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Lender back in the black

By Qiu Quanlin (China Daily)
Updated: 2008-04-11 09:31

Guangdong Development Bank Co Ltd (GDB) reported a record net income of 2.67 billion yuan (about $380 million) for last year, marking its return to the black and achieving its best financial results ever, a company source said yesterday.

"We are delighted with last year's results since it was the first year after the introduction of new strategic investors such as China Life, State Grid, CITIC Trust and Citigroup," company President Michael Zink said.

In 2006, China Life bought 20 percent of GDB for 5.67 billion yuan as part of the Citigroup-led consortium's 24.27 billion yuan deal to acquire 85.6 percent of the GDB.

Last year's net income marks an increase of 3.21 billion yuan from 2006, when GDB registered a net loss of 541 million yuan, according to Zink.

"The company has also achieved a steady growth in total assets and a moderate growth in loans," Zink said.

GDB's total assets reached 437.52 billion yuan last year, up 17 percent over the previous year.

The company's credit card business also maintained its position as the market leader and witnessed rapid growth, with 1.706 million new cards added last year. Till the end of the first quarter of this year, GDB had issued a record 6 million credit cards.

Zink attributed last year's performance to the strengthening of GDB's corporate governance and implementation of the "Five-Year Strategic Development Plan", which was drawn up last year.

"The five-year plan will be used as the road map for our strategic positioning and future growth. We will proactively improve our operations and growth models," he said.

A proactive approach toward the resolution of its non-performing loans (NPLs) and enhanced risk management capabilities in particular played a key role in the company's remarkable achievement, Zink said. The company's NPL ratio declined from 5.8 percent in 2006 to 4 percent last year.

A new assets and liabilities committee was set up to conduct continuous monitoring and review the bank's resource allocation and liquidity conditions.

"We also strengthened the loan origination process to ensure the quality of new loans," he said.

Last year, the company launched "Easy Loan", an innovative loan project offering customized credit services to small and medium-sized enterprises.

GDB also obtained licenses to trade in derivative products, which allowed it to enter the foreign currency business.