(i) The MOF
The MOF is a ministry under the State Council, primarily responsible for, among others, state fiscal revenues, expenses and taxation policies. As at 30 June 2015, the MOF directly owned approximately 34.60% (31 December 2014: approximately 34.88%) of the issued share capital of the Bank. The Group enters into banking transactions with the MOF in its normal course of business, including the subscription and redemption of government bonds issued by the MOF. Details of the material transactions are as follows:
30 June 2015
31 December 2014
Balances at end of the period/year:
The PRC government bonds and the special government bond 1,019,198 1,037,908
Six months ended 30 June
2015 2014
Transactions during the period:
Subscription of the PRC government bonds 26,907 62,424 Redemption of the PRC government bonds 44,805 52,856 Interest income on the PRC government bonds 18,248 17,443 Interest rate ranges during the period are as follows: % %
Bond investments 1.15 to 8.75 1.77 to 6.34
As at 30 June 2015, the Group holds a series of long term bonds issued by Huarong, which is under the control of the MOF, with an aggregate amount of RMB112,128 million (31 December 2014: RMB112,128 million). The details of Huarong bonds are included in note 21.
Other related party transactions between the Group and enterprises under the control or joint control of the MOF are disclosed in note 46(g) “transactions with state-owned entities in the PRC”.
(ii) Huijin
As at 30 June 2015, Central Huijin Investment Ltd. (“Huijin”) directly owned approximately 34.71% (31 December 2014: approximately 35.12%) of the issued share capital of the Bank. Huijin is a state-owned investment company established on 16 December 2003 under the Company Law of the PRC. Huijin has a total registered and paid-in capital of RMB828,209 million. Huijin is a wholly-owned subsidiary of China Investment Corporation, and in accordance with the authorisation by the State, Huijin makes equity investments in the key state-owned financial institutions, and shall, to the extent of its capital contribution, exercise the rights and perform the obligations as an investor on behalf of the State in accordance with applicable laws to achieve the goal of preserving and enhancing the value of state-owned financial assets. Huijin does not engage in other business activities, and does not intervene in the day-to-day business operations of the key state-owned financial institutions it controls.
As at 30 June 2015, the Huijin Bonds held by the Bank were of an aggregate face value of RMB21.63 billion (31 December 2014: RMB21.63 billion), with the terms ranging from 5 to 30 years and coupon rate ranging from 3.14% to 4.20% per
The Group entered into banking transactions with Huijin in the ordinary course of business under normal commercial terms and at the market rates. Details of the material transactions are as follows:
30 June 2015
31 December 2014
Balances at end of the period/year:
Debt securities purchased 20,900 20,821
Interest receivable 618 239
Deposits 20,976 16,506
Interest payable 14 26
Six months ended 30 June
2015 2014
Transactions during the period:
Interest income on debt securities purchased 363 309
Interest expense on deposits 47 26
Interest rate ranges during the period are as follows: % % Debt securities purchased 3.14 to 4.20 3.14 to 4.20
Deposits 0.01 to 5.80 0.39 to 3.30
Huijin has equity interests in certain other banks and financial institutions under the direction of the Government. The Group enters into transactions with these banks and financial institutions in the ordinary course of business under normal commercial terms. Management considers that these banks and financial institutions are competitors of the Group. Significant transactions during the period conducted with these banks and financial institutions, and the corresponding balances as at 30 June 2015 are as follows:
30 June 2015
31 December 2014
Balances at end of the period/year:
Debt securities purchased 923,798 973,027
Due from these banks and financial institutions 127,319 82,410
Loans and advances to customers 31,688 –
Derivative financial assets 632 537
Due to banks and financial institutions 171,643 143,845
Derivative financial liabilities 567 425
Six months ended 30 June
2015 2014
Transactions during the period:
Interest income on debt securities purchased 16,019 18,790 Interest income on amounts due from these banks and financial institutions 323 306 Interest income on loans and advances to customers 574 – Interest expense on amounts due to banks and financial institutions 1,336 548 Interest rate ranges during the period are as follows: % % Debt securities purchased 1.08 to 6.15 2.51 to 5.70 Due from these banks and financial institutions 0 to 7.10 0 to 6.70
Loans and advances to customers 2.71 to 5.70 –
The interest rates disclosed above vary across product groups and transactions depending on the maturity date, credit risk of counterparty and currency. In particular, given local market conditions, the spread of certain significant or long dated transactions can vary across the market.
(b) Subsidiaries
30 June 2015
31 December 2014
Balances at end of the period/year:
Debt securities purchased 17,041 13,768
Due from banks and other financial institutions 253,647 195,574
Loans and advances to customers 23,543 18,308
Derivative financial assets 2,779 1,653
Due to banks and other financial institutions 263,774 210,237
Derivative financial liabilities 2,957 1,984
Commitments 119,878 127,089
Receivables 15,000 –
Six months ended 30 June
2015 2014
Transactions during the period:
Interest income on debt securities purchased 127 13 Interest income on amounts due from banks and other financial institutions 345 224 Interest income on loans and advances to customers 69 – Interest expense on amounts due to banks and other financial institutions 403 369
Net trading expense – 191
Net fee and commission income 781 248
Interest rate ranges during the period are as follows: % % Debt securities purchased 0.76 to 4.50 1.56 to 3.15 Due from banks and other financial institutions 0 to 4.90 0.30 to 5.65
Loans and advances to customers 1.20 to 6.46 –
Due to banks and other financial institutions 0.0125 to 7.44 0.50 to 6.16 The material balances and transactions with subsidiaries have been eliminated in the consolidated financial statements.