Dividend Policy

Our shareholders' general meeting decides whether to pay any dividends and in what amount based on our results of operations, cash flow, financial condition, capital adequacy ratios, future prospects, statutory and regulatory restrictions on the payment of dividends by us and other relevant factors. Under the PRC Company Law and our articles of association, all of our shareholders have equal rights to dividends and distributions. We will pay dividends out of our net profit only after we have fully covered our accumulated losses, if any, and have made the following appropriations:

● appropriations to the statutory surplus reserve equivalent to 10% of our net profit less any accumulated losses, as determined under PRC GAAP; no further appropriations to the statutory surplus reserve are required once this reserve reaches an amount equal to 50% of our registered capital;

● appropriations to a discretionary surplus reserve as approved by the shareholders in our shareholders' meeting.

In addition, according to recent MOF guidelines, financial institutions, including us, are required to maintain a general reserve not less than 1% of the year-end balance of their risk-bearing assets prior to making a dividend distribution. This general reserve will constitute a part of the financial institution's reserves. The MOF has recommended that financial institutions take the necessary steps to satisfy this requirement by the end of 2008 but, in any event, no later than the end of 2010. At an extraordinary general meeting of shareholders on July 31, 2006, our shareholders approved our dividend policies. To comply with MOF's guidelines by the end of 2010, we will appropriate 20% of our net profit as general reserve prior to the completion of the Global Offering or the A Share Offering, whichever is earlier, and 20% to 30% of our net profit as general reserve after the completion of the Global Offering or the A Share Offering, whichever is earlier.

Under PRC law, dividends may be paid only out of distributable profits. Distributable profits means, as determined under PRC GAAP or IFRS, whichever is lower, the net profits for a period, plus the distributable profits or net of the accumulated losses, if any, at the beginning of such period, less appropriations to statutory surplus reserve (determined under PRC GAAP), general reserve, and discretionary surplus reserve (as approved by our shareholders meeting). Any distributable profits that are not distributed in a given year are retained and available for distribution in subsequent years. However, ordinarily we will not pay any dividends in a year in which we do not have any distributable profits in respect of that year. The payment of any dividends by us must also be approved at a general meeting of shareholders. Holders of our shares will be entitled to receive dividends in proportion to their shareholdings.

The CBRC has the discretionary authority to restrict any bank that has a capital adequacy ratio below 8% or a core capital adequacy ratio below 4%, or that has violated certain other PRC banking regulations, from paying dividends or other forms of distributions.