For the trust industry, the recent past 2023 was a historic year for the trust industry in China.

At a time when the industry is facing a battle to change development methods and optimize the business structure, the “Three Categories of Trust Business” and a series of supporting documents were officially released, clarifying the direction for the transformation of the entire trust industry. Thanks to regulatory guidance and the efforts of all parties, the industry is developing more and more steadily. According to data released by the Trust Industry Association in January of this year, as of the end of the third quarter of last year, China's trust asset balance was 22.64 trillion yuan, an increase of 7.45% over the previous year.

(Source: Public Information)

While the overall asset scale of the trust industry is growing steadily, the industry is also transforming and accelerating, optimizing the business structure, and innovating to serve the real economy and people's livelihood. As a representative of a local state-owned trust company, Shandong Guoxin (01697.HK) is also the first mainland trust to enter the international capital market and the first share of Hong Kong stock trusts. It always keeps in mind the “depth of trust and the importance of trust” of customers, insists on seeking steady progress, serves economic and social development, constructs a broad development pattern, and highlights the social responsibility of state-owned enterprises.

Looking back on 2023, in the face of complex and severe domestic and international environment and industry changes, Shandong Guoxin is forging ahead under pressure, moving forward, guided by regulatory guidelines, steadily advancing the trust-based business as a strategic transformation focus, actively responding to shocks exceeding expectations, efficiently coordinating development and risks, and achieving new results.

Looking ahead to 2024, the trust industry is full of opportunities under the call to promote high-quality development and help new quality productivity. Shandong Guoxin will fully implement the spirit of the 20th National Congress of the Party and the spirit of the Central Economic and Financial Work Conference, firmly grasp the theme of high-quality development, maintain strength, reshape capabilities, work hard, conform to regulatory guidance, adhere to unwavering ideas of transformation and development, spare no effort to focus on characteristic management, build a “stable and robust” “specialized and refined” regional trust company, promote new quality productivity, and embark on a new trust journey.

Five areas of concentration, business transformation presents a new situation

In June of last year, the former Banking Insurance Regulatory Commission issued the “Notice on Regulating Trust Business Classification of Trust Companies” (“Three Categories of Trust Business” for short) and was officially implemented.

The “Three Categories of Trust Business” clearly regulate the business categories, definitions, and boundaries of the trust industry, so that trust supervision can be carried out from “anything prohibited by law” in the past to trust companies “where every business can be carried out is clearly written in the rules”, pointing out the original direction of business development for the industry, and also providing an institutional basis for the full integration of the trust industry with the asset management industry. China's trust industry is expected to truly achieve the goal of returning to its roots.

Facing changes in the trust industry, in 2023, there are still many trust companies that have carried out meaningful product development and creation along the path of “three categories of trust business”, embarked on their own characteristic route, and made progress in asset management, wealth management service trusts, etc., which are not only worthy of deep digestion in the trust industry, but also contributed their unique value to the innovation of the entire financial circuit.

Shandong Guoxin is one of them. As a local state-owned trust company, Shandong Guoxin has always been guided by regulatory guidelines, adhering to steady progress and improving quality, keeping in mind the “deep trust and importance of trust” of customers, and conforming to the development trend of the trust industry. Over the past year, through five areas of concentration and return to the roots, business transformation presented a new situation.

The first is to concentrate and return to the roots, and business transformation presents a new situation. Specifically, Shandong Guoxin is actively following the regulatory guidelines and is steadily advancing the original business in line with the trustee's positioning as a key business for strategic transformation. Remarkable results have been achieved in capital markets, active management capabilities, and family trusts, including cooperation with many financial institutions, excellent performance in fixed income products, innovation in family trust business, and development of charitable trusts and pension trusts.

Judging from the results, Shandong Guoxin is progressing steadily, and the results achieved in the fields of capital markets, active management capabilities, and family trusts show that it has successfully promoted a strategic transformation that returns to its roots. Helping the development of new types of productivity, pension finance has become one of the “five major chapters” of finance this year. Shandong Guoxin's efforts in family trusts, charitable trusts, and pension trusts has also shown the company's keen insight and forward-looking attitude towards market changes.

The second is to focus on business innovation and cultivate new competitive advantages. Innovation is the source of a company's development. In the face of homogenized business, each trust company should strive to find a special path that suits them and form differentiated competition with other asset management industries.

Behind adapting to major trends in the trust industry, Shandong Guoxin is also cultivating new competitive advantages through concentrated business innovation. For example, the transformation of wealth management is progressing steadily. Accelerate the transformation from traditional non-standard product sales to standard product sales. The annual standard product sales scale already accounts for 47.13% of the total scale of independent distribution, providing a good guarantee for business development from the financial side. Focus on improving asset allocation capabilities and promote the transformation to wealth management services based on “customer accounts”. By the end of December, 41 special wealth management accounts had been set up to accumulate core customers and expand long-term profit growth points.

Innovation is the key to the sustainable development of enterprises. As can be seen, Shandong Guoxin's innovative practices in wealth management transformation and other areas are worthy of recognition. This not only brought new profit growth points to the company, but also enhanced its differentiated competitiveness.

The third is to focus on green collaboration to serve the real economy and show a new style. Specifically, the Shandong Guoxin Green Trust has been very successful. In 2023, a green trust business of 1,217 billion yuan was added. As of the end of 2023, green trust assets remained at 2.83 billion yuan, of which the green trust business scale was 1,559 billion yuan and the green bond investment scale was 1,271 billion yuan. Respond positively to the country's call for green development and provide high-quality financial supply for the real economy

Green development is a method of economic growth and social development that aims for efficiency, harmony, and sustainability. As a local state-owned enterprise, Shandong Guoxin responds positively to the call for green development and supports the real economy through the development of green trusts, demonstrating the company's firm commitment and responsibility for green development and sustainable finance.

Fourth, concentrate on risk prevention and control, and firmly adhere to the bottom line of risk compliance. Risk prevention is a top priority for major domestic financial regulators. Over the past year, Shandong Guoxin has stepped up efforts to improve the integrity and effectiveness of risk management and control. Strictly control project entry, improve risk prevention capabilities in advance, strengthen advance control of important matters, raise the level of approval for major business decisions, and do a good job of centralizing risk management and control in the industry and counterparties.

As we all know, risk management is an important part of the financial industry. Shandong Guoxin has ensured the steady operation of the company through measures such as strengthening risk management and control and improving integrity and effectiveness, which shows that the company attaches great importance to risk management and compliance.

The fifth is to focus on improving management to promote the construction of a new pattern of high-quality development. This includes adhering to the “deepening reform and management innovation” mindset to implement the new development concept, focusing on key points, highlighting difficulties, and focusing on business reform and institutional mechanism reform, etc., to provide a foundation for high-quality development.

It can be seen from this that in the past year, Shandong Guoxin has achieved a new situation of business transformation and new advantages in differentiated competition, with concentrated efforts to return to the roots, business innovation, green collaboration, risk prevention, and management improvement as the core. Overall, Shandong Guoxin has shown strong competitiveness and innovation in the trust industry, laying a solid foundation for future development.

Further deepen institutional reforms and accelerate advantageous businesses

At the 2024 session, the government work report proposed China's main economic target for 2024: GDP growth of about 5%.

At the same time, in terms of financial layout, the government work report suggests that an active fiscal policy should be moderately strengthened, improved quality and efficiency; a prudent monetary policy should be flexible, moderate, accurate and effective, and vigorously develop technology finance, green finance, inclusive finance, pension finance, and digital finance; in addition, develop a schedule to improve new productivity, encourage the development of venture capital and equity investment, and further promote innovation and development in the digital economy; coordinate development and security, and effectively prevent and mitigate financial risks in key areas.

Looking ahead to 2024, the trust industry has ushered in new development opportunities under the new macroeconomic situation, new forms of industry supervision, and calls to promote high-quality development and promote new productivity improvements. How can trust companies further essentially grasp the development of the trust business and get out of the “quadratic curve” of growth?

Essentially speaking of trusts, trust companies should return to the roots of the trust industry, implement new development concepts, advance steadily and far-reaching in deepening transformation and serve the real economy, and provide better financial products and services to the masses. Trust companies need to change their short-term profit-oriented mindset, focus on investors' needs, and carry out comprehensive innovation from customers and talents to comprehensive system construction capabilities, and from strategy to business.

Shandong Guoxin said that in 2024, it will fully implement the spirit of the 20th National Congress of the Party and the spirit of the Central Economic and Financial Work Conference, firmly grasp the theme of high-quality development, maintain strength, reshape abilities, work hard, conform to regulatory guidance, adhere to unwavering ideas of transformation and development, spare no effort to focus on characteristic management, and build a “stable and healthy” “exclusive and refined” regional trust company.

Specifically, there are the following four new directions:

The first is to accelerate advantageous businesses. Specifically, 2024 will accelerate the development of businesses with unique advantages represented by family trusts, vigorously explore the new blue ocean of the industry, seize the family service trust market, raise the level of insurance trust exhibition, and actively explore the insurance trust business model with pension functions; and expand the scale of standard trusts to lead business development through innovation and give full play to the unique advantages of the trust system in the field of pension and inclusion.

By clarifying the key business directions for this year, especially businesses with special advantages such as family trusts and insurance fund trusts, it will help Shandong Guoxin maintain its leading position in the fierce market competition.

Furthermore, in this year's government work report, pension finance is one of the “five major chapters”. The report clearly states that strengthening social security and services is one of the work priorities, and indicates that third-pillar pension insurance should be actively developed to strengthen the supply of old-age services. China's pension trusts are currently in the exploration and development stage. Pension trusts have natural institutional advantages, and have important livelihood significance and social security functions.

Based on the flexibility and diversity of trust mechanisms, trust companies can actively promote the further development of scenario-based wealth management service trusts and prepaid fund fiduciary service trusts. While continuously diversifying and innovating the business model of pension trusts, trust companies can enhance the inclusiveness of pension trusts and promote the healthy and orderly development of pension finance.

Judging from the layout of Shandong Guoxin, it is further entering the field of pension trusts, innovating services, and improving quality and efficiency.

The second is to dig deeper into the potential for regional development. Providing comprehensive financial services to local governments and enterprises, providing comprehensive financial services throughout the life cycle for key enterprises in the province, striving to make trusts a useful tool for government departments to enhance social governance capabilities; implement the concept of green development, seize opportunities to build a pioneering green, low-carbon, high-quality development zone in Shandong Province, and explore innovative green trust product models.

Green finance is also an important part of the “Five Big Articles” and plays an important role in promoting the construction of a new development pattern. In order to speed up the green transformation, the report of the 20th National Congress of the Party clearly stated the urgency of improving financial policies to support green development. Meanwhile, the government work report further emphasized the key role of a green and low-carbon economy in achieving high-quality development.

As one of China's major economic provinces, Shandong Province has a vast area and huge potential for regional development. By providing comprehensive financial services to local governments and enterprises, Shandong Guoxin can further explore regional development potential and actively develop green trusts. On the one hand, it can help increase the company's share in the local market, and on the other hand, it also helps promote the continuous development of the regional economy and promote the development of new quality productivity in the local green industry.

The third is to keep the bottom line and prevent risks. By establishing a comprehensive risk management system, pre-approval, post-loan management and temporary management of projects will be strengthened, concentration risks will be strictly controlled, early risk correction mechanisms will be established, and new risks will be strictly prevented in a multi-pronged manner.

How can state-owned enterprises adhere to the bottom line that risk does not occur? Shandong Guoxin's approach is to always pay attention to risk and have a strong sense of risk management. This also helps reduce the company's business risks and ensure the steady operation of the company.

Fourth, unswervingly push forward the reform of institutional mechanisms. As we all know, for trust companies, conceptual change is the forerunner, and what really drives business implementation is organizational change, which can play a leading and driving role by formulating collaborative business management measures.

Shandong Guoxin said that it will optimize performance evaluation and talent team building to achieve collaborative work within the company. The adoption of institutional mechanism reforms will help stimulate employees' innovative spirit and work enthusiasm, and improve the overall operating efficiency of the company.

In fact, this year's government report also made many key references to the data economy. Since the report of the 20th National Congress of the Party proposed “speeding up the construction of a cyber power and digital China,” promoting innovation and development in the data economy has become an important path for incubating new quality productivity.

Through further institutional reform and the formulation of measures such as collaborative business management, Shandong Guoxin gives full play to the leading role of innovative front-line talents to flexibly provide data asset service trusts and data asset management trust services, thereby effectively stimulating the financial value potential of data assets. In the future, various social actors such as trust companies will actively participate in the new pattern of diversified co-governance in the digital economy, so they can also jointly explore the development opportunities and diverse values of data trusts to help develop new quality productivity.

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Faced with the overall macroeconomic situation and calls to promote high-quality development and help new levels of productivity, the trust industry is full of opportunities, and each trust company must embark on its own unique path. Over the past year, Shandong Guoxin has worked hard under pressure and forge ahead. Guided by regulatory guidelines, it has steadily advanced the original business that conforms to the trustee's positioning as a key business for strategic transformation. Through five areas of concentration (cohesion returns to the roots, cohesion business innovation, cohesion green collaboration, cohesion risk prevention and control, and cohesion management improvement), business transformation has shown a new situation.

Looking ahead to 2024, Shandong Guoxin will continue to maintain strength, reshape its capabilities, work hard, conform to regulatory guidance, adhere to unwavering transformation and development ideas, spare no effort to focus on characteristic management, build a “stable and healthy” and “specialized” regional trust company, deepen the transformation of service entity managers, promote the development of new quality productivity, and provide more high-quality financial products and services to the masses. Deepen the “secondary curve” of reform and growth through four areas of work, including speeding up high-quality business.