Ping An Bank 2013 1Q Report Release Apr 2013
Contents I. Highlights II. Business Operation (I) Business Development (II) Efficiency Analysis (III) Asset Quality III. Our Vision 1
I. Highlights
I. Highlights: (I) Profitability and Scale (In hundred million yuan) Jan-Mar 2013 Jan-Mar 2012 YoY % 1.Net Profit 35.89 34.95 0.94 2.7% 31 Mar 2013 31 Dec 2012 YTD % 2.Total Assets 18,112 16,065 2,047 12.7% Including: Total Loans 7,548 7,208 340 4.7% Including: Retail Loans (including CC) 2,531 2,258 273 12.1% 3.Total Liabilities 17,224 15,217 2,007 13.2% Including: Total Deposits 10,645 10,211 434 4.3% Including: Retail Deposits 1,859 1,812 47 2.6% 4.Shareholders Equity 888 848 40 4.7% 3
I. Highlights: (II) Quality and Efficiency (In hundred million yuan) 31 Mar 2013 31 Dec 2012 YTD 1. Assets Quality NPL 73.66 68.66 7.3% NPL Ratio 0.98% 0.95% +0.03 pc point Provision to Loan Ratio 1.78% 1.74% +0.04 pc point Provision Coverage Ratio 182.68% 182.32% +0.36 pc point 2. Return on Assets Jan-Mar 2013 Jan-Mar 2012 Average Return on Total Assets (annualized) 0.84% 1.04% -0.20 pc point Fully Diluted Return on Equity (annualized) 14.42% 15.75% -1.33 pc points Weighted Average Return on Equity (annualized) 15.61% 17.11% -1.50 pc points 3. Net Interest Spread 2.01% 2.28% -0.27 pc point 4. Net Interest Margin 2.18% 2.48% -0.30 pc point 5. Cost/Income Ratio 38.73% 38.18% +0.55 pc point YoY In 1Q2013, inter-bank business recorded a rapid growth. The proportion of inter-bank asset scale increased from 11% in 1Q2012 to 31%, and the proportion of inter-bank liability scale increased from 22% to 34%. As the inter-bank interest spread was lower than the basic bank interest spread and narrowed during the reporting period (narrowed from 0.89% to 0.71%), it had diluted effects on overall NIS and NIM, but rapidly increased the absolute contributions to profit. 4
I. Highlights: (III) Income Statement (In hundred million yuan) Jan-Mar 2013 Amount Proportion Amount YoY Amount % Operating Income 108.02 100.0% 10.78 11.1% Proportion Net Interest Income 87.07 80.6% 7.52 9.4% -1.2% Net Non-interest Income 20.95 19.4% 3.26 18.4% 1.2% Including: Net fee income 18.05 16.7% 3.57 24.7% 1.8% Expenses 50.39 4.66 10.2% Operating Fees 41.84 38.7% 4.71 12.7% 0.5% Less: Asset Impairment Loss 10.46 3.60 52.5% Net Profit 35.89 0.94 2.7% Net Profit attributable to the Parent Company 35.89 1.60 4.7% Basic/Diluted EPS (Yuan) 0.70 0.03 4.7% Income Tax Rate 23.9% +2 pc points 5
II. Business Operation (I) Business Development
(I) Business Development Sheet (In hundred million yuan) 31 Mar 2013 YTD Composition % Total Assets 18,112 100% 2,047 12.7% Composition Loans and Advances 7,548 42% 340 4.7% -3% Investment 3,362 19% 466 16.1% 1% Cash and Due from the Central Bank 2,130 12% -63-2.9% -2% Placements of Deposits with Other Financial Institutions 751 4% -192-20.4% -2% Funds Loaned to Other Financial Institutions & Reverse Repurchase Agreements 3,976 21% 1,457 57.8% 6% Other Assets 345 2% 39 12.7% - Total Liabilities 17,224 100% 2,007 13.2% Customer Deposit 10,645 62% 434 4.3% -5% Placements of Deposits from Other Financial Institutions 5,243 30% 1,701 48.0% 7% Funds Borrowed from Other Financial Institutions 219 1% -172-44.0% -2% Repurchase Agreements 647 4% 186 40.3% 1% Bonds Payable 96 1% -65-40.4% - Other Liabilities 374 2% -77-17.1% -1% Shareholders Equity 888 40 4.7% Asset scale expanded rapidly from the beginning of the year, which was primarily due to the increase in scale of inter-bank business: inter-bank asset balance amounted to RMB 472.7 bn, representing an increase of RMB 126.5 bn or 36.5% YTD; inter-bank liability balance amounted to RMB 610.9 bn, representing an increase of RMB 171.5 bn or 39% YTD. The increase in other assets was mainly due to the increase in the capital settlement at the end of the period. 7
(I) Business Development Loan Structure Reduce the number of low-efficiency customers actively and maneuver credit resources Enhance asset and liability structure management and pricing management Transfer low-yield assets in inventory Enhance pricing management for newly granted loans. Increase the proportion of high-yield retail loans, of which the yield increased YoY 8
(I) Business Development Corporate Business 1. of Corporate Deposits and Loans (In hundred million yuan) 31 Mar 2013 YTD Proportion % Proportion Corporate Deposits 8,786 82.5% 387 4.6% -0.3% Corporate Loans 5,017 66.5% 68 1.4% -2.2% General Loans 4,690 62.2% -155-3.2% 5.1% Bills 327 4.3% 223 214% 2.9% 6000 2. Trade Finance Business (In hundred million yuan) Number of customers 9,376 9,668 12,000 3. Investment Bank Business and Feebased Business 4000 2000 5,164 1,226 7,788 10,125 1,819 2,334 2,873 2,867 8,000 4,000 YoY growth rate of issuance scale for debt financing instruments in 1Q2013 ranked first among all principal market underwriters. 0 2009 (Only SDB) 2010 2011 2012 31 Mar 2013 Scale of trade finance credit balance amounted to RMB 286.7 bn. The number of customers was 9,668, up by 292 YTD. Assets quality remained at a relatively satisfactory level with NPL ratio of 0.34%; Utilization of online supply chain finance system was continuously enhanced. The number of online customers grew by 9% to 3,607, representing a coverage of 59.6%. 0 Fees income from bond underwriting of RMB 55 mn was realized. Establishment of Golden Orange investment bank with all efforts. Among which, the golden orange land type investment bank business made significant progress. 9
(I) Business Development Retail Business 1. of Retail Deposits and Loans (In hundred million yuan) 31 Mar 2013 YTD Proportion % Proportion Retail Deposits 1,859 17.5% 47 2.6% -0.3% Retail Loans (excluding CC) 1,928 25.6% 167 9.5% 1.1% 2. Micro Finance 3. Auto Finance The balance of micro loans increased by RMB 8.726 bn or 15.63% YTD to RMB 64.56 bn; 1Q2013, new loans for automobile consumption was RMB 7.9 bn, i.e. 163% YoY. The loan balance was RMB 25.7 bn, i.e. 22% YTD with the largest market share in the industry; NPL ratio was 1.19%, down 0.05 pc point YTD. Credit risk was under effective control and the NPL ratio was contained at 0.22%. 10
(I) Business Development Credit Card Business Number of Cards: 1Q2013, the number of newly issued cards reached 1.16 million, i.e. 28.9% YoY, among which, the crossselling channel of the Group accounted for 42% of new cards. The number of cards in circulation reached 11.66 mn at the end of the period, i.e. 6.0% YTD; Transaction Volume: Total transaction amount reached RMB 92.0 bn, i.e. 122.1% YoY, among which, the online transaction amount reached RMB 4.3 bn, i.e. 187.8% YoY; Profitability: Fee income increased by 82.6% YoY; Assets Quality: NPL ratio was 1.01%, which remained at a relatively satisfactory level in the industry. Proportion of Newly Issued Cards CC Receivables (in hundred million yuan) Others 58% Crossselling 42% 800 600 400 200 497 603 0 31 Dec 2012 31 Mar 2013 11
(I) Business Development Treasury & IB Business Growth of Contributions In 1Q2013, IB business scale grew rapidly with increasing contribution to the overall profit Scale of IB assets amounted to RMB 496.7 bn on daily average basis, i.e. 261% YoY, and scale of IB liabilities amounted to RMB 521.5 bn on daily average basis, i.e. 91% YoY; IB business contributed net interest income of RMB 620 mn to the Bank in 1Q2013; To ensure the accomplishment of absolute profit amount and continuous expansion of IB business scale, interest spread was lowered correspondingly. Channel Construction The accumulated number of online third-party custody, margin and bank securities co-operative entities reached 76, online Hang E-Tong entities and products were accumulated to 30 and 37, respectively, and the number of entities and products under trial were 5 and 6, respectively. Market Position In 1Q2013, the transaction volume in Renminbi foreign exchange market as a market maker increased by over 100% YoY; Ranked top ten in terms of market share of IB Renminbi foreign exchange derivatives transaction; Bond trading activities were further enhanced and our market ranking for bond spot transaction volume rose significantly. 12
(I) Business Development WM Business & Agency Business WM Business At the end of 1Q2013, capital balance for WM of the Bank amounted to RMB 203 bn, of which, capital balance for principal guaranteed WM amounted to approximately RMB 75.8 bn; The scale of WM products issued accumulated to over RMB 510 bn, and fee income of WM business of RMB 249 mn was realized, i.e. 81.75% YoY. Agency Business Having established a comprehensive entrustment business unit, covering more than 20 products of 8 categories: public funds, WM for securities companies, trusts, WM for banks, PE private funds, social security funds, transaction fund custodies and insurance premium custody, the Bank has established stable co-operative relationship with more than 200 financial and asset management institutional customers; As of the end of 1Q2013, the Bank s custodian fee income was RMB 156 mn, i.e. 230% YoY. Net value of assets under custody amounted to RMB 572.3 bn, i.e. 34% YTD. 13
II. Business Operation (II) Efficiency Analysis
(II) Efficiency Analysis Return on Assets (In hundred million yuan) Jan-Mar 2013 Jan-Mar 2012 YoY Average Return on Equity (A*B) 15.61% 17.11% -1.50 pc points A. Average Return on Assets 0.84% 1.04% -0.20 pc point B. Equity Multiplier (times) 18.58 16.38 2.20 Numerator: Average Total Assets 17,089 13,131 30.1% Denominator: Weighted Average Equity (Attributable to Shareholders of the Parent Company) 920 802 14.7% 15
(II) Efficiency analysis in NIS (In hundred million yuan) Jan-Mar 2013 Jan-Mar 2012 YoY ADB Yield ADB Yield ADB Yield Net Interest Spread 2.01% 2.28% -0.27% Interest-earning Assets 16,230 5.06% 12,915 5.71% 25.67% -0.65% Interest-bearing Liabilities 15,351 3.05% 12,165 3.43% 26.18% -0.38% In 1Q2013, inter-bank business grew rapidly. The proportion of inter-bank asset scale on daily average basis increased from 11% in 1Q2012 to 31%, the proportion of inter-bank liability scale on daily average basis increased from 22% in 1Q2012 to 34%, and the inter-bank interest spread decreased from 0.89% to 0.71%. As the inter-bank interest spread was lower than the interest spread for basic banking business, the net interest spread excluding inter-bank factors only decreased by 5bp on a YoY basis, which was far lower than those of the two downward adjustments in interest rate in 2012. 16
(II) Efficiency Analysis Cost/Income Ratio (In hundred million yuan) Jan-Mar 2013 Amount Composition Amount YoY Composition Cost/income Ratio 38.73% +0.55 pc point Operating Fees 41.84 100.0% 12.7% Including: Labor Costs 21.64 51.7% 3.8% -4.4% General Administration Costs 13.55 32.4% 27.6% 3.8% Depreciation, Amortization and Rental Expenses 6.65 15.9% 17.3% 0.6% Operating Income 108.02 11.1% 1Q2013, operating fees of the Bank increased by 12.7% YoY to RMB 4.184 bn, primarily due to headcount, outlets and business scale growth, and continued investment in upgrading the management process and IT system. In 2012, the Bank has achieved remarkable progress in the establishment of outlets and institutions, with 1 new first-tier branch, 5 second-tier branches, 49 outlets of sub-branch level. Most of these institutions and outlets commenced operation in the second half of the year, which increased our operating expenses for the year. 1Q2013, cost to income ratio (business tax exclusive) was 38.73%, i.e. 0.55 pc point YoY from 38.18%, and a decrease of 0.68 pc point YTD. 17
II. Business Operation (III) Asset Quality
(III) Asset Quality 5-tier Loan Classification (In hundred million yuan) 31 Mar 2013 YTD Composition % Composition Normal 7,384 97.82% 317 4.5% -0.23% Special Mention 91 1.20% 19 26.4% 0.20% NPL 74 0.98% 5 7.3% 0.03% Including: Substandard 51 0.68% 1 2.1% -0.02% Doubtful 9 0.12% -1-7.0% -0.01% Loss 13 0.18% 5 52.9% 0.06% Total Loans 7,548 100.00% 340 4.7% Loan Provision 135 9 7.5% Including: Loan Provision for the Year 10.19 NPL ratio 0.98% +0.03 pc point Provision Coverage Ratio 182.68% +0.36 pc point Provision Loan Ratio 1.78% +0.04 pc point In 1Q2013, the Bank s special mention loans and NPLs, in particular in certain branches of the Eastern region, continued to increase, but overall risk was still under control. 19
(III) Asset Quality NPL by Region 31 Mar 2013 YTD (In hundred million yuan) Loan NPL NPL Ratio NPL NPL % NPL Ratio Eastern 2,378 29.1 1.22% 2.7 10.2% +0.16 pc point Southern 2,287 9.4 0.41% -0.8-7.8% -0.06 pc point Western 735 2.1 0.29% - - -0.06 pc point Northern 1,356 8.1 0.59% 0.8 11.0% +0.06 pc point Headquarter 792 25.0 3.16% 2.3 10.1% -0.73 pc point Total 7,548 73.7 0.98% 5.0 7.3% +0.03 pc point 20
(III) Asset Quality NPL by Industry (In hundred million yuan) Agriculture, Husbandry and Fishery Loan 31 Mar 2013 YTD NPL NPL Ratio NPL NPL % NPL Ratio 22 - - - - - Extraction (Heavy Industry) 114 - - - - - Manufacturing (Light Industry) 1,436 28.6 1.99% -0.6-2.0% +0.16 pc point Energy 108 - - - - - Transportation, Storage and Communication 296 0.5 0.17% -0.3-36.3% -0.11 pc point Commercial 1,291 22.8 1.77% 0.2 0.9% +0.14 pc point Real Estate 538 0.1 0.02% - - - Service, Technology, Culture and Sanitary Care 448 1.3 0.29% - - +0.01 pc point Construction 336 1.3 0.38% - - +0.01 pc point Others (Retail Loans) 2,632 19.1 0.73% 5.7 42.4% +0.15 pc point Bills 327 - - - - - Total 7,548 73.7 0.98% 5.0 7.3% +0.03 pc point As of the end of 1Q2013, the Bank s NPLs mainly concentrated in the manufacturing and commerce industries, and NPL ratios for other industries all fell below 1%. 21
(III) Asset Quality NPL by Product 31 Mar 2013 YTD (In hundred million yuan) Loan NPL NPL Ratio NPL NPL % NPL Ratio Corporate Loans 5,017 54.6 1.09% -0.7-1.3% -0.03 pc point Including: General Loans 4,690 54.6 1.16% -0.7-1.3% +0.02 pc point Bills 327 - - - - - Retail Loans 1,928 13.0 0.68% 4.5 52.9% +0.20 pc point Including: Home Mortgage Loans 727 2.8 0.39% 1.1 66.8% +0.15 pc point Retail Business Loans 640 6.7 1.05% 2.1 46.1% +0.22 pc point Car Loans 257 0.6 0.22% 0.2 41.4% +0.04 pc point Others 304 2.9 0.96% 1.1 62.1% +0.34 pc point CC Receivables 603 6.1 1.01% 1.2 24.3% +0.03 pc point Total loans 7,548 73.7 0.98% 5.0 7.3% +0.03 pc point As at the end of 1Q2013, NPL ratio of the Bank s retail loans (credit card exclusive) increased by 0.20 pc point YTD, mainly owing to the increase in NPL ratio of home mortgage loans, retail business loans and other loans. The increase in NPL ratio was mainly attributable to the amendment of the rules for asset quality classification for retail loans by the Bank in 1Q2013 (NPL criterion was shortened from the original overdue 180 days to overdue 90 days), and aggravated by the external economic environment in 1Q2013, some small and micro business owners and self-employed operators were less able to mitigate their exposure and thus became more susceptible to industry downturn, and coupled with the lack of fund lending activities in the private sector, borrowers experienced operating difficulties and failed to repay their debts as they fall due. 22
(III) Asset Quality Capital and CAR (In hundred million yuan) 31 Mar 2013 31 Dec 2012 YTD Influence on CAR Influence on CCAR On-balance Sheet RWA 7,964 7,230 10.2% Off-balance Sheet RWA 1,839 1,726 6.5% Total RWA 9,803 8,956 9.5% -0.96 pc point -0.78 pc point Net Capital 997 1,019-2.2% -0.24 pc point Including: Net Core Capital 809 769 5.1% +0.44 pc point Supplementary Capital 193 254-24.0% CAR 10.17% 11.37% -1.20 pc points -1.20 pc points CCAR 8.25% 8.59% -0.34 pc points -0.34 pc point Note: Net core capital=core capital-deduction from core capital; Net capital=core capital+supplementary capital-deduction from capital. As at the end of 1Q2013, the Bank s CAR and CCAR were up to regulatory standards. Among which, RWA increased by 9.5%, net capital decreased by 2.2% and net core capital increased by 5.1%, leading to a decline in CAR by 1.20 pc points YTD. CCAR decreased by 0.34 pc point YTD. 23
III. Our Vision
Our Vision Optimize asset and liability management and strengthen effective business guidance Foster the full implementation of the assessment system for the two ratios, establish and optimize a new operation assessment system Adjust the operating strategies for notes and obtain gains by accelerating the notes turnover Increase efforts on the recovery of non-performing assets and enhance the Bank s credit assets quality 25
Thank You! IR Contact: PABIR@pingan.com.cn