Shenwan Hongyuan 9000-word performance briefing transcript: How does a top securities firm operate?

What's next? Another securities firm has provided its "answer" at the performance briefing. On April 1st, Shenwan Hongyuan held its 2023 performance briefing. Liu Jian, Secretary of the Party Committee, Chairman, and Director of the Executive Committee of Shenwan Hongyuan Group, Zhang Jian, Deputy Secretary of the Party Committee and General Manager of the securities company, Ren Quansheng, Executive Committee Member and CFO of the group, Xu Liang, Secretary of the Board of Directors of the group, Chen Xiuqing, Executive Committee Member and CFO of the securities company, Wang Sulong, Executive Committee Member, Tang Jun, Executive Committee Member, Zhou Haichen, and others attended the meeting. In response to market concerns about performance growth and how to build a first-class investment bank, the senior management of the group and the securities company provided answers. Good performance last year Ren Quansheng, Executive Committee Member and CFO of the group, introduced that the company's performance in 2023 showed significant growth. Excluding basic business, operating income increased by 16.43% year-on-year, mainly due to investment income, fair value changes, and a significant increase in net interest income, outperforming the market significantly and reflecting the company's good asset allocation and investment trading capabilities. At the same time, the company adheres to an operating strategy of focusing on core competitiveness, continues to increase strategic investment, and maintains stable industry rankings in brokerage, asset management, and investment banking fee income in the overall weak market environment. The company's net profit increased by 74.39% year-on-year, far exceeding the growth in operating income. The full-year ROE was 4.72%, an increase of 1.79 percentage points year-on-year. In terms of leverage, the leverage ratio at the end of the year was 5.38 times, which remained stable and at a reasonable level, with some room compared to the industry leverage ceiling. Profit growth was mainly due to a significant increase in profit margin. The company's operating profit margin in 2023 was 35.57%, an increase of about 15 percentage points year-on-year, mainly due to the company's adherence to budget-first, strengthening input-output evaluation, refined cost management, optimizing internal fund transfer pricing, enhancing the activation of low-efficiency assets, and continuously disposing of and clearing risky projects. In addition, continuous optimization of tax planning was also emphasized. As a result, the company's operating expense ratio decreased by 7.24 percentage points in 2023, and the provision for asset impairment losses decreased by 70% year-on-year, overall promoting the improvement of the company's quality, efficiency, and profitability. Building a first-class investment bank Liu Jian stated that regulatory authorities have recently issued multiple policy documents, proposing a roadmap for building a first-class investment bank and investment institution, and clarifying medium-term or long-term goals. The proposal of these goals reflects the industry's development needs. Securities companies are the most important intermediary institutions in the capital market, connecting fundraisers on one side and investors on the other, playing a crucial bridging role and being one of the five pillars to enhance the intrinsic stability of the capital market. The high-quality development of finance cannot be achieved without first-class modern financial institutions. Shenwan Hongyuan has experienced multiple mergers, reorganizations, and organizational innovations in its history and is an established leading securities institution. The company has always adhered to prudent operations, with deep historical accumulation, relatively balanced business and regional layout, continuous innovation, and the ongoing creation of strengths and advantages On the strategic objectives, actively benchmarking top-tier investment banks in the market, continuously enhancing capital strength, professional service level, compliance and risk management capabilities, and talent team building, persisting in efforts, continuously solidifying the professional capabilities and market competitiveness in serving clients. Looking at the development trends abroad, the future market will gradually move towards integration, and the industry concentration will significantly increase. Professional strength, service capability, talent, including internationalization level, will become the key factors in building a top-notch modern investment bank. Meanwhile, Shenwan Hongyuan will further strengthen its functional positioning, continuously solidifying its comprehensive financial and comprehensive investment and financing service capabilities, serving national strategies and residents' wealth management capabilities, and achieving high-quality development in this process. In terms of light capital business, the main focus is to further establish the concept of customer-centricity and customer-oriented, continuously improve the professional service level, and build a good reputation and brand. The wealth management line should actively transform from a seller-oriented sales model to a buyer-oriented investment advisory model. The institutional line should actively respond to recent market rate reforms, enhance securities research, trading pricing, improve internal collaborative mechanisms for serving large institutions, and accelerate the transformation towards asset-side services. In the asset management line, which is a blue ocean, there is a need to further enhance the performance of managed products, accelerate the transition to active management mode, and strive to take the lead in active management scale. The investment banking line also needs to accelerate the improvement of the customer service system covering regions, industries, and products. In terms of heavy capital business, emphasis should be placed on improving risk resistance and volatility resistance. Previously, securities companies were more of financial intermediaries or market intermediary service organizations. In the future, it is necessary to strengthen the trading function of the market. In the trading process, the requirements for risk management capabilities are relatively high. For FICC business, risk exposure should be controlled, maintaining a stable leverage level, continuously improving various investment strategies mainly based on bond products, including various asset allocation capabilities, and expanding customer trading. In consolidating the foundation of reform, equity business should enhance the stability of investment performance and reduce fluctuations. For stock derivatives business, it is important to adhere to the business positioning of capital intermediation, continuously improve product design capabilities, pricing capabilities, and enhance risk control capabilities. Credit business should focus on customer financing and trading needs, steadily carry out credit business of high quality based on customers' comprehensive financial service needs. Connotative development is the foundation Regarding whether an extensional development strategy will be adopted to achieve strategic development, Liu Jian answered that mergers and acquisitions, extensional development, are important ways for enterprises to integrate industry resources and enhance competitiveness. In recent documents, the China Securities Regulatory Commission has expressed support for listed companies to enhance investment value through mergers and acquisitions. On the other hand, for securities companies, it also supports leading institutions to become stronger through mergers and acquisitions, organizational innovation. Shenwan Hongyuan is both a listed company and a securities company, and the regulatory guidance and direction have been seen. Historically, everyone has a lot of experience, has gone through multiple industry integrations, strong alliances, mergers, and reorganizations Combining experience and insights, Liu Jian's view is that first of all, internal development is still the foundation of a company, or the prerequisite for future mergers and acquisitions. The merger and acquisition strategy should be a natural extension of the business development strategy. High-quality self-development is also the fundamental guarantee for becoming stronger through mergers and acquisitions. If the company itself is not strong, it is very likely to face "indigestion" when trying to become a first-class institution through mergers and acquisitions. Therefore, for Shenwan Hongyuan, it is essential to start with the foundation, implement the company's development strategy well, operate prudently, improve the efficiency of capital allocation and utilization, enhance management level through internal system reform, incentive and constraint mechanisms, talent development, etc., to unleash development potential, continuously enhance core competitiveness, this is the foundation. Only when business development is strong and the foundation is solid, can one be more confident and more likely to succeed in future mergers and acquisitions. In addition, mergers and acquisitions are actually something that cannot be forced. This is like a "marriage", not "finding a partner", ultimately it is about "living together", so if there is such a goal, it is necessary to find a suitable target for mergers and acquisitions. If there is such an opportunity, it will also be considered from the perspective of its own strategic layout and development, comprehensively considering regulatory policies, business complementarity, professional advantages, customer base, including corporate culture, compatibility of corporate system mechanisms, and many other aspects. On the other hand, it is also necessary to consider whether the valuation is reasonable. Overall, whether it is internal development or external expansion, the goal is to improve the company's high-quality development and investment value, truly bringing returns to shareholders. Focusing on products, investment advisory, and financial technology Zhang Jian stated that in order to better implement the political and people-centered nature of financial work, accelerating the construction of a capital market centered on investors is a must. Since last year, the regulatory authorities have actively taken a series of substantial measures to reform the investment side, including a multi-level pension system, relaxing the proportion and scope of various medium and long-term capital entering the market, reforming public offering industry fees, continuing to enrich investment and market-making varieties, and reform measures such as stamp duty concessions. Ultimately, the core is to effectively guide long-term funds such as residents' savings into the equity market, promote active trading and boost confidence, stimulate wealth effects, guide long-term and patient capital, and cultivate long-term capital and patient capital. Zhang Jian understands that investment and financing are two inseparable sides of the same coin, without investment, there is no financing, and without buyers, it is difficult to talk about sellers. Only with balanced development of investment and financing can the capital market form a virtuous cycle. Grasping the concept of regulation and the requirements of financial development is very meaningful for the long-term development of the securities industry. At the same time, with a problem-oriented and goal-oriented approach, what gaps does Shenwan Hongyuan currently have? What should be the next step? Regarding the improvement of the business model, combined with serving the three most important types of clients: individuals, enterprises, and institutions, Shenwan Hongyuan also has certain considerations. From the perspective of individual clients, the most important thing is to meet the needs of investors for wealth preservation and appreciation, so that wealth management business can have lasting vitality. Shenwan Hongyuan mainly focuses on products, investment advisory, and financial technology. In terms of products, it is necessary to enrich the product pool and strengthen the product selection layout, continuously enhance the business expansion of personal pension, strengthen the inclusive functions of products, and deepen internal product synergy. In terms of investment advisory, research empowerment will be strengthened, coordinating professional investment advisory content output, providing support for product allocation strategies, and enhancing the portfolio performance of fund investment advisory. In terms of financial technology, the management system for customer classification and grading will be further improved, promoting the application of financial technology in customer service, investment advisory construction, product selection, etc., to realize the commercial value and logic of the buyer's investment advisory system by serving customers well in asset preservation and appreciation. For institutional clients, the most important thing is to seize the opportunities for various pension funds to enter the market, as well as the pilot landing opportunities for long-term equity investment of insurance funds, relying on the dual advantages of the company's research and trading capabilities, serving medium and long-term capital well, entering the equity capital market, providing comprehensive financial services to institutional clients such as operational custody, product distribution, trading strategy output, capital intermediation, etc., and enhancing the comprehensive financial service capabilities for institutional clients. Finally, for corporate clients, Zhang Jian believes that the most important thing is to recommend high-quality companies to the capital market from the perspective of investors, improving the investability of projects from the source, which is also a higher requirement for securities companies to play the role of gatekeepers in the capital market, undertake industrial research value, empower risk pricing, and other professional responsibilities. For Shenwan Hongyuan, the focus is on the characteristics of various corporate clients, fully leveraging the existing synergies of research + investment + investment banking to provide comprehensive financial services throughout the life cycle of enterprises. Vast Opportunities in Mergers and Acquisitions Business Zhang Jian introduced that in the investment banking sector, under the current strong regulatory environment focusing on risk prevention and high-quality development, the investment banking business has entered a new development stage, especially because the economy is currently at a critical period of transformation, with both opportunities and challenges. In the short term, there is indeed a phased tightening of the pace of IPOs and refinancing, putting pressure on investment banking revenue. However, in the medium to long term, whether from the direction of economic recovery or the direction of current capital market reform policies, positive changes are expected. He continues to be optimistic about the medium to long-term high-quality development of investment banking business under the background of a comprehensive registration system. In the past few years, the company's investment banking business has adhered to a customer-centric service tenet, continuously optimized organizational structure, strengthened talent team building, and ranked at the forefront of the industry in terms of business ranking and professional quality. In 2023, the company's investment banking business has steadily progressed, ranking 9th in the industry in terms of equity underwriting, 8th in terms of IPOs, and stably ranking in the top 2 in inclusive finance and the North Exchange business. Bond underwriting amounts and numbers both rank 7th in the industry, and its position in the industry is becoming increasingly stable. At the same time, actively leveraging the advantages of integrated domestic and foreign operations, overseas investment banking business has grown against the trend, with Hong Kong IPO underwriting ranking 8th, overseas bond issuance ranking 5th, and the pipeline of sponsored underwriting projects increasing, with turnover speed gradually accelerating Regarding mergers and acquisitions, the current regulatory authorities strongly support listings. Companies enhance their investment value through mergers and acquisitions, and have also introduced a series of policy measures to boost the enthusiasm for corporate mergers and acquisitions. Mergers and acquisitions provide another accessible path for asset securitization outside of IPOs for enterprises, which not only helps to enhance the value of listed companies at the capital market level, but also facilitates the integration and optimization of industrial chain resources and a vibrant market. From the perspective of the development of international investment banks, the merger and acquisition revenue of some advanced international investment banks accounts for 40% to 60% of their total investment banking revenue. In the current A-share market environment in China, the space for mergers and acquisitions is relatively broad. The measures announced by the China Securities Regulatory Commission will undoubtedly promote the emergence of more excellent merger and acquisition cases. In its history, Shenwan Hongyuan has also achieved many classic merger cases and cross-border merger cases. The number of merger business professionals has always ranked among the top 5 in the industry. The company will actively seize business opportunities, starting from supporting the development of listed companies' main businesses, to explore truly synergistic and industrially integrated merger and acquisition projects, serve the value enhancement of corporate clients well, and let mergers and acquisitions return to their rightful purpose. Three-point Plan for Derivatives Business Tang Jun introduced that in recent years, with the transformation of wealth management in the capital market and the increasing demand for institutional risk management, the derivatives business has become an important focus of innovation and profit growth for securities firms. As a first-tier trading firm, over-the-counter options, income swaps, and derivatives options market-making are the key focus areas for Shenwan Hongyuan. He shared three points about the future development. First, regulatory authorities' standardized guidance helps the healthy development of over-the-counter business. The Futures and Derivatives Law will be implemented in 2022, and the Derivatives Trading Supervision and Management Measures have widely solicited industry opinions. The regulatory system for over-the-counter derivatives is continuously improving, and businesses such as long-short swaps benefit from the standardized guidance of regulations, maintaining overall stable operation. Counter-cyclical regulatory measures for businesses help in market risk control. Second, building a capital market centered on investors highlights the tool value of derivatives. From the investment perspective, over-the-counter business provides a new risk management approach for the asset management industry, enriching the trading strategies of various asset managers, ultimately indirectly serving the wealth management needs of residents. With the increasing development of the wealth management market, investors' demand for products with different risk-return characteristics is becoming more diversified. The creation of structured products through different strategies helps control the overall volatility risk of the equity market, improve investment success rates, and is an important part of the wealth management product supply matrix. Third, provide products in a reasonable and orderly manner based on the maturity of the business. In the current market volatility, higher requirements are placed on traders for investor suitability management, product structure design and issuance pace arrangements, professional capabilities in hedging transactions, and risk control abilities. Shenwan Hongyuan has long laid out capital intermediary businesses around over-the-counter derivatives and market-making, possessing a certain first-mover advantage. After the test of this round of market conditions and strict regulatory guidance, the company's investment trading and risk control capabilities have withstood the test and will continue to steadily advance along the strategic path of capital intermediation There are three follow-up plans. First, in combination with changes in market cycles and the shift in investors' risk preferences, reasonably and orderly supply various structured products, with a focus on developing principal-protected large asset allocation strategy products, scientifically using hedging tools, and enriching the product shelf of wealth management. Second, promote the improvement of comprehensive financial services for institutions, further meet the needs of institutional clients for integrated financial services that combine investment account management and risk management. Third, in accordance with the guidance from the China Securities Regulatory Commission to build first-class investment banks and investment institutions, continue to strengthen the bottom line of compliance risk control, implement relevant countercyclical regulatory measures, improve the relevant business layout, coordinate the development of the company's comprehensive financial services, and leverage the complementary benefits of different businesses. Regarding cross-border business, Tang Jun stated that the company has always regarded cross-border business as an important part of its derivative product portfolio. Leveraging the advantages of domestic and foreign platforms, adhering to high-quality development, the cross-border business has achieved stable growth for several years, becoming an important source of revenue growth. The southbound cross-border income swap has achieved rapid growth in the nominal principal scale. The northbound cross-border business has made breakthroughs, with the scale and revenue contribution of options business increasing. Cross-border business is the most significant growth direction for leading brokerage derivative businesses. There is a large demand space for domestic and foreign investors to allocate assets bidirectionally. The company will continue to adhere to high-quality development and the trend of bidirectional opening, leverage the advantages of capital intermediary business, accelerate the construction of integrated domestic and foreign trading platforms, enrich hedging strategies and paths, and solidify the foundation for cross-border trading capabilities. In terms of southbound business, actively promote large asset allocation strategy index products to enhance clients' ability to globally allocate and price high-quality assets. At the same time, actively promote northbound cross-border business, continuously meet the demand of overseas long-term funds for A-share investments, provide related structured products, introduce long-term funds from overseas to the domestic market, and tell the story of China. Light Capital Business Focuses on Customer Segments Zhang Jian stated that the light capital business is a licensed business and a fundamental business of securities companies, serving as the window business for the three most important types of clients: enterprises, individuals, and institutions. Generally, the scale and ROE are relatively stable, and it is also the transformation direction of world-class investment banks. However, the competition in light capital business is relatively fierce, with challenges such as homogenization and long-term decline in commission rates still existing. Therefore, from a medium to long-term perspective, the key to developing light capital business is to focus on customer segments, enhance core capabilities, and accelerate the high-quality development and transformation of light capital business. For Shenwan Hongyuan, it is very important to do well in light capital business and enhance the overall market position of various businesses. From the perspective of wealth management, it is necessary to steadily improve the foundation of agency and margin financing, actively respond to regulatory changes, accelerate the development of key businesses such as public fund investment advisory, ESOP, and securities settlement, solidify line management and empower branch institutions, continuously improve service quality, strengthen online and offline channel construction, enhance customer experience and service efficiency. At the same time, optimize customer classification and hierarchical management, provide matching products and services for different types of customer segments, and comprehensively enhance the level of investment advisory services From the perspective of institutional brokerage services, the company is at a critical period of transformation. It will actively respond to the reform of commission rates, focus on new business opportunities brought by medium and long-term, especially pension fund entry into the market, fully leverage the brand advantages accumulated by Shenwan Research Institute over the years, as well as the trading business advantages such as FICC and derivatives formed in recent years. It will improve the sound development model of large institutional business synergy, strengthen personnel team building, increase the transformation from traditional institutional commissions to asset-side services, and enhance comprehensive value contribution. Looking at the asset management business, it adheres to doing difficult but correct things, always putting customer interests first, further improving the investment research system, enhancing active management capabilities, and rewarding customers with long-term stable and good investment performance. Taking the establishment of asset management subsidiaries as an opportunity, actively apply for and layout the public offering track. In investment banking business, after several years of continuous advancement, it has basically stabilized in the top position in the industry. It will continue to deepen institutional mechanism reform, optimize business structure, project structure, personnel structure, and regional layout structure, strengthen the business layout and investment in major strategies, key areas, and weak links, consolidate the advantageous position in areas such as the North Exchange, financial bonds, corporate bonds, actively build a large investment bank ecosystem, improve the matrix layout of regions, industries, and products, and stride forward to the top 10 securities firms. Lastly, in terms of international business, the focus will mainly be on the Hong Kong region, strengthening the integrated development of domestic and foreign lines, enhancing unified control, conducting high-quality cross-border investment and cross-border capital intermediary business, and accelerating the transformation and upgrading of light capital businesses such as wealth management, asset management, and investment banking in international business, to expand, strengthen, and optimize international business. The ability of comprehensive institutional services will be the key to victory Regarding research business, Zhou Haichen stated that since 2023, the regulation has carried out reforms of public offering commission rates and commission rates in two stages, with the aim of optimizing the entire trading commission distribution system. In the short term, competition in the segmented business will intensify, which will to some extent reduce the total amount of public offering commissions in the market. However, in the long term, the depth of the entire fund industry in China is still significantly insufficient, especially the track of wealth management for the entire population is still broad. With the institutionalization process of A-shares, the core of rate reform is still to reduce transaction costs, emphasize openness and transparency, regulate the use of commissions, which is conducive to an active market and the introduction of long-term capital into the market. Therefore, from this perspective, there is still room for the scale of public offering segmented commissions, and the overall industry competitive landscape will further optimize. In this process, brokerage firms with strong comprehensive capabilities in trading and research will further benefit. In terms of positioning and strategy in this area, both research consulting and institutional sales business present attributes of light capital. In this context, the ability of comprehensive institutional services integrating research, trading, and sales will be the key to victory. Under the positioning of industry functionality as a top priority, on the one hand, it is necessary to leverage the advantages of research brands, and on the other hand, leverage the advantages of heavy capital business to promote light To increase the transformation from traditional financial institutions' commissions to asset-side services, integrate internal resources, continuously strengthen the company's institutional sales and trading sector, and create a closed-loop of comprehensive financial services for institutional clients. When it comes to synergistic business, there are two aspects. Firstly, it is necessary to improve quality and efficiency and innovate service models. First and foremost, it is important to stabilize the foundation of investment research. This includes further strengthening the research advantages of investment, policy, and industry research. Shenwan Hongyuan has always been renowned for its investment research. In the past two years, it has established an Industry Research Institute and has been serving national strategies in policy research. From these perspectives, it is hoped that the core competitive advantage of the research business can be built with professional capabilities and differentiated services. Internally, actively support the development of various business lines within the company, while externally, continue to maintain the influence of the sell-side research, continuously strengthen the brand advantage of research, including empowering financial technology, actively serving areas such as public funds, developing more ETF products, and also enhancing the expansion of non-public fund businesses. The second aspect is to strengthen the synergy between light and heavy capital, leveraging some advantages in product development, investment research, and trading. Through high-level specialized asset-side services, it is necessary to enhance the stickiness of the entire institutional client base, driving institutional businesses including commissions, distribution, and custody. At the same time, this will also help enrich the product shelf of the entire asset management, promoting the development of the company's brokerage credit business. Continue to implement the strategy of research + investment + investment banking to support the overall development of the company's comprehensive finance. Five Major Initiatives in Wealth Management Regarding wealth management business, Wang Sulong stated that in the past year, the stock market trading volume has been sluggish, with a decrease in all aspects of brokerage credit business income compared to the same period last year. Although there have been some structural opportunities in the market in 2023, the sustainability is not good. For example, the net asset value of equity public funds has shrunk by over 620 billion compared to the previous year. The company has focused on strengthening the construction of the trading side, investment side, financing side, and service side, increasing layout and investment, continuously enhancing digital finance, product supply, diversified financing, investment advisory services, and other capabilities, improving the ability to respond to market and customer demands, deepening and improving the wealth management system, better meeting the needs of investors for wealth management, and achieving stable performance in a complex market environment. Firstly, the number of customers and asset size have been further increased, focusing on the construction of bank channels, vigorously promoting new customer rights activities, new account openings, and customer assets have shown double growth. In 2023, the number of new customers increased by 34.66% compared to the same period last year, with securities customer custody assets reaching 3.96 trillion yuan at the end of the period, achieving a net income of 2.82 billion yuan from agency trading business. Secondly, the ability to adjust the supply and allocation structure of products in a timely manner. In response to market conditions, accelerate the empowerment of professional investment research. Strengthen cornerstone products such as fixed-income products and income certificates, enrich the supply of index-based products, further optimize the selection, layout, and distribution of financial products for agency sales, and effectively provide customers with professional and multi-level product services based on customer asset allocation and investment needs, achieving steady growth in non-guaranteed scale Three, focusing closely on customer needs, carried out margin trading business for institutional clients, steadily increasing the scale of margin financing and securities lending business. By the end of 2023, the company's balance of margin financing and securities lending business reached 61.624 billion yuan, an increase of 2.535 billion yuan from the end of the previous year. Four, promoting the construction of the two major platforms for clients and employees, enhancing digital management capabilities, focusing on meeting the needs of customers and business development, creating a new generation of mobile terminals for promotion, establishing a people + digital service model, achieving effective connection between customers, platform employees, leveraging the advantages of digitalization, and expanding the radius of services through online, data-driven, intelligent, and platform-based ecosystem services, deepening the connotation of services, and providing customers with agile, efficient, timely, and ultimate services. Five, deepening and refining comprehensive services for listed company shareholders, creating a full range of investment and financing services including ESOP, share repurchase, wealth management, effectively promoting the introduction of high-net-worth clients. In the process of actively transforming into a buyer-side consultant, focusing on continuously improving the professionalism of consulting services, continuously increasing investment in the training, development, and assessment of consulting teams, striving to build a wealth management system with consulting capabilities and brand building as the core competitiveness, realizing the commercial value and logic of the buyer-side consulting system. First, improving the classified and graded consulting service system, providing full life-cycle allocation services for different customer groups, coordinating the output of professional consulting content, enhancing service professionalism, and improving the ability to increase customer assets. Second, adhering to the systematic training of consulting teams, through hierarchical and classified training, practical research, concentrated learning, strengthening the training of two consulting teams with professionalism and service orientation, creating business models and operating consulting teams, guiding the realization of a partnership relationship between employees and customers, delivering professional services, and adhering to the concept of growing assets with customers. Third, relying on exhibition platforms for empowerment, online operation empowerment, financial technology empowerment, and a series of means to expand the scope of customer service, enrich exhibition tools, enhance effective service access, empower both consulting services and customer services. Fourth, optimizing assessment guidance mechanisms, focusing on balancing medium and long-term with short-term, increasing collaborative rewards, strengthening compliance assessments, further adapting to the development of consulting business models, standardizing consulting business, and fully protecting the legitimate rights and interests of investors. Next, as the financial market continues to develop and customer needs evolve, the company will continue to strengthen its investment in buyer-side consulting business, collaborate from multiple aspects, and improve the complete content product line from universal services to high-end services. FICC Empowers Customers to Bring New Growth Poles Tang Jun stated that FICC business is one of the main directions of the company's financial asset allocation business, providing stable investment income through bond proprietary trading, capital intermediary business, and bulk commodity business. Bond proprietary trading has always been a traditional core business of the company. The company has established a sound buyer research system, rich bond strategy system, comprehensive risk management system, guided by low-volatility absolute returns, strictly controlling risk drawdowns, flexibly responding to market changes, and continuously achieving stable investment returns In terms of specific allocation, based on changes in the economic and policy environment, the allocation of fixed-income assets has been moderately increased, especially seizing trading opportunities in the bond market and allocating high-quality assets with strong certainty. In portfolio management and risk control, adjusting the duration according to market changes to ensure the base value of the portfolio, strictly managing industry and regional concentration, continuously optimizing the credit structure of holdings. In terms of multi-strategy bond capabilities, continuously enhancing research and development of fixed-income quantitative portfolio strategies, and continuously consolidating and enhancing investment trading capabilities. At the same time, the company is empowering clients with the investment research advantages of FICC, and capital intermediary business has also become a new growth pole, with a significant increase in revenue contribution for two consecutive years, achieving obvious transformation results. On one hand, the overall scale of bond advisory services has entered the top 5 in the industry, marking the continuous formation of the company's research advantages in bonds and the output of capabilities. On the other hand, the nominal principal of interest rate options continues to grow, maintaining a leading position in the industry, and the steady development of domestic and foreign income swaps for bulk commodities and over-the-counter derivatives. The business of income certificates and quoted repurchases is also effectively developing. The scale of new credit protection tools (commonly known as CDs) ranks in the top 3 in the industry, demonstrating strong competitiveness within the industry. By building a rich variety of FICC business types, serving clients' diversified comprehensive financial needs, the market influence is continuously increasing. Increase in Dividend Payout Ratio On the online platform, the independent non-executive director also responded to investor inquiries about dividends, stating that Shenwan Hongyuan highly values investor returns. While striving to improve company performance, it aims to enhance investor satisfaction through continuous and high dividend payouts. Since its listing in 2015, a total of 14.25 billion yuan in cash dividends has been distributed. In 2023, considering both shareholder returns and the company's operational needs, the company has carefully studied and formulated a cash dividend plan. It proposes to distribute a cash dividend of 0.56 yuan per 10 shares (tax included) to A-share and H-share shareholders registered on the record date, totaling 1.402 billion yuan, accounting for 30.44% of the 2023 net profit attributable to shareholders, an increase from 2022. This proposal has been approved by the company's board of directors and will be implemented pending approval at the shareholders' meeting