China Construction Bank 2024 Interim Results(English Version)

Welcome to CCB's 2024 interim results press conference. Thank you for your continued care, trust, and support. In October 2005, CCB was listed on the Hong Kong Stock Exchange. I was fortunate to be a member of the IPO team, and the memory of that historic moment remains vivid. Over the past 19 years, our achievements have been witnessed by all of you. I'm happy to report our first-half results and next steps. Since the beginning of the year, CCB has adhered to the guidance of the 20th National Congress and implemented the decisions of the central government and State Council. Our development quality has continued to improve with strong overall performance. At the end of June, total assets reached 40.29 trillion yuan, up 5.14% from year-end. Total liabilities were 37.04 trillion yuan, up 5.37%. Net profit was 165 billion yuan with an NPL ratio of 1.35%, down 0.02 percentage points. Net interest margin was 1.54%, return on equity 10.82%, capital adequacy ratio 19.5%, and cost-to-income ratio 24.15%. These figures lead the industry and lay a solid foundation for sustainable high-quality development. First, we focused on serving the real economy. Loans to high-tech companies reached 1.8 trillion yuan, up 12.31%. Green finance loans reached 4.6 trillion yuan, up 14.93%. In inclusive finance, we maintain our position as the largest financial institution by market supply with 3.42 million customers. In pension finance, we're building an integrated service system. For the digital economy, we increased support for core digital industries. Cross-border RMB settlement volume grew 36% year-on-year, and London RMB clearing bank cumulative volume exceeded 100 trillion yuan. Second, we focused on serving customers. In corporate finance, we have 11.354 million customers and 16 million RMB settlement accounts. In personal finance, we serve 762 million individual customers managing financial assets exceeding 19.74 trillion yuan. Total asset management reached 5.2 trillion yuan, and assets under custody exceeded 23 trillion yuan. Third, we pursued high-quality development. We accelerated growth in core areas and increased support for strategic emerging industries, manufacturing, inclusive finance, and green finance. Operating expenses decreased by 1.67% year-on-year. Fourth, we focused on lean management. We built a self-reliant digital technology innovation system, increased AI application, and expanded intensive operations to 308 items. Our MSCI ESG rating is double-A, ranking among the top major banks. Fifth, we maintained bottom-line thinking in risk management. The NPL ratio decreased steadily with a coverage ratio of 238.75%, indicating strong asset quality and risk resilience. In the second half of the year, we will focus on high-quality development, serving the real economy, supporting the development of new productive forces, and promoting five major actions. We will optimize subsidiary and overseas management, strengthen technology resource allocation, and ensure stable asset quality. This year marks the 75th anniversary of the PRC and the 70th anniversary of CCB. We will firmly maintain confidence and work diligently to create better value for our shareholders and stakeholders. Thank you.

Thank you, Ms. Li, for your care and support to CCB. In the first half of this year, we seriously implemented the decisions of the central government and State Council, building a solid foundation for the financial industry. We emphasized quantitative and qualitative development. Overall, our total assets and liabilities developed steadily with stable performance. Our core indicators — ROA, ROE, capital adequacy ratio, cost-to-income ratio, and net interest margin — all maintained stable development and leading positions in the industry. To ensure net interest margin stability, we optimized business structure and improved product and maturity structures through five structural optimizations. We adjusted the asset mix, reducing low-return assets and increasing high-quality ones by 1.5%, now comprising 88% of total assets. We provided differentiated loans with improved risk pricing competitiveness. Our RMB lending rate leads the industry. We also optimized maturity structure and controlled long-term savings ratios. The savings interest rate decreased to around 1.72%, down 5 basis points, returning to 2022 levels. Personal savings rates dropped 12 basis points, the lowest since 2009. For income structure transformation, non-interest income accounted for 21% of total income, up 1.4 percentage points. Fee income maintained a leading industry position at 62.7 billion yuan. Operating expenses decreased by 1.7% year-on-year. Corporate accounts exceeded 11 million and inclusive finance accounts reached 342 million. Our NPL ratio is 1.35%, reduced from the previous year, with all risks under control. Looking ahead, the macro economy is improving with growing opportunities. We will continue lean management, enhance risk management systems, and serve customers with a proactive mindset to push forward high-quality development. Thank you.

Thank you for the question. Since the beginning of the year, we've resolutely implemented regulatory instructions and achieved stable credit growth supporting the real economy. In the first half, loans and advances increased by 1.5 trillion yuan, up 1.66%, higher than the industry average. We continue to consolidate our leading position in loans. Personal loans, especially mortgages, consumer loans, and credit loans, achieved market-leading levels in both interest rates and balances. Inclusive finance loans also maintained a leading market position. Corporate loans increased rapidly with key areas growing above average. Green loans reached a balance of 4.4 trillion yuan. Manufacturing loans reached 3 trillion yuan, up 12.8%. Strategic new industries reached 2.72 trillion yuan. We issued 1.8 trillion yuan to tech enterprises, up 23%. We consolidated credit to traditional areas including power generation with double-digit growth. In property, we implemented the financing coordination mechanism and focused on three major areas. New real estate loans remained at the same level as last year. Looking ahead, with favorable macro trends and policy support, we expect increased loan demand. We will tap potential demand, convert pipeline projects into real ones, and maintain good loan investment speed. We'll strengthen personal and retail loans while targeting weak links in the real economy across the five major areas, and continue to optimize our corporate loan structure. Thank you.

Thank you, Ms. Wang. Net interest margin is something many people care about. For the first half, it was 1.54% for CCB, maintaining a leading position in the industry, with a noticeable reduction in Q2. We continued to optimize business structure, product structure, and maturity structure — five structural optimizations in total. First, we adjusted the asset mix, reducing low-return assets and increasing high-return ones. High-return asset ratio increased by 1.4%. We provided differentiated loans with different pricing, improving competitiveness especially in risk pricing. Our RMB lending rate leads the industry. We also optimized maturity structure and controlled long-term savings ratios. We expect the net interest margin may be approaching a new turning point. Regarding policy impacts, there are both positive and negative effects. The LPR reduction of 25 basis points puts some pressure on margins. However, savings rate adjustments help offset this. The February provision ratio reduction of 0.25% improved margins. In July, the one-year and five-year LPR both reduced by 10 basis points, and banks also lowered savings interest rates. These savings adjustments can hedge against LPR reductions' negative impact, so the overall effect on net interest margin is minimal. Going forward, continued savings rate reductions can help improve the savings structure while slowing margin decline. Our bank will continue to optimize the asset-liability ratio, improve structure, and maintain the stability and competitiveness of our net interest margin. Thank you.

In terms of added services, we also help companies contribute to the community. This is a charity-based product as an added value service, and these are the new products under development. Fourthly, we will expand the coverage of annuity. CCB relies on our very unique pension subsidiary and serves our corporate customers. At the same time, we leverage our professional services to expand the coverage of annuity products. We have two enterprises based in technology parks, and we also offer annuity products to migrant workers and expatriates. In the first half, we have an increase in new annuity customers. To the silver economy, we have a platform for shared services, deepening the collaboration with enterprises needing pension services, and we continuously optimize internal management procedures. Elderly care is one of the industries for which we provide priority support, and we also offer special loans for pensioners so we can diversify our economy. The increase of relevant loans is leading the market. We have very diversified needs from the pension market. It shows great potential and is also one of the important drivers to high-quality development for financial institutions. Going forward, we will build a better brand for our pension services and strengthen the system of our whole portfolio of products so we can be a trustworthy professional bank for pension services. In this way, we can contribute to building the pension system with Chinese characteristics. Thank you.

Thank you for your question. So you have two questions about interest income. First, as you mentioned, for the first half of the year, CCB's reduction has been enlarging compared with the previous term. The intermediary income contributed to various factors like the custody of assets and insurance, etc. The income has been decreasing and is also impacted by relevant policy. The whole banking industry faces the same problem. These are the core areas that have been influenced. While the income increase is slowing down, we also noticed that in recent years we have been promoting the businesses and have had some positive results recently. We want to push forward the intermediary business and pursue high-quality development instead of volume development. In terms of customer base, income structure optimization, and management efficiency, we have all seen noticeable results. In the customer base, we have solid business development and a solid foundation. Our settlement accounts exceeded 16 million, and we had a new increase of 900,000 accounts. In recent years, we also laid emphasis on wealth management business, and for the customers of these sectors, the customer base exceeded 4 million with a new increase of around 500,000. For our wealth management, we maintained very stable growth, and transaction activity has also been improved. The customer base is a strong foundation despite some fluctuation of intermediary income. We always say that customers are our core foundation for development. In terms of income structure, in recent years we have been promoting the intermediary business to be light asset and high efficiency. There are also some good results. For the first half of the year, there were two indicators worth your attention. First, our non-interest income share takes up more than 16% of the total income. Compared with our peers, we are leading in terms of credit business, online payment, and custody services. Secondly, we are trying to explore new impetus for intermediary businesses and increase their share. For the first half of the year, management, consuming finance, investment banking, and income from new industries are taking up more than 6% of our total structure. The new impetus is still improving. In terms of lean management, we try to control our cost and explore new growth engines. The results are good for the first half. We also emphasize the merchants—their payment orders are in high volume. We try to differentiate the management of different types of merchants, and the fees and contribution from these merchants are all very noticeable and satisfactory changes. We have new impetus and new transformation direction with effective measures. For the second half prospect, as the economy is stabilizing and on the capital market, we have various government meetings, like the economy work meeting by the central government, which emphasized the internal stability of the capital market. There are some industry opportunities. The central government also mentioned tailor-made development in terms of information technology, AI, and biometrics. We see new opportunities. In terms of consuming finance, there are abundant opportunities, and the issuance of local banks will be accelerated in the second half. We have unique advantages in the consulting business on projects. From our observation in recent months, some of our subsidiaries like the trust, finance management, and asset management companies have development that is better compared with the first half. Overall, we are faced with a more positive and optimistic environment. For your second question about non-interest income, we actually have a new increase of 10.7 billion, thanks to several tools like funds and forex interest returns all seeing positive growth. In terms of cost, we enhanced the control—for example, insurance fees and other costs have seen several reductions, contributing to the increase of non-interest income. Our positive efforts are accumulating, so for the second half of the year, non-interest income will maintain positive momentum. There may be some fluctuations affected by various factors. In recent years, we also enhanced our deployment of investment assets and optimization of financial assets, with better management to further improve the stable development of non-interest income. Thank you.

Thank you for your question. I will answer this. In recent years, CCB has fully implemented the new philosophy of development regarding ESG, and we implement ESG in all our management systems, coordinating social, economic, and ecological benefits. We also aim at long-term sustainable development, which has been acknowledged by the whole society. Our ESG rating is leading among global banks, and we are also leading in sustainable banks in the world. We have several practices to share. First, we stick to Chinese characteristics while combining with global best practice. ESG has a people-centered philosophy, and we also have Chinese cultural elements—while benefiting ourselves, we should also benefit others. We put people at the center and explore our own ESG way. We construct a structure that combines the board of directors, council members, and various committees. We actively enhance ESG communication and education and carry forward Chinese characteristic ESG management, laying a solid foundation for our ESG work. Second, we integrate ESG elements in our operation and risk management systems. We fully utilize ESG elements to prevent risks and play a positive role. We push forward the low-carbon transformation, with over 4.46 trillion in transformative economy financing. We construct a leading corporate customer ESG rating assessment system with automatic assessment covering all branches in terms of low-carbon management. Green outlets and green data centers are promoted, along with paperless operation across the whole bank. We also expand coverage to reach more remote and vulnerable areas, with a loan balance of 3.86 trillion to better guarantee the benefits of financial customers and nurture employees for high-quality sustainable development. Third, in terms of ESG disclosure, we use it as a starting point to leverage whole linear management. ESG has become a very key assessment factor for investors, and our share of institutional investors is very high. We attach high importance to ESG disclosure, using market language and presenting ESG work across several dimensions. We reflect feedback from various regulators and present improvement measures while receiving their acknowledgment. We improve our own sustainable high-quality development, forming a virtuous cycle. The Hong Kong and Shanghai exchanges have also disclosed various regulations on ESG, posting clear and higher requirements for us. In the future, we will fully implement the working spirit of the CPC Congress and central government meetings, leverage the five chapters requirements and various policies, lay a solid foundation of ESG and the carbon emission system, revitalize the rural economy and emerging economy development, further improving our ESG effectiveness in future work. Thank you.