Thursday, March 28, 2024
 
Columnist
Martin Hennecke
 
MINSHENG BANK
HKEx Stock Code : 01988 
 
Corporate Profile
The Bank provides corporate banking, retail banking, treasury and others.

Business Review - For the year ended December 31, 2012

(I) Corporate banking

In the reporting period, the Company took initiatives to respond to changes in operating and regulatory environments. Targeting on building itself into a distinctive and efficient bank, the Company focused on the implementation of strategies relating to NSOEs and promotion of the Financial Stewardship (金融管家) services and adopted intensive management undercapital restraint. The Company continued to strengthen its customer base, core business foundation and professional team building, and enhanced product and service innovation. It also continued to promote structural adjustment and growth method transformation along with its development.

1. Customer base of corporate banking

In the reporting period, the Company adopted the strategy of positioning itself as a “bank for NSOEs” and continued to expand its customer base with the following measures: (1) the Company took various means and measures to expand into new markets and develop new customers to further enhance the corporate customer base; and (2) leveraging the needs arising from the transformation of the national economy and its business, the Company sped up the development of a strategic NSOE customers and continuously refined and popularized its Financial Stewardship (金融管家)services pattern. The Company also exerted its efforts in developing SME customers in a batch manner to increase the number of customers and further optimize its customer structure.

As at the end of the reporting period, the Company had 16,085 customers with outstanding general loans, and 0.2878 million corporate deposit accounts with outstanding balance, representing significant increases of 18.45% and 22.62% as compared with the end of the previous year, respectively. The average balance of outstanding loans per corporate account further decreased to RMB54 million from RMB59 million as at the end of the previous year, primarily due to the rapid increase in the number of SME customers under the effective customer development strategy. Loan concentration was further reduced and the customer structure continued to be optimized.

In the reporting period, the Company continued to cooperate with ACFIC, CCCPS, local chambers of commerce and industry associations for implementing its NSOE strategy. NSOEs which were able to satisfy the requirements of “professional team building, strategy recognition, integrated finance and value creation” were selected as the Company's target customers. The Company set up dedicated Financial Stewardship (金融管家) service team to provide planning and integrated financialservice schemes, including industry chain financing, the issuance of debt financing instruments, structured financing and cash management, for its customers, based on their strategic development and demands for financial services, in order to cultivate the core NSOE customer base of long-term strategic partnership. In the reporting period, the Company and ACFIC jointly organized the “Press Conference on China's Top 500 NSOEs” (中國民營企業500強發佈會) again and announced the top 500NSOEs, top 500 manufacturers and top 100 service providers of service industry in China. The Company provided integrated financial service scheme, including industry chain financing, issuance of debt financing instruments, structured financing, and cash management to many of those customers.

As at the end of the reporting period, the Company had 13,680 NSOE customers with outstanding loan balances, and outstanding general loans amounted to RMB537,505 million, representing increases of 20.50% and 11.02% respectively as compared with the end of the previous year. In corporate banking business, the number of NSOE customers with outstanding general loans accounted for 85.05% and the relevant general loan amount accounted for 61.57%.

2. Corporate loans

In the reporting period, being committed to its mission of “developing distinctive businesses, restructuring, preventing risks and maintaining steady development”, the Company closely monitored the macro-economic environment and market changes in response to the risks associated with cyclical economic downturn. The Company enhanced the risk management of key businesses and controlled the growth and extension of loans on a rational basis to boost its distinctive business development and optimize its loan structure. The size of corporate loans recorded steady growth and the asset quality remained stable.

As at the end of the reporting period, outstanding corporate loans (including discounted bills) of the Company amounted to RMB913,097 million, representing an increase of RMB76,191 million, or 9.10%, as compared with the end of the previous year. Outstanding general corporate loans amounted to RMB873,037 million, representing an increase of RMB68,020 million, or 8.45%, as compared with the end of the previous year. Non-performing corporate loan ratio of the Company was 0.90%.

The major business strategies and measures of the Company's loan business include the followings:

(1) According to the direction of the “12th Five-Year Plan” and the industrial and financial policies of China, the Company focused its attention on industries and business areas related to urbanization, industrial transformation and upgrade, and customer consumption upgrade. Via innovating business models, the Company further expanded the development of distinctive businesses such as stone materials, marine fishery and tea for advancing the business transformation.

(2) The Company strictly restricted the extension of loans to industries with “high pollution and energy consumption and excessive production capacity”, overlapping construction projects with low quality and government financing platform business in accordance with the requirements of the government's macro-economic readjustment and control and regulatory policies to control credit risks effectively.

(3) The Company targeted on four major customer groups, namely industryconcentrated customers, related customers of core corporate customers, customers engaging in resources industries and customers with weak cycles. It focused on developing customers with outstanding operating results for main business, excellent management, sound financial position, high operational efficiency and bright prospects in order to further optimize customer structure.

(4) The Company enhanced the integration and innovation of credit products and promoted the development of self-liquidating credit business to mitigate its risks effectively through closed operation of funds and self-liquidating procedures. It also provided flexible credit product portfolios including commercial bills, transaction finance and trade finance as well as integrated credit facilities to meet the financing demand of customers. In these ways, the Company continued to optimize its credit structure and steadily increase the revenue from credit business.

In the reporting period, the Company established a professional risk prevention and control platform. While constantly strengthening its stable and standardized operation, the Company also increased its efforts in the innovation of the bill business and the construction of bill products, services and processes in order to satisfy the financial needs of corporate customers as the central task. It strengthened its services to cater for the bill financing and settlement needs of the real economy and SMEs. It further satisfied customers' needs for diversified financial products and provided an effective bill solution to reduce the overall financing cost of customers. In the reporting period, the business volume of direct discounted bills amounted to RMB1,005,692 million, of which, the business volume of direct discounted commercial bills amounted to RMB190,822 million, representing increases of 140.37% and 47.92% respectively as compared with the corresponding period of the previous year.

3. Corporate deposits

In the reporting period, aside from further consolidating the deposit customer base, the Company also exerted efforts in conducting research on liability business models. Focusing on the cash flows of customers, the Company explored new channels. Furthermore, the Company enhanced the establishment of settlement platform and refined the system for cash management business. The Company continued to increase the balance of its deposits through the development of key businesses and services, such as traditional settlement, transaction finance, trade finance and cash management.

As at the end of the reporting period, the balance of corporate deposits of the Company was RMB1,517,954 million, representing an increase of RMB172,696 million, or 12.84%, as compared with the end of the previous year. In the reporting period, 61,954 new corporate deposit accounts of the Company brought a growth of RMB137,265 million in deposits, which accounted for 79.48% of the net increase in corporate deposits.

In the reporting period, the Company continued to strengthen its transaction finance business. The Company formulated specific plans and introduced innovative models for the business development and restructuring. It proactively expanded the customer base in a batch-based manner. Overall sales to large customers, SME and MSE customers were boosted by streamlining industry chains, which contributed to rapid growth of all businesses of the Company. The transaction finance business has become a brand business of the company in improving business structure, stabilizing growth of deposits and increasing integrated revenue. In the reporting period, the transaction finance business volume of the Company amounted to RMB1,112,214 million with 11,288 regular customers and the balance of derivative deposits was RMB229,209 million, representing increases of 64.72%, 60.07% and 40.31% respectively as compared with the corresponding period of the previous year. As at the end of the reporting period, the Company maintained its leading position among its peers with the balance of its transaction finance business amounting to RMB321,391 million.

In the reporting period, the Company sped up the development of cash management products and systems. It successfully developed and launched various new product systems such as “Settlement System” (結算通), cash pool (現金池), virtual account (虛擬賬戶) (new version) and corporation overdraft (法人賬戶透支) (new version). TheCompany emphasized the development of core customers in industry chains, major business circles, trading places and electronic settlement platforms, major trading and logistics industries and their upstream and downstream customers. As at the end of the reporting period, the number of customers of key cash management products of the Company was 9,135 and the daily average customer deposits amounted to RMB215,161 million.

4. Corporate non-interest income business

In the reporting period, the Company integrated the development of intermediary business with organizational restructuring in accordance with applicable laws and regulations. The Company strengthened its service-oriented intermediary business and expanded the scale of trade settlement, custody and fund monitoring services so as to secure the stable growth of revenue on basic intermediary business. It also used the issuance of debt financing instruments, trust wealth management and led syndicated loans to boost the continuous growth of fee income from its direct financing business. In addition, the Company actively developed its intelligence-based intermediary business by integrating commercial bank's investment banking products and services. The integration of structured financing and financial advisory business as well as asset management and financial advisory business diversified and enhanced its service portfolio under a sophisticated business model of smart financing services. The combined effect of innovative products and services and the diversified business model boosted rapid increase in net fee and commission income of the corporate business segment in the reporting period. The aggregated amount of net fee and commission income was RMB9,960 million, representing an increase of 11.33% as compared with the correspondent period of the previous year.

In respect of the commercial bank's investment banking business, the Company offered customers, particularly strategic NSOEs, comprehensive financial services focusing on investment and financing. The Company continued to improve and carry out innovation of its product and service systems and expand the span of its products and services. It focused on broadening varieties of direct financing and asset management products in the capital market and enriching consultation and financial advisory services. It also enhanced its capacities of program integration and design and strengthened the integrated efficiency of professional platforms. The Company established its professional teams, and further standardized the business management and operation model. The Company accelerated the replication and promotion of well-developed business models. It also focused on the trial operation of “Listing Express” (上市直通車) business to establish a new financial service model.

In respect of debt financing instruments, by grasping market opportunities, the Company targeted at medium-sized quality customers, particularly strategic NSOEs, and exerted its efforts to develop collective notes, short-term notes and medium-term notes for SMEs. In the reporting period, a total of 153 issuance of short-term financing bonds, medium-term bills, super short-term financing bonds, targeted instruments and regional optimized notes, totalling RMB108,307 million were issued, which satisfied the financing demand of customers and also boosted the steady growth of net noninterest income.

In respect of the asset custody business, the Company focused on key products in industry chain and cash chain by integrating internal resources and establishing external platforms, maintaining a rapid growth in segmented markets namely, securities investment fund, wealth management custody for fund customers, asset management plans for customers of securities companies, insurance bond plans, equity investment fund and transaction fund custody in bulk commodity exchange. As at the end of the reporting period, the assets held by the Company as custodian (including safekeeping) amounted to RMB989,763 million, representing an increase of 159.67% as compared with the end of the previous year. Revenue from the custody business was RMB997 million, representing an increase of 153.69% as compared with the corresponding period of the previous year. The size and performance of custody business of the Company achieved rapid growth. In the reporting period, the asset custody business of the Company was honoured as the “2012 Best VC/PE Custodian Bank” (2012年度VC/PE最佳託管銀行) by the 21st Century Business Herald, the 2012 Best CustodianServices Bank (2012年度金牌服務力託管銀行) by Financial Money and one of the“2012 Top Five VC/PE Custodian Bank in the PRC” (2012年中國VC/PE最佳託管銀行5強) by the Zero2IPO Group with increasing brand influence.

In respect of pension business, the Company put strategic emphasis on the development of pension business and implemented segmented target markets strategy. It put more efforts into the integration of resources of the Bank to build comprehensive financial service platform for pension service, so as to facilitate the rapid development of pension business of the Bank. As at the end of the reporting period, 121,315 corporate annuity accounts were managed by the Company, representing an increase of 13.70% as compared with the end of the previous year. The corporate annuity funds under custody amounted to RMB6,933 million, representing an increase of 49.03% as compared with the end of the previous year.

5. Operation of the SBUs

In the reporting period, all SBUs of the Company took proactive measures in response to the domestic and overseas economic and financial environment and market changes by enhancing risk prevention, exploring business opportunities in emerging markets, developing the “Financial Stewardship” (金融管家) service model and implementingNSOE strategies. All lines of business at SBUs achieved steady growth and asset quality continued to improve.

(1) Real Estate Finance SBU

In the reporting period, the Real Estate Finance SBU actively responded to the market condition in real estate industry under the government's austerity measures. It strived to maintain a stable and prudent operation and strengthened market monitoring and risk control. Efforts were also made to facilitate the development of commercial investment banking businesses. By ways of granting merger and acquisition facilities, establishing bank syndicate loan and recommending real estate fund and trust business to financial partners, the Real Estate Finance SBU enhanced the level of professional services and consolidated its cooperation with core customers. Through optimizing its business, customer and revenue structure, its asset quality was maintained.

As at the end of the reporting period, the deposit balance and outstanding general loans of the Real Estate Finance SBU amounted to RMB56,656 million and RMB111,463 million, representing increases of 20.69% and 4.66% as compared with the end of the previous year, respectively. The NPL ratio was 0.41%, representing a decrease of 1.31 percentage points from the beginning of the year. The net non-interest income amounted to RMB661 million.

(2) Energy Finance SBU

In the reporting period, the Energy Finance SBU adopted strategies that were in line with the characteristics of specific industries, regions, customers and products. Based on in-depth study of the development trend of the industry, it actively explored new business opportunities and identified potential risks. The Energy Finance SBU effectively promoted a customer structure emphasizing strategic NSOE customers and a business structure focusing on industry chain financing for customers in coal mining and processing industries. It also encouraged investment banking business innovations and diversification of products of commercial banks in order to explore the business model as an integrated service provider for the energy industry. In the reporting period, the Energy Finance SBU issued 21 shortterm financing bonds and medium-term bills, totalling RMB24.6 billion. It also carried out investment bank businesses such as merger and acquisition facilities, and trusts and funds through cooperation with financial institutions, which amounted to RMB22.8 billion in aggregate.

As at the end of the reporting period, the deposit balance and outstanding general loans of the Energy Finance SBU amounted to RMB67,758 million and RMB105,996 million, representing increases of 8.31% and 5.94% as compared with the end of the previous year, respectively. The NPL ratio was 0.56% and the net non-interest income amounted to RMB883 million.

(3) Transportation Finance SBU

In the reporting period, in light of the slowing growth of the automobile industry and the gloomy conditions of the vessel manufacturing and shipping segments, the Transportation Finance SBU focused on expansion of customer base of “Financial Stewardship” (金融管家), and implemented integrated professional developmentand strengthened comprehensive risk management. The Transportation Finance SBU established development strategies for the automobile industry to focus on supporting the group distributors which engaged in high-end brand business and had steady performance growth. Development strategies for the railway industry were also formulated to focus on supporting the railway material enterprises and railway locomotive enterprises at the downstream of the industry chain. As for the development strategies for the port shipping segment, the focus was on facilitating port logistics transaction financing. It carried out business model innovation and business structure optimization. Through granting loan to quality NSOEs and providing financial services including debt financing, trust wealth management and matching businesses, the Transportation Finance SBU maintained its asset quality while enhancing the profitability.

As at the end of the reporting period, the deposit balance and outstanding general loans of the Transportation Finance SBU amounted to RMB47,383 million and RMB47,979 million, representing increases of 16.06% and 4.12% as compared with the end of the previous year, respectively. The NPL ratio was 0.62% and the net non-interest income amounted to RMB547 million.

(4) Metallurgy Finance SBU

In the reporting period, in the face of unfavourable external conditions including the sluggish metallurgy industry, sharp shrinkage of profitability and increasing losses of operations, the Metallurgy Finance SBU optimized its business and management process and enhanced the ability of its professional team. It continued to expand core customer base, such as NSOEs, and put efforts in improving customers' value. Catering for the needs of the transaction chain, it developed trade finance and electronic transaction platform businesses. By fully utilizing resources from the community, it also actively expanded wealth management and bond issuance business to further broaden customer financing channels. Continuous efforts were made to the steady improvement of effectiveness of the mining industry finance business, achieving steady growth in its benefits.

As at the end of the reporting period, the deposit balance and outstanding general loans of the Metallurgy Finance SBU amounted to RMB44,871 million and RMB40,932 million, representing a decrease of 0.12% and an increase of 0.27% as compared with the end of the previous year, respectively. The NPL ratio was 0.69%, and the net non-interest income amounted to RMB628 million.

(5) SME Finance SBU

In the reporting period, under the backdrop of unfavourable factors, namely macro economic austerity measures, sluggish growth of real economies and expansion of private lending crisis, the SME Finance SBU carried out its operations in a legal, compliant and honest manner in strict compliance with requirements pursuant to the “three forbidden rules” (三不准) regarding loans and the “four publicdisclosure rules” (四公開) regarding services issued by the CBRC. Under themarketing and management concept of “regional specialties, batch development and name list-based sales”, it organized “batch plan design workshops” to facilitate “service enhancement, innovation and training”. As such, the SME Finance SBU has formed a “distinctive, batch-based and professional” business model to develop the Company as a professional SME financial service provider in the market.

As at the end of the reporting period, the outstanding loans of the SME Finance SBU amounted to RMB126,076 million, representing an increase of RMB20,859 million, or 19.82% as compared with the end of the previous year. The NPL ratio was 1.55%. The SME Finance SBU had 12,202 customers, representing an increase of 2,490 customers, or 25.64%, as compared with the end of the previous year.

(6) Trade Finance SBU

In the reporting period, the Trade Finance SBU continued to develop with the concept of “becoming a professional service provider of distinctive trade finance” and the brand of “Trade Financier” (貿易金融家), and the objective of“emphasizing on smart financing services”. The Trade Finance SBU expanded room for its business development through distinctive operations and established customer base comprising strategic customers from the top 500 international enterprises and leading domestic NSOEs, and basic customers from mediumsized NSOEs. As at the reporting period, the Trade Finance SBU established 31 branches in 31 cities in China. Outstanding loans denominated in RMB and foreign currencies of the Trade Finance SBU amounted to RMB13,112 million and US$4,204 million respectively. The net non-interest income amounted to RMB4,081 million.

In the reporting period, focusing on “going international” (走出去) financing, longtermorder financing, shipping financing and bulk commodity trade financing, the structured trade finance business of the Trade Finance SBU maintained a rapid growth. A series of unprecedented initiatives under the “going international” financing business were launched and received overwhelming responses from both domestic and international markets. In the face of the gloomy shipping market, the Trade Finance SBU proactively explored new ideas and methods to maintain its distinctive brand feature of “shipping financing bank”. The long-term order financing business has developed in a steady pace. A sophisticated model for contracted energy management and import credits has been gradually developed. New initiatives and directions of bulk commodity trade financing were further explored in accordance with its existing sophisticated business model.

In the reporting period, key featured businesses of the Trade Finance SBU including factoring and structured trade finance business continued to take the leading position among domestic banks. The volume of factoring business in 2012 amounted to RMB136,608 million, representing an increase of 58.66% as compared with the corresponding period of the previous year, and a total of 0.1713 million transactions were recorded. The volume of international dual factoring business amounted to US$2,277 million, representing an increase of 135.96% as compared with the corresponding period of the previous year and ranking the second among domestic banks, and a total of 4,993 transactions were recorded, ranking the third among domestic banks. It continued to carry out innovative businesses patterns including cross-border RMB factoring, back-to-back factoring, maturity factoring, re-factoring, supply chain factoring, and wealth management trust factoring scheme.

In the reporting period, the Trade Finance SBU further improved the organization structure and operation system of Hua Shan Club (華山俱樂部) (the former “TradeFinancier Club” (貿易金融家俱樂部)) and proactively studied the operation of“risk-sharing fund” (風險共擔基金) in the club with an aim to nurture the futureAsian and even world-class corporate leaders. At present, the club, consisting of 30 core NSOE customers of trade finance business, fully demonstrates the strategy of being a “bank for NSOEs” and the advantages of the “Financial Stewardship” (金融管家) service model of the Bank.

In the reporting period, the rapid and healthy growth of the Company's trade fiance business attracted wide attention of domestic and overseas financial media. It was awarded various prizes including the “2012 Best Trade Finance Bank of China” (2012年中國卓越貿易金融銀行獎) by Financial Times of the UK, “BestTrade Finance Bank of China”(中國最佳貿易融資銀行獎) by The Asset (企業財資), a financial press in Hong Kong, and the “Best Trade Finance Service BrandAward” (最佳貿易金融服務產品品牌) by Global Entrepreneur (環球企業家) .

(II) Retail Business

In the reporting period, the retail business of the Company implemented the upgrade strategy for MSE finance 2.0 (小微金融2.0) pursuant to the strategic guideline of “Secondtake-off” for the transformation of MSE finance business. With MSE specialized branches, the Company effectively expanded its service to key commercial areas and featured industries. It capitalized on the synergetic development of MSE business through the platform of urban commercial cooperatives. “Seven New Measures for MSEs” (七新耀小微) were launched to boost the growth of MSE business. Upon implementation of theabove transformation strategies, the retail business of the Company recorded remarkable development. In the reporting period, the Company maintained its leading position for MSE finance business in the industry. In addition, the growth in deposit business and the value of financial assets set a record high.

As at the end of the reporting period, total retail loans of the Company increased by RMB99,391 million, or 27.50%, to RMB460,840 million, as compared with the end of the previous year. The balance of MSE loans increased by RMB84,456 million, or 36.33%, to RMB316,951 million as compared with the end of the previous year.

The balance of deposits of the Company increased by RMB102,882 million, or 35.93%, to RMB389,238 million as compared with the end of the previous year.

In 2013, the Company will continue to focus on the MSE finance business to boost the growth of both traditional retail business and industry chain finance and facilitate the strategic transformation of retail business.

1. MSE finance

In the reporting period, the MSE loan of the Company maintained a rapid growth. In particular, since the third quarter of 2012, the Company had launched the “Seven New Measures for MSEs” nationwide, which stimulated the increase of MSE loans of the Bank and satisfied various MSE needs with new business processes, products and brand image. As a result, the balance of MSE loans exceeded RMB300 billion with the increase in both number and grade of customers. As at the end of the reporting period, the total number of MSE customers was 992,300. Of which, the number of VIP customers increased by over 60,000 as compared with the end of the previous year. The customer structure was further optimized. In respect of return on loans, the interest rates of newly-issued loans in the reporting period floated by 30% or above in average, showing continuously stronger profitability.

In the reporting period, the Company strengthened and reformed the organization forms of MSEs customers by establishing China Minsheng Bank MSE urban commercial cooperatives (中國民生銀行小微企業城市商業合作社), making further innovationsand breakthrough in Company's organizational methods of the MSE clients. Such cooperatives were set up to serve as a national platform for the communication, sharing and collaboration among MSEs. In addition, the Company started to develop special sub-branches for MSE business and had granted licenses to the first 50 special MSE finance sub-branches.

In respect of the risk control over MSE loans, the Company persisted in following the principle of the “Law of Large Numbers” (大數法則) to estimate the risk probabilitiesof specific industries. Risks have been effectively controlled by prudent selection of industries suitable for MSE loans. The core concept of Minsheng MSE finance based on the “Law of Large Numbers” has proved to be practical after the launch of MSE Finance Version 2.0. As at the end of the reporting period, the NPL ratio of MSE loans of the Company slightly increased as compared with the previous year, but remained at a low level of only 0.40%.

During the reporting period, the Company won the award of “2012 Best SME Bank in China” (2012年度中國最佳中小企業銀行) from The Asian Banker and the “2012‘Best Bank for Small Enterprise Financing'” (2012年度‘最佳小企業貸款銀行') fromGlobal Finance of the U.S. It also received the title of the “Advanced MSE Financial Service Unit in the Beijing Banking Industry” (北京銀行業小微企業金融服務先進單位) by the regulatory authorities.

2. Traditional finance

The Company offers various loan products to the retail banking customers. As at the end of the reporting period, the balance of mortgage amounted to RMB71,518 million, representing 15.52% of total retail loans.

In the reporting period, retail deposits of the Company increased rapidly. The Company's balance of retail deposits amounted to RMB389,238 million, representing an increase of RMB102,882 million, or 35.93%, as compared with the end of the previous year. The retail deposits ratio accounted for 20.37% of the total, representing an increase of 2.85 percentage points as compared with the end of the previous year.

The Company offers agency services of wealth management products, funds and insurance. The number of funds offered under its agency services reached 964, a leading number among its peers in the industry. The Company also cooperated with 29 insurance companies to optimize its insurance agency selling platform.

As at the end of the reporting period, the Company had a total of 31.9410 million debit cards in issue, including 3.9544 million cards issued in the year. The featured cards issued by the Company, such as Markor Furnishings Co-Branded Card (美克美家聯名卡) and Kunming Meat and Vegetables Circulation Service Card (昆明肉類蔬菜流通服務卡) received positive market response.

3. Credit card business

In the reporting period, aiming to create the “year of management, efficiency, services and safety”, the Credit Card Centre further improved the business model of “operation group of three and cooperative operations” (三人小組、聯合作業) to strengthenthe cooperation among card issuance, commerce and collection units. The Company boosted card issuance, commerce and asset, the “three major business lines” (三駕馬車) of the credit card business, through innovations of products and services, operationmodel, sales channels and risk management.

As at the end of the reporting period, the aggregate number of credit cards in issue was 14.62 million, including 3.0856 million cards issued in the year. Transaction volume of credit card business was RMB293,769 million, representing an increase of 65.49% as compared with the corresponding period in the previous year. The balance of account receivables at the end of the year amounted to RMB66,305 million, representing an increase of 71.99% as compared with the end of the previous year.

During the reporting period, the Credit Card Centre issued two major high-end credit cards to build up high-end credit card brand. In April 2012, the Company and Delta Air Lines, the second largest worldwide airline, jointly launched the Minsheng-Delta SkyMiles Co-branded Credit Card (民生•達美SKYMILES聯名信用卡), which becamethe first credit card in China jointly issued with a US airline company. The card is a RMB/USD dual-currency card and can be used globally for domestic and overseas bill settlement and cash advance. It also features the functions of both the Minsheng credit card and the “SkyMiles” membership card of Delta. Cardholders can accumulate “SkyMiles” mileage when travelling on applicable flights of Delta or those of its cooperative partners. The Company, Shangri-La Hotels and Resorts and American Express launched an initial issuance ceremony to introduce the Minsheng Shangri-La Co-branded Credit Card in Malaysia in November 2012, which was the first co-branded credit card in China jointly issued with a world-class luxury hotel. With the two brands of American Express and China Unionpay on, the card was the first credit card of the Company jointly issued with American Express. Available in two grades of Platinum Card and Deluxe Platinum Card, it offers exclusive privileges at hotels under the Shangri-La Group and allows cardholders to earn extra Golden Circle Award Points.

In the reporting period, the brand of Minsheng Credit Card was widely recognized by the social community. The Credit Card Centre won the “Employee Training and Development Award” (人員培養與發展獎) as a Special Award of the ExcellentCustomer Service Centre (優秀客戶服務中心) and the “Best Data Collection andAnalysis Awards” (最佳數據挖掘和分析項目獎), the highest award for data analysisin the financial industry in Asia-Pacific region. It was also honoured with the Most Influential Brand in Consumer Market of China (Comprehensive Strength Awards) (中 國消費市場最具影響力品牌 (綜合實力獎)) by the Committee of the 3rd Session ofChina Consumer Economy High-level Forum (第三屆中國消費經濟高層論壇組委會),which further enhanced the core competitiveness of the Credit Card Centre.

4. Customers and related activities

As at the end of the reporting period, the Company had 24.9056 million retail customers. In the reporting period, driven by the increase in the sales of wealth management products, the financial assets of the Company's retail customers had grown rapidly. As at the end of the reporting period, the financial assets of retail customers reached RMB652,380 million, representing an increase of 39.23% as compared with the end of the previous year. Among the retail customers, 0.2336 million customers had individual financial assets of more than RMB0.5 million, and their total deposits amounted to RMB243,260 million, accounting for 62.50% of total retail deposits of the Company.

In the reporting period, the Company continued to offer VIP customers the “5+N” VIP service package, covering services at airports, golf clubs, train stations, medical access and roadside rescue services. The VIP services of traditional Chinese medical healthcare were also launched in 2012. During the reporting period, the Company organized the “Wealth Management Classes” (財富大課堂), golf tournaments andspecial sales of luxury products exclusively for our VIP and MSE customers, which received positive responses as it brought the customers with direct experiences of comprehensive financial services.

During the reporting period, the Company was named the “Best Wealth Management Brand in the Tenth China Finance Billboard” in 2012 (2012年度第十屆中國財經風雲榜最佳財富管理品牌) by hexun.com.

(III) Private banking business

As at the end of the reporting period, the financial assets under private banking managed by the Company amounted to RMB128,170 million and the number of private banking customers was over 9,300 with income from intermediary business amounting to RMB762 million. The size of financial assets managed by the Company increased by 87.38%, while the number of private banking customers recorded a growth of 101.91%. Income from intermediary business recorded a growth of 163.67%.

The Company provided comprehensive financial and non-financial services for customers to actively cater for their needs. It continued to optimize and carry out innovation of asset allocation, high-end insurance and trust financing products. It was also committed to asset protection and enhancing family wealth value. Non-financial services covered eight premium lifestyle services, including Private Banking Business School (私人銀行商學院),Health Stewardship (健康管家), Business Travel Express (商旅通), Traveller (旅行家), ArtGallery (藝術館), Sports Fan (愛體育), Luxury (奢生活) and Clubhouse (俱樂部), whichoffered high-end services with exceptional quality.

During the reporting period, the private banking business of the Company was highly recognized in the industry. The Company published the Report on Private Banking in China 2012 jointly with McKinsey & Company, which was covered by over 300 media around the world. The Company was named “China's Best Private Bank with High Net Worth Customer Services” (中國最佳高淨值客戶服務私人銀行) by Euromoney. It also receivedawards such as the “Golden Shell Award of Most Potential Chinese Private Bank for 2011- 2012” (2011–2012年度最具成長力中資私人銀行) from the 21st Century Business Herald,the “Annual Private Bank with the Best Brand Influence (最佳品牌影響力私人銀行)from China Business News, the “Outstanding Development and Contribution for Chinese Investors (LP)” (中國投資人 (LP) 發展卓越貢獻獎) from the Venture Capital Committeeof the NDRC (發改委創業投資專業委員會), the “Best VC/PE Fund Raising Private Bankof China” (中國VC/PE基金募集最佳私人銀行) from Zero2IPO Group and the “BestPrivate Bank” (最佳私人銀行) from the Shanghai Securities News (上海證券報) .

(IV) Treasury business

1. Transactions

In the reporting period, the transaction volume of RMB denominated bonds of the Company amounted to RMB3,297,096 million, ranking the fifth in the market. In 2012, forward settlement and RMB foreign exchange swap transaction volume also reached US$146,077 million, representing an increase of 164.81% as compared with corresponding period of the previous year. The transaction volume of spot settlement and sales amounted to US$217,036 million, representing a significant increase of 69.25% as compared with the corresponding period of the previous year.

2. Investments

As at the end of the reporting period, the balances of the Company's investment amounted to RMB247,166 million, representing an increase of 14.71% as compared with the end of the previous year. In 2012, the Company's Debt securities assets were on a stable growth track. The Company increased the gain from price differences of RMB Debt securities investment through band operations based on accurate estimation of the domestic Debt securities market trend. In addition, the Company sold part of its foreign currency denominated Debt securities by taking advantage of the market price hike of international Debt securities and effectively mitigated potential investment risk.

3. Wealth management

During the reporting period, the wealth management business of the Company strictly complied with all the relevant regulatory requirements. It focused on promoting the brand value of “Apex Asset Management” by strengthening its asset management and positioning itself as “Financial Stewardship” (金融管家). The Company strivedto develop its business model as the “Smart Choice of Customer for Wealth Growth” (大智之選, 大有之道) . It encouraged innovation of wealth management products forexpanding its product portfolio. It also developed new sale channels to ensure the rapid growth of its wealth management business. In the reporting period, the size of wealth management products grew rapidly. The sales volume of new wealth management products launched was over RMB1 trillion, representing an increase of 42.88% as compared with the corresponding period of the previous year.

4. Trading in gold and other precious metals

In the reporting period, the Company's trading volume of gold in the precious metals market (the Shanghai Gold Exchange and the Shanghai Futures Exchange) amounted to 176.41 tons, and the trading volume of silver amounted to 6,015.63 tons. In terms of on-floor trading value, the Company was the sixth largest dealer at the Shanghai Gold Exchange and also one of the most active proprietary dealers at the Shanghai Futures Exchange. During the reporting period, the Company leased 4 tons of gold to corporate customers, ranking seventh in the market. The outlook of further progress in the market remained positive.

(V) E-banking services

During the reporting period, the e-banking business of the Company grew rapidly. With the launch of mobile banking, the customer size of mobile banking increased. The e-banking business maintained its development and significantly reduced operating cost by mitigating workload of counters. It maintained the leading status in the inter-bank fund integration industry and the growth in the number of customer and fund integration was strong. All indicators of customer services of the Company remained at higher level than its peers. An “Online Banking Business Platform” (空中營業廳) was to be established to strengthen thesales capability of its electronic channels.

1. Mobile banking

On 11 July 2012, the Company officially rolled out mobile banking applications with significant breakthroughs in functions, products, services and customer experience. Special services such as queue reservation at banking operating sites, inter-bank account management, inter-bank funds integration, money transfer by mobile phone number and special wealth management product for mobile banking users outperformed its peers. In order to cater for the payment and settlement needs of MSE customers, the Company introduced the MSE mobile banking applications in mid December which offered featured functions such as centralized management of accounts, bulk transfer, salary payment and corporate administrative payment office (企業財務室) . The service capability of MSE customer financial servicewas enhanced. With the introduction of the innovative two-dimensional barcode for convenient money collection and payment outside the bank, the Company became the first commercial bank in China to provide money collection and payment service through two-dimensional barcode via mobile banking. The number of customers and transaction volume had increased significantly since the launch of mobile banking applications. As at the end of the reporting period, the number of mobile banking customers reached 995,800 and the total turnover of the year amounted to RMB41,040 million. The Company was honoured with the “2012 China's Best Mobile Banking Award” (2012年中國最佳手機銀行獎) at the Annual Award Ceremony of ChinaE-Banking (中國電子銀行年度金榜頒獎) by China Financial Certification Authorityand the “2012 Best Mobile Bank” (2012年度最佳手機銀行) at the Fifth Golden CupAwards (金爵獎) by the China Electronic Commerce Association.

2. Online banking

As the Company continued to strengthen the innovation, application and promotion of online banking products, optimize functions of online banking products and launch marketing activities, the size of its customer base and transaction volume increased significantly. As at the end of the reporting period, the number of personal online banking customers was 4.8058 million. The number of transactions was 104.3468 million, representing an increase of 163.31% as compared with the corresponding period of the previous year, while the annual transaction turnover amounted to RMB5,734.305 billion, representing an increase of 71.52% as compared with the corresponding period of the previous year. The number of corporate online banking customers was 244,900. The number of transactions was 17.4364 million, representing an increase of 52.18% as compared with the corresponding period of the previous year, while the annual transaction turnover amounted to RMB13,062.711 billion, representing an increase of 53.13% as compared with the corresponding period of the previous year. Online transaction replacement rate was 90.35%, representing an increase of 9.86 percentage points as compared with the corresponding period of the previous year. The number of transactions of online banking was 9 times that of the counters. The Company exerted efforts to promote wealth management products via electronic channels. The sales of wealth management products via electronic channels for the year amounted to RMB629.817 billion, representing an increase of 32.45% as compared with the corresponding period of the previous year. Of which, sales of personal wealth management business recorded over RMB590 billion, accounting for over 80% of the sales of the Company's personal wealth management business.

3. Inter-bank fund integration

Inter-bank fund integration is an original online banking product of the Company maintaining a leading position among its peers and is welcomed by customers. It also boosts payment and settlement of MSE customers. In 2012, the Company continued to develop its inter-bank fund integration business by introducing it to the new mobile banking applications, which further consolidated the leading status of the Company in inter-bank fund integration. It launched product promotion and marketing activities to promote products such as fund integration, mobile banking and online banking as a featured product package. It also introduced the e-banking businesses to commercial circles to provide integrated marketing and services to MSE customers. As at the end of the reporting period, the customers involved in the transactions of inter-bank fund integration amounted to 228,200 with a total of RMB179.715 billion integrated, representing 5.8 times the fund integrated in 2011.

4. “95568” customer hotline service

The Company expedited the establishment of a new generation customer service system by applying new version of voice menu and introducing services including reservation of account opening, reservation of bulk cash withdrawal, wealth management agency and new version of online customer service for the MSE customers. The allocation of customer service structure was adjusted and remote hotline backup offices of the three call-in lines of “95568”, “400” corporate customer hotline and “400” MSE customer hotline were established, which realized reasonable human resources allocation and enhanced peak capacity of the hotlines. The total incoming-calls through hotlines amounted to 37.78 million, among which 7.6224 million calls were manually answered, representing an increase of 47.50% as compared with the corresponding period of the previous year. The Company recorded customer satisfaction rate of 98.11%. The Company was awarded “Integrated Role Model Unit” (綜合示範單位獎) at the 2012 Election of Excellent Customer Service Centre (2012年度優秀客服中心評選) by the China Banking Association.

In addition to improving call-in service, the Company also strengthened call-out service and contacted over 5.61 million customers in the year. According to its MSE customer strategy, the Company also set up a standardized “95568” after-sales service interview system to collect the feedback from MSE customers and enhance the effectiveness and efficiency in retaining customers. A total of 0.43 million after-sales service interviews were conducted in the year and the customer satisfaction rate was 98.83%. The Company continued the upgrade of “95568” customer hotline services by establishing stable relationship with the customers and introducing proactive services such as notification, birthday calls and product due date notices. It also launched targeted marketing of financial products to maximize value for customers. It contacted 2.80 million customers in total in the year. In addition, the Company conducted cold calls on fund, sales of wealth management products and electronic channel promotions for different types of customer. A total of 2.03 million customers were called in the year. A customer satisfaction survey and surveys on loss of VIP customers and Happy Payment (樂收銀) customers were carried out. A total of 0.35 million customers weresurveyed in the year and over 0.03 million valid questionnaires were collected, which provided important evidence for decision making under scientific and meticulous management.

Business Outlook - For the year ended December 31, 2012

In 2013, the Company will fully implement the second Five-year Development Outline. To become a “distinctive and effective bank and achieve three specific positioned targets”, the Company will strive for “six areas of advancement” by taking advantage of the economic conditions through reforms and innovation and accelerating the transformations of its operation and management. Targeting at MSEs, freeing up two wings, the Company will focus on all three main strategic businesses to pursue a synergistic breakthrough. It will seek to control costs, increase returns and control risks to ensure healthy development of each business and lay a solid foundation for the strategic transformation under its “Second Take-off” (二次騰飛) . Specific measures are as follows:

Firstly, the Company will improve corporate governance by optimizing governance structure and operation mechanism. According to the latest progress of its corporate governance and relevant policies and regulations, the Company will capitalize on its experience and existing practices to refine the regulations, procedures and mechanisms related to corporate governance, such as the Articles of Association of the Company and the rules of procedures. It will specify the functions of the shareholders' meeting, the Board, the Supervisory Board and the senior management and prepare the standardized corporate governance manual to further enhance corporate governance in a regulated and normative manner.

Secondly, based on the second Five-year Development Outline, the Company will further unify its operation concepts and lead all kinds of Bank's work by implementing the closedloop procedures of planning, division, supervision, assessment and evaluation to ensure their smooth implementation of strategic initiatives.

Thirdly, focusing on MSEs, the Company will create a distinctive financial services model through the combination of industry chain and traditional retail business. For MSE financial services, the Company will speed up the business transformation of branches and subbranches and the establishment of credit factories. It will manage customers by levels and will further improve the services for urban cooperatives services to maintain its competitive edges. Financial Stewardship (金融管家) services model and products and services for NSOEs will be enhanced. The Company will also strengthen and improve private banking businesses through product and service innovation. In addition, to coordinate its three major strategies, the Company will further optimize its cross-selling and services based on its enhanced understanding of customers.

Fourthly, the Company will comply with regulatory requirements to prevent risks. The Company will enhance risk management and the establishment of overall risk management system. The Company will conduct further studies on featured businesses and carry out innovation of assessment models to meet the needs of businesses on a batch and distinctive basis. The Company will carry out early-stage risk control and will strengthen risk management of the entire operation process. It also will assess risks of key areas and key businesses in advance and improve asset monitoring and disposal to ensure asset quality.

Fifthly, the Company will prudently carry out reform programs to further enhance the process-based banking establishment. Various reform measures will be implemented effectively to facilitate the transformation of SBU into a “Financial Stewardship teams with quasi-corporation nature, professional operations and integrated financial resources”.

Operation and service models of featured SBUs in culture, modern agriculture and stone materials will be summarized and consolidated. The Company will continue to optimize the investment banking management system to bring its characteristics of “commercial bank plus investment bank” into full play. Centralized operation reform programs will be steadily promoted for lower costs and higher efficiency.

Sixthly, the Company will strengthen its management and coordination to further improve resources allocation efficiency. The deposit size will maintain steady growth with optimized structure. The Company will make full use of its existing loans under flexible internal arrangements. Capital consumption will be reduced to improve capital allocation efficiency and returns. The Company will also enhance its input-output management by manage expenses on a standardized and dynamic basis. Integration and investment of resources will be coordinated to create communal platforms for customer cultivation, IT application and channel expansion.

Seventhly, the Company will refine its management to establish an efficient strategic implementation system. Based on the go live of the new core banking system, the Company will accelerate its system upgrade and reformation to build an integrated resources and data sharing platform. System building and supervision and evaluation management will be enhanced to establish an incentive system of the new era. With optimized innovation management, its successful practices will be applied in its production. The Company will also promote the application of the three major strategic management tools to put its concepts into practice.

Eighthly, the Company will strengthen its soft power construction to facilitate its strategic transformation. Adhering to the core concept of the “six areas of advancement”, the Company will enhance the establishment of grass-root party organizations, teams, corporate culture and brand to further develop the culture of Minsheng Homeland.

Source: Minsheng Bank (01988) Annual Results Announcement
Chairman DONG Wenbiao Issued Capital (shares) 5,778M
Par Value RMB 1 Market Capitalisation (HKD) 43,508M
 
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