On April 29, Shanghai Pudong Development Bank finally announced its 2023 annual report and 2024 first quarter report in time for the deadline for the annual report.
Assets and Profitability: The business has expanded in size, but profitability has continued to decline
According to the data of the 2023 annual report, the business scale of SPD Bank has expanded steadily, with total assets exceeding 9 trillion yuan to 9.01 trillion yuan, maintaining growth in the past decade, assets increased by 3.48% year-on-year, the growth rate has slowed down, total liabilities have increased by 3.46% year-on-year to 8.27 trillion yuan, and total deposits have increased by 3.28% year-on-year to 4.98 trillion yuan. The year-on-year growth rate of total liabilities basically matched the growth rate of total assets, and the year-on-year growth rate of deposits was lower than the growth rate of liabilities, which increased the allocation of other liabilities.
Image from @SPDB2023 annual report
Profitability continues to decline. In 2023, SPD Bank's operating income will be RMB173.434 billion, a year-on-year decline of 8.05%, -2.75% and -1.24% year-on-year in 2021 and 2022, respectively.
In 2023, SPD Bank will achieve a net profit attributable to the parent company of 36.702 billion yuan, a negative growth for four consecutive years, down 28.28% year-on-year.
Image from @SPDB2023 annual report
In 2023, SPD Bank's net interest margin will only be 1.52%, which will continue to fall and deepen, continuing to fall by 25BP after 2022. Although interest-bearing assets increased by 2.83% year-on-year, net interest income decreased by 11.40% year-on-year, indicating that the decline in net interest margin could not be compensated for by volume premium.
Shanghai Pudong Development Bank said that the yield on the loan side decreased by 29bps year-on-year due to factors such as fee reduction, LPR reduction, and reduction of existing mortgage interest rates, which was the main reason for the decline in net interest margin.
In 2023, SPD Bank's net fee and commission income decreased by 14.77%, of which the income from custody and other fiduciary businesses decreased by RMB5.84 billion compared with 2022, a year-on-year decrease of 52.04%, which was the main reason for the decline in its net fee and commission income.
Image from @SPDB2023 annual report
According to the data of the first quarter of 2024, SPD Bank achieved operating income of 45.328 billion yuan, a year-on-year decrease of 2.751 billion yuan, a decrease of 5.72%, and an increase of 1.490 billion yuan year-on-year, a year-on-year increase of 3.40% after excluding the one-time factor of the sale of the equity of CIFM in the same period last year. The total profit was 20.351 billion yuan, an increase of 844 million yuan, a year-on-year increase of 4.33%, and the net profit attributable to shareholders of the parent company was 17.421 billion yuan, an increase of 1.590 billion yuan, a year-on-year increase of 10.04%.
Loan analysis: The real estate industry is still a risk point for banks, and the credit card business has collapsed
As of the end of 2023, SPD Bank's non-performing loans (NPLs) have achieved a "double decline", with the balance of NPLs reaching RMB74.198 billion, a decrease of RMB421 million from the end of the previous year, and the NPL ratio at 1.48%, a decrease of 0.04 percentage points from the end of the previous year. The overall asset quality has improved, and the ability to offset risks has improved.
From the point of view, like most commercial banks, SPD Bank also experienced a decline in the non-performing loan ratio of corporate loans but an increase in the non-performing ratio of retail loans, the main problem is still in personal housing loans, which increased by 0.13 points from last year, and the non-performing ratio of other retail loans has decreased.
Image from @SPDB2023 annual report
The non-performing loan ratio of the real estate sector increased by 1.05 percentage points, and the risk of the financial sector also increased, up by 1.13 percentage points.
Image from @SPDB2023 annual report
According to the data of the 2023 annual report, the cumulative number of credit cards issued by SPD Bank was 103.0438 million, the number of credit cards in circulation was 48.3761 million, a decrease of 5.76% from the end of the previous year, the balance of credit cards and overdrafts was 385.617 billion yuan, a decrease of 11.09% from the end of the previous year, and the number of monthly active users of the SPD Xiben app reached 27.16 million, an increase of 8.29% from the end of the previous year. During the Reporting Period, the credit card transaction volume was RMB2,269.306 billion, down 6.13% year-on-year, and the total revenue of credit card business was RMB40.659 billion, down 7.03% year-on-year. Except for the data on the number of monthly active users of the Puda Xiben app, the rest are down, and the credit card service like most banks has gone downhill.
It is worth noting that the Yangtze River Delta region accounted for 22.13% of the revenue, but contributed 56.33% of the operating profit, in addition, the Pearl River Delta and the western part of the Taiwan Strait, the Bohai Rim region, the Northeast region and overseas regions have seen the proportion of operating profit contribution higher than the proportion of revenue, and the head office operating income accounted for nearly 4 percent, but there was a negative operating profit, which is almost never happening. Although there will be two waves of rising US dollars in 2023, and many banks will also have foreign exchange losses, if this part of the loss is made up, the operating profit of the head office can be flattened.
According to the branch construction data, the total number of employees in the head office is 19,734, of which 54.3% are in the credit card center, and it is reasonable that the decline in credit card business in 2023 will lead to a negative operating profit of the head office. After experiencing a more volatile market environment, should SPD Bank think carefully about re-planning and resource allocation for each regional market?
Image from @SPDB2023 annual report
In 2023, SPD Bank will provide for a credit impairment loss of 802 million yuan at the group level, in addition, these huge non-performing assets are also a damage to the bank's net profit.
According to the first quarter report of 2024, the total corporate loans of SPD Bank (excluding bill discounting) were RMB3,029.604 billion, an increase of RMB188.605 billion or 6.64% from the end of the previous year, while in terms of retail credit, due to changes in the macro environment, the adjustment of the real estate market, and the maturity of stocks, the growth was under pressure, and the total retail loans amounted to RMB1,850.146 billion, a decrease of RMB15.676 billion from the end of the previous year. For the "king of the public", Shanghai Pudong Development Bank, retail is not its strong point, and it should be based on the old bank in terms of operating "self-help", and the most familiar areas have begun to revitalize.
In the first quarter of 2024, the balance of the last three types of non-performing loans of banks was 75.041 billion yuan, an increase of 843 million yuan from the end of the previous year, the non-performing loan ratio was 1.45%, a decrease of 0.03 percentage points from the end of the previous year, and the provision coverage ratio was 172.84%, a decrease of 0.67 percentage points from the end of the previous year.
Fintech remains in the lead, but the marginal effect of investment is diminishing
In fact, a careful reading of the 400-page annual report shows that SPD Bank maintains an industry leader in the field of financial technology. SPD Bank's data assets reached 62.51PB, an increase of 51.17% from the end of the previous year, and the AI basic platform independently developed and put into production for large model applications supported the online operation of 10 large model application scenarios, making it the first company in the industry to pass the flagship certification of the "Artificial Intelligence R&D and Operation Integration (MLOps) Service Capability" of the Academy of Information and Communications Technology.
SPD Bank's investment in information technology has also been a strategic focus for its development. In 2023, SPD Bank will continue to increase its investment in information technology to promote digital transformation and innovative development, and improve service quality and efficiency. According to the 2023 annual report, the total investment in information technology of SPD Bank was 6.965 billion yuan, a year-on-year decrease of 0.59%, accounting for about 4% of the operating income, and the number of personnel related to technology development was 6,425, a decrease of 22 from 2022.
Image from @SPDB2023 annual report
SPD Bank has also carried out in-depth exploration in the "five tracks" of science and technology finance, supply chain finance, inclusive finance, cross-border finance and treasury finance, including the "Puke" product series of the "commercial bank + investment bank + ecology" model, the construction of the "Pulian e-finance" supply chain finance platform, the treasury construction of the "Puzhi e-purchase" M&A financial business support system of investment banks, and the "Xiaopu Pay" launched in the retail field and other digital services, which also brought data growth and built a good platform foundation for SPD.
The salary of senior executives has been significantly reduced, and the average salary per person is basically unchanged
The decline in performance has led to a pay cut for executives. During the reporting period in 2022, senior executives received a total of 20.6149 million yuan from the company, compared with 18.9422 million yuan in 2023, and in 2023, a number of supervisors of Shanghai Pudong Development Bank will reduce their salaries by more than one million yuan, the highest salary is supervisor Zhang Yong, about 3.15 million yuan, He Weihai and Zhang Baoquan are 2.9 million yuan and 2.89 million yuan respectively, but they are 1.19 million yuan and 1.07 million yuan less than in 2022. The salaries of independent directors have not changed, and the salaries of the president and chairman have also fallen by about 20%.
SPD Bank has a total of 63,600 employees and an average salary of 448,400 yuan, which is basically unchanged from 2022 and 2021.
Can SPD usher in a new life in 2024?
Unexpectedly, although the report card is not bright, but in the capital market, the share price of Shanghai Pudong Development Bank opened high and closed in the red, and even has a tendency to catch up with the highest point last year, industry insiders speculate on two main reasons: First, the similarly ranked China Merchants Bank and China CITIC Bank have risen by nearly 50% since the beginning of the year, and the average increase of the six major banks is about 25%, compared with the increase of Shanghai Pudong Development Bank and Industrial Bank is only 20% Second, the first quarterly report disclosed that the net profit in the first quarter increased by 10%, the total assets increased by 0.51%, and the non-performing loan ratio decreased by 0.03 percentage points.
Image source@百度Stock Market通
Compared with the large state-owned banks and other large joint-stock banks, in fact, the exploration of financial technology of Shanghai Pudong Development Bank is not weak at all, and it can even be said that "the former has some and the latter also has it", so why is the Shanghai Pudong Development Bank in 2023 still so unsatisfactory? Although Shanghai Pudong Development Bank seems to be pursuing digital transformation and strategic transformation, it still can't change the "old model" and "old way of playing" in its bones.
In addition, on February 8, 2024, Shanghai Pudong Development Bank officially issued an announcement on the approval of the chairman's qualifications, clarifying Zhang Weizhong's qualifications as director and chairman of Pudong Development Bank, and the performance of Shanghai Pudong Development Bank in the first quarter has also begun to improve. (This article was first published in Titanium Media APP, author|Li Jingying, editor|Liu Yangxue)
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