The severe economic environment in 2008 has ignited the systematic risks within the entire financial system. With the impact of the financial crisis on the economic entities manifested furthermore, enterprises, especially small and medium enterprises, which are taking heavy losses. The continuing fall of economies outside China also cause hyper-competitions in export trade. A lot of export-oriented companies are facing difficulties. For SMEs, situation was ever grimmer. The complexity of the economic environment had brought a lot of uncertainties to their development and sustainability.
As a bank committed to serve SMEs, United Commercial Bank (China) Limited focuses on building long-term, trustworthy relations with its customers, pays attentions to the interests and needs of its customers, and has taken its role as the solid financial supporter of small and medium enterprises. In 2008, SMEs were facing unprecedented challenges. Orders were cut. Inventories increased. Income receivable returned slower. And even their survival had become a problem. But at that moment, we shared the same boat with many SMEs and tried our best to ease of the ill influence brought by the financial crisis on them. In 2008, we did not reduce loans, adversely we increase the share volume of our loan portfolio by 27% compared with Year 2007.
Via the influence of financial media, we try to fully utilize our strength in capital and information and take different measures to help SME customers develop healthily. For those in better conditions, we provide more finance support; for those with potentials, we provide loans and cooperate with the local government to retransform them into high-end manufacturers; for those with problems, we help them restructure themselves, so in this way, resources can be allocated in a reasonable way.
In 2008, when the world economy was hit hardly by the financial crisis, by taking timely measures such as adjusting our business strategies, improving internal control system and more strictly implementing cost control, and thanks to the efforts of our staff, we managed to make progress in all our businesses and achieved expected results. Compared with last year, our asset volume increased by 33%, deposit increased by 66%. And our share profit reached 4.55 million USD. While developing our businesses, we carefully evaluated the negative impact caused by different risks and calculated asset devaluation reserve accordingly.
In early 2008, with the approval of China Banking Regulatory Committee, we were granted the permission to increase the business scope of our RMB services, which made us capable of providing RMB financing services to domestic enterprises. It significantly helped us develop our market of Chinese corporate customers, enabled us to attract more deposit, and effectively expand our business to cover the Middle West areas. As of the end of 2008, the assets of our RMB businesses had increased by 63.86%, and the contribution of our RMB services to total profit has increased by 284.81%.
In 2008, with the capital injected by the parent bank and the financial support from within the banking group, our capital adequacy rate had reached 41.03%. At the same time, to support our SME strategy, international financial institutes and organizations like DEG of Germany, Asian Development Bank and International Financial Corp. had offered long-term loan to us in various forms. Their support gave us a steady and reliable resource of working capital, effectively met the demands from our increasing loan portfolios, heightened our role in the Chinese market and most importantly, helped us support the development of SMEs. Sufficient capital increased our liquidity ratio to 307.83%, much higher than 75%, which is mandated by regulator. This advantage has laid a solid ground for our bank to prevent all kinds of risks and enjoy a stable and healthy development.
We are actively expanding the coverage of our SME banking services from areas like Jiangsu, Zhejiang, and Shanghai to other east coast areas and areas around the Bohai Sea, then into areas like Shandong and Guangdong. Western provinces like Sichuan have also been considered. We plan to apply for a branch in Jinan in 2009. And the preparation work is now at final stage. Our clientele in Shandong area has already reached a certain scale (25% of our total asset) and is increasing fast. The opening of our Jinan branch will further increase our presence in Shandong area, which would become a center to support our expansion in northeastern provinces. Furthermore, the plan to open a shanghai sub-branch is well underway. It will become an important window for us to start retail business.
Last but not least, we shall uphold our business values centered on risk management, further implement internal control, improve asset quality, and under the premises of manageable risks, actively seek to open new business front and provide better more effective for our customers. Rainbow only appears after thunderstorm. The efforts to stabilize economy by the Chinese government will be successful. We are confident about the future and willing to take hands of our customers to achieve development for both the enterprises and the bank.
President: T.K Ho
