Annual Report 2020

China Merchants China Direct Investments Limited Annual Report 2020 13 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) China Merchants Bank Co., Ltd. (“CMB”) is China’s first joint-stock commercial bank, with its headquarters in Shenzhen, Guangdong and with its shares listed on the Shanghai Stock Exchange since 2002 and on the Hong Kong Stock Exchange since 2006. As of 31 December 2020, the Fund held 55.20 million A shares of CMB, accounting for 0.219% of the total issued share capital of CMB, with a corresponding investment cost of RMB154.61 million (equivalent to US$19.79 million). In July 2020, the Fund received a cash dividend of RMB66.24 million from CMB for 2019. As of the end of 2020, the carrying value of the Fund’s interest in CMB was US$371.70 million, representing an increase of 25.01% over US$297.34 million at the end of last year. The Fund’s unrealised gain attributable to its investment in CMB for 2020 was US$50.88 million, down 48.60% year-over-year. On 20 March 2021, CMB announced that its audited net profit for 2020 was RMB97.3 billion, up 4.82% year-over- year. On 23 June 2020, CMB’s capital plan targets for 2020-2022 were approved by the shareholders meeting of CMB as follows: within the planning period, the core tier-one capital adequacy ratio, tier-one capital adequacy ratio and total capital adequacy ratio shall reach and be maintained at levels greater than 9.5%, 10.5% and 12.5%, respectively. On 9 July 2020, with the consent of both the China Banking and Insurance Regulatory Commission (the “ CBIRC ”) and the People’s Bank of China, CMB completed the issuance of write-down undated capital bonds of RMB50 billion, which will be used to replenish its other tier-one capital in accordance with applicable laws and approval by regulatory authorities and, upon the occurrence of the triggering events specified in the offering documents, to absorb any loss by means of a write-down, whether in whole or in part. On 2 December 2020, CMB was awarded “Bank of the Year in China for 2020” as part of the “Bank of the Year Awards 2020,” published by The Banker magazine. This is the second time that CMB has won this prize since 2016, reflecting widespread recognition by the international media for the bank’s strong overall competitive position and outstanding performance in a complex economic environment. On 12 December 2020, CMB announced that it had received approval from the CBIRC to jointly establish China Merchants Tuopu Bank Co., Ltd. with Wangyin Online (Beijing) Business Service Co., Ltd., a company under the JD Group, in Shanghai. It is the second independent legal entity operating as a direct sales bank to be approved in China. 70% of its capital will be contributed by CMB. The direct sales bank serves customers primarily via digital technologies. As such, it relies on the Internet or mobile Internet, rather than on physical branch offices. In 2020, the Fund did not dispose of any A shares of CMB.