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Reach New HeightReach New HeightShenzhen Development Bank 2010 Annual Report Release
2011.02
1
SDB At a Glance
Business Achievements
Looking Ahead
Financial Results
2
SDB At a Glance
3
SDB At a Glance
Integrity、Professionalism、Service、EfficiencyShenzhen Development Bank (“SDB”) was founded in Shenzhen China 1987, listed in Shenzhen Stock Exchange (Code: 000001) Closing stock price was 15.79 Yuan as of 31st Dec 2010.
SDB provides a broad range of services to commercial, retail, and government customers, through 304 outlets in 21 major cities across China at end of Dec 2010. Total employees were 16,450.
Ping An Group completed the transfer of all SDB shares owned by Newbridge Asia AIV III, L.P. in May 2010, and Ping An Life subscribed more SDB shares through completion of the Non Public Offering in June 2010. Now Ping An and its related parties, as SDB’s biggest shareholder, hold 29.99% of SDB total shares.
SDB’s Shareholder’s Meeting in Sept. 2010 approved to issue about 1.64bn shares through private placement to acquire about 91% of Ping An Bank shares from PAG. Upon the completion of this deal, PAG would own over 50% of SDB.
(RMB mm, %) 2010/12/31
Total Assets 727,610
Total Loans 407,391
Total Deposits 562,912
Non Performing Loan Ratio 0.58%
(RMB mm, %) 2010 FY
Operating Income 18,022
Net profit 6,284
ROAE 23%
4
2010 Full Year Results Highlights
2010 FY Compared with Jan-Dec 2009
Operating Income 18,022 mm yuan 19%
Net Profit 6,284 mm yuan 25%
Basic EPS 1.91 yuan 18%
2010.12.31 Compared with 2009 year end
Total Assets 727.6bn yuan 24%
General Loans excl bills 388.7 bn yuan 24%
Total Deposits 562.9 bn yuan 24%
Shareholders’ Equity 33.5bn yuan 64%
NPL Ratio 0.58% -10 bp
Provision Coverage Ratio 272% 110 pct points
BVPS 9.62 yuan 46%
5
Financial Results
6
(RMB mm, %) Jan-Dec 2010 Jan-Dec 2009 Change YOY %
Net Interest Income 15,829 12,984 22%
Net Fee Revenue 1,585 1,181 34%
Other non interest income 608 949 -36%
Operating income 18,022 15,114 19%
Expenses (excl. biz tax) 7,360 6,311 17%
Business tax 1,325 1,069 24%
Profit before provision 9,338 7,734 21%
Provisions 1,488 1,575 -6%
Before tax profit 7,998 6,191 29%
Net profit 6,284 5,031 25%
2010 FY Income Statement Summary
7
(RMB yuan, %, ) Jan-Dec 2010 Jan-Dec 2009 Change YOY %,Pct points
Basic EPS 1.91 1.62 18%
Diluted EPS 1.91 1.62 18%
Cost income ratio (excl. biz tax) 41% 42% -1 pct points
Income tax rate 21.4% 18.7% 2.7 pct points
ROAA 0.96% 0.95% 1 bp
ROAE 23.3% 26.6% -3.3 pct points
2010 FY Income Statement Summary
8
(RMB mm, %, ) Oct-Dec 2010
Jul-Sep 2010
Oct-Dec 2009
Change from 3Q 2010 %
Net Interest Income 4,369 4,051 3,425 8%
Net Fee Revenue 435 400 399 9%
Other non interest income 58 213 177 -73%
Operating income 4,862 4,664 4,001 4%
Expenses (excl. biz tax) 1,870 1,900 1,867 -2%
Business tax 379 339 301 12%
Profit before provision 2,614 2,425 1,833 8%
Provisions 684 310 200 121%
Before tax profit 1,984 2,142 1,650 -7%
Net profit 1,550 1,701 1,393 -9%
2010 Jul-Dec Income Statement Summary
9
2010 FY Net Interest Income & Margin
Net Interest Income
(RMB mm, %)
Net Interest Margin,Loan Deposit Spread
10
2010 Quarterly Net Interest Income & Margin
Net Interest Income
(RMB mm, %)
Net Interest Margin,Loan Deposit Spread
11
AIEA Yield on AIEA
(RMB mm, %)
AIBL Cost on AIBL
Deposits CostADB General Loans ADB DepositsLoan Yield
2010 FY Average Daily Balance and Spread
12
AIEA Yield on AIEA
(RMB mm, %)
AIBL Cost on AIBL
Deposits CostADB General Loans ADB DepositsLoan Yield
2010 Quarterly Average Daily Balance and Spread
13
Jan-Dec 2010 Jan-Dec 2009 Change YOY % / bp
(RMB mm, %, bp) ADB Yield ADB Yield ADB Yield
General loans 354,853 5.33% 280,566 5.58% 26% -25 bp
- Corporate loans 246, 657 5.34% 196,005 5.52% 26% -18 bp
- Retail Loans 108,196 5.29% 84,561 5.73% 28% -44 bp
Bonds 91,362 2.83% 82,137 3.21% 11% -38 bp
Placement at central bank 60, 381 1.42% 41,769 1.53% 45% -11 bp
Bill&IB 122,382 3.02% 119,321 2.18% 3% 84 bp
Others 7,081 2.82% -- -- -- --
AIEA 636,059 4.13% 523,792 4.11% 21% 2bp
2010 FY Asset Average Daily Balance, Yield
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Jan-Dec 2010 Jan-Dec 2009 Change YOY % / bp
(RMB mm, %, bp) ADB Cost ADB Cost ADB Cost
Total Deposits 502,816 1.53% 412,393 1.69% 22% -16 bp
- Corporate Deposits 297,050 1.59% 223,040 1.66% 33% -7 bp
- Guarantee Deposits 128,159 1.36% 124,556 1.62% 3% -26 bp
- Retail Deposits 77,607 1.58% 64,796 1.94% 20% -36 bp
Bonds 9,467 5.87% 8,844 5.90% 7% -3 bp
IB 93,008 2.26% 83,510 1.26% 11% 100 bp
Others 2,232 2.50% -- -- -- --
AIBL 607,522 1.72% 504,747 1.70% 20% 2 bp
2010 FY Liability Average Daily Balance, Cost
15
Oct-Dec 2010 Jul-Sep 2010 Change from 3Q 2010 % / bp
(RMB mm, %, bp) ADB Yield ADB Yield ADB Yield
General loans 385,115 5.41% 361,681 5.28% 6% 13 bp
- Corporate loans 268,262 5.38% 251,064 5.25% 7% 13 bp
- Retail Loans 116,853 5.48% 110,617 5.33% 6% 15 bp
Bonds 89,968 2.91% 90,731 2.92% -1% -1 bp
Placement at central bank 68,668 1.46% 61,369 1.49% 12% -3 bp
Bill&IB 144,454 3.25% 110,083 3.15% 31% 10 bp
Others 10,203 3.56% 6,269 3.09% 63% 47bp
AIEA 698,407 4.23% 630,133 4.18% 11% 5 bp
2010 Quarterly Asset Average Daily Balance, Yield
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Oct-Dec 2010 Jul-Sep 2010 Change from 3Q 2010 % / bp
(RMB mm, %, bp) ADB Cost ADB Cost ADB Cost
Total Deposits 546,360 1.55% 516,084 1.57% 6% -2 bp
- Corporate Deposits 323,764 1.61% 305,576 1.65% 6% -4 bp
- Guarantee Deposits 138,523 1.39% 129,897 1.37% 7% 2 bp
- Retail Deposits 84,073 1.59% 80,611 1.60% 4% -1 bp
Bonds 9,469 5.90% 9,467 5.87% 0% 3 bp
IB 103,379 2.92% 70,555 2.21% 47% 71 bp
Others 3,836 3.69% 1,107 3.17% 247% 52 bp
AIBL 663,045 1.84% 597,213 1.72% 11% 12 bp
2010 Quarterly Liability Average Daily Balance, Cost
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Other Income
Settlement Fee Income
621 392 58%
501 387 29%
277 301 -8%
169 103 64%
268 204 31%
251 206 22%
1585 1181 34%
Total Fee & Commission Expenses
（ RMB mm,% ） Jan-Dec 2010 Jan-Dec 2009 Change YOY%
2010 FY Net Fee and Commission Income
Realized 34% Growth YoY
Bank Card Fee Income
Consultant Fee Income
Total Net Fee &Commission Income
Brokerage &Trust Fee Income
18
2010/12/31 Key Balance Sheet Items
(RMB mm, % )31st Dec
201030th Jun
201031st Dec
2009Change
from end 09Change from
end 09,%
Total Assets 727,610 624,398 587,811 139,799 24%
Total loans(incl. bills) 407,391 373,625 359,517 47,874 13%
Gen Loans 388,744 353,277 314,232 74,512 24%
Bills 18,647 20,348 45,285 -26,638 -59%
Total Liabilities 694,097 593,977 567,341 126,756 22%
Total deposits 562,912 505,988 454,635 108,277 24%
Shareholders’Equity 33,513 30,421 20,470 13,043 64%
BVPS(RMB yuan) 9.62 8.73 6.59 3.03 46%
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309,479
General Loans & Growth
General loans (excl. credit card receivable) (RMB mm, %)
24%382,400
20
454,635
562,912412,393
Deposits & Growth
Total Deposits (RMB mm, %) Total Deposits (Daily Average) (RMB mm, %)
502,81624% 22%
21
Geo Distribution of Loans & Deposits
Total loans （by Geography, %) Total Deposits （by Geography, %)
22
CAR 、CCAR、RWA
CAR
CCAR
RWA (RMB mm) Net Core Capital (RMB mm)
66% YTD Growth29% YTD Growth
(%)
23
(RMB mm, %)31st Dec 2010
31st Dec 2009
31st Dec 2008
Change from end 2009 %
Normal 403,686 355,717 278,120 13%
Special Mention 1,339 1,356 3,694 -1%
Total NPL 2,367 2,444 1,928 -3%
- Sub Standard 1,309 1,474 1,928 -11%
- Doubtful 620 529 -- 17%
- Loss 438 441 -- -1%
Credit Provision 6,425 3,955 2,027 62%
Provision Coverage Ratio 272% 162% 105% 110 pct points
Asset Quality
24
Asset Quality
Total NPL (RMB mm,%) NPL ratio (%) Special Mention / Total Loan (%)
Very low among listed banks
Very low among listed banks
25
(%) 31st Dec 2010
NPL ratio %
31st Dec 2009
NPL ratio %
Manufacturing (Light industry) 20.5% 0.80% 16.7% 1.35%
Commercial 11.9% 0.19% 14.6% 0.04%
Service, technology, culture and sanitary industries 13.6% 1.57% 10.0% 2.13%
Real estate 5.5% 1.83% 6.5% 1.48%
Transportation,storage and communication 5.0% 0.00% 4.8% 0.34%
Retail loans 30.1% 0.23% 27.7% 0.39%
Bills 4.6% 0.00% 12.6% 0.00%
Others* 8.8% 0.08% 7.1% 0.22%
Loans by Industries & Credit Quality
Note:Others includes: agriculture, husbandry and fisheries, Extraction (Heavy industry), Energy,and Construction.
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(RMB mm,%)From 2009/12/31 to 2010/12/31
NPLs at 2009/12/31 2,444
+ Net downgrades before write-off & collections + 1,105
- Write-off -213
- Collections of NPLs - 969
= Net increase in NPLs = -77
Net downgrades as of total loans 0.19%
NPLs at 31st Dec 2010 2,367
NPL Ratio at 31st Dec 2010 0.58%
2010/12/31 NPL Migration
Note: In Jan-Dec of 2010, the Bank totally collected non-performing asset (including loans with & without written-off) of 2,570 million yuan, including principal collection of 2,256 million yuan. Among the credit assets principal, 1,285 million yuan was written-off loan principal, and 969 million yuan was collected from NPL principal on balance sheet.
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(RMB mm)
From 2009/12/31 to 2010/12/31
Loan Provisions at 2009/12/31 3,955
+ Provision for assets + 1,419
- Provision for Non-loans -14
- Write-offs -213
+ Collections of Written-off loans + 1,285
- Others -7
= Ending Loan Provisions 2010/12/31 = 6,425
2010 Jan-Dec Loan Impairment Provisioning
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31st Dec 2010 31st Dec 2009 Change from end 2009
(RMB mm, %, bp) Amount NPL% Amount NPL% % NPL
Corporate Loan (excl. credit card receivable)
287,296 0.73% 261,876 0.78% 10% - 5 bp
- General Loan 268,649 0.78% 216,591 0.95% 24% -17 bp
- Bills 18,647 0.00% 45,285 0.00% -59% --
Trade Finance 175,497 0.29% 122,621 0.37% 43% -8 bp
Asset Quality – Corporate Loans
29
31st Dec 2010 31st Dec 2009 Change from end 2009
(RMB mm, %, bp) Amount NPL% Amount NPL% % NPL
Retail Loan(excl. credit card receivable)
113,751 0.18% 92,888 0.33% 22% -15 bp
- Mortgage 64,877 0.16% 59,399 0.34% 9% -18 bp
- Business Loans 18,626 0.26% 11,193 0.52% 66% -26 bp
- Car Loan 10,667 0.13% 6,453 0.18% 65% -5 bp
- Others 19,581 0.17% 15,843 0.25% 24% -8 bp
- Credit Card Receivable﹡ 6,344 1.21% 4,753 1.68% 33% -47 bp
Asset Quality – Retail Loans
﹡The number is including retail and corporate credit card receivable.
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Business Achievements
31
Commercial Business (1)
Corporate Deposits (RMB mm, %）General Commercial Loan (RMB mm, %）
+ 24% + 25%
32
+ 43%+ 33%
Commercial Business (2)
Total trade finance(RMB mm, %）
Client No. of Trade Finance (number , %）
33
（RMB mm, %） 31st Dec 2010 % 31st Dec 2009 % change%
Domestic trade finance 162,716 93% 115,134 94% 41%
International trade finance 12,781 7% 7,487 6% 71%
Total trade finance 175,497 100% 122,621 100% 43%
Commercial Business (3)
10
The leading position of SCF brand was reinforced and advanced, which showed an significant international influence
New product/business of trade finance
Enhance SCF Brand Construction
•SCF system successfully connected with Electronic Commercial Bill System.
•Innovated Delivery Against Bank Guarantee Mode and credit functional modle
•The number of online branches has reached 9.
•Apart from auto sector, SCF system has successfully expanded into steel, home appliance and grain & oil industries.
•Constructed a SCF’s‘research & education supply chain’.
•In 2010, SCF and products of the series won a total of 9 awards of different kinds.
•Global Finance magazine of the US has awarded SDB “Best Supply Chain Finance Bank in China”.
Acceleration of Online SCF construction
Corporate Banking (4)
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•4S store construction financing
•Li Xing Hang Mercedes-Benz certificates supervision model, Company-owned vehicle mortgage, Nissan car-rental financing, Machinery industry order financing
Corporate Banking (5)
10
Corporate Sales Management Model
Design & implement the new corporate sales management model, increase differentiated incentives and improve RMs per capital productivity to quickly increase market shares.
Build three core competition barriers of innovation, efficiency and ITs.
Trade Finance
Establish classified customer management system, implement pertinent strategy based on customer segment, to enhance customer overall value contribution.
Customer Service Upgrade
Enhance cash management system and product system, establish e-platform for cash management & supply chain finance, become the top brand in cash management among domestic commercial banks.
Cash ManagementCorporateBankMainStrategy
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Retail Business (1)
Retail Loans (excl C/C) (RMB mm, %) Retail Business Loans
Home Mortgage Loan Car Loan
22%
9%
66%
65%
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Retail Business (2)
Credit Card Receivable No. of Credit Card (Thousand, %)(RMB mm, %)
1. Bank WM products Sales – 100.3 bn yuan, 355% up YOY1. Bank WM products Sales – 100.3 bn yuan, 355% up YOY
3. Custody Business– 37.8bn yuan, 313% up YOY3. Custody Business– 37.8bn yuan, 313% up YOY
Wealth Management
2. Fund Sales - 6,627mn yuan, 41% up YOY2. Fund Sales - 6,627mn yuan, 41% up YOY
Credit Card
33% 13%
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Retail Business (3)
Effective Increases of Retail Business Scaleand Targeted Customers Scale
SDB won “China’s Most Respected Bank in 2010”, “China’s Top Ten Best Retail Banking in 2010”, “China’s Top Ten Best Banking Finance Product in 2010”, “Best Banking Finance Product in 2010”, and “Best Marketing and Service Team in 2010” ect.
•Fully roll out “OutletLeapfrog” project
•Promote the front-line sales model across the bank to improve productivity.
•The sales capacity was 2.68 times of that at the beginning of the year.
•Continue to promote improvement of service quality
•Customer Service Center implemented BIS certification of ISO9000 Quality Management System
•Product innovation continued, and platform improved continuously.
•Built a platform for Debit Card Customization
•Improve the “Creative Incubator” system for personal loan
Retail Business (4)
渠道整合
Upgrade customerservice
Segment customer management, optimize the service providing process, build up a compound and highly efficient business channel and operating system to further improve the customer service.
Develop the micro-lending
Standardize salesmanagement processand capacity
Utilize the outlet capacity, expand various customer-acquisition channels, formulate a new sales management model, regulate the sales process and tools, elevate the per capital output by fully implementing the basic retail methodology
Fully utilize the PAG’s resources to expand various customer-acquisition channels. Explore existing and potential customers within the group’s business scope through credit card and insurance businesses.
Introduce cross-selling
Stress the micro-lending business, facilitate development of other businesses through micro-lending, increase overall customer contribution and profit. Implement the specialized operating and management model, build an embedded and flexible risk management system and risk-pricing strategy
Retail BankMainStrategy
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Looking Ahead
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Active balance sheet & capital management
Innovation for fee income business & price management
Retail Banking – Build up differentiate competition advantage
Corporate Banking – Trade finance, cash management, customer service upgrade
2011 Key Initiatives
Improve operation efficiency, Stress compliance culture
Explore constructively with PA new biz opportunities together
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