Financial Holdings

Corporate Governance: CITIC Financial Holdings upheld and strengthened the comprehensive leadership of the Communist Party of China, promoting the deep integration of Party leadership and corporate governance. The company clearly defined decision-making matters and processes for each governance entity and focused on building a solid foundation for corporate governance by completing the transfer in of equity in over six financial subsidiaries by the end of August 2023. These included CITIC Bank, CITIC Securities, CITIC Trust, CITIC-Prudential Life, CITIC Consumer Finance, and Tianjin OTC. CITIC Financial Holdings enhanced its governance framework, with an emphasis on strengthening the composition of the board of directors. Two specialized committees were established within the board of directors. The company explored the establishment of a mechanism for nominating and managing directors and supervisors. The company strived to ensure the compliant and efficient operation of corporate governance mechanisms, while providing support for the performance of directors and supervisors, and ensuring the smooth implementation of major corporate governance decisions.

Risk Management: CITIC Financial Holdings fully implemented regulatory requirements and strengthened its risk and compliance management functions. It emphasised the role of the headquarters in providing management, guidance, and support while overseeing the risk management responsibilities of the financial subsidiaries. The company continuously enhanced its risk and compliance management system, ensuring smooth and standardised functioning of risk management committees at the board and management levels. The coordination and consultation mechanism among experts in risk management, compliance, internal control, and management operated smoothly. To establish a robust risk management framework, CITIC Financial Holdings implemented three lines of defence: early warning, control, and coordinated resolution. It continuously improved seven major risk management mechanisms, including risk warning, risk preference and compliance control supervision, risk reporting, unified credit control, risk segregation, coordinated risk management and resolution, and recovery and disposal. Special attention was given to effective risk warning, strengthening the role of risk preference guidance, and thus gradually creating a centralised closed-loop mechanism to address and control risks. The company strengthened risk control in key areas such as real estate and local government debt, establishing special task forces to enhance policy analysis and coordinate business development and risk mitigation in these two sectors. As a result, the non-performing loan ratios in these two areas decreased by 0.62 and 0.11 percentage points respectively compared to the beginning of the year. The company’s overall risk profile ameliorated as the customer base continued to improve. The company effectively resolved risks through synergy between CITIC’s industrial and financial operations. CITIC Financial Holdings promoted collaboration between industry and finance, resulting in risk resolution exceeding RMB30 billion in 2023, yielding positive economic and social benefits. Furthermore, the company focused on enhancing its compliance and internal control management levels by implementing a three-year action plan for improvement. It also launched the “Five Ones” initiative to support financial subsidiaries in optimising the quality and efficiency of their compliance and internal control management.

Capital Management: CITIC Financial Holdings concentrated on strengthening coordinated management and enhancing its comprehensive, refined, and cross-functional capital management system, with an aim to transition capital management towards a proactive, efficient, and value-creating approach. It focused on critical aspects such as institutional foundations, organisational structure, information systems, and policy research to strengthen management effectiveness to ensure proactive planning, precise and scientific measurement, dynamic and timely evaluation, as well as effective assessment and incentivisation. During the year, CITIC Financial Holdings conducted a thorough review of its systems, involving optimising measurement processes to ensure compliance with regulatory guidance. It led its financial subsidiaries in reviewing and improving their organisational structures, clearly defining roles and responsibilities, improving capital planning, and strengthening operational foundations. In line with the “cloud-based management and data integration” requirements, CITIC Financial Holdings developed innovative solutions by building seven key functional modules and integrating seven of its business operations. This enhanced the seamless integration of entire processes and online operations, and facilitated the launch and operation of the industry’s first capital management system. The company closely monitored and adapted to evolving capital regulatory policies, continuously conducting assessments and analysis, developing forward-looking strategies and enhancing the support of capital for sustainable business growth. Furthermore, it implemented refined capital management practices within financial subsidiaries, focusing on cost reduction and efficiency improvement across all aspects of operations. Through comprehensive assessments and optimisation of product structures, CITIC Financial Holdings achieved capital savings of RMB21.3 billion throughout the year, significantly enhancing its capacity for organic development.

Wealth Management: CITIC Financial Holdings strengthened the mechanism of the CITIC Wealth Management Committee, fully leveraging the advantages of its comprehensive financial licences. The company integrated channels, clients, and products across its financial subsidiaries in the areas of wealth management, asset management, and comprehensive financing. The aim of integration was to achieve seamless coordination and the effective utilisation of resources throughout the value chain. As of the end of 2023, the wealth management business of financial subsidiaries reached RMB23.1 trillion, a year-on-year increase of 5.2%. The asset management business exceeded RMB7.5 trillion, with a growth rate of 6.7%. Comprehensive financing reached nearly RMB13.8 trillion, demonstrating a significant annual growth rate of 8.1% and outperforming the market. The concept of “One CITIC, One Customer” was vigorously implemented, resulting in a crossselling scale of RMB207.4 billion across corporate, retail, and group insurance areas. The combined financing scale surpassed the major threshold of RMB2 trillion, while the collaborative private equity investment funds exceeded RMB22 billion. These accomplishments demonstrated the increasing synergistic contribution of CITIC Financial Holdings in customer service, product innovation, platform development, and intellectual support. Firstly, the company has been actively driving synergistic customer service by implementing innovative models such as the “N+1+1” integrated service and the “People–Home–Enterprise–Society” framework for entrepreneur offices. These efforts have benefited 39 strategic clients and 100 entrepreneur clients, resulting in a substantial increase of over RMB260 billion in assets under management (AUM). Moreover, its coverage of services for national-level specialised and sophisticated enterprises reached 60%, showing an improvement of 12.4 percentage points. It took the lead in introducing the “Pension Ledger” programme, serving over three million households. Secondly, CITIC Financial Holdings promoted collaboration in driving integrated and innovative product development by leveraging its comprehensive financial licences, full product lifecycle capabilities, and comprehensive service advantages. It constructed a multi-product landscape consisting of “CITIC Prime Products,” “CITIC Innovative Products,” and a “Wealth Boutique Pool.” The annual sales volume of “CITIC Prime Products” reached RMB66.8 billion. Innovation played a crucial role in unlocking the potential of existing assets and expanding effective investments. CITIC Financial Holdings implemented 13 public REITs projects, ranking first in terms of both size and quantity in the market. Moreover, it introduced the market’s first comprehensive financial solution for special assets, enabling the successful implementation of special asset projects exceeding RMB70 billion. Additionally, its pension management business surpassed RMB1 trillion, solidifying its market brand presence. Thirdly, CITIC Financial Holdings focused on promoting the seamless integration of its system platforms with the aim of building a “Digital Financial Holdings” framework. Its goal is to create a comprehensive financial service gateway and introduce the “CITIC Wealth Plaza.” With compliance as a priority, it successfully centralised the digital applications of 12 CITIC Group subsidiaries, enabling cross-channel interactions, user recognition, and data sharing. As a result, it attracted 12.48 million new registered users throughout the year, with 1.32 million monthly active users. It also directed over 800,000 customers to its subsidiary companies, expanding the value and impact of its platform. Fourthly, CITIC Financial Holdings actively promoted “Intelligent Integration” by leveraging the expertise of over 100 think tank experts and a research team of over 1,000 professionals. It provided comprehensive and allencompassing consulting support to both internal and external clients, including foreign exchange guidance, capital operations, merger and acquisition strategies, and tailored CITIC comprehensive solutions. Its services have benefited over 140,000 clients. It also published industry-leading think tank reports such as the “White Paper on Central Enterprise Treasury System Construction,” the “1030 Action Plan for Financial Support to Qianhai,” and the “Top Ten Trends in Artificial Intelligence Development.” These think tank achievements have greatly contributed to enhancing the quality and efficiency of CITIC Financial Holdings’ comprehensive financial services.

Fintech: The launch of core functionalities of CITIC Financial Holdings’ Digitisation 2.0 project has supported the company in establishing a comprehensive management system and extending platform capabilities to its financial subsidiaries. The project, known for its distinctive advantages in “comprehensive business, multiple legal entities, integration, and innovation,” was awarded second prize in the “Financial Technology Development Awards” by the People’s Bank of China. CITIC Financial Holdings continued to enhance promotion of its operations through its Financial Shared Service Centre and Procurement Platform. By implementing initiatives including empowering the management of financial subsidiaries and applying intelligent technologies, the company improved risk control and efficiency. The Financial Shared Service Centre was honoured with first place in the CGMA Global Management Accounting 2023 China Awards. A Treasury Management System was developed and tailored to the characteristics of the financial holding industry, boosting the digitalisation of treasury information. In addition, a cross-sector, multi-legal entity risk management system was also established in line with domestic financial holdings characteristics, focusing on the core functions of the financial holding company and strictly adhering to regulatory requirements. In pursuit of the objective of “cloud-based management and data integration”, CITIC Financial Holdings completed integration of risk data from financial subsidiaries, enabling T+5 reporting of risk data. The improvement of the Smart Office Platform and the Management Dashboard Data System facilitated process integration, providing better support for comprehensive management.