Annual Report 2021

China Merchants China Direct Investments Limited Annual Report 2021 14 INVESTMENT MANAGER’S DISCUSSION AND ANALYSIS (CONTINUED) REVIEW OF INVESTMENTS (CONTINUED) On 3 December 2021, CMB announced that it had received approval from the CBIRC for its subsidiary, CMB Wealth Management Co., Ltd. (“ CMB Wealth Management ”), to increase its capital and to make other changes to its registered capital. A strategic investor, JPMorgan Asset Management (Asia Pacific) Limited (“ JPMorgan Asset Management ”), will contribute RMB2,667 million to subscribe for 10% of the shares of CMB Wealth Management. After completion of the capital increase, the registered capital of CMB Wealth Management will grow to approximately RMB5.56 billion from RMB5 billion, while CMB and JPMorgan Asset Management will hold 90% and 10% of the shares of CMB Wealth Management, respectively. As an important benefit, CMB Wealth Management can now draw on the deep experience of JPMorgan Asset Management as a leading international asset management institution in fintech, investment research, risk management, etc. On 7 December 2021, with the approval of both the CBIRC and the People’s Bank of China, CMB completed the issuance of undated capital bonds of RMB43 billion in the China’s national interbank bond market. The issuer’s conditional redemption right is attached to the bonds, which can be exercised on the annual interest payment dates of the fifth year and each subsequent year. The proceeds from this issuance of the bonds will be used to replenish the bank’s additional tier-one capital, in accordance with applicable laws and approval by regulatory authorities. In 2021, the Fund did not dispose of any A shares of CMB. China Credit Trust Co., Ltd. (“CCT”) was established in 1995, with its headquarters in Beijing. The principal activities of CCT are trust management, fund management, investments and loan financing. It is the first trust company with a full range of licenses for international business in the Chinese trust industry. As of 31 December 2021, the Fund held a 6.94% equity interest in CCT, with a total investment cost of US$50.49 million. In June 2021, CCT declared a cash dividend for 2020, and the Fund is entitled to receive a total of US$2.04 million (pre-tax) from CCT. As of the end of 2021, the carrying value of the Fund’s interest in CCT was US$218.16 million, representing an increase of 1.05% over US$215.90 million at the end of last year. The Fund’s unrealised gain attributable to its investment in CCT for 2021 was negative of US$3.04 million, while the relevant amount for 2020 was US$26.56 million. For 2021, CCT recorded an unaudited net profit of RMB958 million, down 10.55% year-over-year. During the year, the company recorded an increase in income from commissions and handling fees, as well as interest income, compared to last year. In addition, the loss due to credit impairment for the year rose, while investment income and the gain on change in fair value saw decreases, compared to last year. In response to stronger regulation from regulatory bodies and a requirement to downsize the channel business, the total amount of CCT’s trust assets declined as compared to last year, while income from commissions and handling fees increased, due to an increase in the amount of CCT’s actively managed trust assets. As a result of these changes, CCT saw an increase in actively managed trusts as a percentage of its total trust assets, as CCT continues to optimise its business mix.