Financial Association News November 13th (Reporter Zou Juntao) Why was there a significant drop in profit compared to last year, yet a performance turnaround was achieved in the first three quarters of this year? At the quarterly performance briefing held today, the management of Shanghai Pudong Development Bank provided an explanation.

Xie Wei, President of Shanghai Pudong Development Bank and Secretary of the Board of Directors, pointed out that the main driving factors for the company's performance growth this year are five aspects: rapid growth in crediting, significant improvement in asset structure, strengthened comprehensive management of liabilities, continuous solidification of asset quality, and maximizing income by seizing investment trading opportunities.

Furthermore, regarding investors' concern about whether the fourth-quarter profit can surpass the third quarter, Xie Wei stated that they will spare no effort to achieve that. It is worth mentioning that Xie Wei also mentioned during the meeting that the current revenue growth of the company has actually turned positive after excluding the impact of relevant factors.

The fourth quarter will consolidate the stable and positive trend of performance.

It is understood that in 2023, Shanghai Pudong Development Bank achieved a year-on-year decline of 28.28% in net income attributable to the parent company, marking the slowest profit growth rate in nearly 20 years for the company. In the first three quarters of this year, Shanghai Pudong Development Bank achieved a net income attributable to the parent company of 35.223 billion yuan, an increase of 25.86% year-on-year.

Xie Wei stated that since the beginning of this year, the company's crediting has achieved rapid growth, providing support for the stability of net interest income. In the first three quarters, the net increase in group crediting reached a historically high level for the same period, reaching 347.357 billion yuan, with the capacity improvement significantly mitigating the impact of market interest rate declines.

Furthermore, Xie Wei stated that during the reporting period, the company significantly improved the asset structure, further enhancing resource allocation efficiency; strengthened comprehensive management of liabilities, and achieved effective control of the interest payment rate. During the reporting period, the parent company's deposit interest payment rate decreased by 17bps compared to the same period last year, with the company and retail customer deposit interest payment rates decreasing by 19bps and 11bps respectively.

Xie Wei stated that in the first three quarters, the company achieved good operational development results. In the fourth quarter, we will spare no effort to consolidate the stable and positive development trend.

In addition, some investors are concerned about when the revenue growth rate can turn positive. The financial report shows that Shanghai Pudong Development Bank achieved a total revenue of 129.839 billion yuan in the first three quarters of this year, a decrease of 2.24% year-on-year. Xie Wei responded, "In the first three quarters, the overall operational performance of the company has shown a continuous positive trend. Excluding the one-time impact of selling the UBS Morgan stock in the same period last year, operating income increased by 1.265 billion yuan year-on-year, a growth of 0.98%."

Will continue to increase the efforts in disposing of non-performing assets.

The financial report shows that in recent years, Shanghai Pudong Development Bank has been focusing on the core goal of reducing risks, adopting a dual approach of "controlling new and reducing old", optimizing the credit structure, improving the quality of new loans; increasing efforts in clearing non-performing assets, and taking multiple measures to enhance the effectiveness of non-performing asset disposal.

In the first three quarters of this year, the non-performing loan balance of Shanghai Pudong Development Bank was 73.844 billion yuan, a decrease of 0.354 billion yuan from the end of the previous year; the group's non-performing loan ratio was 1.38%, a decrease of 0.10 percentage points from the end of the previous year; the provision coverage ratio was 183.85%, an increase of 10.34 percentage points from the end of the previous year.

The management of Shanghai Pudong Development Bank stated that the risk management effectiveness of the company has been continuously demonstrated throughout the year, the asset quality has been continuously strengthened, non-performing loans have been steadily declining, the provision for impairment losses has decreased year-on-year, and at the same time, the risk hedging capacity has been continuously improving.

Xie Wei stated that next, the company will continue to optimize the risk management system. On the one hand, balance the relationship between speed and stability, improve the quality of new loan offerings; on the other hand, pragmatically resolve existing risks, focus on resolving key risk disposal work. Improve risk management from three dimensions: institutional optimization, tool optimization, and mechanism optimization.

In terms of specific measures, Xie Wei stated that in the future, efforts will continue to be increased in disposing non-performing assets, enrich disposal methods, increase recovery efforts, and achieve greater effectiveness in dealing with non-performing assets.

Strive to further narrow the decrease in net interest margin.

The third quarterly report shows that the net interest margin of Shanghai Pudong Development Bank continues to decline. The latest data shows that the group-calculated net interest margin is 1.46%, a decrease of 0.02 percentage points from the first half of the year. Investors are quite concerned about how the net interest margin will stabilize.

The management of Shanghai Pudong Development Bank stated that the company will continuously strengthen the active management of its asset-liability portfolio based on policy and market environment changes, following the principles of "foresight, efficiency, initiative, and resilience."

Xie Wei stated that on the liability side, on one hand, they will increase the proactiveness of liability management, adjust and optimize the overall liability structure of the Bank, reasonably determine the proportion of various liabilities, optimize the structure of deposits of various maturities. On the other hand, by enhancing customer stickiness through products and services, strengthening the customer base, improving the ability to attract customers in a scenario-based and platform-based manner, expanding the low-cost core deposit base, increasing the retention of demand deposits, reducing the overall liability interest payout rate, and striving to further narrow the decrease in net interest margin.

How to deal with the impact of future exchange rate fluctuations on cross-border business.

In addition, some investors raised concerns at the meeting, stating that with Trump in office, the outlook for China's import and export trade may not be optimistic, leading to a significant short-term depreciation of the Renminbi, which may affect Shanghai Pudong Development Bank's cross-border business.

Ge Yufei, General Manager of the Head Office Risk Management Department of Shanghai Pudong Development Bank, responded by saying that against the backdrop of current global market fluctuations, the company will intensify tracking and monitoring of the international market situation, enhance the identification and response to country risks, and make full use of policies facilitating cross-border Renminbi transactions.

Regarding the response measures, Ge Yufei stated: firstly, make good use of the policy convenience of "two markets, two resources" to reduce financing costs for enterprises, improve the convenience of cross-border fund use; secondly, build an e-commerce product system and cultivate a cross-border e-commerce service ecosystem; thirdly, meet the cross-border supply chain financing needs of enterprises through supply chain products such as "Cross-border Pu Chain Link"; fourthly, leverage the service advantage of Shanghai Pudong Development Bank's "Puyin Hedging" to help enterprises hedge against risks of exchange rate and interest rate fluctuations.