Shanghai Pudong Development Bank Posts Negative Profit Growth in First Quarter

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The Shanghai Pudong Development Bank (SPD Bank) was the only Chinese commercial lender to see negative growth in net profits for the first quarter of 2018.

The latest round of financial reports indicates that China’ 26 A-share banks saw total net profits attributable to parent company of 406.525 billion yuan in the first quarter of 2018, for year-on-year growth of 5.6% and a growth acceleration of 2 percentage points compared to the same period of last year.

The improvement comes following easing revenue and profit growth in the Chinese banking sector on the back of heightened regulatory scrutiny and ongoing financial reforms.

SPD Bank was the salient exception to the overall robust performance of China’s commercial banks since the start of 2018. Its first quarter net profits attributable to parent company were 14.306 billion yuan, for year-on-year growth of -1.09%, and a growth deceleration of 7.72%.

The first quarter marked the third consecutive quarter that the Shanghai-based commercial lender has seen a year-on-year decline in net profits.

The bank has also seen the fastest growth in non-performing loans out of Chinese commercial lenders, with an increase from 21.585 billion yuan as of the end of 2014 to 69.196 billion yuan as of the end of the first quarter, for a rise of 220.57%.

SPD Bank recently met with difficulty as a result of the extension of 77.5 billion yuan in illicit loans to shell companies by its Chengdu branch as part of efforts to conceal non-performing loans, incurring it a fine of 462 million yuan at the start of 2018.

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