President and CEO Ma Weihua
The Year 2004 has witnessed excellent performance for China Merchants Bank. During the past year, facing the ever-changing business environment with the accelerated domestic financial reforms and fierce competition, the staff of the Bank, by sticking to the requirements of the Board of Directors, strictly implementing the strategic guideline of reaching the balanced growth of profitability, quality and scale, fulfilled all the targets set out at the beginning of Year 2004 to the satisfaction of the shareholders and the public.
By the end of 2004, the total assets of the Bank reached Rmb602.77 billion, up 19.62% over the previous year; the Bank's total deposits were Rmb511.16 billion, increased by 27.2%; the Bank's total loans balance in RMB was Rmb373.82 billion, increased by 22.5%; net profit realized was Rmb3.14billion, increased by 41%; and NPL ratio was reduced by 0.28% as compared to that of the end of last year.
In 2004, we saw four encouraging changes in respect of the business development. First, the overall profitability of the Bank was improved substantially. Compared with the previous year, the return on assets increased by 0.22% whereas the income to cost ratio decreased by 3.7%. Second, the Bank embarked on the business structure adjustment smoothly, and the annual fee and commission income totaled Rmb1.59 billion, up 42.07%. Total fee and commission income accounted for 7.07% of the total operating revenue, a year-on-year increase of 0.18 percentage point, the consumer lending accounted for 14.57% of the Bank's total loans, up 3.32% over the beginning of the year. Third, the stability of the Bank's liabilities was enhanced remarkably and the annualized average daily deposit increased by Rmb100.6 billion, surged up by Rmb15.3 billion over the same period of the previous year. Fourth, the asset quality remains steady. At the end of the year, the NPL ratio further decreased both by overdue and by five-tier loan classification standards.
In 2004, we strictly implemented the government's macroeconomic policies, adhered to the principle of being selective and flexible in choosing projects and customers, proactively adjusted the client structure and effectively reduced credit risks. Meanwhile, we further strengthened the precautionary measures against market risks and operational risks. Throughout the last year, there was no major cases involving RMB1 million or more had occurred in the Bank, 100% of the external fraudulent cases were resolved before any harms were done to the Bank.
In 2004, we further segmented our customer base, enhanced product innovations, and successfully launched 'All-in-One' gold card, 'Sunflower' card and the 'Wealth Management Account' which are regarded as leading 3G personal banking products in China market. Driven by innovation, the Bank has again achieved excellent progress in marketing. With newly issued 'All-in-one' cards over 5.6 million, the accumulated issuance of the 'All-in-one' card exceeded 33 million. At the same time, 2.22 million credit cards were issued in the year and average consumption volume per card ranked the first in China. In the bidding for the General Electricity's US Dollar cash pooling project, the Bank became the winner out of over 10 foreign and domestic banks after the intensified competition. The winning of the tender aroused wide recognition and praise from inside and outside the banking sector.
In 2004, through more than two years' hard working, the development and testing of our new core business system was completed, and was successfully launched in Dongguan and Hangzhou Branches. By co-operating with the international leading companies, we achieved preliminary results in developing the asset and liability management system, internal fund transfer pricing system, and internal credit rating system. SAP finance and human resources management systems were also successfully launched bank-wide. With all these systems being developed and implemented, the Bank has greatly improved its advantage in technology and management skills.
In 2004, with the understanding and supports from all parties, we successfully issued Rmb3.5 billion subordinated debts and Rmb6.5 billion convertible bonds, and became the fist bank that met the Capital Adequacy Ratio requirements of the regulator. We further expanded our network by opening three new branches and one non-local sub-branch in year 2004. In the evaluation by renowned organizations and media, the Bank was granted a series of recognition such as 'China's most respectable enterprise' and 'Top Ten Listed Companies in China', which further enhanced the brand, recognition, and CI of the Bank.
The above-mentioned achievements would not have been made without the hard working of our staff and the great supports from our clients, investors and the whole society. I hereby would like to, on behalf of the management of China Merchants Bank, express my sincere thanks to all the friends who have been consistently caring and supporting the development of China Merchants Bank.
In 2005, domestic and foreign situation not only provides us valuable opportunity for development but also brings us unprecedented challenges. We will continuously stick to our strategic guideline of reaching the balanced development of profitability, quality and scale, firmly move forward with our management internationalization progress. In addition, adhere to the requirements of Capital Adequacy Ratio and interest rate liberalization, we will consistently step up the strategic adjustment of structures of asset, liability, customer and income, and further increase the proportion of capital-saving business and non-interest income, hence deliver a good return to the shareholders and the society.