Competitive Strengths

　　2023 was the first year of fully implementing the guiding principles from the 20th National Congress of the Communist Party of China (CPC). Under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, China’s economic recovery and growth were boosted, and high?quality development was solidly promoted. The Agricultural Bank of China, guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, comprehensively implemented the guiding principles from the 20th CPC National Congress and the Central Financial Work Conference, conscientiously implemented the decisions and plans of the CPC Central Committee and the State Council, steadily advanced our work in all areas, and maintained a steady and positive operating performance. 

　　The Group’s strength was further increased. As at the end of 2023, the Group’s total assets were RMB39.9 trillion, the capital adequacy ratio remained generally stable, and the aggregate market value increased by 22%. Our asset quality was consolidated and improved. The non-performing loan ratio was 1.33%, representing a decrease of 0.04 percentage point as compared to the end of the previous year. The leading indicators such as the formation ratio of the non-performing loans and the overdue loan ratio were controlled at a low level. The allowance to non-performing loans maintained a high level at 303.87%. Our operating efficiency was enhanced steadily. We recorded an operating income of RMB695.5 billion and remained positive growth in 2023; net profit amounted to RMB269.8 billion, representing an increase of 4.2% as compared to the previous year. We were awarded the Best Commercial Bank of the Year by Financial News, a media overseen by the People’s Bank of China. 

　　Over the past year, we firmly adhered to our positioning and shouldered the responsibilities as a large state-owned bank for providing high-quality financial services to support high-quality development of the economy, enhancing the strength and quality of ourselves to contribute to the building of a strong financial sector, and remaining committed to the path of financial development with Chinese characteristics. 

　　Focusing on our primary responsibilities and core businesses, we enhanced our financial capabilities to serve Sannong and County Areas. The acceleration of building a strong agricultural sector and implementing the rural revitalization strategy injected strong momentum into development of China’s agriculture industry and rural areas in 2023. We optimized the system and mechanism of our County Area Banking Division, launched a series of differentiated supporting policies, and continuously enhanced our financial service capabilities. Our financial supply to rural areas and County Areas was significantly increased. The balance of loans and advances to customers in County Areas was RMB8.78 trillion, representing an increase of RMB1.45 trillion as compared to the end of the previous year, accounting for more than 50% of the increments of loans to customers. Our loans in key areas such as sufficient supply of food and major agricultural products, rural industries, and rural construction continued to grow rapidly, and the growth rate of loans to 832 counties lifted out of poverty continued to be higher than the growth rate of loans to customers of the Bank. The product innovation was accelerated. We innovated the financing model for high-standard farmland construction, which supported the construction of a total of more than 13 million mu high-standard farmland. We launched featured products such as Liangnong E-loan, making the total number of Sannong-dedicated credit products reaching 281. We established several rural revitalization industry funds, and launched the first rural revitalization equity index and bond index in the Chinese market. The breadth and depth of our financial services were further expanded. Leveraging the synergy of our innovative online and offline banking services, we promoted continuous expansion of coverage and increased the loans to rural households with the balance of Huinong E-loan exceeding RMB1 trillion. We integrated the agriculture-related financial scenarios and launched the ABC Huinong Cloud digital rural service platform, which covered over 2,400 counties and districts. We have been awarded the highest rating “Excellent” for three consecutive years in the nationwide assessment of financial institutions’ services for rural revitalization. 

　　We fulfilled our mission and deepened the positive interaction between the financial sector and the real economy. The domestic demand steadily recovered and the building of a modern industrial system was accelerated in 2023. We proactively met the financing needs of the real economy, utilizing a variety of service tools to comprehensively support the economic recovery.  

　　Our financing supply reached a historical high. The total balance of our loans and advances to customers was RMB22.6 trillion, with a year-on-year increase of RMB2.85 trillion; the balance of our financial investments was RMB11.2 trillion, with a year-on-year increase of RMB1.68 trillion. We further strengthened the support for key sectors. Loans in key sectors such as manufacturing, scientific and technological innovation, inclusive small and micro businesses, and green development continued to maintain rapid growth on a high base level. The balance of loans granted to manufacturing industry was RMB2.95 trillion, representing an increase of 28% as compared to the end of the previous year; among which, the balance of medium-and long-term loans granted to the manufacturing industry was RMB1.21 trillion, representing a year-on-year increase of 58%. Loans granted to the strategic emerging industries exceeded RMB2 trillion. The balance of green credit was RMB4.05 trillion with an increase of RMB1.35 trillion. According to the PBOC caliber, the balance of loans to inclusive finance was RMB3.5 trillion, representing a year-on?year increase of 37%; the interest rate of newly issued inclusive loans was 3.67%, representing a decrease of 23 BPs as compared to the previous year. The capacity for integrated financial services continued to improve. We leveraged the synergy arising from the Group’s full range of licenses and omni-channel operations, improved the whole life cycle financial service system for science and technology startups, launched ABC SISON, an Investment Banking Intelligent Advisory Service System, upgraded the online comprehensive service platform Inclusive E-station for small and micro enterprises, and launched a number of debt financing instruments in Dual Carbon and technological innovation. We achieved significant effectiveness in ESG governance. We actively implemented the ESG standards and enhanced our brand image of a green bank. We were recognized as one of the top ten “China ESG Model” (first batch) by the China Central Television together with State-owned Assets Supervision and Administration Commission, All?China Federation of Industry and Commerce, China Academy of Social Sciences, China Enterprise Reform and Development Society and other authoritative institutions, and as the “Advanced Institution of Green Bank Evaluation” by the China Banking Association. 

　　Adhering to the philosophy of finance for the people, we better served the needs of the people for a better life. Income of urban and rural residents grew steadily, favorable policies to benefit people’s livelihoods and to promote consumption were frequently launched, and the diversified financial needs of the people continued to grow in 2023. We closely focused on customer needs, continued to improve customer experience, enlarged our customer base, and consolidated the foundation for business development. We vigorously developed the consumer finance for people’s livelihood. Aligning with the policies to expand domestic demand and to promote consumption, we increased supply of consumer credit, and accelerated the expansion of consumer financial scenarios. The annual increment of personal consumption loans amounted to RMB147.1 billion, with a growth rate of 75.9%, ranking first among comparable peers in terms of both increment and growth rate. The number of credit card customers and transaction volume maintained rapid growth. Great efforts were made to enhance convenience of our financial services. We continued to optimize elderly-friendly services at outlets and accelerated online business processing, which effectively reduced the number of customer visits to the outlets, improved the customer experience continuously, and our regulatory evaluation of consumer rights protection was upgraded. We solidified our customer base. We promoted the team expansion and improved the service quality of the customer managers. The number of customer managers reached 97 thousand and the customer service capabilities improved continuously. The total number of  

　　our retail banking customers reached 867 million, maintaining first in the banking industry; the number of VIP retail banking customers exceeded 50 million, and the number of private banking customers and AUM maintained rapid growth. The total number of our corporate banking customers increased to 10.87 million. Our capacity for customer fund management was continuously strengthened. The balance of deposits from customers was RMB28.9 trillion. The deposits from domestic customers increased by RMB3.91 trillion with an average daily increase of RMB3.90 trillion as compared to the previous year, ranking first in the industry in terms of increments of both time point and average daily. The balance of deposits from retail banking customers was RMB17.11 trillion, representing an increase of over RMB2 trillion, maintaining first in the banking industry in terms of both the balance and increments. The balance of deposits from corporate customers was RMB10.48 trillion, representing an increase of RMB1.44 trillion, maintaining the leading position among the comparable banks in terms of both the increment and growth rate. 

　　We deepened reform and innovation, and continued to build new drivers for development and new advantages. The comprehensive deepening of reform continued and a new round of technological revolution accelerated towards breakthrough in 2023, which imposed higher demands on financial reform and innovation. Carrying on innovating on the basis of what has worked in the past, we implemented a series of reforms and innovation programs to stimulate business vitality. Our digital transformation has been further deepened and substantiated. We completed the foundation framework for digital transformation, established a data-driven business operation model, achieved significant results in our marketing, risk control, and management through data empowerment. We widely applied the digital business models, such as hierarchical and classified operation for retail banking customers and chain marketing for corporate customers. The scenario financial ecosystem was further expanded, with 42 thousand internet high-frequency scenarios established. The collaboration between online and offline channels showed significant effectiveness. Leveraging our advantages of leading online traffic and extensive offline outlets, integrating products and service processes based on customer-oriented principle, we built a new model of omni-channel collaboration. The efficiency of marketing services in foundation-level institutions was significantly improved, enabling the customer managers marketing with a single PAD. The customer experience of our mobile banking was continuously optimized, with the number of monthly active users reaching 213 million, maintaining the leading position among the comparable pears. We made substantial and cumulative progress of the reforms in key areas. We continuously optimized the credit approval mechanism, with loan processing efficiency further enhanced. Great efforts were made to streamline our counter business process and the time required for corporate account opening at outlets was significantly shortened. We accelerated to optimize the layout of  

　　outlets, with the proportion of outlets in County Areas arising to 56.4%, and further extended our financial services to grassroots levels. 

　　We strengthened bottom line thinking and ensured high-quality development with high-level security. We placed greater emphasis on preventing and controlling financial risks, developed our risk management system more proactive and intelligent, and improved risk prevention, early warning, and disposal mechanism to strengthen our capacity to cope with complex risk challenges, so that we firmly maintained our bottom line of safety. Our asset quality remained stable and was  

　　improved. Credit risks in key areas such as real estate and local government debts were generally under control, and efforts to dispose of non-performing loans were intensified, so that our nonperforming loan ratio steadily declined. Market risk was controlled more precisely. We established and launched a market risk control platform, enabling online monitoring of each market-related transaction across the Group, which maintained our market and liquidity risk indicators robust. The foundation for technological security was further solid. We steadily advanced the construction of disaster recovery system, continuously enhanced our capacity to ensure business continuity, and maintained the safe and stable operation of our technological systems. 

　　The sound operating results of Agricultural Bank of China benefited from the fundamentals of China’s economic recovery, the strong drive of high-quality development, and our differentiated advantages crossing the urban and rural areas, and continuously improved financial service capacity. These achievements attributed to the hard work of all cadres and employees of the Bank, as well as the trust and support from our customers, shareholders and regulatory authorities. On behalf of the Board of Directors, I would like to express my heartfelt gratitude! The Board of Directors proposed distribution of a cash dividend of RMB2.309 (tax inclusive) per 10 ordinary shares to all the ordinary shareholders. 

　　2024 is the 75th anniversary of the founding of the People’s Republic of China and is a key year for achieving the goals of the 14th Five-Year Plan. With the effective implementation of a  

　　series of macroeconomic policies, China’s long-term positive economic outlook will continue to consolidate and strengthen, and the prospect for high-quality development will be brighter.  

　　Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, we will deeply implement the guiding principles from the 20th CPC National Congress and the Central Financial Work Conference. Anchoring the goal to build a strong financial sector, we will focus on comprehensive rural revitalization and the five target areas, continuously optimize financial supply, effectively prevent and defuse financial risks, act as the major bank in serving the real economy, and be the cornerstone of financial stability, so as to make morecontributions to building a strong country and advancing national rejuvenation!