NewsSZDB pre-announced preliminary FY09 NPAT of Rmb 5.0bn, up 714% yoy(off a low base in 2008, due to one-off NPL write-off of Rmb 9.4bn). NPATand revenue were in line with our expectation but were 6% higher/3%lower than Reuters consensus estimates, respectively. FY09 total assetsand deposit growth were 24% and 26% yoy, respectively, in line with ourexpectations.
AnalysisKey positives: 1) healthy 8% qoq growth in net interest income vs. 6% qoqasset growth implies continued NIM expansion in 4Q09, 2) solid 10% qoqrevenue growth could also imply strong fee income in 4Q09, and 3) NPLformation remains low at 11 bps annualized in 4Q09 (we assume no writeoffin 4Q09 given low level of loans in the loss category) and the bankfurther raised its NPL coverage ratio to 160% from 153% at end of 3Q09,and 4) special mention loan balance and ratio declined 19% and 9bp qoq,respectively, to Rmb 1.4bn and 0.4%.
Key negatives: Tier 1/total CAR were 5.50%/8.90% at the end of 2009,slightly lower than our estimates of 5.76%/9.16%; which may be partly dueto higher than expected loan growth (FY09 total loans were up 27% yoy,and 2% higher than our estimate; normal loans were up 30%, and 3.2%higher than our estimate).
ImplicationsWe view SZDB’s results as largely in-line.
We are Not Rated on SZDB.