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Chairman’s Message

The year 2005 is the last year of the period of the tenth Five-Year Plan. Facing increasingly intense banking competition, SPDB, thanks to the support of its shareholders, clients and people of all circles and in the principle of scientific development concept, has firmly grasped opportunities, endeavored to transform management principles and marketing mode, and kept good momentum of continuous and sound development. Business scale has been continuously expanded, asset quality further improved, and its overall strength continues to boost up.

By the end of 2005, the bank’s before-tax profit reached RMB 4.231 billion, up RMB 1.182 billion or 38.77% on a year-on-year basis; after-tax profits, RMB 2.485 billion, up RMB 555 million or 28.78%. Total assets rose to RMB 573.067 billion, a net increase of RMB 117.534 billion or 25.80%. The bank’s outstanding balance of RMB and foreign currency loans stood at RMB 377.22 billion, up RMB 66.318 billion or 27.68%. The total outstanding balance of RMB and foreign currency deposits was RMB 505.576 billion, an increase of RMB 109.605 billion or 27.68%. According to the principle of 5-category classification of loans, the company’s NPL ratio stood at 1.97%, down by 0.48% from the 2.45% at the end of 2004. Loan loss reserves totaled RMB 10.577 billion and reserve coverage of NPL reached 142.16%, the best among the domestic banks.

In the past year, the bank made great effort to push forward the business transformation, deepen system reform and strengthen risk management, etc. In terms of management principles, the bank focuses on differentiated customer services so as to provide them with value added. In terms of business structure, corporate banking, personal banking as well as treasury business shall develop hand in hand, and great effort are made to pay equal attention to scale and quality, risk and profit, business-line management and area management. In terms of marketing, the mode is transformed into product marketing, technology marketing as well as brand marketing. Product marketing turns out to be the highlight of marketing tasks in 2005. Various innovative products and service functions, such as internet banking, Leisure Banking—consolidated consumer banking solution and SDPB Wealth Plus—integrated corporate banking solution, are intensely promoted to the different market segments. The year 2005 is also a year of deepening and pushing forward flat and matrix management organizational restructuring, which is carried out orderly from the headquarter to branches. The management functions of specialization, standardization and vertical integration has been deepened in business development system. And in IT support systems, the feature of intensification, standardization and low cost has initially emerged. In 2005, the company continues to carry out and finalize the concept of overall risk management, changing from focusing on credit risk to monitoring all risks including credit risk, operational risk and market risk, from risk controlled by risk management department to risk controlled by all business lines and posts, so as to realize an all-around risk management which monitors all processes and involves all employees. At the same time, the bank should refer to the internal control experience of relatively good commercial banks in the world and actively explore the system framework of internal control system construction.

In the following years, the financial reform will be further deepened in China. And to improve the marketization degree will be at the top of the agenda. Meanwhile, some breakthroughs will be undertaken in the reforms of money market, foreign exchange market and capital market. Facing both great opportunities and real challenges, the company will stick to scientific development concept and international management principles of modern commercial banks. The bank will push forward mechanism and system reform as well as management innovation, continuously improve corporate governance structure, establish right values ,speed up the transformation of business pattern and profit mode, enhance its ROA & ROE, maintain sound asset quality, continuously build up a strong brand, upgrade the core competence towards the financial globalization, and build SPDB into a leading commercial bank according to international standards.

JIN Yun
Chairman of the Board of Directors
Shanghai Pudong Development Bank