2012-04-26

[Shenzhen, China] 18:00 Apr 25, 2012

　　Today Shenzhen Development Bank (SDB, SZSE 000001) submitted 2012 Q1 performance report to SZSE. Please refer to www.sdb.com.cn or www.cninfo.com.cn for the whole text. This press release gives a summary view of the consolidated financial data of SDB and its controlled subsidiary Ping An Bank for 2012 Q1.
　　In face of economic transformation, growth slowdown and increasingly fierce competitions in financial markets in China, the Q1 of 2012 saw sound progress in implementing business development strategy, active development of deposits and various competitive businesses taking the opportunity of the 2-bank integration, continuous advancement in cross-selling demonstrating advantages of integrated finance, continuously enhanced portfolio management with improved asset and liability management level, and well-developed risk management mechanism that put various risks under effective control. Highlights are as below:
　　■ 2012 Q1 saw consolidated net profit RMB3.429bn attributable to parent company, up 43% YoY; operating income RMB9.724bn, up 67% YoY.
　　■ Consolidated total assets increased 9% over year beginning to 1,368bn by end Q1 of 2012.
　　■ Consolidated total deposits grew 8% over year beginning to 914.8bn and total loans grew 5% over year beginning to 651.4bn, by end Q1 of 2012.
　　■ In 2012 Q1 Consolidated NIM was 2.47% and consolidated net fee/ commission income saw a sharp increase of 200% YoY.
　　■ 2012 Q1 saw consolidated cost to income ratio 38%, down 1.81% vs end of last year.
　　■ NPL ratio and provision coverage were 0.68% and 253% respectively where NPL ratio remains relatively low vs the industry. Provision/loan ratio further improved with the consolidated ratio being 1.73% and that of SDB 1.91%.
　　■ By end Q1, consolidated CAR and CCAR were 11.63% and 8.63% respectively, in line with regulatory requirements.
　　■ In Q1, cross-selling paid off on a consolidated basis with 900,000 new credit cards issued.

Profitability remained stable
　　In 2012 Q1 the Bank realized consolidated net profit 3.429bn attributable to shareholders of parent company, up 43% YoY and 32% QoQ. SDB realized net profit 2.776bn, up 16% YoY and 35% QoQ.

2012 Q1 P&L in simplified form

　　Note: The 2011 Q1 data are that of SDB.

　　In 2012 Q1, average total interest-earning assets of SDB grew 30% YoY and the consolidated average total interest-earning assets including PAB grew 67% YoY. Due to fast growth of lower-spread inter-bank assets, NIM of SDB decreased slightly YoY to 2.41%; consolidated net interest income grew 56% YoY to 7.955bn where net interest income of SDB grew 18% YoY. Net fee and commission income continued growing where SDB grew 106% YoY and consolidated figure grew 200% YoY, with the net fee and commission income % of SDB further improved to 14%. The bigger YoY growth in fee income at both banks was primarily attributed to the increase in the scale and customer base as a result of combination, innovation in Wealth Management products, improved service quality and other factors.
　　Operating expense of SDB (excl. business tax) grew 25% YoY. Cost to income ratio of SDB (excl. business tax) was 35.43% in Q1, down 0.13% YoY and the consolidated cost to income ratio was 38.18%. The Bank further increased provisions and the consolidated asset impairment loss was 686mn in this quarter; consolidated income tax rate was 21.93%. Consolidated net profit attributable to shareholders of parent company grew 43% YoY where SDB grew 16%. Consolidated basic EPS was RMB0.67, slightly down from RMB0.69 in 2011 Q1 (SDB), which was attributed to the increase in net assets as a result of NPO in 2011. As of March 31 of 2012, the total shares of SDB reached 5.123bn shares.

Strong growth in deposits and continuous development of leading businesses
　　As of March 31, 2012 the consolidated total assets were RMB1,368bn, up 9% over year beginning; total deposits 914.8bn, up 8% over year beginning, where retail deposits strongly grew 11%; consolidated total loans 651.4bn, up 5% over year beginning. The consolidated equity attributable to shareholders of parent company was 76.8bn, up 5% over end of last year, where the shareholders’ equity of SDB grew 4% over year beginning.
　　The liquidity of SDB remained good and by end 2011 the liquidity ratio of the Bank surpassed the regulatory requirement of 25%, where RMB liquidity ratio reached 62.58%. The Bank monitored its asset liquidity through this ratio and other internal indicators.

Simplified balance sheet as of March 31, 2012
In RMB mn

　　In respect of Corporate banking, the Bank continued to show leading performance compared with other banks. By end of March, consolidated corporate deposit balance increased by 6.9% compared with year beginning, corporate loan balance increased by 6.8% compared with year beginning. Trade Finance continued to grow quickly with a consolidated balance of RMB253.3bn, representing a growth of 8.5% from year beginning with an NPL ratio of 0.30%, which was still relatively low.
In respect of Retail banking, total Wealth Management issuance scale of the Bank reached RMB170bn in Q1, and fee income from WM products realized a YoY growth of 138%. Total Fund agency sales of the Bank reached RMB1.63bn, with a YoY growth of 61%. Bancassurance counter premium reached RMB330mn and agency sales of Trust product reached RMB1.839bn, with a YoY growth of 137%. Consolidated personal loan balance of the Bank (excluding Credit Card) was RMB165.5bn, increased by RMB270mn from year beginning. Unsecured loans became an important engine for the growth of personal loan.
　　Credit Card business featured with cross selling grew quickly. Consolidated card issuance number in Q1 reached 900,000; accumulated CIF reached 9.64mn of which new card issuance number of SDB was 770,000 and accumulated CIF number of SDB was 4.59mn; of new cards issued, new card issuance number of SDB/PA Life co-branded card and i-Car card reached 450,000.
　　In respect of Treasury business, the Bank continued to accelerate improvement of bank-to-bank platform and system and achieved fast growth of business scale, of which precious metal business has become a highlight: on YoY basis, agency transaction volume increased by 18.9%, income of agency business increased by 4.3%, total income of precious metal business increased by 38.4%, silver business volume ranked No. 4 in Gold Exchange.
　　In respect of Micro Finance business, by end of Q1 staff of combined Micro Finance Head Office have basically come on board, 11 sub-divisions have been established and total Micro lending reached RMB50.9bn, representing a growth of 6% from year beginning with an NPL ratio of 0.58%.

Asset quality was basically stable, both CAR and Core CAR met regulatory requirement
　　As of end of Q1, consolidated NPL ratio and provision coverage ratio of the bank were 0.68% and 253% respectively and the NPL ratio was relatively low in banking industry. Consolidated NPL balance was RMB4.4bn, NPL ratio picked up by 0.15 percentage compared with year beginning. Incremental NPLs concentrated in manufacturing and commercial sectors mainly due to impact of macro economic and financial situation as well as the private lending crisis in Wenzhou, esp. the structural risks emerged in SMEs in Jiangsu and Zhejiang Province such as sluggish export demand, rising operating cost, insufficient fund supply, etc. However, overall risk was controllable and asset quality was basically stable. LGFV loans, which have drawn lots of attention, were further reduced to RMB47.3bn, which was RMB3.6bn or 7% less than that at year beginning and accounted for 7% of all loans. Overall asset quality was normal without NPL. In the future as government rolls out financial reforms in Wenzhou, the Bank will further prevent and solve various potential risks in existing loans and strictly control incremental NPLs to guarantee asset quality.
　　In Q1 2012, consolidated NPL recovery of the bank was about RMB400mn, of which RMB352mn was credit asset (loan principal); 99% of the recovery was in cash and the rest was in kind.
　　As of March 31, 2012 consolidated CAR and Core CAR of the Bank were 11.63% and 8.63% respectively, which met regulatory standards.

Integration is expected to be completed soon and the Bank will continue to push forward its strategic objective
　　Integration of the two banks has been pushed forward smoothly as business continued to grow. In February 2012 the proposal about merger through absorption and renaming was reviewed and approved with high pass rate by shareholders of both banks. By end of Q1 the design of integration plan for Merger Day has been completed and development and test of most of IT alterations have been done. The two banks are pushing forward preparation for implementation on merger day, including merger day drills, branches integration, regulatory communication, customer communication and rebranding, etc.
　　The company has put in place a clear “Best Bank Strategy” for the future development of the bank as well as specific strategies and implementation plans for various business lines including Corporate, Retail, Treasury, etc. and Regions. Meanwhile the company will fully leverage PAG strengths to plan on potential cross selling with other PAG subsidiaries, business model and products. At present the strategic planning has been basically put in shape. In the future the Bank will implement strategic requirements gradually and update the strategy in line with changes of external environment in time and try to achieve 5-year strategic objectives.

About SDB

　　SDB is the first joint-stock company listed on Shenzhen Stock Exchange (SZSE 000001). As a national bank headquartered in Shenzhen, total asset of SDB + PAB reached RMB1.368trillion as of March 31, 2012. Through 399 outlets in 27 main cities nationwide, the two banks provide diversified financial services to corporate, retail and public sector customers. Currently Ping An Insurance (Group) Company of China, Ltd. and its related subsidiaries hold 2.684bn shares of SDB, representing approximately 52.38% of total post-NPO equity of SDB.

　　Key items on the consolidated balance sheet as of March 31, 2012:
　　　　- Total deposit: RMB 914.8bn
　　　　- Total loan: RMB651.4bn
　　　　- Total asset: RMB1.368trillioin

　　Key items on SDB balance sheet as of March 31, 2012:
　　　　- Total deposit: RMB697.3bn
　　　　- Total loan: RMB494.6bn
　　　- Total asset: RMB1.0879trillion
 

Summary of income statement for January - March 2012 [consolidated, unaudited]

(In RMB mn, except for per-share number)

Summary of SDB income statement for January - March 2012 [unaudited]

(In RMB mn, except for per-share number)