2010-10-28

[China，SZ] At 18:00, Oct. 27, 2010

　　Shenzhen Development Bank (SDB, Shenzhen Stock Exchange 000001) today files its 2010 First 3Q Performance Report with Shenzhen Stock Exchange (hereinafter referred to as SZSE). Full text of report is available on SDB official website www.sdb.com.cn or www.cninfo.com.cn. This press release gives a summary of financial highlights and management analysis for 2010 first 3 quarters attached with highlights of income statement..

　　In the first three quarters of 2010, interest earning assets grew steadily, spread improved slightly than last quarter, fee income increased robustly, asset quality maintained quite good quality and profitability achieved good increase compared with same period last year. Highlights are as follows:

•  The first 3 quarters of 2010 achieved net profit 4.73 bn Yuan, up by 30% compared with the same period of last year; and EPS (earning per share) at RMB 1.46 Yuan, up by 25% compared with the same period of last year.
•  By the end of Sep. 30, 2010, total assets reached 675.1 bn, up by 15% compared with the end of last year; general loans grew by 21% compared with that by the end of last year to 381.5 bn; total deposits arrived at 536.7 bn, up by 18% versus that by end of last year.
•  Asset quality was further improved: By end of Sep. 30, 2010, NPL balance was 2.26 bn and NPL ratio 0.57%, down by 11 BPs versus 0.68% at the year beginning; provision coverage further increased by 92% compared with that by the end of last year to 254%.
•  The bank Capital Adequacy Ratio(CAR) and Core Capital Adequacy Ratio(CCAR) increased by 1.19% and 1.48% compared with the end of last year and respectively reached 10.07% and 7%.
•  The bank continues to invest in information system, human resources, process optimization, business strategy and other aspects.

Profit Achieved Good YOY Growth
　　In the first 3 quarters of 2010, thanks to sound assets and liabilities growth and further optimization of structure as well as less demand for credit provision as result of good credit quality, the bank accomplished 4.73 bn Yuan net profit, up by 30% on YoY basis. In the three quarters, the bank achieved 1.7 bn Yuan net profit in the third quarter, up 28% and 17% on YoY and Quarter-by-Quarter basis respectively.

2010 First 3 Quarters Income Statement Highlights

　　During Jan.-Sep., 2010, the average interest earning assets grew 20% and NIM was at par with the same period of last year, and net interest income grew 40% YoY to 11.46 bn; fee income and commission net income significantly increased by 47% to 1.15 bn Yuan. Since the Bank disposed of high yielding bonds last year, the other operating net income dropped by 29% to 550 mm Yuan; in conclusion, the operating income increased 18% to 13.16 bn Yuan.

　　From Jan to Sept 2010, operating expenses of the bank (excluding business tax) reached 5.49 bn Yuan, 23.5% higher than the same period of last year, mainly resulting from increase of outlets, staff number and business scale and continued investment for promoting management & IT system. During this period, the cost income ratio (excluding business tax) was 41.7%, 1.73 percentage points higher than the same period of last year, remaining the same level with full-year of 2009. The provisions made for asset impairment during the period reached 804 mm Yuan, falling 42% YOY, as a result that the bank continues to have good-quality assets.

　　ROAE(annualized) of the bank for the first three quarters of 2010 reached 23.3％, decreasing by 2.45 percentage points YOY, as a result that the shareholders’ equity of the bank increased largely after it supplemented the core capital by almost 7 bn Yuan at the end of Jun. The basic EPS reached 1.46 Yuan, increasing by 25% YOY. As of Sept 30 2010, the bank’s total shares issued reached 3.485 bn.

Consolidated Featured Advantages and Achieved Good Business Performance
　　During the first three quarters, assets and liabilities scale of the bank has achieved a good growth and the structure has been further optimized. As of Sept 30 2010, its total assets increased by 15% to 675.1 bn Yuan, general loans (excluding discounting bills) increased by 21% to 381.5 bn Yuan, and total deposits increased by 18% to 536.7 bn Yuan. Its shareholders’ equity expanded to 32.1 bn Yuan, 57% higher than the year beginning, due to the non public offering(NPO) and profit growth.

　　The liquidity status of the bank continued to be good. At the end of Sept 2010, its liquidity ratio reached 43.8%, higher than the regulatory requirement. The bank monitored its asset liquidity through this ratio and other internal indicators.

Summary of Balance Sheet on Sept 30 2010
Unit: RMB mm

　　The corporate business of the bank achieved stable improvement during the report period. The bank has continued to optimize its liabilities structure through more efforts in promoting products/channels which are helpful to the growth of liabilities business. The online supply chain financial system (phase I) launched by the bank is stably running with a breakthrough of 1000 users this quarter. As of the end of Sept 2010, compared with the end of last year, its corporate deposit balance increased by 18%; general corporate loan balance increased by 24%; trade finance credit facility balance was 162.6 bn Yuan, a 32% growth compared with the year beginning. In addition, its trade finance NPL continued to be at a low level at 0.32%, 0.05 percentage point lower than the year beginning.

　　With regard to retail business, the bank continues to focus on improving customer reliance and sales capacity of outlets, and to improve the income level of fee business. By Sep 30, 2010, compared with the end of the previous year, personal loan balance (excl. credit card) was 107.2 bn Yuan, increased by 15%; NPL ratio of personal loan is 0.18%, dropped 0.15% compared with the year beginning. The whole bank's personal loan NPL amount and NPL ratio both dropped in Sep. Good asset quality of personal loan was maintained. The number of effective credit card reached 4.04 mm, increasing 11% compared with the year beginning. As of the end of 3Q, sales amount of retail wealth management product reached 62.5 bn Yuan, which is 3.5 times of that in the same period last year. In first 3 quarters of 2010, auto financing loan increased with a strong momentum. Auto financing loan newly disbursed was 9.7 bn Yuan, increased by 51% compared with the year beginning.

Asset Quality Further Improved and CAR Level Reached Standard
　　In the first 3 quarters of 2010, the bank actively adjusted its credit loan policy according to the country's macro-control policy and regulators' risk reminders. It further optimized credit loan structure, strictly controlled the risks of loan increment, strengthened collection work of existing NPL, and got involved in asset prevention and risk reduction work in advance.

By Sep 30, 2010, the banks NPL and NPL ratio were both reduced compared with the year beginning. Provision coverage further improved: NPL balance was 2.26 bn Yuan, decreased 30 mm Yuan compared with the previous quarter. NPL ratio was 0.57%, decreased by 0.11% compared with the year beginning. Provision coverage rate was 254%, up 91.7% compared with the year beginning. Jan - Sep, 2010, the bank had collected 2.25 bn Yuan of NPL assets. In which, 1.99 bn Yuan was principal. In the credit loan principal recovered, 1.21 bn Yuan of principal were written off, and the 770 mm Yuan of NPL principal were not written off.

　　By Sep 30, 2010, the bank's CAR and CCAR was 10.07% and 7.00%, up 1.19% and 1.48% compared with the year beginning. In addition, in Sep 2010, the bank signed Share Subscription Contract and Supplemental Agreement to Share Subscription Contract with PingAn. It is agreed in the contract that, PA is to subscribe the company's 1.638 bn shares issued non-openly with PAB's 7.825 bn shares (about 90.75% of PAB's total shares) held by PA, and with cashes. The above contract and the proposal to issue shares to PA to purchase the asset were approved in the first temporary shareholder meeting of 2010 on Sep, 2010. After PAG shareholder meeting approves the proposals, they will be submitted to regulatory approval before execution.

 

Looking into the Future
　　The bank will continue upholding the philosophy of running sound business, fortify business foundation, improve risk management, implement credit portfolio management for different business structure, undertake differentiated customer management while pursuing business development, strengthen advantages in SME and trade finance business. We will enhance compliance, audit and operation management to ensure that the bank’s overall business keeps healthy and compliant. In the meantime, with the entry of PAG as a strategic major shareholder, our bank will step into a higher level in respect of financing capacity, business innovation, customer base, and infrastructure, and this will help to improve the bank’s capability in providing full-range financial services.

About SDB
　　SDB is the first joint-stock firm listed on the Shenzhen Stock Exchange (000001 SZSE). As a national bank headquartered in Shenzhen, its total assets reached RMB675.1bn as of Sep 30, 2010. Through 303 outlets in 20 cities nationwide, SDB provides diversified financial service to its corporate, retail and public sector customers. Currently, Ping An Insurance (Group) Company of China, Ltd and its related subsidiaries hold 1.045bn shares of SDB, accounting for around 29.99% of SDB post-NPO total equity.

Key items on the balance sheet as of Sep 30, 2010:
- Total deposit: RMB536.7bn
- Total loan: RMB398.4bn
- Total asset: RMB675.1bn

 

Summary of Income Statement from Jan to Sept. 2010 (unaudited)
（Except for the figures of per share, all units for below figures are million in RMB）

			Change
	Jan-Sep 2010	Jan-Sep 2009	Amount	%
1. Operating income	13,160	11,114	2,046	18%
Net interest income	11,460	9,560	1,900	20%
Non-interest income	1,700	1,554	146	9%
2. Operating expense	6.436	5,212	1,224	23%
Business tax and surcharges	946	768	178	23%
Business & management expenses	5,490	4,444	1,046	24%
3.Pre-provision operating profit	6,724	5,901	823	14%
Minus：asset impairment loss	804	1,375	-571	-42%
4. Operating profit	5,920	4,526	1,394	31%
5. Profit before tax	6,014	4,540	1,474	32%
(Minus)：Income tax	1,280	903	377	42%
6．Net profit	4,734	3,637	1,097	30%
7．Basic EPS (Yuan)	1.46	1.17	0.29	25%

Summary of Income Statement from July-Sept 2010 (unaudited)
（Except for the figures of per share, all units for below figures are million in RMB）