The principal activities are the provision of corporate and personal banking services, conducting treasury business, the provision of asset management, finance leasing and other non-banking financial services.
Business Review - For the year ended December 31, 2012
Corporate Finance Business
In 2012, the Bank optimized its financial service models for large, medium and small corporate customers, promoted stratified operation for corporate customers, enhanced innovation of products and services in supply chain finance and cash management, accelerated business restructuring, and thereby achieved continuous and rapid development of corporate finance business.
The Bank expanded diversified source channels of corporate deposits, and reinforced growth of corporate liabilities that were of low cost and stable sources. Through systematic marketing to institutional customers, better cash management and provision of transaction banking products and services such as supply chain finance, the Bank pioneered into sources of corporate liabilities on the capital market and achieved continuous and steady growth of corporate deposits. The Bank further adjusted the structure of corporate asset through optimized allocation of credit resources. As a response to market-oriented interest rate reforms, the Bank made use of multiple tools such as bonds, mid-term notes, private equity bonds, and wealth management products for financing purpose, which, while expanding financing channels for customers, also promoted coordinated development of on and off-balance sheet asset business in corporate finance.
As at the end of the reporting period, corporate deposit accounts of the Bank stood at 309,700, an increase of 25,700 accounts over the end of the previous year; corporate deposit balance of the Bank reached RMB1,781.610 billion, up by 14.34% over the end of the previous year, with the balance of deposits from institutional customers including fiscal and taxation entities registering RMB477.790 billion, up by 18.15% over the end of the previous year, accounting for 26.82% of the Bank's total corporate deposits; and negotiated deposits recorded RMB99.340 billion, accounting for 5.58% of the Bank's total corporate deposits. The Bank's corporate loan balance (including discounted bills) registered RMB1,256.581 billion, up by 13.88% over the end of the previous year, and the balance for corporate general loans registered RMB1,188.415 billion, up by 12.31% over the end of the previous year. During the reporting period, the Bank realized RMB61.312 billion operating income from corporate finance business, accounting for 71.12% of its total operating income, which included net non-interest income from corporate finance business of RMB7.136 billion, 56.38% of the Bank's net non-interest income.
The Bank proactively adjusted growth speed of international business, expanded service chains, improved development efficiency and effectiveness and screened business risks, as a result of which, its international business achieved fast and sound development. During the reporting period, the Bank put forward settlement facilitation services such as ¡§Trade Fast Track¡¨ and ¡§Direct Investment Track¡¨ in response to new policy requirements of foreign exchange administration including regulations on customs verification for trade in goods and the policy on direct investment, and effectively enhanced quality of customer service by unique services such as customer training and ¡§24-hour no-deadline bill submission¡¨, all of which enabled the Bank to seize early opportunities resulting from policy adjustment.
During the reporting period, the Bank achieved USD239.663 billion in foreign exchange receipts and payments (including trade account, non-trade account and capital account) in its international business, up by 8.59% over the previous year, achieving a market share of 4.55%, ranking No.6 of all national commercial banks (according to the monthly statement on statistics of international receipts and payments prepared by the State Administration of Foreign Exchange) and No.1 among all joint-stock banks. Cross-border Renminbi receipts and payments realized by the Bank totalled RMB153.1 billion, achieving a market share of 5.30%. The Bank realized RMB2.580 billion fee income in international business, up by 29.32% over the previous year.
Cross-border Renminbi business of the Bank covers all-round financial products and services such as cross-border Renminbi settlement, financing, buy and sell, bonds, direct investment. During the reporting period, the Bank successfully handled China's first case of cross-border Renminbi foreign debt business under the three parties agreement model and first case of cross-border Renminbi business for a third-party payment, thanks to its efforts to strengthening its overseas platforms and capturing the market opportunities. The Bank's trade finance business continued with fast growth. During the reporting period, the Bank introduced new financing products including but not limited to nominated negotiation, re-negotiation, forfaiting-transfer, confirmation of bill payment and Red Clause L/C finance, which satisfied extensive customer requirements. During the reporting period, cumulative amount of on-balance sheet trade finance business of the Bank recorded RMB123.700 billion, up by 58.88% over the previous year.
Investment Banking Business
The Bank continued to apply its professional operation model in investment banking, put into play its role as provider of financial intermediary services on the capital market and enhanced its differentiated competitiveness. During the reporting period, the Bank successfully underwrote the first Asset-Backed Notes (ABN) and the first batch of Super Short-Term Commercial Paper (SCP) for central SOEs with AAA rating in China, completed the first case of cross-border M & A finance arrangements for overseas delisting of Chinese enterprises and granted its first batch of option loans to SMEs with high growth potentials.
During the reporting period, the Bank recorded RMB366.230 billion cumulative financing for customers, realized RMB2.641 billion net non-interest income from investment banking business, up by 31.77% over the previous year, of which business income from asset management, bond underwriting and structured financing went up by 149.64%, 53.65% and 40.75% respectively over the previous year.
The number of debt financing instruments underwritten by the Bank in 2012 took the third place in the Chinese banking industry (as per Wind rankings of aggregate numbers of bond underwriting in 2012). Meanwhile, the Bank maintained its first place among the leading small and medium-sized joint-stock banks for syndicated loans in Mainland China (as per Bloomberg Press rankings).
Business with Financial Institutions
Business with financial institutions is an important component of the Bank's corporate finance business. For a long time, the Bank promoted the construction of a marketing service system targeting institutional customers focusing on ¡§team, product, program and system¡¨, gradually set up its product/ service system and professional service teams for institutional customers, and developed special business system and information management system thereof. While deepening its cooperation with government agencies including fiscal departments at all levels, the Bank proactively drove forward its cooperation with institutional customers in areas of public utilities such as health care, assurance of people's livelihood, culture and education. As at the end of the reporting period, the Bank recorded nearly 15,000 accounts of institutional customers, and acquired a cumulative number of 280 licenses for fiscal agency business at national and sub-national levels, covering 28 provinces (autonomous regions and municipalities directly under the central government). As such, CITIC Bank is one of the commercial banks in China with the largest number and richest varieties of licenses for fiscal agency business.
Supply Chain Finance Business
The Bank enhanced product innovation and business model optimization for its supply chain finance business. Innovative non-standard business models such as bill pool pledge financing, financing with prepayments plus receivables and financing with physical goods pledge plus receivables were launched; the product series of port finance were further improved; the management model for steel finance business was optimized; and the supply chain finance business system was developed and put into operation, enriching functions of the commercial bill business system. During the reporting period, the Bank intensified professional operation of its supply chain finance business, constructed the platform for centralized management of supply chain finance business and extended its service to industries including pharmaceuticals, paper making, construction, engineering and machinery, food and apparel.
As at the end of the reporting period, the Bank's effective credit-receiving customers in its supply chain finance business reached 9,375 accounts, an increase of 1,513 accounts over the end of the previous year; cumulative value of financing reached RMB746.668 billion, an increase of RMB65.263 billion over the previous year; balance of credit stood at RMB286.605 billion, up by RMB15.298 billion over the end of the previous year; and the Bank had attracted 65 automobile brands into its ¡§head-office-to-head-office¡¨ business cooperation network, covering all key domestic automobile manufacturers in China. The number of cooperating car dealers reached 4,716, an increase of 681 or 16.88% over the end of the previous year.
The Bank further improved its cash management products system. Particulars include online operation of Cash Management version 5.2 which expands functionalities such as access to group funds reporting and multi-bank multi-currency cash pools and efforts to continue to promote the development of the online wealth management product sales system, the Wealth Management Account All in One Project, and the business system for integration of wealth and asset management.
As at the end of the reporting period, the cumulative number of cash management projects reached 2,487, up by 551 over the end of the previous year; while cumulative cash management customer accounts reached 15,148, an increase of 3,342 over the end of the previous year. During the reporting period, the Bank achieved cash management transaction value of RMB13.76 trillion, an increase of RMB2.41 trillion or 21.23% over the previous year.
Small Enterprise Finance
The Bank kept improving its operation and management structure for small enterprise finance, built up a special service system virtually covering all areas in China with active small enterprises, and strengthened regional marketing management functions of small enterprise finance centers at branches.
Focusing on the target market positioning of ¡§One Chain, Two Circles, and Three Clusters¡¨ and the marketing strategy of ¡§cluster marketing + credit upgrading¡¨, the Bank took the initiative to construct multiple cluster marketing platforms such as fairs, chambers of commerce, associations, parks and the supply chain. As at the end of the reporting period, the Bank enjoyed cooperation with about 800 cluster platforms of small enterprises of all types, and acquired nearly 10,000 new customers via these platforms. With quicker pace in its development of products tailored to small enterprises, the Bank launched numerous new products such as legal-person property mortgage loans, micro standard collateralized loans, micro credit loan and seed funds with impressive results.
As at the end of the reporting period, the Bank had 17,329 small and micro enterprise clients1 , an increase of 1,957 over the end of the previous year, to which the total balance of credit reached RMB352.878 billion, up by RMB42.626 billion or 13.74% over the end of the previous year; the balance of general loans totalled RMB212.218 billion, up by RMB43.763 billion or 25.98% over the end of the previous year, when the NPL balance was RMB3.382 billion and the NPL ratio was merely 1.59%. In parallel with sound and rapid development of credit to small and micro enterprises, the Bank gradually exhibited the profitability and advantages of the business. As at the end of the reporting period, the interest rate of outstanding loans for small and micro enterprises was 15.83% higher than the benchmark interest rate, markedly higher than the average interest rate of corporate loans.
In line with the development concept of shifting the focus of small business finance ¡§downward¡¨, the Bank will promote its small enterprise finance enterprise to continue its move towards micro retail enterprises and gradually shift target industries from manufacturing to service, from commodities and raw materials to consumer goods and from production-based services to consumption-based services. With more vigorous introduction of a flat business model, the Bank will set up smallbusiness operation and management centers at its urban branches, introduce quantitative risk control techniques, refine the standard credit granting work flow and realize concentrated batch processing of credit grant for small enterprises at its middle and back offices.
Retail Finance Business
In 2012, the Bank deepened the ¡§Customer Focus¡¨ business concept in its retail banking business, and reinforced construction of its customer system, product system, service system, channel system and customer manager system. Retail banking at outlets steadily moved towards sales orientation. More comprehensive wealth management was provided to retail customers. By boosting construction of savings channels and innovating wealth management products, the Bank achieved steady growth in retail assets under management1 . As at the end of the reporting period, the Bank's balances of personal deposits and retail AUM reached RMB366.972 billion and RMB617.063 billion respectively, up by 19.51% and 27.27% over the end of the previous year respectively.
The Bank adjusted retail credit product structure. While maintaining personal housing mortgage loans as its core business, the Bank focused on development of personal business loans and credit card loans, and paced up its expansion into other personal consumer loans. As at the end of the reporting period, the balance of retail credit totalled RMB320.044 billion, up by 26.07% over the end of the previous year, of which the balance of personal housing mortgage loans reached RMB185.935 billion, up by 9.53% over the end of the previous year; and the balance of personal business loans reached RMB63.539 billion, up by 69.23% over the end of the previous year. The Bank made great efforts to promote growth of the overall yield of its retail finance business through adjustment of retail credit product mix and improvement of product pricing capacity.
During the reporting period, the Bank achieved RMB14.106 billion operating income from retail finance, accounting for 16.36% of the Bank's total operating income, of which net non-interest income from retail finance reached RMB4.223 billion, accounting for 33.36% of the Bank's total net non-interest income. The individual customer base of the Bank was further expanded, reaching 33.12 million accounts as at the end of the reporting period, an increase of 13.1% over the end of the previous year.
The Bank further promoted sales-oriented transformation of outlets. In parallel with the construction of VIP Wealth Management Centers at 35 branches, the Bank initiated its wealth management construction project, upgrading the current VIP wealth management system.
In response to changing customer demands, the Bank launched innovative products including entrusted equity investment and bank-securities cooperation products, which, while meeting customer needs for all-round investment, also increased retail AUM and retail liabilities.
The Bank focused on promoting the development of fund and insurance agency business. The Bank reinforced sales of money market funds, bond funds and principal-guarantee hybrid funds that were of medium and low risks in line with market situations and bank customer features. At the same time, the Bank proactively introduced premium insurance companies and products and effectively developed competitive cooperation mechanisms between its outlets and insurance companies in strict adherence to its business strategy of cooperating only with ¡§premium companies and premium products¡¨. During the reporting period, agency fund sales of the Bank (including collective wealth management plans of securities brokerages) reached RMB40.007 billion, up by 62.59% over the previous year; and insurance sales on agency basis amounted to RMB5.686 billion, up by 137% over the previous year. Fee income from insurance agency sales doubled year-on-year, becoming a growth driver of retail fee-based business.
As at the end of the reporting period, the number of VIP customers holding AUM over RMB500,000 reached 236,800, an increase of 32.93% over the end of the previous year; the balance of AUM of VIP customers amounted to RMB383.769 billion, accounting for 62.57% of the Bank's total retail AUM; AUM of VIP customers incremental to the reporting period recorded RMB96.404 billion, accounting for 75.03% of the Bank's total incremental retail AUM.
During the reporting period, the Bank provides private banking services to high net worth individuals with daily average AUM of over RMB6 million and to the companies in which these individuals have controlling or non-controlling equity interests. The Bank further strengthened development of its private banking service system with the objective of ¡§helping customers preserve wealth, create wealth and pass on wealth¡¨. Further efforts were made to conduct refined management, including provision of professional consulting and investment advisory services, establishment of an open platform for private banking products, development of a marketing system to enhance interaction between the Head Office, the branches and the sub-branches, construction of unique systems regarding training, remuneration and incentives of private banking customer managers, launch of uniform bank-wide standards for private banking services, and creation of a differentiated value-adding service system for private banking customers.
As at the end of the reporting period, standard private banking customers1 of the Bank numbered 11,700 accounts and the balance of their AUM totalled RMB105.353 billion.
The Bank enhanced product innovation and upgrading in its credit card business centering around the brand new branding concept of ¡§Your love, Share it¡¨. Innovative products such as the ¡§I-Platinum Card¡¨ joined the high-end family. With the rights and interests of card holders and the Bank's service system fully upgraded under the theme ¡§Family, Business Travel and Fashion¡¨, ¡§I- Platinum Card¡¨ holders enjoyed high-end services such as 10% cash refund for hotel consumption, compensation of RMB1,000 for flight delays over 2 hours (inclusive) and experience of Magic SPA for six times. Due rights and interests of high-end products such as the ¡§Supreme Leadership¡¨ No- Limit Card were upgraded. CITIC Magic Card, CITIC-Prudential Insurance Joint-Brand Card and Private Banking Card were optimized, improving customer experience. In terms of business travel, the Bank continued to boost its cooperation with partners in the business travel industry including airlines, travel agencies and brand hotels, expanded marketing scope of business travel products, and improved its all-round business travel product system that covered airlines, hotels and tourism. For research and development of products related to rights and interests of card holders, the Bank introduced innovative products including automobile rescue and assistance, global loss assistance for CPP Selective, Golf rights and interests and Gushengtang health packages, which effectively enriched the contents of existing value-adding products.
As at the end of the reporting period, the Bank issued a cumulative number of 17.1391 million credit cards, up by 21.78% over the end of the previous year. During the reporting period, credit card transaction value of the Bank and total income from credit card business amounted to RMB273.086 billion and RMB5.928 billion respectively, up by 64.10% and 63.50% over the previous year respectively. Credit card consumer loans of the Bank doubled its business income over the previous year.
Internet banking, as an important direction of the Bank's strategic development, aims at enabling the Bank to lead the industry in internet banking services, developing strong support to the Bank's traditional business and customers, and making full use of the advantages of internet banking in business innovation for independent customer operation and creation of ¡§another CITIC Bank online¡¨ through product innovation, brand development, market expansion, service capacity expansion, improvement of service efficiency and reduction of operation costs.
In order to actively respond to the new socioeconomic trends and development of the internet economy and to realize the supporting role of internet banking to its business, the Bank set up its Internet Banking Department at the Head Office to integrate corporate and personal internet banking business and further promote business innovation and development. During the reporting period, the Bank enjoyed rapid growth of income from fee-based internet banking business, with income of feebased personal internet banking business amounting to RMB90.4746 million, up by 69.80% over the previous year; and that of corporate internet banking intermediate business totalling RMB155.4866 million, up by 29.58% over the previous year.
Please refer to ¡§Domestic Distribution Channels¡¨ under ¡§Management Discussion and Analysis¡¨ in this announcement for development details of the Bank's online banking business including internet banking platform, mobile banking platform and e-commerce platform.
Auto Consumer Credit
The Auto Finance Center of the Bank conducted auto consumer credit business in Beijing and Shanghai enjoying important market shares. By continous innovation of business process and products and optimizing customer loan experience, the Bank maintained its regional competitive edge in the above regions. During the reporting period, the Auto Finance Center of the Bank issued 14,800 personal auto consumer loans valued at RMB3.507 billion in total, up by 0.4% over the previous year; and the stock volume and balance of personal auto credit registered 33,800 loans and RMB4.970 billion. As at the end of the reporting period, personal auto consumer credit business of the Bank covered a cumulative number of 71 auto brands and 590 dealers located in Beijing and Shanghai, an increase of 154 dealers over the end of the previous year; and the NPL ratio of personal auto consumer loans stood at 0.55%. In addition, the Bank has launched auto credit business in 10 branches including Zhengzhou Branch, Wuhan Branch, Chongqing Branch, etc. as at the end of the reporting period, and will launch the business in all branches in 2013.
Financial Market Business
For the reporting period, the Bank's operating income from its financial market business reached RMB10.797 billion, accounting for 12.52% of the Bank's total operating income; and its net noninterest income from financial market business totalled RMB1.299 billion, accounting for 10.26% of the Bank's total net non-interest income.
Treasury and Capital Market Business
The Bank dynamically adjusted business structure, proactively promoted strategic transformation and thereby steadily escalated its overall profitability and facilitated liabilities growth of the whole bank via product and service innovation.
The Bank reinforced product design and market risk management for FX against RMB market making business, innovated new products such as structured options and cross-border business, and created value for customers through product innovation. The Bank proactively pushed forward its Renminbi denominated bond market making business, interest rate derivatives market making business and underwriting business, endeavored to improve its capability in pricing and trend judging, tapped into actual demands of customers, and effectively satisfied customer needs for managing financial risks and improving financial earnings with the use of Renminbi denominated derivatives.
The Bank prioritized the launch of bond-asset-portfolio type wealth management products and structured wealth management products that are of low risk and stable yields, with its product system covering multiple product categories (daily open, regularly open and closed, etc.). With continuous enhancement of product R & D, the Bank was able to launch the first open bond type wealth management product with progressive yields in the banking industry that realized real-time availability of redeemed funds, which satisfied customer demand for wealth management of different maturities and achieved relatively higher yields for customers on the basis of controllable risk.
The Bank, in continuous pursuance of its prudent development strategy, focused on standardized simple derivatives business, and satisfied customer demand for financial management mainly through simple interest rate derivatives on the basis of controllable risk. Meanwhile, the Bank intensified its efforts to conduct market research, and provided customers with high quality professional hedging services.
The Bank adopted a prudent investment strategy for Renminbi denominated bond investment, took an appropriate grasp of market rhythm, made timely adjustment of duration, optimized asset structure and paid equal attention to return on asset and market risk. In terms of foreign currency bond investment, the Bank highlighted adjustment of asset structure, actively reduced assets with relatively high expected risks, and thus enhanced yield stability and risk resilience of its assets in general.
To fully tap into market growth potentials of interbank business, the Bank newly established an Treasury and Financial Institutions Department at the Head office to integrate interbank business management and Renminbi liquidity risk management functions bank-wide, push forward development of interbank business, upgrade liquidity risk management and build the ¡§CITIC Interbank Finance¡¨ brand. During the reporting period, the Bank enjoyed rapid growth of interbank business while effectively preventing risk via such means as platform construction, reasonable allocation of assets and enrichment of business products.
The Bank explored for new cooperation models of interbank business, tapped into the channel value of interbank business and constructed platforms for interbank business cooperation, focusing on 6 types of customers, namely, banks, securities companies, enterprise group financial companies, trust companies, insurance companies and financial leasing companies. The Bank increased credit lines granted to major interbank trading counterparts under the prerequisite of controllable risk. Meanwhile, the Bank constructed extensive platforms for business cooperation between itself and securities companies via the conclusion of head-office-to-head-office cooperation agreements. As at the end of the reporting period, the Bank verified credit lines to 242 customers of interbank business and granted credit lines to 148 banks, and signed strategic cooperation agreements with 19 interbank business customers. Cumulatively, the Bank signed third-party depositary agreements with 89 brokers and agreements on margin trading and short selling business with 20 brokers, recorded 57,125 incremental terminal customers for securities investment and covered over 80% of the domestic securities companies in its securities trading funds depositary business during the reporting period.
The Bank made efforts to construct a systematic marketing platform, improve performance evaluation and incentive mechanisms, enrich source channels of interbank liabilities and enhance absorption of low-cost funds. During the reporting period, daily average balance of Renminbi and foreign currency deposits from financial institutions reached RMB353.280 billion, an increase of RMB171.538 billion or 94.39% over the previous year.
The Bank optimized its asset distribution, and reinforced allocation into high-yield assets. In addition, the Bank furthered interbank business cooperation in reverse repurchase of interbank discount of bank drafts, and promoted interbank business cooperation with large state-owned banks, and national joint-stock banks in non-settlement deposits and placements with banks and non-banking financial institutions. During the reporting period, the average daily balance of interbank assets of the Bank stood at RMB396.648 billion, up by RMB169.416 billion or 74.56% over the previous year.
Special Business Area: Asset Custody Business
For its asset custody business, the Bank focused on construction of resource platforms, consolidation of customer base, and development of professional teams.
As at the end of the reporting period, assets under the Bank's custody reached RMB725.428 billion, an increase of 117.36% year-on-year, of which the scale of pension under contract totalled RMB27.903 billion, up by RMB13.306 billion or 91.16% over the previous year. During the reporting period, total intermediary income from custody business reached RMB483 million, an increase of 50.94% over the previous year; the Bank enjoyed over 200% growth in its traditional custody business including public funds and brokerage collective wealth management, became the first joint-stock bank in China to conduct QFII custody business, doubled the size of PE custody, realized full custody of insurance funds in areas such as debt investment, equity investment and property investment, linked with 12 exchanges for online trading funds custody and was listed among the top three in the whole banking industry in terms of online annuity growth rate for three consecutive years as per statistics of the Monthly Statements on Management of Enterprise Annuity Business prepared by the China Banking Association.
Special Business Area: Wealth Management Business
The Bank newly established the Wealth Management Department at the Head Office and further clarified the organizational structure for wealth management business in line with the work principle of ¡§unified management, unified accounting, unified sales and unified branding¡¨, and the management philosophy of ¡§separating front, middle and back offices, unifying channels and safeguarding consistent customer relationship¡¨, resulting in more standard business management and improvement of risk resilience in wealth management.
The Bank focused on expanding source channels of wealth management assets, increased scale and yield of wealth management projects, put its professional capacity of designing wealth management products into play and satisfied customized demands of customers by grasping opportunities for market investment, reinforcing innovation of research and development models and cross-platform business, constructing the Securities of Trust (SOT) model for cooperation between the Bank, securities companies and trust companies, and pioneering into credit up-grading resources of guarantee companies. As a result, the Bank increased issuance scale and integrated yields of wealth management products.
During the reporting period, the Bank earned RMB1.236 billion intermediary business income from wealth management, including RMB977 million fee income from wealth management products developed and sold by the Bank, and created wealth management yield of RMB7.290 billion for customers. As at the end of the reporting period, the Bank recorded 18 major categories of existing wealth management products in private and corporate banking plus wealth management products sold or recommended on agency basis, basically covering all wealth management product categories available at the market, with total sales of wealth management products reaching RMB926.695 billion, of which wealth management products developed and sold by the Bank, amounted to RMB863.995 billion; and products sold on agency basis totalled RMB62.7 billion in value. As at the end of the reporting period, the Bank's outstanding wealth management products of all categories reached RMB278.451 billion, including RMB238.004 billion outstanding wealth management products developed and sold by the Bank and RMB40.447 billion outstanding products sold on agency basis.
Service Quality Management
In pursuit of the service philosophy of ¡§business integrity, customer orientation, and value creation for customers¡¨, the Bank guided all employees to raise morale and build up the sense of urgency, the sense of responsibility and the sense of crisis and thus upgraded its financial services.
The Bank continued to enhance the management of service quality from the perspective of customer experience. Efforts were made to intensify service management and improve service management mechanisms. Emphasis was placed on normalization of service management. Stringent service quality evaluation was carried out; customer complaints were managed in better ways; and awareness of service execution was reinforced. In parallel with institutional assurance of quality, efforts were made to enhance awareness of employees for professional, standard and well-regulated service execution.
Service quality management of the Bank was recognized by all sectors of the society. 28 sub-branch outlets of the Bank won the honor of ¡§Top 1000 Demonstration Units of Civilized and Standardized Services in the Chinese Banking Industry in 2012¡¨, which event was organized by the China Banking Association. Meanwhile, the Bank won the ¡§Award for Outstanding Contribution to the Competition for the Honor of Top 1000 Demonstration Units of Civilized and Standardized Services in the Chinese Banking Industry in 2012¡¨.
Integrated Financial Service Platform of CITIC Limited CITIC Limited
has numerous financial subsidiaries that are engaged in multiple business areas including banking, securities, fund, trust, insurance, futures and etc., most of which are of niche markets. The Bank has long been practicing, under the prerequisite of lawfulness and compliance, the business philosophy of ¡§customer focus¡¨, and has endeavored to establish its unique competitive advantages via the integrated financial service platform of CITIC Limited. In the meantime, the Bank has continuously consolidated its cooperation with CIFH and CNCBI to steadily push forward its ¡§going global¡¨ strategy.
Provision of Integrated Financial Solutions
The Bank provided customers with differentiated integrated financial services through cross-selling of financial products and joint marketing of major projects.
¡E Underwriting of commercial papers, medium-term notes, private placement notes and assetbacked papers: During the reporting period, the Bank and CITIC Securities jointly underwrote RMB14.5 billion debt financing instruments.
¡E Issuance of wealth management products: During the reporting period, in collaboration with CITIC Securities, CITIC Trust China Securities and CITIC Kingview Capital, the Bank issued RMB110.857 billion worth of corporate wealth management products.
¡E Provision of cross-border financing solutions: During the reporting period, in cooperation with CNCBI, the Bank provided its strategic customers with a cumulative amount of USD 330 million cross-border structured financing support.
Extensive Sharing of Customer Resources
The Bank cooperates with four securities companies under CITIC Group, i.e., CITIC Securities, CITIC Securities (Zhejiang), China Securities, and CITIC Wantong Securities, on third-party depositary services, and is the main depositary bank for CITIC Securities and CITIC Securities (Zhegjiang), and the general depositary bank for China Securities and CITIC Wantong Securities.
¡E Institutional customers: As at the end of the reporting period, the Bank shared 4,637 institutional customers with securities companies under CITIC Group, achieving RMB11 .35 million fee income for depository services during the reporting period.
¡E Personal customers: As at the end of the reporting period, the number of personal accounts of third-party depositary business from the four securities companies increased by 5,000 persons over the end of the previous year.
Cross-Design and Cross-Selling
¡E Realizing advantages of the custody business platform: The Bank conducted cooperation with CITIC Securities, CITIC Trust, China Securities, CITIC Capital and CITIC Kingview Capital in product development, industrial (venture capital) fund investment platform construction and trust market pioneering and expansion. During the reporting period, the custody scale of PE products denominated in both Renminbi and foreign currencies jointly launched by the Bank and CITIC Capital reached RMB886 million; the custody scale of the collective/targeted asset management program for securities companies jointly launched by the Bank and CITIC Securities totalled RMB30.046 billion; and the collective funds trust scheme jointly launched by the Bank and CITIC Trust registered RMB17.020 billion in scale.
¡E Joint development of annuity business: During the reporting period, CITIC Securities was the investment manager of ¡§Splendid Life¡¨, a corporate annuity program jointly launched by the Bank and Ping An Annuity Insurance Company of China, Ltd., which totalled RMB384 million in scale. CITIC Securities acted as the investment manager of ¡§Xiangrui Xingtai¡¨, a series of corporate annuity programs jointly launched by the Bank and Taikang Pension & Insurance Co., Ltd., which was valued at RMB290 million in scale. CITIC Securities and China AMC acted as the investment managers of ¡§Golden Life No.1¡¨, a corporate annuity program jointly launched by the Bank and China Merchants Bank Co., Ltd., totalling RMB168 million in scale. Corporate annuity business with CITIC Trust as trustee and CITIC Bank as custodian totalled RMB90.6133 million in scale.
¡E Other interbank cooperation: In cooperation with CITIC Securities Futures, the Bank jointly conducted standard bill pledge business, rendered credit support to enterprises engaged in futures hedging and sold special-account fund products of CITIC Securities Futures on agency basis. As at the end of the reporting period, the Bank had provided integrated credit support to over 20 premium customers of CITIC Securities Futures. In addition, the Bank conducted cooperation with Tianan Insurance and CITIC-Prudential Insurance in liabilities, settlement and cash management business and became the latter two's major partner bank.
Cooperative Provision of Value-added Services for Customers
The Bank kept cooperation with CITIC-Prudential Insurance to promote insurance value-added services for card holders.
¡E Value-added services for Fragrant Card holders: Assurance services including female surgery allowances were provided to Fragrant Card holders that satisfied certain conditions of asset management. As at the end of the reporting period, such assurance was made available to 250,000 Fragrant Card holders.
¡E Value added services for Happy Elderly Card holders. In view of advanced age of card holders in general, the Bank launched value-added services including personal accident insurance and hospitalization allowances for card holders, benefiting about 6,000 customers as at the end of the reporting period.
¡E ¡§Hui Card¡¨ Going-abroad Finance Project: The Bank provided short-term overseas rescue and assistance insurance for Hui Card holders. Short-term travel insurance was delivered to 23,567 card holders as at the end of the reporting period.
Cooperation with Strategic Investors
Based on the principle of mutual benefit, mutual trust and reciprocity, the Bank promoted its cooperation with BBVA in prioritized projects, promoting strategic cooperation in all related business areas.
¡E Cash management: The two sides successfully provided cash management services to MONGO, a strategic customer of BBVA, and jointly communicated with several medium and large enterprises with regard to overseas fund management such as opening of Non-Resident Accounts (NRA) and foreign exchange settlement and sales and reached preliminary intention for cooperation thereof.
¡E International business: During the reporting period, international settlement and trade finance completed between the two parties totalled USD79.5918 million and USD622 million respectively.
As at the end of the reporting period, the Bank has opened 11 cross-border Renminbi settlement Nostra accounts for BBVA and its subsidiaries, covering all BBVA subsidiaries in major Latin American countries. By jointly launching marketing programs, etc., the Bank and BBVA collaborated to work out financial solutions to meet demand of the Bank's customers for comprehensive cross-border financial services in their pursuit of ¡§going global¡¨ in Latin America.
¡E Treasury and capital market business: Leveraging advantages of the Bank in treasury and capital market business and those of BBVA in global financial market business, the two parties conducted cooperation in foreign exchange, derivatives and wealth management business. During the reporting period, the transaction value of foreign exchange treasury business between the Bank and BBVA was around RMB34.656 billion, while the value of their derivatives transaction totalled RMB5.95 billion.
¡E Financial services to small enterprises: The two parties were engaged in joint research vis-avis standard credit granting process for small and micro enterprises, quantitative risk control techniques and construction of business operation platforms, as well as promotion of cooperation in related business areas and development of personnel exchange mechanisms.
¡E Investment banking: Bilateral cooperation projects in this regard mainly concentrate in crossborder equity M&A, ship finance, export credit, overseas project finance and cross-border cash management for large and medium state-owned and private enterprises that are customers of the Bank. From 2011 to the present, contractual value of cross-border financing projects jointly provided by the Bank and BBVA totalled USD260 million, including about USD50 million concluded during the reporting period. In addition, the two parties have USD 770 million crossborder financing projects being jointly promoted.
¡E Private banking: The two sides continued their explorations for a cooperation model consistent with their respective business development requirements, so as to provide private banking services that integrate Chinese and Spanish characteristics.
¡E Pension business: With reference to rich BBVA experience in pension business, the Bank promoted bilateral cooperation in pension business system development and product design.
¡E Economic research: The two sides co-prepared the China Real Estate Outlook-Annual Report 2012 which analysed commercial and affordable housing development in China on the basis of analysis.
Business Outlook - For the year ended December 31, 2012
The Bank targets for approximately 14% growth of aggregate assets and around 14% growth of self-operating deposits in 2013. Proactive efforts will be made to adjust and optimize its business structure, customer structure and profit structure, achieve steady increase of net profit and control NPL ratio at a relatively low level.
In 2013, the Bank will follow its guiding philosohpy ¡§expand deposit scale, promote structural transformation and upgrade management level¡¨ and focuse its efforts on the following seven aspects:
Enhance marketing to improve business competitiveness: The Bank will focus on liabilities business and prioritize taking in stable low-cost settlement deposits and savings to realize rapid scale expansion of liabilities at controllable cost, speed up restructuring of assets business, and vigorously develop fee-based business.
Drive the focus of corporate customers upward and that of retail customers downward: The Bank will steadily implement the policy of moving the focus of big corporate customers upward to highlight the status of medium corporate customers as the core customer group of the Bank and pace up movement of the focus of retail customers downward to accelerate the construction of a service system for small and micro enterprises.
Speed up information technology and operation system development to render effective support to business growth: The Bank will pool resources and make the best use of time to promote construction of core systems, reinforce cooperation between IT and business departments, enhance safety, and further develop data centers and disaster backup centers to ensure efficient business operation.
Develop outlets and internet banking with a quicker pace to increase the Bank's stamina for future development: The Bank will exert further efforts to accelerate its institutional development, and steadily promote direct management of tier-two branches, while accelerating the construction of its organizational framework and service system for internet banking, speeding up development of mobile payment and e-commerce and increasing input into e-channel construction.
Intensify internal risk control capability building to ensure stable asset quality: With firm adherence to its ¡§proactive but prudent¡¨ risk preference, the Bank will actively grasp the macro development opportunities, upgrade capability for comprehensive risk management and control, reinforce risk management and control in retail credit and small enterprise finance, and enhance compliant operation and audit of key areas.
Further the guiding role of performance evaluation and support development of key geographical regions and business areas: The Bank will enhance the guiding role of performance evaluation by constructing a scientific comprehensive performance evaluation system. Meanwhile, more resource input will be made to increase support to strategic priorities. Credit business scale expansion will focus on supporting development of low-capital-consuming business lines and financial input will lean towards key regions, key customers, key products and innovative business areas.
Reinforce development of support and assurance systems to ensure safe, stable and healthy operation of the Bank: The Bank will strengthen the construction of its accounting system and projects that are operated bank-wide in a concentrated manner, improve corporate governance and investor relations management, refine market value management, and enhance development of operation assurance systems.
Source: CITIC Bank (00998) Annual Results Announcement
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