ANNUAL REPORT 2020 Annual Report 2020
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Quanzhou Huixin Mic Quanzhou Huixin Micro-credit Co., Ltd.* 泉州匯鑫小額貸款股份有限公司 (Established in the People’s Republic of China with limited liability) r Stock Code: 1577 o-c r edit Co., Ltd.* 泉州匯鑫小額貸款股份有限公司 Quanzhou Huixin Micro-credit Co., Ltd.* 泉州匯鑫小額貸款股份有限公司 ANNUAL 2020 REPORT Annual Report 2020 * for identication purpose only Contents 2 Corporate Information 4 Chairman’s Statement 5 Management Discussion and Analysis 27 Directors, Supervisors and Senior Management 33 Report of the Directors 49 Report of the Supervisory Committee 51 Corporate Governance Report 62 Environmental, Social and Governance Report 81 Independent Auditor’s Report 86 Consolidated Statement of Profit or Loss and Other Comprehensive Income 87 Consolidated Statement of Financial Position 88 Consolidated Statement of Changes in Equity 89 Consolidated Statement of Cash Flows 90 Notes to Financial Statements 156 Financial Summary 157 Definitions Corporate Information DIRECTORS NOMINATION COMMITTEE Executive Directors Mr. Zhou Yongwei (Chairman) Mr. Sun Leland Li Hsun Mr. Wu Zhirui (Chairman) Mr. Zhang Lihe Mr. Zhou Yongwei Mr. Yan Zhijiang Ms. Liu Aiqin JOINT COMPANY SECRETARIES Non-executive Directors Mr. Yan Zhijiang Mr. Jiang Haiying Ms. Ng Ka Man (ACG, ACS) Mr. Cai Rongjun Independent Non-executive Directors AUTHORISED REPRESENTATIVES Mr. Zhang Lihe Mr. Wu Zhirui Mr. Lin Jianguo Mr. Yan Zhijiang Mr. Sun Leland Li Hsun REGISTERED ADDRESS SUPERVISORS 12/F, Former Finance Building Ms. Hong Lijun (Chairwoman) No. 361 Feng Ze Street Mr. Li Jiancheng Quanzhou City Ms. Ruan Cen Fujian Province Mr. Chen Jinzhu PRC Mr. Wu Lindi HEADQUARTERS/PRINCIPAL PLACE AUDIT COMMITTEE OF BUSINESS IN THE PRC Mr. Zhang Lihe (Chairman) 12/F, Former Finance Building Mr. Lin Jianguo No. 361 Feng Ze Street Mr. Cai Rongjun Quanzhou City Fujian Province REMUNERATION COMMITTEE PRC Mr. Lin Jianguo (Chairman) Mr. Sun Leland Li Hsun Mr. Wu Zhirui 2 Quanzhou Huixin Micro-credit Co., Ltd. Annual Report 2020 Corporate Information (continued) PRINCIPAL PLACE OF BUSINESS IN PRINCIPAL BANKERS HONG KONG The Agricultural Bank of China 31/F, Tower Two Jinjiang Jinjing Sub-Branch Times Square No. 200 Zhong Xing Road, Jin Jing Town 1 Matheson Street Jinjiang City Causeway Bay Quanzhou City Hong Kong Fujian Province PRC COMPANY’S WEBSITE China Minsheng Bank Quanzhou Branch www.qzhuixin.net No. 689 Citong Street Fengze District Quanzhou City STOCK CODE Fujian Province PRC 1577 Xiamen Bank Yilong Sub-Branch AUDITOR AND REPORTING No. 857 Xiahe Street ACCOUNTANT Huli District Xiamen City Ernst & Young Fujian Province Certified Public Accountants PRC Xiamen Bank LEGAL ADVISER Quanzhou Branch No. 474 Huixin Street Akin Gump Strauss Hauer & Feld Licheng District (as to Hong Kong laws) Quanzhou City Fujian Province PRC H SHARE REGISTRAR Boardroom Share Registrars (HK) Limited 2103B, 21/F, 148 Electric Road North Point Hong Kong Quanzhou Huixin Micro-credit Co., Ltd. Annual Report 2020 3 Chairman’s Statement On behalf of the Board, I would like to express my gratitude to all Shareholders for their support to the Company. Over the past year, the sudden outbreak of COVID-19 has ravaged the world, posing a serious threat to global public health. The world has been suffering its worst economic recession since the end of the Second World War, with major economic sectors hitting hard simultaneously for the first time. The operation of global industrial and supply chains was hampered, while trade and investment activities remained sluggish. To cope with the economic recession, the central bank has increased its efforts to provide inclusive credit to SMEs and microenterprises. The total amount of inclusive credit granted to SMEs and microenterprises has increased by approximately 30%, with the interest rate lower of 0.51% than that in 2019 and relaxed requirements for risk tolerance of customers. In addition, due to the government’s efforts to control the mess of private lending and the different understandings by local courts of the latest judicial interpretation of the Supreme People’s Court on the trial of private lending cases, the lending business of licensed institutions will be affected to a certain extent in the short term. In view of the said circumstances, we adjusted our business strategies. We scaled down the unsecured credit business and focused on asset quality. Focusing on the expansion of property mortgage business, we maintained a prudent attitude for development through strict examination of credit access for new customers and of new application for loans. Meanwhile, we will continue to monitor changes in market conditions, industry policies and regulations for timely adjustments to our business structure. We will also actively exchange experience with peer organisations and expand models for business cooperation. In order to better accommodate to the opportunities and challenges brought by changes in the market environment and laws and regulations, we actively organised internal training, business discussions and team building to guide key business personnel to conduct research on key industries and equity investment projects. In addition, we established an efficient and capable business team through appropriate streamlining based on the Company’s operating conditions. In order to adapt to the normalization of epidemic prevention and control, we have established an online information system. Our business approval currently has been implemented online, and the online information system will be continued to optimise in the later period so as to continually enrich its functions. For the year ended 31 December 2020, our net interest income was RMB143.5 million; net profit was RMB53.9 million; and balance of our loans amounted to RMB869.9 million. In a new year, as the global economic situation remains grim, we will continue to strive for seeking opportunities amidst challenges in order to reward Shareholders and the public as well as realise corporate value and social value. Quanzhou Huixin Micro-credit Co., Ltd. WU Zhirui Chairman 26 March 2021 4 Quanzhou Huixin Micro-credit Co., Ltd. Annual Report 2020 Management Discussion and Analysis INDUSTRY OVERVIEW Since the China Banking Regulatory Commission (中國銀行業監督管理委員會), which is transformed into the CBIRC, and the People’s Bank of China (中國人民銀行) (the “PBOC”) promulgated the Guiding Opinions on the Pilot Operation of Microfinance Companies (關於小額貸款公司試點的指導意見) in 2008, which first formalized the registration procedures for microfinance companies at the national level, China’s microfinance industry has seen rapid expansion. In 2012, the State Council approved the establishment of a pilot financial reform zone in Quanzhou City, making Quanzhou City the third pilot financial reform zone in China. Fujian provincial government subsequently implemented a series of financial reform policies and measures aiming at developing and cultivating the local financial services sector and channeling private capital to SMEs and local microenterprises. In 2014, the National Development and Reform Commission of the PRC (中華人民共和國國家發 展和改革委員會) designated Quanzhou City as a pilot zone for the comprehensive reform of the private economy, initiating reform programs that include improving the financial services sector as well as increasing the financial support of, and the financing resources available to, private enterprises. In December 2015, the State Council promulgated the Plan for Promoting the Development of Inclusive Finance (2016–2020) (Guo Fa [2015] No. 74) (推進普惠金融發展規劃 (2016–2020年) (國發[2015]74號), which aims to improve the quality and the coverage of inclusive finance service. In 2017, the government of Quanzhou City promulgated the Opinions on Promoting the Sound and Sustainable Development of Micro-credit Companies, Pawnshop Companies and Financing Guarantee Companies (泉州市人民政府關於促進小額貸款公司、典當行 和融資擔保公司健康持續發展的若干意見), which encourages microfinance companies to develop innovative businesses. In 2018, the Quanzhou Financial Affairs Bureau (泉州市金融工作局) and certain other government departments promulgated Opinions on the Implementation of Strengthening Financial Services of Real Economy to further Facilitate and Reduce the Cost of the Financing (關於加強實體經濟金融服務進一步緩解融資難融資貴的實施意見), which allow microfinance companies in Quanzhou to comprehensively carry out microfinance business mainly for SMEs and ‘agriculture, rural and farmers’ (三農) in Quanzhou City. China’s finance leasing industry has developed rapidly since 2012. With China’s industrial reform and equipment upgrades, the steady growth of China’s fixed asset investment has created greater potential for the development of the finance leasing industry. In 2016, Fujian provincial government promulgated the Opinions on Promoting the Development of the Finance Leasing Industry (關於促進融資租賃業發展的意見), which has implemented effective measures in taxation and development environment to support the finance leasing industry in Fujian province. BUSINESS OVERVIEW Our Group is principally engaged in loan business and finance lease business. We conduct our loan business primarily through the Company and JJHX. Based in Quanzhou City, we are the largest licensed microfinance company in Fujian Province in terms of revenue in 2020, according to the statistics of the Fujian Financial Supervision Bureau (福建省地方金融 監督管理局). We are primarily dedicated to providing local entrepreneurial individuals, SMEs and microenterprises with practical and flexible short-term financing solutions to support their continued development and address their ongoing liquidity needs.