Bank of China Limited

Honorable investors, analysts, honorable friends from the media, good afternoon. Welcome you to Bank of China 2021 results announcement. My name is Mei-Fei Qi, Board Secretary for Bank of China. Today's result announcement will be co-chaired by myself and the press conference press spokesperson and general manager of the present office, Mr. Jia Tianbing. Because of the pandemic reason, we still have online result announcement. which is regrettable. I hope that next time we can have in-person meeting. First of all, please allow me to introduce you the leaders from Bank of China. They are Vice Chairman, President of BOC, Mr. Liu Jin, Executive Director, EVP, Mr. Wang Wei, Executive Director, EVP, Mr. Lin Jingzhen, EVP, Mr. Chen Huaiyu, EVP, Mr. Wang Zhiheng, CIO, Mr. Liu Jiantong, Besides, in accordance with the latest version of the governance code of Shanghai Stock Exchange, the representative of our independent directors, Mr. Wang Changyun, is attending this meeting online. We have two sessions in this result announcement. First, we will have Mr. Liu, president of the bank, to introduce you the performance of the bank, and then we will have questions and answers. For a long period of time, me, dear friends, investors, and analysts have provided long-term attention, support, and care to Bank of China. We are deeply impressed, and there are many investors and customers online. We are greatly encouraged by your interest. My sincere thanks to all of you, our dear friends. In recent times, there are many odd volatilities in the capital market. However, the banking board is relatively stable and makes a contribution to the stability of the capital market. We hope that through our solid result announcement, we can bring more confidence to the market. We have just announced our results for 2021 and the presentation can be downloaded on our website or you can have access to the PBT through the web link now. And for the financial data provided today, except the special notes, are all compiled according to RFIS reporting rules. Now we will invite President Mr. Liu Jin to introduce us 2021 result of Bank of China plan of the bank and our future prospects. Now the floor is given to Mr. Liu. Dear friends from the media, investors, analysts, good afternoon. I'm very happy to meet you online to introduce you Bank of China 2021 performance. In the past one year, Bank of China conscientiously implemented Party Committee State Council's deployment and policies, and we worked together to achieve the full year's target, and we have made rather good business results. we have stable financial results with operating income exceeding 600 billion and up-tax profit and profit attributable to shareholders increased by 10.85%, 12.28% respectively and our business scale increased steadily. Asset and liabilities increased by 9.51%, 9.59% respectively. Loans grow steadily. especially for long-term and mid-term loans, and deposit also increased. Overseas custodian business ranked as number one. Our ROA and ROE increased by 0.02, 0.67% respectively, and core tier one capital ratio increased by two basis points. And name was 1.75% and fee income contribution increased by 0.14% and NPL ratio 1.33%, a reduction of 0.13% as compared to 2020. Overdue loan amount and ratio both reduced. Provision cover ratio 187.05% and commercial service manufacturer inclusive finance asset quality maintain stable and NPR resolution amount 147.5 billion RMB. Customer base further consolidated effective corporate customer increased by 11.7, FI and custodian businesses further increased and individual customer amount rank as number one. compared to peers and also internet banking, mobile phone banking customer increased by large margins and our brand image further increased with increased comprehensive strength and we have won many market recognitions by numerous awards that we have won. Bank of China have implemented our 14th Five-Year Plan. In 2021, we have achieved growth in eight key areas. In last year's result announcement, I introduced you the eight focal points of Bank of China's development. Now, I will introduce these eight sectors one by one, and you can make reference to our PPT. First, IT Finance. We set up product service system that cover the whole life cycle of IT company. We provide comprehensive financial support in the amount of 1.26 trillion. Our customer was 36,000 IT companies. And we are setting up a fund of fund in the amount of $30 billion with the support of Miniature for Information and Technology. We also help small and medium-sized companies to be innovative. In green financing, we support green development and transformation of traditional companies. We issue the action plan and green finance planning. And in total, our green credit exceeds $1.4 trading, we use the tools provided by PPOC and to support 270 green projects. Green bond underwriting exceeded $129.4 billion domestically, and green bond business skills and green innovation is market leading. In terms of inclusive finance, we promote SME finance and reduce the price and fight the pandemic together with the market entities. Inclusive loan incremental amount was 53.15% as compared to the previous year and the average cost was only 3.96%. Digitalized inclusive financing are making progress. Online inclusive loans increased by more than $100 billion. We also set up a service for specialized small companies. We provide financing to 15,000 specialized small companies in cross-border finance. we further consolidate our advantage in international settlement, cross-border RMB, foreign exchange settlement, cross-border custodian. And international settlement amount reached 7.26 trillion US dollar up 26%. And for southbound connect and northbound connect, the number of assigned customers took up more than 60% of the market total. For e-commerce companies, we provided them with RMB settlement, foreign exchange settlement services and other services. We also provided services to the four major exports of China to stabilize foreign investment in China, to stabilize the foreign trade. We take the initiative in LPR reform and we use the software Sonia and Toner to ease the bond. We are the only organization that can do this. For consumer finance, we integrate personal loans with credit card with consumer finance. Domestic RMB consumer low increased by 9.69% and credit card installment also increased. For wealth management, we further practice the national strategy of common prosperity. By the end of last year, total individual customer reached $495 million and total asset $11 trillion. income increased by 33% year-on-year. We also fastened the development of Asia-Pacific private banking platform to provide them with online and offline services combined, provide them with financial and non-financial services. Private banking customer increased by 10.80% and asset increased by 16.75% to 2.16 trillion. Domestic private banking financial asset increased by 23.63%. So the number of customers and the amount of asset management both increase. And for supply chain financing, we make use of corporate loan, cash management, insurance, and other kinds of tools to provide core enterprise liquidity of $2.16 trillion. And we have a 1 plus 1 model customer in the amount of $11.6 trillion. and online supply chain financing call customer increased by 41% and online supply chain business amount increased by 63%. For rural financing, we are deeply involved in helping set up rural financial system and farmer and agriculture related loan increased by 60% and inclusive agriculture related loan increased by 46% we have BOC Fullerton which is a focus on rural finance to support agriculture and small companies and businesses we are the largest rural banking group in China and also the asset increase by 25.50%, and NPR ratio was only 1.3%. We further strengthen one body, two wins strategy. Commercial banking is our one body, and the two wins are globalized operation and comprehensive operation. Last year, domestic institutions' profit contribution increased by 0.35%. We focus on key industries, Green finance strategic and emerging loans increased by 28.8% and 135% respectively Our overseas institutions fight against the pandemic maintain stability and their contribution to the bank further increase We further promote digitalization and focus on key points and we set up IT Finance Plus plan, and we set up a steering group for financial digitalization to lead the work for digitalization of the bank. Total IT investment, $18.6 billion, an increase of 11.4%. We also increased the number of staff, and the staff number increased by 13.75%. Six of our size result got the rewards from PBOC and we have made application to 4569 patent among this 194 are granted we started the Oasis project which is our enterprise architecture and data governance project have made initial achievements. Digital assets are playing a bigger role. IT enablement have yield good results. We have issued a mobile banking app version 7.0 and we further improve intelligent global transaction banking platform and we also We focus on four strategic scenarios, which is cross-border education, silver hair, which is senior person, and sports. We further strengthen risk management, optimize our risk management system, and have process control over all the process. We further optimize our credit structure for liquidity risk and market risk. It is rather stable. internal control and operating risk management is further strengthened and we further improve compliance risk governance system and management procedures. For this year, we will work steadily to implement the decisions of the State Council and the Party Committee and try to build first-level, world-level bank and create more value to shareholders, society and employee. will be deeply involved in the national economic development to support the real economy. We will further strengthen our advantage of one body and two wings, establish a new development pattern. Third, we will further achieve digitalization. Fourth, we will mitigate financial risk and establish a firm defense line. 2022 is a special year for Bank of China. In 2022, After serving the 2008 Beijing Olympic Games, we play our advantage of the most international bank in China again to sponsor the Winter Olympic Games of Beijing and Zhangjiakou and we bring hope and warmth to the world in the midst of the winter of the pandemic and we work together for a better future. we just completed our task of serving the Paralympic Games. To serve the two Olympic Games, both the winter and the summer Olympic Games, is an important witness of our service provided to the society. And we can help 300 million persons to be engaged in winter sports in China. After serving Winter Olympic Games, many Winter Olympic Games venues and equipment producers and winter sports lovers become Bank of China's customers. And we are bringing new vitality to northern part of China through winter sports. and if you want to play winter sports, please use the Bank of China's financial services and I hope that you can also get involved in winter sports to be one part of this 300 million persons in winter sports. 2022 is a year for us to celebrate our 110 years anniversary and we are also seeing the rapidly evolving world we will stick to our original goal and try to make new achievements in a new economic and social condition. We will serve economic and social development and make new contribution to this end. Thank you. Now we come to the second part of the result announcement, and we will allow question and answer. To allow more friends to ask a question, each of you can only ask one question, and also please identify yourself before asking questions. Now please give us the first person who are asking the question. Now you can unmute yourself. You have the floor. Thank you. Thank you for giving me this opportunity to ask the question. My name is from Morgan Stanley. My question is about future prospects. Because if we look at the Central Economic Work Conference of the party, it is pointed out that the economy is facing triple pressure and at the same time, the government specifies the areas for increased lending. So I want to know from the management, what is the corporate lending demand and actual lending? And what is the expected scale, structure, and the pace of overall lending of the bank for the year? And what are the key industries and areas that you focus on? Thank you, Mr. Xu. Credit market is a question of common interest. You have asked a very professional question. Now the floor is given to Mr. Wang Zhihong, EVP responsible for corporate banking. Thank you for your question. Financial sector shoulder the mission of serving the economic social development and help people living a better life. Bank of China is continuously contributing its strength to serving national strategy and the real economy. By the end of February 2022, total corporate loan reached 7.4 trillion, an increase of 368 billion, 47.2 billion more a year. The growth rate was 5.19%. We focus on key areas and key industries, By the end of February, corporate green loan increased by 8.6%, strategic new emerging industry loan increased by 11.6%, manufacturing loan increased by 6.9%. In terms of regional breakdown, we focus on key region of the country, Jingjingji, Yangtze River Delta, Big Bay area, loan accounted for more than 70%.

and in 2022 our bank will be focusing on the development trend and the priorities to keep a very reasonable growth of the corporate loans so as to intensify the lending for the real economies and continuing optimizing the credit structure for the corporate to be specific we will be focusing on the business opportunities on the infrastructure, transportation, hydro construction and municipal construction as well as new types of infrastructure and secondly we will be focusing on some types of enterprises featuring the specialized refined features and innovative little giant focusing our attention to the intelligence manufacturing, green manufacturing, high tech and etc. Thirdly we will be focusing on the green low carbon and fourthly we will be focusing on the credit of the inclusive types of finances so that we will be providing better services for the special agricultural produce and improve our capabilities in providing banking services for the agricultural businesses so looking into the future first of all we will stabilize the scale of the credit and it is expected that the increase rate of our credit and loans will be no less than 10 percent. And secondly, we'll optimize the structure, and from an industry perspective, we'll be putting our focus to the micro and small businesses, high tech, green development, and have a very stringent control on the two highs and one over capacity. And from a region perspective will be focusing on the coordinated and balanced development of the East, Middle East, and the Northeast region. And from the arrangement of the personal loan, we would adopt the principle of not speculation, so under the prerequisite of satisfying the requirement results, we would just satisfy the needs of reasonable residential requests and we would also need to have a balanced development of the personal lending and corporate lending. Just now you have also asked the question about the rhythm of the lending and in the future our bank will be focusing on the implementation of the monetary policies so that we can play a role of a stabilizer that should be shouldered by the state-owned big banks. And I would like to give the floor to the second speaker. Thank you so much. And just now, Mr. Liu has given us an introduction of your performance, and we have seen a double digit of the growth of the performance, and such momentum has been tapped. Some investors are quite concerned about whether the profit can be maintained first of all to be stable and also to keep a fast momentum of growth. Can you just give us an introduction of some core performance indicators and also give us a prediction of the outlook of 2022. Thank you Mr. Ma and also for your recognition of the performance of BOC and we are also quite proud of the performance last year and we would like to give the floor to President Liu and Mr. Ma is clearly my old friend even though we haven't seen each other offline but I do see you quite a lot online and I have read quite some of your articles online as well. Thank you for your recognition of the BOC for the 14th five-year plan has started last year and the economic development as well as the pandemic control has been keeping ahead globally which has created a very favorable operating environment for the banking business and last year BOC has been kept the general tone of trying to make improvements amidst stability as it is mentioned that the operating performance has been maintained stable and has a upward trend and we have a very fast increase of the post tax profit and when it comes to the operating income we have a breakthrough of over 600 billion reaching 605.7 billion an increase of 6.71% and we have a enhanced the lending and we have also tried to provide more services to the development of the real economy and also tried to reduce the comprehensive financing cost. So we have adopted the strategy of the double optimization of the quantity and price so that we can control the increase of the debt cost and we have maintained a very stable name and also we have very good performance of the inclusive financing and the cost of the financing has also steadily decreased and also let's look at the cost structure we will be able to see that the interest-bearing cost is also maintained at a low level last year we have made tremendous efforts to controlled the general debt. It has been achieving some great results. And the second feature is that the income structure has been significantly improved. The group has realized $180.6 billion of the non-interest income, an increase of 19.01%, the commission and the fee income, marks 81.4%, an increase of 7.82%, and the non-interest income accounts for 3.08%, and to increase by 3.08% to 29.81%. So our bank has been implementing the state policy of the reduction of the fees and the taxation so that we will seize the opportunity of the capital market and enhance the product innovation and try to explore the online businesses and wealth management. Previously, Min Jingying, president, has been in control of the corporate business and starting from last year, he was transferred to the retail businesses because of his very rich experiences in the corporate side, he would be able to bring a lot of radiation effect to the prosperity of the retail businesses as well. So this is the second feature. And the third feature is that our operating efficiency has been improved. The ROA and ROE stood at 0.89% and 11.28% 0.2 and 0.67% respectively in an increase and the cost to income ratio is 28.17% keeping at a very stable level so from last year's perspective. It is a rather satisfying result. Looking into this year, for this year, we still have ongoing raging pandemic. We have seen some rebound of the resurgence of the cases, and we haven't seen a very robust world economic recovery. There is high volatility in the international financial market. the development of China has been facing the three-layered pressure of the demand contraction, the supply shock, as well as the weaker anticipation. However, the long-term fundamentals hasn't been changed. In the recently held financial stability meetings as well as the central economic meetings as you will be able to see that the fundamentals are kept stable we will have such optimism to the long-term development and in order to promote the stable development of the capital market and try to make sure that the economic operation can be maintained at a reasonable range the standing committee of the State Council and the financial meetings has deployed a series of very important measures personally I believe all these important measures that has been taken are sort of like the spring brazes that they are bringing warmth for us and also boost our confidence which has also provided a very favorable opportunity for the banking businesses to grow so BOC will definitely implement the deployment of the CPC and the State Council and try to implement the requests of the financial committees. We will try to leverage the spring break of the policies and we would be able to maintain a reasonable growth of the newly added loans to provide better services for the prosperity and the revitalization of the real economies. So at the end of this quarter, we have been trying to make better results in this regard. We believe for the first quarter report, you will be able to see more satisfying results. Well, in order to boost the economic development, we should also try to improve our own resource allocation and try to have stable growth. for our own bank. Now I would like to give the floor to the next speaker. Thank you, the city management of BOC. I'm from Zhongtai Securities Research Institute. I want to ask one question about inclusive loan we have noticed that the BOC has enhanced the support to the medium and small enterprises and inclusive loan has been kept a fast growth momentum so I really want to know what is your strategy and market position in this regard and also can you look into into 2022 about your target of the inclusive loans and also what is the quality of the assets so thank you Mr. Dai, indeed the inclusive loan is what we have been put our focuses on. Mr. Dai has also asked the questions about our market positions and the strategies and the logic of our operation. We would like to give the floor to Mr. Wang Wei. Thank you. As you have mentioned, indeed BOC in the inclusive finance has been making continuous and relentless effort on the one hand. It is how we implemented the requests of the central government and the responsibility we have shouldered in supporting the economic development. On the other hand, we have also catered to the changing landscape of the new reforms. With the further deepening of the supply-side structural reform, which has generated the new business models and the new growth models, we have seen the prosperity of the micro and small businesses. According to the statistics, we have altogether 120 million micro and small businesses. Among the 120 million small businesses, a very large amount of them hasn't really satisfied their financing requests, so there is quite a room for us to further provide better services for these financing requests from the medium and small businesses. Well, on the other hand, the national policy has also provided a favorable policy environment for the inclusive financing, so trying to provide services for the micro and small businesses is the definite choice of our restructuring of the BOC. And the BOC has listed inclusive financing into the eight priority areas of the BOC, which has markedly clarified the strategic position of the inclusive finance. We will take a multiple measures to make sure that the financing for the medium and small businesses can achieve a quantity increase and a wider coverage and reduction of the prices which has achieved very marked results. First of all, we have achieved leapfrog types of development of inclusive finance as introduced by President Liu, and our increase rate has reached 33.15% in 2021, number one in our peers of the four, and also the average interest rate stood at 3.96% and trying to give benefits to the medium and small businesses. And secondly, we have used the technology to empower the digital inclusive financing. We have come out with our business model of the online and offline tool wheel driven businesses. And in 2021, we have they termed it as the online product breakthrough year with our online businesses reaching more than 100 billion and we have already increased the inclusive business from less than 2% in 2020 to 34% and last year we have more diversified product portfolio and we have also tried to cater to the changing landscape in the market and thirdly we have more innovative featured products and services so we have the inclusive loan, among which we have eight different series of more than 50 types of products. And we have also rolled out the New Year benefit loan, as well as the MSE benefit loan types of product services. So centered around the technological innovation enterprises, we have signed the strategic cooperation agreement with the National Intellectual Property Bureau and we have set up such Intellectual Property Financing Innovative Lab and we have also tried to perfect our service system for the specialized, refined, featured and innovative enterprises providing more than 130 billion credit for over 15,000 such enterprises and firstly we have fully played our comprehensive strength to satisfy the diversified financing needs. So we have reached such a principle that we are not only providing the commercial banking services but also for the village-based banks, consumer financing, public interest financing. So such a diversified whole coverage financial services has been provided. Looking into 2022 and taking full into consideration of the current economic situation and the regulatory requirement the newly added inclusive loan will be amounting 300 billion nearly the same increase comparable with last year and centered around the online product enhancement requirement for this year our online new added will achieve more than 50 percent and also when it comes to the asset quality for recent years we have realized the double deduction for both inclusive loan MPL and MPL ratio double reduction however till now the MPL ratio cannot truly reflect the asset qualities of the inclusive loan. There are several reasons. First of all, such loans are actually newly extended for the last three years, and also such an extension of the repayment of the principal and the interest are still further extending, so such a risk might be further delayed but our overall judgment is that the quality of the inclusive financing is controllable and if compared with the average loan quality it is even higher and it is within a range of what policy really allows so we hope that we can take a proactive risk mitigation approach and pay great attention to the concern and the predictions of the credit risks from the customers and also from the approval of the credit and the post loan management, we would be able to make sure a high quality development of the inclusive finance. Thank you so much. Thank you, Mr. Wang.

We would like to... We will have the next question. Please unmute yourself and ask your question. Yes, thanks to the management for this opportunity. I'm from JP Morgan. I'm the analyst Li Yuli. I have a question about private wealth management. As we all know, wealth management is very important to many domestic commercial banks. The capital market also gives high valuations to the business. In recent years, the BOC already has made a lot of efforts and has made a lot of progress in terms of wealth management and wealth management related financial services so I would like to know what do you think the future opportunities and the growth points are and also given your good advantages in terms of high end wealth and private banking businesses so what's your plan thank you in fact two days ago we celebrated the 15th anniversary of BOC private banking 15 years ago I also began to work for this area, so I'm also responsible for our private banking business, but still I want to give the floor to our Vice President Lin Jingzhen to answer the question. Yes, thank you, the friend from JPMorgan Chase about your interest in our wealth management and services business. As our President has said in his presentation, In the year 2021, the BOC Wealth Management made new progress, especially for the growth of the lead and the high-end clients. It was the highest in the past three years. BOC is already a famous name in this regard. Then for the future trends, we are optimistic and positive. At the national level, the 14th five-year plan has achieved to clarify the common prosperity long-term goal, therefore providing strategic support to the development of our wealth management business. At the market level, there are opportunities from the implementation of the new asset regulations, continuous improvement of regulatory policies and continuous reforms of the capital markets. They will help shape even better, more benign competitive landscape and bring about more opportunities for wealth management at the client level. Our people definitely will have increasing disposable income and will have changed the wealth structure. They will have more diversified demand for assets allocation, thus creating a lot of business opportunities for us. Then for BOC, the wealth management is one of the eight priority segments as identified by our strategic plan. During the 14th five-year plan, BOC will continue to grow our wealth management business in terms of the size, client base, and the share of revenues. We will continue to make new progress and ensure that the strategic targets are well attained. Dear colleagues, in the next step, we will, together with our government, implement the common prosperity strategy. We will also achieve the transition of the wealth management business model so that wealth management actually becomes an important toolkit for us to expand the client base, to increase deposits and to improve our profitability. It will become further our core competency. Specifically, we have five priorities in terms of wealth management development. First, the priority of a better product selection. We should have the buyers thinking because BOC has a lot of advantages. For example, we can provide group-wide and market-wide wealth financing platform, and our product selection, monitoring, evaluation, and dynamic adjustment mechanism will be more professionalized, standardized, and systemized. So our wealth management product pool is more competitive. The second priority is about asset allocation. we should shift from the single product focus to asset allocation mentality so as to sell more portfolio products including FOF and the entrusted portfolio products. We will also provide better, smart and intelligent diagnosis and asset allocation services so the risks will be more diversified and yet income will be increased, returns will be increased for our clients. The third priority is about whole life cycle company for the clients. We will shift from the transaction mindset to the whole process life cycle company in service mentality. So we will provide services before, during, and after the sales. So we continue to provide long-term income for the clients. Therefore, we also expand to the client base to achieve win-win. The fourth priority is about team building. Our team in the area of wealth management will be more professionalized. Our wealth managers, private bankers and investment advisors will provide differentiated services. They will also benefit from more digital toolkits. The fifth priority is about group-wide and the services. Our private banking is very important and it also benefits from BOC advantages as a globalised bank. We are the bank for the entrepreneurs and we will also further develop the family trust business, complete the family wealth management ecosystem and help clients better manage inherit and ensure the continuity of the legitimate wealth. The Asia-Pacific private banking platform building will be accelerated and we will also further strengthen the synergy among and between the private banking plus investment banking plus commercial banking so that we provide more comprehensive services to high net worth clients. We will also further complete the charity platform so that the BOC will work together with the private banking clients to fulfill our social responsibility for the benefit of a common prosperity. Thank you Vice President Lin. Now the next question. You can unmute yourself for the next question. Yes, many thanks to the management for this opportunity. I'm from Bo Shi Fund, the management company. Financial Industry Analyst Liao Chenyu. I have a question about asset quality. Last year, the domestic economy continued to recover. In the past two years, BOC also has withstood a lot of tests from home and abroad, especially from the COVID pandemic. So can you give us highlights and also stress points about the BOC asset quality, especially what's your forecast of this year which industries and which geographic regions do you think we should pay special attention to in terms of asset quality and asset quality changes? Can you give us the forecast of the asset quality trends in 2022? Yes, thank you for your question. You have asked a series of questions related to risks. I give the floor to our chief risk officer, Liu Jiantong. Thank you Mr. Yao for your question and also for your attention to the BOC developments. Last year BOC proactively responded to changes at home and abroad and we had better early recognition and early disposal of the risks and therefore we have achieved more disposal of the MPLs in advance. Last year we achieved disposal of NPLs of about 100 billion yuan in advance. Second, about existing NPLs, we have expanded the channels of disposal. We have increased the pace of the resolution of big NPL clients. Last year, we disposed of more than 100 billion yuan of NPLs. Third, we made a steady progress of optimizing credit structure for strategic emerging industries, the manufacturing and the green finance. They got a greater share of our credits. In fact, last year, our asset quality related indicators were good and turned for the better. In terms of the NPL's overdues and the NPL disposal, in fact, we were doing better than many of our peers. At the end of last year, Our NPL balance went up, but the NPL ratio went down. The overdue balance and overdue ratio doubled down. The NPL balance was 208 billion yuan, up by 1.5 billion yuan. NPL ratio 1.33% down by 0.13 percentage points. Overdue rate went down by 0.19 percentage points. the CSIS differential was negative between overdue and MPLs. Then for the priority, the key industries and the sectors, they are very important to us. For some temporary and regional or localized risks, we pay special attention to them. For example, some real estate developers might have cash flow problems and in those less developed regions, some local governments have more debt maturities within a short period of time. Some manufacturers and traditional energy companies have difficulties in transition upgrading and green transition. But at the same time, we have noticed that the financial market has more volatilities, which might give rise to risks. Since last year, the prices of commodities have continued to increase. Now they still are high, not favorable to low-end manufacturers, construction industry, wholesalers, and retailers. Some businesses might have the probability of default. And also recently, the Russian-Ukraine conflict, U.S. dollar appreciation, have enabled some commodity prices to reach the unprecedented high levels, therefore bringing more shocks to the financial markets. We will monitor the implications of these risks to our client cash flow situation and to the client's resolvency so we can further dispose of the possible risks We will do the following. First, the overall risk management and strengthening of the governance structure. Second, some more bottom line mentality that we will increase our pre-warning monitoring and emergency response capabilities. Third, digital transition, more smart and intelligent risk management, the big data, AI and knowledge graph will be helpful and enabling so that we can better identify the risk profiling of the key product lines and the target clients. Fourth, the monitoring over some key areas and their concentration levels. For example, the big clients, especially those that might be affected by the volatility of the financial markets. Fifthly, we will continue to dispose of MPLs, especially improving the quality of the disposals expanding the channels, giving full play to securitization and tapping into the value of already written off assets. We will also better manage the overseas assets quality. They will adopt more industry portfolio management especially. They will control the limits or the business sizes with those industries that they are more affected by the pandemic or that are in more risky countries we will continue to proactively prevent and dispose of systematic risks we believe we can do it we will not let down our shareholders thank you Mr Liu we will have the next question the next question Please unmute yourself. Yes, I'm very happy about this opportunity. I'm from the city of Lyon, securities company, France. So I have a question about BOC overseas business. Last year, the pandemic was very volatile, but still the global economy had a strong sense of recovery. This year, I believe the global economy will maintain that recovery momentum. BOC is the most globalized Chinese bank. Last year, I think you did a good job in terms of responding to the uncertain external environment. So my question is, what is your strategy for overseas business development in the new year, in the next step? Will you have more ambitious targets and financial goals for Overseas business for 2022. Yes, thank you, Mr. Fan. Yes, we are a very globalized bank and overseas business is also our competitiveness. Now let me give the floor to VP Chen Huaiyu. He will answer the question. Many thanks to Mr. Fan for the question. Yes, for 2021, the pandemic was volatile. Sorry, his microphone is off. sorry his microphone is off roughly the idea is that last year BOC managed the pandemic implications we ensured business continuity and employee security and also the 14th five-year plan had a good starting point laying down foundation for overseas business developments in the year 2022 This year, the global economy will continue to recover, thus providing favorable external environments for our overseas business. But the global recovery might be diverging with still unevenness and uncertainties. Advanced economies might have changes of their monetary policy. the interest increases actually are favorable to BOC, but still there are spillover risks from the advanced countries' monetary policies. For emerging economies, their financial risks go up, but BOC has only a small proportion of assets and revenues from emerging economies. This year, we will continue to give priority to stability we will continue to improve the quality and efficiency of the overseas business especially for the global green sustainable transition for RCEP implementation China's further foreign trade with other countries especially the neighboring countries and in terms of the conglomerate syndicate loans and debt and bonds underwriting these are our traditional competitiveness and we will maintain the one body two wins strategy we will provide more comprehensive services to both domestic and international clients so that we can support the country's double circulation strategy and high level openness strategy In terms of the overseas branch layout, they already are in 62 countries and the regions. In the future, we will improve the quality of the overseas branches. We will also have more regional integration. The Asia-Pacific synergy mechanism will cover all RCEP economies. We will also promote the region integration. regionalized management over Europe, Africa, the Middle East. We will build the IPU regional headquarters. We will further improve the synergy service capability and the management capability within those regions. And we will continue to monitor the pandemic situation, the local economic development situation, and external geopolitical tensions so as to ensure security of our business and the personnel. We will also further and more fine-tune the overseas risk management and response to the changes of the external environment and more heightened and tougher regulatory requirements from abroad. In terms of business plan, budgeting and asset allocation, we will give full play to our strength in the Asia-Pacific region. We will further develop business in advanced countries. We will provide high-quality services to Belt and Road, and we will stabilise business in the other emerging economies. BOC is more than 100 years old and we are the GC we will continue to give full play to our global service capabilities so as to support the national strategy thank you ladies and gentlemen dear colleagues so much for the online questions from investors and analysts according to regulatory requirements. We also have got questions from the small and the medium investors. Some of their questions are collected and already are addressed by the answers previously. But still, there are two questions. I want to ask these two questions on behalf of the medium and the small investors. One is about capital and dividends. At the ad hoc shareholder assembly, adopted BOC latest capital plan. They would like to know more about this and also they want to know the dividend payout policy. So I give the floor to President Liu Jing.