Bank of Jinzhou is an urban commercial bank based in Liaoning Province and Northeast China. It is also one of the urban commercial banks in Liaoning Province with assets of over 100 billion yuan. The bank's recent 2016 interim results exceeded expectations. The bank's various revenue and profit data increased significantly during the period: operating income increased 67.79% year on year to RMB 7.851 billion (same below); net interest income increased 65.96% year on year to $7.372 billion; net revenue from fees and commissions increased 220.45% year on year to $423 million; net profit increased 163.75% year on year to $3.798 billion; basic profit per share during the period was $0.66, with no interim interest paid.
Benefiting from the steady growth of Northeast China's economy, profit levels have steadily increased. During the period, bank operating revenue increased 67.79% year-on-year to 7.851 billion yuan, and net profit attributable to shareholders was 3.794 billion yuan, an increase of 164.57%. Interest spreads remained at a reasonable level, with net interest income reaching 7.372 billion yuan, up 65.96% year on year; net interest spread was 3.78%, up 62 basis points year on year; net interest spread increased 55 basis points year on year to 3.49%.
The Asset Quality Department has a healthy level of health and a stable capital base. The bank's non-performing loan ratio and balance rose slightly from 0.99% ($879 million) in the second half of 2014 to 1.10% ($1,247 million) in the first half of this year; the provision coverage rate was 382.66% as of the end of June, up 13.53 percentage points from the previous month; the loss preparation to loan ratio was 4.2%, an increase of 38 basis points over the previous month. It reflects an increase in bank non-performing loans, but corresponding risk management measures have also increased.
The bank's core adequacy ratio, tier-1 capital, and capital adequacy ratios were 9.12%, 9.13%, and 10.75% respectively, which is higher than regulatory requirements.
The contribution of non-credit assets has increased, and the financial leasing business has increased dramatically. The bank's net income from interest on non-credit assets during the period was $4.485 billion, an increase of 92.16% over the previous year; in addition, the total assets of financial leasing companies increased 4.5 times month-on-month to $5.609 billion.
The corporate bank loan structure was optimized and adjusted, focusing on diversification of distribution channels. The bank's loans to companies amounted to 103.848 billion yuan, an increase of 13.82% over the previous year, of which the wholesale and retail industry and manufacturing accounted for 63%. We expect the bank to actively increase the share of other sectors such as leasing, commercial services, and real estate in the future. In addition, Bank of Jinzhou has actively developed mobile and WeChat banking services in recent years and achieved results. Among them, in the first half of 2016, WeChat Bank's cumulative number of customers and transaction amounts both increased more than 3 times. It is expected that banks will strengthen their e-banking business in the future.
The main risk. 1) Default risk; 2) Liquidity risk; 3) Market and operational risk; 4) Interest rate risk; and 5) Regional risk.
