China Merchants Bank Co., Ltd.

Dear investors, analysts, good morning. Welcome to China Merchants Bank 2026 Third Quarter Results Announcement. The meeting now begins. I am Xie Yanhua, General Manager of the Office of the Board. CNB on last Friday, October 30th, announced our third quarter results. Today we will present our third quarter operating results. Take your questions and listen to your feedback and suggestions. The meeting is being held via audio webcast. Simultaneous interpretation from Chinese to English will be provided. First, please allow me to introduce attendees today. They are Mr. Peng Jiawen, EVP, CFO, and Secretary of the Board of the Bank, as well as General Managers of the Digital Finance Development Office, Assets and Liabilities Management Department, Financial Accounting Department, General Office of Operate Finance and Retail Finance, Wealth Management Platform Department, and Risk Management Department. We are also joined online by our independent non-executive directors, Mr. Tianhong Qi, Mr. Shi Yongdong, Ms. Li Jian, Mr. Lu Liping, and Mr. Zhang Yong. On behalf of China Merchants Bank, I would like to extend a warm welcome to all of you. I would also like to express our sincere gratitude for our long-term care, support, and investment in China Merchants Bank. The meeting will consist of two sessions. First, Mr. Peng Jiawen will present the highlights of our 2026 third quarter results, which will take about 15 minutes, followed by a Q&A session of approximately 75 minutes. I would now like to give the floor to Mr. Peng for the third quarter results presentation. Dear investors, analysts, good morning. Last Friday, we have released our third quarter report of 2026. Today, I'm joined by general managers of relevant head office departments for this conference. Taking this opportunity, I would like to first thank you for your continued care and support to China Merchants Bank. I will now use 15 minutes to report to you the bank's operating performance for the first three quarters. And as usual, all the figures I mentioned is in accordance with IFRS accounting standards as in our age share disclosures. Since the start of the years and mixed complex environment, CNB pursued a strategic goal of building a value creation bank and Maintained Coordinated Development. We have shown steady improvement. Key points are as follows. First, our net operating income and net profit grew steadily. ROAA, ROAE and capital adequacy ratio are maintaining high levels. In the first three quarters, the gross net operating income was $264.676. Capital adequacy ratio rebounded. Under advanced measurement approach, CET1, Tier 1, and capital adequacy ratio of the group were 14.38%, 16.88%, and 18.64% respectively, up 0.22%, 0.37%, and 0.4% from year-end 2025, keeping strong capacity in organic capital generation. Cost-to-income ratio, 29.24%, down 3%. 0.62% point year-on-year. Second, we continue to strengthen asset and liability management. Deposits and loans are growing steadily. We effectively address insufficient credit demand, especially retail loan demand. We took multiple measures to strengthen asset origination and push liability towards higher quality growth. On the asset side, as of the end of September, the group's total assets was $13.76 trillion. up 5.28% from the end of last year. Total loans and advances was $7.45 trillion up 2.69% of which retail loans were $3.67 trillion down 1.28% as consumer and housing demands remain in recovery. And a group adhered to sound and prudent principles, proactively refined retail credit strategy Our corporate loans were $3.56 trillion, up 10.59%. In line with the interest rate trends and asset liability allocation needs, we made reasonable arrangements and scaled financial investments to $4.48 trillion, up 9.19%. On the liability side, total liabilities Weiquan Zhou, Weiquan Zhou, Weiquan Zhou, Weiquan Zhou 0.35% from the full year 2025 and the proportion of demand deposits stabilizing. Third, net interest income grew well and the net interest margin led the industry. Our advantage of low funding costs was consolidated. Since the start of the year, the decline in asset yields have narrowed and the liability costs have fallen steadily. In the first three quarters, the yield on assets was 2.8%, down 28 basis points year on year. With cumulative have declined, narrowing by 4 bps from the first half. The cost of liabilities was 1.04%, and the average cost of customer deposits was 0.95%, both down by 27 bps. Driven by this, the NIM for the first three quarters was 1.82%, down 5 basis points. Year-on-year, flat versus the first half. In particular, the NIM in the third quarter was 1.82%, remaining flat quarter-on-quarter. Net interest income in the first three quarters was $169.379 billion, up 5.83%, accelerating from the first half to the fourth quarter. Non-interest income growth improved and its share of net operating income remained high. In the first three quarters, net non-interest income was $95.385 billion, up a relatively high level. Net fee and commission income was $58.61 billion, up 4.29%. with a growth rate moderating from the first half, mainly due to capital market volatility. Other net non-interest income was $36.771 billion, representing a year-on-year increase of 4.95%, with a growth rate further improving from the first half, mainly due to the increase in the valuation gains of bond investments. Extensive wealth management business consolidated, with customer-based AUM and total asset management scale growing soundly. As at the end of September, retail customers totaled 236 million, up 5.36% from the end of last year. Golden Sunflower and above customers totaled 6.50 million, up 9.63%. Corporate customers totaled 3.97 million, up 9.7%. Retail AUM reached 18.71 trillion, up 1.63 trillion, or 9.52%. The average daily balance of corporate wealth management products was 665.5 billion, up 26.78% from year 2025. Total asset management scale 5.18 trillion, up 9.51% from the beginning of the year. Customer base and business scale continue to grow rapidly, underpinning the growth of extensive wealth management businesses. Income from extended wealth management sustained growth momentum. In the first three quarter, we generated 36.22 billion of income from this regard, up 11.12%. Among this, fee and commission income increased of Wealth Management increased by 13.71% year-on-year. Fee income from Wealth Management products, funds and trust schemes rose 8.77%, 31.63% and 32.27% respectively. Fee income from Asset Management To turn positive, up 0.11%, a custody commission increased by 19.89%. Sixth, we prevented and resolved risk in key areas with stable asset quality and strong risk compensation capacity. As at the end of September, the group's NPL ratio, 0.94%, remained flat from year end 2025. NPL formation was 56.16 billion up by 8.157 billion year-on-year. NPL formation ratio annualized 1.07% up by 0.11 percentage points. In terms of recent key areas, the non-performing lower ratio of the company's loan to the property development industry and the manufacturing sector were 3.89%. and 0.39% respectively, down 0.75 and 0.05 percentage points respectively. Affected by the external environment, retail NPL 1.19% up by 0.11 percentage points. With overall risk under control, the group adhered to sound and prudent provisioning, made adequate provision. From January to September, the credit cost ratio analyzed was 0.72% up 0.05% year-on-year. At the end of September, the group's allowance coverage ratio was 389.39%, down 2.4% maintaining a sufficient level of risk buffers. This is our operating performance in the first three quarters. Looking into Q4 and next year, China's economy will continue to trend better with new drivers and higher quality, yet the external environment remains complex and severe. CNB will further advance value creation bank strategy, keep strategic focus, stay customer-centric, consolidate principal position of retail finance through wealth management, and take asset quality as the foundation, and strengthen technology support. Thank you. Thank you, Mr. Peng. We will now proceed to the Q&A session and please read out the compliance statement and instructions. Dear participants, please note that the complete official live broadcast is the only authoritative record of this presentation. Editing or distributing of any of this content without authorization is prohibited. Before asking the questions, please state your name and the institution you represent. As many participants would like to ask questions today, please ask only one question at a time. For mobile users, please tap More at the bottom of the audio screen and select Raise Hand. For PC users, please click Participant and then Raise Hand.

Now the first question. Now we will invite Mr. Zhang Shuai Shuai from CICC to raise the first question. Thank you for giving me this opportunity. Congratulations for your third quarter, especially we have seen improvement for the single digit. And what I have noticed that currently we are facing a very complex environment. But if you look at CNB's data, it's improving quarter by quarter. Does that mean that after one or two years adapting to the external environment, CNB is Weiquan Zhou, Weirong Zhou, Weirong Zhou Weipeng Zhao, Weirong Zhou, Weirong Zhou, Weirong Zhou Thank you for your question. Thank you for Thank you for your continuous recognition of our performance for the past recent years. and looking into the future, it will continue to be very complex and I would like to seize this opportunity to share with you some of the achievements that we have made for the past years. And at the same time, I will give you some thoughts on what kind of measures that we have taken to tackle with a very complex external environment. Overall speaking, we can say that facing the overall complex environment, We are concentrating on the 15th five-year plan and continue to be more able to be more internationalized, to be more able to provide comprehensive service to our customer and to be more digitalized so as to provide a better operating results. And as I just mentioned about the performance for the Weiquan Zhou, Weirong Zhou, Weirong Zhou, Weirong Zhou Weiquan Zhang, Weiquan Zhang, Weiquan Zhang, Weirong Zhou, Weirong Zhou, Weirong Zhou, Weirong Zhou Also, coverage ratio around 389%. So, our risk mitigation capability is still at a relatively high level. And fifthly, high cost ratio and also improving. So these are the main features of our performance for the first three quarters, especially under this very hard and challenging external environment. And these are the marginal improvements that we have made. So I think we should think about or reflecting on what have we done in the right way and what other things that we need to improve for the improve. My thoughts are as follows. Firstly, I think that CNB's operating philosophy is to keep a balance among efficiency scale and also as a quality. And at the same time, we think value to be a value creating bank is very important for us and follow the natural rule of the banking industry and also to leveraging on the CMB's own advantage and to stay in customer centric philosophy. Customer's need is at the center and to deepen our business. Our relationship with our customer. And this is the strategic. We stood first to our strategy. And secondly... Weirong Zhou, Weirong Zhou, Weirong Zhou, Weirong Zhou, Weirong Zhou, Weirong Zhou Weirong Zhou, Weirong Zhou We are striving to improve our capability in terms of asset origination and especially to strike a balance among the amount of the assets we can originate and the pricing that we can charge as well as the quality of the assets. And secondly, liability management is also very important. Weipeng Zhao, Weirong Hou, Weirong Hou, Weirong Hou, Weirong Hou Weipeng Zhao, Weirong Hou Bothly, risk management, very key, prudent risk management culture. And anytime that we think that as a quality is our priority. If you look at the three core things that we mentioned for all the long time as a quality, efficiency and scale, we prioritize as a quality. And we think this is the key element that will help us to weathering through these challenging times. So this is my thoughts on that, on your question. These are all the measures that we can take. In the future, I think, indeed, We are facing, I think, for the overall external economy, indeed, we are facing a challenging environment, but there are also positive factors, more and more positive factors are accumulating for the economy to recover. But definitely, we are seeing challenges, such as low-interest environment. And also in terms of as a quality, there are many volatilities. And also fourthly, volatilities in the capital market. So facing this complex environment, I would like to seize the opportunity to share with you some of my views on the trends. And now I think that different banks are thinking about next year's targets. Currently, the features that I have just mentioned is also the common feature that the whole bank industry is facing. So the first feature is that for the future operation is that I think for asset liability management, quality is more important, but growth rate will lower down. As I said, the liability structures are under adjustment. Such as for loan, I think this loan growth rate, so lowering down the growth rate of the loan side will be a new norm. This is affirmative from the macro side, and so if you look at the micro side. From the micro monetary policy side, it's also the same tune that will lay a higher emphasis on the quality of the loan growth rather than the amount of the loan growth. But at the same time, this will help us to have more business opportunities and provide more comprehensive business opportunities to customers. In terms of liability management, I think it's not purely on pure customer deposit growth. Rather, I think we will more emphasize it on the AOM growth and also more multiple ways of liability origination. And secondly, I think that NIMH, will continue to face downward pressure. The banking industry, overall speaking, I think will still face pressure for the whole banking industry. For the first three quarter data, we can see that banking are periodically stabilizing. And we have seen that some peers stater, some are even rebounding. But our judgment is that it's kind of a periodical performance that's stabilizing. So NIM pressure is still on and it's the NIM pressure and also what determines NIM is the overall environment, such as there is a lack of effective demand from the loan side. So very fierce competition and so facing rapid downward pressure on the loan yield and at the same time, Weirong Zhou, Weirong Zhou, Weirong Zhou So even though we will have some temporary rebound, that is why we need to Weipeng Zhao, Weirong Hou As for the banking industry and for CNB, we are emphasizing on customer-centric philosophy, have a deep relationship with that. We'll support the AOM and also the customer growth in the future. And also to consolidate our operation base. In terms of the asset quality, we will continue to have a sound asset quality. I know that you all face on the asset quality, especially for the retail side, but our judgment is that, overall speaking, asset quality is under control, and also we have high risk mitigation measures. And when we can better control the credit risk, we will also improve, enhance our capability in terms of managing these liquidity risks and other market risks. So these are the four trends. Might not cover the full trend, but these are the main four aspects of our operating. So judging from these four aspects, I think that for next year, including CMB, I think that investors may have a clue on our performance next year. Definitely, we will follow the 15th five-year plan, continue to consolidate our strength in terms of wealth management and cross-border financing and intelligent bank characteristic, and hopefully that we can have progressive and stable performance next year for your reference. Thank you.

Next question, please. Next, we will invite Zhu Chenxi from Guotai Haitong Asset Management. Good morning, senior management. I'm Zhu Chenxi from Guotai Haitong Asset Management. My question is about NIM. Actually, previously, Mr. Peng has mentioned about NIM. Still, I want to ask a question about name. Actually, we see in the third quarter, the name is remaining flat, quarter on quarter. Under current environment, it is difficult for us to say that the name is turning up. But I want to ask that, do we think the name is entering a relatively stable interval? Mr. Peng has already introduced a bit about it. Can you provide some more information? I would like to invite Ms. Li Li from Asset and Availability Department for a more detailed introduction. Thank you for the question. Yes, actually everyone is paying close attention to the name trend from the first three quarter. 1.82% and Q3 1.82% flat quarter-on-quarter. For the reason, we are seeing that the liability cost has decreased two basis points and the SSI also down two basis points. So the two have been offset by each other. So as for the reason, for Q3, our Demand deposit daily average increased by 0.3 percentage points. And also we have seen good momentum in client deposit growth. And also we have rotation of low yield assets. So that also pushed forward to the downturn of liability costs on the asset side, The deposit cost decreased by two fifths quarter on quarter and the decline has been narrowed as compared to the past quarter. And the decline has been narrowed. And we are seeing that the decline magnitude is improving as compared to the last quarter. Our retail loan is still facing sluggish growth. This is because the market impact us and we are also taking proactive control on retail loan growth. This is exerting some impact on our yield on retail loans. However, on corporate loan side, we are improving in volume as well as our pricing. And we have also taken proactive control and management. Through refined management, we improve and many more. Looking into the future, Mr. Peng has already introduced the main direction. The third quarter name remaining flat is a good sign, but we cannot say it has already been stabilized. There are still uncertainties if we look into the future. Overall speaking, we think the magnitude of decline will be better than year-on-year. Firstly, we think the current monetary policy, we do not weigh down the possibility of LPR cut and RRR cut. And currently we are seeing a shift of policy benchmark recently, and this will exert some impact on the market rate. And the market rate is facing a rate decline, and this is reflected in the constraint on retail loan growth. and also we are seeing new bond yield is lower than existing bonds so there will be some pressure on our asset utilization and the benefits from repricing will be narrowed so we are seeing less room for deposit cost decline. Even though we are facing these challenges we still have confidence In a complex environment, the bank will be tested for our capacity and ability in name management. We will take multiple measures to play down the effect. We will value volume growth as well as quality and pricing. In the asset side, We will explore more market opportunities and explore opportunities in structural reform and put emphasis on both volume, quality and pricing to maintain a stabilized name and maintain a good absolute level of name in leading the industry. Thank you.