Business Innovation | "CITIC Experience" in Serving the Private Economy

By Lu Yin, Corporate Finance Department, China CITIC Bank

The CPC Central Committee and the State Council issued the "Opinions on Promoting the Development and Growth of the Private Economy", and the People's Bank of China and other eight ministries and commissions jointly issued the "Notice on Strengthening Financial Support Measures to Help the Development and Growth of the Private Economy". In March this year, the "Government Work Report" of the "Two Sessions" once again emphasized the "two unswerving" and demanded that "a good environment for fair competition and competitive development be created for enterprises of all types of ownership." ”

For financial institutions, actively supporting the development and growth of the private economy is not only the need to serve the national strategy and meet regulatory requirements, but also the inevitable choice to actively integrate into the economic development trend, optimize the business structure, and create a good business environment for their long-term and healthy development. For a long time, China CITIC Bank has insisted on providing high-quality financial services to all types of market entities without discrimination, and has given priority to meeting the financing needs of private enterprises, ranking among the top banks of its kind in the proportion of loans to private enterprises.

After the promulgation of the relevant "Opinions" and "Notice" of the state, China CITIC Bank immediately convened a party committee and successively studied and formulated the "Action Plan for China CITIC Bank to Support the Development and Growth of the Private Economy through Finance" and the "Implementation Plan for China CITIC Bank to Strengthen Financial Support Measures to Help the Development and Growth of the Private Economy". Rural revitalization and other key areas of the private economy have been supported, and effective work experience has been formed.

Experience 1: Create products, establish characteristics, and support the private economy to "seek new quality"

The private economy is an important carrier of new quality productivity, and China CITIC Bank actively combines financing and wisdom to support, serve and integrate into the development of new quality productivity. In terms of science and technology innovation finance, since last year, China CITIC Bank has established a science and technology innovation finance center in its head office and branches, formulated a development plan for science and technology innovation finance, and formed a special organizational structure, professional risk control model, special supporting resources and exclusive financial solutions for science and technology enterprises. As of the end of February this year, the account opening coverage rate of state-level specialized, special and new enterprises has exceeded 60%, and the credit coverage rate has exceeded one-third. In the past three years, the compound annual growth rate of the Bank's loans to strategic emerging industries has reached 42%. In view of the lack of collateral for private technology-based enterprises, China CITIC Bank has developed special products such as e-loans, investment-loan linkage scorecards, listing relay loans, equity incentive financing, and credit loans for employees of science and technology enterprises at different stages of the enterprise growth cycle, and has provided loans of nearly 40 billion yuan to specialized, special and new small and micro enterprises throughout the year. In terms of inclusive finance, we will give full play to the advantages of inclusive product innovation test fields, continue to expand the product system under "housing, chain, government, innovation and network", continue to improve the popular "CITIC Easy Loan" series of characteristic products, and with the help of new technologies such as the Internet and big data, we will continue to innovate and launch standardized products and localized products with regional characteristics, so as to increase the proportion of first loans and credit loans. Inclusive loans to small and micro enterprises increased by 22% for the whole year, nearly three times the average growth rate of all loans in the bank. In terms of green finance, the head office formulated a three-year development plan for green finance, continued to strengthen the construction of the green finance ecosystem, increased credit to private enterprises in key areas such as clean energy, industrial energy conservation and carbon reduction, green infrastructure upgrading, resource recycling, ecological protection and restoration, and actively promoted special and scenario-based products such as ESG performance-linked loans, forest tenure pledge loans, green syndications, and green intelligent manufacturing loans, with a compound annual growth rate of 77% in the past three years.

Experience 2: Go to 10,000 enterprises, expand customer groups, and expand the service coverage of private enterprises

In recent years, China CITIC Bank has anchored five categories of customers, namely "chain", "science and technology", "capital market", "cross-border" and "park", to improve the quality and expand the scope of small and medium-sized customers, and continuously consolidate the foundation of credit delivery. In 2023, the Bank will conscientiously implement regulatory requirements such as "Visiting 10,000 Enterprises, Improving Confidence, and Providing Excellent Services" and "One Chain, One Policy, One Batch" to promote financing, and carry out the activity of "Entering 10,000 Enterprises - 100 Days of Partners", organizing nearly 200 marketing activities and visiting more than 20,000 enterprises. In addition, it jointly launched the "Work Plan for Supporting Private Enterprises to "Go Global" and Jointly Building the High-quality Development of the Belt and Road Initiative with the All-China Federation of Industry and Commerce, deepened cooperation with the Torch Center of the Ministry of Science and Technology and the SME Center of the Ministry of Industry and Information Technology, and held activities such as the "Venture Capital Small and Medium-sized Enterprises - Trustworthy and Far-reaching" Private Equity Investment Fund Ecological Partner Forum. Relying on the synergistic advantages of CITIC Group and the unique characteristics of CITIC Financial Holding's full financial license, China CITIC Bank has created a characteristic comprehensive financing service system with "commercial bank + investment bank + synergy + matchmaking" as the core, providing private enterprises with full-cycle, full-scenario and full-ecological products and services. For example, in collaboration with the securities and equity investment resources within the group, the service model of "one-point intervention and multi-point response" has been formed, and the early, smaller and newer private enterprises have been deployed in advance, providing diversified services such as equity investment and debt financing to accompany the growth of the enterprise. In 2023, the Bank comprehensively used a variety of means to break through the dilemma of private enterprises in issuing bonds, actively empowered the high-quality development of private enterprises through bond underwriting business, and underwrote nearly RMB50 billion of debt financing instruments for private enterprises throughout the year. The branches also strengthened cooperation and docking with local government departments, core enterprises and industrial parks, carried out special marketing activities such as "Pratt & Whitney Four Seasons", "Double Hundred Project", "Homing Action" and "Hui Daifa", implemented more than 200 supply chain projects throughout the year, and invested more than 10 billion yuan in supply chain loans to more than 2,400 small and micro enterprises.

Experience 3: Reduce costs, control costs, and reduce the operating burden of private enterprises

Only by forming a mutually beneficial and win-win situation can the two sides cooperate for a long time and achieve steady and far-reaching results. China CITIC Bank is committed to reducing financial costs and operating burdens for enterprises. In terms of fees, in addition to strictly implementing the regulatory provisions such as "seven prohibitions", "four disclosures" and "two prohibitions and two restrictions", we will take the initiative to bear and reduce or exempt account opening fees, production costs, online banking transfer fees and other fees. In terms of loan interest, through the bank's special subsidy for private enterprise loans, the capital cost of private enterprise financing is reduced, and interest rate coupons are also issued for inclusive and high-quality customers, so as to make profits to enterprises in a variety of ways. In response to the needs of enterprises to renew loans, the head office pushes the list of enterprises with temporary loans to the branches to carry out list-based services, and flexibly sets up continuous methods such as borrowing and repaying at any time, repaying according to the plan and even "renewing the loan without principal repayment", so as to facilitate customers to arrange repayment plans independently according to the business cycle, and greatly save the cost of "reverse loan" for enterprises.

Experience 4: Excellent system, strong technology, digital empowerment to help improve the quality and efficiency of services

The increasing customer base of private enterprises has put forward higher requirements for the efficiency and accuracy of marketing services and risk control and early warning. On the one hand, China CITIC Bank has improved marketing efficiency by strengthening technology empowerment, improved the digital precision marketing platform, promoted the hierarchical and classified management of business opportunities, optimized the distribution rules and outbound call system of business opportunities, launched the "Xinzhihui" face-to-face mini program, and enriched the visual "digital assessment" tools, which greatly reduced the transactional work burden of account managers and effectively improved marketing efficiency while improving marketing accuracy. On the other hand, it optimized the intelligent risk control platform, launched more than 40 functions in 3 categories, including model statistical monitoring, visual display, and full life cycle management, improved more than 240 risk control modes and monitoring rules such as enterprise credit reporting, capital flow, and shell enterprises, and launched 7 categories of inclusive offline auxiliary approval models and more than 30 inclusive exclusive early warning signals, so as to promote the accuracy of inclusive financial intelligent early warning to exceed 80%, the proportion of automatic regular inspection to reach 100%, and the first post-loan inspection task to be reduced by 60%.

Experience 5: Increase willingness, strengthen ability, and relieve the worries of the grassroots

In terms of internal management promotion, China CITIC Bank actively implements the work deployment of the People's Bank of China, focusing on establishing a long-term mechanism to serve small and micro enterprises that dare to lend, willing to lend, and can lend and lend, and strive to improve the willingness, ability and sustainability of branches to serve private small and micro enterprises. In recent years, the head office has decomposed and issued incremental plans for private enterprise loans to relevant business departments and branches every year, and gradually increased the weight of indicators. In the credit granting process of specific projects, the head office timely promoted and copied the working mechanisms such as the "three-terminal linkage" of Hangzhou Branch and the "matrix" asset promotion of Shanghai Branch, so as to form a consensus and synergy within the bank. In accordance with the principle of "should be exempted" and the model of "positive list + negative list", the head office formulated detailed rules for the operation of due diligence and exemption for small and micro enterprises and science and technology innovation finance, and set up bad tolerance levels for private enterprise loans, small and micro enterprise loans, and inclusive small and micro enterprises, so as to further stimulate the endogenous power of serving private enterprises. In 2023, the Bank conducted more than 11,000 due diligence and exemption evaluations for inclusive small and micro enterprise credit grants, and more than 97% of them were found to meet the regulatory and internal due diligence exemption standards, effectively eliminating the worries of the grassroots and solving the problem of fear and reluctance to lend.

CITIC Tower

Finance is the lifeblood of the national economy, and China CITIC Bank will firmly implement the decisions and arrangements of the CPC Central Committee, adhere to the people-centered value orientation, adhere to the fundamental purpose of providing financial services to the real economy, and regard the continuous improvement of the quality and efficiency of serving the private economy as its natural mission, so as to grow and achieve glory together with the private economy. The "CITIC Experience" will also burst out with new sparks and light in the process of continuous exploration and practice.

(This article was published in the first half of April 2024)