General situationIn 2001, under the leadership of the Central Committee of the Chinese Communist Party and the State Council, the Bank of Communications consciously abided by the monitoring of the People’s Bank of China and tried hard to adapt to the development and changes of the economic and financial situations home and abroad. It initiated the right situation for reform and development in the first year of the new century by deepening reforms, strengthening management and focusing on innovation.By the end of the year, the total deposit balance of the bank was RMB 472.508 billion yuan, with the increase of RMB 67.867 billion yuan, up 16.77 percent compared to the last year, of which, the saving deposit balance was RMB 157.637 billion yuan, increased by 30.62 percent with RMB 36.956 billion yuan than the previous year; foreign exchange deposit balance was US$5.584 billion, decreased by US$369 million; the loan balance of RMB was RMB 329.111 billion yuan, up 12.60 percent with RMB 36.852 billion yuan; foreign exchange loan balance was US$2.355 billion, decreased with US$26 million; international settlement completed US$36.89 billion, increased by 5.35 percent with US$1.872 billion; the exchange amount of “Waihuibao?(personal foreign exchange transaction) was US$23.324 billion, increased by 1.21 percent; the distribution of the Pacific Ocean Card amounted to 2,5.01 million, increased by 58 percent with 9.18 million; the card deposit balance was RMB 33.7 billion yuan, increased by 140.66 percent with RMB 19.7 billion yuan; and the profits of the domestic bank amounted to RMB 2.491 billion yuan. Apart from the impact of the financial policies adjustment and the verification of the bad debts, the actual profits were RMB 7.182 billion yuan, which increased with RMB 1.839 billion yuan, namely, 34 percent according to the same caliber.Innovation of the product and technologyIn 2001, the bank got abundant benefits and had significant breakthrough in the development of the intermediate, international and private capital businesses. The technological content in the products and services were increasingly improved, which improved the market competitiveness and promoted the overall development of all the businesses. The bank took the favorable opportunity of the opening of B-share market to exploit new business in securities market and develop insurance and agent business for insurance companies. On the basis of the previous 6funds trusteeship, it trusted 3 more closed funds, moreover, as the first domestic commercial bank successfully trusted and sold the first open fund in China on a commission basis---Hua’an Fund.With continuously increase of new international products, the bank timely put forward such new products as forfaiting, import insurance and agent and so on. By the end of the year, branch banks are opened to operate foreign exchange in 75 cities along the seaside and in economy-developed areas throughout the country, 1330 business spots can directly transact foreign exchange and direct agent bank relationship is established with 1265 branches of 489 banks in 76 countries and regions all over the world. The size of the abroad assets has amounted to US$10.736 billion. In 2001 the bank began to apply the network technology to “Waihuibao?(personal foreign exchange business) to establish even quotation system ahead of all the same domestic trades, which enabled the technological elements, the quality of services and the ability to control risks of the “Waihuibao?to continue to keep ahead in our nation.As private financial business was increasing rapidly, the market position of the Pacific Ocean Card also improved constantly. By the end of the year, the number of the distribution of the Card broke through 25,000,000 and the deposit of the added cards was 1.4 times as many as the total of the last 8 years. The transaction volume of the Pacific Ocean Card was 2.4 times of that of last year. The transaction volume of the “Quanguotong?all-over-the-nation) Card broke through RMB 1000 billion yuan, increased by 5.41 times in comparison with that of last year. In 2001, the bank successfully developed bank-transfer business of the Pacific Ocean Card, bringing special customers increased by nearly ten thousand. The ATM increased by 40 percent, the CDM and CRS by 70 percent and the POS by nearly 50 percent. 84 banks dredged private remittance business by “Quanguotong?card, which covered 134 cities. The customer service centers were established, which provided 24-hour telephone transaction and consulting services all day long through the special telephone line 95559.In 2001, our bank made great progress in electronization. The comprehensive business operation system, a new developed bank business operation system was put into use in 33 branches directly under the bank. This system can provide perfect information about customers and play a quite important part in improving our operation and management level. Through establishing credit management data center, the bank realized the electronization and non-paper of the credit risk classification and greatly improved the quality and efficiency. Through making use of the integrated RMB and foreign currency real-time exchange system, we for the first time integrated the electronic exchange system of RMB and foreign currency and realized this integration in the true sense. The function of “real-time currency-transfer capital?enabled us to gradually perfect the whole exchange, payment and account systems. In 2001, the bank also developed loan trustee business for export rebates account, exploited across-bank account capital checking-up system for group customers, provided “transaction volume?clearing service for China Commodity Transaction On-line Co Ltd and carried through cash management business with the function of consultation and payment and the non-recourse bill discount business.Risk ManagementIn 2001, as the experimental bank of the World Bank appointed by the People’s Bank of China to be the technology assistance project of ASEM Fund, our bank completed the predicted goal of the project about strengthening credit flow of the Bank of Communications. According to its requirements, we were establishing the overall risk management system ranging from risk identifying, measuring, monitoring and controlling. We set about forming the risk management system focusing on credit policy committee, the credit auditing committee and the risky assets management committee and forming the internal monitoring control focusing on the audit sector. We established the early alert system and flexible exit mechanism, improved credit managing and organizing framework and business operating procedure. We also carried out credit obligation mechanism.In 2001, we tried all our best to clear out and cut down unfavorable assets, intensified the quality monitoring of all our assets and identified the obligations of the added unfavorable assets throughout the whole banks. The work on clearing out and cutting down those self-employed companies were also carried out in time. We have cleared out and cut down 85 such companies during the year and completed our plan on it. At the same time, we played a further role in auditing and monitoring and firmly carried on audit, coordination and reform work.