Ping An Bank's profits up 30% in 2012

Shenzhen-based Ping An Bank announced on March 8 that its net profit rose by 30.39 percent year-on-year in 2012, but its non-performing loan ratio had soared because of the deteriorating situation for small and medium-sized enterprises in the Yangtze River delta area.

According to its annual report, the first by one of China's 16 listed lenders to be released for the past fiscal year, the bank contributed 13.4 billion yuan ($2.14 billion) net profit to its parent company last year.

The bank, previously known as Shenzhen Development Bank, was acquired by Ping An Insurance Group, China's second-largest life insurance company, in 2011. The lender's figures showed that the non-interest income of Ping An Bank increased by 54.21 percent in 2012 to about 6.7 billion yuan, accounting for 16.89 percent of the total revenue, up from the previous year's 14.68 percent.

However, the lender's outstanding non-performing loans edged up to roughly 6.9 billion yuan at the end of 2012, doubling the figure at the beginning of the year to some 3.3 billion yuan ― the non-performing loan ratio rising to 0.95 percent from 0.53 percent.

"About 88 percent of the increased non-performing loans come from four branches in the Yangtze River Delta area, including Wenzhou, Hangzhou, Ningbo in Zhejiang province and Shanghai," said Zhao Jichen, vice-president of Ping An Bank, at a news conference, adding that the business at the rest of the areas remains stable.

The manufacturing industry in East China ― especially those SMEs that have failed to upgrade their operations and skills ― has been hard hit by the domestic and global economic slowdown, which led to the surge in bad loans, Zhao said.

The companies in South China are proving better at establishing brands and improving their operations and industrial restructuring after weathering the South East Asia financial crisis in 1998, he said.

The bank has the bad loan situation under control, and it is sending a professional team to settle the non-performing loans in East China, he said.

Shao Ping, who became president of Ping An Bank last October, said the new management are pulling together to make it the best commercial bank in the country.

It will focus on its corporate business in the next three to five years while nurturing its retail operations. The retail side is expected to have the same importance as its corporate business in the next five to eight years, and finally it will become the major source of the bank's profits, Shao told reporters.