Annual Report 2022

13 China Merchants China Direct Investments Limited Annual Report 2022 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 2022, 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 2022, the Fund received a cash dividend of RMB84.01 million from CMB for 2021. As of the end of 2022, the carrying value of the Fund’s interest in CMB was US$295.30 million, representing a decrease of 30.05% from the value at the end of last year of US$422.16 million. The Fund’s unrealised loss attributable to its investment in CMB for 2022 was negative of US$93.88 million, while the relevant amount for 2021 was US$40.72 million. On 25 March 2023, CMB announced that its audited net profit for 2022 was RMB138.0 billion, up 15.08% year- over-year. On 24 May 2022, CMB announced that its subsidiary, CMB Wealth Management Co., Ltd. (“ CMB Wealth Management ”) had completed a change of business registration with respect to increasing its capital, along with other changes to its registered capital. As a result, the registered capital of CMB Wealth Management increased to approximately RMB5.56 billion. In addition, CMB and JPMorgan Asset Management (Asia Pacific) Limited (“ JPMorgan Asset Management ”) came to hold stakes in CMB Wealth Management of 90% and 10%, respectively, whereas CMB had held a 100% stake before. As an important benefit of introducing JPMorgan Asset Management as a strategic investor, CMB Wealth Management can now draw upon the deep experience of JPMorgan Asset Management as a leading international asset management institution in fintech, investment research, risk management, etc. On 29 June 2022, CMB’s capital plan targets for 2022-2024 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 10.0%, 11.0% and 13.0%, respectively. On 22 July 2022, the board of directors of CMB considered and approved a resolution: the withdrawal of its application to commence operations for China Merchants Tuopo Bank Co., Ltd. (“ CM Tuopo Bank ”) and, accordingly, terminated all preperatory work for the establishment of CM Tuopo Bank. CMB had announced in December 2020 that it intended to establish CM Tuopo Bank jointly with a company under the JD Group, of which CMB would hold a 70% equity interest. CM Tuopo Bank would have been an independent legal entity operating as a direct sales bank, but also as a digital bank that would solely operate online rather than through physical branch offices. On 2 August 2022, CMB announced that it had received a “no objection” letter from the China Banking and Insurance Regulatory Commission (“ CBIRC ”) in relation to the exercise of its redemption right to redeem all of the US$1 billion offshore preferred shares issued by the bank. On 25 October 2022, CMB redeemed all non-cumulative perpetual offshore preferred shares that were non-publicly issued on 25 October 2017. Upon redemption and cancellation of such shares, there were no more outstanding offshore preferred shares of CMB in issue.