The bank's non-performing loans ratio fell to 8.3 per cent from 9.3 per cent at the end of last year, but remained unchanged to the level reported for the end of June.

But provisions for credit for the first nine months of the year were adjusted down 29 per cent from a year earlier to 993 million yuan (US$125.7 million).

"The bank was pleased that lower provisions for credit were appropriate in 2006, as more of the problems in the old loans portfolio have now been dealt with," the bank explained in the statement, adding that it had completely eliminated the shortfall of provisions under the China Banking Regulatory Commission's formula during the first quarter.

But analysts said they held conservative attitudes towards SDB's financial status.

"The SDB's new operating income increased by just 26 per cent for the first nine months of 2006. It would be no different from other commercial banks," Luo Yi, an analyst with China Merchants Securities, told China Daily.

He expressed doubts over the reduction of provisions, which could boost net profit but was insufficient.

Another analyst with Ping'an Securities, who wished to be anonymous, expressed the same concern, saying: "The bank's future is unclear. Some handsome figures are meaningless."

The SDB is 17.89 per cent-owned by US buyout firm Newbridge Capital.

The bank's shares were up 3.37 per cent to 9.82 yuan (US$1.2) yesterday in an overall market that was up about 0.22 per cent.

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