Exploring SPD Bank's "Digital Intelligence" Business Strategy
In the challenging year of 2024, Shanghai Pudong Development Bank (SPD Bank) has delivered an impressive semi-annual business performance with its steadfast strategy and stable management, allowing many funds to see its true value.
Recently, SPD Bank presented its 2024 "mid-term exam" results, achieving a revenue of 88.248 billion yuan in the first half of the year, with a net profit of 27.324 billion yuan, a year-on-year increase of 15.71%. The non-performing loan ratio and the provision coverage ratio are also in a good state.
Business strategy is a key factor in determining success or failure. It is reported that the "digital intelligence" strategy that SPD Bank is fully promoting is the key to its outstanding performance. Its focus on the "five major tracks" aligns well with the five major financial "articles". At the same time, the construction of Shanghai's "five centers" is also a key point mentioned by SPD Bank.
Business performance is stable and improving in quality
On August 19, SPD Bank released its performance report for the first half of 2024. As of the end of June this year, SPD Bank achieved a revenue of 88.248 billion yuan. Excluding the one-time impact of the sale of the equity of Shanghai Investment Morgan last year, the operating income increased by 1.259 billion yuan year-on-year, a growth of 1.45%. The net profit attributable to the parent company in the same period was 26.988 billion yuan, a year-on-year increase of 16.64%.
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Asset scale has reached a new level. As of the end of June this year, the total assets of SPD Bank were 9.25 trillion yuan, an increase of 2.74% compared to the end of last year. Among them, the total loan amount was 5.31 trillion yuan, an increase of 5.92% compared to the end of last year. The total liability amount was 8.5 trillion yuan, an increase of 2.73% compared to the end of last year.
At the same time, asset quality is also improving. The semi-annual report shows that as of the end of June this year, the non-performing loan ratio of SPD Bank was 1.41%, a decrease of 0.07 percentage points compared to the end of 2023, and the non-performing loan ratio has been declining for four consecutive years. The provision coverage ratio is 175.37%, an increase of 2.53 percentage points compared to the end of the first quarter. The provision coverage ratio has been rising for three consecutive years.
The decrease in the non-performing loan ratio and the increase in the provision coverage ratio indicate the increase in the "gold content" of net profit.
The clearer the knowledge, the more resolute the action; the more resolute the action, the clearer the knowledge. SPD Bank, which is in its prime, has explored a path suitable for its own development according to local conditions.
In the first half of this year, SPD Bank focused on the "five major tracks" of technology finance, supply chain finance, inclusive finance, cross-border finance, and treasury finance, and achieved significant results.Supporting the construction of Shanghai's "five centers" is also a key point mentioned by Shanghai Pudong Development Bank (SPDB). From the data perspective, SPDB ranks in the top three in the market for over 30 financial market businesses; it has implemented the first-ever Interest Rate Swap IMM contract transaction in the market; the "e-Peer" registered institutional customer base has exceeded 2,900; "PuYin Risk Aversion" has served approximately 24,000 customers in total; and "PuYin Custody" has a custody scale of 17.95 trillion yuan.
At the same time, "risk prevention" remains one of the main tasks for banks in 2024, and the continuous upgrade of SPDB's risk control capabilities is also due to the "digital intelligence" strategy.
As Xie Wei, Deputy Secretary of the Party Committee, Vice President, and Secretary of the Board of Directors of SPDB, stated at the performance briefing, SPDB uses "digital intelligence" methods to manage risks from the system, model, tools, and operations, balancing "volume, price, risk, and profit," establishing a risk management funnel, and promoting the continuous improvement of asset quality.
The "actionist" of digital intelligence
Behind the remarkable performance in the five major tracks, the "digital intelligence" strategy of SPDB is indispensable.
It is understood that since the fourth quarter of 2023, SPDB has been fully promoting the implementation of the digital intelligence strategy, creating a second growth curve, and empowering the "five major tracks."
Specifically, in technology finance, SPDB has deepened the comprehensive financial service model of "equity, debt, loan, insurance, lease, incubation, matchmaking, and alliance," with products such as "PuChuang Loan," "PuTou Loan," "PuXin Loan," "PuYan Loan," and "PuKe M&A Loan" being implemented to empower, and has built the "Tech Radar" intelligent platform to efficiently identify potential technology companies. As of the end of June, it has served more than 64,000 technology companies, with technology finance loan balances exceeding 550 billion yuan.
In the supply chain track, SPDB has accelerated the construction of the "PuLianTong" digital intelligence supply chain system by applying blockchain, big data, artificial intelligence, and other technologies, launching full-process online products such as "PuLianTong," "PuCheTong," and "PuTieTong," and building the "PuLian e-Finance" platform to solve financing difficulties for small and medium-sized enterprises at the end of the supply chain. It has served a total of 2,781 supply chain core customers and nearly 23,000 upstream and downstream supply chain customers.
In the inclusive finance track, SPDB has created an enterprise-level and system-level digital inclusive finance ecosystem, continuously strengthening the construction of inclusive finance systems and mechanisms, enhancing the digital application foundation, establishing characteristic management institutions for inclusive finance, and launching "4+N+X" inclusive finance characteristic products. As of the end of June, the balance of inclusive finance loans under the two-increasing口径 was 449.8 billion yuan, and the number of small and micro loan customers under the two-increasing口径 exceeded 320,000.
In the cross-border finance track, by integrating the advantages of various licensed institutions within the group and cross-border transaction service platforms, a "6+X" cross-border financial service system has been launched. The number of active cross-border customers exceeds 30,000, the volume of cross-border business exceeds 2 trillion yuan, and the balance of cross-border RMB financing is 128.6 billion yuan, a 125% increase from the end of the previous year.On the track of treasury and finance, adhering to the "one body and two wings" positioning of "serving customers as the body, and wealth management and asset management as the wings", we create value for customers through "retail integration, public-private interaction, group collaboration, and domestic and international linkage", as well as "platformization, digitalization, ecologicalization, and specialization". We serve nearly 163 million individual customers (including credit cards).
Prudent operation supports valuation enhancement
Prudent operation is the best support for stock prices.
The performance of Shanghai Pudong Development Bank (SPD Bank) is also reflected in the secondary market. The day after the release of the semi-annual report, the highest price of SPD Bank reached 9.03 yuan per share during the trading day, setting a new high for a year.
Looking at the long term, the banking sector has become a popular target for funds in the first half of the year. Data shows that the overall increase of the banking sector has exceeded 30% since the beginning of the year.
So far this year, the stock price of SPD Bank has increased by nearly 40%, ranking at the forefront among the 42 listed banks on the A-share market.
The strategy is effective, the operation is appropriate, and the performance is steadily improving, which has also made many securities firms cheer for it. Huafu Securities clearly stated in the research report that "the operating quality and efficiency of SPD Bank have been improved, and the performance elasticity has been released". Zhongtai Securities maintained its "buy" rating. Zheshang Securities pointed out that the scale expansion of SPD Bank has accelerated, the interest rate spread has increased quarter by quarter, the non-performing assets have achieved a double decrease, and the operating momentum is better than expected.