Comprehensive Financial Services Segment Investments, Equity Funds, Aims to Become a Leader in Integration
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MAJOR SUBSIDIARIES CITIC Bank is a joint-stock commercial bank offering corporate banking, retail banking and financial markets services. In a joint venture with Baidu, CITIC Bank also launched an intelligent direct bank, CITIC AiBank. CITIC Trust is the market leader in its field in China, providing integrated financial services including financing, wealth management and trust services. CITIC-Prudential Life COMPREHENSIVE綜合金融服務 is a joint venture between CITIC Corporation and Prudential plc, offering life, health and accident FINANCIAL insurance, as well as reinsurance SERVICES services. CITIC Securities is a premium securities company in China with businesses spanning securities, funds, futures, direct Our comprehensive financial services segment investments, equity funds, aims to become a leader in integration. To commodities. All respective facilitate connectivity and collaboration, we businesses maintain a leading will apply to establish a financial holding position in the market. 綜合金融服務 company, providing more robust financial solutions for the real economy and in turn strengthening each of our businesses. CITIC LIMITED ANNUAL REPORT 2020 Comprehensive Financial Services REVENUE TOTAL ASSETS HK$ million HK$ million 2019 222,316 2019 7,703,980 2020 229,103 2020 9,113,747 Comprehensive Financial Services Financial Comprehensive +3% +18% PROFIT ATTRIBUTABLE TO CAPITAL EXPENDITURE ORDINARY SHAREHOLDERS HK$ million HK$ million Advanced Intelligent Manufacturing Intelligent Advanced 2019 42,845 2019 4,975 2020 43,516 2020 7,909 +1.6% +59% Advanced Materials Advanced Year in Review In 2020, despite confronting challenges arising from CITIC Trust maintained steady operations as it the COVID-19 pandemic, the overall businesses continued to reduce the scale of its business, and performed well as profit attributable to shareholders optimise its asset structure. Its net profit increased 7% increased by 1.6% year-on-year, reaching HKD43.5 to RMB3.9 billion as a result. CITIC-Prudential Life’s billion. CITIC Bank actively pursued business net profit surged 40% to RMB2.5 billion, driven by New Consumption transformation for different operations. Its annual the dual growth of premium income and investment net profit increased 2% to RMB49 billion as both income. Backed by optimistic capital market net interest and non-interest income recorded sentiment, the securities business performed well, satisfactory growth. Experiencing pressure including with net profit of CITIC Securities increasing by 22%. the COVID-19 pandemic and amplified regulations, New-type Urbanisation 9 CITIC LIMITED ANNUAL REPORT 2020 Comprehensive Financial Services BANKING 綜合金融服務 CITIC Bank is a leading national commercial bank with highly integrated capabilities and strong brand recognition in China. With nearly 60,000 staff and total assets exceeding RMB7 trillion, its core businesses include corporate banking, retail banking and financial markets services. In 2020, CITIC Bank was ranked 21st in the Top 500 World Banking Brands and 24th in the Top 1000 World Banks according to Tier 1 capital as published by the British financial magazine The Banker. In response to the impact of the COVID-19 pandemic increase year-on-year. Accompanied by the growth of in 2020, multiple measures were implemented in interest-earning assets, net interest income increased terms of monetary, fiscal, and industrial policies by 2% year-on-year. Non-interest income1 increased to ensure that the overall Chinese banking sector by 10% year-on-year to RMB44.9 billion, of which fee remained stable, that risks were well managed and income increased by 8% compared with the previous that the ability to serve the real economy continued year, mainly driven by increased fee income generated to improve. Facing a wide range of challenges and from the wealth management business and income pressure, CITIC Bank continued to promote its business from the fund custody business. The proportion of transformation. Net profit increased by 2% to RMB49.0 non-interest income continued to increase from 21.8% billion and revenue reached RMB195.4 billion, a 4% to 23.0%. RMB million 2020 2019 Change Revenue 195,399 187,881 4% Profit attributable to ordinary shareholders 48,980 48,015 2% Total assets 7,511,161 6,750,433 11% Return on equity (%) 10.08% 11.06% -0.98 percentage point 1 The income related to credit card consumption installments has been reclassified from fee income to interest income since 2020. The financial indicators have been restated during the comparison period with respect to interest income and non-interest income. 10 CITIC LIMITED ANNUAL REPORT 2020 Comprehensive Financial Services With its balanced strategy, CITIC Bank’s total assets Bank has increased its provisions and strengthened grew moderately by 11% in 2020. Total loans its efforts in disposal of non-performing assets while increased by 12%, which were mainly allocated in key impairment allowances increased by 7% year-on-year areas including inclusive finance, manufacturing, and to RMB83 billion. The provision coverage ratio at the private enterprises. Total deposits recorded steady end of the year reached 171.68%, a decline of 3.57 growth of 12% throughout the year. Net interest percentage points from the same period last year. margin narrowed by 19 bps to 2.26% mainly due to the decline in overall market interest rates. By the end of the year, the core tier-1 capital adequacy ratio increased by 5 bps to 8.74%, while the total CITIC Bank continues to increase its efforts to resolve capital ratio rose 57 bps to 13.01%. CITIC Bank will Services Financial Comprehensive non-performing and problematic loans and its asset continue to strengthen its capital base, through the quality has become more solid. During the reporting selective expansion of capital replenishment channels period, the NPL ratio declined by 0.01 percentage and by developing a capital-light business model to point to 1.64%. To further strengthen the quality strengthen the organic growth of capital. of its asset base and effectively mitigate risks, CITIC Business Highlights Revenue By percentage Revenue By percentage RMB million 2020 2020 2019 2019 Manufacturing Intelligent Advanced Corporate banking 89,473 45.8 93,790 49.9 Retail banking 79,644 40.8 71,284 37.9 Financial markets 22,713 11.6 19,476 10.4 Other 3,569 1.8 3,331 1.8 Materials Advanced Corporate Banking Our corporate banking sector recorded revenue clients reached 825,300 in total. Leveraging synergies of RMB89.5 billion, a surge of 50% year-on-year, across all of our businesses, CITIC Bank has maintained accounting for 45.8% of total revenue. Corporate loans steady growth during the year. grew by 11% during the year. CITIC Bank continued to lower corporate financing costs to benefit more Investment Banking: CITIC Bank actively serves customers and allocated more credit resources to the real economy, particularly in providing full new-type infrastructure including transportation, support to manufacturing industries and the new New Consumption water conservancy, and others, as well as to high-end economy to mitigate the impact of the COVID-19 manufacturing. To help corporate clients overcome pandemic. The bank underwrote 38 anti-pandemic challenges during the pandemic, emergency loans related bonds worth RMB26.8 billion in Beijing, of nearly RMB200 billion were made to various Tianjin, Zhejiang and other locations. corporates that were struggling to survive the pandemic. The bank’s corporate deposits increased by International Business: CITIC Bank introduced 14%, maintaining its leading position among Chinese seven major measures and launched a green joint stock commercial banks. CITIC Bank adheres to channel for the import and export of pandemic the principle of being customer-centric and continued prevention resources to ensure smooth cross-border to strengthen relationships with core customers and settlement during the pandemic. Our free trade (FT) foster customer acquisition. The number of corporate zone business has formed a “three-point nationwide” New-type Urbanisation 11 CITIC LIMITED ANNUAL REPORT 2020 Comprehensive Financial Services FT account2 system in Shanghai, Guangzhou and private banking clients, an increase of 22%. All key Haikou. Assets of these FT accounts have increased retail banking businesses are progressing well and 194% year-on-year. developed in an orderly manner: Transaction Banking: The bank continued to Personal lending business: To support the real develop its transaction banking business to drive economy and consumer consumption upgrading, the transformation of corporate banking. During CITIC Bank promoted the balanced development the year, CITIC Bank served a total of 713,600 of its three main products including mortgage, transaction banking clients, an increase of 18% year- personal business loan and unsecured loan. Total on-year. Transaction volumes increased by 37% to personal loans (excluding credit card) increased 132.8 million trades while turnover surged by 66%, by 16% last year. The Bank continued to grant reaching RMB107 trillion. mortgage loans in accordance with the real estate regulations and control requirements of Custody Business: Custody assets reached a the government at all levels, with total mortgage new high of over RMB10 trillion. After CITIC Bank loans increasing by 18% during the year. Personal became the custodian of a national annuity as business loan products continued to be optimised well as 25 provincial annuities, it further obtained with diversified