民生银行(01988) - 2021 - 中期财报

Company Strategic Positioning and Initiatives The company defines its mission as "serving the public, caring for people's livelihood" and aims to become a first-class commercial bank within five years, focusing on being a bank for private enterprises, agile and open, and customer-centric Mission, Vision, and Strategic Positioning The company's mission is "serving the public, caring for people's livelihood," with a vision to be a "long-lasting bank, a century-old Minsheng," aiming to become a first-class commercial bank in five years by focusing on private enterprises, agility, and customer-centric services - The company has established three strategic positions: "Bank for Private Enterprises, Agile and Open Bank, and Customer-Centric Bank," aiming to leverage its unique advantages in serving private enterprises, enhance service efficiency and experience through digital transformation, and build an integrated customer-centric collaborative system[11] - The company has set a five-year development goal to become a distinctive, continuously innovative, value-growing, and prudently managed first-class commercial bank[10] Strategic Initiatives To achieve its strategic positioning, the company has formulated eight strategic initiatives, centered on a "four-wheel drive" business layout and "four major guarantees" support system, focusing on retail, SME, corporate, and financial market businesses, supported by digitalization, regional development, risk management, and institutional mechanisms - At the business level, the company proposes four core strategies: strengthening retail finance, deepening small and micro enterprise finance, enhancing corporate finance, and reinforcing financial market business, forming a "four-wheel drive" development model[12] - At the support level, the company emphasizes accelerating digital transformation, focusing on four key regions including the Guangdong-Hong Kong-Macao Greater Bay Area and the Yangtze River Delta, improving its comprehensive risk management system, and ensuring strategic implementation through institutional safeguards such as optimizing governance structure and establishing efficient coordination mechanisms[12][13] Company Profile China Minsheng Bank, established in 1996, is China's first national joint-stock commercial bank primarily initiated by private enterprises, listed on SSE (A-share: 600016) and HKEX (H-share: 01988) Company Profile China Minsheng Bank, established in 1996, is China's first national joint-stock commercial bank primarily initiated by private enterprises, listed on SSE (A-share: 600016) and HKEX (H-share: 01988) | Item | Information | | :--- | :--- | | Company Name | CHINA MINSHENG BANKING CORP., LTD. | | Legal Representative | Gao Yingxin | | Establishment Date | 1996年2月7日 | | A-share Listing Information | 上交所，股票簡稱：民生銀行，股票代碼：600016 | | H-share Listing Information | 香港聯交所，股票簡稱：民生銀行，股份代號：01988 | - The company is China's first national joint-stock commercial bank primarily initiated by private enterprises, with a business scope covering various core commercial banking operations[18][19] Financial Highlights In H1 2021, the Group's operating performance faced pressure, with both operating income and net profit declining year-on-year, while total assets grew steadily, but asset quality indicators showed some deterioration Key Financial Indicators In H1 2021, the Group's operating performance faced pressure, with both operating income and net profit declining year-on-year, while total assets grew steadily, but asset quality indicators showed some deterioration | Operating Performance (RMB million) | H1 2021 | H1 2020 | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Operating Income | 86,350 | 96,759 | -10.76% | | Net Interest Income | 65,753 | 69,020 | -4.73% | | Net Profit Attributable to Shareholders | 26,556 | 28,453 | -6.67% | | Basic EPS (RMB) | 0.56 RMB | 0.61 RMB | -8.20% | | Scale Indicators (RMB million) | June 30, 2021 | Dec 31, 2020 | Change from Prior Year-End (%) | | :--- | :--- | :--- | :--- | | Total Assets | 7,069,708 | 6,950,233 | 1.72% | | Total Loans and Advances | 4,031,900 | 3,853,931 | 4.62% | | Total Deposits | 3,852,340 | 3,728,174 | 3.33% | | Total Equity Attributable to Shareholders | 575,436 | 529,537 | 8.67% | | Asset Quality and Capital Adequacy (%) | June 30, 2021 | Dec 31, 2020 | Change (percentage points) | | :--- | :--- | :--- | :--- | | Non-Performing Loan Ratio | 1.80% | 1.82% | -0.02 | | Provision Coverage Ratio | 142.87% | 139.38% | 3.49 | | Core Tier 1 Capital Adequacy Ratio | 8.52% | 8.51% | 0.01 | | Capital Adequacy Ratio | 13.43% | 13.04% | 0.39 | Management Discussion and Analysis This section reviews the macroeconomic environment, outlines the company's strategic goals and initiatives, provides an overview of overall operations, and analyzes key items from the income statement, balance sheet, loan quality, and capital adequacy Macroeconomic Environment Review In H1 2021, the global economy stabilized with a "two-track" recovery, while China's economy maintained steady recovery, with macro policies remaining consistent and the banking sector seeing improved asset quality despite narrowing net interest margins - China's economy showed a "stable with solidifying and improving trends" posture, with Q2 GDP two-year average growth rebounding from 5.0% in Q1 to 5.5%[27] - The macro policy tone was "no sharp turns," with prudent monetary policy guiding overall financing costs to be stable with a slight decrease through LPR reform and optimized deposit rate regulation[27] - In the first half, the banking sector's net interest margin narrowed, but benefiting from economic recovery and improved asset quality, commercial banks collectively achieved a net profit of RMB 1.1 trillion, a year-on-year increase of 11.1%[28] Goals and Strategies The company steadfastly advanced its strategic transformation, focusing on supporting the real economy, deepening its private enterprise strategy, promoting digital financial transformation, building a customer-centric service system, focusing on key regional development, and enhancing risk and refined management capabilities - The company firmly adheres to its mission of "serving the public, caring for people's livelihood," strengthening financial support for the real economy, including small and micro enterprises, manufacturing, and inclusive finance[29] - Promoting digital financial transformation aims to achieve a "fully distributed" architecture through enhanced technology and data capabilities, providing more efficient and convenient services to customers[29] - Implementing a key regional strategy, focusing on the four major regions of Guangdong-Hong Kong-Macao Greater Bay Area, Yangtze River Delta, Beijing-Tianjin-Hebei, and Chengdu-Chongqing, and formulating differentiated operating strategies to enhance market competitiveness[30] Overall Operating Performance In H1 2021, net profit attributable to shareholders decreased by 6.67% to RMB 26.56 billion, and operating income decreased by 10.76% to RMB 86.35 billion, primarily due to fee concessions, real estate credit controls, and reduced non-standard investments | Indicator | H1 2021 | Y-o-Y Change | | :--- | :--- | :--- | | Net Profit Attributable to Shareholders | RMB 26.56 billion | -6.67% | | Operating Income | RMB 86.35 billion | -10.76% | | Annualized Return on Average Total Assets | 0.76% | -0.07 percentage points | | Annualized Weighted Average Return on Net Assets | 10.43% | -1.05 percentage points | | Indicator | June 30, 2021 | Change from Prior Year-End | | :--- | :--- | :--- | | Total Assets | RMB 7.07 trillion | +1.72% | | Total Loans and Advances | RMB 4.03 trillion | +4.62% | | Total Deposits | RMB 3.85 trillion | +3.33% | | Non-Performing Loan Ratio | 1.80% | -0.02 percentage points | | Provision Coverage Ratio | 142.87% | +3.49 percentage points | Income Statement Analysis The Group's operating income decreased by 10.76% and net profit attributable to shareholders by 6.67% year-on-year, mainly due to a narrower net interest margin and a significant drop in non-interest net income, partially offset by reduced credit impairment losses Net Interest Income and Net Interest Margin Net interest income decreased by 4.73% to RMB 65.75 billion, and net interest margin narrowed by 0.20 percentage points to 2.02%, primarily due to lower asset yields from policy implementation and asset allocation shifts | Indicator | H1 2021 | H1 2020 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income (RMB billion) | 65.753 billion RMB | 69.020 billion RMB | -4.73% | | Net Interest Margin (annualized) | 2.02% | 2.22% | -0.20 percentage points | | Net Interest Spread (annualized) | 1.93% | 2.24% | -0.31 percentage points | - The decline in net interest margin was primarily attributed to lower asset yields, including reduced yields on new loans, a decrease in the proportion of high-yield real estate development loans, and a shift in the investment portfolio towards low-yield, high-liquidity standardized bonds[52] - From the perspective of influencing factors, asset expansion contributed RMB 7.41 billion positively to net interest income, but interest rate changes (net interest margin narrowing) resulted in a negative impact of RMB 10.68 billion[41] Non-Interest Net Income Non-interest net income significantly decreased by 25.75% to RMB 20.60 billion, driven by a 12.90% drop in net fee and commission income due to business adjustments, and a 39.95% decrease in other non-interest net income from reduced non-standard investments and less favorable bond market conditions | Item (RMB million) | H1 2021 | H1 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Net Fee and Commission Income | 12,684 | 14,562 | -12.90% | | Other Non-Interest Net Income | 7,913 | 13,177 | -39.95% | | Total Non-Interest Net Income | 20,597 | 27,739 | -25.75% | - The significant decline in other non-interest net income was primarily due to: 1) a RMB 4.58 billion reduction in related income from decreased non-standard investment scale; and 2) a lack of bond market trading opportunities, leading to a RMB 2.83 billion year-on-year decrease in trading gains[56] Balance Sheet Analysis Total assets reached RMB 7.07 trillion, up 1.72% from year-end, with loan proportion increasing to 57.03%; total liabilities grew 1.15% to RMB 6.48 trillion, with deposits up 3.33% and optimized structure; total shareholders' equity increased 8.51% due to retained earnings and perpetual bond issuance | Item (RMB million) | June 30, 2021 | Dec 31, 2020 | Change from Prior Year-End (%) | | :--- | :--- | :--- | :--- | | Total Assets | 7,069,708 | 6,950,233 | 1.72% | | Net Loans and Advances | 3,956,091 | 3,782,297 | 4.59% | | Net Financial Investments | 2,029,466 | 2,120,650 | -4.30% | | Total Liabilities | 6,482,413 | 6,408,985 | 1.15% | | Deposits | 3,892,249 | 3,768,151 | 3.29% | | Bonds Issued | 701,144 | 957,880 | -26.80% | | Total Shareholders' Equity | 587,295 | 541,248 | 8.51% | Loan Quality Analysis Asset quality remained stable, with NPL ratio slightly down to 1.80% and special mention loans decreasing to 2.86%; corporate loan NPL ratio rose to 1.92%, while personal loan NPL ratio significantly dropped to 1.63%, with NPLs concentrated in mining, manufacturing, and wholesale/retail | Loan Classification | June 30, 2021 (RMB billion) | Proportion (%) | Dec 31, 2020 (RMB billion) | Proportion (%) | | :--- | :--- | :--- | :--- | :--- | | Normal Loans | 3.844099 trillion RMB | 95.34% | 3.669206 trillion RMB | 95.20% | | Special Mention Loans | 115.410 billion RMB | 2.86% | 114.676 billion RMB | 2.98% | | Non-Performing Loans | 72.391 billion RMB | 1.80% | 70.049 billion RMB | 1.82% | - Personal loan quality improved significantly, with the NPL ratio decreasing from 1.96% to 1.63%, and both small and micro enterprise loans and credit card NPL ratios showing a notable decline; meanwhile, the corporate loan NPL ratio increased from 1.72% to 1.92%[82][83] - Corporate non-performing loans were primarily concentrated in mining (NPL ratio 12.42%), manufacturing (3.15%), and wholesale and retail (3.27%), with these three industries collectively accounting for 66.34% of corporate non-performing loans[84][85] Capital Adequacy Ratio Analysis All capital adequacy ratios met regulatory requirements and improved from year-end, with Core Tier 1 Capital Adequacy Ratio at 8.52%, Tier 1 Capital Adequacy Ratio at 10.31%, and Capital Adequacy Ratio at 13.43%, while leverage ratio also increased to 7.50% | Capital Adequacy Ratio Indicators (%) | June 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Core Tier 1 Capital Adequacy Ratio | 8.52% | 8.51% | | Tier 1 Capital Adequacy Ratio | 10.31% | 9.81% | | Capital Adequacy Ratio | 13.43% | 13.04% | | Leverage Ratio | 7.50% | 6.93% | Key Business Review The company steadily advanced its businesses, optimizing deposit structure and reducing costs, while loans grew, shifting towards retail, SME, and manufacturing. Corporate banking deepened customer operations, retail banking grew clients and assets through digitalization, and other businesses also progressed Deposit and Loan Business Deposit structure optimized with a 73.91% reduction in structured deposits, lowering deposit costs by 0.21 percentage points; loan growth was 4.60%, with credit resources tilting towards inclusive small and micro enterprises and manufacturing, and retail loans increasing to 41.78% - Deposit structure optimization yielded significant results, with structured deposit balances substantially decreasing by RMB 125.76 billion (-73.91%) from the end of the previous year, leading to a year-on-year decrease of 0.21 percentage points in the deposit cost rate to 2.15%[113] - Credit structure continued to optimize, with inclusive small and micro enterprise loan balances growing by 8.38% and manufacturing loans by 6.42% from the end of the previous year, both higher than the bank's average loan growth of 4.60%[114] Corporate Banking Business Corporate banking deepened customer segmentation, achieving growth across strategic, institutional, and SME client segments. Corporate deposit structure optimized with higher average daily balance of demand deposits and lower cost. Investment banking maintained market position, with bond underwriting reaching RMB 165.45 billion - Corporate deposits reached RMB 3.01 trillion, an increase of 2.25% from the end of the previous year, with the average daily proportion of demand deposits increasing by 2.28 percentage points year-on-year, and the average cost rate of corporate deposits decreasing by 0.21 percentage points year-on-year[118] - In investment banking, the underwriting and issuance scale of various bonds reached RMB 165.45 billion, ranking tenth among lead underwriters of interbank non-financial enterprise debt financing instruments[119] Retail Banking Business Retail banking, as a long-term strategy, is driven by "digitalization + ecosystem." During the reporting period, retail business operating income proportion increased to 44.01%, and pre-tax profit grew by 31.52% year-on-year. Total retail customer assets exceeded RMB 2 trillion, reaching RMB 2.02 trillion | Retail Business Indicators | June 30, 2021 | Change from Prior Year-End | | :--- | :--- | :--- | | Managed Retail Customer Assets | RMB 2.02 trillion | +5.76% | | Retail Loans and Credit Card Overdrafts | RMB 1.67 trillion | +RMB 82.792 billion | | Retail NPL Ratio | 1.63% | -0.33 percentage points | | Small and Micro Loan NPL Ratio | 2.21% | -0.59 percentage points | | Credit Card NPL Ratio | 2.84% | -0.44 percentage points | - Digital marketing and risk control capabilities improved, achieving precise marketing through over 900 user tags, with online non-mortgage consumer loan scale growing by 33.42% while the NPL ratio decreased from 0.52% to 0.45%[124][125] Treasury Business Treasury business continued to optimize its structure. Net investment decreased by 4.26% from the end of the previous year. Wealth management transformation progressed, with net-value product scale reaching RMB 671.05 billion, increasing its proportion to 78.70%, and legacy assets orderly reduced - Wealth management business transformation yielded significant results, with the scale of net-value products compliant with new asset management regulations reaching RMB 671.05 billion, an increase of 26.95% from the end of the previous year, and its proportion of total wealth management product scale increasing from 61.38% to 78.70%[143] - Precious metals business trading volume totaled RMB 352.26 billion, ranking among the top ten traders in inquiry trading on the Shanghai Gold Exchange[145] Risk Management The company adhered to a prudent risk management philosophy, comprehensively strengthening control over various risks including credit risk, market risk, operational risk, and liquidity risk, while continuously reshaping compliance culture and enhancing anti-money laundering effectiveness - Credit risk management: strengthened credit policy guidance, supported private and small and micro enterprises, strictly controlled risks in key areas such as real estate and government platforms, and explored digital approval using big data and AI technologies[169] - Market risk management: improved the management system based on the principle of full coverage, adopted differentiated measurement methods for banking book and trading book, and monitored through a limit system, stress tests, and other means[170] - Liquidity risk management: closely monitored market conditions, ensured the bank's liquidity safety and stability by strengthening the customer base, optimizing liability structure, and increasing reserves of high-quality liquid assets, with all regulatory indicators maintained within a reasonable range[172] Outlook For H2, external environmental uncertainties persist, and the foundation for domestic economic recovery remains unstable. Macro policies will maintain continuity, focusing on supporting the real economy. Banking assets are expected to grow steadily, with credit targeting inclusive, green, and tech innovation sectors, but net interest margins will still face pressure - It is expected that macro policies will remain stable in the second half, with monetary policy focusing on cross-cyclical design and paying more attention to supporting small and micro enterprises, manufacturing, and other key areas[179] - The main risks faced by the company include: external environmental uncertainties, credit risk in areas such as real estate and local government debt, financial market volatility risk, and operational and information technology risks arising from the development of online businesses[180] Share Changes and Shareholder Information This section details changes in share capital and the company's shareholder structure, including major shareholders and any share pledge situations Shareholder Information As of the reporting period, the company had 431,313 common shareholders, with a dispersed equity structure and no controlling shareholder or actual controller. Top shareholders include Dajia Life Insurance, China Oceanwide, Tongfang Guoxin, and New Hope Liuhe - As of the end of the reporting period, the company had no controlling shareholder or actual controller. The largest single shareholder was Dajia Life Insurance Co., Ltd. - Universal Product, with a shareholding ratio of 10.30%[191] | Top 5 Common Shareholders | Shareholding Ratio (%) | Number of Shares | | :--- | :--- | :--- | | HKSCC Nominees Limited | 18.92% | 8,284,494,733 shares | | Dajia Life Insurance Co., Ltd. - Universal Product | 10.30% | 4,508,984,567 shares | | Dajia Life Insurance Co., Ltd. - Traditional Product | 6.49% | 2,843,300,122 shares | | China Oceanwide Holdings Group Co., Ltd. | 4.61% | 2,019,182,618 shares | | Tongfang Guoxin Investment Holdings Co., Ltd. | 4.31% | 1,888,530,701 shares | Preferred Share Information This section provides details on the company's preferred shares, including issuance, redemption, conversion, and dividend distribution Preferred Share Information During the reporting period, there were no new preferred share issuances, repurchases, or conversions, nor any restoration of preferred share voting rights. The company's outstanding domestic and overseas preferred shares are accounted for as other equity instruments, with no dividend distribution in the period - The company's outstanding domestic preferred shares "Minsheng You 1" have a total issuance amount of RMB 20 billion with a coupon dividend rate of 4.38%; overseas preferred shares have a total issuance amount of approximately RMB 9.93 billion with an initial dividend rate of 4.95%[197][535] - During the reporting period, the company had no preferred share dividend distribution, repurchase, conversion, or voting rights restoration events[201] Bond Information This section outlines the company's outstanding bonds, including types, issuance, redemption, interest payments, and credit ratings Bond Information As of the end of the reporting period, the company's outstanding bonds primarily included Tier 2 capital bonds, perpetual bonds, and special financial bonds for small and micro enterprises. A RMB 4 billion subordinated bond was redeemed, and interest payments were made for several outstanding bonds, all rated AAA with stable outlook - During the reporting period, the company completed the redemption of the RMB 4 billion "11 Minsheng 02" subordinated bond on March 18, 2021[204] - On April 19, 2021, the company newly issued RMB 30 billion in perpetual bonds (21 Minsheng Bank Perpetual Bond 01) with a coupon rate of 4.30%, used to supplement additional Tier 1 capital[213] - As of the end of the reporting period, all of the company's outstanding bonds held a credit rating of AAA with a stable outlook[206][207][208][210][211][212][214] Corporate Governance This section describes the company's corporate governance structure, including the board of directors, supervisory board, and compliance with regulatory requirements Overview of Corporate Governance The company continuously improved its corporate governance system, organically integrating Party leadership with corporate governance and actively implementing regulatory standards, enhancing the quality of decision-making and oversight through optimized board and supervisory board operations, in compliance with relevant laws and codes - During the reporting period, the company's Board of Directors held 6 meetings, reviewing 59 proposals; the Supervisory Board held 2 meetings, reviewing 14 proposals, with each governance body effectively fulfilling its duties[217] Employee Information As of the end of the reporting period, the Group had 57,090 employees, with 54,481 at the company. 99.1% of employees held college degrees or above. The company conducted 311 training programs for 57,000 participants | Item | Number | | :--- | :--- | | Group Employees | 57,090 people | | Company Employees | 54,481 people | | Subsidiary Employees | 2,609 people | | Proportion of Employees with College Degree or Above | 99.1% | Environmental and Social Responsibility This section details the company's initiatives and performance in environmental protection and social responsibility, including financial services for rural revitalization Financial Services for Rural Revitalization The company actively fulfilled its social responsibility by prioritizing financial services for rural revitalization, establishing a leadership group and principles, focusing on two designated poverty alleviation counties (Huaxian, Fengqiu) through consumption, industrial, and talent support to create a "Minsheng model" for rural revitalization - The company established a rural revitalization working group and formulated a specific work plan, clarifying the assistance principles of "two focuses, three non-reductions, five enhancements," demonstrating its high regard and systematic planning for the rural revitalization strategy[247] Significant Matters This section covers significant events such as major litigation, arbitration, and profit distribution Major Litigation and Arbitration Matters During the reporting period, no major litigation or arbitration significantly impacted operations. As of period-end, the company was involved in unresolved lawsuits as plaintiff totaling approximately RMB 23.41 billion and as defendant totaling approximately RMB 1.75 billion | Litigation Role | Number of Cases | Amount Involved (RMB 10,000) | | :--- | :--- | :--- | | As Plaintiff | 3,123 | 2,340,736 10,000 RMB | | As Defendant | 173 | 174,587 10,000 RMB | Profit and Dividend Distribution The company implemented its 2020 profit distribution plan, paying a cash dividend of RMB 0.213 per share (tax inclusive), totaling RMB 9.33 billion. The Board of Directors decided against profit distribution or capital reserve capitalization for H1 2021 - 2020 dividend: cash dividend of RMB 0.213 per share (tax inclusive), totaling RMB 9.33 billion[258] - H1 2021 profit distribution plan: no profit distribution or capital reserve capitalization[259] Financial Report This section presents the company's unaudited interim consolidated financial statements for H1 2021, including the income statement, statement of comprehensive income, statement of financial position, statement of changes in equity, and cash flow statement, along with related notes and supplementary financial information Financial Report This section contains the company's unaudited interim consolidated financial statements for H1 2021, reviewed by PricewaterhouseCoopers in accordance with International Standard on Review Engagements 2410, resulting in an unmodified conclusion review report - This interim financial report is unaudited but was reviewed by PricewaterhouseCoopers in accordance with International Standard on Review Engagements 2410, resulting in an unmodified conclusion review report[4][265][267]