273                   960,725     664,273
      Consulting and advisory fees                 1,150,740         1,280,731               1,150,740      1,273,273
      Others                                        871,751            392,759                   871,634     392,731
      Subtotal                                     7,204,809         4,461,471               7,181,091      4,452,700
                                                   (489,083)          (412,925)              (486,789)      (412,855)
                                                   6,715,726         4,048,546               6,694,302      4,039,845


      5.3 Net trading income
                                                                                Group and Bank
                                                                          Year ended 31 December
                                                                                   2011                         2010
      Precious metals                                                           117,267                       (5,417)
      Trading securities                                                        (14,054)                       9,681
      Derivative financial instruments                                         (825,471)                     (97,670)
      Total                                                                    (722,258)                     (93,406)


      5.4 Other operating income
                                                             Group                                Bank
                                                    Year ended 31 December                   Year ended 31 December
                                                     2011              2010                  2011               2010
      Net gains on foreign exchange                242,996           540,420               242,996           540,420
      Rental income                                 72,823            77,687                72,823            77,687
      Net gains on disposal of foreclosed assets     4,011           168,363                 4,011           168,363
      Others                                       263,333           130,572               213,949           125,955
      Total                                        583,163           917,042               533,779           912,425
                                                                                                  2011 Annual Report   207



                                           SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                    NOTES TO THE FINANCIAL STATEMENTS
                                                 FOR THE YEAR ENDED 31 DECEMBER 2011
                                           (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                          [English translation for reference only]
5 NOTES TO THE FINANCIAL STATEMENTS (Continued)

5.5 Employee benefit expenses
                                                            Group                             Bank
                                                    Year ended 31 December                Year ended 31 December
                                                    2011                  2010             2011               2010
Salaries and bonuses                            9,814,685             8,441,619       9,750,349         8,433,426
Welfare funds                                    233,739               255,098          233,739           255,098
Social insurance                                1,194,758              676,429        1,191,495           673,001
Housing funds                                    462,530               632,870          460,649           606,288
Labour union funds and staff education funds     472,328                118,270         470,870            117,264
Total                                          12,178,040           10,124,2866      12,107,102        10,085,077


5.6 Operating expenses
                                                        Group                                Bank
                                                    Year ended 31 December                Year ended 31 December
                                                    2011                  2010             2011               2010
Rental expenses                                 1,266,959             1,029,407       1,255,676         1,020,240
Advertising expenses                            1,256,734             1,134,569       1,256,734         1,134,569
General and administrative expenses              476,783               400,177          476,783           400,177
Cost of electronic equipment                     434,908               296,153          432,794           295,213
Cost of estate management                        156,079               129,218          156,079           129,218
Cost of currency transportation                  129,992               111,446          129,992            111,446
Cost of vehicles and vessels use                 127,287                96,034          127,287             96,034
Others                                          2,482,277             2,320,481       2,419,095         2,294,788
Total                                           6,331,019             5,517,485       6,254,440         5,481,685


5.7 Business tax and surcharges
                                                        Group                                 Bank
                                                    Year ended 31 December                Year ended 31 December
                                                    2011                  2010             2011               2010
Business tax                                    4,365,870             3,070,926       4,352,007         3,066,763
Urban maintenance and construction tax           303,384               208,172          302,536           207,908
Extra charges for education                      229,634               116,296          229,087            116,144
Total                                           4,898,888             3,395,394       4,883,630         3,390,815
208   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      5 NOTES TO THE FINANCIAL STATEMENTS (Continued)

      5.8 Impairment charges
                                                                                Group                          Bank
                                                                        Year ended 31 December      Year ended 31 December
                                                                             2011           2010         2011             2010
      Loans and advances to customers                                    7,159,118    4,533,401      7,089,442        4,505,198
      Other receivables                                                    204,636         3,961       204,636           3,961
      Available-for-sale financial assets                                        -        (4,629)              -        (4,629)
      Foreclosed assets                                                     82,927        11,146        82,927          11,146
      Interest receivable                                                   53,294        44,301        53,294          44,301
      Others                                                                     -          (761)              -          (761)
      Total                                                              7,499,975    4,587,419      7,430,299        4,559,216


      5.9 Income tax expense
                                                                                Group                          Bank
                                                                        Year ended 31 December      Year ended 31 December
                                                                             2011           2010         2011             2010
      Current income tax                                                 9,283,112    6,099,232      9,235,704        6,093,334
      Deferred tax (income)/expenses                                     (798,937)         3,087     (797,544)           3,087
      Total                                                              8,484,175    6,102,319      8,438,160        6,096,421


      Reconciliations between the Group’s theoretical income tax expense and actual amount are as follows:

                                                                                Group                          Bank
                                                                        Year ended 31 December      Year ended 31 December
                                                                             2011           2010         2011             2010
      Profit before tax                                                 35,839,287   25,280,906     35,646,113     25,272,096
      Tax calculated at a tax rate of 25%                                8,959,822    6,320,226      8,911,528        6,318,024
      Differences of prior year tax clearance                             (14,403)       (56,730)     (14,403)         (56,730)
      Tax effect of expenses that are not deductible for tax purposes      325,962       407,154       323,947         353,648
      Tax effect arising from income not subject to tax                  (787,433)      (572,447)    (782,912)        (518,521)
      Unrecognized tax loss from subsidiaries                                 227          4,116           -                  -
      Income tax expense                                                 8,484,175    6,102,319      8,438,160        6,096,421


      5.10 Earnings per share

      Basic earnings per share(EPS) amount is calculated by dividing consolidated net profit attributable to shareholders
      of the Bank by the weighted average number of ordinary shares outstanding during the year. There are no potential
      diluted ordinary shares in the Bank, so the basic EPS equals to the diluted figure.
                                                                                                                        2011 Annual Report      209



                                                   SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                            NOTES TO THE FINANCIAL STATEMENTS
                                                         FOR THE YEAR ENDED 31 DECEMBER 2011
                                                   (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                                  [English translation for reference only]
                                                                                                      Year ended 31 December
                                                                                                              2011                   2010
                                                                                                                                    Note 1
Net profit                                                                                             27,285,981             19,177,209
Weighted average number of outstanding ordinary shares (thousand)                                      18,653,471             15,544,559
Basic and diluted EPS (RMB)                                                                                   1.46                       1.23
Note 1: The Bank distributed share dividend in June 2011, and therefore the earnings per share for 2010 has been restated accordingly.

5.11 Cash and balances with central banks
                                                                               Group                                  Bank
                                                                     2011-12-31         2010-12-31         2011-12-31         2010-12-31


Cash                                                                  5,648,021          4,924,527          5,603,272           4,897,736
Mandatory reserve deposits                                         307,862,296         220,013,816        306,666,511        219,857,154
Balances with central banks other than mandatory
                                                                     52,978,762         68,156,410         52,572,730         67,701,248
  reserve deposits
Fiscal deposit in central banks                                         468,020            154,007             467,589            154,007
Total                                                              366,957,099         293,248,760        365,310,102        292,610,145


The Group is required to place reserve deposits with the PBOC, which is forbidden to be used in the Group’s
ordinary business. The reserve rate for deposits denominated in RMB of the Bank is 19% at 31 December 2011 (31
December 2010: 16.5 %). The reserve rate for deposits denominated in foreign currencies of the Group is 5% at 31
December 2011 (31 December 2010: 5%).

5.12 Due from and placements with other banks and financial institutions
                                                                               Group                                  Bank
                                                                     2011-12-31        2010-12-31          2011-12-31         2010-12-31
Due from domestic banks                                            257,163,843          66,190,867       255,850,179          65,881,867
Due from overseas banks                                              10,712,639          3,348,846         10,712,639          3,348,846
Placements with domestic banks                                     104,746,813          26,527,931       104,736,813          26,527,931
Placements with overseas banks                                        5,734,485          2,486,534          5,734,485          2,486,534
Placements with domestic other financial institutions                   934,000          2,239,000            934,000          2,239,000
Total                                                              379,291,780         100,793,178        377,968,116        100,484,178


5.13 Financial assets held for trading
                                                                                              Group and Bank
                                                                                          2011-12-31                          2010-12-31
RMB corporate bonds                                                                        3,347,336                                        -
RMB bonds issued by policy banks                                                           1,799,974                                        -
RMB treasury bonds                                                                           371,410                                        -
PBOC bills                                                                                   348,121                                        -
Total                                                                                      5,866,841                                        -
210   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      There is no restriction in the Group’s financial assets held for trading to be turned into cash.

      5.14 Derivative financial instruments
                                                                                    Group and Bank
                                                                                       2011-12-31
                                                                                                         Fair values
                                                                  Notional Amount
                                                                                                Assets                   Liabilities
      Derivative financial instruments held for trading:
      Currency swap contracts                                          55,961,106           355,635                      (301,356)
      Foreign-exchange forward contracts                               46,044,831           150,181                      (132,030)
      Interest-rate swap contracts                                     39,453,623               42,971                 (1,068,997)
      Precious-metal forward contracts                                  3,712,055                    -                    (12,646)
      Total                                                                                 548,787                    (1,515,029)

                                                                                    Group and Bank
                                                                                       2010-12-31
                                                                                                        Fair values
                                                                 Notional Amount
                                                                                            Assets                       Liabilities
      Derivative financial instruments held for trading:
      Currency swap contracts                                          40,670,134          344,209                       (308,888)
      Foreign-exchange forward contracts                               18,826,125          135,025                       (141,208)
      Interest-rate swap contracts                                     27,801,244          548,524                       (721,987)
      Precious-metal forward contracts                                    936,520               5,591                              -
      Total                                                                               1,033,349                    (1,172,083)


      Notional amount of derivative financial instruments just represents the amount of underlying asset or reference index
      upon which changes in the value of derivatives are measured. It doesn’t represent the future cash flow or the current
      fair value, and therefore could not reflect the credit risk and market risk faced by the Group. With the fluctuating
      price of foreign exchange rates, interest rates, and the stock or futures fair value of derivatives may bring advantage
      (recognized as assets) or disadvantage (recognized as liabilities) impact to the Group, and the influence could
      fluctuate largely in different period.

      5.15 Financial assets purchased under resale agreements
                                                                                                Group and Bank
                                                                                 2011-12-31                            2010-12-31
      Bills under resale agreements                                             271,599,582                            354,336,426
      Bonds under resale agreements                                                 9,910,200                           37,445,718
      Loans under resale agreements                                                         -                             150,000
      Total                                                                     281,509,782                            391,932,144
                                                                                                                  2011 Annual Report   211



                                             SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                      NOTES TO THE FINANCIAL STATEMENTS
                                                   FOR THE YEAR ENDED 31 DECEMBER 2011
                                             (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                            [English translation for reference only]
5.16 Loans and advances to customers
                                                        Group                                              Bank
                                                2011-12-31         2010-12-31                2011-12-31                2010-12-31
Corporate loans
Normal loans                                 1,023,791,007        897,143,950              1,019,334,920              894,992,785
Trade finance                                    22,345,625         9,588,225                22,345,625                 9,588,225
Discount bills                                   23,994,515        21,888,569                23,244,759                21,562,245
Individual loans
Real estate mortgage                           225,690,380        191,290,882               225,071,302               191,120,786
Credit card and overdraw                         11,826,372         7,766,546                11,826,372                 7,766,546
Others                                           23,788,145         18,811,129               22,940,778                18,332,270
                                             1,331,436,044       1,146,489,301             1,324,763,756            1,143,362,857
Individual impairment allowances                (2,222,442)        (2,783,597)               (2,222,442)               (2,779,677)
Collective impairment allowances               (26,889,652)       (19,592,714)              (26,777,597)              (19,563,641)
Total impairment allowances                    (29,112,094)       (22,376,311)              (29,000,039)              (22,343,318)
                                             1,302,323,950       1,124,112,990             1,295,763,717            1,121,019,539


5.16.1 Loans and advances to customers listed by way of impairment assessment
                                                                        Impairment loans
                                      Collectively
                                   assessed non-        Collectively        Individually
Group                              impaired loans        assessed             assessed           Subtotal                     Total
As at 31 December 2011
Corporate loans                    1,065,163,009         1,600,918           3,367,220          4,968,138           1,070,131,147
Individual loans                     260,445,917              858,980                  -         858,980              261,304,897
Impairment allowances               (25,309,972)        (1,579,680)        (2,222,442)        (3,802,122)             (29,112,094)
Net                                1,300,298,954              880,218        1,144,778          2,024,996           1,302,323,950
As at 31 December 2010
Corporate loans                      923,504,898         1,225,635           3,890,211          5,115,846             928,620,744
Individual loans                     217,104,519              764,038                  -         764,038              217,868,557
Impairment allowances               (18,530,259)        (1,062,455)        (2,783,597)        (3,846,052)             (22,376,311)
Net                                1,122,079,158              927,218        1,106,614          2,033,832           1,124,112,990
212   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
                                                                         Impaired loans
                                          Collectively
                                       assessed non-      Collectively       Individually
      Bank                             impaired loans      assessed            assessed           Subtotal                   Total
      As at 31 December 2011
      Corporate loans                  1,059,957,166       1,600,918          3,367,220         4,968,138           1,064,925,304
      Individual loans                    258,979,472        858,980                      -       858,980             259,838,452
      Impairment allowances               (25,197,917)   (1,579,680)         (2,222,442)       (3,802,122)            (29,000,039)
      Net                              1,293,738,721         880,218          1,144,778         2,024,996           1,295,763,717

      As at 31 December 2010
      Corporate loans                     921,027,609      1,225,635          3,890,011         5,115,646             926,143,255
      Individual loans                    216,455,564        764,038                      -       764,038             217,219,602
      Impairment allowances               (18,501,186)   (1,062,455)         (2,779,677)       (3,842,132)            (22,343,318)
      Net                              1,118,981,987         927,218          1,110,334         2,037,552           1,121,019,539


      5.16.2 Loans and advances to customers listed by industry
      Group
                                                                           31 December 2011                  31 December 2010
                                                                                Amount           (%)            Amount          (%)
      Corporate loans
      Manufacturing                                                        301,013,060         22.60     239,344,458        20.89
      Wholesale and retail, catering                                        154,511,923        11.60     111,587,341            9.73
      Real estate                                                           115,118,113         8.65     116,295,395        10.14
      Geological survey, irrigation                                          96,352,526         7.24     109,944,003            9.59
      Transportation, warehouse and postal service                           92,241,356         6.93         88,620,161         7.73
      Social services                                                        81,128,873         6.09         71,617,633         6.25
      Construction                                                           69,554,536         5.22         55,872,464         4.87
      Electricity, gas and water supply                                      50,809,298         3.82         45,688,323         3.99
      Mining                                                                 32,493,241         2.44         26,491,676         2.31
      Education, culture, broadcasting                                       18,764,174         1.41         19,300,140         1.68
      Agriculture, forestry, farming and fishery                              8,012,922         0.60          5,653,125         0.49
      Sanitation, sport and social welfare                                    4,873,488         0.37          6,665,036         0.58
      Scientific research and comprehensive technological services            3,566,969         0.27          1,613,786         0.14
      Others                                                                 17,696,153         1.33          8,038,634         0.70
                                                                          1,046,136,632        78.57     906,732,175        79.09
      Bank acceptance bills discount                                         11,833,184         0.89         10,937,264         0.95
      Re-discount                                                            11,204,646         0.84          8,789,559         0.77
      Commercial acceptance bills discount                                      956,685         0.07          2,161,746         0.19
                                                                             23,994,515         1.80         21,888,569         1.91
                                                                           261,304,897         19.63     217,868,557        19.00
                                                                          1,331,436,044       100.00   1,146,489,301       100.00
                                                                                                     2011 Annual Report   213



                                             SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                      NOTES TO THE FINANCIAL STATEMENTS
                                                   FOR THE YEAR ENDED 31 DECEMBER 2011
                                             (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                            [English translation for reference only]
Bank                                                              31 December 2011             31 December 2010
                                                                      Amount         (%)           Amount         (%)
Corporate loans
Manufacturing                                                    298,746,314      22.55        238,163,863      20.83
Wholesale and retail, catering                                   153,977,401      11.62        111,369,423        9.74
Real estate                                                       115,118,113      8.69        116,290,609      10.17
Geological survey, irrigation                                      96,337,526      7.27        109,916,592        9.61
Transportation, warehouse and postal service                       92,192,256      6.96         88,567,967        7.75
Social services                                                    81,031,554      6.12         71,565,422        6.26
Construction                                                       69,373,886      5.24         55,769,521        4.88
Electricity, gas and water supply                                  50,709,763      3.83         45,634,198        3.99
Mining                                                             32,408,641      2.45         26,412,924        2.31
Education, culture, broadcasting                                   18,633,774      1.41         19,203,637        1.68
Agriculture, forestry, farming and fishery                          7,590,472      0.57          5,405,331        0.47
Sanitation, sport and social welfare                                4,747,088      0.36          6,629,103        0.58
Scientific research and comprehensive technological services        3,528,269      0.27          1,613,786        0.14
Others                                                             17,285,488      1.30          8,038,634        0.70
                                                                1,041,680,545     78.64        904,581,010      79.11
Bank acceptance bills discount                                     11,123,328      0.84         10,774,206        0.94
Re-discount                                                        11,164,746      0.84          8,658,521        0.76
Commercial acceptance bills discount                                 956,685       0.07          2,129,518        0.19
                                                                   23,244,759      1.75         21,562,245        1.89
                                                                 259,838,452      19.61        217,219,602      19.00
                                                                1,324,763,756    100.00      1,143,362,857     100.00


5.16.3 Loans and advances to customers listed by geography
Group                                        31 December 2011                         31 December 2010
                                                   Amount            (%)                       Amount             (%)
Shanghai                                       173,384,367         13.02                   152,930,683          13.34
Beijing                                         66,064,834          4.96                    58,556,895            5.11
Sichuan Province                                53,700,099          4.03                    45,931,965            4.01
Tianjin                                         47,046,428          3.53                    40,968,273            3.57
Shandong Province                               63,021,874          4.73                    52,494,860            4.58
Guangdong Province                              81,448,454          6.12                    69,686,953            6.08
Jiangsu Province                               146,616,104         11.01                   126,454,323          11.03
Henan Province                                  69,194,164          5.20                    62,806,757            5.48
Zhejiang Province                              211,264,823         15.87                   186,167,353          16.24
Liaoning Province                               77,438,050          5.82                    68,555,352            5.98
Other districts                                342,256,847         25.71                   281,935,887          24.58
Total                                        1,331,436,044        100.00               1,146,489,301           100.00
214   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      Bank                                      31 December 2011                               31 December 2010
                                                        Amount              (%)                          Amount            (%)
      Shanghai                                    172,796,094           13.04                     152,527,964            13.34
      Beijing                                      66,064,834            4.99                      58,556,895             5.12
      Sichuan Province                             53,414,936            4.03                      45,729,792             4.00
      Tianjin                                      47,046,428            3.55                      40,968,273             3.58
      Shandong Province                            62,291,854            4.70                      52,185,760             4.56
      Guangdong Province                           81,448,454            6.15                      69,686,953             6.09
      Jiangsu Province                            145,344,509           10.97                     125,700,708            10.99
      Henan Province                               68,297,527            5.16                      62,219,357             5.44
      Zhejiang Province                           210,325,239           15.88                     186,167,353            16.28
      Liaoning Province                            77,238,108            5.83                      68,555,352             6.00
      Other districts                             340,495,773           25.70                     281,064,450            24.60
      Total                                     1,324,763,756         100.00                    1,143,362,857           100.00


      5.16.4     Loans and advances to customers listed by guarantee
                                                Group                                               Bank
                             31 December 2011           31 December 2010            31 December 2011         31 December 2010
      Collateral loans              522,317,829               463,988,746                 520,934,594              463,440,967
      Secured loans                 400,149,867               317,123,313                 396,426,218              315,254,125
      Clean loans                   282,388,294               248,571,242                 281,391,615              248,235,291
      Pledged loans                 126,580,054               116,806,000                 126,011,329              116,432,474
      Total                       1,331,436,044             1,146,489,301               1,324,763,756             1,143,362,857


      5.16.5     Loans and advances to customers past due
      Group and Bank
                                                                  31 December 2011
                              Past due up to      Past due 90 days      Past due 1 year
                                     90 days                -1 year                -3 years    Past due over
                           (90 days included)     (1 year included)   (3 years included)             3 years              Total
      Collateral loans               667,840               791,890                1,061,273         547,150          3,068,153
      Secured loans                  399,600               185,997                 911,257          934,335          2,431,189
      Clean loans                    695,453                53,605                 184,242              23,020         956,320
      Pledged loans                   33,210                97,170                  14,349          189,665            334,394
      Total                        1,796,103             1,128,662                2,171,121       1,694,170          6,790,056
                                                                                                                       2011 Annual Report   215



                                                 SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                          NOTES TO THE FINANCIAL STATEMENTS
                                                       FOR THE YEAR ENDED 31 DECEMBER 2011
                                                 (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                                [English translation for reference only]
Group
                                                                      31 December 2010
                              Past due up to      Past due 90 days          Past due 1 year         Past due over
                                    90 days                 -1 year                   -3 years               3 years
                        (90 days included)        (1 year included)       (3 years included)                                       Total
Collateral loans                    111,798                640,773               1,176,931                  452,710           2,382,212
Secured loans                        19,424                415,377               1,209,638                  815,696           2,460,135
Clean loans                         410,977                 21,444                    193,525                 10,834           636,780
Pledged loans                         8,137                      674                   70,252               238,984            318,047
Total                               550,336              1,078,268               2,650,346                 1,518,224          5,797,174


5.16.5 Loans and advances to customers past due (Continued)
Bank
                                                                   31 December 2010
                             Past due up to      Past due 90 days         Past due 1 year         Past due over
                                   90 days                 -1 year                -3 years                 3 years
                      (90 days included)          (1 year included)     (3 years included)                                         Total
Collateral loans                   111,598                640,773               1,176,931              452,710                2,382,012
Secured loans                       19,424                415,377               1,209,638              815,696                2,460,135
Clean loans                        410,977                  21,444                193,525                  10,834              636,780
Pledged loans                        8,137                     674                    70,252           238,984                 318,047
Total                              550,136               1,078,268              2,650,346            1,518,224                5,796,974


5.16.6 Allowance on impairment losses for loans and advances to customers
Group
                                                          2011                                                2010
                                        Individually     Collectively                      Individually       Collectively
                                          assessed        assessed            Total          assessed          assessed            Total
Balance at beginning of the year         2,783,597       19,592,714 22,376,311              2,967,528         15,379,197     18,346,725
Accrual/reversal of impairment            (380,426)       7,539,544      7,159,118               141,655       4,391,746      4,533,401
allowances for loans(Note 5.8)
Loans written off                         (186,180)        (322,527)     (508,707)             (309,603)        (110,125)     (419,728)
Recovery after written off                     95,569       135,174        230,743               134,708               955     135,663
Unwind of discount on allowances              (90,118)      (55,253)     (145,371)             (150,691)         (69,059)     (219,750)
Balance at end of the year               2,222,442       26,889,652 29,112,094              2,783,597         19,592,714     22,376,311
216   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      Bank
                                                             2011                                         2010
                                            Individually   Collectively                  Individually   Collectively
                                              assessed      assessed           Total       assessed      assessed            Total
      Balance at beginning of the year       2,779,677     19,563,641     22,343,318      2,963,608     15,378,327      18,341,935
      Accrual/reversal of impairment         (376,506)      7,465,948      7,089,442        141,655      4,363,543       4,505,198
      allowances for loans(note 5.8)
      Loans written off                      (186,180)      (322,527)      (508,707)       (309,603)      (110,125)      (419,728)
      Recovery after written off                95,569        125,788       221,357         134,708              955      135,663
      Unwind of discount on allowances         (90,118)       (55,253)     (145,371)       (150,691)       (69,059)      (219,750)
      Balance at end of the year             2,222,442     26,777,597     29,000,039      2,779,677     19,563,641      22,343,318


      5.17 Available-for-sale financial assets
                                                                                           Group and Bank
                                                                            31 December 2011                   31 December 2010
      Bonds(at fair value)
       RMB corporate bonds                                                         46,599,867                           33,904,631
       PBOC bills                                                                  43,148,040                           18,234,584
       RMB bonds issued by policy banks                                            34,217,723                           27,758,425
       RMB treasury bonds                                                          12,795,495                           14,932,112
       Local government bonds                                                          8,952,175                         7,379,789
       Foreign currency treasury bonds                                                 1,020,351                          178,985
       RMB bonds issued by financial institutions                                       986,191                          1,656,587
       Other foreign currency bonds                                                     209,289                            97,519
                                                                                 147,929,131                           104,142,632
      Equity securities (at cost)                                                      1,127,620                          767,620
      Total                                                                      149,056,751                           104,910,252


      5.18 Investment securities-Held-to-maturity
                                                                                            Group and Bank
                                                                            31 December 2011                   31 December 2010
       RMB treasury bonds                                                          70,531,903                           48,522,336
       RMB bonds issued by policy banks                                            42,848,894                           38,822,617
       Local government bonds                                                      26,493,856                           15,170,043
       RMB corporate bonds                                                         16,392,908                           10,526,109
       RMB bonds issued by financial institutions                                      1,864,913                         5,059,312
       Foreign currency corporate bonds                                                 314,444                           328,512
       PBOC bills                                                                        88,535                         25,127,707
       Total                                                                     158,535,453                           143,556,636
                                                                                                                  2011 Annual Report   217



                                                 SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                          NOTES TO THE FINANCIAL STATEMENTS
                                                       FOR THE YEAR ENDED 31 DECEMBER 2011
                                                 (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                                [English translation for reference only]
5.19 Investment securities-Loans and receivables
                                                                                           Group and Bank
                                                                             31 December 2011                31 December 2010
Bonds
 RMB bonds issued by financial institutions                                         4,675,956                           1,660,478
 RMB treasury bonds                                                                 1,685,111                           2,046,644
 RMB corporate bonds                                                                  429,819                                     -
 PBOC bills                                                                           965,242                                     -
                                                                                    7,756,128                           3,707,122
Entrusted product                                                                   1,003,408                                     -
Total                                                                               8,759,536                           3,707,122


5.20 Investments in associates
Group
                                                                     Movement
                                                   Net profit
                                                   adjusted         Other      Exchange
                                                   by equity       equity            rate                    Share         Voting
                          Cost 31/12/2010           method      movement      adjustment 31/12/2011      proportion     proportion
First Sino Bank       363,414        629,818         93,000        (9,079)       (3,000)      710,739         30%             30%

              Business       Place of            Legal
 Name         nature         incorporation       representative Operation scope                             Registered capital
                                                                  Drawing public deposits; granting loans
                                                                  of short-term, mid-term and long-term
                                                                  nature; discounting bills and notes;
                                                                  buying government securities, financial
                                                                  securities, buying foreign currency
                                                                  securities other than shares; providing
                                                                  letters of credit and guarantee, handling RMB
First Sino    Joint venture
                            Shanghai             Liu Xinyi        domestic and foreign settlements;         1,100,000,000
Bank          bank
                                                                  trading foreign currencies, agency
                                                                  insurance, engaging in placement and
                                                                  bank card business; providing safe
                                                                  deposit box services; providing credit
                                                                  rating and consulting services; other
                                                                  business
                                                                  approved by CBRC.

       Assets as at          Liabilities as at       Net assets as at 2011 operating           2011
 31 December 2011        31 December 2011         31 December 2011           income        net profit                 Organization
           ( 000)                     ( 000)                 ( 000)         ( 000)          ( 000) Relationship              code
        40,572,729               38,112,791                  2,459,938         916,471      312,224 Significant       60736846-9
                                                                                                    influence
218   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      5.21 Investments in joint ventures
      Group
                                                                            Movement
                                                              Net profit adjusted by                          Share        Voting
                                     Cost      31/12/2010                                31/12/2011
                                                                     equity method                        proportion    proportion
      AXA SPDB Investment         102,000            39,036                (20,534)          18,502            51%           51%
      Managers Co., Ltd.

                                 Business     Place of          Legal              Operation scope                 Registered
       Name                      nature       incorporation     representative                                     capital
      AXA SPDB Investment        Fund         Shanghai          Jiang              Securities investment           RMB
      Managers Co., Ltd.                                        Mingsheng          funding, sales of fund, asset   200,000,000
                                                                                   management and other
                                                                                   business approved by CSRC.


            Assets as at   Liabilities as at Net assets as at 2011 operating 2011 net
      31 December 2011 31 December 2011 31 December 2011             income      loss           Organization
                 ( 000)              ( 000)          ( 000)          ( 000) ( 000) Relationship        code
                     50,816                 14,452              36,364             21,644 (40,279) Common              71788059-4
                                                                                                   Control


      According to the articles of association of AXA SPDB Investment Managers Co., Ltd., when 2/3 of the voting rights
      held by the shareholders' representatives passed then the special resolution can be passed, the special resolution
      including company’s strategic plan, investment plan using owner’s capital, annual financial budget plan and final
      financial statement plan authorized to the board of directors, the profit distribution plan and loss compensation plans,
      equity transfer and articles of association’s revision. Thus the Group holds AXA SPDB Investment Managers Co.,
      Ltd. 51% of the voting shares, but the Group together with the other shareholders control the company.

      5.22 Property, plant and equipment
      Group                                           31 December 2010           Additions       Disposals     31 December 2011
                                                              14,466,999         2,263,001       (510,120)             16,219,880
      Land and buildings                                       7,405,438          650,196         (51,873)              8,003,761
      Vehicles                                                  312,257            62,246         (22,960)                351,543
      Soft wares                                                478,452           127,206            (8,620)              597,038
      Electronic computers and other equipments                3,596,806          954,262        (417,935)              4,133,133
      Property improvement                                     2,674,046          469,091            (8,732)            3,134,405
                                                               5,920,674         1,327,820       (426,161)              6,822,333
      Land and buildings                                       1,585,232          270,606         (14,170)              1,841,668
      Vehicles                                                  186,388            39,769         (22,228)                203,929
      Soft wares                                                333,334            89,207            (8,620)              413,921
      Electronic computers and other equipments                2,109,742          572,386        (376,360)              2,305,768
      Property improvement                                     1,705,978          355,852            (4,783)            2,057,047
                                                                                                   2011 Annual Report   219



                                            SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                     NOTES TO THE FINANCIAL STATEMENTS
                                                  FOR THE YEAR ENDED 31 DECEMBER 2011
                                            (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                           [English translation for reference only]
Group                                         31 December 2010        Additions     Disposals    31 December 2011
                                                       8,546,325                                         9,397,547
Land and buildings                                     5,820,206                                         6,162,093
Transportations                                         125,869                                            147,614
Vehicles                                                 145,118                                            183,117
Electronic computers and other equipments              1,487,064                                          1,827,365
Property improvement                                    968,068                                          1,077,358


The depreciation accrued during this year of the Group is RMB 1,327,820,000.

5.22 Property, plant and equipment (Continued)
Bank                                        31 December 2010        Additions        Disposals   31 December 2011
                                                   14,417,457       2,238,622        (510,120)          16,145,959
Land and buildings                                   7,405,438       650,196          (51,873)           8,003,761
Vehicles                                              307,957          58,036         (22,960)             343,033
Soft wares                                            478,419        127,169           (8,620)             596,968
Electronic computers and other
                                                     3,582,961       946,955         (417,935)            4,111,981
equipments
Property improvement                                 2,642,682       456,266           (8,732)           3,090,216
                                                     5,912,510      1,313,725        (426,162)           6,800,073
Land and buildings                                   1,585,232       270,606          (14,170)           1,841,668
Vehicles                                              186,022          38,530         (22,225)             202,327
Soft wares                                            333,330          89,203          (8,620)             413,913
Electronic computers and other
                                                     2,107,140       568,106         (376,364)           2,298,882
equipments
Property improvement                                 1,700,786       347,280           (4,783)           2,043,283
                                                     8,504,947                                           9,345,886
Land and buildings                                   5,820,206                                           6,162,093
Vehicles                                              121,935                                              140,706
Soft wares                                            145,089                                              183,055
Electronic computers and other
                                                     1,475,821                                           1,813,099
equipments
Property improvement                                  941,896                                            1,046,933


The depreciation accrued during this year of the Bank is RMB 1,313,725,000.
220   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      5.23 Deferred tax assets

      The Group’s movement in deferred tax assets is as follows:

                                                                                                                             2011
      Balance at beginning of the year                                                                                 3,772,723
      Deferred tax credited to profit or loss (note 5.9)                                                                 798,937
      Deferred tax charged to equity                                                                                    (301,801)
      Balance at end of the year                                                                                       4,269,859

                                                                       31 December 2011              31 December 2010
                                                                    Deductible                      Deductible
                                                                     temporary Deferred tax          temporary Deferred tax
                                                                    differences      assets         differences      assets
      Impairment allowances for loans and other assets              14,169,546        3,542,387      9,969,522         2,492,381
      Amortisation for long-term assets                                  22,620            5,655        19,917              4,979
      Salaries payable                                                 525,516          131,379      2,564,250           641,063
      Fair value changes for available-for-sale financial assets     1,371,585          342,896      2,578,790           644,697
      Fair value changes for precious metals                             37,601            9,400                 -                -
      Fair value changes for derivative financial instruments          966,242          241,561                  -                -
      Non-offset deferred tax assets                                17,093,110        4,273,278    15,132,479          3,783,120

                                                                       Taxable                         Taxable
                                                                    temporary     Deferred tax      temporary        Deferred tax
                                                                   differences       liabilities   differences          liabilities
      Fair value changes for financial assets hold for trading       (13,676)          (3,419)               -                    -
      Fair value changes for derivative financial instruments                -                 -     (41,586)            (10,397)
      Non-offset deferred tax liabilities                            (13,676)          (3,419)       (41,586)            (10,397)
      Net deferred tax assets after offset                         17,079,434       4,269,859      15,090,893          3,772,723


      5.23 Deferred tax assets (Continued)

      The Bank’s movement in deferred tax assets is as follows:

                                                                                                                             2011
      Balance at beginning of the year                                                                                 3,772,723
      Deferred tax credited to profit or loss (note 5.9)                                                                 797,544
      Deferred tax charged to equity                                                                                    (301,801)
      Balance at end of the year                                                                                       4,268,466
                                                                                                                            2011 Annual Report     221



                                                    SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                             NOTES TO THE FINANCIAL STATEMENTS
                                                          FOR THE YEAR ENDED 31 DECEMBER 2011
                                                    (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                                   [English translation for reference only]
                                                                                     31 December 2011               31 December 2010
                                                                                   Deductible                    Deductible
                                                                                    temporary Deferred tax        temporary Deferred tax
                                                                                   differences      assets       differences      assets
Impairment allowances for loans and other assets                                   14,169,546     3,542,387       9,969,522        2,492,381
Amortisation for long-term assets                                                     22,620           5,655             19,917         4,979
Salaries payable                                                                     519,944        129,986       2,564,250          641,063
Fair value changes for available-for-sale financial assets                          1,371,585       342,896       2,578,790          644,697
Fair value changes for precious metals                                                37,601           9,400                  -               -
Fair value changes for derivative financial instruments                              966,242        241,561                   -               -
Non-offset deferred tax assets                                                     17,087,538     4,271,885      15,132,479        3,783,120

                                                                                   Taxable                           Taxable
                                                                                temporary Deferred tax            temporary Deferred tax
                                                                               differences   liabilities         differences   liabilities
Fair value changes for financial assets hold for trading                            (13,676)        (3,419)                   -               -
Fair value changes for derivative financial instruments                                    -                -       (41,586)         (10,397)
Non-offset deferred tax liabilities                                                 (13,676)        (3,419)         (41,586)         (10,397)
Net deferred tax assets after offset                                           17,073,862        4,268,466       15,090,893        3,772,723


5.24 Other assets
                                                                           Group                                      Bank
                                                                    31 December                                  31 December
                                                                  2011                    2010                  2011                     2010
Settlement and clearing accounts                            1,646,205                  843,455            1,646,205                  843,410
Deposit for gold trading guaranty                             900,882                  203,589              900,882                  203,589
Prepaid for constructions                                   1,163,743                1,141,782            1,163,743                1,139,398
Wealth management products (Note 1)                                    -             2,100,000                       -             2,100,000
Foreclosed assets (Note 2)                                    309,682                  328,507              309,682                  328,507
Prepaid rental expenses for land                              206,104                  187,831              206,104                  187,831
Interest receivables                                       11,071,074                6,492,715           11,063,132                6,489,785
Sub-prime asset-based security                                         -               153,414                       -               153,414
Continuing involved assets                                             -               153,414                       -               153,414
Trading finance receivables                                            -             1,945,775                       -             1,945,775
Other receivable (Note 3)                                     812,556                1,259,353              803,787                1,257,104
Other long-term assets                                        196,393                  230,991              190,784                  230,549
Total                                                      16,306,639               15,040,826           16,284,319               15,032,776
Note 1: Wealth management products
      The Group records cash received from issuing wealth management products which the Group guarantees the safety of principal and
      related assets obtained from the investment of these cash in the financial statements. The Group records received cash as other
      liabilities, and assets obtained according to its nature. If assets obtained are investments in trust products, they are recorded as other
      assets.
Note 2: Foreclosed assets
222   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      Group and Bank
                                              31 December 2011                                      31 December 2010
                                   Original value        Provision     Net value         Original value           Provision     Net value
      Real estate                        907,259         (623,438)       283,821              850,392             (539,119)      311,273
      Equity share                        67,110          (41,249)        25,861               35,383              (18,149)       17,234
      Others                                     -                 -             -              13,303             (13,303)             -
      Total                              974,369         (664,687)       309,682              899,078            (570,571)       328,507
      The foreclosed assets will be disposed once conditions are met after balance sheet date.

      5.24 Other assets (Continued)
      Note 3   Other receivable
                                                           Group                                                 Bank
                                                     As at 31 December                                As at 31 December
                                                       2011                     2010                      2011                      2010
      Within 1 year                                  848,930              1,274,479                 840,161                     1,272,230
      1 to 2 years                                   429,857               379,084                  429,857                      379,084
      2 to 3 years                                   143,475               213,032                  143,475                      213,032
      Over 3 years                                   245,650                   64,498               245,650                       64,498
                                                 1,667,912                1,931,093                1,659,143                    1,928,844
      Less: Impairment                           (855,356)                (671,740)                (855,356)                    (671,740)
      Net                                            812,556              1,259,353                 803,787                     1,257,104


      5.25 Due to and placements from other banks and financial institutions
                                                                           Group                                    Bank

                                                                       31 December                            31 December

                                                                       2011                2010                  2011               2010

      Due to domestic banks                                    328,062,870           287,312,706      330,270,542             288,834,329

      Due to other domestic financial institutions             109,074,407            50,326,041      109,073,417              50,295,508

      Due to overseas banks                                        2,275,948            180,072            2,275,948             180,072

      Due to other overseas financial institutions                 1,495,044                   -           1,495,044                    -

      Placements from domestic banks                            66,970,025            14,118,450          66,970,025           14,118,450

      Placements from overseas banks                                       -            296,695                         -        296,695

      Total                                                    507,878,294           352,233,964      510,084,976             353,725,054
                                                                                                                           2011 Annual Report      223



                                                    SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                             NOTES TO THE FINANCIAL STATEMENTS
                                                          FOR THE YEAR ENDED 31 DECEMBER 2011
                                                    (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                                   [English translation for reference only]
5.26 Financial assets sold under repurchase agreements
                                                                                   Group                                  Bank
                                                                              31 December                              31 December
                                                                                2011                2010                2011             2010
Bills sold under repurchase agreements                                    9,997,894          2,136,846           9,932,773         2,085,846
Bonds sold under repurchase agreements                                  76,021,675         14,826,625           76,021,675        14,826,625
Total                                                                   86,019,569         16,963,471           85,954,448        16,912,471


5.27 Due to customers
                                                            Group                                                  Bank
                                                      31 December                                              31 December
                                                        2011                       2010                        2011                      2010
Current deposits
-Corporate                                     582,969,466                623,228,016                 578,201,045               620,676,119
-Individual                                     86,572,289                  83,035,127                 85,829,141                82,657,535
Time deposits
-Corporate                                     647,712,370                573,012,546                 645,307,940               571,923,436
-Individual                                    236,345,787                193,086,894                 235,523,781               192,714,631
Pledged deposits                               264,050,073                154,860,831                 262,603,866               154,418,033
Treasury deposits                               30,780,000                  10,000,000                 30,780,000                10,000,000
Other deposits                                   2,625,136                   3,236,118                     2,586,756               3,233,615
Total                                       1,851,055,121               1,640,459,532               1,840,832,529              1,635,623,369


5.28 Debts issued
Group and Bank
                                                                                             31 December
                                                                                            2011                                         2010
06 SPDB subordinated bond(note 1)                                                               -                                  2,600,000
07 SPDB subordinated bond (note 2)                                                     6,000,000                                   6,000,000
08 SPDB subordinated bond (note 3)                                                     8,200,000                                   8,200,000
11 SPDB subordinated bond (note 4)                                                  18,400,000                                                -
Total                                                                               32,600,000                                    16,800,000
Note 1: On 15 June 2006, the Bank issued subordinated debts of RMB2.6 billion in the interbank bonds market. The tenor of the debts is 10
      years and the Bank has an option to early redeem part of or all the debts at the end of the fifth year at par. The Bank redeemed all the
      subordinated debts on 30 June 2011.
Note 2: On 28 December 2007, the Bank issued RMB6 billion subordinated debts via public market, including RMB1 billion fixed rate
      subordinated debts and RMB5 billion floating rate subordinated debts. Fixed rate subordinated debts have a tenor of ten years and the
      Bank has an option to early redeem part of or all the bonds at the end of the fifth year at par. The fixed rate is 6.0% during the first 5
      years, and the rate change to 9% for the next 5 years. Floating rate subordinated debts have a tenor of ten years and the Bank has an
      option to early redeem part of or all the bonds at the end of the fifth year at par. The coupon rate is basic rate plus basic spread. Basic
      rate equals to one-year lump sum time deposit rate issued by PBOC on the date of interest calculation. The basic spread rate during
      the first 5 years is 1.8% and the rate will change to 4.8% in the next 5 years.
Note 3: On 26 December 2008, the Bank issued RMB8.2 billion subordinated debts in the interbank bonds market. The subordinated debts
      have a tenor of ten years and the Bank has an option to early redeem part of or all the bonds at the end of the fifth year at par. The rate
      of the subordinated debts in the first 5 years is 3.95%, and the rate will change to 6.95% in the next 5 years.
Note 4: On 11 October 2011, the Bank issued RMB18.4 billion subordinated debts in the interbank bonds market. The subordinated debts
      have a tenor of fifteen years and the Bank has an option to early redeem part of or all the bonds at the end of the tenth year at par. The
      coupon rate is 6.15%.
224   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      5.29 Other liabilities
                                                                            Group                                         Bank
                                                                    31 December                                      31 December
                                                                  2011                       2010                    2011                    2010
      Interest payable                                     20,278,588                   11,753,812            20,245,022                11,745,295
      Staff benefits payable                                 6,853,628                   6,856,610             6,817,140                 6,836,227
      Wealth management products (Note 5.24)               15,713,540                    6,752,100            15,713,540                 6,752,100
      Settlement and clearing accounts                       4,649,723                   2,585,500             4,649,723                 2,585,130
      Business and other tax payable                         1,634,102                   1,188,629             1,628,625                 1,186,965
      Withholding individual income tax                        836,932                    209,766                 836,526                 209,616
      Re-credit funds                                          456,389                    281,293                 456,389                 281,293
      Deferred revenue                                         207,074                   3,720,808                207,074                3,720,808
      Fiscal account suspense                                  118,964                    796,141                 118,964                 796,141
      Dormant account balance                                  102,954                    104,762                 102,954                 104,762
      Prepaid expense                                           26,006                     67,231                  26,006                  67,231
      Promissory notes (Note 1)                                         -                1,631,426                        -              1,631,426
      Continuing involved liabilities                                   -                 153,414                         -               153,414
      Others                                                 1,116,364                   1,570,244             1,086,807                 1,557,748
      Total                                                51,994,264                   37,671,736            51,888,770                37,628,156
      Note 1: The promissory notes are reclassified to due to customers in order to meet the requirement change from CBRC in 2011.

      5.30 Share capital

      The share capital of the Bank are all issued and paid in full ordinary shares, par value is RMB1 per share.

                                                                                                   Share transferred
                                                                                                    from restricted in
                                                                                                       trading to non-
                                             Opening               Share Increase                         restricted in       Closing
      2011                                   balance Percentage dividend   issues                              trading        balance Percentage
      Shares with trading restrictions
       - Shares with trading                          -             -               -          -                      -             -            -
         restrictions
      - Shares owned by                               -             -               -          -                      -             -            -
        State-owned legal persons
       - Other domestic-owned                2,869,765        20.00%        860,930            -                      -   3,730,695         20.00%
         shares
      Including:
      Shares owned by                        2,869,765        20.00%        860,930            -                      -   3,730,695         20.00%
        domestic legal persons
      Shares owned by                                 -             -               -          -                      -             -            -
        domestic natural persons
                                                                                                         2011 Annual Report   225



                                             SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                      NOTES TO THE FINANCIAL STATEMENTS
                                                   FOR THE YEAR ENDED 31 DECEMBER 2011
                                             (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                            [English translation for reference only]
                                                                              Share transferred
                                                                               from restricted in
                                                                                  trading to non-
                                 Opening               Share Increase                restricted in   Closing
2011                             balance Percentage dividend   issues                     trading    balance Percentage
 - Shares owned by                       -             -         -        -                      -           -           -
   Foreign investments
Including:
Shares owned by                          -             -         -        -                      -           -           -
  foreign legal persons
Shares owned by                          -             -         -        -                      -           -           -
  foreign natural persons
Total shares with                2,869,765        20.00%   860,930        -                      -   3,730,695     20.00%
 trading restrictions
Shares without trading
restrictions
- Ordinary shares quoted in     11,479,059        80.00% 3,443,717        -                      - 14,922,776      80.00%
RMB
 - Domestic listed foreign               -             -         -        -                      -           -           -
   shares
 - Overseas listed foreign               -             -         -        -                      -           -           -
shares
 - Others                                -             -         -        -                      -           -           -

Total shares without            11,479,059        80.00% 3,443,717        -                      - 14,922,776      80.00%
   trading restrictions
Total shares                    14,348,824       100.00% 4,304,647        -                      - 18,653,471     100.00%


Pursuant to the resolution passed on the 2010 annual general meeting of shareholders, a dividend consisting of three
shares per 10 shares was proposed with the number of total shares being 14,348,824,000. After the appropriation,
the total number of shares summed up to 18,653,471,000. The capital has been verified by Ernst & Young Hua Ming
CPAs with the issuance of report of Ernst & Young Hua Ming (2011) Yan Zi 60468058_B01.
226   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
                                                                                             Share
                                                                                       transferred
                                                                                   from restricted
                                                                                      in trading to
                                          Opening                 Share   Increase non-restricted      Closing
      2010                                balance Percentage   dividend     issues       in trading    balance Percentage
      Shares with trading restrictions
       - Shares with trading                     -         -          -            -              -           -         -
         restrictions
      - Shares owned by                   211,247      2.39%    63,374             -     (274,621)            -         -
        State-owned legal persons
       - Other domestic-owned             692,912      7.85%   207,874 2,869,765         (900,786)    2,869,765   20.00%
         shares
      Including:
      Shared owned by                     601,192      6.81%   180,358 2,869,765         (781,550)    2,869,765    20.00%
        domestic legal persons
      Shared owned by                      91,720      1.04%    27,516             -     (119,236)            -         -
        domestic natural person
       - Shares owned by
         Foreign investments
      Including:
      Shares owned by                            -         -          -            -              -           -         -
        foreign legal persons
      Shares owned by                            -         -          -            -              -           -         -
        foreign natural persons
      Total shares with                   904,159     10.24%   271,248 2,869,765       (1,175,407)    2,869,765    20.00%
        trading restrictions
      Shares without trading
        restrictions
       - Ordinary shares quoted in       7,925,887    89.76% 2,377,765             -    1,175,407 11,479,059       80.00%
         RMB
       - Domestic listed foreign                 -         -          -            -              -           -         -
         shares
       - Overseas listed foreign                 -         -          -            -              -           -         -
         shares
       - Others                                  -         -          -            -              -           -         -

      Total shares without               7,925,887    89.76% 2,377,765         -        1,175,407 11,479,059       80.00%
        trading restrictions
      Total shares                       8,830,046   100.00% 2,649,013 2,869,765                  - 14,348,824    100.00%
                                                                                            2011 Annual Report   227



                                     SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                              NOTES TO THE FINANCIAL STATEMENTS
                                           FOR THE YEAR ENDED 31 DECEMBER 2011
                                     (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                    [English translation for reference only]
5.31 Capital surplus

The Group

                                31 December 2010            Increase          Decrease     31 December 2011
Excess of contributed capital         60,568,141                   -                   -         60,568,141
Other capital surplus
Changes of invested                     (17,194)                   -             (9,079)            (26,273)
  companies equity
 Others                                   22,319                   -                   -              22,319
Total                                 60,573,266                   -             (9,079)         60,564,187

                                31 December 2009            Increase          Decrease     31 December 2010
Excess of contributed capital         24,238,441         36,329,700                    -         60,568,141
Other capital surplus
 Changes of invested                      (9,501)                  -             (7,693)            (17,194)
  companies equity
 Others                                   21,571                748                    -              22,319
Total                                 24,250,511         36,330,448              (7,693)         60,573,266


The Bank

                                31 December 2010            Increase          Decrease     31 December 2011
Excess of contributed capital         60,568,141                   -                   -         60,568,141
Other capital surplus
 Changes of invested                     (17,194)                  -             (9,079)            (26,273)
  companies equity
 Others                                   21,571                   -                   -              21,571
Total                                 60,572,518                   -             (9,079)         60,563,439

                                31 December 2009            Increase          Decrease     31 December 2010
Excess of contributed capital         24,238,441         36,329,700                    -         60,568,141
Other capital surplus
 Changes of the invested                  (9,501)                  -             (7,693)            (17,194)
  company s equity under
  the equity method
 Others                                   21,571                   -                   -              21,571
Total                                 24,250,511         36,329,700              (7,693)         60,572,518
228   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      5.32 Surplus reserves
      The Group and the Bank
                                                    31 December 2010                   Increase          31 December 2011
      Statutory surplus reserve                              7,350,244                2,720,795                  10,071,039
      Discretionary surplus reserve                          7,899,569                3,835,136                  11,734,705
      Total                                                 15,249,813                6,555,931                  21,805,744

                                                    31 December 2009                   Increase          31 December 2010
      Statutory surplus reserve                              5,432,677                1,917,567                   7,350,244
      Discretionary surplus reserve                          5,255,899                2,643,670                   7,899,569
      Total                                                 10,688,576                4,561,237                  15,249,813


      Pursuant to related regulations, the Bank shall make for statutory surplus reserve amounting to 10% of net profit
      until accumulated statutory surplus reserve reaches 50% of share capital. After appropriation is made to the statutory
      surplus reserve, the Bank can appropriate the discretionary surplus reserve.

      5.33 General risk reserve
      The Group and the Bank
                                                31 December 2010                     Increase            31 December 2011
      General risk reserve                               9,500,000                  9,200,000                    18,700,000

                                                 31 December 2009                    Increase            31 December 2010
      General risk reserve                               6,900,000                  2,600,000                     9,500,000


      Pursuant to Circulars No.49 and No.90 issued by MOF in 2005 (the “MOF Circulars”), effective from 17 May, 2005
      and 5 September 2005 respectively, banks and certain other financial institutions in the PRC, are required to maintain
      adequate allowances for impairment losses against their risk assets. In addition, a general risk reserve should be
      established through the appropriation of retained earnings. This general reserve should form part of the shareholders’
      equity of financial institutions. As a guiding principle, the balance of general risk reserve should not be less than 1%
      of the aggregate amount of all risk assets.
                                                                                                        2011 Annual Report   229



                                              SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                       NOTES TO THE FINANCIAL STATEMENTS
                                                    FOR THE YEAR ENDED 31 DECEMBER 2011
                                              (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                             [English translation for reference only]
5.34 Retained earnings

The Group

                                                                    2011                           2010
                                                              Amount       Percentage        Amount          Percentage
Opening balance of retained earnings                       25,258,526                     17,216,074
Plus: Net profit attributed to the Bank' s shareholders    27,285,981                     19,177,209
Less: Appropriations to
                                                           (2,720,795)        10.00%      (1,917,567)            10.00%
  statutory surplus reserve
    Appropriations to
                                                           (3,835,136)        20.00%      (2,643,670)            20.00%
    discretionary surplus reserve
    Appropriations to
                                                           (9,200,000)                    (2,600,000)
    general risk reserve
    Dividends on ordinary shares                           (2,295,811)                    (1,324,507)
    Dividends transferred to
                                                           (4,304,647)                    (2,649,013)
    share capital
Closing balance of retained earnings                       30,188,118                     25,258,526


As at 31 December 2011, retained earnings of the Group include 1.14 million of subsidiaries' statutory reserve
attributed to parent company (31 December 2010: 0), of which the amount accrued in 2011 is 1.14m (2010:0)

The Bank

                                                                    2011                           2010
                                                              Amount       Percentage        Amount          Percentage
Opening balance of retained earnings                       25,258,928                     17,218,010
Plus: Net profit                                           27,207,953                     19,175,675
Less: Appropriations to                                    (2,720,795)        10.00%      (1,917,567)            10.00%
  statutory surplus reserve
    Appropriations to                                      (3,835,136)        20.00%      (2,643,670)            20.00%
    discretionary surplus reserve
    Appropriations to                                      (9,200,000)                    (2,600,000)
    general risk reserve
    Dividends on ordinary shares                           (2,295,811)                    (1,324,507)
    Dividends transferred to                               (4,304,647)                    (2,649,013)
    share capital
Closing balance of retained earnings                       30,110,492                     25,258,928


Pursuant to the resolution of 2010 annual general meeting of shareholders’ on 28 April 2011, besides made 10%
of statutory reserve from net profit, the Bank made 20% of discretionary surplus reserve from net profit of RMB
3,835,136 thousands, made general risk reserve of RMB 9.2 billion, and distributes 3 shares and cash dividend of
RMB 1.6 (before tax) for each 10 shares to all shareholders. The total distributed dividend amounted to RMB 4,304,647
thousands.
230   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      Besides made 10% of statutory reserve from net profit for 2011, the resolution on 2011 board of directors’ meeting on
      14 March 2012 proposes that the Bank made 20% of discretionary surplus reserve from net profit of RMB 5,441,590
      thousands, made general risk reserve of RMB 4.35 billion, and distributed cash dividend of RMB 3 (before tax) for
      each 10 shares to all shareholders. The total distributed dividend amounted to RMB 5,596,041 thousands. Above
      resolution is pending for approval of shareholders’ meeting.

      5.35 Non-controlling interest

      Non-controlling interest of the Group is as follows:

                                                                           31 December 2011            31 December 2010
      Mianzhu SPD Rural Bank Co., Ltd.                                                 33,552                     27,681
      Liyang SPD Rural Bank Co., Ltd.                                                122,369                      26,315
      Gongyi SPD Rural Bank Co., Ltd.                                                  38,835                     26,327
      Fengxian SPD Rural Bank Co., Ltd.                                                20,049                     15,821
      Zixing SPD Rural Bank Co., Ltd.                                                  88,899                     26,262
      Banan Chongqing SPD Rural Bank Co., Ltd.                                         31,571                     26,206
      Zouping SPD Rural Bank Co., Ltd.                                                 88,518                     22,070
      Zezhou SPD Rural Bank Co., Ltd.                                                  30,623                     22,483
      Ganjingzi Dalian SPD Rural Bank Co., Ltd.                                        24,018                     21,992
      Hancheng SPD Rural Bank Co., Ltd.                                                22,903                     22,870
      Jiangyin SPD Rural Bank Co., Ltd.                                                49,996                     45,487
      Pingyang SPD Rural Bank Co., Ltd.                                                49,073                           -
      Xinchang SPD Rural Bank Co., Ltd.                                                51,139                           -
      Total                                                                          651,545                     283,514
6 SEGMENT REPORTING

Management reviews the performance of the Group based on the branches and subsidiaries in different economic region. The branches mainly provide
service for the local customers and a few clients in other region, so business division are distinguished based on the location of the assets.

The operating segments’ principle business is providing customers with various commercial banking services and investment business, including
accepting public deposits and granting commercial loans, discounting bills, trade financing, lending and borrowing in interbank money market and
securities investment, etc. Shanghai segment in this segment report includes head office, offshore department and Shanghai branch.

                                                                                                                                                                      Other
                                                         Sichuan                 Shandong    Guangdong        Jiangsu        Henan       Zhejiang     Liaoning      districts   Inter branch
2011                          Shanghai        Beijing    Province      Tianjin    Province     Province      Province      Province      Province     Province      of PRC             offset         Total
Interest income             135,637,813   10,960,132    6,935,752 10,408,086     7,286,810   16,840,001    26,014,504     9,571,556    31,936,827   11,777,927   62,707,406 (208,855,577)       121,221,237
Including:                   25,432,185   4,341,680     3,741,250   6,914,981    4,139,651    8,474,303     7,974,811     4,771,847    13,339,000   7,522,252    34,569,277                 - 121,221,237
External
interest income
Internal interest income    110,205,628   6,618,452     3,194,502   3,493,105    3,147,159    8,365,698    18,039,693     4,799,709    18,597,827   4,255,675    28,138,129 (208,855,577)                 -
Interest expense           (125,583,163) (8,022,353) (4,864,604) (7,809,523) (4,877,034) (12,776,668) (20,121,185)       (6,241,621) (23,129,132) (8,524,916) (46,685,053)      208,855,577 (59,779,675)
Including:                 (15,626,494) (3,081,775) (2,001,180) (2,296,507) (1,501,185)      (5,071,341)   (3,048,762)   (2,150,012)   (5,275,713) (3,310,250) (16,416,456)                 - (59,779,675)
External
interest expense
Internal interest expense (109,956,669) (4,940,578) (2,863,424) (5,513,016) (3,375,849)      (7,705,327) (17,072,423)    (4,091,609) (17,853,419) (5,214,666) (30,268,597)      208,855,577               -
Net interest income          10,054,650    2,937,779    2,071,148   2,598,563    2,409,776    4,063,333     5,893,319     3,329,935     8,807,695    3,253,011   16,022,353                 -    61,441,562
Net fee and commission        1,468,452     229,749      276,928     180,354      332,432       617,144       424,918       286,751       967,300     268,387     1,663,311                 -     6,715,726
income
Dividend income                  49,510             -           -            -           -             -             -             -            -            -              -               -       49,510
Net trading income            (719,771)             -           -            -           -             -             -             -            -            -      (2,487)                 -     (722,258)
Net losses on disposal         (65,140)             -           -            -           -             -             -             -            -            -              -               -      (65,140)
of investment securities
Other operating income            7,791      66,280         8,540      26,381       36,397       35,205        68,633        13,641       135,172      37,820      147,303                  -      583,163
                                                                                                                                                                                                              (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                                                                                                                                                                                             [English translation for reference only]
                                                                                                                                                                                                                                                                                  FOR THE YEAR ENDED 31 DECEMBER 2011
                                                                                                                                                                                                                                                                                                                         2011 Annual Report




                                                                                                                                                                                                                                                                                     NOTES TO THE FINANCIAL STATEMENTS
                                                                                                                                                                                                                                                                            SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                                                                                                                                                                                                                                                                                         231
                                                                                                                                                                                                                                                                                                                          232


6 SEGMENT REPORTING (Continued)
                                                                                                                                                                           Other       Inter
                                                  Sichuan                         Shandong       Guangdong      Jiangsu       Henan        Zhejiang       Liaoning       districts   branch
2011                   Shanghai      Beijing      Province         Tianjin         Province        Province    Province     Province       Province       Province       of PRC       offset               Total
                                                                                                                                                                                                                                                                                                                          2011 Annual Report




Staff expenses        (4,272,153) (484,450)       (268,393)      (352,596)        (363,401)        (742,149)   (880,460)    (468,451) (1,433,646)      (537,522) (2,374,819)                   - (12,178,040)
Operating expenses (1,769,363) (471,865)           (96,635)      (147,606)        (243,732)        (456,471)   (524,674)    (263,283)      (622,950)   (309,741) (1,424,699)                   -    (6,331,019)
Depreciation           (420,347)    (68,536)       (26,177)       (35,796)         (43,488)         (85,753)   (100,658)     (52,297)      (147,234)      (59,846)    (287,688)                -    (1,327,820)
expenses
for property and
equipment
Business tax and       (644,176) (222,062)        (237,033)      (168,546)        (236,053)        (293,606)   (503,562)    (244,800)      (840,740)   (275,843) (1,232,467)                   -    (4,898,888)
                                                                                                                                                                                                                   [English translation for reference only]




surcharges
Impairment charges (1,045,110) (371,293)          (238,471)      (294,271)        (335,812)        (563,872)   (798,050)    (464,290) (1,288,351)      (421,839) (1,678,616)                   -    (7,499,975)
Share of profits of       93,000           -              -              -                -                -           -            -              -             -               -             -         93,000
associates
                                                                                                                                                                                                                                                                             NOTES TO THE FINANCIAL STATEMENTS




Share of profits of     (20,534)           -              -              -                -                -           -            -              -             -               -             -       (20,534)
joint ventures
                                                                                                                                                                                                                                                                             FOR THE YEAR ENDED 31 DECEMBER 2011




Profit before tax      2,716,809 1,615,602 1,489,907             1,806,483        1,556,119       2,573,831 3,579,466 2,137,206            5,577,246   1,954,427     10,832,191                -     35,839,287
                                                                                                                                                                                                                                                                             SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.


                                                                                                                                                                                                                   (All amounts expressed in thousands of RMB unless otherwise stated)




31 December                                           Sichuan                       Shandong     Guangdong        Jiangsu         Henan        Zhejiang       Liaoning       Other districts
2011                    Shanghai        Beijing       Province          Tianjin      Province      Province      Province       Province       Province       Province             of PRC                  Total
Loans and advances 161,330,675      65,234,643 52,716,899           46,288,179 61,360,320         80,029,502 143,190,658      67,036,498 206,531,772        76,102,296        342,502,508          1,302,323,950
to customers
Total Assets          597,827,086 136,225,662 84,876,353 130,867,953 88,376,536 205,466,885 212,877,512 129,515,154 258,443,618 129,250,157                                   710,966,773          2,684,693,689
Due to customers      361,223,612 118,536,628 76,102,207            65,093,236 74,646,601 119,278,660 185,958,164 108,694,047 231,338,290                   96,836,082        413,347,594          1,851,055,121
Total liabilities     486,582,147 134,385,942 83,269,803 128,842,605 86,742,471 202,605,335 208,998,682 127,246,532 252,662,004 127,144,579                                   696,670,809          2,535,150,909
Total Equity          111,244,939    1,839,720       1,606,550       2,025,348       1,634,065     2,861,550    3,878,830      2,268,622      5,781,614      2,105,578          14,295,964          149,542,780
                                                       Sichuan                 Shandong    Guangdong        Jiangsu        Henan       Zhejiang      Liaoning Other districts   Inter branch
2010                         Shanghai       Beijing    Province      Tianjin    Province     Province      Province      Province      Province      Province       of PRC             offset          Total
Interest income             89,935,198    7,636,469   4,111,347   5,509,548    4,583,314    9,558,422    17,989,051     6,307,106    22,595,745     6,855,149     31,734,864 (133,849,281)       72,966,932
Including:                  17,324,498    2,590,886   2,081,349   3,351,696    2,634,126    3,700,601     5,786,607     3,223,466     9,918,769     3,863,615     18,491,319                -    72,966,932
External
interest income
Internal interest income    72,610,700    5,045,583   2,029,998   2,157,852    1,949,188    5,857,821    12,202,444     3,083,640    12,676,976     2,991,534     13,243,545 (133,849,281)                 -
Interest expense           (81,487,767) (5,484,229) (2,488,434) (3,762,335) (2,972,706)    (6,747,675) (13,395,772)    (3,722,402) (15,659,499)    (4,564,364)   (21,327,520)   133,849,281     (27,763,422)
Including:                  (5,139,967) (2,055,604)   (614,063) (1,104,123) (1,071,828)    (2,685,030)   (2,041,645)   (1,096,808)   (4,121,352)   (1,654,161)    (6,178,841)               - (27,763,422)
External
interest expense
Internal interest          (76,347,800) (3,428,625) (1,874,371) (2,658,212) (1,900,878)    (4,062,645) (11,354,127)    (2,625,594) (11,538,147)    (2,910,203)   (15,148,679)   133,849,281                -
expense
Net interest income          8,447,431    2,152,240   1,622,913   1,747,213    1,610,608    2,810,747     4,593,279     2,584,704     6,936,246     2,290,785     10,407,344                -    45,203,510
Net fee and commission       1,281,613     140,916     166,396     141,521       158,644      319,351       227,945       196,340       515,340       162,536        737,944                -     4,048,546
income
Dividend income                 48,726            -           -            -           -             -             -             -             -             -              -               -        48,726
Net trading income             (93,406)           -           -            -           -             -             -             -             -             -              -               -       (93,406)
Net losses on disposal         (96,404)           -           -            -           -             -             -             -             -             -              -               -       (96,404)
of investment securities
Other operating income         136,897       57,340       7,489      40,089       46,573       42,021        98,205        14,550       192,409        63,149        218,320                -       917,042
                                                                                                                                                                                                               (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                                                                                                                                                                                              [English translation for reference only]
                                                                                                                                                                                                                                                                                   FOR THE YEAR ENDED 31 DECEMBER 2011
                                                                                                                                                                                                                                                                                                                          2011 Annual Report




                                                                                                                                                                                                                                                                                      NOTES TO THE FINANCIAL STATEMENTS
                                                                                                                                                                                                                                                                             SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                                                                                                                                                                                                                                                                                                          233
                                                                                                                                                                                                                                                                                                                                        234


                                                                                                                                                                                           Other     Inter
                                                              Sichuan                         Shandong Guangdong                Jiangsu           Henan      Zhejiang    Liaoning        districts branch
2010                           Shanghai         Beijing       Province         Tianjin         Province  Province              Province         Province     Province    Province        of PRC offset                   Total
Staff expenses               (3,574,812)      (401,333)      (222,345)       (292,101)        (301,052)         (614,819)      (729,400)       (388,079)   (1,187,675)   (445,299) (1,967,371)               - (10,124,286)
                                                                                                                                                                                                                                                                                                                                        2011 Annual Report




Operating expenses           (1,836,748)      (479,907)      (275,346)        (47,730)        (177,362)         (335,906)      (594,141)       (162,340)    (316,265)    (186,422) (1,105,318)               -     (5,517,485)
Depreciation expenses          (396,354)       (68,580)       (38,734)        (26,355)          (37,068)         (73,734)      (102,886)        (42,780)    (116,382)     (49,019)      (246,298)            -     (1,198,190)
for property and
equipment
Business tax and               (472,500)      (161,269)      (138,754)       (121,418)        (155,736)         (197,046)      (364,432)       (174,295)    (621,600)    (199,956)      (788,388)            -     (3,395,394)
surcharges
Impairment charges             (691,222)      (234,513)      (141,500)       (215,834)        (197,188)         (348,295)      (529,487)       (299,654)    (709,352)    (255,031)      (965,343)            -     (4,587,419)
                                                                                                                                                                                                                                 [English translation for reference only]




Share of profits of              93,529                 -               -                -               -                -               -            -             -           -               -           -         93,529
associates
Share of profits of             (17,863)                -               -                -               -                -               -            -             -           -               -           -        (17,863)
joint ventures
                                                                                                                                                                                                                                                                                           NOTES TO THE FINANCIAL STATEMENTS




Profit before tax              2,828,887     1,004,894         980,119      1,225,385           947,419        1,602,319       2,599,083       1,728,446    4,692,721    1,380,743      6,290,890            -     25,280,906
                                                                                                                                                                                                                                                                                           FOR THE YEAR ENDED 31 DECEMBER 2011




                                                             Sichuan                         Shandong        Guangdong          Jiangsu           Henan       Zhejiang       Liaoning      Other districts
                                                                                                                                                                                                                                                                                           SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.


                                                                                                                                                                                                                                 (All amounts expressed in thousands of RMB unless otherwise stated)




31 December 2010          Shanghai            Beijing        Province          Tianjin        Province         Province        Province         Province      Province       Province            of PRC                  Total
Loans and advances      146,254,823        57,753,818 45,133,135 40,217,441 51,479,813                       68,924,045 123,814,861           61,202,450   183,455,408     69,183,523       276,693,673          1,124,112,990
to customers
Total Assets            568,010,792   105,460,019 67,226,710 99,961,641 68,388,253 152,956,090 173,440,645 104,009,631                                     219,409,809    107,313,710       525,233,474          2,191,410,774
Due to customers        309,089,814   103,890,295 64,915,130 64,188,398 63,501,707 107,419,459 163,343,719                                    98,716,057   209,308,156     93,988,228       362,098,569          1,640,459,532
Total liabilities       468,839,430   104,232,012 65,982,578 98,654,845 67,450,678 151,055,467 170,387,541 102,252,054                                     214,645,780    105,832,586       518,797,953          2,068,130,924
Total Equity             99,171,362         1,228,007       1,244,132       1,306,796         937,575         1,900,623       3,053,104        1,757,577     4,764,029      1,481,124          6,435,521          123,279,850
                                                                                                      2011 Annual Report   235



                                       SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                               FOR THE YEAR ENDED 31 DECEMBER 2011
                                           (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                          [English translation for reference only]
7 CONTINGENCIES AND COMMITMENTS

7.1 Credit commitment
Item                                                               31 December 2011                 31 December 2010
Bank acceptance                                                          370,981,123                      311,660,235
Acceptance under letter of credit                                         25,615,734                        11,668,317
Guarantee issued                                                          47,854,363                       39,465,175
Letters of credit issued                                                 198,422,064                       46,317,238
Un-utilised credit card limit                                             42,752,585                       28,437,580
Total                                                                    685,625,869                      437,548,545


7.2 Commitment of certificate bond

The Group is entrusted by State Bureau of Finance to issue certificate bond. Bondholders are eligible to claim cash
in exchange for their bonds at any time before the maturity date and the Group is obliged to fulfil bondholder's claims.
As at 31 December 2011, the Group has total obligation of RMB 2,713,032 thousands to fulfil cash claims of the
certificate bonds. (31 December 2010: RMB 3,265, 495 thousands)

7.3 Operating leases commitment

According to the lease contract signed with the lessor, the minimum payable amount of operating leases commitment
by the Group is the following:

                                                                   31 December 2011                31 December 2010
Within 1 year                                                              1,151,157                           945,021
1 to 5 years                                                               3,248,764                         2,538,741
Over 5 years                                                               1,417,149                         1,023,118
Total                                                                      5,817,070                         4,506,880


7.4 Capital commitment

As at 31 December 2011, the major capital commitments of the Group which had been approved but not paid
amounted to RMB 414,912 thousand (31 December 2010: RMB 200,153 thousand).

7.5 Fulfil of earlier commitment

The Group has fulfilled the earlier commitments such as capital expenditure commitment and operating lease
commitment as at 31 December 2010.

7.6 Pending litigation

As at 31 December 2011, the number of litigations the Group was charged as defendant and hadn’t adjudicated yet
was 20, and the amount involved was about RMB 151 million. The possibility of expected compensation was low, so
the Group didn’t recognize any provision (December 31, 2010: no provision recognized).

7.7 Equity investment commitment

As at 31 December, 2011, the Group has signed contract with Silicon Valley Bank, about investing RMB 500 million
to Pudong Development Silicon Valley Bank Co., LTD, which was under construction. The Group accounts for 50%
of the registered capital of the company. (As at 31 December 2010: none).
236   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      8 CUSTODY BUSINESS

      The Group provide safe-keeping, trust and entrusted loan business. The assets arose from these kinds of custody
      business weren’t recorded in the financial statement. As at 31 December 2011, the balance of entrusted loan
      business was RMB 98.595 billion. (As at 31 December 2010: RMB 162.371 billion).

      9 RELATED PARTIES

      9.1 Related parties relationship

      If a party has the ability to control the other party or significant impact on the other party's financial and business
      decisions, or a party and other party under same control or common control, they shall be deemed as related parties.
      Individual or enterprise could all be related parties.

      9.2 Subsidiary companies

      For information of subsidiaries, please refer to Note 4 “Scope of consolidated financial statements”.

      9.3 Associates and joint ventures

      For information of associates and joint ventures, please refer to Note 5.20 “Investments in associates” and Note 5.21
      “Investments in joint ventures”.

      9.4 Others

      The other related parties of the Group include the key management personal (including directors, supervisors
      and senior management) and their close family members, companies controlled, common controlled or significant
      influenced by key management personal and their close family members, principle shareholder who holds above 5%
      shares of the Bank.

      As at 31 December, 2011, the principle shareholders who hold above 5% shares of the Bank include:
                                                                                Ownership                      Main Business
      China Mobile Group Guangdong Company Limited                                 20.00%             Mobil Communication
      Shanghai International Group Co., Ltd.                                     16.927%                     Financial Service
      Shanghai International Trust Investment Company                              5.232%                      Trust Business


      9.5 Transaction between related parties

      The major transactions between the Group and related parties are loans and deposits. They are performed under the
      similar commercial terms as third parties. The amount of transaction with related parties is immaterial.

      Loan to related parties
                                                                       31 December 2011                  31 December 2010
      Company significantly influenced by key management personal
      Bailian Group Co., Ltd.                                                      60,000                            130,000
      Shanghai Bailian Group Co., Ltd.                                                   -                           100,000
      Total                                                                        60,000                            230,000
                                                                                     2011                                2010
      Interest income                                                               7,307                              22,549
                                                                                                      2011 Annual Report   237



                                        SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                     NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                                FOR THE YEAR ENDED 31 DECEMBER 2011
                                             (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                            [English translation for reference only]
Due from related parties

                                                                   31 December 2011                31 December 2010
First Sino Bank                                                              129,702                            14,580
AXA SPDB Investment Managers Co., Ltd.                                        27,931                            40,862
Shanghai International Trust Investment Company                               19,252                            62,540
Total                                                                        176,885                           117,982
                                                                                2011                              2010
Interest expense                                                               2,992                             2,449


Deposit from related parties

                                                                   31 December 2011                31 December 2010
China mobile Ltd.                                                         17,319,224                        1,998,790
Including: China Mobile Group Guangdong Company Limited                    1,447,283                          761,738
                                                                                2011                              2010
Interest expense of deposit from related parties                             222,717                             8,801


Guarantee to related parties

                                                                   31 December 2011                 31 December 2010


Bailian Group Co., Ltd.                                                      408,850                           329,500
As at December 31, 2011, the Group provided 2 guarantees for Bailian Group, and these guarantees will be matured in
2012 and 2013 respectively.


Bank acceptance to related parties

                                                                   31 December 2011                 31 December 2010
China mobile Ltd.                                                                   -                           20,000


Lending to related parties

                                                                   31 December 2011                 31 December 2010
First Sino Bank                                                               94,514                                  -
                                                                                2011                              2010
Interest income                                                                  540                               159
238   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      Derivative transactions with related parties

                                                                             31 December 2011
                                                                                               Fair Value
                                                        Notional amount
                                                                                             Asset                 Liability
      First Sino Bank
      Currency Swap Contracts                                 1,446,700                          -                (11,909)
      Forward Exchange Contract                                332,761                       2,661                   (246)
                                                                                             2,661                (12,155)


                                                                             31 December 2010
                                                                                               Fair Value
                                                        Notional amount
                                                                                             Asset                 Liability
      First Sino Bank
      Currency Swap Contracts                                  147,569                        798                  (1,810)
      Forward Exchange Contract                                319,008                       1,035                 (2,001)
                                                                                             1,833                 (3,811)

      9.5 Transaction between related parties (Continued)

      Commission income from related parties

                                                                                     2011                            2010
      China mobile Ltd.                                                               298                              340
      AXA SPDB Investment Managers Co., Ltd.                                        2,870                            2,400
      First Sino Bank                                                                    -                             680
      Total                                                                         3,168                            3,420


      Operation expenses to related parties

                                                                                     2011                            2010
      China mobile Ltd.                                                            47,175                          28,236

      Compensation of key management personal

      According to the regulations of the relevant authorities, the 2011 annual compensation of Bank’s directors,
      supervisors and other senior management persons is pending for approval. The Bank will formally implement and
      disclose it once it’s approved. The accrued compensation of key management personal does not have significant
      impact on the financial statements of 2011. (The approved annual compensation of Bank’s directors, supervisors and
      other senior management in 2010 is RMB 36,382 thousands.)

      10 FINANCIAL RISK MANAGEMENT

      The Group exposes to a variety of financial risks. The Group analyses, evaluates, accepts and manages some
      degree of risks or risk portfolios. Managing risk is core to the financial institution, and the inherent risks are an
      inevitable consequence of business operation. The Group’s aim is therefore to achieve an appropriate balance
      between risk and return and minimise potential adverse effects on the Group’s financial performance.
                                                                                                               2011 Annual Report   239



                                         SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                                 FOR THE YEAR ENDED 31 DECEMBER 2011
                                               (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                              [English translation for reference only]
The Group designs risk management policies to identify and analyse these risks, set appropriate risk limits and
control procedures, and monitor the risks and limits through information systems.

The Group mainly exposes to financial risks such as credit risk, market risk and liquidity risk. Market risk includes
currency risk and interest rate risk.

The board of directors of the Bank decides the Group's risk preference, then senior management of the Bank design
risk management policy and procedures in the areas such as as credit risk, market risk and liquidity risk accordingly.
After the policies and procedures being approved by the board of directors, they will be followed by related
departments of the Bank.

10.1 Credit risk

Credit risk represents the potential loss that may arise from the failure of a debtor to meet its obligation or
commitment to the Bank. Credit risk is greater when counterparties are concentrated in one industry or geographic
region, because a group of otherwise unrelated counterparties could be adversely affected in their ability to repay
their obligations due to economic developments affecting their common industry or region.

The Group has established relevant mechanism, and set limit of individual borrower’s tolerable credit risk. The Group
regularly monitors and reviews above credit risk limit.

The Group conducts credit evaluation before granting facilities to individual customer, and regularly examines the
credit limit. The means of credit risk management include obtaining collateral and guarantee. For credit commitments,
the Group generally requires for guarantee deposits to mitigate credit risk.

10.1.1 Credit risk measurement
Loans and credit risk measurement

The Group uses a five-grade classification system to manage the quality of its loan portfolio. Such classification
system is based on “the Guidance on Credit Risk Classification” (the Guidance”) issued by CBRC. Under the Group’s
own system and CBRC guidance, the Group classifies its credit assets and off-balance sheet credit exposures into
five categories, which are namely pass, special mention, substandard, doubtful and loss. The last three categories
are also classified as “non-performing” assets.

The core definition of the credit asset classification is as follows:

Rating             Description of the rating
Pass               The borrower is able to fulfil the contractual obligations, and there is no uncertainty that principal and
                   interest can be paid on time.

Special Mention The borrower is able to make current due payments, but there exist some potential factors that may
                have negative impact on the borrower s future payments.
Substandard        The borrower's repayment ability has been impaired and its normal income cannot repay the loan
                   principles and interest in full. Losses may be incurred to the Bank, even with the execution of guarantee.
Doubtful           The borrower cannot repay the principal and the interest in full. Significant losses will be incurred even
                   with the execution of guarantees.
Loss               After taking into consideration all possible recovery actions and necessary legal proceedings, the
                   principal and interest are unable to be collected, or only a very small portion of principal and interest can
                   be collected.
240   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      Bonds and other bills

      The Bank manages the risk of bonds and other bills through controlling the scale, setting the access by issuer and
      rating and post management. For foreign currency securities, only those with rating (by Standard & Poor or equivalent
      agencies) equivalent to or higher than BBB can be invested. Investments in RMB debt securities are limited to those
      bonds with credit rating equivalent to or above AA- assigned by rating agencies recognised by PBOC.

      Due from and placements with banks and other financial institutions

      Head office reviews and monitors the credit risk of individual financial institutions on regularly basis. Limits are placed
      for each individual bank or non-banking financial institution which has business relationship with the Bank.

      10.1.2 Risk limit management and mitigation policies
      The Bank manages and controls concentrations of credit risk wherever they are identified in particular, to individual
      counterparty and group, and to industry and region.

      The Bank manages the credit risk by setting limit on one borrower, or groups of borrowers, and to geographical and
      industry segments. Such risks are monitored on a revolving basis and subject to an annual or more frequent review,
      when considered necessary.

      Exposure to credit risk is also managed through regular analysis of the ability of borrowers and potential borrowers to
      meet interest and capital repayment obligations and by changing these lending limits where appropriate.

      Some other specific control and mitigation measures are outlined below:

      Collateral

      The Bank employs a range of policies and practices to mitigate credit risk. The most traditional of these is taking
      of guarantee, including collateral, guarantee deposit and guarantor. The Bank implements guidelines on the
      acceptability of specific classes of collateral. The principal collateral for loans and advances are:

      •   Housing, land use right;
      •   Commercial assets, including premises, inventory and account receivables
      •   Financial instruments such as debt securities and stocks.

      Value of collateral is usually required to be assessed by professional valuer designated by the Group. When there is
      a sign indicating that the value of collateral impaired, the Group will review whether the collateral can cover the credit
      risk again. To mitigate the credit risk, the Group set limit on the loan-to-value ratio for difference types of collateral.
      The principal collateral types for corporate loans and retail loans are as follows:

      Collateral (Continued)

      Collateral                                                                     Maximum loan-to-value ratio
      Time deposit                                                                            95%-100%
      PRC treasury bonds                                                                      90%-100%
      PRC financial institution bonds                                                            90%
      Rights to collect fees                                                                     70%
      Rights to operate                                                                          60%
      Commercial building and factory                                                            60%
      House                                                                                      70%
      Land use rights                                                                            60%
                                                                                                       2011 Annual Report   241



                                         SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                                 FOR THE YEAR ENDED 31 DECEMBER 2011
                                             (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                            [English translation for reference only]
For loans guaranteed by third parties, the Group will evaluate the financial condition, credit history and ability to meet
obligations of the guarantor on regular basis.

Guarantee of financial assets other than loans and advances is determined by the nature of the instruments. Debt
securities, treasury and other eligible bills are generally unsecured, with the exception of asset-backed securities and
similar instruments, which are secured by portfolios of financial instruments.

Derivative instruments

The Group maintains strict credit limits on derivative transactions with counterparties. The Group mitigates credit risk
associated with derivative instruments by requiring margin deposits from counterparties.

Credit commitments

The primary purpose of these instruments is to ensure that funds are available to a customer as required.
Guarantees, acceptances and letters of credit, which represent irrevocable commitment that the Group will make
payments in event that a customer cannot meet its obligations to third parties, carry the same credit risk as loans.
In some cases, such as those situations where the amount of credit commitment exceeds the original credit limit,
margin deposits are required to mitigate the credit risks. The Group's potential amount of credit risk is equivalent to
the total amount of credit commitments.

10.1.3 Maximum exposure to credit risk without considering collateral or other credit enhancements
                                                                                    2011-12-31              2010-12-31
Credit risk exposures relating to balance sheet items:
Balance with central bank                                                          361,309,078             288,324,233
Due from and placements with banks and other financial institutions                379,291,780             100,793,178
Financial assets held for trading                                                     5,866,841                        -
Derivative financial assets                                                            548,787                1,033,349
Financial assets purchased under repurchase agreements                             281,509,782             391,932,144
Loans and advances to customers                                                  1,302,323,950            1,124,112,990
Available-for-sale financial assets                                                147,929,131             104,142,632
Investment securities – held-to-maturity                                           158,535,453             143,556,636
Investment securities – loans and receivables                                         8,759,536               3,707,122
Other financial assets                                                              13,529,835               12,948,126
Subtotal                                                                         2,659,604,173            2,170,550,410
Credit risk exposures relating to off-balance sheet items:
Letter of credit                                                                   198,422,064               46,317,238
Acceptance under letter of credit                                                   25,615,734               11,668,317
Guarantee issued                                                                    47,854,363               39,465,175
Acceptance                                                                         370,981,123              311,660,235
Un-utilised balances of credit card                                                 42,752,585               28,437,580
Subtotal                                                                           685,625,869             437,548,545
Total                                                                            3,345,230,042            2,608,098,955
242   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      Table above represents the credit risk exposure to the Group, without taking account of any collateral held or other
      credit enhancements attached. For on-balance-sheet assets, the exposures set out above are based on carrying
      amounts as reported in the balance sheet.

      10.1.4 Due from and placements with banks and other financial institutions and financial assets
      purchased under resale agreements
      Due from and placements with banks and other financial institutions and financial assets purchased under resale
      agreements are neither past due nor impaired. The credit risk can be evaluated referencing to counterpart’s nature.

      Due from and placements with banks and financial institutions                              2011-12-31                     2010-12-31
      Domestic commercial bank                                                                  361,910,656                     92,718,798
      Overseas commercial bank                                                                   16,447,124                       5,835,380
      Domestic other financial institutions                                                          934,000                      2,239,000
                                                                                                379,291,780                    100,793,178
      Sufficient acceptance bills and bonds have been pledged for financial assets purchased under resale agreements, thus they were not exposed
      to significant credit risk.


      10.1.5 Loans and advances
                                                                                               2011-12-31                       2010-12-31
      Neither past due nor impaired                                                        1,322,814,002                     1,139,007,668
      Past due but not impaired                                                                 2,794,924                         1,601,749
      Impaired                                                                                  5,827,118                         5,879,884
      Gross                                                                                1,331,436,044                     1,146,489,301
      Less: provision                                                                        (29,112,094)                      (22,376,311)
      Net                                                                                  1,302,323,950                     1,124,112,990


      Neither past due nor impaired

      The Group classifies credit assets according to related regulations, including those promulgated by CBRC. Please
      refer to Note 10.1.1 for more information. Loans and advances neither past due nor impaired are classified as
      following:

      Neither past due nor impaired (Continued)
                                                     Corporate loans                    Individual loans                               Total
      2011-12-31
      Pass                                            1,056,776,980                        258,260,891                       1,315,037,871
      Special mention                                      7,642,172                            133,959                           7,776,131
                                                      1,064,419,152                        258,394,850                       1,322,814,002
      2010-12-31
      Pass                                              918,482,787                        215,596,435                       1,134,079,222
      Special mention                                      4,853,677                             74,769                           4,928,446
                                                        923,336,464                        215,671,204                       1,139,007,668
                                                                                                                      2011 Annual Report     243



                                             SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                                     FOR THE YEAR ENDED 31 DECEMBER 2011
                                                  (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                                 [English translation for reference only]
Past due but not impaired
                                                                       31 December 2011
                             Past due up         Past due 30 -           Past due 60-90          Past due over
                              to 30 days              60 days                      days                90 days                     Total
Corporate loans                  375,564               118,622                   26,203                    223,468              743,857
Individual loans               1,565,577               296,208                  160,332                     28,950           2,051,067
                               1,941,141               414,830                  186,535                    252,418           2,794,924
                                                                       31 December 2010
                             Past due up         Past due 30 -           Past due 60-90          Past due over
                              to 30 days              60 days                      days                90 days                     Total
Corporate loans                   15,153                    219                  17,712                    135,379              168,463
Individual loans               1,055,681               239,765                  130,089                      7,751           1,433,286
                               1,070,834               239,984                  147,801                    143,130           1,601,749
The Group concludes these past due loans can be compensated through the operation of borrower, the payment of guarantor or disposal of
collateral, so they are not recognized as impaired.

Impaired

                                                                     31 December 2011                                31 December 2010
Corporate loans                                                                4,968,138                                      5,115,846
Individual loans                                                                 858,980                                        764,038
                                                                               5,827,118                                     5,879,884
Fair value of collateral was estimated by management based on the latest available external valuations and adjusted by taking into account
the current experience and market situation. Valuation of the collateral will be considered when assessing the impairment of loans and
advances.

Loans and advances renegotiated

Renegotiated loans represent the loans whose original contract repayment terms have been modified as a result of
the deterioration of borrowers’ financial conditions or inability to repay the loans according to contractual terms. At
31 December 2011, net value of the renegotiated loans held by the Group amounted to RMB 83,785 thousands (31
December 2010: RMB 103,920 thousands).

10.1.6 Investment securities
The tables below analyse the Group’s investment securities by external rating agencies, including S&P or equivalent
agencies recognised by the PBOC.

                                                            Available-         Investment securities-
Foreign alrrenay securities                  for-sale financial assets               held-to-maturity                              Total
31 December 2011
AAA                                                         1,214,332                         314,444                        1,528,776
Not rated                                                       15,308                                 -                         15,308
                                                            1,229,640                         314,444                        1,544,084
31 December 2010
AAA                                                            247,774                        328,512                           576,286
Not rated                                                       21,030                                 -                         21,030
                                                               268,804                        328,512                           597,316
244   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      10.1.6 Investment securities
                                                         Financial                                Investment
                                                            assets           Available-            securities-     Investment
                                                          held for             for-sale               held-to securities- loans
      RMB securities                                       trading     financial assets             -maturity and receivables                  Total
      31 December 2011
      Mid and long term:
      AAA                                                 483,520          36,944,513             14,050,788               329,862        51,808,683
      AA-to AA+                                             19,852           5,799,774             1,804,316                99,957         7,723,899
      A-to A                                                       -                   -                 1,620                       -         1,620
      Short-term:
      A-1                                               2,843,964            4,841,770             2,401,097                         -    10,086,831
      Not rated:
      Treasury bonds                                      371,410          12,795,495             70,531,903             1,685,111        85,383,919
      PBOC bills                                          348,121          43,148,040                  88,535              965,242        44,549,938
      Bonds issued by policy banks                      1,799,974          34,217,723             42,848,894                         -    78,866,591
      Bonds issued by financial institutions                       -                   -                        -       4,675,956          4,675,956
      Local government bonds                                       -         8,952,176            26,493,856                         -    35,446,032
      Entrusted product (Note1)                                    -                   -                        -       1,003,408          1,003,408
                                                        5,866,841         146,699,491           158,221,009             8,759,536 319,546,877
      Note 1: It represents beneficial right of the entrusted product, which invests in entrusted loans, acquired by the Group.

      10.1.6 Investment securities (Continued)
                                                         Financial                              Investment           Investment
                                                            assets        Available-             securities-          securities-
                                                          held for for-sale financial               held-to           loans and
      RMB securities                                       trading            assets              -maturity         receivables                Total
      31 December 2010
      Mid and long term:
      AAA                                                         -        29,120,242           12,035,686                       -        41,155,928
      AA-to AA+                                                   -         2,742,545            3,489,528                       -         6,232,073
      A-to A                                                      -                    -             89,752                      -           89,752
      Short-term:
      A-1                                                         -         3,441,896                       -                    -         3,441,896
      Not rated:
      Treasury bonds                                              -        14,932,112           45,473,000           2,046,644            62,451,756
      PBOC bills central bank                                     -        18,234,584           25,127,708                       -        43,362,292
      Bonds issued by policy banks                                -        28,022,660           41,842,408                       -        69,865,068
      Bonds issued by financial institutions                      -                    -                    -        1,660,478             1,660,478
      Local government bonds                                      -         7,379,789           15,170,042                       -        22,549,831
                                                                  -      103,873,828          143,228,124            3,707,122           250,809,074
                                                                                                      2011 Annual Report   245



                                       SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                               FOR THE YEAR ENDED 31 DECEMBER 2011
                                          (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                         [English translation for reference only]
10.2 Market risk

Market risk is the risk of loss arising from movements in observable market variables such as interest rates,
exchange rates and equity markets. The Group exposes to market risk in both trading account and bank account
items, includes interest rate risk and currency risk.

Market risk management department formulates universal policies and procedures under a consolidated framework
and supervises the implementation of such policies and procedures. Treasury department is in charge of Head
Office’s investment portfolios management, trading of treasury business and executing the relevant policies of
market risk. Audit department audits independently on whether market risk management system works reliably and
effectively regularly.

The Group measured market risk with consideration of the established benchmarks and management ability, main
methods include stress tests, analysis on valuation at risk, gap analysis and sensitivity analysis. The market risk of
new products and businesses should be recognised before its commencement in compliance with relevant policies.

10.2.1 Currency risk
The Group was established and operates in PRC, and conducts the majority of its businesses in RMB, with foreign
transactions mainly in US dollar.

The table below summarizes the Group’s exposure to foreign exchange rate risk, assets and liabilities categorized by
original currency having been measured in RMB.

                                                                 31 December 2011
                                          RMB               USD               HKD           Others                Total
                                                        Into RMB          Into RMB        Into RMB           Into RMB
Cash and balances                  364,398,438         2,175,502           203,862         179,297        366,957,099
  with central bank
Due from and placements            350,744,813        23,413,220         1,567,605       3,566,142        379,291,780
  with banks and financial
  institutions
Financial assets held for            5,866,841                  -                 -               -          5,866,841
  trading
Derivative financial assets            435,477            25,658            10,282          77,370             548,787
Financial assets purchased         281,509,782                  -                 -               -       281,509,782
  under resale agreements
Loans and advances to            1,252,043,480        47,262,266         2,200,612         817,592      1,302,323,950
  customers
Available-for-sale financial       147,827,111           298,789           930,851                -       149,056,751
 assets
Investment securities-             158,221,009           314,444                  -               -       158,535,453
  held-to-maturities
Investment securities-               8,759,536                  -                 -               -          8,759,536
  loans and receivables
Other financial assets              13,033,785           466,992              7,364         21,694         13,529,835
                                 2,582,840,272        73,956,871         4,920,576       4,662,095      2,666,379,814
Due to central banks                    50,000                  -                 -               -             50,000
246   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
                                                                               31 December 2011
                                                        RMB                USD              HKD             Others                Total
                                                                       Into RMB         Into RMB          Into RMB            Into RMB
      Due to and placements                    494,846,617             9,800,017       2,467,069           764,591         507,878,294
        from banks and financial
        institutions
      Derivative financial liabilities                23,332           1,459,336                -           32,361            1,515,029
      Financial assets sold                        86,019,569                  -                -                 -          86,019,569
        under repurchase
        agreements
      Due to customers                      1,792,462,741             49,564,078       3,324,097         5,704,205        1,851,055,121
      Debts issued                                 32,600,000                  -                -                 -          32,600,000
      Other financial liabilities                  41,167,172           129,522            9,297            14,167           41,320,158
                                            2,447,169,431             60,952,953       5,800,463         6,515,324        2,520,438,171
                                               135,670,841            13,003,918        (879,887)       (1,853,229)        145,941,643




                                                                                   31 December 2010
                                                                RMB            USD            HKD             Others              Total
                                                                          Into RMB       Into RMB          Into RMB           Into RMB
      Cash                                               4,579,933          118,098         52,702           173,794         4,924,527
      Balances with central bank, due from             753,491,564       21,642,792      3,024,383         2,890,816       781,049,555
        and placements with banks and other
        financial institutions, financial assets
        purchased under resale agreements
      Derivative financial                                526,136           368,489                 -        138,724         1,033,349
        assets
      Loans and advances to                          1,086,069,803       36,266,462       979,407            797,318      1,124,112,990
        customers
      Available-for-sale financial assets              104,641,448          268,804                 -                 -    104,910,252
      Investment securities-                           143,228,124          328,512                 -                 -    143,556,636
        held-to-maturities
      Investment securities-                             3,707,122                 -                -                 -      3,707,122
        loans and receivables
      Other financial assets                             6,455,411                 -                -                 -       6,455,411
                                                     2,102,699,541       58,993,157      4,056,492         4,000,652      2,169,749,842
      Due to central bank                                   50,000                 -                -                 -         50,000
      Due to and placements from banks                 341,238,598        9,032,010      1,256,997           706,359       352,233,964
        and other financial institutions
      Derivative financial liabilities                     487,911          447,968                 -        236,204         1,172,083
                                                                                                                2011 Annual Report   247



                                       SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                    NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                               FOR THE YEAR ENDED 31 DECEMBER 2011
                                           (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                          [English translation for reference only]
                                                                       31 December 2010
                                                RMB                USD                HKD            Others                 Total
                                                                Into RMB         Into RMB         Into RMB             Into RMB
Financial assets sold                     16,963,471                   -                 -                  -        16,963,471
  under repurchase
  agreements
Due to customers                       1,590,803,410       39,347,013           5,298,336         5,010,773       1,640,459,532
Debts issued                              16,800,000                   -                 -                  -        16,800,000
Other financial liabilities               12,304,636                   -                 -                  -        12,304,636
                                       1,978,648,026       48,826,991           6,555,333         5,953,336       2,039,983,686
                                         124,051,515       10,166,166          (2,498,841)      (1,952,684)         129,766,156



The Group measured the possible effect on net profit which caused by foreign exchange rate fluctuation through the
sensitivity analysis. The table below shows the result of sensitivity analysis on the balance sheet date.

Net Profit                                              2011-12-31                                  2010-12-31
Increase/(decrease)                           Exchange rate fluctuation %                    Exchange rate fluctuation %
                                                         -1%                   1%                     -1%                    1%
USD against RMB                                   (102,003)                102,003              (172,572)               172,572
Other currencies against RMB                           22,081              (22,081)                   925                  (925)


The sensitivity analysis was based on all assets and liabilities, characteristics of static currency risk structure. The
hypothesis is shown as below: (1) exchange rate sensitivity represents the exchange gain or loss caused by the 1%
fluctuation in absolute value of relevant currency exchange rates (middle) on the balance sheet date; (2) different
currency rates’ fluctuation was simultaneous and in the same direction; (3) foreign currency position contains spot
exchange position and forward exchange position.

Based on the above-mentioned hypothesis, the actual exchange gain or loss may differ from the sensitivity analysis
result.

10.2.2 Interest rate risk
Interest rate risk refers to adverse movements in interest rates, resulting in potential losses to the Group, including
interest rate risk of bank book and trading book.

Since interest rates for most assets and liabilities are controlled by PBOC benchmark interest rate, the Group's
interest rate risk mainly results from re-pricing risk of bank book. The Group has established a relatively perfect
system of internal transfer pricing, through which, the Group's interest rate risk of bank book is managed in a
centralised way. The Group measured and monitored interest rate risk with the main methods such as value-at-risk
analysis and sensitivity analysis.

The table below summarises the Group’s exposures to interest rate risks. The table presents the Group’s assets and
liabilities at carrying amounts, categorized by the earlier of contractual re-pricing or maturity dates.
248   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
                                                                                             2011-12-31
                                                                                                                                non-
                                                                           3 months-1                                       interest-
                                            <1 month     1-3 months             years          1-5 years       >5 years      bearing                 Total


      Cash and balances with              361,309,078                  -                 -                -            -    5,648,021         366,957,099
        central bank
      Due from and placements             234,841,518     90,136,975         53,564,691          700,000               -       48,596         379,291,780
        with banks and other
        financial institutions
      Financial assets held for               189,919      1,404,058          2,914,895          842,732        515,237              -          5,866,841
        trading
      Derivative financial                           -                 -                 -                -            -     548,787              548,787
        assets
      Financial assets under                55,497,238   150,256,828         75,755,716                   -            -             -        281,509,782
        resale agreements
      Loans and advances to               383,301,288    261,235,277        607,504,190       28,422,092      21,861,103             -       1,302,323,950
        customers
      Available-for-sale financial           4,556,851    14,294,591         37,699,551       71,019,599      20,358,539    1,127,620         149,056,751
        assets
      Investment securities-                 2,207,857    11,700,705         32,483,501       79,227,255      32,916,135             -        158,535,453
        held-to-maturities
      Investment securities-                       953       483,238          2,694,020         1,295,288      4,286,037             -          8,759,536
        loans and receivables
      Other financial assets                         -                 -                 -                -            -   13,529,835          13,529,835
                                         1,041,904,702   529,511,672        812,616,564 181,506,966           79,937,051   20,902,859        2,666,379,814



                                                                                             2011-12-31
                                                                            3 months-1                                     non-interest-
                                             <1 month     1-3 months             years          1-5 years       >5 years        bearing              Total


      Due to central bank                            -             -           50,000                     -            -                 -          50,000
      Due to and placements from          219,421,070    132,121,990       156,332,148                    -            -          3,086        507,878,294
        banks and other financial
        institutions
      Derivative financial liabilities               -             -                 -                    -            -     1,515,029           1,515,029
      Financial assets sold under          65,336,720      6,273,035        14,409,814                    -            -                 -      86,019,569
      repurchase agreements
      Due to customers                   1,012,856,951   244,297,572       431,363,209       157,950,632       2,000,000     2,586,757 1,851,055,121
      Debts issued                                   -             -         6,000,000         8,200,000      18,400,000                 -      32,600,000
      Other financial liabilities           8,900,790      4,994,750         1,818,000                    -            -    25,606,618          41,320,158
                                         1,306,515,531   387,687,347       609,973,171       166,150,632      20,400,000    29,711,490 2,520,438,171
                                         (264,610,829)   141,824,325       202,643,393        15,356,334      59,537,051    (8,808,631)        145,941,643
                                                                                                                    2011 Annual Report   249



                                              SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                                      FOR THE YEAR ENDED 31 DECEMBER 2011
                                                   (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                                  [English translation for reference only]
                                                                              2010-12-31
                                                                3 months-1                               non-interest-
                                       <1 month    1-3 months        years      1-5 years     >5 years        bearing            Total


Cash and balances with central 288,324,233                  -             -             -            -     4,924,527      293,248,760
  bank
Due from and placements              84,784,785    14,455,633    1,543,760              -            -          9,000     100,793,178
 with banks and other financial
  institutions
Derivative financial assets                    -            -             -             -            -     1,033,349        1,033,349
Financial assets purchased          158,405,476    76,125,396 157,401,272               -            -               -    391,932,144
  under resale agreements
Loans and advances to               293,932,437 309,904,498 480,177,847       26,906,039    13,192,169               -   1,124,112,990
  customers
Available-for-sale financial          3,127,806     8,083,215   13,613,565    59,340,586    19,977,460       767,620
  assets                                                                                                                  104,910,252
Investment securities-                4,818,255    18,436,364   41,114,655    58,607,250    20,580,112               -    143,556,636
  held-to-maturities
Investment securities-                      459       113,007      476,340     1,456,838     1,660,478               -      3,707,122
  loans and receivables
Other financial assets                         -      500,000    1,600,000              -            -     4,355,411         6,455,411
                                    833,393,451 427,618,113 695,927,439 146,310,713         55,410,219    11,089,907 2,169,749,842



                                                                              2010-12-31
                                                                 3 months-1                              non-interest-
                                       <1 month    1-3 months         years     1-5 years     >5 years        bearing            Total


Due to central bank                            -            -       50,000              -            -               -         50,000
Due to and placements from          117,701,913    92,557,001   120,094,517   21,880,000             -            533     352,233,964
  banks and other financial
  institutions
Derivative financial liabilities               -            -             -             -            -     1,172,083         1,172,083
Financial assets sold under           4,911,600     5,565,585     6,486,286             -            -               -      16,963,471
  repurchase agreements
Due to customers                    945,828,618 230,835,240     276,877,179 181,662,789      1,477,661     3,778,045     1,640,459,532
Debts issued                                   -            -     7,600,000    9,200,000             -               -      16,800,000
Other financial liabilities                    -            -             -             -            -    12,304,636        12,304,636
                                   1,068,442,131 328,957,826    411,107,982 212,742,789      1,477,661    17,255,297     2,039,983,686
                                   (235,048,680)   98,660,287   284,819,457 (66,432,076)    53,932,558    (6,165,390)     129,766,156
250   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      The Group measured the possible effect on net profit and equity which caused by interest rate fluctuation through the
      sensitivity analysis. The table below shows the results of the sensitivity analysis on the balance sheet date.

                                                                     Interest rate fluctuation (Basis points)
                                                            2011-12-31                                    2010-12-31
                                                              -100               +100                      -100              +100
      Net profit increases/(decreases)               (2,359,825)           2,359,825               (2,000,703)          2,000,703
      Revaluation reserve in equity                    2,384,413         (2,315,606)                 2,413,926         (2,279,952)
        increases/(decreases)


      The sensitivity analysis was performed on the basis of static characteristics of the interest risk of the assets and
      liabilities. In the relevant analysis, the fluctuation was only measured during one year, which reflected the effect on
      the annualized interest income given re-pricing the assets and liabilities.

      The hypothesis was shown as below:

      Except for current deposit, all assets and liabilities re-priced or matured at the middle of the period for maturity within
      3 months and 3-12 months;

      The interest rates of current deposit and statutory deposit reserve in central bank remain the same;

      The yield curve moved in parallel with interest rate;

      There were no other changes for the portfolio of assets and liabilities.

      Due to the hypothesis mentioned above, the actual interest income may be different from the sensitivity analysis
      results.

      Based on the assumption of the parallel movement of the yield curve with interest rate change, the sensitivity
      analysis of the equity is derived by revaluating the ending balance of the available-for-sale financial assets as a result
      of certain percentage of interest rate changes.

      10.3 Liquidity risk

      Liquidity risk is the risk that the Group will not meet liabilities as they fall due, and it results from amount and maturity
      mismatches of assets and liabilities. The liquidity risk management system of the Group includes planning before-
      event, managing during-event, and adjusting after-event and emergency plan. In accordance with the Group’s
      situation, according to the regulatory index systems, the series of the daily liquidity system was designed to monitor
      the implement of the relevant ratio limits, manage the index system’s grading, and adjust the different levels in
      different ways.

      The table below presents the cash flows payable by the Group under non-derivative financial assets and liabilities by
      remaining contractual maturities at the balance sheet date. The amounts disclosed in the table are the contractual
      undiscounted cash flows.
                                                                                                                               2011 Annual Report       251



                                            SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                                    FOR THE YEAR ENDED 31 DECEMBER 2011
                                                 (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                                [English translation for reference only]
Non-derivative financial assets and liabilities cash flow
                                                                                      2011-12-31
                                                                                      Due within
                                               Repayable           Due within          3 and 12 Due between             Due after
                                    Overdue    on demand            3 months            months 1 and 5 years             5 years                Total


Cash and balances with                     - 366,957,099                         -             -               -                 -       366,957,099
  central bank
Due from and placements                    -   16,370,589         311,693,687        54,319,910        729,726                   -       383,113,912
  with banks and other
  financial institutions
Financial assets held for                  -                 -        502,491         3,092,403       2,281,652          842,127           6,718,673
  trading
Financial assets under                     -                 -   207,725,324         77,800,792                -                 -       285,526,116
  resale agreements
Loans and advances to              6,216,914   10,993,447        201,861,477 649,540,653            342,700,599 424,046,233 1,635,359,323
  customers
Available-for-sale financial               -                 -      7,521,641        37,609,506      91,760,628        33,070,220        169,961,995
  assets
Investment securities-                     -                 -      5,269,085        33,778,986     101,764,371        41,366,819        182,179,261
  held-to-maturities
Investment securities-                     -                 -        296,089         3,210,377       2,477,591         5,483,378         11,467,435
  loans and receivables
Other financial assets                     -     2,458,761                       -             -               -                 -         2,458,761
                                   6,216,914 396,779,896         734,869,794 859,352,627            541,714,567 504,808,777 3,043,742,575



                                                                                       2011-12-31
                                                                                      Due within
                                                Repayable           Due within         3 and 12       Due between          Due after
                                    Overdue     on demand            3 months           months        1 and 5 years         5 years             Total


Due to central bank                        -             -                   -           50,000                    -                 -        50,000
Due to and placements from banks           -    42,958,099        314,191,203        161,444,009                   -                 -    518,593,311
and other financial institutions
Financial assets sold under                -             -         71,873,106         14,605,162                   -                 -     86,478,268
repurchase agreements
Due to customers                           -   742,793,153        530,036,824        444,406,546       181,040,895        2,088,128 1,900,365,546
Debts issued                               -             -                   -         7,780,500        13,050,300       24,058,000        44,888,800
Other financial liabilities                -     5,328,030         13,895,540          1,818,000                   -                 -     21,041,570
                                           -   791,079,282        929,996,673        630,104,217       194,091,195       26,146,128 2,571,417,495
                                   6,216,914 (394,299,386)       (195,126,879)       229,248,410       347,623,372      478,662,649       472,325,080
252   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
                                                                                        2010-12-31
                                                                                        Due within
                                                     Repayable        Due within         3 and 12 Due between           Due after
                                      Overdue        on demand         3 months           months 1 and 5 years           5 years           Total


      Cash and balances with                 -   293,248,760                   -                 -                 -            -    293,248,760
        central bank
      Due from and placements           9,000        6,929,698        89,569,459         4,285,021                 -            -    100,793,178
        with banks and other
        financial institutions
      Financial assets                       -                - 234,530,872            157,401,272                 -            -    391,932,144
        purchased under resale
        agreements
      Loans and advances to          1,203,632                - 147,816,258            428,019,495       272,770,618 274,302,987 1,124,112,990
        customers
      Available-for-sale financial           -                -        3,357,393         8,447,466        65,286,438   27,818,955    104,910,252
        assets
      Investment securities-                 -                -       15,927,052        36,296,912        67,578,154   23,754,518    143,556,636
        held-to-maturities
      Investment securities-                 -                -         113,466           476,340          1,456,838    1,660,478      3,707,122
        loans and receivables
      Other financial assets                 -        4,355,411         500,000          1,600,000                 -            -      6,455,411
                                     1,212,632   304,533,869 491,814,500               636,526,506       407,092,048 327,536,938 2,168,716,493



                                                                                         2010-12-31
                                                                                          Due within Due between
                                                        Repayable         Due within       3 and 12       1 and 5        Due after
                                         Overdue        on demand          3 months         months          years         5 years          Total


      Due to central bank                        -                -                -         50,000                -             -        50,000
      Due to and placements from                 -      73,547,936      141,185,248 110,734,951           23,866,767    2,899,062    352,233,964
        banks and other financial
        institutions
      Financial assets sold under                -                -      10,477,185       6,486,286                -             -    16,963,471
        repurchase agreements
      Due to customers                           -    743,784,141       193,153,454 506,518,522 187,341,999             9,661,416 1,640,459,532
      Debts issued                               -                -                -      2,600,000       14,200,000             -    16,800,000
      Other financial liabilities                -      12,304,636                 -                 -             -             -    12,304,636
                                                 -    829,636,713       344,815,887 626,389,759 225,408,766            12,560,478 2,038,811,603
                                       1,212,632 (525,102,844)          146,998,613      10,136,747 181,683,282 314,976,460          129,904,890
                                                                                                       2011 Annual Report     253



                                          SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                       NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                                  FOR THE YEAR ENDED 31 DECEMBER 2011
                                                (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                               [English translation for reference only]
Derivatives cash flow

Derivatives settled on a net basis

The Group’s derivatives that will be settled on a net basis include interest rate swaps and precious metal derivatives.

The table below analyses the Group derivative financial instruments that will be settled on a net basis into relevant
maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash flows.

                                     Within 1                                                   Above 5
                                      month        1-3 months     3-12 months      1-5 years      years               Total
2011-12-31
Interest rate swaps              (159,849)                957       (148,118)    (1,236,746)      10,883        (1,532,873)
Precious metals derivatives          (12,657)               -               -              -              -        (12,657)
Total                            (172,506)                957       (148,118)    (1,236,746)      10,883        (1,545,530)
2010-12-31
Interest rate swaps                    (409)                -               -     (130,560)     (48,851)         (179,820)
Precious metal derivatives             5,598                -               -              -              -          5,598
Total                                  5,189                -               -     (130,560)     (48,851)         (174,222)


Derivatives cash flow

Derivatives settled on a gross basis

The Group’s derivatives that will be settled on a gross basis are foreign exchange derivatives include currency
forward and currency swaps.

The table below analyses the Group’s derivative financial instruments that will be settled on a gross basis into
relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows.

                                       Within 1                                                Above 5
                                        month        1-3months    3-12 months      1-5 years     years                Total
2011-12-31
Foreign exchange derivatives
-Outflow                        (45,450,075)       (22,374,629)   (32,698,422)   (1,417,807)          -       (101,940,933)
-Inflow                          45,455,964         22,439,566      32,693,856    1,416,551           -        102,005,937
2010-12-31
Foreign exchange derivatives
-Outflow                        (18,123,939)       (11,117,011)   (29,917,589)     (314,179)          -        (59,472,718)
-Inflow                          18,108,758         11,107,463      29,965,482      314,555           -         59,496,258
254   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      Off-balance sheet items

                                                 No later than 1 year           1-5 years      Over 5 years                Total
      2011-12-31
      Acceptance                                        370,981,123                     -                  -        370,981,123
      Acceptance under letter of credit                  25,615,734                     -                  -         25,615,734
      Guarantee issued                                   26,774,625           20,761,714            318,024          47,854,363
      Letter of credit                                  196,828,146            1,593,918                   -        198,422,064
      Un-utilised balances of credit cards               42,752,585                     -                  -         42,752,585
      Total                                             662,952,213           22,355,632            318,024         685,625,869


      10.4 Fair Value of financial instruments

      10.4.1 Financial instruments not measured at fair value
      The financial assets and financial liabilities not measured at fair value in the financial statement include: balances
      with central banks, due from and placements with banks and other financial institutions, financial assets purchased
      under resale agreements, loans and advances to customers, investment securities- held-to-maturity, investment
      securities-loans and receivables, due to and placements from banks and other financial institutions, financial assets
      sold under repurchase agreements, due to customers, interest payable and debts issued.

      The table below summarizes the carrying amount and fair value of investment securities classified as held-to-maturity
      and loans and receivable, debts issued of the Group as at balance sheet date.

                                                                2011-12-31                            2010-12-31
                                                      Carrying amount          Fair value    Carrying amount          Fair value
      Financial assets:
      Investment securities - held-to-maturity             158,535,453       159,088,021         143,556,636       138,602,082
      Investment securities - loans and                      8,759,536         8,872,568           3,707,122          3,717,046
      receivables
      Financial liabilities:
      Debts issued                                          32,600,000        32,630,030          16,800,000        16,342,990


      Investment securities classified as held-to-maturity and loans and receivables

      Fair value of investment securities-held-to-maturity is based on quoted market price. If market information is not
      available, the fair values of investments securities classified as held-to-maturity and loans and receivables are
      calculated using discounted cash flow model, and if it is applicable, fair value can be estimated based on the financial
      instruments’ price of similar credit risk, maturity and yield rate.

      Debts issued

      Fair value of debts is based on market price. If market information is not available, the fair value of debts is calculated
      using a discounted cash flow model which is based on a current yield curve appropriate for the remaining term to
      maturity.

      Other than the financial instruments above, the fair value of financial assets and financial liabilities is calculated with
      discounted cash flow model, and the carrying amount is not significantly different with the fair value.
                                                                                                           2011 Annual Report   255



                                               SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
                                            NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                                       FOR THE YEAR ENDED 31 DECEMBER 2011
                                                    (All amounts expressed in thousands of RMB unless otherwise stated)
                                                                                   [English translation for reference only]
10.4.2 Fair value hierarchy
The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputs
used in making the measurements:

• Level 1 – Quoted prices in active markets for identical assets or liabilities. This level includes listed equity securities
and debts instruments.

• Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices). This level includes the majority of the OTC
derivative contracts and RMB debt instruments traded in interbank market. The sources of input parameters like
LIBOR yield curve or counterparty credit risk are Bloomberg and China Bond.

• Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable inputs). This
level includes equity investments and debt instruments with significant unobservable inputs.

                                                       Level 1                  Level 2        Level 3                 Total
2011-12-31
Financial assets held for trading                              -              5,866,841              -            5,866,841
Available-for-sale financial assets                            -            147,929,131              -         147,929,131
Derivative financial Assets                                    -               548,787               -             548,787
                                                               -            154,344,759              -         154,344,759
Derivative financial Liabilities                               -              1,515,029              -            1,515,029
                                                               -              1,515,029              -            1,515,029
2010-12-31
Available-for-sale financial assets                            -            104,142,632              -         104,142,632
Derivative financial assets                                    -              1,033,349              -            1,033,349
                                                               -            105,175,981              -         105,175,981
Derivative financial liabilities                               -              1,172,083              -            1,172,083
                                                               -              1,172,083              -            1,172,083
No financial instruments are classified as level 1 or level 3 in the Group.

10.5 Capital management

The Bank takes sufficient measures of capital management, fully in accordance with the requirements of the
authorities, to cover the inherent risks in its business. The primary objectives of the Bank’s capital management are
to ensure that the Bank not only complies with imposed regulatory capital requirements, but also maintains healthy
ratios to maximize shareholders’ value. Given the change of the economic environment and risk characteristics, the
Bank will actively adjust the capital structure. Generally, the measures of adjusting the capital structure contain the
change of the allocation of dividend, capital issue and issuance of subordinate bonds. There is no material change
from the previous year with respect to the objectives and measures of the Bank’s capital management.

The Bank calculated the capital adequacy ratio and core capital adequacy ratio in accordance with the “Capital
Adequacy Ratio of Commercial Banks Management Policy” and the calculation methods agreed by the regulatory
authorities.
256   2011 Annual Report




      SHANGHAI PUDONG DEVELOPMENT BANK CO., LTD.
      NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
      FOR THE YEAR ENDED 31 DECEMBER 2011
      (All amounts expressed in thousands of RMB unless otherwise stated)
      [English translation for reference only]
      The core capital included the capital, capital reserve, surplus reserve and retained earnings. The affiliated capital
      included general reserve and long-term subordinated debts. Pursuant to relevant regulations, the deducted items
      mainly include the capital investment in unconsolidated financial institution.

                                                                             2011-12-31                       2010-12-31
      Total capital base before deductions                                  202,157,870                      155,551,760
      Including: Core capital                                               146,005,110                      120,676,000
      Supplementary capital                                                  56,152,760                       34,875,760
      Deductions: Unconsolidated investments and others                      (2,393,590)                      (1,705,420)
      Total capital – net                                                   199,764,280                      153,846,340
      Core capital – net                                                    144,808,315                      119,823,290
      On balance sheet risk-weighted assets                               1,328,919,126                    1,127,395,810
      Off balance sheet risk-weighted assets                                231,260,892                      150,964,930
      Market risk capital adjustment                                         13,127,875                        1,027,500
                                                                          1,573,307,893                    1,279,388,240
      Capital adequacy ratio                                                     12.70%                           12.02%
      Core capital adequacy ratio                                                 9.20%                            9.37%


      11 ASSETS PLEDGED

      These assets of the Group are pledged as collateral under repurchase agreements and treasury deposits.

                                                                             2011-12-31                       2010-12-31
      Discount bills and rediscount bills                                    10,076,043                        2,136,846
      Available-for-sale financial assets                                    45,845,734                       12,788,425
      Investment securities-held-to-maturities                               69,572,056                       15,518,220
      Total                                                                 125,493,833                       30,443,491


      12 EVENTS AFTER THE BALANCE SHEET DATE

      Approved by CBRC and PBOC, the Bank issued RMB 30 billion bonds in the interbank bonds market during 24
      February 2012 to 28 February 2012. The bonds have a tenor of five years and the coupon rate is 4.2%. It will be
      used to increase source of fund, optimize maturity structure of liabilities, and support loans to medium-sized and
      small enterprises.

				
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