ping an bank 2012 annual report...

Ping An Bank

2012 Annual Report Release Mar 2013

I. Highlights

Agenda

II. Financial Results

III. Business Development

1

IV. Efficiency Analysis

V. Asset Quality

VI. Our Vision

I. Highlights

I. Highlights (I) — Profitability and Scale

(In hundred million yuan) 2012 2011

YoY

Change Change %

1.Net Profit 135.11 103.91 31.20 30.0%

2.Total Assets 16,065 12,582 3,483 27.7%

Including: Total Loans 7,208 6,206 1,002 16.1%

Including: Retail Loans (including CC) 2,258 1,899 359 18.9%

3.Total Liabilities 15,217 11,828 3,389 28.7%

Including: Total Deposits 10,211 8,508 1,703 20.0%

Including: Retail Deposits 1,812 1,523 289 19.0%

4.Shareholders’ Equity 848 754 94 12.5%

Including: Equity attributable to

Shareholders of the Parent Company 848 733 115 15.7%

3

I. Highlights (II) — Quality and Efficiency

(In hundred million yuan) 2012 2011 YoY

1. Asset Quality

NPL Balance 68.66 32.95 108.36%

NPL Ratio 0.95% 0.53% +0.42 pc point

Provision Loan Ratio 1.74% 1.70% +0.04 pc point

Provision Coverage Ratio 182.32% 320.66% -138.34 pc points

2. Return on Assets

ROAA 0.94% 1.04% -0.10 pc point

ROAE 16.78% 20.32% -3.54 pc points

3. Net Interest Margin 2.37% 2.56% -0.19 pc point

4. Cost Income Ratio 39.41% 39.99% -0.58 pc point

4

II. Financial Results

II. Financial Results — Income Statement

(In hundred million yuan)

2012 YoY

Amount Proportion Amount

Change

Amount

Change %

Proportion

Change

Operating Income 397.50 100.00% 101.07 34.09% -

Net Interest Income 330.36 83.11% 77.46 30.63% -2.21%

Net Non-interest Income 67.14 16.89% 23.61 54.21% 2.21%

Including: Net Fee Income 57.22 14.39% 20.57 56.13% 2.03%

Expenses 190.76 47.16 32.83% -

Operating Fees 156.64 39.41% 38.09 32.13% -0.58%

Less: Asset Impairment Losses 31.31 9.82 45.71%

Net Profit 135.11 31.20 30.03%

Net Profit attributable to the Parent

Company 134.03 31.24 30.39%

Basic/Diluted EPS（Yuan） 2.62 0.15 6.07%

Income Tax Rate 23.02% +1.40 pc points

6

In 2012, the Bank strictly implemented the regulatory requirements under Notice of Remediation for Non-compliance Operation of Banking

Financial Institutions in the PRC by the CBRC through continuous strengthening and improvement of public services to serve the physical

economy effectively, and our consultant fee income dropped. However, buoyed by factors such as the merger, expansion of the Bank’s size

and customer base, rapid development of bank card business, innovative wealth management products and enhanced services quality, the

Bank’s net fee income achieved satisfactory overall growth.

III. Business Development

III. Business Development (I) — Balance Sheet


2012/12/31 YTD

Balance Composition Balance

Change

Balance

Change %

Composition

Change

Total Assets 16,065 100.00% 3,483 27.69% -

Loans and Advances 7,208 44.87% 1,002 16.13% -4.46%

Investment 2,896 18.03% 858 42.12% 1.84%

Cash and Due from the Central Bank 2,193 13.65% 587 36.55% 0.88%

Placements of Deposits with Other Financial

Institutions 943 5.87% 544 136.42% 2.70%

Funds Loaned to Other Financial Institutions &

Reverse Repurchase Agreements 2,519 15.68% 2,091 489.22% 12.28%

Other Assets 306 1.90% -1,599 -83.92% -13.24%

Total Liabilities 15,217 100.00% 3,389 28.66% -

Customer Deposit 10,211 67.10% 1,703 20.01% -4.83%

Placements of Deposits from Other Financial

Institutions 3,542 23.28% 1,988 127.93% 10.14%

Funds Borrowed from Other Financial Institutions 391 2.57% 138 54.55% 0.43%

Repurchase Agreements 461 3.03% 69 17.73% -0.28%

Bonds Payable 161 1.06% - 0.16% -0.30%

Other Liabilities 451 2.96% -509 -53.01% -5.16%

Shareholders’ Equity 848 94 12.47%

8

At the end of 2012, The proportion of customer deposit decreased while the proportion of inter-bank deposits increased; under the restriction of the deposit-to-

loan ratio, the proportion of loans and advances also decreased and the proportion of inter-bank assets and investment increased; other assets and liabilities decreased, mainly due to the decline in agency payment business（decrease in size and transferred to loans and inter-bank items).

III. Business Development (II) — Corporate Business

2,025 2,472

309

401

0

1,000

2,000

3,000

2011/12/31 2012/12/31

International

Domestic

2,334

2,873

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1. Change of Corporate Deposits and Loans

2. Innovation and Services 3. Trade Finance Business (in hundred million yuan)

• As of the end of 2012, the number of customers of trade

finance business was 9,376 ; the Bank’s trade finance

credit balance amounted to RMB 287.3 billion, i.e. 23%

YTD; NPL ratio was 0.34%, which was still kept at a

relatively low level

Continuous upgrading of online supply chain financial services: launched the supply chain financial service 2.0 which advocates the interaction and synergistic operation between core enterprises and their upstream and downstream enterprises, banks, logistics and warehouse enterprises along the supply chain via internet service platforms

Rapid development of cash management and electronic settlement products: provided professional cash management solutions for thousands of our customers, and the replacement rate for the number of transactions done via electronic channel reached nearly 60%

International business and offshore business grew steadily: international trade finance balance amounted to RMB 40.1 billion, i.e. 30% YTD, international and offshore settlement volume for the year amounted to USD 196.0 billion, i.e. 21% YoY.


2012/12/31 YTD

Balance Proportion Balance

Change

Balance

Change %

Proportion

Change

Corporate Deposits 8,399 82.3% 1,413 20.2% 0.2%

Corporate Loans 4,949 68.7% 642 14.9% -0.7%

General Loans 4,845 67.2% 715 17.3% 0.6%

Bills 104 1.5% -73 -41.1% -1.3%

III. Business Development (III) — Retail Business

As of the end of 2012, the balance of micro loans of the Bank amounted to RMB 55.834 billion, i.e. 16% YTD

The NPL ratio for micro loans increased to 1.24%, but since the overall size of micro loan was minimal and the NPL increase mainly incurred in the Eastern region, the impact on the Bank’s loan quality was limited

10

1. Change of Retail Deposits and Loans

2. Micro Finance 3. Auto Finance

As of the end of 2012, loan balance for automobile consumption amounted to RMB 21.1 billion, i.e. 67% YTD; the new loans granted for automobile consumption for the year amounted to RMB 18.3 billion, i.e. 83% YoY

Credit risk was effectively managed, and NPL ratio was well contained at 0.18%


2012/12/31 YTD

Balance Proportion Balance

Change

Balance

Change %

Proportion

Change

Retail Deposits 1,812 17.7% 289 19.0% -0.2%

Retail Loans (excl Credit Cards) 1,761 24.4% 109 6.6% -2.2%

247

497

0

200

400

600

2011/12/31 2012/12/31

• Number of Cards: As of the end of 2012, the number

of new card issuance of the Bank reached 4.49 million,

i.e. 69% YoY, among which, the cross-selling channel

of the Group accounted for 54% of new cards. The

number of cards in circulation reached 11.00 million, i.e.

22% YTD.

• Transaction Volume: Total transaction amount

reached RMB 218.4 billion, i.e. 65% YoY; loan balance

reached RMB 49.7 billion, i.e. 101% YTD.

III. Business Development (IV) — Credit Card Business

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1. Business Development Proportion of New Cards

Credit Cards Receivables (in hundred million yuan) • Profit before tax in 2012 amounted to RMB 1.24 billion,

i.e. 98% YoY, of which, the net operating income

increased by 63% YoY.

• NPL ratio was 0.98%, down by 0.12 percentage point

YTD.

Cross-selling

54% Others

46%

2. Profitability

3. Asset Quality

III. Business Development (V) — Treasury &

Inter-bank Business

Continuous growth in

business size and significant

achievements in channel

expansion

The size of inter-bank assets and liabilities of the Bank maintained a rapid yet steady and healthy growth, and the growth rate ranked one of the top among all joint stock banks nationwide

The co-operation with peers has achieved considerable development, with the number of newly signed Hang E-Tong reaching 22, new online bank partners reaching 14 and new online securities brokers for third-party custody business reaching 9

In respect of business scopes such as bonds, inter-bank lending, foreign exchange, precious metal and notes, the Bank has stepped up our efforts in market making, increased trading categories, expanded the scope of counterparties and enhanced trading volume and activeness

During the year, the number of newly issued wealth management products ranked the second among all joint stock banks nationwide, and the market position and competitiveness have both shown a significant surge

12

III. Business Development (VI) — WM Business &

Agency Business

• As of the end of 2012, the Bank’s capital balance for wealth management (including corporate, retail, inter-bank) amounted to approximately RMB 150.0 billion, of which, the capital balance for principal guaranteed wealth management was over RMB 67.0 billion;

• The accumulated issuance scale of wealth management products amounted to approximately RMB 1.4 trillion, fee income for wealth management business of RMB 654 million was realized, up 83%YTD

WM Business

• Riding on the synergy of our channels, the Bank focused on our asset custody business segment, such as trust, wealth management banking and asset management for securities customers;

• As of the end of 2012, the size of custody in terms of net worth exceeded RMB 427.2 billion, i.e. 261% YoY, and custodian fee income exceeded RMB 200 million, i.e. 128% YoY

Agency Business

13

III. Business Development (VII) — Outlets

Under the strong support of

regulatory authorities, the Bank

has achieved significant progress

in institutional expansion in 2012

As of the end of 2012, the

number of institutions and

outlets of the Bank reached

450, up by 55 from the

beginning of the year

– 1 new first-tier branch

(Zhengzhou Branch). The

preparation work for another first-

tier branch (Xi’an Branch) has

been basically completed and is

going to commence operation

soon

– 5 new second-tier branches

(Taizhou, Changzhou, Honghe, Jingzhou, Zhangzhou）

– 49 new branches and outlets

The coverage of institutions

and outlets of the Bank has

basically included all major

customer bases of Ping An and

major domestic cities

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Beijing

Tianjin Dalian

Qingdao Jinan

Xi’an

Zhengzhou

Chengdu

Chongqing

Jingzhou Wuhan

Nanjing Changzhou

Wuxi Shanghai

Hangzhou Ningbo

Taizhou

Wenzhou

Fuzhou

Quanzhou

Xiamen

Zhangzhou

Shenzhen

Dongguan Guangzhou

Foshan

Zhongshan

Huizhou

Zhuhai

Kunming

Honghe

Haikou

First-tier branches opened First-tier branch under preparation Second-tier branches

IV. Efficiency Analysis

IV. Efficiency Analysis (I) — Return on Assets

(In hundred million yuan) 2012 2011 YoY

Average Return on Equity (A*B) 16.78% 20.32% -3.54 pc points

A. Average Return on Assets 0.94% 1.04% -0.10 pc point

B. Equity Multiplier 17.93 19.62 -1.69

Numerator: Average Total Assets 14,324 9,927 44%

Denominator: Weighted Average Equity (attributable

to Shareholders of the Parent Company) 799 506 58%

16

IV. Efficiency Analysis (II) — Change in NIS

17


Jan-Dec 2012 Jan-Dec 2011 YoY

ADB Yield ADB Yield ADB

Change

Yield

Change

Net Interest Spread 2.19% 2.39% -0.20%

Interest-earning Assets 13,950 5.35% 11,318 5.29% 23.25% 0.06%

Interest-bearing Liabilities 13,160 3.16% 10,663 2.90% 23.42% 0.26%

IV. Efficiency Analysis (III) — Change of IEA

18

Jan-Dec 2012 Jan-Dec 2011 YoY Factors for Change of

Weighted Average Yield Rate

ADB % Yield ADB % Yield ADB %

Change

Yield

Change

ADB %

Change

Yield

Change Total

A B C D E=A-C F=B-D G=(A-C)*D H=A*(B-D) I=G+H

=A*B-C*D

General Loans 46% 6.87% 51% 6.44% -5% 0.43% -0.30% 0.20% -0.10%

Bonds 14% 3.94% 16% 3.84% -2% 0.10% -0.06% 0.01% -0.05%

Due from CB 13% 1.51% 11% 1.51% 2% - 0.02% - 0.02%

Bill & IB 18% 4.94% 17% 5.54% 1% -0.60% 0.08% -0.11% -0.03%

Others 9% 6.02% 5% 5.94% 4% 0.08% 0.21% 0.01% 0.22%

AIEA 100% 5.35% 100% 5.29% -0.05% 0.11% 0.06%

Notes: 1. Others mainly represent receivables for agency payment business and payments on behalf of commercial banks.

2. In 2012, the average discount yield (excluding price differences) was 6.14%, down by 0.60 percentage point YoY; the

average discount yield (including price differences) was 7.09%, down by 0.92 percentage point YoY.

IV. Efficiency Analysis (IV) — Change of IBL

19

Note: Others mainly represent payables for agency payment business.

Jan-Dec 2012 Jan-Dec 2011 YoY Factors for Change of

Weighted Average Cost Rate

ADB % Cost ADB % Cost ADB %

Change

Cost

Change

ADB %

Change

Cost

Change Total

A B C D E=A-C F=B-D G=(A-C)*D H=A*(B-D) I=G+H

=A*B-C*D

Total Deposits 69% 2.54% 75% 2.19% -6% 0.35% -0.13% 0.24% 0.11%

Bonds 1% 6.21% 1% 6.13% - 0.08% -0.01% - -0.01%

IB 27% 4.31% 21% 4.81% 6% -0.50% 0.27% -0.13% 0.14%

Others 3% 6.35% 3% 6.68% - -0.33% 0.03% -0.01% 0.02%

AIBL 100% 3.16% 100% 2.90% 0.16% 0.10% 0.26%

IV. Efficiency Analysis (V) — Cost Income Ratio


2012 YoY

Amount Composition Amount Change Composition

Change

Cost Income Ratio 39.41% -0.58 pc point

Operating Fees 156.64 100.0% 32.1% -

Including: Labor Costs 84.39 53.8% 29.1% -1.2 pc points

General Administration Costs 48.04 30.7% 34.9% +0.6 pc point

Depreciation, Amortization and

Rental Expenses 24.21 15.5% 37.9% +0.6 pc point

Operating Income 397.50 34.1%

20

In 2012, operating fees of the Bank surged by 32.1% YoY, primarily affected by the consolidation basis, headcount and

business scale grew, the resources pooled for integrating the policies, procedures and systems after the merger, and

continued investment in upgrading the management process and IT system.

V. Asset Quality

V. Asset Quality (I) — 5-tier Loan Classification


2012/12/31 YTD

Balance Composition Balance

Change

Balance

Change %

Composition

Change

Normal 7,067 98.05% 938 15.30% -0.71%

Special Mention 72 1.00% 28 62.74% 0.29%

NPL 69 0.95% 36 108.36% 0.42%

Including: Substandard 50 0.70% 33 188.40% 0.42%

Doubtful 10 0.13% 1 7.69% -0.01%

Loss 9 0.12% 2 32.86% 0.01%

Total Loans 7,208 100.00% 1,002 16.13% -

Loan Provision 125 20 18.47%

Including: Loan Provision for the Year 30.37 9.00 42.12%

NPL Ratio 0.95% +0.42 pc point

Provision Coverage Ratio 182.32% -138.34 pc points

Provision Loan Ratio 1.74% +0.04 pc point

22

In 2012, special mention and NPL of individual branches of the Bank continued to rise, but overall risk was still under

control. Excluding the impact of Wenzhou branch, NPL ratio of the Bank was maintained at a relatively low level of

0.67%.

V. Asset Quality (II) — NPL by Region

(In hundred

million yuan)

2012/12/31 YTD

Loan

Balance

NPL

Balance NPL Ratio

NPL

Balance

Change

NPL

Balance

Change

%

NPL Ratio Change

Eastern 2,487 26.4 1.06% 13.5 104.30% +0.50 pc point

Southern 2,167 10.2 0.47% 1.0 10.50% +0.01 pc point

Western 601 2.1 0.35% 1.1 99.90% +0.13 pc point

Northern 1,372 7.3 0.53% 1.8 33.70% +0.04 pc point

Headquarter 581 22.7 3.89% 18.3 416.70% +2.57 pc points

Total 7,208 68.7 0.95% 35.7 108.36% +0.42 pc point

23

As of the end of 2012, the Bank’s NPL ratio in the Eastern region was 1.06%, up 0.5 percentage point YTD, whilst that of the remaining regions

(Southern, Western, Northern) remained stable basically. In 2012, new NPLs in the Eastern region accounted for 38% of our total new NPLs,

excluding those attributable to Wenzhou branch which was under centralized management by our headquarter, but overall risk was still under

control.

In a bid to reduce the overall NPL ratio in the Wenzhou region to lessen the burden on our branch, while congregating the resources of the entire

Bank to conduct professional management and recovery, the Bank transferred the aforesaid credit underwriting of RMB 2 billion of the Wenzhou

branch to the Special Asset Management Department of our headquarter at the end of 2012, thereby increasing the NPL ratio of our headquarter

compared with the beginning of the year.

V. Asset Quality (III) — NPL by Industry


2012/12/31 YTD

Loan

Balance

NPL

Balance

NPL

Ratio

NPL

Balance

Change

NPL

Balance

Change

%

NPL Ratio Change

Agriculture, Husbandry and

Fishery 18 - - - - -

Extraction (Heavy Industry) 116 - - - - -

Manufacturing (Light Industry) 1,596 29.2 1.83% 18.7 178.01% +1.05 pc points

Energy 135 - - - - -

Transportation, Storage and

Communication 303 0.8 0.28% -0.4 -27.49% -0.12 pc point

Commercial 1,388 22.6 1.63% 12.0 113.65% +0.64 pc point

Real Estate 423 0.1 0.02% -1.9 -95.73% -0.52 pc point

Service, Technology, Culture

and Sanitary Care 462 1.3 0.28% -0.1 -7.21% +0.01 pc point

Construction 345 1.3 0.37% 1.0 413.73% +0.28 pc point

Others (Retail Loans) 2,318 13.4 0.58% 6.5 92.80% +0.22 pc point

Bills 104 - - -0.1 - -0.07 pc point

Total 7,208 68.7 0.95% 35.7 108.36% +0.42 pc point

24

As of the end of 2012, the Bank’s NPLs mainly concentrated in the manufacturing and commercial industries, and NPL ratios for other

industries accounted for less than 1%.

V. Asset Quality (IV) — NPL by Product


2012/12/31 YTD

Loan

Balance

NPL

Balance

NPL

Ratio

NPL

Balance

Change

NPL

Balance

Change

%

NPL Ratio

Change

Corporate Loans 4,950 55.4 1.12% 29.6 114.53% +0.52 pc point

Including: General Loans 4,845 55.2 1.14% 29.2 112.3% +0.51 pc point

Bills 105 - - -0.1 -80.8% -0.07 pc point

Retail Loans 1,761 8.5 0.48% 4.3 104.56% +0.23 pc point

Including: Home Mortgage

Loans 704 1.7 0.24% 0.3 18.0% +0.05 pc point

Retail Business Loans 552 4.6 0.83% 3.2 240.8% +0.52 pc point

Car Loans 211 0.4 0.18% 0.1 37.4% -0.05 pc point

Others 294 1.8 0.62% 0.7 68.5% +0.30 pc point

CC Receivables 497 4.9 0.98% 2.2 79.26% -0.12 pc point

Total Loans 7,208 68.7 0.95% 35.7 108.36% +0.42 pc point

25

V. Asset Quality (V) — Capital and CAR

(In hundred million yuan) 2012/12/31 2011/12/31 YTD Influence on

CAR

Influence on

CCAR

On-balance sheet RWA 7,230 6,381 13.30%

Off-balance sheet RWA 1,726 1,566 10.23%

Total RWA 8,956 7,947 12.70% -1.44 pc points -1.09 pc points

Net Capital 1,019 915 11.37% +1.30 pc points

Including: Net Core Capital 769 672 14.43% +1.22 pc points

Supplementary Capital 254 247 2.83%

CAR 11.37% 11.51% -0.14 pc point -0.14 pc point

CCAR 8.59% 8.46% +0.13 pc point +0.13 pc point

26

Note: Core net capital=Core capital-Deduction from core capital; Net capital=Core capital+Supplementary capital-Deduction from capital.

As of the end of 2012, the Bank’s capital adequacy ratio and core capital adequacy ratio were up to regulatory standards. Among which,

weighted risk assets increased by 12.7%, net capital increased by 11.37% and core net capital increased by 14.43%, leading to a decline in

capital adequacy ratio by 0.14 percentage point from the beginning of the year. Core capital adequacy ratio increased by 0.13 percentage point

from the beginning of the year.

VI. Our Vision

Our Vision

28

Thank You !

IR Contact:

[email protected]

ping an bank 2012 annual report...

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