Net profit surges 46.2% YOY. The number of decisions and contracts signed for ship operating lease business hit a record high
China Development Bank Financial Leasing Co., Ltd. ( “CDB Leasing” or “the Company”; stock code: 1606.HK) announces its interim results ended June 30, 2021 (the “Reporting Period”).
Results Highlight:
For the six months ended June 30, 2021:
- Total lease financing to lessees amounted to RMB57.1 billion, representing an increase of 12% YOY;
- Net profit reached RMB1.8 billion, representing an increase of 46.2% YOY;
- Total revenue and other income was RMB10.4 billion, representing an increase of 8.6% YOY;
- Total assets reached RMB311.52 billion, representing an increase of 2.7% as compared with that as of the end of last year;
- Return on average equity was 13.33%, representing an increase of 3.5 percentage points as compared with that for the same period of last year;
- Non-performing asset ratio was 0.78%, representing a decrease of 0.02 percentage point compared with that as at the end of last year;
- Continue to maintain high credit ratings, “A1” by Moody’s, “A” by Standard & Poor’s and “A+” by Fitch.
In the first half of 2021, CDB Leasing maintained strategic determination, strengthened responsibility, adhered to new development concepts, steadily promoted high-quality development, and achieved good results in business investment, risk prevention and control, internal management, etc. During the Reporting Period, the Company’s total revenue and other income was RMB10.4 billion, representing an increase of 8.6% YOY; net profit amounted to RMB1.8 billion, representing an increase of 46.2% YOY, primarily due to 1) the growth in total leased assets resulting from the increase in financing to lessees, 2) the substantial year-on-year increase in revenue from ship operating lease business, 3) the decline in the rate of financing cost of US dollars, 4) the year-on-year decrease in impairment losses this year as COVID-19 pandemic was under control in China.
During the Reporting Period, CDB Leasing strengthened the customer-centric business development model to improve the quality and efficiency of business development. The Company deepened its research and analysis system, kept abreast of internal and external changes, sorted out and conducted analysis on factors affecting business operations and development opportunities to improve the foresight and effectiveness of business decisions. Based on the changes in business landscape and the characteristics of customer demand, the Company improved the customer management plans, improved active services, and ensured the implementation of project development. In the first half of 2021, the Company’s leasing investment remained at the forefront of the industry, and its customer-centric model continued to yield good results.
Besides, CDB Leasing sped up the improvement of business development, increased the coverage of key strategic regions, and effectively served strategic emerging industries, green development, inclusive finance and other key fields. In the first half of 2021, the Company’s business investment in key strategic regions such as the Yangtze River Economic Belt and Guangdong-Hong Kong-Macao Greater Bay Area increased by 16.7% YOY, accounting for 84.0% of its total investment. Its investment in strategic emerging industries grew by 15.8% YOY. CDB Leasing leveraged its advantages in leasing products to support green development and pollution prevention and help implement “carbon peak and neutrality” initiatives. As a result, its investment in the new energy sector increased by 52.6% YOY. The Company also followed the guidance of national policies to promote inclusive financial services. Its investment in construction machinery and commercial vehicles increased by 40.0% YOY, with more than 34,000 units of new equipment for lease being added. In addition, the Company accelerated the application of fintech, developed self-risk control models, built an intelligent management system, and promoted the transformation of the vehicle business to the passenger car terminal retail business to make new development in passenger car business.
In terms of the aviation business, CDB Leasing deeply analyzed the global air cargo market, and took the lead in promoting passenger-to-cargo conversions in the industry, thus reducing the pressure on the depreciation of old wide-body aircraft. Due to obvious economies of scale and strength, the Company has been able to leverage its aircraft leasing platform to work with existing and new airline customers and other industry stakeholders to support the sector’s recovery, while strengthening the platform’s capabilities and financial position to enable further growth and ensure sufficient liquidity for the future. During the Reporting Period, the Company signed new lease transactions for a total of 31 aircraft with 11 customers, sold 4 aircraft, added 3 new lessees and acquired 14 aircraft on operating lease. As at June 30, 2021, the total assets of the aircraft leasing segment amounted to RMB 81,648.3 million; total revenue and other income from the segment recorded RMB3,656.8 million.
As for Infrastructure leasing business, relying on China Development Bank’s resources advantages in the infrastructure sector, the Company focused on key national strategic development regions such as the Yangtze River Economic Belt, Guangdong-Hong Kong-Macao Greater Bay Area and Beijing-Tianjin-Hebei region, implemented arrangements for “carbon peak and neutrality”, stepped up support in the area of green and low carbon circular economy, facilitated the implementation of the domestic demand expansion strategy, and supported the development of green finance and the real economy, resulting in additional lease financing to lessees of RMB31,742.9 million during the Reporting Period, representing an increase of 9.5% YOY. As at June 30, 2021, the total assets of the infrastructure leasing segment amounted to RMB152,638.5 million, representing an increase of 12.2% compared with that as at the end of last year; total revenue and other income from the segment recorded RMB3,748.2 million, representing an increase of 19.4% YOY.
The profit contribution of ship leasing business increased substantially year on year. The Company further boosted the overall increase in new and second-hand bulk carriers to promote “domestic shipbuilding” and support the development of domestic shipbuilding enterprises based on the high-quality development concept. The remarkable profit contribution in the first half of the year proved how forward-looking and scientific the Company was to strategically develop ship operating lease business, and served as an affirmation of its enhanced professional capabilities in ship leasing business. On the one hand, the Company seized opportunities for cooperation with top clients and solidly developed ship finance leasing business; on the other hand, the Company strengthened industry research with a focus on the impact of COVID-19 pandemic on the development trends of the shipping market, and stepped up the efforts to develop ship operating lease business. During the Reporting Period, the number of decisions and contracts signed for the Company’s ship operating lease business reached a record high. The Company successfully delivered 36 ships, including 13 newly built ships and 23 second-hand ships. As at June 30, 2021, the total assets of ship leasing segment amounted to RMB37,433.7 million, representing an increase of 9.5% as compared with that as at the end of last year; total revenue and other income from the segment reached RMB1,991.3 million, representing an increase of 122.2% YOY.
2021 marks the first year of the 14th Five-Year Plan for CDB Leasing’s inclusive finance business. The Company, on the one hand, uphold the “market-oriented” and “professional” development concept, proactively improve the ability to serve the real economy with inclusive finance, and provide efficient and convenient financial leasing services to small, medium and micro customers; on the other hand, accelerate the stable development of the Company’s inclusive finance business, build an inclusive finance system with “controllable risks, a considerable scale, strong professionalism, a prominent brand, and excellent assets”, and vigorously promote the shift of inclusive finance business from traditional sectors to digital fields, so as to create another growth driver for the Company. During the Reporting Period, CDB Leasing further refined the business process management and constantly optimized and improved the business system, thus laying a solid foundation for the digital transformation of inclusive finance business. As at June 30, 2021, the total assets of the Company’s inclusive finance business amounted to RMB29,997.6 million, representing an increase of 19.4% compared with that as at the end of last year; total revenue and other income from the segment reached RMB717.0 million, representing an increase of or 14.9% YOY.
Improve overall management of assets and liabilities; enhance the compliance and internal control system
During the Reporting Period, CDB Leasing has improved the overall management of assets and liabilities, and established a regular mechanism to control interest rate and exchange rate risks. The Company accelerated the issuance of financial bonds and revived existing assets through multiple channels, as well as formulated the Company’s capital replenishment plan and continuously consolidated the foundation for business development. In the meantime, the Company strengthened risk control in key areas, enhanced the comprehensive system, and enhanced risk control capabilities. Specifically, the Company developed a list of customers and projects subject to risk warning and monitored it, accelerated risk mitigation for key projects, and maintained the overall stability of asset quality. Additionally, the Company insist on compliance principles to improve the compliance and internal control system.
Keep promoting IT system construction and consolidating information security foundation
During the Reporting Period, CDB Leasing continued to promote information system construction and data governance to consolidate the Company’s information security foundation. On another hand, the Company developed intelligent data platform, core leasing business system, passenger car system and other relevant systems to support business development; as well as implemented regulatory requirements, reinforced data governance, thoroughly searched for deficiencies in data standards, and strengthened information and data security management; and further improved the Company’s IT infrastructure and network security system.
According to the announcement, looking forward, CDB Leasing will balance the development relationship among scale, quality and efficiency, strengthen market analysis and judgment, track customer needs, seize business development opportunities, actively promote business innovation, and constantly enhance internal operation management. Meanwhile, it will continue to strengthen the risk and compliance management system, consolidate the business operation foundation, and pave the way for the Company’s development during the 14th Five-Year Plan period.