Shenzhen Development Bank, which is controlled by United States private equity firm Newbridge Capital, said its first-half net profit surged 117 per cent, thanks to wider loan margins and higher fee revenue. Net profit rose to 1.12 billion yuan for the six months to June, from the revised 518 million yuan a year earlier under international accounting standards, the bank said in a statement to the Shenzhen Stock Exchange yesterday. The lender, in which Newbridge holds a 16.7 per cent stake, expects to embrace more business opportunities after it boosts its capital adequacy ratio above the mandatory minimum 8 per cent from a planned fundraising. Last month, the bank said it would raise up to eight billion yuan through subordinated bonds and another eight billion yuan via hybrid capital bonds. Its current capital adequacy ratio - the measure of a bank's strength - was 3.88 per cent at the end of June, up from 3.71 per cent at the end of last year. The bank had been prohibited by regulators from raising new capital for two years until it finally gained approval from its non-controlling stakeholders in June to go ahead with a revised plan to make all its shares tradable. As part of the share reform programme, it issued 313 million call warrants priced at 19 yuan per share, which it forecast would push core capital adequacy ratio above the 4 per cent regulatory requirement when all are exercised. Net interest income for the Shenzhen-based lender rose 42 per cent, to 4.46 billion yuan, faster than the 14 per cent growth in total lending, of which retail loans, mainly mortgage, grew by 34 per cent. It did not provide the actual amount for total and retail loans nor for net fee revenue, which it said increased by 51 per cent. Its bad loan ratio was reduced to 7 per cent at the end of June, from last year-end's 7.98 per cent, with the total problematic loans down to 14.52 billion from 14.57 billion. Credit ratings agency Fitch Ratings this month gave a D/E rating for the bank, which is one grade above its worst. 'The rating reflects the bank's improving, although still relatively weak, credit profile, including its very thin capitalisation and lower asset quality relative to its peers,' the ratings agency said. Capital exercise The bank plans to raise 16 billion yuan through the issuance of bonds Shenzhen Development Bank's profit for the six months to June 1.12b yuan