Bank of China Limited

Investors, analysts and friends from the media, good afternoon. Welcome to the Bank of China 2025 Interim Results Press Conference. I am Duocheng Wen, Board Secretary of BOC. Today's press conference will be co-hosted by me and Ms. Yu Ke, BOC spokesperson. In light of recent major event preparations in Beijing and considering everyone's schedules and participation preferences, This press conference will be conducted via live webcast. We extend a warm welcome to all participants joining online. Firstly, allow me to introduce the bank's leadership in attendance, Mr. Zhang Hui, Vice Chairman and President of BOC, Mr. Cai Zhao, Vice President, and Wu Jian, Vice President, Yang Jin, Vice President, and Liu Chenggang, Member of the Party Committee. Additionally, representative of our bank's independent director is also participating online. Our 2025 interim results have been publicly announced today. The presentation materials are available for download on our official website or can be viewed on the live streaming page. All financial figures mentioned today unless otherwise stated are prepared in accordance with the International Financial Reporting Standards, IFRS. Today's agenda consists of two segments, results presentation and Q&A session. First of all, let me invite Mr. Zhang Hui, President of BOC, to present our interim results. Dear investors, analysts, and friends from the media, good afternoon. Welcome to Bank of China's 2025 Interim Results Press Conference. Thank you for your longstanding trust, attention, and support for the Bank of China, BOC, Please allow me first to briefly introduce BOC's operating performance for the first half of 2025 and the four-year outlook. Subsequently, together with the attending members of the senior management team, we will engage in in-depth discussions and exchanges on the topics you are concerned about. And just now, the senior management team members were already introduced to you. You may notice there are some new faces, and we have a stronger leadership now at the senior management team of BOC, and please rest assured you will have higher return as investors. Since the beginning of this year, BOC has thoroughly implemented the decisions and deployments of the CPC Central Committee, solidly advanced the various management and operational tasks while serving high-quality economic and social development, achieving positive results. Steady progress in financial performance. The group achieved operating income of 329.4 billion RMB, a young year increase of 3.61%, with net fee income growing 9.17% year-on-year. Post-tax profit reached 126.1 billion RMB, and post-tax profit attributable to the bank's shareholders was 117.6 billion RMB, remaining stable year-on-year, with the trend of change continuously improving compared to the first quarter. The name stood at 1.26%, the ROA was 0.7%, ROE was 9.11%, and the cost-to-income ratio was 25.11%, all maintained within reasonable ranges. Second, steady growth in assets and liabilities. Total assets reached 36.79 trillion RMB, an increase of 4.93% from the end of last year. of high-yielding assets such as loans and bond investments increased by 2.32 percentage points. Total liabilities amounted to 33.6 trillion RMB, an increase of 4.85% from the end of the last year. The proportion of customer deposits to total liabilities increased by 0.7 pps. The market competitiveness of RMB-denominated average daily deposits domestically has improved year-on-year, and the leading advantage in foreign currency deposits has expanded. to improve the quality and growth in customer base. The number of total corporate customers, total individual customers, and the total financial assets of individual customers steadily increased. Customer structure optimized with the number of medium-sized corporate credit customers offering higher comprehensive returns, increasing by 13.48% from the end of the last year, and the proportion of mid- to high-end individual customers rising by 0.16 pps. solid and effective risk prevention and control. Asset quality remains stable with the NPL ratio at 1.24% down by 0.01 percentage points from the end of the last year. The NPL coverage ratio was 197.39%. The bank was among the first to complete the replenishment of 165 billion RMB in core tier one capital. The core tier one CAR and CER reached 12.57% and 18.67% respectively, up by 0.7 percentage points and 0.69 percentage points from the end of the last year before the capital increase, laying a more solid foundation for BOC's medium to long-term development. Fifth, continuous commitment to shareholder returns. We formulated and implemented market value management measures focusing on stable operations to continuously create long-term investment value for shareholders. efficiently completed the interim and final dividends for 2024 with a total distribution of 7.36 billion RMB. The board meeting held today proposed an interim dividend for 2025 of 1.094 RMB per 10 shares, totaling RMB 35.25 billion, RMB maintaining a highest payout ratio of 30%. Specifically, in the first half of the year, BOC proactively addressed the new situations, responded to new challenges with solid and effective measures, and seized the new opportunities with an innovative spirit, achieving new breakthroughs in its own high-quality development, mainly reflected in the following five aspects. First, continuously optimized the financial service supply, fully supporting high-quality real economy development. By the end of June, RMB loans issued by domestic institutions increased by 10%, 1.41 trillion RMB from the end of the last year up 7.72%. We increased the financial support for key areas such as two major projects and new three initiatives. The balance of equipment renewal loans exceeded 90 billion RMB. Loans directed to the manufacturing sector grew by 12.99% from the end of the last year and loans to strategic emerging industries increased by 22.92%. We actively supported initiatives to boost the consumption with personal consumption loans growing by 15.42%. We adhere to the two unwavering supporting the development and growth of the private sector. the private economy with loans to private enterprises increasing by 12.93% from the end of last year. We helped stabilize the real estate market, meeting rigid and upgraded housing demand. We supported the healthy and stable development of the capital market with credit services for listed companies, stock repo, and increased plans in maintaining a market-leading position. Second, we solidly executed the five key areas of finance. supporting the development of new quality productive processes according to local conditions. We seized the market opportunities such as AI and M&As of tech enterprises. We innovated technology finance products like computing power loans. The balance of technology loans reached 4.59 trillion yen. The number of credit customers among technology enterprises exceeded 160,000. Comprehensive services provided cumulatively exceeded 780 billion RMB. The intended scale of the SciTech Innovation Final Fund exceeded 50 billion RMB. The balance of green loans increased by 16.95% from the end of last year. Green bond investment and underwriting scale remain the highest among Chinese financial institutions. We solidly advance the implementation of the financing coordination mechanisms for small and micro enterprises. The balance of inclusive loans of SMEs reached 2.65 trillion RMB with the number of borrowing enterprises surpassing 1.72 million. The number of credit customers and coverage rates for national and provincial level little giant specialized and sophisticated enterprises that produce new and unique products led the market. We further increased the financial support for the pension industry, ranking high in the market in terms of the number of enterprises that are newer to individual accounts and the scale of enterprise or community custodial funds. Digital finance accelerated business empowerment, deepening the application of new technologies like AI. The number of MAU of personal mobile banking grew by 8.59% year-on-year. Consumption volume by digital R&B remained market's leading position. We fully leverage the global presence and comprehensive operations to support high-level opening up. We further increase the financial supply for stabilizing foreign trade. The volume of international settlement handled by domestic institutions exceeded 2.1 trillion U.S. dollars, up 16.5% year-on-year, maintaining a market-leading position in international trade settlement business. We proactively serve the new forms of foreign trade, formulating service loans to service plans to support cross-border trade facilitation. The total transaction volume of cross-border e-commerce increased by 42.1% year-on-year. The leading advantage in cross-border R&B business remains solid. The number of direct and indirect participants in the cross-border interbank payment system, CIPS, and the number of R&B clearing banks remained the highest among peers. Cross-border R&B clearing volume exceeded $560 trillion R&B, maintaining a global leading position. We actively serve the going global and bringing in strategies guided by the eight actions for high-quality Belt and Road cooperation. We supported major landmark projects and small yet smart livelihood programs. We ranked first in underwriting volume for panda bones, Chinese offshore, bonds and offshore RMB bonds. The full market size of cross-border custody continues to rank first among Chinese financial institutions versus commercial banking accelerated transformation development with continuous optimization of the asset and liability structure, overall improvement in basic product service capabilities, and strengthened IT support. Operating income and pre-tax profit for the first half of 2025 increased by 9.02% and 10.88% year-on-year, respectively. Comprehensive operations involved in quality, improved in quality and efficiency with core business indicators of several subsidiaries advancing. BOC Wealth Management moved up two places to rank first among the big four banks. BOC Aviation's own fleet value ranked first in Asia. BOC International's IPO underwriting ranking rose to the sixth in the market. Fourthly, balance the development and security, fully preventing and mitigating financial risk. We deepened the comprehensive risk management system, conducted forward-looking control of various risks, and strengthened systematic risk prevention. We enhanced the credit asset quality management, steadily progressing NPL resolution, improved the quality and efficiency of recovery and disposal, and maintained reasonable and sufficient risk buffer levels. We strengthened overseas risk management to ensure the safety of overseas assets and personnel, effectively responded to financial market fluctuations, proactively conducted special stress tests in key areas. We accelerated digital transformation, continuously improved the group's technological operation level. We consolidated basic technological capabilities solidly, advancing infrastructure and construction with the total number of servers in the group's cloud platform reaching 40,000. We deepened the innovative application of new technologies, released the AI application and promotion work plan, and utilized the large model LLM technology to empower over 100 scenarios across the bank. We also deepened efforts to reduce the burden on grassroots levels with enterprise-level RPA covering over 3,300 scenarios. Going forward, BOC will continue to focus on its main responsibilities and businesses, fully leverage its global presence and comprehensive operations, solid advance its own high-quality development while serving the real economy, and lay a solid foundation for the conclusion of the 15th five-year plan period and the commencement of the 15th five-year plan period. We will optimize financial supply and improve our diverse and professional product and service system. We will actively serve domestic demand expansion, consumption promotion, and investment stabilization. We will increase credit allocation to key areas and weak links. We will support enterprise production, operation, and job stabilization and expansion through finance. BOC will continuously improve the product and service system, highly adaptable to new quality productive process. focused on the overall goal of building modern people's cities, supporting the stable and healthy development of the real estate market through finance. Second, we will leverage advantages and characteristics to enhance global layout capabilities and international competitiveness. We will strengthen financial support for key regions and areas of Belt and Road Corporation. We will improve the quality and efficiency of services for Chinese enterprises going global and foreign investment coming into China. will support the construction of the RMB clearing network and expand the leading advantage in source border RMB clearing. We'll fully meet customers' diversified investment and financing needs in a low-interest rate environment and enhance the adaptability and competitiveness of comprehensive financial services. Third, we'll focus on risk prevention and control and firmly guard the bottom line in preventing systematic financial risks. And fourthly, we will strengthen asset... and quality management, enhance forward-looking control market risk, improve the quality and efficiency of internal control and compliance management, accelerate digital transformation, continuously consolidate the foundation for high-quality development, and deepen the application of new technologies like AI, agilely respond to market and customer needs, accelerate product innovation and promotion. Friends facing a complex and changing internal and external environment, all employees of BOC will unite and overcome difficulties and make progress to repay the trust and support of our customers, investors, and all sectors of society with stable operating performance. Thank you, and your questions are more than welcome. Thank you, President Zhang. Now we move on to the Q&A session. In order to enable more participants to have opportunities to ask questions, please limit yourself to one question each. Before posing your question, please state your name and institution. Meeting Assistant please take the first question.

Can I ask the question? Sure. Thank you. Thank you for giving me the first opportunity. from UBS. First of all, I would like to congratulate BOC for achieving very prudent results in the first half of the year. So since the beginning of this year, the bank has faced a complex and a changing macro environment. So how does the management evaluate your performance in the first half of the year? Just now, President Zhang has mentioned key areas of work for BOC. So given the latest domestic and international situation, what's your business objective and the strategy for the future? Thank you very much for your continued interest in BOC's operation strategy. I will address this question to Mr. Zhang. Thank you for your question. Just now, I have given you a comprehensive introduction of the business results. I've mentioned that in the first half, the financial benefits of BOC was steady and the assets and liabilities have a steady growth. We have done a good job in risk control and improved the quality and quantity of our customers. And this has been fully recognized by everyone here. Now, how do we see the results of the first half of this year? Well, I think there are five areas. First, we have fully implemented our responsibility as a state-owned major bank We have implemented the spirit of the Central Bureau Committee meeting on April the 25th focused on the two majors and two new areas and play a bigger role in serving the real economy. In terms of fulfilling our responsibilities as a major state-owned bank, BOC has made our own contribution and efforts. Also, it has laid a very good foundation for our continued business growth. For example, RMB loans of domestic institutions increased by RM1.41 trillion. Also, our loans to manufacturing sector and to the business sector have outpaced our peers. We've also implemented a consumer support policy and the loans for trading consumption have increased nearly three-fold compared with the last year. Also, in technology finance, Our new financing has exceeded our peers. So this is the first thing. Second, we have consistently created very good shareholder returns. Ever since BOC's listing after the joint stock reform, BOC has delivered over 940 billion RMB of dividends. So since 2015, the dividend ratio has remained at 30%, which is very high. And the investors have fully shared the business results of the BOC. Especially since the beginning of this year, we have overcome the difficulties and challenges to promote high-quality transition in a low-interest environment. And the operating income increased by 3.61% year-on-year and is expected to maintain at this good level among the state-owned banks. Third, we have actively seized the market opportunities brought about by the changing external environment. Actually, this has brought a lot of opportunities for the transition of commercial banks like us. We have seized the opportunities of implementing a package of financial policies, and we have introduced a series of comprehensive service plans for AI and the going global of businesses. we've also seized the opportunities of the recovery of the capital market and we have built the open wealth management platform and developed the wealth management business and these fees from the wealth management business have also achieved rapid growth and outpaced the market and this has also hatched the insufficient credit demand and also helped us address the profit and income difficulties in the low interest income. Number four, continue to consolidate our global advantages. We have consistently enhanced the resource input for the overseas institutions. Now we cover 64 countries and regions and established a financial service network of one access and global response. In the first half of this year, we have consistently optimized the one bank, one policy strategy for overseas institutions. and the contribution, the profit contribution of overseas institutions reached 29.76% up by 2.12 percentage points year on year. And number five, we have strictly observed the bottom line of risk compliance. We have been among the first banks to complete the replenishment of 165 billion of CET1 we have improved and deepened the comprehensive risk management system development and have maintained a very good and reasonable level of risk compensation capabilities. We've also improved the overseas risk shock response mechanism and has carried out an exercise for responding to extreme scenarios so that we can better control risks for the overseas institutions. in the second half of the year we face some shared pressures and challenges as our peers but we are competent to address those challenges and to achieve steady operation results I think it can be seen from three aspects first in the domestic low interest environment this is our common challenge we will have to continue to improve our asset and liability structure and further and expand the non-interest income. Second, the Federal Reserve will probably start the interest cut, so we need to seize this window period and make sure that the overseas business will make more contribution to our overall business. Third, we will continue to address the risk pressures from inclusive finance and consumer finance. We need to strengthen risk control in key areas, so as to ensure asset quality and control risks. Just as you have mentioned, in the interim results release, I have talked about eight insists. We will continue to follow this strategy to carry out our operation work. and I would like to highlight the following for your reference. First, consolidate our advantages to improve our global competitive advantage. We need to leverage our competitive advantage of global layout to offset the low interest rate environment so that our global business will make greater contribution to the group. As you can see in the first half of the year, our global advantage have played a very important role heading in offsetting the risks of the external environment. So in the future we will improve our global financial market business, global financial institutions business and to accelerate capacity building for the global custodian businesses so as to nurture new growth points for our business and make us more competitive globally. We need to maintain our net interest income. We need to consolidate the customer deposit base and to increase the size of low cost deposits. We need to seize the market opportunities offered by the wealth management businesses and to further increase our total financial assets. We also need to reduce the cost of liabilities so that the low-cost customer deposits and the comprehensive income will play a greater role. Also, we need to expand to medium-sized credit clients, improve the return on assets. Also, we need to be flexible in bond investment so as to increase their contribution. Third, coordination for better comprehensive services. We need to establish a comprehensive asset management platform for the group so as to meet the investment and financing needs of the customers in a low-interest environment. We need to dive deeper into the Hong Kong market because we have a lot of advantages in the Hong Kong market. We need to fully leverage that, especially investment, insurance, and the comprehensive capabilities. Also, we need to establish a technology finance ecosystem so as to expand our early mover advantage in patient capital. And number four, we need to maintain a high contribution of the non-interest income. We need to accelerate strategic transition and promote the development of non-interested businesses so as to ensure relatively rapid growth for personal, Business, we need to establish an open wealth management platform covering whole group and full markets. And for corporate business, we need to seize opportunities of bond insurance, mergers and reorganizations, and the public leads so as to expand the income for the M&A advisor consultants. and to seize the opportunities in market volatilities and to make sure that the financial market business make greater contribution to the group's value. And number five, reduce cost and increase efficiency. We need to focus on intensive operation that is strong front desk, intensified middle desk and efficient back end so as to optimize business procedures and risk control. and second, we need to strengthen the granular management of the financial cost, focus on resource guarantee in key areas and remain committed to strategic and benefit orientation so as to improve the efficiency of investment. Number six, we need to make sure that we have prudent operation. We need to enable digital and smart transformation of the risk management the management has developed relevant plans and that we are implementing those plans. And just as you have pointed out, inclusive finance, consumer finance has some key risk areas and we need to strictly control the new MPLs and strengthen substantive collection and enhance asset quality control for key accounts. Also, we need to strengthen compliance control for overseas institutions to improve the efficiency and quality of internal control and compliance management. Number seven, remain target-oriented to optimize customer and business structure. For corporate clients, we need to expand more mid-sized clients and strengthen the digitalized operation system so as to dig deeper into those clients that offer high comprehensive value. And for financial institutions business, we need to have granular management and operation to target more international clients. And for retail clients, we should target high net worth individuals and leverage our global advantages to play a better role in the asset allocation for those high net worth individuals. And also, this is also an important way to expand our low cost liabilities. And in terms of business structure, we need to focus on the five key areas. For example, technology finance, we need to create an ecosystem, and for green finance, we need to have more credit supply for the high speed railway in green buildings operation for inclusive finance we need to strengthen the financial coordination mechanism for small micro businesses and for pension finance we need to enrich our product offerings for the senior citizens and also for technology and digital finance we need to promote digital transformation we also need to improve our government financial services so as to create a unique model of BOC in serving the government financial needs number eight we need to empower business through digital technology and enhance our basis of self-controlled technology just as you have heard BOC and its branches and subsidiaries have made a lot of attempts in digital empowerment and have yielded very good results. And for the group level, we are actually spreading and promoting these practices and have yielded good results. We strengthened the application of new technology such as AI to improve the efficiency of customer services and management. In the first half of this year, China's capital market has recovered, and both the Shanghai and Shenzhen stock markets have rallied and bottomed out. And BOC has the confidence and capabilities to leverage this capital market recovery to create more value for the investors. And also, I hope that the investors will continue to pay attention and support BOC. Thank you very much.

Thank you, Mr. Zhang.