China Minsheng Banking Corp., Ltd. 213 Annual Results Announcement March 214
Disclaimer This presentation contains forward-looking statements that involve risks and uncertainties. These statements are generally indicated by the use of forwardlooking terminology such as believe, expect, anticipate, estimate, plan, project, target, may, will or other similar words that express an indication of actions or results of actions that may or are expected to occur in the future. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this presentation. These forward-looking statements are based on our own information and information from other sources we believe to be reliable. Our actual results may be materially less favorable than those expressed or implied by these forward-looking statements which could affect the share price of our shares. 1
Agenda 1 Business overview 2 Financial performance 3 Outlook 2
Business overview In 213, our Group actively responded to the adjustments and changes in macro-economic environment and regulatory policies, pressed ahead with strategic transformation and delivered continuous improvement in profitability 1 Continuous improvement in profitability and stable return to shareholders Net profit attributable to equity shareholders of the Group amounted to RMB42,278 million, representing an increase of 12.55% Y-o-Y Operating income amounted to RMB116,12 million, representing an increase of 12.87% Y-o-Y Net assets per share attributable to equity shareholders of the parent company was RMB6.97, representing an increase of 21.22% over end of 212 Basic earnings per share was RMB1.49, representing an increase of 11.19% Y-o-Y 2 Optimized business structure and remarkable achievement of strategic businesses 4 Total assets of the Group amounted to RMB3,226,21 million, representing an increase of.44% over end of 212 Total balance of loans and advances to customers and total deposits increased by 13.7% and 11.45% over end of 212, respectively The balance of personal deposits grew fast, reaching RMB51,944 million at the end of this reporting period, representing an increase of RMB117,17 million, or 29.76%, over end of 212. The balance of personal deposits accounted for 23.8% of total deposits, representing an increase of 3.36 percentage points over end of 212 Net non-interest income amounted to RMB33,69 million, representing an increase of 28.63% Y-o-Y, and the net non-interest income accounted for 28.48% of the operating income, representing an increase of 3.49 percentage points Y-o-Y Outstanding loans to small and micro enterprises (SMEs) 1 amounted to RMB44,722 million, representing an increase of 27.69% over end of 212. The number of SME customers reached 1.9 million, representing an increase of 91.97% over end of 212; the outstanding loans to SMEs accounted for 25.96% of the Company's total balance of loans and advances 1, representing an increase of 2.89 percentage points over end of 212 By the end of 213, 3,35 community branches and self-service outlets have been completed and commenced operations 1 The outstanding general loans to NSOEs 1 amounted to RMB585,241 million, and the number of NSOE customers with outstanding loan balances 1 reached 12,973, accounting for 64.91% and 86.52% of corporate banking segment 1, respectively The Company had 12,9 private banking customers, representing an increase of 37.39% over end of 212. The scale of financial assets under management 1 reached RMB191,941 million, representing an increase of 49.76% over end of 212 The number of mobile banking customers 1 reached 5,545.2 thousand with total transaction amount 1 up to RMB1,125,851 million 3 Improved operating efficiency with stringent cost control Note: 1 Bank standalone The cost-to-income ratio was 32.69%, representing a decrease of 1.4 percentage points Y-o-Y Enhanced risk management and maintained stable asset quality The impaired loans ratio, provision coverage ratio and provision for total loans ratio were.85%, 259.74% and 2.21%, respectively 3
Corporate banking Consolidating existing customer base and enlarging scale of financial assets We took initiatives to respond to the changes of economic and financial environment to strengthen the reform of SBUs and corporate banking business development of its branches. We also strengthened our regional distinctive features and our "two chains" financial services, enhanced the innovation of corporate banking products in order to continuously facilitate the transformation and development of our corporate banking business Corporate deposits and loans (general corporate loans) 1 No. of corporate deposit customers with outstanding balance 1 (in thousands) % of NSOEs in total customers with outstanding loans 1 (%) 2,, 1,5, 1,517,954 1,614,454 5 4 3 2 1 87.% 86.52% 39.4 86.% 85.5% 287.8 85.% 84.% 83.% 82.% 81.% 8.% 212 31 Dec 年 12 212 月 31 日 2131 年 Dec 12 月 213 31 日 212 31 年 Dec 12212 月 31 日 213 31 年 Dec 12213 月 31 日 1,, 873,37 91,635 No. of cash management customers 1 (in thousands) No. of trade finance customers 1 5, 3 25 2 261.9 16, 12, 11,288 13,966 15 121.4 8, 31 Dec 212 31 Dec 213 Loans Deposits 1 5 31 Dec 212 31 Dec 213 4, 31 Dec 212 31 Dec 213 Source: Annual reports Note: 1 Bank standalone 4
Corporate banking Achieving rapid growth in net non-interest income businesses We promoted the integrated financial services model of Financial Stewardship in order to enhance the major contribution of commercial banks investment banking business to the revenue of the intelligence-based intermediary business. We also accelerated the development and innovation of investment banking model to improve the professional level and value-creating capability of the intermediary business services Net fee and commission income from corporate banking business 1 16, 12, 8, 4, 9,96 14,295 212 年 213 年 Commercial bank investment banking business 3 3 3 3 3 Further advanced on commercial banking + investment banking and smart financing, and become a distinctive and efficient investment bank providing comprehensive financial services Established seven business segments, including merger and acquisition, capital market, investment management, innovative financing, fixed income, issue of bonds and institutional wealth management Focused on the major industries of SBU and regional featured industries of branches, and promoted the development of investment banking business for enterprises to improve profitability Strived to develop innovative high-end investment banking business with a clear profit model to drive the upgrade of its investment banking business Through our strategic customers, thorough studies on businesses and industries were conducted and distinctive comprehensive financial services were provided Assets in custody (including safekeeping) 1 2,5, 2,, 1,5, 1,, 5, 213 Best Custodian Bank 21st century China Business Herald 989,763 1,956,73 Corporate annuity funds in custody 1 1, 9,173 8, 6,933 6, 4, 2, Debt financing instruments in issue 1 115, 11,52 11, 18,37 15, 31 Dec 212 31 Dec 213 31 Dec 212 31 Dec 213 1, 31 Dec 212 31 Dec 213 Source: Note: 1 Bank standalone Annual reports No. of accounts 121,315 138,64 5
Corporate banking Launching SBUs reform version 2. We comprehensively innovated and reformed the operation mode to facilitate the transformation of SBUs into a professional investment banking provider from the traditional deposit and loan model, aiming to realize structural transformation and increase our returns on capital Balance of deposits and loans of industry SBUs 1, 2 (general corporate loans) Net non-interest income from industry SBUs 1, 2 12, 8, 4, 57,37 15,715 11,82 62,98 5,156 51,758 29,88 32,516 3,5 3, 2,5 2,719 3,94 Real Estate Finance SBU Energy Finance SBU Transportation Finance SBU Metallurgy Finance SBU 2, 212 213 Deposits Loans Continuous growth in trade finance business Net non-interest income 1 6, 4, 4,81 The Innovative Transaction Bank in China (213) Financial Times 5,264 Rapid development of Modern Agriculture Industry Finance SBU and Culture Industry Finance SBU Modern Agriculture Industry Finance SBU Initiated the establishment of a financial service platform for modern agricultural industries with adoption of a "full and partial outsourcing" model Active customers in marine fisheries and tea industry chains amounted to 5,613 and 1,27, representing increases of 127.15% and 248.9% over end of 212, respectively The outstanding general loans to customers in marine fisheries and tea industry reached RMB13,258 million and RMB2,92 million, representing increases of 18.86% and 137.71% over end of 212, respectively 2, 212 213 Culture Industry Finance SBU Source: Annual reports Notes: 1 Bank standalone 2 Including Real Estate Finance SBU, Energy Finance SBU, Transportation Finance SBU and Metallurgy Finance SBU Further explored new businesses and commercial models, formulated fundamental targeted customer base and enlarged financial assets rapidly The outstanding balance of financial assets of the Culture Industry Finance SBU amounted to RMB3,641 million, which included outstanding credit balance of RMB2,566 million and non-credit balances of RMB1,75 million, accounting for 29.52%. Deposit balance was RMB2,835 million 6
Retail banking Comprehensively expanding small business finance and community finance activities We comprehensively carried out the transformation focusing on small business finance and community finance in all branches. Apart from further enhancing small business finance, we officially launched community finance. We gathered pace in development through transformation, promoting its retail banking business to a whole new stage of development Outstanding loans to small and micro enterprises 1 No. of small and micro enterprise customers 1 (in thousands) 5, 4, 3, 2, 316,951 44,722 2,5. 2,. 1,5. 1,. 992.3 1,94.9 1, 5. 31 Dec 212 31 Dec 213. 212 31 年 Dec 12212 月 31 日 2131 年 Dec 12213 月 31 日 The official launch of community finance business and continuous innovations on micro-loan products The launch of community finance Promoted the construction of product portfolio, channel network and supporting system of community finance to become the leading service provider of small business finance and community finance in the industry. 3,35 community branches and self-service outlets have been completed and commenced operation in 213 Concentrated financial resources, logistic resources and human resources to expedite the establishment of the community financial service system; launched Smart Family product series and accelerated the establishment of software supporting platform and non-financial platform Persisted in the community finance strategy and expedited the upgrade and improvement of the marketing management model for community finance; further strengthened the regional planning of community finance, optimized channel and network distribution, strengthened the head office-to-head office marketing and implemented distinctive marketing model Innovations on microloan products Upgraded micro-loan products to "Micro-Loan 2.", introduced five key series of products, namely recurring loan, loan for freight bill, loan for sales volume, loan for tax bills and collection loan and launched Xiaowei Bao which offered multi-channel acceptance and counter services through mobile operation and sales Note: 1 Bank standalone 7
Retail banking and private banking businesses continued to expand China s Best Private Bank with High Net Worth Customer Services Euromoney Best Private Bank with Integrated Services 21st Century Business Herald The Private Bank of 213 Economic Observer Best Domestic Private Banking Performance Hurun Report Personal loans and advances Private banking AuM and number of customers 1 7, 6, 5, 4, 3, 2, 1, 465,576 65,529 25, 2, 15, 1, 5, 128,17 191,941 212 31 Dec 年 1212 月 31 日 213 31 年 Dec 12213 月 31 日 212 31 年 Dec 12 月 212 31 日 213 31 年 Dec 12 月 213 31 日 No. of customers 9,389 12,9 Personal deposits 6, 51,944 5, 393,774 4, 3, 2, 1, 31 Dec 212 31 Dec 213 Fee and commission income from private banking business 1 2, 1,699 1,5 1, 762 5 31 Dec 212 31 Dec 213 Source: Annual reports Note: 1 Bank standalone 8
Agenda 1 Business overview 2 Financial performance 3 Outlook 9
Overview of key financial indicators Income statement highlights (RMB million, except per share data) 213 212 Key profitability indicators (%) 213 212 Change (ppt) ROAA 1.34 1.41 (.7) ROAE 23.44 25.67 (2.23) Net interest margin (NIM) 2.49 2.94 (.45) Net fee and commission income to total operating income Growth rate (%) Operating income 116,12 12,861 12.87 Of which: Net interest income 83,33 77,153 7.62 Net non-interest income 33,69 25,78 28.63 Profit before income tax 57,151 5,652 12.83 Net profit attributable to equity shareholders of the Bank 42,278 37,563 12.55 Basic earnings per share (RMB) 1.49 1.34 11.19 25.8 19.95 5.85 Cost to income ratio 1 32.69 34.9 (1.4) Statement of financial position highlights Asset quality indicators (%) 31 Dec 213 31 Dec 212 Change (ppt) Impaired loans ratio.85.76.9 Allowance to total loans ratio Capital adequacy ratio indicators (%) 2 Core tier-one capital adequacy ratio Tier-one capital adequacy ratio 31 Dec 213 2.21 2.39 (.18) 8.72 na 8.72 na Capital adequacy ratio 1.69 1.75 31 Dec 212 Growth rate (%) Total assets 3,226,21 3,212,1.44 Of which: Gross balance of loans and advances to customers 1,574,263 1,384,61 13.7 Total liabilities 3,21,923 3,43,457 (.71) Of which: Deposits from customers Equity attributable to equity shareholders of the Bank 2,146,689 1,926,194 11.45 197,712 163,77 21.24 Source: Annual reports Notes: 1. Cost to income ratio = (Operating and other expenses business tax and surcharges) / operating income 2. The capital adequacy ratio and relevant indicators as at the end of the reporting period were calculated in accordance with the Administrative Measures for the Capital of Commercial Banks (Provisional) (Decree of the CBRC 212 No. 1) which became effective on 1 January 213 and other relevant regulatory requirements. The capital adequacy ratios as at the end of other periods were calculated in accordance with the Administrative Measures for the Capital Adequacy Ratios of Commercial Banks 1
Profitability Our Group sustained good performance in terms of profitability and operating results. ROAA and ROAE recorded slight decreases as compared to end of last year primarily due to net interest margin compression Profit before income tax ROAE 8, 6, 5,652 57,151 3% 23% 25.67% 23.44% 4, 15% 2, 8% % 212 212 年 213 213 年 212 212 年 213 213 年 Basic earnings per share ROAA (RMB) 1.6 1.5 1.4 1.34 1.49 2.% 1.5% 1.41% 1.34% 1.3 1.% 1.2 1.1.5% 1. 212 213 % 212 213 Source: Annual reports 11
Net interest income The expansion of interest earning assets fuelled the growth in net interest income Net interest income Growth and composition of interest income 2, 182,154 1, 18, 7,189 8, 6, 77,153 83,33 16, 14, 12, 1, 151,887 5,327 19,354 2,478 12,533 5,33 8,69 37,548 4,485 9,447 6,567 11,992 4, 2, 8, 6, 4, 98,22 14,926 2, Source: Annual reports 212 213 212 213 Total balance of loans and advances to customers Securities and other investments Balances with the central bank Balances with banks and other financial institutions Placements with banks and other financial institutions Financial assets held under resale agreements Finance lease receivables 12
Net non-interest income Fast growing fee and commission income further diversified the company's income sources Net non-interest income 4, 35, 3, 25,78 25, 2, 15, 33,69 Growth and composition of fee and commission income 33,61 36, 78 33, 517 2,277 3, 3,654 27, 22,91 24, 5,121 76 721 21, 1,734 3,41 18, 2,491 2,573 15, 8,69 2,734 12, 1, 5, 9, 6, 3, 5,331 6,431 9,764 Source: Annual reports 212 213 212 213 Trust and other fiduciary services Bank card services Settlement services Agency services Fee and commission of credit commitments Financial advisory services Finance lease services Others 13
Operating efficiency The growth in operating income and successful cost control measures led to a decrease in cost-to-income ratio, while net profit per employee further increased Stable growth in operating income Further decrease of cost-to-income ratio 1 15, 12, 9, 12,861 116,12 45% 35% 34.9% 32.69% 6, 3, 25% 212 213 15% 212 213 Successful control over operating expenses Net profit per employee 2 6, 5, 4, 3, 2, 1, 42,889 45,962 212 213.8.78.76.74.72.7.78.79 212 213 Source: Notes: Annual reports 1 Cost to income ratio = (Operating and other expenses business tax and surcharges) / operating income 2 Net profit per employee = net profit / the number of employees 14
Deposit and loan portfolios The balance of deposits and loans continued to grow steadily. The deposit mix remained stable while the percentage of personal loans further increased Deposits from customers Gross balance of loans and advances to customers 2,5, 2,, 1,5, 1,, 5, 1,926,194 2,146,689 2,, 1,5, 1,, 5, 1,384,61 1,574,263 212 31 年 Dec 12212 月 31 日 213 31 年 Dec 12213 月 31 日 212 31 年 Dec 12212 月 31 日 213 31 年 Dec 12213 月 31 日 Deposit mix (by duration) Loan mix 1%.2%.29% 1% 75% 37.87% 37.75% 75% 33.63% 38.46% 5% 5% 25% 61.93% 61.96% 25% 66.37% 61.54% % 31 Dec 212 31 Dec 213 Time Demand Other % 31 Dec 212 31 Dec 213 Corporate loans and advances Personal loans and advances Source: Annual reports 15
Asset quality Comprehensive risk management system has been fully implemented to ensure the stability of asset quality Proactive measures to control asset quality Impaired loans ratio Enhancing credit planning, proactively adjusting loan distribution, and continuously optimizing asset structure Continuing to improve risk management policies and imposing multidimensional risk limit management for various industries and regions Strengthening risk monitoring, early-warning and routine post-loan management Closely monitoring loans with potential risk factors and problems in an early and timely manner Comprehensively utilizing all available recovery and disposal measures to improve efficiency and effectiveness of recovery Strengthening training programs to improve the professional skills and the comprehensive qualities of the risk management team 1.%.8%.5%.3%.%.76%.85% 212 31 年 Dec 12 月 212 31 日 213 31 Dec 年 1213 月 31 日 Provision coverage ratio Provision for total loans ratio 4% 3% 314.53% 259.74% 3.% 2.3% 2.39% 2.21% 2% 1.5% 1%.8% % 31 Dec 212 31 Dec 213.% 31 Dec 212 31 Dec 213 Source: Annual reports 16
Capital adequacy ratio All capital adequacy indicators of the Group have met the regulatory requirements for the transition period under the new measures issued by the CBRC, while total equity to total assets ratio further increased Core tier-one capital adequacy ratio 1 Tier-one capital adequacy ratio 1 1.% 8.% 7.8% 7.86% 8.18% 8.72% 1.% 8.% 7.81% 7.87% 8.18% 8.72% 6.% 6.% 4.% 4.% 2.% 2.% % 31 Mar 213 3 Jun 213 3 Sep 213 31 Dec 213 % 31 Mar 213 3 Jun 213 3 Sep 213 31 Dec 213 Capital adequacy ratio 1 Total equity to total assets ratio 12.% 1.% 8.% 9.87% 9.92% 1.15% 1.69% 8.% 6.% 5.25% 6.33% 6.% 4.% 2.% % 31 Mar 213 3 Jun 213 3 Sep 213 31 Dec 213 4.% 2.% % 31 Dec 212 31 Dec 213 Source: Note: Annual reports 1. Calculated in accordance with the Administrative Measures for the Capital of Commercial Banks (Provisional) which became effective on 1 January 213 and other relevant regulatory requirements 17
Agenda 1 Business overview 2 Financial performance 3 Outlook 18
214 Outlook In 214, in order to fully realise the objectives under the New Three-Year Plan, our Group will strive to ensure sustainable development across all businesses and achieved the Second Take-off. We will devote to position ourselves as the best commercial bank in China with core competitiveness and unique business characteristics. Specific measures are as follows: 1 2 3 4 5 6 Further refine the structure of corporate governance and provide clear guidelines for the comprehensive risk management, so as to further improve and regulate the corporate governance system With focus on regional distinctive services and services for small business finance and community finance as well as the industry chains and supply chains, transformation of branches will be implemented to strengthen the growth of branches and sub-branches Further enhance risk control, strengthen the collection and disposal of nonperforming loans and maintain the stability of asset quality Push forward reform and innovation by implementing of the results of major reforms in SBUs, small business financing and private banking version 2. Continue to optimise the management system of e- banking business and improve traditional counter services to better serve customers Streamline and optimize the procedures of midand-back office to further enhance internal operation efficiency and lower operation cost 19
Q&A 2