中国信达(01359) - 2020 - 年度财报

Company Overview China Cinda Asset Management Co., Ltd. (China Cinda), established in 1999, is China's first financial asset management company, primarily engaged in non-performing asset management and financial services, listed on the Hong Kong Stock Exchange in December 2013 - China Cinda Asset Management Co., Ltd. (China Cinda), established in 1999, is China's first financial asset management company, primarily engaged in non-performing asset management and financial services, and was listed on the Hong Kong Stock Exchange main board on December 12, 2013[4] Company Basic Information | Item | Content | | :--- | :--- | | Legal Chinese Name | 中國信達資產管理股份有限公司 | | Legal English Name | China Cinda Asset Management Co., Ltd. | | H-share Listing Exchange | The Stock Exchange of Hong Kong Limited | | H-share Stock Code | 01359 | | Overseas Preferred Share Stock Code | 04607 | | Legal Representative | Zhang Ziai | | Registered Address | Building 1, No. 9 Naoshikou Street, Xicheng District, Beijing, China | | International Internet Address | www.cinda.com.cn | Financial Summary The company maintained stable asset size in 2020, achieving a 1.5% year-over-year increase in net profit attributable to shareholders, significantly impacted by the disposal of Happiness Life Insurance equity Key Financial Data for 2020 | Indicator | 2020 | 2019 | YoY Change | | :--- | :--- | :--- | :--- | | Total Assets (Million RMB) | 1,518,083.6 | 1,513,230.0 | +0.3% | | Total Revenue from Continuing Operations (Million RMB) | 100,134.0 | 96,146.9 | +4.1% | | Profit for the Year (Million RMB) | 14,737.3 | 15,018.2 | -1.9% | | Net Profit Attributable to Shareholders of the Company (Million RMB) | 13,247.9 | 13,052.9 | +1.5% | | Average Return on Equity (ROE) | 8.26% | 8.56% | -0.30pp | | Average Return on Assets (ROA) | 0.97% | 1.00% | -0.03pp | | Earnings Per Share (RMB) | 0.32 | 0.31 | +3.2% | - In 2020, the Group's asset scale remained stable, with net profit attributable to shareholders of the Company achieving a 1.5% year-over-year growth[18] - Performance was significantly impacted by discontinued operations (disposal of Happiness Life Insurance equity), which contributed RMB 3.75 billion in after-tax profit[18][38] - The basis of accounting standards for financial data changed: IFRS 9 adopted since 2018, previously IAS 39[17] - Due to the disposal of Happiness Life Insurance equity, the insurance business was classified as discontinued operations, with financial data for 2019 and 2020 separately presented for continuing and discontinued operations[17] Chairman's Statement Chairman Zhang Ziai reviewed 2020 performance, highlighting a 0.3% increase in total assets to RMB 1.52 trillion and a 1.5% rise in net profit attributable to shareholders to RMB 13.25 billion despite the pandemic - Chairman Zhang Ziai summarized the 2020 performance, stating that despite the impact of the pandemic, the Group's total assets reached RMB 1.52 trillion, a 0.3% year-over-year increase, and net profit attributable to shareholders reached RMB 13.25 billion, a 1.5% year-over-year increase[24] - In 2020, the company focused on its core business of resolving financial risks, deeply participating in the resolution of risks for small and medium-sized financial institutions and the bankruptcy reorganization of large enterprises, while utilizing financial services to support the resumption of work and production in the real economy[24] - Progress was made in corporate governance, with the company receiving the "Best Corporate Governance Bank" award from Global Finance magazine[25] - The company completed the equity transfer of Happiness Life Insurance and steadily advanced the spin-off listing of Cinda Securities and the construction of "Digital Cinda"[25] President's Statement President Zhang Weidong emphasized the group's focus on core non-performing asset business, with new investments of RMB 45.63 billion in acquisition and management, while actively exploring new business models and advancing digital transformation - President Zhang Weidong emphasized that in 2020, the Group focused on its core responsibilities and main business, consolidating its advantages in non-performing asset business, with new investments of RMB 45.63 billion in acquisition and management businesses, maintaining its industry-leading position[27] - The company actively promoted business transformation, exploring new business models such as non-performing asset judicial auction funds, private equity secondary market transactions, and mergers and acquisitions, focusing on problematic institutions and assets[27] - Looking ahead to 2021, the Group will adhere to the philosophy of "professional operation, efficiency first, value creation," optimize its asset structure, accelerate business transformation, improve turnover efficiency, and promote the construction of "Digital Cinda"[27] Management Discussion and Analysis This section provides an in-depth analysis of the company's financial performance, operational highlights, risk management, and capital management in the context of the macroeconomic and regulatory environment Macroeconomic and Regulatory Environment In 2020, while the global economy faced a deep recession due to COVID-19, China achieved 2.3% positive growth, with domestic policies focusing on stability and financial supply-side reform, accelerating changes in the non-performing asset market - In 2020, China was the only major economy globally to achieve positive economic growth, with its full-year GDP increasing by 2.3% year-over-year[34] - Regulatory authorities orderly advanced the resolution of high-risk financial institutions and corporate debt risks, intensifying efforts in non-performing asset disposal[35] - The non-performing asset market saw an expansion of participants, with the approval of the fifth national AMC and the emergence of the first foreign-controlled local AMC[35] - Non-performing asset disposal channels broadened, with pilot programs for single-account transfers of corporate non-performing loans and bulk transfers of individual non-performing loans, alongside the rapid development of online trading platforms[35] Financial Statement Analysis In 2020, the Group achieved a net profit attributable to shareholders of RMB 13.25 billion, a 1.5% year-over-year increase, with total revenue from continuing operations growing 4.1% to RMB 100.13 billion, despite a significant 58.0% increase in asset impairment losses Group Operating Performance The Group's net profit attributable to shareholders grew 1.5% year-over-year to RMB 13.25 billion in 2020, with ROE at 8.26%, while pre-tax profit from continuing operations declined 15.4% due to a 58.0% surge in asset impairment losses, with after-tax profit from discontinued operations contributing significantly Consolidated Income Statement Overview (Million RMB) | Item | 2020 | 2019 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue from Continuing Operations | 100,134.0 | 96,146.9 | 4.1 | | Asset Impairment Losses | (14,096.8) | (8,924.2) | 58.0 | | Interest Expense | (39,618.5) | (44,366.6) | (10.7) | | Pre-tax Profit from Continuing Operations | 16,309.3 | 19,272.4 | (15.4) | | After-tax Profit from Discontinued Operations | 3,752.0 | 1,500.4 | 150.1 | | Net Profit Attributable to Shareholders of the Company | 13,247.9 | 13,052.9 | 1.5 | - Asset impairment losses significantly increased by 58.0%, primarily due to impairment losses on non-performing debt assets measured at amortized cost, which rose from RMB 3.54 billion to RMB 7.66 billion, reflecting the impact of macroeconomic downturn and the pandemic[65][66] - Interest expense decreased by 10.7% year-over-year, mainly benefiting from lower market interest rates and the Group's optimized liability structure, with borrowing interest expense decreasing by 17.4%[62] Summary of Group Financial Position As of year-end 2020, the Group's total assets were RMB 1.52 trillion, a slight 0.3% year-over-year increase, with financial assets at fair value through profit or loss growing 8.4% and bonds payable increasing 16.7%, reflecting an optimized financing structure Key Items of Consolidated Statement of Financial Position (Million RMB) | Item | December 31, 2020 | December 31, 2019 | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 1,518,083.6 | 1,513,230.0 | 0.3 | | Financial assets at fair value through profit or loss | 446,916.7 | 412,164.6 | 8.4 | | Loans and advances to customers | 353,456.3 | 337,859.1 | 4.6 | | Financial assets at amortized cost | 220,233.0 | 227,645.1 | (3.3) | | Total Liabilities | 1,323,041.2 | 1,324,819.5 | (0.1) | | Borrowings | 556,912.1 | 536,591.3 | 3.8 | | Bonds Payable | 355,777.5 | 304,849.6 | 16.7 | | Deposits from customers | 273,644.2 | 275,205.8 | (0.6) | | Total Equity | 195,042.4 | 188,410.5 | 3.5 | - The total amount of non-performing debt assets measured at amortized cost decreased by 3.7% to RMB 187.4 billion, mainly due to a decrease in the scale of new acquisitions during the year[92] - Simultaneously, out of prudence, its impairment provisions significantly increased by 43.6%[93] - The balance of bonds payable increased by 16.7%, primarily due to the company's issuance of RMB 55.05 billion in asset-backed securities and RMB 8.0 billion in Tier 2 capital bonds, reflecting the company's strategy to optimize its liability structure and expand direct financing[98] Business Review The Group's operations are primarily divided into non-performing asset management and financial services, with the former contributing 70.5% of total revenue and 54.1% of pre-tax profit, while the latter's profit share significantly increased due to the disposal of Happiness Life Insurance equity 2020 Segment Performance Overview | Business Segment | Total Revenue (Million RMB) | Revenue Share (%) | Pre-tax Profit (Million RMB) | Pre-tax Profit Share (%) | | :--- | :--- | :--- | :--- | :--- | | Non-performing Asset Management | 80,100.1 | 70.5 | 11,503.1 | 54.1 | | Financial Services | 34,371.6 | 30.3 | 9,848.1 | 46.3 | | Total | 113,555.9 | - | 21,281.8 | - | - The pre-tax profit share of the non-performing asset management segment decreased from 78.0% in 2019 to 54.1%, mainly due to the recognition of asset impairment losses[80] - The pre-tax profit share of the financial services segment significantly increased from 23.7% in 2019 to 46.3%, primarily benefiting from the gain on disposal of Happiness Life Insurance equity and improved operating efficiency of various financial subsidiaries[80] Non-performing Asset Management Business As a core business, non-performing asset management covers non-performing debt assets, debt-to-equity assets, and other non-performing asset businesses, with net non-performing debt assets at RMB 375.6 billion and new acquisitions of RMB 105.1 billion in 2020 Key Financial Data for Non-performing Asset Management Business (Million RMB) | Item | 2020 | 2019 | | :--- | :--- | :--- | | Net Non-performing Debt Assets | 375,603.2 | 385,449.7 | | Newly Acquired Non-performing Debt Assets | 105,056.9 | 116,710.8 | | Non-performing Debt Asset Income | 29,326.5 | 30,101.2 | | Book Value of Debt-to-Equity Assets | 77,239.3 | 77,009.4 | - Acquisition and Management Business: In 2020, new acquisitions amounted to RMB 45.63 billion, and disposed assets had a book cost of RMB 41.58 billion, with an Internal Rate of Return (IRR) of 12.6% (compared to 15.6% in 2019)[118][119] - Acquisition and Restructuring Business: Asset quality faced pressure, with the impairment ratio increasing from 2.87% to 3.90%, and the provision coverage ratio increasing from 200.0% to 217.3%[121][122] Financial Services Business The financial services segment provides comprehensive financial services through subsidiaries like Nanyang Commercial Bank, Cinda Securities, Jingu Trust, and Cinda Financial Leasing, achieving a total business synergy scale of RMB 444.2 billion and synergy income of RMB 4.87 billion in 2020 2020 Performance of Major Financial Subsidiaries (Million RMB) | Subsidiary | Revenue | Pre-tax Profit | Total Assets | | :--- | :--- | :--- | :--- | | Nanyang Commercial Bank | 13,328.5 | 3,676.0 | 424,117.0 | | Cinda Securities | 4,336.7 | 954.1 | 47,321.5 | | Jingu Trust | 489.4 | 154.5 | 4,761.8 | | Cinda Financial Leasing | 2,716.7 | 203.6 | 53,874.1 | - Nanyang Commercial Bank: As of year-end 2020, total assets were RMB 424.1 billion, total loans were RMB 235.4 billion, and the non-performing loan ratio was 0.86%, an increase from 0.67% at the end of the previous year[141] - In 2020, the Group's total business synergy scale reached RMB 444.2 billion, involving 2,278 clients, and achieving synergy income of RMB 4.87 billion, effectively enhancing the Group's overall operating efficiency[161] Risk Management The company adheres to a “proactive management, bottom-line adherence” risk management philosophy, establishing a comprehensive framework covering credit, market, operational, and liquidity risks, overseen by the Board of Directors - The company has established a comprehensive risk management organizational system comprising four levels and three lines of defense, involving the Board of Directors, senior management, risk management functional departments, and business operating departments[169][173] - In early 2020, the Board of Directors approved the "Group Risk Appetite Statement (2020)," emphasizing a commitment to maintaining stable and sustainable profitability within acceptable risk levels and ensuring endogenous capital growth[172] - The company utilizes various risk management tools such as economic capital, risk limits, rating classifications, impairment provisions, and stress testing, and actively promotes the construction of risk management information systems to enhance risk control capabilities[175][176] Capital Management The company established a capital-constrained operating model to ensure capital levels meet regulatory requirements and support business high-quality development, with all capital adequacy ratios meeting regulatory thresholds as of year-end 2020 Capital Adequacy Ratios | Item | December 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Core Tier 1 Capital Adequacy Ratio (%) | 10.66 | 11.20 | | Tier 1 Capital Adequacy Ratio (%) | 13.70 | 14.37 | | Capital Adequacy Ratio (%) | 17.47 | 16.76 | - The company manages its capital in accordance with the "Capital Management Measures for Financial Asset Management Companies (Trial)" issued by the CBIRC, ensuring a robust capital position[185] Outlook Looking ahead to 2021, the company anticipates business opportunities in the non-performing asset sector due to banking asset quality pressure and accelerating financial market risk exposure, focusing on core business, alternative investment banking, and digital transformation - Commercial banks' asset quality is expected to remain under pressure, and non-bank financial institutions such as trusts and leasing companies will also see an increase in non-performing assets, potentially leading to more problematic institutions and assets, creating business opportunities for financial asset management companies[188] - The company's strategy will focus on its core non-performing asset business, promoting transformation and upgrading its models, expanding alternative investment banking services, and exploring business opportunities in bankruptcy reorganization, mergers and acquisitions, and listed company distress relief[189] - The company will accelerate structural optimization, promote group synergy upgrades, apply an "investment + investment banking" mindset, and expedite the Group's information technology construction and digital transformation[189] Changes in Share Capital and Major Shareholders This section details the company's ordinary share capital structure and major shareholder holdings as of year-end 2020, along with information on preferred shares Ordinary Share Capital As of year-end 2020, the company's total share capital was 38.165 billion shares, with domestic shares accounting for 64.45% and H shares for 35.55%, primarily held by the Ministry of Finance and the National Council for Social Security Fund Ordinary Share Capital Structure (as of December 31, 2020) | Share Class | Number of Shares | Proportion (%) | | :--- | :--- | :--- | | Domestic Shares | 24,596,932,316 | 64.45 | | H Shares | 13,567,602,831 | 35.55 | | Total | 38,164,535,147 | 100.00 | Major Shareholder Holdings (as of December 31, 2020) | Major Shareholder Name | Number of Shares Held | Share Class | Proportion of Total Share Capital (%) | | :--- | :--- | :--- | :--- | | Ministry of Finance | 22,137,239,084 | Domestic Shares | 58.00 | | National Council for Social Security Fund | 2,459,693,232 | Domestic Shares | 6.44 | | National Council for Social Security Fund | 2,901,006,093 | H Shares | 7.60 | Preferred Shares Information The company has 160 million outstanding overseas preferred shares, with dividends of $142.4 million (after tax) distributed on September 30, 2020, at a dividend rate of 4.45% (after tax), and no redemption or conversion occurred during the reporting period - On September 30, 2020, the company distributed dividends for its overseas preferred shares, with a dividend rate of 4.45% (after tax), totaling $142.4 million (after tax)[199] - The overseas preferred shares include a mandatory conversion to H-shares trigger event clause, primarily related to the company's viability[200] - No trigger events occurred during the reporting period[200] Corporate Governance Report This report outlines the company's adherence to the Hong Kong Corporate Governance Code, its governance structure comprising the Shareholders' Meeting, Board of Directors, Supervisory Board, and Senior Management, and the establishment of five specialized Board committees Corporate Governance Overview During the reporting period, the company fully complied with the Hong Kong Corporate Governance Code, earning the "Best Corporate Governance Bank" award from Global Finance magazine, and revised its Articles of Association to enhance governance mechanisms - The company has fully complied with the code provisions of Appendix 14 "Corporate Governance Code" of the Hong Kong Listing Rules[249] - The company's corporate governance structure includes the Shareholders' Meeting, Board of Directors, Supervisory Board, and senior management[252] - The Board of Directors has five specialized committees: Strategy and Development, Audit, Risk Management, Nomination and Remuneration, and Connected Transactions Control[269] - On June 30, 2020, the Shareholders' Meeting approved the revision of the company's Articles of Association, which became effective on October 27 of the same year after approval by the CBIRC[252] Board of Directors' Report This report details the Board's proposed profit distribution plan for 2020, including a cash dividend of RMB 1.041 per 10 shares (tax inclusive) for ordinary shares, totaling approximately RMB 3.973 billion, pending shareholder approval Profit and Profit Distribution The Board proposes a 2020 ordinary share cash dividend of RMB 1.041 per 10 shares (tax inclusive), amounting to approximately RMB 3.973 billion, subject to shareholder approval Proposed 2020 Dividend Distribution Plan | Item | Content | | :--- | :--- | | Distribution Basis | Per 10 shares | | Cash Dividend (tax inclusive) | RMB 1.041 | | Total Dividend Amount (approx.) | RMB 3.973 billion | | Recipients | Domestic shareholders and H-share shareholders | | Status | Subject to approval by the Shareholders' Meeting | Supervisory Board Report This report summarizes the Supervisory Board's work in 2020, including its oversight of company operations, financial status, internal control, and the performance of directors and senior management, providing independent opinions on key matters Supervisory Board Work Summary In 2020, the Supervisory Board held 4 meetings, reviewed 13 proposals, and focused on supervising legal compliance, financial status, performance of directors and senior management, internal control, and risk management - The Supervisory Board held 4 meetings throughout the year, reviewing 13 proposals, including regular reports, internal control evaluation reports, and performance evaluation reports[343] - Key areas of supervision included: performance supervision, financial supervision, internal control and compliance supervision, and risk management supervision, with attention also paid to the impact of the pandemic on the company's operations and asset quality[343][344] Independent Opinions The Supervisory Board issued independent opinions on the company's 2020 operations, affirming legal and compliant operations, fair financial reporting, satisfactory performance of all directors and senior management, and effective internal controls, with no dissenting opinions - The Supervisory Board issued positive independent opinions with no dissenting views on four aspects of the company's operations: legal compliance, financial reports, performance evaluation of directors and senior management, and internal control[346] Significant Matters The most significant event during the reporting period was the completion of the transfer of the company's 50.995% equity in Happiness Life Insurance, which was approved by the Shareholders' Meeting and the CBIRC - The most significant matter during the reporting period was the completion of the transfer of the company's 50.995% equity in Happiness Life Insurance, which was approved by the Shareholders' Meeting and the CBIRC[348] - During the reporting period, the company did not experience any litigation or arbitration that had a significant adverse impact on its operating performance, did not implement any equity incentive plans, and neither the company nor its directors, supervisors, or senior management received any significant penalties from securities regulatory agencies[348] Audit Report and Financial Statements This section includes the Independent Auditor's Report and the detailed Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards Independent Auditor's Report Ernst & Young issued an unmodified audit opinion on the company's 2020 consolidated financial statements, affirming their fair presentation of the Group's financial position and operating results, identifying four key audit matters - The auditor, Ernst & Young, issued a standard unmodified audit opinion on the 2020 consolidated financial statements[353] - Key audit matters include: * Classification and impairment provisions of financial assets * Valuation of financial instruments * Assessment of control, joint control, and significant influence * Transfer of financial assets[355] Consolidated Financial Statements This section presents the detailed consolidated financial statements prepared in accordance with International Financial Reporting Standards, including the consolidated income statement, statement of comprehensive income, statement of financial position, statement of changes in equity, consolidated cash flow statement, and comprehensive notes - The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and comply with the disclosure requirements of the Hong Kong Companies Ordinance[353][390]