Shandong International Trust Co., Ltd. 2018 Annual Results Announcement

Business income increased by 2.8%;
Trust business segment operating profit margin increased to 76.6%

HONG KONG, Mar 24, 2019 - (ACN Newswire) - Shandong International Trust Co., Ltd. ("Shandong International Trust" or the "Company", Stock Code: 1697.HK) is pleased to announce its annual results of the Company for the year ended 31 December 2018 (the "Period").

Results Highlights
For the year ended 31 December 2018,

- Business income amounted to approximately RMB1,695 million, representing an increase of 2.8% over the corresponding period in 2017;
- Trust business operating income amounted to approximately RMB944 million, representing an decrease of 16.8% over the corresponding period in 2017;
- Proprietary business operating income was approximately RMB751 million, increased by approximately 46.2% over the corresponding period in 2017;
- Net profit attributable to shareholders of the Company was approximately RMB872.2 million, decreased by approximately 2.5% over the corresponding period in 2017;
- Fee and Commission Income was approximately RMB891 million, decreased by approximately 21.1% over the corresponding period in 2017;
- Interest Income was RMB648 million, representing an increase of approximately 32% as compared with 2017.

During the Period, the Company's business achieved a steady growth in 2018 with operating income of RMB1,695 million, representing a year-on-year increase of 2.8%, achieved net profit attributable to shareholders of the Company of RMB872.2 million , which decreased by 2.5% as compared to last year. Achieved trust business operating income of RMB944 million, representing an decrease of 16.8% over the corresponding period in 2017, achieved Proprietary business operating income was approximately RMB751 million, increased by approximately 46.2% over the corresponding period in 2017. In 2018, the income from the trust business and proprietary business of the Company accounted for 51.7% and 48.3% of the total revenue of the Company respectively.

Trust business structure is continuously optimized
Trust business is the Company's principal business, as a result of the success of the Company's three strategy of strengthening the traditional business, expanding the business returning to the original commitment of trust industry, and offering strong support to the launch of new business. The trust AUM of all trusts decreased from RMB263,408 million as at December 31, 2017 to RMB 231,922 million as at December 31, 2018, and the total number of trusts was 955 and 1,078 as at the respective dates.

Segment operating profit before income tax for trust business decreased by 13.9% from RMB839.9 million in 2017 to RMB723.1 million in 2018 primarily due to a 16.8% decrease in segment income from trust business from RMB1,134.1 million in 2017 to RMB943.7 million in 2018. The segment margin of trust business increased from 74.1% in 2017 to 76.6% in 2018.

Heighten active management capability for financing trusts
As at 31 December 2018, the AUM of actively managed trust was RMB89,658 million, representing a year-on-year increase of 9.1 percentage point and accounting for 38.7% of the total trust AUM. During the Reporting Period, revenue from the actively managed trust amounted to RMB627 million, accounting for 70.4% of the total income from trust business (indicating a year-on-year growth of 1.0 percentage points).

Family trusts business showed exponential growth, representing a year-on-year increase of 194.21%
The family trusts business maintained a rapid growth, as at 31 December 2018, the Company's family trust business has signed in aggregate a contract amount of RMB7.66 billion, of which the trust assets that have actually been delivered amounted to RMB5.836 billion, representing a year-on-year increase of 194.21%, thus continuing to secure a leading position in the industry. The Company's "Wealth Succession Family Trust" was awarded once again with the "Best Family Trust Scheme" by Securities Times, representing that the Company has been fully recognized by the market for its wealth management and financial service abilities, and has been leading the industry.

Since 2018, the Company triumphantly implemented an order of delivering RMB0.5 billion super-large scale pure capital family trust product, special-purpose family trust and independent investment right retained family trust. It officially launched the family trust brand "De Shan Qi Jia", representing that the Company has reached a new height in both the breadth and depth of development of family trust and family office business.

During the Reporting Period, the Company continued to develop their private wealth management business. Improving their asset allocation, the Company successfully achieved higher yields for customers. As at December 31, 2018, the Company managed 10 discretionary wealth management trusts, with the AUM reaching RMB2.048 billion.

Diverse development of Proprietary Business
In 2018, in order to reasonably allocate its own funds and improve the operation quality and efficiency of its own funds, the Company insisted on the strategy of combining long-term, mid-term and short-term assets, and proactively made investments with its own funds. The Company on one hand utilised the synergy between the proprietary business and the trust business, actively implemented the "investment and loan linkage mechanism", and provided great support for the transformation and innovation of the trust business. While on the other hand, the Company captured the opportunities arising from the qualification to conduct equity investment business with its proprietary assets and participated in the establishment of venture capital fund, in a bid to seek proprietary business transformation and foster new growth engines. The Company also actively pushed forward the equity transfer for First-Trust Fund Management Co. Ltd. and focused on the optimisation of the layout of the financial equity investment business. And lastly, with liquidity being assured, short term operations such as government bonds purchased under agreements to resell, purchase of wealth management products and dedicated account management for overseas assets were actively carried out to improve utlisation efficiency of domestic and overseas capitals. The aforementioned strategies contributed to the increase of its income, the Company recorded an income of RMB883.1 million for its proprietary business in 2018, representing a year-on-year increase of 29.6%

Continuously obtaining the highest rating
As a trust company licensed by the CBRC, the Company is permitted to conduct businesses across a number of markets, such as the real economy, capital markets and money markets. The growth of the Company in recent years has been recognised and praised by different sectors in the society. In the assessment of the trust industry conducted by the China Trustee Association for the years of 2015, 2016 and 2017, the Company was awarded with the highest rating of "Class A" for three consecutive years. On top of that, the Company was awarded with the highest rating of Grade AAA for six consecutive years in assessment of provincial corporate financial performance conducted by the Shandong Provincial Bureau of Finance.

Prospects
After 40 years of exponential economic growth, China has steadily entered a stage of high-quality development characterised by economic structure optimisation, transformation and upgrading. The PRC government is also promoting supply-side reform to address overcapacity, deleverage the financial industry, further securing China's long term high-quality development. As a company whose business operations are conducted in China and most of the company's income is generated within China, the Company will face endless opportunities and challenges brought by the change in the government policies, general economic and financial market conditions of China.

Along with the optimistic economic structure, China's economy maintained a steady growth with a huge potential and flexibility. As China's economy enters a stage of high-quality development, citizens' wealth will continue to accumulate, the number of wealthy customers will continue to increase. Hence the potentials and prospects of the assets management industry will be enormous. It is expected to further push the Company's business development and transformation.

In the future, even though China's financial industry may faces challenges such as weaker growth momentum a slower synchronized growth as a whole, and the deleverage of the financial industry. But with the company's strategy of developing new innovative business, it is expected to offset the potential decrease in its traditional business. On top of that, the Company actively further enhances its management capability, explores new development directions, and puts huge efforts on expanding its original business. Looking forward, the Company will be able to minimize the negative effects from the whole industry, and further establish its leading position.

Facing the challenges and opportunities in 2019, the Company will continue to consolidate its traditional competitive business, expedite exploration of innovative business, and promote greater breakthrough in active management, as to enhance its risk management capability and form a stable income source. And also, the Company will explore the development of asset-backed securitisation business and strive to make breakthroughs in asset-backed securitisation business. The Company will further expand its marketing channels, and to explore the implementation of on-line marketing. And to encourage and guide business teams to conduct business in major regions across the nation, including Beijing-Tianjin-Hebei Region, Yangtze River Delta and Guangdong-Hong Kong-Macau Greater Bay Area, to explore more business opportunities.


 
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