Shenzhen Development Bank Announces: 2009 Net Profit Substantially Up by Over 700%


[Shenzhen, China] January 26, 2009

  Shenzhen Development Bank (“SDB”; SZSE 000001) filed announcement today: it is expected that the Bank would record net profit of about 5bn Yuan in 2009, up over 700% compared with 2008. The bank stated that, the substantial net profit growth is due to primarily the big decrease of credit provision compared with the last year, and also the increase of net interest income and non-interest income YOY.

  Details were disclosed in the 2009 Annual Performance Pre-announcement the Bank filed with Shenzhen Stock Exchange, which is available at

  This press release, which is posted at, summarizes key items of the Pre-announcement.‎

  SDB expects that the Net Profit would record approximately 5bn Yuan in full year 2009, up more than 700% compared with full year 2008. Basic Earning Per Share (“EPS”) is expected to amount to about 1.6 Yuan, also up more than 700% over last year.

  As PBC took successive actions to cut down interest rates in late 2008, which resulted in significant decline of commercial banks’ interest spread in 2009, many banks reported Net Interest Income decline from a year ago for YTD 3Q 2009. SDB in 2009 took adapting measures promptly to adjust the structure and pricing of assets and liabilities, and managed effectively the cost of deposits and the yields on earning assets. This has mitigated the decline of Net Interest Margin which declined 55bps in a year to 2.47%. As the growth in earning assets exceeded the net interest margin decline, the Bank successfully realized Net Interest Income growth of around 3% YOY to 13 bn Yuan. Net fee income also achieved growth and Operating Income grew about 4% YOY to 15.1 bn Yuan.

  In the fourth quarter of 2008, in light of domestic and international financial and economic conditions then, the Bank recorded a special one time large provision and write-offs, which resulted in a very unusual big decline of Net Profit. In 2009, the Bank maintained very good credit quality thus the requirement on provisions declined significantly to the normal level, which primarily contributed to the significant Net Profit of over 700% YOY. The Bank anticipated Return On Weighted Average Equity (ROAE) would reach about 26% in 2009, which exhibits sound profitability of the Bank.

In the twelve months of 2009, total deposits and total loans (including bills) grew by about 26% and 27% respectively to about 455bn Yuan and 360bn Yuan.

  In 2009, in light of the economic development and mix adjustment requirement, the Bank continually supported financing demand of SMEs through the model of supply chain finance, and also provided good credit support to the development of consumer finance. In the meantime, the bank maintained credit standards and made good quality loans, with great efforts to keep solid asset quality through measures such as improving early-warning system and accelerating collection. At the end of 2009, the Non Performing Loan (“NPL”) Ratio was estimated to maintain at a very low level of 0.68%, the same as the end of last year. Special Mention loan ratio (“SM Ratio”) further declined from the 1.3% at the beginning of the year to about 0.4%. NPL ratio and SM ratio to total loans are among the very best compared with latest disclosed figures of all listed commercial banks. Provision Coverage Ratio (Total credit provisions/Total loans) was enhanced from the 105% at the beginning of the year to about 160% at 12/31/2009.

  The Bank announced that the Capital Adequacy Ratio (CAR) would be about 8.9% at the end of 2009, and Core CAR about 5.5%. In the first half of 2009, the Bank added 1.5 billion Yuan tier 2 capital from issuance of Hybrid Tier 2 Bonds. At June 29th, the Shareholders’ Meeting of the Bank passed the Non Public Offering (“NPO”) plan of issuing new shares of no less than 370 million and up to 585 million at 18.26 Yuan per share to Ping An Life Insurance Company of China, Ltd. At the completion of this capital injection, after regulatory approval, the Bank will improve its core capital by between 6.8 and 10.7 billion Yuan. Addition of the new equity capital from the investment by PA to the figures of 12/31/2009 would compute to CCAR of over 7% and CAR of more than 10%. The Bank believes that the investment by PA will provide a strong base for continuous success and healthy growth of the Bank.

  The 2009 Full Year predicted figures for the Bank have not been audited. The audited 2009 Full Year results including the balance sheet are expected to be announced in mid March 2010.

About SDB
  Shenzhen Development Bank, the first joint-stock owned company to list on the Shenzhen Stock Exchange (SZSE 000001), is a national Bank headquartered in Shenzhen, with RMB 588 billion Yuan in assets as of December 31 2009. SDB provides a broad range of services to commercial, retail, and government customers, through 302 branches and sub-branches in 20 major cities across China. 16.76% of the Bank’s shares are owned by Newbridge Asia AIV III, L.P.