CITIC Limited Half-Year Report 2020

4 Half-Year Report 2020 CITIC Limited Chairman’s Letter to Shareholders Dear Shareholders, The last half year has been extraordinary. The worldwide outbreak of COVID-19 triggered one of the greatest economic shocks in decades. Consumer and business activity has been brought to a halt, and six months later, many countries remain in the grip of the pandemic. The scale and nature of the disruption confronting us and others in so many industries is simply unprecedented. As I discussed earlier this year, we anticipated a very tough 2020 and our results reflect the challenges we are facing across our operations. For the first six months of the year, CITIC Limited’s profit attributable to ordinary shareholders was HK$27 billion, including HK$2.4 billion from the sale of our 22% stake in the McDonald’s business in mainland China and Hong Kong. The profit was down 19% against the same period in 2019. Excluding the Renminbi to HK Dollar conversion effect, profit fell 16%. At the end of June, CITIC Limited had HK$38 billion in cash and available facilities. The board recommends an interim dividend payment of HK$0.10 per share, which is HK$0.08 less than the same period last year. The reduction in dividend reflects the lower profit for the period and the challenging outlook for the remainder of 2020. BUSINESS PERFORMANCE The financial services segment recorded HK$21.9 billion in profit contribution, 14% less than the corresponding period in 2019. Higher provisions made at CITIC Bank and CITIC Trust were a key factor in the profit decline, reflecting the impact of the pandemic and slower economic growth. Profits at CITIC Bank and CITIC Trust were RMB25.5 billion and RMB1.1 billion, a respective decrease of 9.8% and 35% year-on-year. Operationally, CITIC Bank’s net interest income grew 5.6% as total assets increased during the period. However, net interest margin narrowed as the bank transitioned to a loan prime rate that reflects lower prevailing market rates. The bank also lowered lending rates to provide support to corporate customers impacted by the pandemic and the overall macroeconomic environment.