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PSBC(1658.HK)2017 Interim Results

Date: 2017-08-31



On August 29, 2017, Postal Savings Bank of China Co., Ltd. (“PSBC” or the “Bank”, Stock Code: 1658.HK) was pleased to announce the results of the Bank and its subsidiary for the six months ended June 30, 2017 (the “Reporting Period”).

In the first half of the year, amid tough and complex economic and financial situation and the challenging reform and development duties, PSBC adhered to the strategic positioning as a large retail bank, adapted to the new norm of economic development, firmly instilled the philosophy of value creation, accelerated the transformation and improved quality and efficiency, and the development trend was favorable.

Management and development grew steadily and market competitiveness increased continuously. As of the end of June 2017, the Bank’s total assets reached RMB8.54 trillion, representing an increase of 3.37% as compared to the end of the previous year; total deposit balance was RMB7.81 trillion, up by 7.14% as compared to the end of the previous year; total loans reached RMB3.34 trillion, up by 10.95% as compared to the end of the previous year. The Bank’s operating income was RMB105,973 million, up by 13.60% year-on-year; net profits reached RMB26,592 million, up by 14.54% year-on-year. Cost-to-income ratio continued to decline, and return on average assets increased on a year-on-year basis. Bank strengthened refined management, significantly improved the fund pricing power, and the average cost% of total interest-bearing liabilities was only 1.46%, down by 22 BP (base point) as compared to the end of the previous year. Net interest margin was 2.31% and net interest spread was 2.38%, representing a YOY increase of 1 BP and 4 BP respectively.

Business structure was optimized, generating notable success in serving real economy. Focusing on providing services to Sannong, the Bank provided more financial support for agricultural supply-side reform, promoted loans to new agriculture operation entities and the pilot program of loans secured against the “two rights” (rights of contracted rural land and farmers’ housing property rights) so as to provide quality financial services to the vast rural areas. As of the end of the June 2017, the balance of agriculture-related loans was RMB1.01 trillion, up by RMB88, 802 million or 9.68% as compared to the end of the previous year. Committed to serving SMEs, the Bank used big data technology as an important tool to vigorously promote the innovation of financial products for small business. Balance of corporate loans to small enterprises amounted to RMB173,931 million. The Bank also actively supported national major projects, continued to increase credit extension to various sectors such as transportation, electricity and urban infrastructure, etc., actively established the presence in industries such as new energy, medical care and high-end equipment manufacture, and promoted the implementation of national strategies as well as transformation and upgrading of economic structure. The balance of the corporate loans amounted to RMB1.27 trillion, up by RMB189,168 million or 17.53% as compared to the end of the previous year.

Adhering to focus of retail bank, and continuously promoting customer services ability. The number of individual customers of the Bank maintains a steady growth trend. At the end of June 2017, the number of the Bank’s personal customers reached 539 million. Capabilities of high-end customers services and customer value mining are also enhanced, that achieved 24.60 million VIP customers, up by 12.10% as compared to the end of the previous year. Total personal loans amounted to RMB1,792,039 million, representing an increase of 13.26% as compared to the end of the previous year. Among them, the Bank caught up with the historical window of transformation from economic growth to the consumer-driven style, to develop consumer finance. It achieved personal consumer loans of 1340 billion, including credit card overdrafts, increased by 16.08% as compared to the end of the previous year and accounted 40.10% of total loans.

In the first half of 2017, the number of e-banking channel users and the transaction substitution rate continued to grow rapidly. The Bank recorded over 200 million electronic banking customers, including 149 million mobile banking customers, 167 million personal e-banking customers, and the substitution ratio of electronic banking transactions was increased to 84.28%.

Transformation and upgrading maintained a good momentum, releasing new development potential. The intermediary businesses developed rapidly. The number of the Bank’s credit cards increased by 3.34 million, or 81.08% year-on-year, and the number of credit cards in circulation amounted to 15 million. While reinforcing the outlet advantage, the Bank made full use of new technologies like big data, cloud computing, blockchain to blaze new trails in Fintech innovation and launched such products as the new generation mobile banking, UnionPay QR code payment and QuickPass, etc. The Bank also promoted the “Internet + Finance + Industry” mode to build a PSBC titled Internet consumer financial products system, with products including “PSBC Prime Loan”, “PSBC Wage Earners Loan” and “PSBC Homebuyers Loan”. Besides, the Bank launched a pilot program of the new generation retail credit factory and standardized the business process and greatly improved the efficiency of retail credit processing through centralized operations and intelligent examination and approval.

Conducted solid and effective internal risk control and kept assets in good quality. The Bank adhered to prudent operation, accorded priority to risk prevention and control, and strengthened overall risk management persistently. Moreover, the Bank continued to improve credit risk management, strengthened credit access control and “three examinations” for loans as well as credit risk monitoring and early warning, and enforced unified credit management and concentration risk management and control to ensure the asset quality is under control. The Bank continued to maintain a strong liquidity management, effectively broadened financing channels, completed the initial issuance of negotiable certificates of deposit (NCDs), and actively prepared the issuance of certificates of deposit (CDs). As a result, the Bank’s liquidity coverage ratio (LCR) reached 135.42%, meeting regulatory requirements. The Bank gradually improved interest rate risk management and established a long-term quota control mechanism for assets with fixed interest rate. Besides, they highly emphasized internal control and compliance as well as case prevention and control, identified potential risks ahead of time and provided a solid ground for compliance operation. As of the end of June 2017, the non-performing loan balance of the Bank amounted to RMB27,375 million, and the non-performing loan ratio was 0.82%, down by 0.05 percentage point as compared to the beginning of this year; the allowance coverage ratio was 288.65%, taking the leading position of the industry.

2017 is the first year after the listing of Postal Savings Bank of China, and marks the 10th anniversary of the establishment of PSBC. With a diversified shareholding, the Bank has taken a key step forward in further improving its corporate governance, enhancing its comprehensive competitiveness and growing into a leading international large bank. In the next half of the year, the Bank will carefully implement the guidelines of the National Financial Work Conference, insist on pursuing a stable growth and unswervingly persist in the strategic positioning as a large retail bank. The Bank will also deepen reforms, accelerate transformation, strengthen serving real economy and strictly and comprehensively control risks, to provide customers with better financial services, thereby delivering excellent results to investors.