2008 was not a year we can forget. It witnessed unprecedented turmoil in global financial markets, domestic economic slowdown and the Wenchuan earthquake. Each of these presented great challenges to CDB. However, by taking a scientific outlook and adhering to the macroeconomic policies set by the State, we were able to support economic development of the country by playing a pioneering role in medium-to long-term investment and financing. At this historical moment, I had the great honour to join CDB's leadership team and soon realised the weight of the responsibilities that I would shoulder.

In 2008, we were able to embrace both corporate reform and business development on our agenda, accelerating our own commercialisation and sustaining our core business growth despite the downturn in the economic cycle and structural adjustments required of our major industries.

I am pleased to present the strong financial results we attained in 2008. These are summarised by our core operational indicators. As of the end of 2008, the Bank's total assets amounted to RMB 3,821.2 billion, out of which loans outstanding were RMB 2,898.6 billion. Though asset quality and profitability declined slightly due to external factors such as earthquake disaster relief, the market and economic downturn, and foreign currency conversion losses from capital injection, our results showed we outperformed most of our peer banks and better than virtually all other policy or development banks. Our non-performing loan was 0.96%; it is a tribute to our staff and our system that these key figures remained below 1.00%. Total profit was RMB 27.9 billion, yielding a return on assets of 0.62%, and return on equity of 5.97%; however the ratio of allowance for loan impaired losses to identified impaired loans remained high at 210.12%, and the capital adequacy ratio was 11.31% as of 31 December 2008.

In 2008, all business operations achieved steady growth

Sustainable Growth in Medium- to Long-Term Lending. Loans to basic and pillar industry are the cornerstone of the Bank's business ¨C even after its commercialisation reform, this will hold true. In its continued effort to alleviate restraints in economic development and society, the Bank extended 65.7% of its new loans in 2008 to key industries such as coal, electricity, oil, transportation, agriculture & related industries, telecommunications and public infrastructure. The Bank also devoted resources to accelerating the upgrade of critical industries such as equipment production, telecommunications and steel production. The Bank has continued to encourage a balanced regional development, with RMB 462.43 billion or 39.5% of total loans disbursed to projects in the Central and Western regions, and RMB 105.64 billion or 9.03% of total loans disbursed to projects in the North-East industrial regions of China. Additionally, we also provided support to Wenchuan post-earthquake reconstruction amounting to RMB 17 billion. We also exercised environmental protection initiatives amounting to RMB 83.3 billion in the areas of river basin restoration. sewage disposition and clean energy exploitation.

Steady Performance of Funding Operations. During 2008, we actively explored innovative approaches to issue long-term bonds under increasingly adverse market conditions. As a result, we managed to issue RMB-denominated financial bonds amounting to RMB 620 billion, with total issues to date breaking RMB 1 trillion for the first time. The total trading volume in 2008 reached RMB 12,000 billion, and we have successfully issued the third tranche of Kai Yuan asset backed securities ("ABS"), which made CDB the leading domestic financial institution in the ABS market by volume and amount of funds raised.

Further Expansion of Grass-roots Financing Business. Grass-roots financing is a "Blue Ocean" for CDB, a limitless potential. The Bank's expansion of its grass-roots financing business in 2008 was supported by continued allocation of resources and by the Bank's expanding its network of loan assistance agencies, through continuous cooperation with both local governments and credit assistance agencies. This created an operating model based on the principle of "collective community building with mutual sharing and compensation for risk-taking". The Bank has also continued its innovative grass-roots financing business by lending to agricultural facilities, microfinance for farmers and hometown lending to students, where a total amount of RMB 201.5 billion in loans were disbursed in 2008.

Further Acceleration of International Cooperation. Accelerating international cooperation remains a critical element of CDB's desire to be recognized as internationally benchmarked against leading commercial banks. CDB continued to support the State's "Go Global" Strategy by increasing the depth and coverage of its international business and cooperation in key markets, and improving the platforms for expanding its international syndication business and strategic projects. 2008 also witnessed the largest single-year growth in the Bank's foreign currency lending, and CDB was positioned as the largest foreign cooperation investment and financing bank among domestic banks, with a balance of foreign currency loans amounting to USD 64.5 billion at year end. This made CDB the bank with largest foreign investment and foreign lending in China. Most importantly, the number of non-performing foreign currency loans has remained at zero for 25 consecutive quarters.

Further Enhancement of Operating Efficiencies and Management Capabilities. The overall enhancement of both the Bank's operational efficiency and customer relationships were largely attributed to the revamp of the Bank's projects assessment system. This involved a critical shift of focus from projects to individual customers and the use of regional teams in the supervision of delivery. Given its significance, the Bank undertook initiatives focused on credit and customer service quality, improving bank-wide economic capital management and efficiency of its capital allocation. These were supplemented by changes to the financial and management accounting systems and processes so as to implement new accounting standards.

Accelerated Implementation of Bank-wide Risk Management Practices. CDB is focused on ensuring and maintaining appropriate compliance within its operations. The Bank has reinforced its overall risk management framework through establishing a two-tier risk prevention framework and a dynamic risk monitoring mechanism that covers both the Head Office and branch operations. The Bank also accelerated its implementation of the Basel II Accord. Given the potential impact of the global financial crisis on global markets, the Bank has also maintained a close monitoring of its market risk positions and maintained a comprehensive framework of early warning indicators. The Bank has also improved its post-lending credit administration system, invested into the new pattern of "centralized management and integrated payment" of capital in the urban infrastructure projects, and effectively controlled risks in lending to SMEs through establishing loan assistance agencies.

The excellent performance of the Bank in 2008 is a result of the concerted efforts and hard work of all our staff members. On behalf of the Bank's management, I would like to take this opportunity to express our sincere appreciation to every employee at the Bank. I also wish to thank our friends in China and abroad for their continuous attention, support and help to CDB.

Outlook for 2009

Looking forward to 2009, we will adhere to the State-enunciated principles of "stimulating domestic demand, maintaining growth, adjusting organisational structure, improving capabilities, accelerating reform, increasing vitality, focusing on improving the people's livelihoods, and promoting a harmonious society." Whilst we shall always endeavour to carry out State mandates, we shall nonetheless continue to provide high-quality, profitable banking and financial services, all to better China's economic and social development.

The Bank will continue to seize the opportunities offered by our advantages in development financing and medium-to long-term investment and funding in order to support the traditional areas of "basic and pillar industries" and promote the construction of key projects;

The Bank will continue to tap into opportunities arising from investment in international cooperation and improve internal operational mechanisms and risk management capabilities;

The Bank will continue to devote itself to innovative approaches to developing and approving small loans, alleviating the constraints placed on development of sectors such as agriculture, rural communities, farmers and sole proprietors;

The Bank will continue to perform its social responsibilities, with particular focus on the welfare of our people and the robust development of SMEs. The Bank is committed to leveraging the good practices and experiences of the past, and tailoring new models for performing banking operations in these areas.

At the same time, the Bank will incorporate the concepts of maximizing shareholder return, creating value and minimizing risk in its daily operations to support our responsibility to maintain a viable and successful business model for development financing, enhance profitability and competitiveness, and continue to develop in the process of reform.

In our journey towards commercialisation reform, we will still be confronted with many challenges in many different respects. However, I firmly believe that our collective efforts will be able to generate greater value for our shareholders and the general public, resulting in an ever brighter future for CDB!