Ping An Bank 2013 Annual Report Release
Content
I. Financial Highlights II. Business Operations III. Looking Ahead
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I. Financial Highlights 1. Profit and Scale 2. Asset Quality and Efficiency 3. Income Statement
4. Regulatory Indicators
1. Profit and Scale YoY (In RMB’100 million)
2013
2012 Change
1. Net Profit
152.31
135.12
Change %
17.19
12.7%
YTD 31 Dec 2013
31 Dec 2012
Change 2. Total Assets Including: Total Loans Including: Retail Loans (including CC) 3. Total Liabilities Including: Total Deposits
Including: Corporate Deposits 4. Shareholders’ Equity
Change %
18,917
16,065
2,852
17.8%
8,473
7,208
1,265
17.5%
3,257
2,258
999
44.2%
17,797
15,217
2,580
17.0%
12,170
10,211
1,959
19.2%
10,053
8,399
1,654
19.7%
1,121
848
273
32.2%
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2. Asset Quality and Efficiency (In RMB’100 million)
31 Dec 2013
31 Dec 2012
YTD
1. Asset Quality 75.41
68.66
9.83 %
NPL Ratio
0.89%
0.95%
-0.06 pc point
Provision to Loan Ratio
1.79%
1.74%
+0.05 pc point
201.06%
182.32%
+18.74 pc points
NPL Balance
Provision Coverage Ratio
2013
2012
YoY
2. Return on Assets
0.87%
0.94%
-0.07 pc point
16.57%
16.78%
-0.21 pc point
3. Net Interest Spread (NIS)
2.14%
2.19%
-0.05 pc point
4. Net Interest Margin (NIM)
2.31%
2.37%
-0.06 pc point
40.77%
39.41%
+1.36 pc points
Average Return on Total Assets
Weighted Average Return on Equity
5. Cost / Income Ratio
Notes: 1. The decrease in ROA was mainly due to the impact of additional provision, and it would have been increased YoY if the additional provision remains the same as the same period of 2012. 2. The increase in CIR was primarily due to the increase in strategic investment for supporting operation transformation and outlet expansion. 4
3. Income Statement 2013
YoY
(In RMB’100 million) Amount Operating Income
Proportion
Amount Change
Amount Change %
Proportion Change
521.89
100%
124.40
31.3%
Net Interest Income
406.88
77.96%
76.52
23.2%
-5.15%
Net Non-interest Income
115.01
22.04%
47.88
71.3%
5.15%
104.56
20.03%
47.34
82.7%
5.63%
62.68
32.9%
56.15
35.9%
268.45
61.72
29.9%
68.90
37.60
120.1%
152.31
17.19
12.7%
152.31
18.28
13.6%
1.86
0.22
13.4%
Including: Net Fee Income Expenses Operating Fees Operating Profit Before Provisions Less: Asset Impairment Loss Net Profit Net Profit Attributable to Parent Company Basic / Diluted EPS (in RMB)
253.44 212.79
40.77%
1.36%
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4. Regulatory Indicators
Standard Level
31 Dec 2013
31 Dec 2012
Liquidity Ratio (RMB and Foreign Currency)
≥25%
49.56%
51.99%
Loan / Deposit Ratio (including bills, RMB and Foreign Currency)
≤75%
69.67%
70.64%
≤5%
0.89%
0.95%
Capital Adequacy Ratio
≥8.5%
9.90%
N/A (note)
Tier 1 Capital Adequacy Ratio
≥6.5%
8.56%
N/A (note)
Core Tier 1 Capital Adequacy Ratio
≥5.5%
8.56%
N/A (note)
NPL Ratio According to Administrative Measures for the Capital of Commercial Banks (Trial)
Note: The Administrative Measures for the Capital of Commercial Banks (Trial) has been implemented by the Bank since 1 Jan 2013.
At the end of the reporting period, the key regulatory indicators of the Bank were in compliance with the regulatory requirements.
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II. Business Operations 1. Rapid Growth in Deposits 2. Remarkable Optimization of Business Structure 3. Continuous Improvement of Interest Spread 4. Business Innovation Highlights 5. Smooth Progress in Institutional Reform 6. Solidifying Development Foundation
1. Rapid Growth in Deposits 31 Dec 2013
YTD
(In RMB’100 million)
Balance Corporate Deposits
Retail Deposits
Total Deposits
Proportion
Balance Change
Balance Change %
Proportion Change
10,053
82.60%
1,654
19.7%
+0.35%
2,117
17.40%
305
16.8%
-0.35%
12,170
100%
1,959
19.2%
-
The deposits of the Bank grew steadily in 2013. The deposits at the end of the reporting period increased by 19.18% YTD, ranking the Bank one of the top players among peers.
The annual average deposits balance was RMB 1,141.8 bn, an increase of RMB 229.8 bn or 25.20% as compared with the annual average deposits balance of 2012.
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2. Remarkable Optimization of Business Structure (1) Structure of Assets
• Ineffective inter-bank assets had been cut to ensure an orderly development of the inter-bank business. A coordinative asset and liability structure of the Bank effectively mitigated the liquidity risk and helped it ride out of the liquidity crisis in June and December, setting it free from obtaining expensive short term funding; • The loan structure had been optimized to focus on micro loans and consuming finance. High yield operations, such as micro loans, New One Loan, and auto loans grew rapidly and the percentage to ending balance increased significantly.
Structure of Liabilities
• The Bank has been devoted to developing the deposits business, leading to a YTD increase of 1.28 pc points in the year end deposit to total liabilities; • The year end loan-to-deposit ratio and daily average loan-to-deposit ratio recorded a substantial decrease, remaining below 70% throughout the year.
Changes of the Loan Structure in 2013 (In RMB’100 million)
Total Loans General Corporate Loans Corporate Loans
Discounted Bills
Subtotal General Retail Loans Micro Loans & New One Loan Retail Loans Auto Loans
Credit Card Receivable Subtotal
31 Dec 2013
Proportion
8,473
YTD Balance Change
Proportion Change
1,265
5,093
60.11%
248
-7.11%
123
1.45%
19
0.01%
5,216
61.56%
267
-7.10%
789
9.31%
-122
-3.33%
1,113
13.14%
473
4.26%
487
5.75%
276
2.82%
868
10.24%
371
3.35%
3,257
38.44%
998
7.10% 9
2. Remarkable Optimization of Business Structure (2) Fostering Investment Banking Business
• The Bank leveraged on its integrated financial advantages and put great efforts on developing investment banking business. The fee-based income from investment banking for the year increased by RMB 1.3 bn from the previous year to RMB 1.6 bn, contributed significantly to the fee-based income growth of the Bank.
Remarkable Optimization of Income Structure
• With enhancement in the organization and incentives, it resulted in an annual fee-based business income of RMB 11.5 bn, representing an increase of 71.3% YoY. The percentage of fee-based business income to operating income increased by 5.15 pc points, with the income structure of the Bank improving remarkably.
Fee-based Business Income
Percentage of Fee-based Business Income
(In RMB’100 million) 150
100%
27% 22.04%
115 100
18% 67
16.89%
+71.3%
75%
+5.15 pc points
54.2%
+17.1 pc points
71.3%
50%
50
9%
0
25% 0%
0% 2012
Growth Rate of Fee-based Business Income
2013
2012
2013
2012
2013
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3. Continuous Improvement of Interest Spread Quarterly Deposit-Loan Spread 5.20%
Quarterly Average Cost of Deposit Rate 2.50%
4.82% 4.80%
2.45%
4.57%
2.41%
4.31%
4.40%
2.38%
2.40%
4.11% 4.00%
2.39% 2.37%
2.35% 1Q2013
2Q2013
3Q2013
4Q2013
1Q2013
Quarterly NIS
2.14%
2.20%
3Q2013
4Q2013
Quarterly NIM 2.34%
2.40%
2Q2013
2.52%
2.60% 2.40%
2.31%
2.04% 2.00%
2.18%
2.21%
1Q2013
2Q2013
2.20% 2.01%
1.80%
2.00%
1Q2013
2Q2013
3Q2013
4Q2013
3Q2013
4Q2013
Against the backdrop of market interest rates acceleration, the Bank’s deposit cost remained stable while achieving swift growth in deposits. The utilization efficiency of loan resources and average loan interest rate have been increased by enhancing loan pricing management. The deposit-loan spread, NIS and NIM for the year maintained a steady QoQ growth.
The Bank’s return on assets also improved gradually, representing a significant increase as compared with the previous year, netting out the effect from provision. 11
4. Business Innovation Highlights Ping An Dual Debit-credit Card
• Fast product promotion: As at the end of the year, the accumulated number of card users reached 352,000 with an approved credit limit of RMB10.9 bn, and 35,042 customers were granted with a credit line; • Remarkable product advantages: As at the end of the year, the deposit balance and loan balance amounted to RMB 5.4 bn and 6 bn, respectively, and the average loan interest rate was significantly higher than the loan interest rate. It has become an important tool for the Bank’s business, customer and return restructuring.
Investment Banking
• The Golden Orange series investment banking businesses, including the Golden Orange Club, Golden Orange Housekeeper and Golden Orange Wealth Management, demonstrated initial market influence by providing one-stop and comprehensive integrated financial services for the customers; • The Bank accelerated its innovation efforts to actively explore for new investment banking businesses, such as Golden Orange Capital, Golden Orange Small and Micro Enterprises and industrial funds.
Treasury and Inter-bank Business
• Hang-E-Tong channel: More than 100 cooperation institutions covering the banking, securities, trusts and funds sectors, and the content of cooperation has been enriched continuously; • Featured gold businesses: Introduced the “Ping An Gold” brand, covering precious metal investment and financing, trading, wealth management and physical gold, etc..
Internet Finance
• The Bank made an innovation by introducing the corporate-targeted WeChat Bank and the brand new “Orange-E-Net” (online Supply Chain Finance). Several online financing projects on the e-business platform had been rolled out; And the new version of Pocket Bank for retail business was launched.
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5. Smooth Progress in Institutional Reform Industrial Business Unit: Strong Start
Reduction of Cost Centers
• The number of cost centers had been cut from 79 to 38, thereby considerably enhancing the operational management effectiveness.
Real Estate Finance BU Energy and Mining Finance BU Transportation Finance BU
Product Business Unit: Transformational Development
Increase of Profit Centers
• 15 business units had been set up and commenced operation to launch professional operations targeting different customers in different product segments. Featuring “integrated financial services” and “internet financial services”, the new business units achieved rapid growth and have become the key drivers of the business and income of the Bank.
CC & Consuming Finance BU Financial Market BU
Investment Banking BU Asset Custody BU
Inter-bank BU Trade Finance BU Bills BU Offshore Finance BU SME Finance BU
Initial Operational Success
• In the half year since the establishment of the real estate and energy business units, the total deposits have already reached RMB 29.4 bn. The loan scale was RMB 39.3 bn, with new loans yielding a relatively high level of return. The accumulated fee-based business income was RMB 629 mn. • The results grew rapidly leveraging on accelerated transformation of products and platform business units such as investment banking, custody, trade finance, financial market and bills.
Institutional Finance BU
Private Banking BU
Platform Business Unit: Service Upgrade
Corporate Internet Finance BU
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6. Solidifying Development Foundation
Accelerated Outlet Expansion
• The Bank enhanced the strategic investment and incentive efforts in outlet establishment to accelerate outlet expansion. • During the reporting period, 5 branches, including the Xi’an branch, Suzhou branch, Linyi branch, Leshan branch and Xiangyang branch and 73 sub-branches had been approved to commence operation. As at the end of the reporting period, the Bank had a total of 38 branches and 528 outlets.
Effective Capital Injection
• The Bank successfully completed the non-public offering of shares. Upon completion of the capital injection from the Group at the end of 2013, the capital adequacy ratio increased from 8.91% at the end of the third quarter to 9.90%, up by 0.99 pc point. • The Bank actively implemented the issuance of tier two capital bonds.
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III. Looking Ahead
Looking Ahead of Year 2014
Restructure by Coordination and Planning Strengthen Control to Enhance Efficiency Expedite Innovation to Create Uniqueness Strict Risk Control for Sound Operations Capital Replenishment for Institutional Expansion
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