Agricultural Bank Of Chin

Ladies and gentlemen, good afternoon. Welcome to Agriculture Bank of China 2024 Interim Results Announcement. I'm very honored to meet with both offline and online analysts as well as media friends from both and home and abroad. So here I would like to thank you for your active participation in our announcement and thank you too for your long-term interest in Agriculture Bank's development. So we do have the other participants, the Executive Director, Vice President of our bank, Mr. Zhang Xuguang, Executive Director, Vice President Lin Li, Vice President Xu Han, Vice President Liu Hong, and Board Secretary Liu Qing, as well as the other directors online. Next, I would like to firstly introduce the performance results of Agriculture Bank of China in the first half of the year. We actually strongly implement the deployment of the central government. We also actually do a very good performance in our business performance, and we also strike very solid steps in terms of high quality development. There are four major manifestations. First, the major quality indicators keep positive growth. We should see that the Chinese economy has been continuously recovering and also created a very good business environment for Agriculture Bank of China. So we have been very entrepreneurial. In the first half of the year, we have the net profit 136.5 billion, 2% increase year-on-year and operating income 3,075 billion, increased by 4% and interest income 290 billion, increased by 1%, so you can see these are all positive growth. And NIM, 1.45% and one bips up versus the first quarter. So you can see NIM has been stabilized and the second deposit as well as loans increased positively. So you can see that loan totaled 24.4 trillion, an incremental of 1.77 trillion. and increased by 7.8% and will also be very strong in terms of the client management. So you can see that the total deposit from the client and 34.1 trillion incremental of 1.5 trillion and domestic corporate balance is about 11.9 trillion and personal deposit as well as the individual deposit are all ranking the first among the peers. And the deposit interest bearing is 1.63 percent, dropped by 0.08 percentage points. And sadly, the asset quality remains stable. NPR ratio 1.32 percent, dropped by 0.01 percent versus the end of last year. And you can see that the overdue loans also dropped by 0.01 percent. And the loan provisioning rate is 303.94%. So you can see that the total provision is more than trillion. So you can see the asset quality is pretty much sound with adequate provisioning and a very safe cushion. And fourth, we have been further consolidating our client base. Our individual clients is about 870 million ranking top among the peers. The newly added credit card users is about 3.96 million, and agriculture wealth management, 11.9 million, and corporate clients, 11.5 million, an incremental of 674,000. Clients are the cornerstone for our survival and development. We have to further consolidate the base of our clients for the future growth. In H1, The reason for such a sound performance should be attributable to the wise guidance as well as determination of the central government. So good microeconomic conditions as well as the support from the shareholders as well as the clients, it should also be attributable to the positive efforts from all the employees of our bank. And next, I would like to talk about the three major tasks. First, we serve the three agriculture as well as the integration of urban and rural development. First, we coordinate the new type of rural revitalization and urbanization. We continuously to increase the loans provided to the county level institutions. So you can see that the county level loans accounts for 40.1% incremental of 87 million, increased by 9.4%. 1.6% higher than the average. And second, we focus on a major area and depend on financial services. We focus on grain as well as the major agriculture product supply. And the relevant lows is about 99.7 billion, incremental of 9.4 million. So you can see that we have been more capable in terms of safeguarding supply. So you can see that the rural related and the construction related loan balance is 2.2 trillion increased by 13.6%. And 830 poverty alleviation counties also get more than 11.9 million loans. And 180 focused or the mainly targeted poverty alleviation counties also has incremental. of 1.3 million loans. This has been further consolidating the results of the poverty innovation and the surge. With new models, we have been very much dedicated to benefiting the agriculture. Our agriculture related loans has been witnessing the increase of 94.5%. We also have the agriculture land loans, cold chain loans, as well as the other innovative loan types to satisfy diversified needs of our agriculture clients. In the poverty-stricken areas, we also have the poverty alleviation loans and incremental of $33.2 billion to empower the agriculture farmhills. And second, the five major chapters, as well as the other financial services, do witness fruitful results. First, we focus on the development of the new quality protective forces, and we also Constructed a new mechanism for the high technology manufacturing, an incremental of 52.7%. And the strategically important emerging area was the incremental of 53 billion. And the second, we also focus on the low carbon and green transition of our society. We deploy the green as well as the green credit extension. Green credit balance is more than 4.8 trillion. Well, at the same time, through green M&A loans, green bonds, as well as the other products, we also offered more than $200 billion, an increase of 30%. The ESG-related wealth management products totaled $19, with a total amount of $54.1 billion. And third, we continuously optimized inclusive finance services. Inclusive finance has been witnessing higher quality So PBOC calculated the inclusive loan is actually 450 million. And in terms of the amount as well as the growth, we're also ranking number one. And fourth, we actively developed a pension support financial development. We developed multi-level, multi-peeler pension scheme development to support the electronic as well as the physical social security card and medical card as a total clients is actually the 242 and 343 million. And the individual pension accounts as well as the contribution are also ranking among the top in this industry. We also optimized the elderly support financial services. We have the elderly adaptive renovation for our financial outlets so as to deliver a more comfortable and convenient environment. We also get more support to our clients, including the credit as well as loans deposit and elderly support products. And fifth, digital financial services has witnessed more innovations. Reform is the first driver. So we deeply integrated into the digital China development to empower our businesses. So the personal mobile MAU is actually 223 million. So the increase of 8.59% also taking the lead in this industry. For the online credit, Nongying Yidai balance is more than 500 million, increase of 20.3%. We also serve the high quality development. And the third, we're also coordinated the safe development first we have been intensifying to mitigate the credit risk risk mitigation is our top priority we have been actively promote the risks in different areas to support the real estate sector financing support so as to safeguard the delivery of the houses we precisely satisfy the reasonable needs of the real estate projects we implemented a package of the debt mitigation and resolution solutions so as to properly handle the resolution of the NPL and actually the asset quality has been very stable and the second we've been forward looking in market risk control we timely adjust the duration as well as the structure of the bond so as to have a better management of the exposure we also greatly strengthen the management of all kinds of platforms to have the see-through management of all kinds of businesses to have a very good understanding and assessment about our derivative strategies and instead continuously consolidate the technology safety mechanism to have the emergency release as well as the other mitigation drill to have tested more than 50 systems to actually ensure the continuous business deployment. So these are the business performance as well as our focuses in the first half of the year. And next, I would like to brief you about our arrangement in the second half. We think that the Chinese economic development is quite resilient from middle to long term. Economic transition and industrial upgrading has been properly handled. New momentum has been cultivated, in particular with the third plenum, all kinds of measures to Japan reform as well as the macro regulation measures. So market vitality as well as potential will be continuously stimulated. But at the same time, our bank will continue to implement the sub-plenum of the 20th Party Congress theory to continue to precisely serve the three agricultures as well as their real economies so as to promote high quality development of the Agriculture Bank of China. And in second half of the year, jobs first we will continue to actually maintain the stability so with the positive growth we will continue to take the potential to further expand the sources of income to consolidate our business and the second we will continue to serve the agriculture rural as well as the farmers related business as well as the county clients According to the set plenum of the 20th Party Progress, we have seen more opportunities for the rural development. We will grasp these opportunities to focus on the priorities of the agriculture as well as rural development, innovate our business so that we will better serve the street agriculture as well as rural revitalization. we will continue to strengthen the services delivered to the real economy. And in recent years, we will continue to promote the optimization of the agriculture-related economy. So we will continue to deepen the financial services delivered to the five major chapters, stabilize the growth, and to make up for the weaknesses, continuously to improve the precision of serving the real economy. And we will also be forward looking to mitigate all kinds of risks. We will actually have the overall safety approach. So we will have the early warning as well as the disposal so that we can ensure the overall stability of the quality. And next, we come to the QA session. We'd like to invite Liu Ting, the World Secretary, to moderate this session. Thank you, President Wang. Now we come to the QA session. Each of the speakers, please raise one question only. Please also identify yourself before you raise the question. First, on-site speaker, the lady in the front row. Dear management, thank you for giving me this chance for raising a question. I come from Shanghai Securities. So we've seen that the revenue and the margin are quite good in the first half of the year. So what are the drivers for such a good performance? In the second half of the year, do you think that you will continue to maintain such a good performance? So what will be the drivers for the future growth? Okay, let me take this question. I would like to thank the journalist from Shanghai Securities Daily and then just a brief view about our performance in the first half of the year.

In the first half of the year, we keep our role as the mainstay for serving the real economy. While promoting economic growth, we have, in a down-to-earth manner, propelled our own high-quality development, striking a balance between speed and quality, efficiency and quality. Overall performance is turning for the better. According to the data shared with you, operation net profit, operation income, and net interest income have realized year-on-year positive growth and NIM has also been stabilized, MPL ratio stabilized. That means in the context of the current economy, this is no easy job. This has laid a solid foundation for the whole year performance. It also validated the effectiveness of the initiatives and strategies for the first half of the year. That means the key priorities we have set and the methodology we adopted are effective. So we are confident in the second half and also the whole year performance result. In the opening remarks we have mentioned for the second half, the target is to keep the whole year operational quality and efficiency. keep steady growth and stability and break and build we will use for keeping to realize whole year stability and improvement for the whole year first stable growth of the credit size and optimization of the structure in the first half of with strength and support for the real economy no one's have realized the stable growth in terms of the structure we have been optimizing it In key areas and weaknesses, we have strengthened our efforts. For example, county loans, rural revitalization, key county loans, manufacturing industry, green credit, inclusive finance, and the sci-tech finance. We have kept a very good, very high growth rate. So the structure has been keeping optimizing. and overall scale is having stable growth going forward we'll continue to focus on our key business areas and adapt to the policy directions of macroeconomic control and make sure the five major initiatives will be used to serve new quality productive forces with a stable supply of financing second we'll go all out to ensure the overall stability of meme in the first half meme has stabilized and even turned for the better in the latter half of the year, we will strike a balance between quality and pricing so that the pricing is more refined. and will also, in a down-to-earth manner, improve our service capability and also the cementing of the customer base and control the liabilities to ensure the stability of NIM. Third, we'll keep net interest income diversified growth. In the first half, fee income decline margin is 7.9% compared with quarter one that is narrowed. In the second half, We will keep expansion of domestic bonds, promote consumption, and the credit market high quality. These opportunities will be used for high quality development of credit. We'll also follow closely the market developments and adapt flexibly to financial markets fluctuations to optimize our investment portfolios and transaction strategies to tap potentials and encourage the growth of other net interest income. Lastly, we hope to keep stability of asset quality. That is a very essential point. In the first half, MPL ratio over due rate compared with the end of last year declined by 0.01 percentage points and the provision coverage rate was kept at very high level. So we have adequate capability to compensate for the risks. In the second half, we'll comprehensively increase risk control, especially key areas and county level risk mitigation. And we also strengthen the demand management of overdue loans. And we'll also strengthen the efforts to collect back the interest and principal for non-performing assets. Through such measures, For the stability of the overall performance of the second half, we are quite confident. That's all for my answer to this question. Thank you, President Wang, for your answer. Now we would like to invite a question from the online meeting room. We will use the application time as a sequence. First question, please. Thank you for the opportunities to raise the question, Xi-Zhang from Morgan Stanley about NIM. We can see in the first half, it has been rallying and has been recovering. So from the asset side and from the liability side, why NIM is getting for the better. Going forward for July, the deposit interest rate pricing is lowered, but LPR is also lowered, of course. So can you give us your trending, projecting about the meme trend? Thank you, dear analyst, for the question. Let me respond to this question. In this first half of this year, Under the guidance of macroeconomic policies, policy interest LPR has been lowered and overall trend of interest rate is declining and the banking sector is conceding profits to the real economy continuously as the analyst mentioned. NIM is overall narrowed but compared with quarter one, it is stabilizing and turning for the better. And for the new margin rallying from the asset and liability sides, mainly affected by the falling factors from the asset side, mainly it is due to the lowering of LPR and also the mortgaging loan interest rate adjustment of the real estate sector. And we also have exceeded profits to the real economy. Therefore, the real estate Mortgage loans interest rate is lowered. This is consistent with other banks and the decline margin has also turned for the better. In order to adapt to the current situation, we have been following closely the economic transformation, for example, centering around Sanlong and the five major financial initiatives to tap the potentials and needs of real economy. For the overall credit expansion and the structure optimization has also contributed positively to NIM. It has also offset the overall impact of lowered LPR from the liability side we have been conveying the messages of the market requirement of interest rate adjustment. Last year, comparable to our peers, for three times, we lowered the interest rate. This year, many loans entered the state of repricing, especially for medium and long-term loans. Therefore, for newly generated loan interest rate, it has been remarkably low. reduced. Therefore, for deposit cost, pressure on us is lowered, and the deposit interest rate has been declined a little bit compared with the end of last year. For 2023, RMB newly generated time deposits, the interest rate is 2.16%, and for the first half of this year, it has dropped to 1.85%, a 31 BP decline. And about the deposit interest rate, it has been lowered to 1.7%. Compared with last year, it was lowered by 8 BPs. So overall impact from both loans and deposits, you can see. And from the liability side, the cost is declined and the pressure on us is lowered. Therefore, NIM is turning for the better. The analyst asked the question about the July LPR or policy interest rate lowering and ABC interest rate lowering. The overall impact of these two factors can be offset and that is beneficial for us to stabilize the NIM. going forward especially in the second half of this year in terms of the NIMS trend according to our current analysis overall NIMS will be kept at a stable level on the one hand we are enhancing financial support for the real economy so that the financing cost can be reduced while stabilizing so NIM will have the pressure of further narrowing coupled with the bond market interest rate at a low level so NIM will still be under pressure we will work hard to realize a reasonable growth of credit size and also the constant improvement of quality and structure to offset the pressure from the liability side from the policy perspective june july july deposit interest rate lowering is a reflection of the results of the market-based deposit interest rate adjustment especially for r b market the pressure will be lowered and for the us fed interest card is in the final stage. It is estimated that there will be interest cards by the US Fed in September. So from that perspective for foreign currency interest, the liabilities interest rate increase will be ended. So for the current pressure from foreign currency will also be alleviated and we are constantly improving and strengthening our management to strengthen the control of liabilities cost to ensure high quality of liabilities. From that perspective, the deposit interest rate has space for further improvement taken as a whole. In light of all those factors, NIM in the second half will be kept at a stable level. We will also strive to realize further margin improvement of NIM. That's all for my response to your question. Thank you, President Wang, for your response and to Depp's explanation about the new trend. Next question. Gentleman in the middle, please. Senior Management from Pungpai News. In the first half, ABC Loans have got a very stable level. What will be the future top priority areas for loans to serve the real economy? I'd like to ask BP to answer the question. Thank you, dear journalist, for your question. For ABC, we have been upholding the principle of serving the real economy through five major initiatives, financial initiatives to provide credit support for weak areas. There are following features. First of all, the growth is balanced and evenly distributed. Current loan balance is 24.4 trillion yuan, an increase of 1.8 trillion, a growth rate of 7.8%. For a real economy, loans increased by 2.1 trillion, growth rate is 10.2%. taken as a whole, credit expansion has kept a reasonable pace and the overall size is increasing. Second feature, credit structure is fit for purpose for transformation. ABC is sticking to our main businesses, county level loans increased by 9.4% higher than the average growth rate by 1.6 percentage points. We also focus on key areas of green finance, credit balance, increased by 8 trillion yuan, growth rate higher than average. The manufacturing industry increased over 270 billion yuan, a growth rate of 8-9%, increasing finance loans, a growth of 600 billion yuan, a growth rate of 24.4%. And for personal loans, we are leading an increase of more than 500 billion yuan, a growth rate of 7.3%, both the increment and the growth rate are at the leading position compared with our peers. But personal business loans increased by more than 270 billion yuan, For personal consumer finance loan, including credit cards, it increased about 130 billion yuan. In the second half of the year, with the Chinese economy further rallying, the real economy's credit demand will also be rallying. And it is estimated the total credit loans of ABC will keep a reasonable growth. In the second half, we'll keep working on following priority areas. First of all, based on the central conference on financial work, according to the requirements for high quality development with optimized allocation of financial resources. We'll get more credit resources to be put into five major chapters, and key areas set by the country to further optimize the credit structure. First of all, we'll continue to focus on main businesses, including poverty alleviation, in the industry development in rural areas, totally seven areas to increase credit support for rural revitalization. Second, we'll strengthen inclusive finance services, which is still a blue sea with great potentials and great demand. ABC is committed to building ourselves into a bank with the widest coverage and the biggest support for inclusive finance loans. Third, we'll serve green transformation with positive support for low carbon transformation and the green in upgradation of ecosystems.

And fourth, to make tech finance even stronger to follow the technological guidance from our central government and focus on the key client base to improve the credit extension support and also adapt it to all kinds of FinTech services system related to the latest development to stably expand the scope of the pilot projects as well as to further accelerate iteration so as to provide a whole life cycle services to the tech companies, and fifth, to deliver the more comprehensive individual financial services. Recently, you can see continuous growth of the farm holds are great support to our business development. In the second half of the year, we will focus on the production, consumption, and operation of the farmholds so as to increase the extension of the credit to the farmholds. Generally speaking, we will coordinate the balanced aggregate as well as a good mixed structure so as to enhance the quality of the credit extension. Thank you, President Zhang. Next one, please. This gentleman. Hi everyone, I'm the analyst from Guo Xing Securities. In May, you can see that Western policy of the real estate sector, the government has been promoted commercial banks participated in the reasonable finance of the real estate developers. So what about the wet list of the Agriculture Bank of China and what are the related projects and the corporate real estate loans, whether the NPL already hit the bottom, what will be the priorities in the future? And how are you going to consolidate new model to serve the real estate sector? Okay, we would like to give the floor to Vice President Liu Hong. Thank you for raising this question. Since the first half of this year, the government has been positively guided real estate sector policy optimization. We downgrade the loan interest rate and to reduce the down payment ratio and lifted the extensions as well as restrictions so as to provide a loose environment. So you can see there are some positive changes on the market. In some of the geography, the commercial house projects sold are very positive and on the upward trend, the confidence of the market is slowly recovering. Our bank has been resolutely implement the decisions as well as the policy so as to play our role as a counter cyclical. So we follow the market oriented as well as the legal based rules to satisfy all the developers reasonable financing needs to facilitate the stability and optimization of the real estate sector. In the first half of 2024, So our real estate balance is $892.3 billion, an incremental of $131 billion, mainly to the urban renovation as well as the social housing projects, et cetera, as well as the commercial projects with better promises and a stable cash flow. So the client base also covers SOEs, mixed ownership, as well as the private companies. So you can see that with the urban real estate financing mechanism established in the first half of the year, you can see the three batches of the white list. ABC strictly follow the regulatory requirements and also, you know, capture the projects and implement the closed and management of all the funds. So actually there are SOEs, mixed ownership, as well as the private developers are all in the name list. So actually, We also positively push forward the smooth progress of the projects. By the end of June, you can see that the real estate NPR ratio has remained flat, much lower than the peak time of the previous year. The newly added NPR is also decreasing. Our bank will continue to strengthen risk control of the property sector to have full provisioning and to actually ensure the stability as well as the quality of our assets so we will continue to construct a new model of real estate development to construct the good houses satisfied with the needs of the people so as to satisfy people's needs for living better and live a wealthy life in the future we will continue to implement the rules of the third platinum about the new decisions of the real estate to satisfy the reasonable financing needs of the developers so as to push for the sound and the positive development of the real estate sector. First, we will continue to ensure the delivery of the houses. We will strengthen the connection with the government to inevitably use different approach to finance the projects and to dispose the risks. And the second, we will continue to enhance the quality of the coordination mechanism, continue with the white list mechanism, so as to pay attention to both the quantity as well as the quality. And instead, we will continue to provide finance to the three major projects, in particular for actually the civil use list to actually have the approval procedures accelerated for the social housing projects. Okay, that's all from my side. Thank you, President Liu. Next question, please. Thank you, management, from Financial Times. My question is about rural revitalization. So in promoting rural revitalization, what will be the major measures adopted by the management? What will be the future outlook? And in the future, how are you going to implement the spirit of the subplenum of the 20th Party Congress as to do a good job in rural revitalization? We would like to give the floor to President Lin Li. Okay, thank you for this question. In Agriculture Bank of China, we regularly emphasize one philosophy, which is also our working language. We always see that, you know, we should be agriculture prioritized, which means we should serve agriculture rural areas as well as the farmers. These are our main businesses. We delicately implement the spirit of the central government and state council, promoting comprehensive rural revitalization, and highlight the political center as well as the people-centered nature. So strengthen serving the clients, product elimination, and tech empowerment, et cetera, so as to build us into a leading bank in terms of revitalization in the first half of the year the three agriculture balance is about 9.6 trillion an increase of about 800 billion so you can see the growth is 1.6 percentage higher than the average speed so we have five major actions been taken first implemented the grain finance so in terms of the farmlands as well as the seeds we actually formulated the specific and dedicated policies for farmlands and seas. We had the farmlands loans and agriculture and the grain warehouse loans, as well as the other whole product or chain product. So you can see that the supply guarantee loan is more than $900 billion, an increase of $144 billion. 10 percentage points higher than the average growth and a second we implemented and further expanded poverty elevation achievements so there is a dedicated campaign to do three things first we continue to consolidate achievements of the poverty elevation and a second we continue to promote revitalization is a area and for those low-income people we will also regularize their support in 160 key supporting areas we support in their featured products as well as the poverty elevation and we coordinate eastern and western regions in terms of the support delivery in 160 key counties the total loan balance is at more than 400 billion an increase of about 300 million. So you can see that this is also a very big increase. So certainly, we also support the wealthy development project or campaign. We support more on the tourism, e-commerce, as well as the coaching. By the end of June, you can see that the total loan balance is 2.26 trillion and 15 percentage points higher than a global average growth and falls with support of farmers to become more wealthy. We greatly support the farm households loans development so as to develop the credit worthy households development. So you can see that The continued development has been further related to the farming households last year, with the loan balance exceeding trillion level. It also kept a faster growth. In the first half of the year, you can see that agriculture-related loans is about $1.6 trillion, an increase of $300 billion. The growth is about 29.5%. The farming households is actually $6.95 million. and will cumulatively serve more than 17 million farming households. In particular, in the second half of the year, with the guidance of the Mohawk, we also have the dedicated products of Lang Nong Yi Dai. So the balance is about 94.3 billion. It will be mainly targeted for the poverty area and major supported area, as well as the revolutionary area. And the balance is 72.6 billion. And six will also implemented. the loans to support the livelihood development of different counties and countryside for example the infrastructure and public utilities as well as the other environmental improving projects by the end of june you can see that rural construction balance is 2.2 trillion an increase is 200 billion and 5.8 percentage points higher than the bank's average growth Such planning focused on promoting the China style modernization and also proposed the integrated development of rural and urban areas and focusing on promoting the common development and prosperity of both areas to empower rural as well as the urban areas, there's a series of reform measures being adopted. So you can see that county level rural areas has a new round of opportunities. For example, we will see the faster development of the rural industries and rural consumption will be further upgraded. And the rural infrastructure development will be further intensified. And rural basic public services and supporting facilities will be accelerated, et cetera. All of this will play a very important role for ABC to better serve rural revitalization. And in the future, ABC will continue to implement the spirit of the subplenum of the 20th Party Congress, in particular, focus on the key areas of rural revitalization in five major priorities. We will make dedicated efforts. First, we will intensify the loan extension to the street agriculture as well as the county area to strengthen the food security development to further upgrade the consumption in rural areas and to develop the public utilities as well as infrastructures. And the second, we should focus on the policy product as well as service model innovation. In particular, we focus on the new business format and new players and new and production players so as to build a featured supply chain development for the rural areas to precisely satisfy the needs of rural areas as well as the agriculture. So here I would like to say for natural disasters as well as agriculture price downward trend, we will comprehensively consider about the low extension rollover or the other solutions as to mitigate the challenges as well as difficulty of the farming households. And third, we'll be very much dedicated to integrate technology With finance, we use a new generation of the fintech to build a more convenient and beneficial products to the farming households. In particular, we comply with the smart bank development trend to play dig into the value of the value of the data in the rural areas as to support the business model innovation so that data can play a bigger role and the farming households, they will see more convenience while at the same time we use remote sensing of the satellites and big data and accelerate the AI deployment so as to actually facilitate rural revitalization.

First of all, we will further nurture compliant corporate culture and internal control so that we, during and after loan disbursement, we can make full use of technical means to realize whole process, whole product, whole personnel risk control. Fifth, we will improve the mechanisms of the business unit in terms of authorization and incentives. We will strengthen support for them to nurture high caliber professional talents who understand agriculture and who love the rural areas. And we also work hard to build and make full use of our personnel, especially the personnel serving rural revitalization in rural areas. They are emotionally connected to the rural areas, and they will write new chapters for pro-farmer development. Thank you. Thank you, VP Lin, for your response. Next question, please. Lady from the right. Thank you for the opportunity to raise a question. I have a question regarding digital finance, which is one of the five chapters and also a main battlefield for modern banks. So what is your progress on digital transformation and how you work on digital finance and provide a featured digital finance service system? Thank you for the question. I would like to ask VP Xu Han to answer the question. Thank you for the question. Digital transformation. Let me report to you what we have done and what we will do in the future. In the first half of the year, we worked hard in five aspects. First, we have improved digital products and service system. We launched a new generation online products. fast learn 3.0 we have also made iterations and launched a new featured products we have strengthened support for smes and sci-tech enterprises by improved the financial services for different scenarios like education government business etc so that g b and c are having win-win results through our ecosystems second we are strengthening scitech empowerment for sanon we have launched digital village platform and other agriculture-related applications. By the end of June, the platform has welcomed 260,000 entities covering more than 6,000 countries, serving more than 6 million customers, and farmers' credit size has been expanding. By the end of June, their loans balance is $1.4 trillion. an increase of 319.7 billion yuan compared with year beginning. Thirdly, we are deepening the channels of digital finance and operational capabilities. We have launched Pound Bank 9.2 by the end of February, 231 million MAUs daily serving 996,000 person times every day. We have also optimized the procedure for opening accounts to support mobile banking services for new account opening through fast and convenient services for our customers. Firstly, we are enhancing the application of AI. for key areas. AI utilization share is increased. We pay special attention to the empowerment of AI for our business operations through intelligent outbound calling and manual outbound calling and our outlets. We're integrating the three. We have also launched the Nongyi Riga Palm Traderers so that trailer business can be handled online through Palm Banking. We're also efficiently empowering the daily operations of our business managers. AI is very popular right now. We have worked very hard on AI. In addition to big model, big data model, we have also worked hard on decision-making AIs. Thirdly, we are solidifying the digital infrastructure to accelerate enterprise level wide coverage enterprise architecture so that enterprises can enjoy the bottom layer data support from us. The unit is 10,000. So originally it was more than 10,000. Now we focus on between 200 and 300 more frequently used items. It is a huge systematic project. You can also make a comparison between ABC and other banks. So we have worked very hard and effectively. in terms of the utilization of SciTech. We have also coordinated the data centers of three places to progress with distributed core project to increase our cybersecurity protection capabilities to strengthen guarantee for business continuity with reliable and stable financial services. So that's a five-prong answer regarding what we have done in the first half of the year. Next, I would like to focus on what we will do in the future. Mainly, the following will go all out for smart bank centering on AI deep application will do well in the following. First of all, business readiness to accurately identify the directions for utilization of AI to so that operation model and business processes can be coordinated and aligned with each other so that we can provide better services and convenient services for customers. Second, data readiness. Through data and knowledge projects, we can accumulate high quality data and solidify the data foundation for AI application. Maybe after another one or two years, you will find that the bottlenecks of AI is not the algorithms and computing resources, but data. So the key is the data. So we need to work hard on data. Third, dwell in technology readiness. Technology plus model will be our IT's architecture for IT R&D and operation efficiency will be increased. Current architecture and processes are for the existing business processes. Previously, it was reliant on manual labor, but now we are using systems. But if you use data, AI, and models very quickly, that is a big challenge for the system architecture of banks, big challenge for traditional architecture. Firstly, we will do well in management of models to improve host lifecycle management models so that we can strengthen continuous operation capability and keep improving data model capabilities. Previously, we didn't have models, but now we have too many models. They may be conflicting with each other and present problems to us. So new problems. Fifthly, we'll ensure personnel readiness to have high quality talents to get the talents ready for AI application in the future. That's my five-prong response to the question. Thank you VP Xu for the answer. Now let's invite another question from online meeting room. Can you hear me? Yes. Thank you I'm from . I have a question related to inclusive finance. Over the past several years, the regulators have been promoting the banking sector to develop inclusive finance loans. ABC has been very active. Your inclusive finance business has been developing rapidly, loan balance more than 4.5 trillion, but the economy is down, so people are concerned. For SMEs and private enterprises, they may not be strong enough in being resilient in risks and some assets may expose the risk. So how do you guard against the credit risks in terms of inclusive finance and going forward, how do you strike a balance between scale growth and risk control? Thank you. I would like to invite VP Liu Peng to take the question. Thank you for the question. In the first half of the year, ABC has been actively honoring the spirit that financial work is of political nature to serve the people, to strengthen support for inclusive finance. We support SMEs for their operations, which has greatly promoted the real economy to turn for the better. By the end of June, inclusive finance loan balance of ABC reached 4.5 trillion yuan, an increase of 923.6 billion yuan, and for SMEs inclusive finance loans increased by 3.2 trillion and an increase of more than 500 billion yuan compared with the beginning effective users and increase of 890 000 compared with the beginning so in SMEs and inclusive finance loans our main feature in ABC. Now the Chinese economy overall is having a very good fundamentals, good momentum is being accumulated, providing a solid foundation for healthy and sound development in this area. ABC will continue to strengthen support for inclusive finance by expanding the coverage and making the services more convenient. First of all, we focus on major strategies, major areas and the vulnerabilities and strengthen the loan disbursements for inclusive finance, optimize the credit structure to meet the agriculture-related, sci-tech, green and manufacturing industries' loan needs and also the inclusive finance market financing needs in northeast of China so that we can serve the high quality development of the real economy. Second, we'll promote the development of the digital inclusive finance version 2.0 so that we can have the product system and have a dedicated platform for SMEs and pro-farmer platforms so that we can further improve our services for inclusive finance. Third, we'll give full play to ABC's role feature of having wide coverage in rural areas will combine offline and online and work on two legs, rural and urban, so that resources can be more reasonably and fairly distributed and financial development can benefit more general public. ABC will uphold the philosophy of high-quality development, strike a balance between business growth and risk control, and ensure compliance and internal control. Inclusive finance loans' overall risk has been kept at a low level for many years. Asset quality has been kept within the range of regulators' requirements, with the macroeconomic policies results began to play out, the market players will resume. ABC has the confidence and capability to continue to realize the high quality and sustainable development of inclusive finance. Thank you. Thank you VP Liu for the answer. Next question. Gentleman in the middle. City Management and Union from Economic Daily. And my question is related to retail business. We can see ABC announcement of results, be it personal loans or credit card business. For retail business, it has been growing very well. But for the banking sector overall, the growth margin is declining. So can you explain to us the development priorities for retail banking of ABC? Now I would like to ask VP Lin to answer the question. Over the past three years, among the 700 commercial banks in the world, ABC for three consecutive years has been awarded the largest retail banking with the largest brand value. For financial sector and banking sector of China, ABC is the only bank that has been awarded this title, and that shows the high recognition of the work by ABC. It also shows the retail business changes in banking sector of China. In ABC's operations and development, I think retail business has very important role position, a strategic position. In specific practice, we have been earnestly practicing the philosophy of people's finance for the people. We uphold the three drivers, that is innovation, sci-tech, and service. In this process internally, we have also taken stock of the experience that is walking into tens of thousands of hospital households, racking our brains, making every possible means to promote such development and kept a very good momentum. By the end of June, for ABC's personal customers, total is 870 million, which has kept our leading position in our peers.

You can see that for the new citizens as well as the elderly people, we pay special attention. We have to fully respect those elderly people. We also have the commercial clients and the countryside clients, et cetera. We have very effective measures adopted for different kinds of a client base. Individual clients' financial assets altogether, 21.18%, And you can see that the individual deposit daily is $17.55 trillion, all among the first for the peers. And individual loans is $8.65 trillion. In the future, for ABC, we will continue to implement the third plenum of the 20th Party Congress, as well as the Central Financial Conference period. In particular, we would like to focus on the priority area for the general public, continue to deepen reform and opening up to do the difficult but correct things so as to enhance the quantity as well as the quality of the financial services. In the future retail business, there will be three focuses. First, focus on inclusive finance to increase the convenience as well as the availability of the services. first to strengthen the accountability of the services. For the integration of the rural and urban areas, we would like to specifically provide good services for the new citizens, in particular for the May 21st financial service plans, and to further enhance the so-called, actually the blessing card for the migrant workers, SME cards, as well as the other feature products promotion just to facilitate new citizens to be better integrated into the new urbanization process. And the second, we would like to continue to expand financial supply. We abide by the open bank philosophy to insist on the client-centered approach to optimize the ecology of the services. We insist on that the team building will be the key to enhance the comprehensive services capabilities and to focus on innovation of the product as well as the services. insist on digital finance so as to construct the competitiveness of our businesses. And here we would like to coordinate, consolidate overseas as well as domestic business resources to promote insurance, wealth management, precious metal, as well as the family trust, as well as the private banking businesses, so as to link the entire market to cover the whole spectrum of the businesses. And of course, during this process, we're going to manage our expectation as well as to have the qualified delivery, to have the crossover cooperation so as to provide more and high quality product and services to our clients so as to satisfy their diversified needs and to facilitate their wealth-related income. and said continuously to enhance the availability as well as the convenience of the financial services. We have to make good usage of the platform-based instrument to go to the schools and enterprises as well as the campus so as to reach out to more clients. In terms of the outlets deployment, we have been promoting the development of the community-based outlets so that ABC will become the bank nearby. or the next door bank. And we will continue to optimize the process of our businesses so as to enhance the convenience of the foreigners as well as the elderly people. In particular, in terms of the payment, and second, we have to focus on the pension-related finance. And first, we have to provide the stable and sound financial services. continue to do a good job for the pension finance to promote the pension related services all over China to have the consumption credit as well as the other pension related services so that the elderly people will get better product as well as services during their whole life cycle. And we should also assist our client to have a safe and sound as well as the appreciated wealth for the elderly support. And the second, to enhance the warmth of the financial services, we have to further penetrate to our client to further expand the coverage of the urban and rural areas in terms of the pension finance to make our outlets more elderly adaptive and to positively explore the so-called the digital engineering service so as to enhance the precision as well as the warmth of the financial services and instead to further do a good job in terms of the financial education. We should take good advantage of the 22,000 outlets of ABC. We should also enter into the communities, the service providers as well as the elderly universities and to provide all kinds of promotion campaigns such as anti-fake campaigns so that to safeguard the pocket as well as the wealth of the elderly people. And third, focus on customer services as to enhance the satisfaction. We have to provide precise services to our clients. In particular, five capabilities. First, comprehensive service capabilities. and digital support capabilities, precise operation capabilities, professional investment advisor capabilities, as well as the very people-centered insights capabilities. Through these five capabilities, the retail business of ABC will shift from product-centered to the client-centered philosophy. In the past three years, ABC in our retail businesses, we have been insistent on this principle the shift from product-centered to the client-centered approach. At the same time, we will continue to strengthen one client and one bank philosophy, continue to provide layered services to a different segment of the people so as to satisfy their differentiated needs, and further to consolidate the consolidation of the resources. Now we have been thinking about the unified the client benefits system so as to enhance their experiences. And second, to even enhance the precise services, in particular, the tech-led as well as the data-empowered services. Data should further facilitate our AI plus services. In ABC, we have been promoting AI plus. There are seven projects altogether. Two of them are in the retail segment. so that online as well as offline will be better converged together in terms of service delivery. First, we have to take a deep insight into the demand and then match the relevant product and then reach out to the clients and then finally accompany our clients during the whole process. And third, optimize the scenario-based services to build the multiple scenarios to serve the clients and to integrate the bank services into people's daily life and work. and to further enhance thickness of the client and enhance finance plus non-finance one-stop financial services capabilities and force very importantly to further consolidate the consumer interest arise protection. We insist on that actually the client's interest will be our utmost interest so we will respond to the needs of our clients in particular from the root level we have to consolidate the foundation of consumer protection we believe that for consumer protection we shouldn't just talk about consumer protection for consumer protection sake we have to do a good job from the root in our businesses but at the same time do a good financial knowledge dissemination and publication work and in a word high quality development student needs have efforts being made but we still have confidence to make a positive trend thank you presently next one please this lady i come from securities daily my name is my question is that abc in terms of the personal credit business, you have been outperforming the other peers. Do you feel that pressure in your credit asset quality in the future in terms of the measures? What would be the new measures being adopted to safeguard the stability? Okay, this is also about the retail business. Okay, thank you for raising this question. So we can respond from three different aspects. For ABC, you can see that the personal credit business, on the one hand, we implemented the central government guidance about stimulating consumption and to expand the service coverage. We pay high attention to the businesses with clear inclusive finance features. The business strategy is very clear. We insist on making progress through stability and to actually have more innovations among stability to connect different dots into a business line. So as to stress our credit extension by June, you can see that the balance is 8.65 for individual clients. And you can see on a year on year basis, there's an increase of about 112 billion, increased by 7.3%. and taking the lead in terms of the amount as well as the growth speed and we do consumption balance and 1.2 trillion increase by about 84 billion and we also extend 330 billion and an increase of 120 billion credit consumption 1.1 trillion increased by 35.1 billion and individual operation related loans more than 2 trillion, 2.38 trillion and an increase of 595 billion. So we extended 1.94 trillion, an increase of 570 billion and individual mortgage 5.07 trillion, we extended 309.6 billion. So you can see from all different aspects, we have been further stimulating consumption and expand domestic demand. And a second, for the individual credit business, you can see that the quality of the asset is quite stable and controllable. Among different months, you will see that there will be some volatility of the asset quality. But generally speaking, the overall quality is still stable and controllable. The NPR rate is 0.79%. Provisioning rate is 395.1%. In terms of the asset quality, as well as the cushion and buffer, we can see that this is a very good protection in which NPR ratio is 0.1%. 58% credit card and individual consumption loan NPR rate, 1.17% credit card. NPR is 1.42% and individual operation loans, 0.95% in terms of NPR rate. So from this statistics, we can understand that the individual loans risk control as well as the asset quality are quite stable and reasonably controllable, but we still keep a close eye on that. Sometimes there will be some volatility. We should pay high attention to that so as to fight against all kinds of risks. And certainly we have to further strengthen the risk prevention and mitigation. We should implement the central government decision and deployment on mitigating and the resolute risk of the finances so as to prevent the systemic risk from happening. This is our mission. during our daily work we have been adopting different measures in summary there are four characters which is actually controlled new and to a bit the old first we have to further integrate the risk control with the business development first insist on compliant business development to further actually have a better control about the compliance work we think that there are thousands of different businesses but compliance is the utmost priority first we have to optimize the whole process risk monitoring mechanism the depths of the research control should be integrated into the policy adjustment the client access as well as the other things so as to consolidate risk control from the source

For personal loans, if we innovate a product, the leading department is not the business department, but the risk department. we can stamp the source of risks, like risk control requirements, risk control arrangements are embedded into the products, product by design. And this is a very effective approach. Certainly we have established at the head office level, a dedicated personal credit model monitoring committee, because now for many business, It is online. This way it is more efficient, but that means for model control optimization and improvement, risk control is a key factor. Every month, we'll have regular meetings on market access and credit extension model to have iteration and optimization to have early identification of risks, early warning, and early disposal. For those that cannot pass the risk control requirement, we must suspend or stop it to ensure the risks are controllable. push ahead the risks into the front part so that we can ensure authenticity, fight against the fraud and illegal intermediaries or brokers. In the context of complicated environment, we need to have strict control of various substantive risks. First of all, we need to make full use of blockchain technology to have a good optimization of pre-landing investigation. and the rules and procedures are implemented. On the other hand, we have enhanced the cross-validational model and data to improve the truthfulness of a pre-lending credit investigation through truthfulness that is true person, second, true transaction, third, true mortgage or collateral, and on-site investigation. For personal business and loan business, we have introduced factors such as external data from industrial and commercial bureau and CUP, a China banking union, with very good effect. And we have a red line that cannot be touched. That is, in ABC, we prohibit various level of institutions to cooperate with various brokers and intermediaries to guard against professional ethics risks. And we also pay attention to empowerment by SciTech to make sure that the pre-lending, general lending and post-lending management is very intelligent. Through establishing online plus offline collaboration, we can improve such management from manual labor to data-driven We rely on big data modeling technology to extract the risk features to build, optimize, and share early warning models to make sure that the clues of early warning are more accurate so that grassroots level banks can have better management. and we can relieve their burden firstly we are having diversified disposal of non-performing assets we have established an improved non-performing assets long-term mechanism we made full use of collection right of assets securitization and reorganization means to accelerate the disposal of non-performing assets so that we can dissolve the existing risks going forward abc will further Stick to coordinated development, striking a balance between development and security. Pay attention to livelihood areas internally. We think to do well, the simple things, that is no simple job. We have been expanding supply of sustained high-quality financial services to resolve various risks and challenges so that personal credit business can have very good development and so that people can have a very good sense of gain. Thank you VP Lin for your answer. Next question. Gentleman in the middle please. I'm from Everbright Securities. My name is We can see this year we have the pressure of economic downturn. The pressure is increasing, but your asset quality is quite good. Even the interim asset quality is even better than year beginning. So my question is, in the current context, in terms of the generation of NPL loans, in what areas the risks are higher? that should grab more of our attention and going forward, how to assess the evolution of asset quality. Thank you. I'd like to ask VPC Han to answer the question. Thank you for the questions. Thank you for your attention to asset quality of ABC and for your recognition of our asset quality. ABC has always deemed risk control as an internal theme to resolve the real estate debt and local governments that to improve the MPL disposal by the end of June. MPL ratio is 1.42% down by 0.01% compared with the beginning. And if you look at other indicators overall, ABC's MPL pressure is not very big for loans of concern, 1.42%. keep it flat at beginning and overdue rate down by 0.01 percentage points. ABC has always stick to prudent risk classification. For overdue and MPL, CSER's difference is negative 26.8 billion. For MPL, legal persons and retail business. For legal persons, you pay a lot of attention to local government's debt and real estate sector with the national policies implementation in these two sectors coupled with our own efforts. The loan risks in real estate sector are kept flat in ABC. MPL ratio is kept flat compared with year beginning, much lower than the peak value of last year. For urban investment, SS MPL ratio is kept as stable and MPL ratio has realized a double decline. For retail business, MPL ratio has always kept at a low level. And the journalists have asked questions about inclusive finance, personal loans, and our president and VPs have given very good explanations. I will not go into details again. ABC has kept a very good track record in this regard. Going forward for the second half of the year, we'll be vigilant in terms of NPR ratio, but we are confident of keeping long-term stability of asset quality. Main reasons are Chinese economy is turning for the better and the momentum is still there. And the Chinese government has taken a series of measures to stable growth, which has very good effect. It is a very good macroeconomic environment and ABC has been trying hard to serve the economy to optimize our credit structure. Credit extension is highly aligned with the national strategy and economic transformation that is a foundation for good asset quality for us. At the same time, ABC has been consolidating credit foundation to strengthen risk control of key areas. We have been conducting stress testing and for potential customer prospects, we are also been guarding against the risks and the digitalization have been expanded to pre-landing, during landing and post-landing. We have good customer management and risk estimate capability and accuracy is improved. So we are confident of the future asset quality of ABC. Thank you. Thank you, VPC for your response. Next question. The lady from the left. Thank you, Madam Moderator. I'm from . I have a question related to FinTech. FinTech is one of the top five chapters and top chapter. So what has been your achievements in using FinTech to serve SMEs? Any innovation in this model? And what is your next step plan? Thank you. I'd like to invite VP Liu Hong to answer the question. Thank you for the question. In the first half of the year, we have been sticking to the principle of making steady progress while keeping stability by nurturing emerging industries and making the present for future industries while keeping good job at current industries for high-tech industries growth momentum. It is very promising, showing great resilience and endogenous demand. For example, new energy vehicles The sales of new energy vehicles grew by 32% year-on-year, and high-tech manufacturing and service sector investment have realized double-digit growth for both industries. That shows the promising aspects for emerging industries. ABC has been honoring the spirit of the Central Economic World Conference so that we are innovation-driven. to grab the opportunities. We have been innovating financial products and service mechanisms to have high level self-reliance on FinTech. By the end of June, ABC's strategic emerging industries loan balance, it reached 2.63 trillion yuan. and our practices are the following. First, we innovated and improved the dedicated credit policy system. We have been keeping improving SciTech innovation, industrial policies and operation policy guidance to have differentiated policies, targeted policies for SciTech enterprises in different development stages. We have dedicated credit solutions for them so that SciTech enterprises can have all around whole life course credit demand And second, we have innovated and launched new products. For example, emerging industry empowerment loan to optimize loans for specialized and new legal giants enterprises. And we also encourage branches to accelerate innovations for local products to better serve new industries, new models, and new growth drivers. Third, we have innovated and improved the dedicated institutions' service capabilities. We have established 19 SciTech financial service centers, more than 300 FinTech-featured branches to explore diversified organizational structure and business models. We have also been strengthening staffing of fintech talents, especially the R&D talents so that fintech finance can have high quality development. We have also been working on the ecosystems based on our strong features centered around the fintech finance the government financial institutions and enterprises industry academia we have a batch customer acquisition and we have diversified financial services including debt investments and bonds so that industry chain value chain industry chain and the value chain and talents chain are deeply integrated up at present China is working hard on frontier leading technology, disruptive technology and common technology. In light of the new opportunities and new challenges in such a disruption track, ABC will intensify its efforts for the development, the support for strategic and emerging industries and encourage the development of new technologies to promote new quality productive process and going forward we will further serve we will optimize the organizational structure to serve SciTech finance innovations so that we can have more credit products that are suited to SciTech enterprises so that we can make sure our services are more efficient and effective we can give full play to our advantages and enhance internal and external cooperation so that sci-tech enterprises can enjoy diversified, relay-type financial services so that strategic and emerging industries, high-tech manufacturing and agricultural technology enterprises, loan scale and share can have big improvements. Thank you. Thank you, VP Lin. for your answer. We have had full communication due to time constraint. We have last question, a question from the online meeting room. Please select a very hard question that has not been touched before. The question from online is, this dividend distribution ratio of ABC, will it be kept above 30%? How about the interim period and what are the specific arrangements? Thank you. Let me take this question. I would like to thank the netizen for the question. You're concerned, you're interested in knowing the dividend distribution of ABC. You can see since our listing, ABC has been Upholding the principle of maximizing the shareholders' interests, we have stricken a balance of immediate return to shareholders and the long-term development of ABC. We have kept a high and stable payout ratio of dividend kept at above 30% with very good return for our shareholders. Going forward, we will continue to pay attention to the interests of the shareholders and keep the payout ratio of dividend very stable and strike a balance of the interests of different groups and protect shareholders' interests. In terms of the interim dividend distribution, we are still working on it as scheduled, according to our plan. Prior to Spring Festival, we want to complete the interim dividend distribution so that the shareholders can benefit from that.

In the morning, the board already reviewed our interim profit distribution. It is suggested that actually tax included 40.738 billion. which is 1.16 yuan per share. And we're going to propose this to the board for the review. After the board made a decision, we will continue with all kinds of work so that before the Spring Festival of next year, we're going to finish the dividend payout. Thank you. Thank you, President Wang. Ladies and gentlemen, I sincerely thank you for participating. in Agriculture Bank of China 2024 interim results announcement. I would like to thank the investors, analysts, as well as media friends for your continuous interest and long-term support to ABC. I'd also like to thank the top management for the comprehensive interpretation of our results announcement. If you have further questions, please continue to contact our PR team as well as media team. That's the end for this results announcement. Thank you for your participation. See you next time.