October 26 -- Shenzhen Development Bank (SDB) (000001.SZ) recorded a 62.93 percent year-on-year increase in net profit for the first three quarters to 7.69 billion yuan, with basic earnings per share of 2.01 yuan, up 37.67 percent, reports yicai.com, citing a company filing.

The weighted average return on net assets (not annualized) fell 1.33 percentage points year-on-year to 17.64 percent.

This was the first financial report for SDB since it acquired a 90.75 percent stake in Ping An Bank in July following a merger with Ping An Insurance (Group) Company of China (601318,2318.HK). SDB consolidated Ping An Bank's earnings into its third quarter report.

Shenzhen Development Bank recorded a 73.95 percent year-on-year rise in third quarter net profit to 2.96 billion yuan, with basic earnings per share of 0.65 yuan, up 32.65 percent. The weighted average return on net assets (not annualized) fell 1.19 percentage points year-on-year to 4.3 percent.

For the first three quarters, the bank recorded net interest margin of 2.56 percent.

Through the end of September, SDB’s capital adequacy was 11.46 percent, while core capital adequacy ratio hit 8.38 percent.

The provision coverage ratio hit 365.77 percent, while the non-performing loan (NPL) ratio was 0.43 percent as of end September.

Shenzhen Development Bank had total assets of 1.2 trillion yuan as of end September, an increase of 66 percent from the end of 2010.

Excluding the results of Ping An Bank, SBD posted a 50.89 percent year-on-year rise in net profit to 7.12 billion yuan for the first three quarters, with net interest margin of 2.58 percent and provision coverage ratio of 382.77 percent. The NPL ratio would have been 0.46 percent as of end September, down slightly from 0.58 percent at the beginning of 2011.

According to SDB president Richard Jackson, the implementation of restrictive monetary policies, including hikes in the interest rates and reserve ratios, will result in an increase in the NPL ratio.

Excluding Ping An Bank, SDB reported net interest margin of 2.58 percent for the first three quarters, compared to the 2.63 percent recorded in the first half of 2011.

At a meeting with investors held in August, senior bank executives had highlighted the possibility of a narrowing in the net interest margin in the later part of 2011, and said the bank expects both the rate of return on loans and the cost of deposits to rise at the same time.

Ping An Bank posted third quarter net profit of 591 million yuan, while total assets were up 14 percent from the beginning of 2011 to 290.4 billion yuan. The NPL ratio was 0.34 percent.

Shares of Shenzhen Development Bank were up 0.78 percent to trade at 16.77 yuan per share at 10:13 today.