Financial News Agency, November 1 (Reporter Cao Yunyi)Pudong Development Bank held a third quarter results conference today. The most frequently asked question at the conference was the reason why net profit and performance continued to decline in the third quarter. In response, Xie Wei, deputy governor and secretary of the board of directors of Pudong Development Bank, said that mainly due to low interest rates in the loan market and the repricing of stock assets, net interest income declined year-on-year; the decline in income due to fluctuations in the capital market; and the promotion of negative pressure reduction and increased risk planning, which affected operating efficiency.

By the end of the third quarter, Pudong Development Bank's total assets (group caliber) reached 8.81 trillion yuan, an increase of 103.669 billion yuan over the end of the previous year. The total amount of local and foreign currency loans was 4.92 trillion yuan, an increase of 20.834 billion yuan over the end of the previous year; the total amount of local and foreign currency deposits was 4.96 trillion yuan, an increase of 129.209 billion yuan over the end of the previous year.

In terms of operating efficiency, SPD Bank achieved operating income of 132,815 billion yuan in the first three quarters, and net profit attributable to parent company shareholders of the parent company of 27.986 billion yuan after tax. Among them, the third quarter achieved operating income of 41,585 billion yuan, a year-on-year decrease of 7.66%, and realized a total profit of 31,803 billion yuan, a year-on-year decrease of 30.05%.

As for the reason for the decline in profits, Xie Wei said it was mainly due to a combination of internal and external factors. “On the one hand, net interest income declined year-on-year due to low interest rates in the loan market and repricing of existing assets; at the same time, due to fluctuations in the capital market, the revenue contribution of intermediary businesses such as wealth management, financial management, and credit cards declined. On the other hand, in recent years, the company has taken the initiative to adjust its asset structure, continuously promote negative pressure reduction, and increase risk planning. Operating efficiency has been affected to a certain extent.”

In terms of asset quality, SPD Bank continues to reduce poor pressure, strictly control risk costs, and control investment quality. As of the end of the third quarter, the non-performing loan ratio was 1.52%, and the provision coverage rate was 177.04%, up 18 percentage points from the end of the previous year; the loan provision ratio was 2.68%, up 0.26 percentage points from the end of the previous year.

In response to investors' questions about why net interest spreads declined significantly faster than comparable companies in the same industry in the first three quarters, Xie Wei explained that from the asset side, the bank strengthened credit investment in key regions, key industries, and key customer groups. Affected by multiple LPR cuts, loan market interest rates are low. Since this year, compounded by stock loan repricing, the company's loan yield has declined. On the debt side, since this year, clients' financial investment needs have been partially transformed into demand for time deposit products. There is a trend of regularization of deposits, there is limited room for cost improvement, and interest expenses have increased year-on-year. As a result, the level of net interest spreads declined year-on-year.

Xie Wei said that in the future, in terms of net interest income, we will actively promote lightweight, “double carbon”, and digital transformation and development, cultivate new momentum for revenue growth, strengthen active asset and liability management, and manage loan investment and deposit interest rates.

“In terms of non-interest income, it enhances diversified Chinese income competitiveness and capital-light operation capabilities. Promote the growth of key businesses such as wealth, private banking, investment banking, transaction banking, and custodian. On the cost side, strengthen proactive risk prevention, increase collection, and reduce cost consumption.” Xie Wei said.

Furthermore, investors are concerned about the 50 billion yuan convertible bonds issued by Pudong Development Bank, which currently has a high premium rate and a low conversion rate. Xie Wei said that the current valuation level of the banking industry is at a historically low level, and there is still a certain gap between the company's stock price and the stock price. In order to promote convertible debt-for-equity swaps, the company first makes every effort to improve operating efficiency, strengthen risk pressure reduction and structural adjustment, and consolidate the basis for stock conversion with good business performance; second, strengthen communication with the market and investors, enhance investors' recognition, and strive to promote value return and valuation improvement; third, after each year's dividend distribution, it will remove interest on convertible stock prices to reduce conversion prices, which is beneficial to promoting convertible debt-for-equity conversions.

Faced with the performance improvement issues that investors are most concerned about, Xie Wei also listed the bank's future direction. First, seize opportunities and increase agreed asset investment; second, focus on key areas such as revenue, middle income, and non-performing asset settlement to accelerate the expansion of low-cost deposits, increase the contribution of medium income, expand bad settlement results, and accelerate business efficiency; third, focus on customer and project reserves, strengthen group collaboration, and adhere to the bottom line of risk compliance; fourth, enhance professional capabilities, strengthen service support, improve the level of integrated business development of customers, products, services and management, and improve development efficiency。