Bank Of China Unsp/Adr

Good afternoon. Welcome you and my big thanks to you for participating 2026 BOC interim results release amid this Ren. And my name is Liu Chenggang, EVP and the Board of Secretary of BOC. And today's release will be co-hosted by me and BOC spokesperson, Madam Yu Ke. And this release is web broadcasted simultaneously. Welcome friends online. I want to introduce the leaders of BOC. Vice Chairman, President, and Chief Compliance Officer Mr. Zhang Hui, EVP Cai Zhao, and EVP Wu Jian, EVP Huang, Xueling, and we have directors online. And the 2026 interim results of the bank have been announced externally and the PPTs can be downloaded from our websites. Today, all the financial data are compiled according to RFRS. Now I want to give the floor to Mr. Zhang Hui to introduce you the interim results of the bank. Dear investors, analysts, media friends, good afternoon. Welcome you to BOC2026 Interim Results Announcement. It's a great pleasure to meet old and new friends. 2026 is a meaningful year for BOC. On the one hand, as the first A plus H dual listed bank in China, this year marks the 20th anniversary of our RPO. After 20 years of continuous operation, our bank with a history of more than 100 years have achieved better corporate governance, globalized operations and diversified business transformation with asset scale grew by 8 times and overseas institutional coverage expand from 27 countries to 64 countries, and we are coming from a big bank to a stronger bank. And this year also marks the end of the 14th Five-Year Plan and the beginning of the 15th Five-Year Plan. In the past five years, BOC continuously improved its comprehensive stress opportunity revenue net profit, and the name stabilized. First among peers, and net interest income contribution increased to 33%, asset and liability grew by more than 50%, and the globalization advantage has been further consolidated. Overseas profit contribution improved by 4.6 percentage points, NPL the lowest among peers, and the CAR ratio and ranks as number 8 among J-SIBs. In the first half of the year, we have completed our operating targets with good quality enhancement. First, financial performance achieved steady growth in the first half operating revenue 357.1 billion, profit before provision 230.4 billion, An increase of 8.41% and 9.77% respectively. Net profit attributable to shareholders of the bank grew by 4.67% and 5.10% respectively. and the growth rate achieved QoQ growth since 2025. Name stabilized 1.27%. Net interest income grew by 10.20%. Cost income ratio decreased by 1.68%. Operating efficiency further enhanced. Asset and liability Continuously improved its quality. Total asset exceeded 40 trillion, an increase of 477% as compared to the end of last year. Loan and bonds and other high-yield assets improved by 1.32%. Domestic unpaid loans grew by 1.2 trillion, a growth of 5.98%. Total liabilities reached 36.95 trillion yuan. A growth of 5.11%. Overseas current deposit percentage also increased. Domestic RMB deposit interest rate reduced by 22 basis points. Liability cost is within control. Asset quality is stabilizing. NPL ratio 1.22% down 0.01 percentage point. Newly incurred NPL balance also reduced. Provision coverage ratio 208.5% up 0.48% by the end of last year. Coverage ratio 18.31% and 8 basis points higher than the previous quarter. Bill says stick to the principle of creating value through prudent operation. and generate shareholder trust through stable return. Since IPO, BOC have made payout or cash dividend of more than 1 trillion yuan with payout ratio maintained at a high of 30%. To mark the 20th anniversary of our IPO, we suggest that the payout ratio to be increased to 31% and we declare a cash dividend of 1.19 yuan We sow in spring and reap in autumn, hard work will be rewarded. At the end of March, in our annual result release, BOC talked about our six orientations. In the first half of the year, our good performance demonstrated the correctness of our thoughts and the correctness of our six orientations. First, I want to introduce you Thank you very much. We continuously expand our global network. Our global network covers 64 countries and regions, and number two in terms of institutions. within the world. And Hong Kong and Macau, we maintain a leadership position. In J20 countries, BRCA countries, and 10 ASEAN countries, and 21 APEC economies, we all have institutional presence. BUC have provided high-quality globalized financial services which won market recognition. This year, we won continuing bank status for RMB in England, Sri Lanka, and Indonesia. And RMB Calary Network covers 19 countries and regions. We underwrite a pound-a-pound of 38 billion and assist overseas issuers to get RMB direct financing exceeding 110 billion. Cross-border are overwhelmingly leading the peers. And cross-border R&B businesses scale rank as number one in the world. We fully leverage our global service ecosystem and serve companies going global and investing into China. We iteratively upgrade our multi-layer, multi-dimensional global services. and we help the country contribute to the establishment of overseas comprehensive system service system by the country and we rely on our network in 64 countries and regions to provide cross-border investment promotion endeavors of the government and we provide to 90% of the Fortune 500 companies in China, and we provide 7x24 multi-currency cash pool services. We provide across-the-clock services, and fund transfers and settlements can be done within seconds. We take the lead and establish the first Chinese global custody bank. Overseas and cross-border custody scale increased by 16.20%, 19.38% respectively. We upgrade DOC global salary payment and provide stock incentive for services to listed Chinese companies in overseas market. And we enhance global organizational stress. In the past 100 years, we have accumulated capacities in corporate governance, talent team, compliance system, and risk control capacity. This is our most precious assets. In the first half, we further strengthen regional intensive and integrated development. We further consolidate Hong Kong regional headquarters, strengthen POC Europe regional headquarters, and we have established Expatriate Royster with more than 10,000 talents on the list. In international settlement, Forex transactions, AML compliance, we have a large talent reserve. And also we further promoted overseas compliance management. Overseas compliance management momentum is stable. We further established a bank-specific risk management policy and we review this policy on a regular basis. We align risk appetite with our strategic goals and development capacity so as to elevate our risk control capability to a new level. Second, we expand into new businesses to serve the real economy. We focus on the five financial priorities and we are a leading bank in tech finance. Tech loan balance take up more than one-third of our total corporate loan. We in total served 200,000 tech companies. We have a full chain presence across key technology sectors. provide services to 5,200 core AI companies. And in total, green finance balance grew by 13.32%. Green bond underwriting scale, investment scale, rank among the top in the industry. And inclusive finance provided to micro and small enterprises grew in amount and the customer number by 10.6%, 8.19% respectively. Individual pension contribution grew by 54% and elderly care industry loan balance grew by 50%. Digital finance empowerment enablement have been further enhanced. MAU of mobile banking increased by 6.6%, cross-border. E-commerce transaction amount grew by 24% year-on-year. Digital RMB consumption amount are among the top in the market. And also PoE loan balance grew by 9%. We also support the domestic consumption market loan. In the first half, 200 billion and have to stabilize the real estate market. In total, we provided individual consumption loan to 3 million customers. We also provided interest rate subsidy for installment payment And we make a continuous movement to create value We cope with opportunities and challenges in external environment And we actively promote volume and price synergy Optimize domestic and overseas asset and liability structure Fully leverage our global presence and multi-currency businesses Name stabilized in the first half and we name improved by two basis points as compared to the first quarter that's for RMB and for foreign currency name it improved by 13 basis points contributing to group name stabilization. We continuously optimize our revenue structure and expanding to wealth management, payment, settlements, transactions, custody and other capitalized businesses. We expand the source of net interest income to generate higher comprehensive return. Individual customer, wealth management, custody business, settlement, clearing fee income grew by 22%, 10% 4% respectively. Non-interest income percentage was more than 13% among the top in the peers. We stick to capital intensive operation and we focus on the philosophy of saving capital and create value at the same time. We optimize our We want to be stronger in many businesses to provide The total number of corporate customers exceeded 9 million, a growth of 7.54%.

Targeting the long-term development, we've focused on the government clients and connected party actors to provide an ecosystem of services while providing a banking plus We are an ecosystem for open-ended financial services. We are also expanding seven customer segments and our effective individual customers have expanded to 409 million for mid to high-end individual customers. 5.84% over the end of last year and we have enhanced key business products and services such as third-party custody, payroll services, fast payment and social security card-like products. For cash management accounts and daily average deposits, they have grown by 7.94% and 10.69% respectively. For asset custody business, the total size has reached RMB 26.75 trillion with 10.27%. And for the comprehensive financing projects, there's been a 20% year-on-year growth. Number five, we have made our business development even more stable with the balance between development and security underpinned by comprehensive risk management. We have pushed forward the look through risk management for domestic and overseas institutions, making risk management more capable, effective and efficient. We have strengthened asset quality management by optimizing the longer-acting mechanism for loan management, intensive and centralized measures, and the relevant measures to dissolve and others. Thirdly, we have further optimized internal controls and compliance management with three-line defense system with compliance and risk management always in place. Number six, we are more tilted towards what we call intelligence. We are pressing ahead with digital intelligence empowerment and technology Underpinning technology stack. We are pressing ahead with 40 technology strategic projects. The delivery cycle has been reduced by 15% in terms of timing and we are expediting the plan of AI+. For BOCAI large language models, there's been over 32,000 customers covering 3,800 scenarios. Number three, we are making our channels more efficient and the paperless 4. We are deepening science and technology innovation and expansion of results. We have deployed over 190 innovative results with 37 high-value achievements. are being incorporated into rollout of programs. Last but not the least, the board meeting this morning adopted the 15th five-year plan for BOC, establishing our priorities and directions for the next five years of high-quality development. We are building ourselves into a strong financial institution, focusing on six areas of capacity building. We are going to improve our capabilities to serve the real economy, global footprint, and international competitiveness. We are enhancing comprehensive customer service capabilities, risk management capabilities, integrated operational capabilities, and high caliber talent pool. For the second half, we are going to press ahead with our targets orientation, mid to long term planning, and the focus on tech financing and other key areas of priority. We are going to better serve the real economy while giving a full play to our globalized footprint and strengths with comprehensive customer service services and we will firmly guard the bottom line of no systemic financial risks ever happening. So we're going to leverage its good momentum to roll out the 15th five-year plan while pressing ahead with high quality development with sustained long-term value so as to pay back to our customers, investors and the entire society as a whole. Thank you for listening. Now let's kick off the Q&A. Please ask one question every time and please identify yourself with your organization before asking the question. Now the floor is open to analysts and investors. Lady from the sixth row. Thank you for giving me this opportunity. I'm from Guotai Haitong Securities. Ma Tingting, my name. I have a question about asset and liability management. Since the beginning of 2096, lower speed and higher quality has become the new normal. I would like to invite management to talk about asset and liability management for the second half of this year and key loan extension directions. especially the balance between domestic and overseas loan extension for the mid and longer term future. In this new development stage of the 15th February plan, how do we find the right balance between growth and quality? President Zhang, thank you for the question. We have continued to play the role of serving the real economy as a key player while transmitting the relatively easy monetary policy with multiple. For the first half of this year, we grew our IMB loan by 5.96% higher than the industry average. And we are also adding up to a bond investment with 10.6% growth rate in our domestic business higher than that of last year. and we focus on tech green and inclusive finance with higher than average exchange rate growth rate we have also we're also seeing opportunities of foreign trade development and Chinese companies going global and our overseas commercial banking loans have created a five-year high with double-digit growth for overseas RMB denominated loans We are shifting gear in economic development and restructuring. As you have pointed out, low speed and high quality has become the new normal. We're going to cater to these trends while finding the right balance between domestic and overseas market and the right balance between volume and price so as to push for balanced development of asset and liability management. How do we find the right balance between domestic and overseas loans? Let me focus on the two following aspects. On domestic business with the stable overall volume and a better service for the key areas, we're going to make our support for real economy more efficient and effective. We're going to make sure that RMB loan growth rate is higher than average. We will continue optimizing We are going to focus on the five priorities with tech innovations, green development and mid to long-term manufacturing as the key areas of loan support. We align ourselves with the key projects of the 15th five-year plan of the country. We are also implementing the synergistic tools between fiscal and monetary policies such as making use of fiscal industry interest rate subsidy tools. For overseas business, we will continue to regard globalization as the core mandate while maintaining a good growth momentum for loan extension. We are also providing more and more better financial services for foreign companies. In this way we are providing comprehensive and better quality comprehensive financial services for Fortune 500 companies and leading Chinese companies. We are assisting in the build-up of RMB ecosystem. with Xueling, a high-quality business development of overseas institutions. Talking about how are we going to find the right balance between growth on the one hand and quality on the other during the 15th five-year plan. During the morning session the board adopted our 15th five-year plan establishing a blueprint for our next five years of development and growth in order to implement our own 15th five-year plan while analyzing opportunities and the risks and the external environment and soliciting extensive opinions We will continue to focus on the five priorities of the financial sector, enhance comprehensive risk management and compliance management. We're going to strengthen our global talent pool and we're going to further promote global international use of the RMB. We are focusing on seven priority tasks. We have broken down those tasks into specific projects. We are going to press ahead with implementation of the 15th five-year plan and development blueprint and translate it into high-quality results. Talking about assets and liability business, we're going to focus on four strategies with better balance between scale and quality. First of all, continue to optimize asset and liability structure on the asset side. We will strengthen the varieties, the industry targets and duration management of loans while focusing on the five tasks and loan support for key industries and sectors. We will give a better play to loan investment in our asset Allocation with the right scale and issuance tempo. On liabilities, we're going to focus on payroll services, fast payment, third-party custodian, cash management and other key products and services. We're going to expand sources of low-cost funding while optimizing deposit structures and lowering, optimizing our liabilities cost. Secondly, we are going to strengthen our capabilities of value creation with comprehensive coverage of different modalities of the financial industry. We're going to transform our revenue structure by sparing no effort to develop payment, settlement, treasury management, bond underwriting, global custodian, We will go all out to expand non-interest revenue. Thirdly, we are going to expand our global footprint and strengths. We will continue to optimize our global footprint and service mechanisms while further enhancing profit contribution from overseas institutions. We are going to further help with internationalization of the RMB We are going to provide comprehensive financial services for our clients in the overseas market. and we will continue to enhance financial market business activities. Number four, we will continue to solidify risk management and compliance management. With comprehensive capabilities and deployment, we are further strengthening our look through risk management and compliance capabilities, especially in terms of key sectors and business areas. so as to ensure the overall stability of our asset quality. At the same time, we will continue to provide forward-looking judgment analysis for market risk and liquidity risk, etc. I hope that would answer your question about our asset and liability management and our implementation of the 15th Five-Year Plan. Thank you, President Zhang. Next question, please. The gentleman from the second row. Thank you. I'm from CICC, Lin Yingqi by name. Over the past several quarters, we could see that BOC's name has continued to stabilise. Could you help analyse the drivers? How do we identify the short-term impact and the long-term impact for the second half of 2026? What are the sources of pressure and support respectively for the NIM development? There are great expectations for rate hike by the USD. What's going to be the impact on our overseas NIM and investment returns? As I'm in charge of asset availability business, I'm going to provide you with some answers. Now the RMB market rate is kept at a reasonable low level while key foreign currencies are observing higher interest rates. Our global diversified currency allocation has been further brought to play starting from In Q2 2025, we started to stabilize our NIM and for the first half of 2026, it improved by 1 basis point to 1.27%. In the shorter term, the negative impact is under control. and there has been a repricing of mature long term deposits of the RMB. So for the mid to longer term future we have exercised comprehensive management striking a balance between volume and price. For the first half of this year with reasonable targets we are highlighting the synergy between volume and price.

SIGAMP loan maintained flat and even growth and also newly incurred loan deposit stabilized loan interest rate stabilized marginally with yield remarkably improved as compared to the first half of the year and also group Foreign currency name increased a lot as compared to last year, contributing to stabilization of group name. Overseas core asset maintained faster growth. Well, foreign currency interest rates are maintained at a relatively high level. That's why in the first half, overseas institutions' loan growths are better than the previous year and the bond investment grew faster. Well, for overseas low-cost capital and funds, the acquisition capabilities are gradually enhancing. In global custody, payroll services, cash management, and we are improving and also in funding such treasury funding agency businesses the contribution from this business are growing and also customer deposit interest are declining in the first half domestic institutions overseas institutions the current deposit contribution are increasing well Foreign currency deposit and loan spread marginally improved. Overseas intuition operation mainly rely on the foreign currency name and it is higher than domestic RMB name. Well, in terms of pressure, RMB new loans interest rate are stabilizing. However, when credit are slowing down and the quality are improving, the overall asset yield is under pressure. On the supporting factors, RMB liability costs are reducing and we will gradually control the high-cost deposit. by volume and by price, and continuously optimize the deposit structure. In the latter half of the year, we will continuously lower our deposit cost. On asset side, we will optimize the asset structure, and high-yield businesses will gradually grow, and risk-based pricing capability enhancement will further enhance our asset yield. And foreign currency name Contribution will continue. Foreign currency asset percentage of the bank is rather high, with foreign currency name higher than RMB name. And the US dollar interest rate may be uncertain in the near term. And we're confident that through active adjustment of asset and liability, we will continuously improve the resilience of our name. Thank you. That's all for my answer to our question because we have many H-share analysts online. Now we will invite our meeting assistant to connect friends online to ask a question. Can you hear me? Yes, we can hear you. My name is Lele Li from JPMorgan Chase. My question is about non-interest income. Bill says non-interest income performance was very stable in the first half of the year. Can management tell us the drivers of non-interest income growth? have asked to analyze the features and the drivers of net interest income by business lines and by region. And what is your prospects for the latter half of the net interest income? Now the floor is given to EVP Huang. Thank you for your question. The economy of the country is stabilizing with positive foreign trade growth and also active transactions in the capital market contributing a good environment for non-interest income growth of the bank. BOC actively promotes business transition and expands non-interest income sources. In the first half of the year, Non-interest income stabilized and improved for the better. Non-interest income of the bank was 120.38 billion, an increase of 5.04% year-on-year. The percentage of non-interest income to total income was 33.71%, mainly benefiting from settlement clearing, agency sales, and financial market performance. In terms of the drivers, I want to list four. First, we continuously optimize the supply of high-quality financial services with a steady growth in settlement and clearing. By the end of June, total corporate customer accounts and total corporate settlement accounts grew by 7%, respectively, and leading to 6.83% Gross of domestic corporate settlement fee and also debit card payment transaction amount exceed 4 trillion yuan. Commission fee growth grew by 6.5% in this category. And cross-border RMB settlement amount, international settlement amount, e-commerce transaction amount grew by more than 20%, respectively, contributing to continuous growth of corporate international settlement fee and commissions. Second, we continuously enhance our wealth management capacity and satisfy customer demands to upgrade their asset allocation. We establish a global integrated asset allocation system and provide more products to our customer. Agency sales fund and wealth management product exceeded 7,800 and individual customer investment category financial asset grew by In Macau and Hong Kong and they are working hard to increase their agency sales income by 4.6% and our integrated operation companies also strengthen their fee income by Interaction with headquarters, stock sales, fund, and wealth management products We also improve our global custody service system We are the first Chinese bank to offer global custody service among Chinese peers And in the first half of the year, group custody as at a scale grew by 10.27% leading to 10.29% increase of our custody business revenue. Domestic asset custody and wealth management achieved double growth with fee income grew by 12%. Overseas custody asset, cross-border custody asset grew by 16% and 19% respectively. The scale rank as number one among Chinese peers, leading to cross-border custody fee business grew by 13.09%. We further leverage our strength in global financial market. with steady growth in investment and transaction business. We strengthen our professional judgment about microeconomy and financial market trends, effectively balance between risk and investment opportunities, and provide 24-hour buy-7 and uninterrupted services to our customers. Looking into future, the microeconomy will be stable in China, and the structure will be better. In a low interest rate environment, wealth management need will be further released. We will continuously consolidate the foundation for non-interest business since domestic and overseas opportunities rely on domestic operation and create international global synergy to maintain the contribution of non-interest income to total revenue amid low interest environment. We will steadily enhance payment and settlement business. This is the cornerstone of our non-interest income. We will further expand our leadership in international settlement across border RMB settlement and also promote faster payment and credit card business enhancement so as to lay a solid foundation for non-interest income. Second, we will further expand wealth management, asset management, custody services. and the customer have a need to upgrade their asset allocation and allocate more to wealth management, asset management products. We will rely on our global advantage and China resources, expand agency sale of fund, insurance products, wealth management products and precious metal products. We rely on asset custody and wealth management capability. We will further enhance the contribution from wealth management and asset management. Third, we will continue to enhance our competitiveness in financial market. amid market volatility and we will further enhance our client-driven transaction business revenue and we will strengthen market assessment and strengthen active management of bond holdings and enhance business synergy for bond investment businesses so as to generate more non-interest income. Thank you. Now we welcome more questions. Thank you for giving me this opportunity. My name is Claire Ouyang from Goldman. I have a question about globalization of the bank. The global competitiveness of the bank is further consolidated in the first half of the year. Looking into the latter half of the year, under the 15th five-year plan period, what are the opportunities of the bank have in global operation, and how can you turn this advantage into profitability? Recently, we hold a company day in Shenzhen. to further expand our globalization. Globalization is within the JIN of BOC and also the strength of the bank in our past 100 years of operation. In recent years, global operation of the bank further strengthened and contributed to Our income amid low-interest environment In the first half of the year, we found three highlights First, financial contribution maintained at high level in the first half of 2026 Overseas net profit 6.4 billion USD Contributing to 27.21% of total Group Net Profit ROE and Cost Income Ratio are better than domestic performance Overseas NIM increased by 5.6% Q1Q 11.6% YoY and supporting the stabilization of Group NIM Second, maintain high-quality growth in various businesses Overseas Asset Scale exceeded 1.34 trillion The US dollar up 5.67% year-on-year, and the loan grew by 26.1 billion US dollar up. The growth rate was 5.82%. Asset quality was stable. At the end of June, overseas non-performing loan amount, NPR ratio, reduced by 5.3 billion. Yuan and 0.2% respectively. In Hong Kong and Macau, the NPL ratio was better than peers. Looking into the latter half and the next five years, there are many Chinese companies going global and R&D are more influential globally. During the 15th Five-Year Plan period, the BOC will continuously take globalization as our priority. and Ten Hour Globalization Advantage into profit growth. During the 15th five-year plan period, we will continue to maintain overseas business contribution to the Group, and the contribution rate of overseas institutions in terms of net profit will make new breakthroughs.