2012-03-09

[Shenzhen, China] 　　18:00, March 8, 2012

　　Shenzhen Development Bank (stock code 000001 with SZSE) today submitted 2011 performance report against Shenzhen Stock Exchange. The full text of the report can be viewed at official website of SDB www.sdb.com.cn or www.cninfo.com.cn.

　　Shenzhen Development Bank (hereinafter abbreviated as “SDB” or “the Bank”) controlled 90.75% of interest of PAB via non-public offering at July 2011, and hence completed an important step of asset restructuring between the two banks. This news release summed up consolidated financial data for 2011, which means 2011 full year data for SDB and the data of its controlling subsidiary PAB from the date of the acquisition to end of 2011, followed with extract of income statements.

　　Under complicated economic situation domestically and internationally as well as fierce competitions, the Bank steadily put business strategy in place, actively acquired deposits, put intensive efforts on portfolio management, pushed ahead with cross selling, improved pricing and ALM capabilities, optimized risk management mechanism, and delivered good performance. Highlights of the performance are as below:
　　■ In 2011, the Bank (SDB+PAB) recorded 29.64bn Yuan of operating revenue, representing an increase of 65% versus previous year; net profit attributable to parent company amounted to 10.28bn, a year-on-year growth of 65%; basic earnings per share is 2.47 Yuan, an increase of 30% on year-on-year basis. Net profit of SDB totaled 9.18bn, a year-on-year growth of 47%.
　　■ Total asset of the Bank (SDB+PAB) amounted to 1,258.2bn at end of 2011, an increase of 73% versus year beginning; and SDB saw an increase of 36% in total asset size versus year beginning.
　　■ In 2011, net interest margin of the Bank (SDB+PAB) increased by 4 basis points to 2.53%, and net fee and commission income of the Bank (SDB+PAB) saw significant increase of 131% year on year.
　　■ In 2011, full year cost/income ratio of the Bank (SDB+PAB) was 40%, down 0.96% versus previous year.
　　■ Non-performing loan rate of the Bank (SDB+PAB) by Dec. 31, 2011 was 0.53%, down 0.05% versus year beginning; provision coverage ratio was kept at an industry good level of 321%, up by 49% versus year beginning
　　■ Capital adequacy ratio and core capital adequacy ratio of the Bank (SDB+PAB) by Dec. 31, 2011 were 11.51% and 8/46% respectively, meeting regulatory requirements.

Rapid growth in profits year on year
　　In 2011, the Bank (SDB+PAB) recorded 29.64bn Yuan of operating revenue, representing an increase of 65% versus previous year, and operating revenue of SDB saw a year-on-year growth of 39%; net profit attributable to parent company amounted to 10.28bn, a year-on-year growth of 65%; net profit for SDB totaled 9.18bn, a year-on-year growth of 47%. The profitability of the Bank improved steadily.

Abstract of full year profit/loss items for 2011

　　Note: Data of previous year in the table refer to SDB data solely. Consolidated profit data include full year data of SDB and PAB data from the acquisition date (July 2011) till end of the year.
　　In 2011, the Bank (SDB+PAB) recorded 25.29bn Yuan of net interest income thanks to the growth in interest-earning assets at both banks and scale expansion as a result of the merger, an increase of 60% versus previous year; SDB saw a year-on-year growth of 36% in net interest income. Driven by interest rate rise from the central bank and improvement in loan pricing, the yield of general loans in the consolidated statements rose by 0.98%, versus 0.59% of rise in deposit funding cost during the same period, showing the expansion of loan/deposit spreads. Interest spread rose by 4 basis points versus same period of previous year as a result of the increase of Treasury/inter-bank business as a percentage of total asset/liabilities volume. Net fee and commission income amounted to 3.67bn Yuan, representing an increase of 131%, and SDB saw an increase of 72% in this regard. Fee income of both banks saw great increase year on year mainly due to the expansion of business size and customer base as a result of the merger, innovations in WM products and improvement in service quality.

　　In 2011 the consolidated operating expense was 11.86 billion Yuan, up by 61% over previous year, and SDB saw a year-on-year growth of 28% mainly due to increase in staffs and business size as well as continuous input to optimization of management process and IT system. Two banks consolidated cost-to-income ratio (excluding business tax) was 40%, down by 0.96% over previous year, and SDB saw a year-on-year decrease of 3.24%. Two banks asset impairment loss increased by 44% over previous year, and SDB saw an increase of 22%. Actual consolidated income tax rate was 21.6%.

　　The consolidated average total return on assets was 1.04%, up by 9bps over previous year; SDB average total return on assets increased by 12bps over 2010 to 1.07%; the consolidated weighted average return on equity was 20.32%, and SDB weighted average return on equity decreased by 5.0% over 2010 to 18.35%. The decrease in return on equity over previous year was mainly because net assets increased by 29.4 billion Yuan through non-public offering of shares during the reporting period. The consolidated basic earnings per share was 2.47 Yuan with a year-on-year growth of 30%; and SDB basic earnings per share saw a year-on-year increase of 16%. As of December 31st 2011, SDB had 5.123 billion shares in total.

Key advantages strengthened with good business performance

　　As of Dec 31st 2011, the consolidated total asset was 1258.2 billion Yuan, up by 73% over year beginning with both size and strength further improved. SDB total asset increased by 36% over end of previous year; two banks consolidated total general loan (excluding discount) was 603 billion Yuan and up by 55% over year-beginning; SDB total general loan (excluding discount) up by 17%; two banks consolidated total deposit was 850.8 billion Yuan and up by 51% over year beginning; SDB total deposit up by 14%. Two banks consolidated daily average deposit growth was above the average of joint stock banks. Due to completion of non-public offering and profit growth, the consolidated equity attributable to shareholders of parent company was 73.3 billion Yuan and up by 121% over end of previous year; and SDB shareholders equity up by 117% over year beginning.

　　SDB liquidity status continued to be good. By end of 2011 the Bank’s liquidity ratio was higher than 25% required by regulators, with RMB liquidity ratio of 51.9%. The Bank monitored liquidity of assets through this and other internal indicators.

Summary of balance sheet as of Dec 31st 2011

RMB million

　　The Bank’s corporate business has been steadily improved during the reporting period. By end of 2011, balance of corporate deposit increased by 11% over year beginning; balance of corporate loan increased by 15% over year beginning, net income from corporate fee business saw a year-on-year growth of 71.5%, number of credit customers rapidly increased. Balance of trade finance credit was 224.6 billion Yuan and up by 28% over year beginning. The Bank designed and launched the first online supply chain financial “universal product code” and completed direct connection with China Railway Modern Logistics Management System, which opened a new chapter of real-time interaction between supply chain finance and logistics data. The Bank designed and launched Wuhan housing provident fund online business system, which signified that the first domestic housing provident fund cross-bank online business system was put into formal operation. Facing the complex economic tendency, the Bank’s trade finance asset quality continued to be good and by end of 2011 the Bank’s trade finance non-performing ratio was 0.26%, down by 3bps over year beginning and kept at a low level.

　　For retail business, the Bank continued to strengthen business improvement and internal cross-selling. By end of 2011, the Bank’s retail deposit increased by 29% over year beginning; retail loan increased by 14% and net fee income increased by 70.5%. The Bank’s wealth management products issued in 2011 increased by 466% on a year-on-year basis, and balance of WM products saw a year-on-year growth of 337%; total transaction amount in Shanghai Gold Exchange reached 210 billion Yuan, with total silver transaction on exchange stably staying at No. 3 in the industry and gold transaction volume among top 5. Ratio of non-performing personal loan was 0.27% which was good. In 2011 the Bank issued 1.93 million new credit cards with a year-on-year growth of 107%; total card in force was 5.72 million with a year-on-year growth of 38.5%; loan balance was 9.62 billion with a year-on-year growth of 52%. By leveraging PAG integrated financial platform, in 2011 the Bank developed and designed SDB-PA Life co-branded credit card and SDB I-car credit card and issued 1.01 million new cards. Credit card non-performing loan balance was 59 million Yuan, with NPL ratio down by 0.60% to 0.61% on a year-on-year basis, which was low in the industry. In 2011 the Bank continued to push micro finance business system building, by end of the reporting period, balance of micro lending was 40.9 billion and up by 90% over year beginning, with NPL ratio of 0.39%.

　　PAB retail business achieved diversified development in 2011, with unsecured personal loan “New UPL” disbursed by nearly 4 billion, 720,000 new credit cards issued and total card in force by year end exceeding 5 million.

Continuous improvement of asset quality and CAR/CCAR up to standards

　　In 2011 the Bank made active adjustment to credit policies as per national macroeconomic regulation requirements and regulators risk reminder to further optimize credit structure, strictly control new loan risks, enforce collection of existing NPLs and get involved in asset protection and risk solution for problem loans in advance.

　　As of Dec 31st 2011, the consolidated balance of NPL was 3.3 billion Yuan with NPL ratio of 0.53% which was down by 0.05% over year beginning; SDB NPL ratio was 0.58%. Provision coverage was 321%, up by 49% over year beginning; SDB loan provision coverage was 326%. Both NPL ratio and provision coverage were at a good level in the industry.

　　During the reporting period, the Bank successfully issued 3.65 billion hybrid capital bonds in inter-bank bond market to raise supplementary capital by 3.65 billion Yuan. Along with capital accumulation and stronger capital management, by Dec 31st 2011 the Bank’s CAR and core CAR were 11.51% and 8.46% respectively, which were in line with regulatory standards.

2011 asset quality indicators

Looking into the future and carrying out Best Bank Strategy

　　In 2012 the Bank will continue to push merger with PAB centering on the objective of “Best Bank”, and expedite integration of two banks organization, staffing, policy and system; push regional reform, optimize organization structure and operation mechanism, improve management efficiency; improve ALM ability, strengthen portfolio management and cost control, improve capital utilization efficiency and per capita/per outlet productivity; push steady development of all strategic businesses and improve market share.

　　For corporate business the Bank will continue to push customer tiering strategy, develop supply chain business, develop optimized and applied products, increase effective customers and effective businesses; for retail business the Bank will follow the retail business development orientation of integrated resource and collaborative development to establish retail collaborative operation platform, implement the integrated business strategy of “one customer, multiple products” in an organized way, and realize sound and rapid development of retail business. For micro finance and credit card business, the Bank will strengthen channel building, implement precise marketing, improve market share of card issue and transaction volume; the Bank will also make use of integrated financial platform to effectively integrate internal and external resources and channels, gradually set up competitive business strategy, partnership risk management mode, advanced micro finance IT system, as well as standardized, professional and streamlined operation mode.

About SDB

　　Shenzhen Development Bank (SDB), a national bank headquartered in Shenzhen, is the first joint stock company listed on Shenzhen Stock Exchange (SZSE 000001). As of December 31st 2011, the Bank’s total asset has reached RMB 987.8 billion. Through 395 outlets in 28 main cities across China, SDB and PAB provide corporate/retail/government customers with various kinds of financial services. At present, Ping An Insurance (Group) Company of China, Ltd. and its subsidiaries hold 2.684 billion SDB shares, representing about 52.38% of total shares of SDB after the NPO.

　　Key items by consolidated balance sheet on December 31st 2011:
　　　　- Total deposit: 850.8 billion Yuan
　　　　- Total loan: 620.6 billion Yuan
　　　　- Total asset: 1258.2 billion Yuan

　　Key items by SDB balance sheet on December 31st 2011:
　　　　- Total deposit: 640.6 billion Yuan
　　　　- Total loan: 469.9 billion Yuan
　　　　- Total asset: 987.8 billion Yuan
 

Summary of consolidated income statement for Jan-Dec 2011 [audit data]

(RMB million except earnings per share)

Summary of SDB income statement for Jan-Dec 2011 [audit data]

(RMB million except earnings per share)