Shenzhen Development Bank Co, 17 percent-owned by US private-equity firm Newbridge Capital Inc, said that its 2008 net profit fell 77 percent because of a significant provision for bad loans and write-offs.
Net profit for the year was 614 million yuan (US$89.8 million), down from 2.65 billion yuan a year earlier, while net interest income increased 31percent to 12.6 billion yuan.
The medium-size bank said it set aside an additional 5.6 billion yuan in the fourth quarter to cover loans that are likely to turn sour, and wrote off 9.4 billion yuan of bad loans in accordance with a new regulatory requirement.
After the write-offs, the bank's nonperforming-loan ratio dropped to 0.68 percent at the end of last year from 5.64 percent a year earlier, and its credit-provision ratio increased to 105.14 percent from 48.28 percent.
China's banking regulator late last year ordered banks that have operational risks to set aside credit provisions equivalent to at least 150 percent of their bad loans, on concerns that a loose monetary policy may have led banks to be less stringent in their lending practices.
The bank's capital-adequacy ratio was 8.58 percent at the end of last year, below the 10 percent prerequisite for Chinese banks that want to open new outlets or conduct mergers and acquisitions.
The lender has proposed to sell up to 28 billion yuan of bonds to boost its capital base.
By People's Daily Online