China Constr Bank H

Ladies and gentlemen, good afternoon. The meeting is going to kick off. We would like to invite moderator. Distinguished investors, analysts, media friends, good afternoon. Welcome everyone to attend CCB 2022 interim results renouncement. I'd also like to thank you for your all-along support to CCB. In terms of the prevention and control of COVID-19, this meeting takes the form of phone connection as well as webinar. The attendees of today's meeting are President of CCB Mr. Zhang Jiliang, Vice President Cui Yong, Mr. Ji Zhihong, Ms. Zhang Ming, Mr. Li Yun, CRO Mr. Chen Yuanguo. According to the requirements of the regulators, we also invited our independent director Kenneth Chang to attend online. They are also the representatives of the board as well as the supervisors to attend this meeting. Good afternoon, I'm the board secretary Hu Changmiao. The interim results was officially publicly announced last night. And we also showcase the performance results on our official website for your reference. When we come to the official interactions, we'd like to invite President Zhang Jiliang to brief you about our H1 performance. Over to you, Mr. Zhang Jiliang. Distinguished investors, analysts, media friends, good afternoon. Welcome everyone to attend 2022 interim results announcement. Thank you for your long-term interest and your support to CCB. I'm very glad to share with you our performance in the first half of this year. And I'd also like to update about our future outlook. In the first half of the year, CCB actively implemented the decisions and the deployments of the central government and the state council. We have been working on the stability as well as future development. We have been fulfilling the responsibility in the economic and political sense. And we also coordinate the COVID-19 prevention and control as well as economic and social development. We have been implementing the new finance activities to consolidate our client base to improve our operational performance as to cope with the risks and the challenges. So core indicators has been quite stable. NIEM was 2.09 percent, ROE 1.01 percent, ROE 12.59 percent. Taking the lead among peers, business size, benefits, return and asset quality developed in a coordinated way. So total asset exceeds 33 trillion RMB up by 11.4 percent. Total liability exceeds 31 trillion up by 12.2 percent. And net profit, 161.7 billion. Year on year increase of 4.95 percent. NPR ratio, 1.4 percent. Down by two percentage points. Provision coverage, 244 percent. Capital adequacy ratio, 17.95 percent. We are capable to fight against all kinds of risks. First, we are quite determined to serve the real economy. We want to prevent COVID-19 to stabilize the economy and to pursue secure development. We have promoted a series of quite strong as well as heartfelt and speedy and pragmatic measures so as to consolidate economic recovery and stabilize the macro economy. On my hand, we continue to increase our capital support. RMB loans increased by 1.54 trillion. Year on year increase of 364.2 billion. RMB debt investment increased by 800 billion. We greatly participated in the government debt subscription. Also support monetary as well as fiscal policy. On the other hand, we continue to optimize our resources allocation to focus on the key priorities in our national economy. For example, infrastructure, manufacturing industry, strategic emerging industry. The loans increased by 8 percent, 14.4 percent, and 26.7 percent respectively. And tech related loans exceeds 1 trillion. Jingjingji, Yanshui River Delta region and GBA area also get more loans in the total loan extension. We also cut our fees and surrender profit to the real economy. Inclusive loans increased by 267.1 billion. The balance total 2.14 trillion. And second, we have been very effectively in promoting our strategies. Centering on the pinpoints of the economic and social development, we have been promoting series of new finance explorations and practices. Rely on the FinTech stress, we have been built different kinds of operational scenarios. We use the smart governance system to enable the national governance system as well as the modernization of the governance. We also coordinated our leading strengths. For example, our fast loans as well as a wait only platform reach out to more SMEs. Platform as well as digitalization based development promoted high quality and sustainable development of inclusive finance. Inclusive finance balance takes about 10 percent of the total. We also deepened rural revitalization practices. Yuenong Tong continued to converge online and offline practices. Agriculture related loans increased by 12.4 percent. We also constantly improved the green and low carbon development footprint. The green loans total 2.4 trillion BN and green product development products further diversified. We also actively increased our lending to foreign investment and foreign trade. Also promoted whole currency payment products. The global matchmaker platform facilitated the interconnectivity of the market. We also continue to construct the housing reform focusing on equal emphasis on rental as well as house purchase. The house rental platform comes more than 90 percent of the prefectural level geography and above. The house rental loans totaled 180.6 billion RMB. Third, our operation and development further improved its quality and efficiency. We have been trying to strike a balance between the size as well as the return of the business. We further continue to the corporate business base and business structure. We also strengthened corporate as well as private businesses. With higher efficiency and high quality services to precisely reach out to the clients and also expand a client base and deliver comprehensive financial services. So corporate accounts totaled 12.58 million taking the lead in the industry. And personal accounts totaled 730 million. AUM exceeds 16 trillion. Credit card exceeds 115 million. We also promote online and offline convergence, optimize the outlist deployment and also accelerate the digital transformation as well as binary star campaigns. The mobile phone as well as the internet banking services have a total of 500 million clients. CCB life has registered users of about 66 million and DAU 4 million. We also consolidated on balance sheet and off balance sheet coordination to shift from the bank balance sheet to the operation of the client's balance sheet. So as to promote the grant asset and grant wealth management ecosystem. And CCB Dragon wealth branding became more influential. Our agency business, wealth management business, continued to develop with the total custodian size more than 19 trillion. And investment banking business also taking the lead in the industry and of course our risk control continued to be strengthened. We further improve our comprehensive risk management framework to mitigate major risks to actually exclude the major risks and strengthen our preventive scenarios. And to better control property as well as the local government implicit debt risks. We continue to strengthen credit asset quality to have the tiered based management for the key accounts and promote unified credit risk monitoring system. Asset quality continue to be stable and the risk categorization has been quite consolidated. The delinquency ratio is 43 basis points lower than NPL ratio and the gap between overdue as well as NPL is 87.9 billion. We also intensified the disposal of NPL, strengthen the cash recovery as well as the other aspects. We also strengthen internal control as well as compliance management AML work is very effective and consolidated. We also share our benefits and return with the shareholders. Last month we completed 2021 dividend payout with a total number of 91 billion. Since IPO, CCB created significant amount of cash return for our shareholders. We have paid out one trillion yuan in total and we are also listed as the China IPO Association, the most rewarded company. We also have to consolidate poverty alleviation as well as revitalization. The workers and labor's harbor platform offer comprehensive services to the society. We also improve our senior and elderly support facilities and change women project to take a deep route. So as to offer to provide knowledge to the different people and aggressive level. Our strategic initiative also got high recognition in 2022. The bankers also ranked us as number two in the world top 1000 banks. And in 2022 in Fortune 500 we ranked 24 up by one position. And we also were awarded by the Asian bankers as the best retail bank in Asia Pacific, China's best inclusive finance bank and China's best custodian bank and China's best comprehensive risk control bank. And MSCI ESG rated CCB as A level and CSI ESG rated CCB as triple A. We are the highest level among the peers. Since this year we can see that in the assessment of the service to the rural revitalization, you can see that CCB is also ranked as the excellent level. Since this year facing very complicated external dynamics and risk and challenges, the central government coordinated the COVID control as well as economic development and also made very effective achievements in terms of COVID control as well as economic recovery, creating very favorable conditions for the stable and sound development of the banking sector. So far we see that unprecedented dynamics over the past century, the global economy slowed down with more inflation as well as market dynamics. However, the long term good trend of the economy hasn't been changed and the economic resilience continue to be strengthened. There are a lot of favorable conditions for us to promote high quality development. The economic transformation and upgrading has generated new momentum for the growth, digital transformation, green development as well as tech innovation expect more financial support and at the same time we can also expect historical opportunities for the commercial banks. In the future, CCB will continue to insist on Xi Jinping's new outlook for China's development with the Chinese characteristics. We will grasp the opportunities and to pursue a good path for financial development in China to consolidate our capabilities to serve the national economy, to participate in international competition and we will also utilize the digitalization as well as platform based operation to promote our new finance initiative and to solve the deep rooted problems, optimize the mechanism and promote mainstream business to develop in a stable and sound manner so as to realize the sustained, balanced as well as coordinated development of size, benefits and risks. Firstly, we will continue to play our role as the major bank to serve the economy and society. This is our responsibility to serve the real economy and also the fundamental guarantee to realize sound and sustainable development. We will continue to implement 23 measures to prevent COVID as well as to promote economic and social development and to continue to lay equal emphasis on the key priority area, key industries, key clients as well as key geographies will continue to surrender benefits to the real economy to help those SMEs so as to realize the six debilities and six guarantees. And the second, we will continue to balance size and quality so as to improve the quality and efficiency of our operation. We will continue to pursue high quality development. We will pursue the reasonable growth of quantity as well as stable growth of the quality. Asset and liability business will strike a balance as to satisfy the needs of the market major players. We will continue to optimize the liability structure as well as liability structures. And we're going to make breakthroughs and to deliver more coordination and to better allocate the benefits. Cost control will also insist on the principles as to improve the input-output ratio. And certainly, we will continue to deepen the new finance initiatives. Based on CZB 14th Five-Year Plan Blueprint, we are going to integrate the platform-based mindset into our new finance initiative. House rental will continue to deliver support to the social housing development. We're also going to improve the influence of the comprehensive house rental platforms.

We'll continue to improve the structure of inclusive finance and to provide better services to the customers and to improve the Huitong ecosystem. For FinTech, we have to let FinTech play a leading and driving role so as to take stock of the needs of the customers to integrate and share and better use the data. And for green finance, we'll continue to improve the share of asset and to expand the services and products of green finance and to prevent climate risk and to transition risks. For rural revitalization, we have to take an integrated approach regarding the product and services and to improve the comprehensive services regarding all types of rural-related products. And also, we will have to promote deposits and existing funds and to focus on the key areas and become a model in these areas. And number four, we'll continue to strengthen our fundamentals and to improve the quality of our businesses. For commercial banks, customer operation is the basis and the business development is the fruits. We'll continue to enhance the roots and to have a customer service system that is multi-tiered and multi-category based. And number five, we will leverage the digital tools and to make use of the three mid-office and to also leverage the corporate level and other platforms to promote the integrated development of business data and platforms. Number five, we'll have to balance business development and security and enhance risk control and compliance to follow the rules of financial development and observe the bottom line to be prudent, comprehensive, and proactive in our risk management and build such a culture. We'll have to have full coverage in our risk management and enhance business operation, the first, second, and the third line of defense. And to accelerate risk treatment and control and to ensure that all the key indicators are within a reasonable range. And we also have to strengthen AML and to protect consumer rights and data security. So this is our ambition. And we will continue to implement the arrangements of the central government and to seek progress among steady development, to make consistent efforts to pursue high quality development, and to produce tangible results to repay your trust and support. Thank you. Thank you, President Zhang. Now let's turn to the Q&A session. To enable more questions, more investors, and the media to have more opportunities, we suggest that each one just raise one question. And please identify yourself before raising your questions. Okay, now let's start the Q&A session. Ladies and gentlemen, if you want to raise a question, please press the star button and wait until you are called. First question comes from Morgan Stanley. Please. Thank you for giving me the first opportunity. I'm financial analyst Xu Ran from Morgan Stanley. First of all, I would like to congratulate the CCB for achieving good performance results in this complex situation in the first half of the year. We have seen that in July, some key economic indicators have all recovered, including the industrial added value and export growth. However, social financing growth has slowed down and we continue to expect complicated situation in overall economic development. So I would like to consult the management on your opinion on the current macroeconomic situation and the environment for banks' operation. For the lending of CCB, you have more lending in the first half of the year on a -on-year basis. Do you expect this to be the same for the whole year? And what are the key areas for lending? And personal mortgage loans has been impacted to some extent, so would you accelerate the supply of consumer lending? So Mr. Zhang, President Zhang, thank you. So this year, because of the impact of both internal and external factors, China is facing a lot of pressure in its economic development. So the central government and the CPC Central Committee has introduced a series of measures to stabilize the economy. Actually, from the mid to long-term perspective, China has the world's most potential, has the largest market in the world with the greatest potential. We have the world's most complete industrial system and our economy is resilient, dynamic, and has a great potential. So our fundamentals remain good and we are confident that we can overcome the volatilities and difficulties for the time. And China's economy will achieve long-term and high-quality development. So in the first half of this year, CCB has fully implemented the financial policy in advance, in full, and with accurate targets. The total lending of the group has exceeded 20 trillion RMB Yuan, with an addition of 1.58 trillion Yuan. And the balance of bond investment exceeded 8 trillion RMB Yuan, with an increase of 800 million Yuan. Both are historic highs. And we have also increased support to the key areas and weak links. And for inclusive loans, the balance of inclusive loans have reached 2.14 trillion RMB Yuan. We continue to be number one among the peers. Second, we have continued to provide funding for manufacturing sector and the green sector. And the balance of green loans exceeded 2 trillion RMB Yuan. And the balance of mid- to long-term loans for the manufacturing sector exceeded 800 million Yuan. So the growth rate of both has exceeded 20%. And third, we have actively supported the rural sector. In the first half of the year, rural-related loan growth and the growth rate has exceeded the previous historic average. And also, we have leveraged our traditional advantage in infrastructure support. Our balance of loans in the infrastructure sector has exceeded 5.5 trillion RMB Yuan and has maintained steady growth. And number five, we have continued to consolidate our advantage as the largest retail bank. And the growth of personal business loans has exceeded 35%. So in the second half of the year, CCB will actively seize the critical period for economic recovery and implement the monetary policy of PBOC and continue to provide steady loans. You have mentioned consumer loans. Actually, in the first half of this year, the market conditions was quite harsh. But we managed to provide the personal mortgage loans in a steady and orderly manner. And also, we continue to expand the consumption scenes and to innovate the service model. We actively promoted the consumer finance and have registered a positive growth. Actually, personal consumption loans has increased by 22.8 billion Yuan. And credit loans has increased by 14.1 billion Yuan. So as the government's policies to boost consumption and stabilize the economy continues to take effect, I believe that the consumer confidence will continue to recover and the consumption demand and the market room will continue to be released. So from the long term, I think there will be a good opportunity. And we believe that in the second half of this year, the growth of consumption loans will be better than the first half of this year. That's my brief answer to your question. Thank you. Thank you, President Zhang. Next question, please. Next question comes from Sun Lulu from the Security Times. Thank you. We have seen that given the COVID and just economic slowdown, despite this, CCP has maintained its asset quality on the whole. We know that the asset quality of banks is closely related to the macro environment, especially economic growth rate. So given the pressure in overall economic growth, how do you see the asset quality for the second half of this year? And as the central government has raised the policy requirement to lower the provision rate, what's the impact on the lending cost for CCP? Thank you. So in the first half of this year, because of COVID and the triple pressure of the macro economy, CCP has fully leveraged its professional capabilities in lending management and has strike a balance between stabilizing growth and preventing risks. So by the end of June, NPL ratio of the group was 1.4 percent, which is 0.02 percentage points compared with the beginning of the year. And the overdue rate is 0.97 percent, which is relatively low. And we have very solid asset quality and very prudent categories. By the end of June, the scissors gap of the overdue non-performing loans was minus 78.858 billion yuan, which is better than most peers. And the proportion of non-performing loans overdue for 19 days and more was 44.89 percent, which is relatively low. So CCP always pursued prudent management and has taken a prudent and forward-looking approach in foreseeing the risks in key areas and has taken proactive measures for adjustment and management. Take the real estate sector as an example. While meeting the reasonable financing need for the real estate sector, we have strictly controlled risks. The corporate real estate loan non-performing ratio was 2.98 percent and the NPL ratio for personal mortgage loans was 0.25 percent. Both were relatively good among the peers. And the risks were generally under control. And in some other sectors, for example, in infrastructure and manufacturing sectors, the NPL ratio has the NPL ratio and the NPL assets amount have both been reduced. It's fair to say that we have enough room for managing the asset quality, credit assets quality, and we have the capabilities and the confidence to respond to all types of risks. And in terms of provisions, by the end of June, the provision coverage rate was 244.12 percent, which was 4.16 percentage points compared with the beginning of the year. However, it was 2.24 percentage points compared with the Q1. So we have ample financial capabilities to fend off the future risks. So in the future, we will closely follow the developments of the macroeconomy and the changes in the asset quality to strictly follow the requirements of the MOF and the CBI RC to objectively and reasonably evaluate the ECL. And to set aside the provisions in full and in time. Thank you. Next question, please. Next question comes from Tama. Please. Thank you for this opportunity. I'm sorry from Tama. I have a question regarding the real estate sector. There are two aspects of my question. Since last year, we have seen many risks in China's real estate sector. So my question is, what's the asset quality of CCB in the real estate sector? And how do you see the future trend of the real estate sector? And what are your response measures? The second question is that recently we have seen that the Ministry of Urban and Rural Development and Housing and MOF and the PBOC have introduced a series of measures to enable specialized loans from policy banks and bank loans to support the delivery of overdue houses. What's your interpretation? Okay. CRO Chen will answer this question. CCB has always actively implemented the decisions and arrangements of the central government. And we believe that housing is for living, not for speculation. And around the goal of stabilizing the land price, the housing price and expectation, we have provided ample and reasonable financing support for the real estate sector on a city by city basis. So in the first half of the year, the real estate sector has faced a lot of pressure and the NPR ratio has risen. We have seen reduction of the housing sales. And the lending assets for the real estate sector have been affected at CCB. And our NPR ratio was 2.98%, which is higher than last year. And personal loans was 6.48 trillion RMB Yuan, which was also higher than last year. However, it was generally under control and we continue to be the best among the peers.

In recent years, you can see that our asset quality in the property sector remains quite stable. This is because we always bear in mind that fighting against financial risks, in particular, prevent systematic risk from happening is our fundamental role and our time-honored theme. You know, because CCB insists on serving the real economy and insists on our three major strategy, keep optimizing our credit structure to use our credit resources to support the priority area in the economy. As a result, property extension has been reduced. And second, we have been very forward looking to make deployment in the house rental and we deliver more credit resources to house rental sector. At the end of June, we can see that our total house rental loans were 180.6 billion, an increase of 35%. House rental loans has nothing to do with exposure. And since we continue to optimize our client structure, geography structure, as well as client base, we are quite capable in terms of fighting against the risks. In terms of the property developers loans, we can see that most of the projects are concentrated in tier one and tier two cities. The balance in tier one and tier two cities occupies more than 85% and more than 87% of the loans are delivered to the residential house projects. We think that property sector will continue to our key priority in the future. And we think that the central government has been releasing favorable policies in June. The property sector has witnessed the marginal improvement. The construction area and the land purchase area all witness month by month increase. And recently, PBOC continued to reduce five-year LPR by 15 percentage points. Multiple government authorities issued policies through policy bank loan. We are supporting the delivery of the difficulty property projects and the local government also issued a series of bailout measures. I believe that all of these measures will help us to stabilize the market conditions and to recover the market confidence. In short term, there will still be volatility on the market, but in the longer term, I believe that major theme is to stability. CCB will continue to follow the market-oriented, legal-based and professional principles, actively shoulder social responsibilities, and to give more financial support in order to guarantee the delivery of the house projects. First of all, stabilize the loan extension. We will continue to implement the property financial policies so as to stabilize the delivery of the projects and to satisfy the financial needs of the property sector to support the rigid as well as the improvement housing demand and to deliver more support to the social housing as well as the house rental services so as to maintain the sound as well as long-term development of the property sector. And second, to promote M&A. According to compliance, risk control, as well as commercially viable principles, we will actually conduct property M&A financial services and, third, controlled risks. CCB will continue to incorporate property business into our key priorities in the future to take full advantage of intelligent risk control instruments to continue to have a good monitoring of the risk in the property sector. We will also standardize the pre-sale funding management so as to better control the risk. We will also facilitate the property developers to have a very sound development in the future. Thank you, Mr. Chen Yuan-guo. Next question. Next question comes from Xinhua News Agency, Wu Yu. Hi, management. I'm Wu Yu from Xinhua News Agency. There's a follow-up question. We can see that what is the change for the mortgage demand? In particular, we see that there is some delay of the delivery of the house projects, and there's also suspension of the mortgage. Is CCB under such impact, and what is the asset quality of CCB's mortgage? How can we forecast the future mortgage asset development? We would like to give the floor to our Vice President, Li Ren. Thank you for raising this question. I think that there are three major aspects in your question. I'd like to take the question one by one. First of all, I'd like to briefly talk about the overall development as well as asset quality of mortgage loans in CCB. CCB insists on implementing the rules of the central government and state council. We insist on that houses are for living rather than for speculation. We also stabilize the loan price so as to stabilize the expectation by the end of June. Our individual mortgage balance is worth $6.48 trillion, increased by 92.69 billion yuan. NPR ratio opened to 5% keeping the lead amount appears. As always, CCB strictly implemented the national policies. We keep optimizing the mortgage quality and structure. In terms of the mortgage structure, there are three characteristics. First of all, optimize the regional structure. We would choose the best performing geographies. 50% of the mortgage loans are extended to Bohai region, Yangtze River Delta region, and Pearl River Delta region. More than 65% of the loans are extended to tier one and tier two cities with good economic operation, continuous population growth, and second, optimize the client base. We will select the high quality developers to support the individual clients, rigid as well as improvement based housing demand. 80% of the loans are extended to the clients who purchase a house with an area below 144 square meters. And sadly, we keep optimizing the product mix. We insist on the balance development of the new house as well as secondhand houses. By the end of June, secondhand house loans was $1.76 trillion, takes 27% of the total. In many years of development, we'll also continue to improve the professionalism and refine the risk control for mortgage lending. There are three things we did. First of all, for the pre-loans access risk control, we have collected different kinds of data, and all together we cooperated with the risk department as well as the corporate lending department to score the developers as well as their projects. So as to optimize the access of the projects. And second, during the lending, we will precisely identify the risks. We will give priority to the default conditions as well as the abnormal conditions for the advance payment of the key clients. The system will block the risky loans before the loan is extended. And third, you know, there's also intelligent risk monitoring system. After lending, we actually have 128 risk alert and risk monitoring models to actually give pre-alert for the post lending risks. So through all of the three professional capabilities, you can see that since 2020, for the newly issued mortgage, the NPR ratio was just 0.07%. So this is about the risk control for the individual mortgage. And the second part, you can see in terms of the demand of the mortgage loans, in the first half of this year, you can see that in different months, there's volatility for the demand of the individual mortgage. In April and May, due to the volatility pressure of the house developers as well as the outbreak and resurgence of COVID-19 from the demand side, there's a big pressure. And in June, you know, thanks to the policy optimization as well as the recovery of the pandemic, the acceptance as well as extension of the mortgage loans recovered reached 88.9 billion as well as 89.9 billion respectively. Month by month increase of .5% and 49.4%. And daily acceptance is about 3 billion. And recently, central and local government also issued a series of policies. You can see there's also the policy from the policy banks to ensure the delivery of the products. And the local government also issued a series of policies to stabilize the property segment. And you can see that on August 24, the five-year LPR downgraded by 15 percentage points. This was also in favor of the development of the demand side of the mortgage loans. And certainly, you're also interested in a so-called mortgage suspension. A while ago, you can see that in the public channels, you see the media also released the mandatory suspension of the mortgage, which actually got high attention from different walks of life. After such a bill, it's of great importance. And in the first hand, respond to mortgage suspension. You can see that according to the data collected by July, we see that the personal mortgage related to suspension is about 1.14 billion, which accounts for .018% of the total. And NPL was 500 million, which is .0077% of the total in the balance. Generally speaking, the personal mortgage risk is well under control. In the future, CCP will cooperate with the local government to stabilize the delivery, to stabilize people's livelihood, as well as stability. It has to mitigate risks, promote the sound and smooth development of the property segment. Thank you, Mr. Li Ren. Next question, please. Next question from Jiang Shuai from CICC. Thank you. Thank you, management, for giving me this opportunity. I'm Jiang Shuai from CICC. I'd like to ask a question about infrastructure. When it's at this year, infrastructure investment will be very important, Peter, to stabilize the growth. There's also the acceleration of the issues of the specialized data as well as the policy finance. And for CCB, you know, we do enjoy great strengths in infrastructure. So my question is that whether we're going to benefit more from this trend, what kind of deployment and arrangement do you have in this aspect? Thank you for raising this question. We'd like to give the floor to Vice President Cui Yong. Thank you for raising this question. I can tell you that in this round of infrastructure investment, we benefited a lot during this process. As we know, I think all of you here today, both offline and online, you see that China's infrastructure development is pretty fast. People's daily traveling, transportation, and logistic experience are greatly enhanced. This is attributable to the fast increase in the infrastructure investment. You can see that infrastructure development is already very famous, name card for our capability. You see that in CCB, in terms of infrastructure, we do have traditional strengths. To grow infrastructure-related finance is also actually taken by CCB to implement the President Xi Jinping's general instructions. But at the same time, we should also play the role of infrastructure as a cornerstone. Since this year, central government and city council issued a series of policies and measures to promote the further development of infrastructure to expand effective investment. In CCB, we also actively implemented the decisions of CC of central government and city council and further intensified credit support. The loan to infrastructure increased steadily, and CCB continued to benefit from that. The role played by infrastructure as a cornerstone continues to showcase. There is some data I would like to share with you by the end of June. Our infrastructure loan balance, like Mr. Johnson said, was 5.5 trillion yuan, and it takes almost 52% in our total corporate loans. An MPL ratio is much lower than a corporate loan, and the asset quality is pretty high. And in terms of the extension, there is an increase of 406.6 billion, an increase of 8%. And new infrastructure loan balance, 115.1 billion, an increase of 14.3 billion. And according to our arrangement, we would like to make the following ideas. First of all, we would like to strengthen the credit extension to key areas. We will continue to support transportation, water conservation, et cetera. In particular, recently there are also special arrangements from the state council to water conservation project. We are going to extend loans to 5G base stations, AI, big data center, as well as the other new infrastructure development.

Also, we will focus on urban renewal, the shortages and weaknesses in towns and some other areas in new types of urbanization. So both old and new infrastructure needs will be satisfied. Second, we will take a proactive approach to follow up the supporting funds for the infrastructure. So CCB has coordinated with NDRC and policy banks to share information on a regular basis and have established a liaison system for the projects. We have also participated in the syndicate loans led by the policy banks and have provided full-fledged support for the infrastructure projects that are eligible for the loans and have provided differentiated policy support. And we are requested to provide these loans as soon as possible, so we have made some special arrangements. Number three, we focus on project-based and list-based management. First, we will get the list of key projects from the key provinces and ministries so as to better align our work with the government's requirements. So everybody is working extra hours to fully cover the projects in the lists. And second, we have carried out a white list dynamic differentiated management for the key infrastructure clients and the clients of new infrastructure. So we were requested to have quick decision-making process by the government. And the third, to provide a whole process financial service for the special bonds, special debt system, and to follow up the progress of the projects on a regular basis and to provide more supporting funds for the special bond projects. And number four, we have strengthened the support of policy support. For example, we have made it clear that we will accelerate the extension for policy-supported projects and have made differentiated policy arrangements in these areas. Thank you. Next question, please. Next question is from Lee Hsiao-ying from the Hong Kong Business News. I would like to thank the management for this opportunity. Good afternoon. So before raising the question, I would like to say that we have been holding this phone conference for several years because of the COVID. So we really look forward to a -to-face communication. So my question is about aging and old age financing. So we know that China is entering an aging society, so we pay a lot of attention to financing for the retirees. And China has promoted the personal pension system, and the CCP has a dedicated pension company and have participated in the wealth management product pilot. So what is the overall plan arrangement in this respect? Thank you for your interest in our old age and the pension finance development. In the first half of this year, we have received a lot of policy support in terms of personal pension and inclusive pension loans. As we can see, China is entering an aging society, so it is urgent to develop pension and old age financing. And personal and commercial banks has a unique advantage in providing such services. Actually, a large proportion of our customers base are natural customers of our old age financing services. And the policy have made it clear that the personal pension business will shift from a product system to an account system. So the core of this system is to ensure the old age assets will maintain and grow its value. So commercial banks asset management business starts from wealth management. And after more than 10 years of development, our multi-license comprehensive and systematic operation capabilities have continued to improve. And we have the capability to provide old age wealth planning and asset allocation capabilities for the general public. And the people's trust in us is our natural advantage to enter this business. So CCB has put forward the 1314 development strategy that is to provide a full life cycle service for our customers. So there are two ones here. First, we have this goal of becoming a professional old age financing bank. And also we want to improve our one stop service capabilities. And for three, it means we'll have to focus on the three pillars for old age care. And by four, we mean that we will have a four in one service system, which consists of old age wealth conservation, industry cultivation, service provision and ecosystem construction. In the first half of this year, we have participated in the innovative pilots and improved our existing business. In terms of our services, we have improved the amount and quality of our pillar one and pillar two business. We have the CCB pension, a dedicated company. The pillar two business has a total assets of four hundred and sixteen point two billion yuan up by nine point one percent compared with the beginning of the first year, beginning of the year. And you're all very focused on the pillar three business. And we have made the preparation for that. We have two subsidiaries, CCB Wealth Management and the CCB BlackRock. Both have received the license for wealth management and the wealth management products issued by CCB Wealth Management exceeded 17 billion yen, which ranked number one among the subsidiaries of the big four. And the CCB pension has got the license for old age pension pilots in 19 in 2019. And they have the license for target date and target risk funds. And also they have covered a full range of product. And CCB Life have gained the qualification for a tax deferred pension insurance pilot and their product line covers all types of needs for the old people, including health, old age care and health care. So in terms of the old old age care service, CCB will offer a dedicated channel on the CCB Life app, which is the health and old age care to meet the customers needs for old age care. And in terms of the old age care industry, CCB has developed the marketing guidelines for the old age care industry. So it's fair to say that CCB not only focuses on the product and the services and their innovation, but also tries to integrate internal and external resources so as to promote this business in a systematic manner. As the next steps, we will focus on three things. First, to offer long term and prudent product. And second, we will ensure that customer service is appropriate and relevant, which means that the products we offered will meet the risk of preference of the customers and also meet the needs of the customers. So that the customers will rest assured with our offerings. And third, we need to provide professional and accurate support for the old age care industry. So the old age care industry has a lot of problems such as under supply of effective services and mismatch of structure. So there is urgent need for old age care facilities and the daycare services for the people and the clinical services for the elderly and high tech and smart old age services, etc. So CCB has the responsibility, the capability and the willingness to contribute to old age care in China and to build a dedicated and professional pension financing bank with our own features and live up to people's expectations so as to contribute our wisdom and capabilities to China's old age care. Next question please. Next question is from Guangdong Development Securities. I have a question regarding digital operation. Just now, President Zhang has mentioned the specific application of the digital tools in the business. So my question is that could you share with us the progress and the achievements of digital operation in CCB and what's the impact on our business development? Thank you. Vice President Zhang will take this question. Thank you for your question and interest in digital operation. Indeed, CCB was one of the early movers in exploring digital operation. We have put forward the three strategies, implemented the new finance and now it has become a -to-day operation. So we have translated this idea into real practice. In the first half of this year, we have actively implemented the regulators requirement for digital operation and have strengthened the foundation for our fintech capabilities. As for the progress and achievements, I would like to approach it in five aspects. First, we have a master plan for building a digital CCB. So this year we have developed this master plan for building a digital CCB, 2022 to 2025. We firmly hold that data should be a key production factor and the technology should be a core production tool. And the ecosystem will become a new development pattern for us. And we have made a master plan for the long-term objectives, implementation strategy, management model, talent training and cultural development for the digital transformation of the CCB. Second, we have built and improved our organization system. So we are one of the first major banks to adjust our structures for this digital transformation. In 2020, we have built a fintech and the digital operation committee headed by the president so as to take a coordinated approach in the digital transformation. And this year we have established a special committee to coordinate the management and we focus on the synergy between different departments, business lines and the regions. And by now we have built an organization system that is open, sharing, responsive and agile. And number three, we have consistently enhanced our data system for technology development. We have a top plus 2.0 strategy that is technology, openness, platform and joint operation. So in the data, technology and business offices, we have enabled the responsive response, the agile response that supports digital operation. And we adopted the domestic office system so as to support the single track operation of the whole system, which is the first of its kind in the whole industry. And for the distributed technology platform capability development, we have already established a core system that is independently developed, secure, stable and has high performance. That is up to international standards. And we are one of the model businesses identified the state council in this respect. And number four, we have an ecosystem for business operation, focusing on the pinpoints and key challenges. We have built the ecosystem, built the scenes and expanded the users to connect the G, B and the C end so as to promote the digital operation capabilities.

From the G end, we actually serve the digital government development with intelligent governance. We have already cooperated with 29 provincial governments and also offered house rental as well as social housing platform. And from the B end, we actually take the corporate internet banking as well as mobile banking and the core and also constructed a vertically deprooted corporate service system. And the platform built for the inclusive finance clients already served 7.7 million SMEs. And from the C end, take mobile banking as well as CCB life as the binary stars. We promoted the integration of financial services as well as non-financial services. And with the regional different scenarios, we also constructed integration of online convergence with the offline services. You can see that 72% of the newly added clients are acquired online. Mobile banking and internet banking individual clients almost approached 500 million, which has kept a leading amount of peers. And online account received transactions already accounted for .57% of the total. It also shows that we have been very wide connection in terms of the coverage. We have been having this fintech wings so as to provide more convenience to our clients. And first, we keep increasing of risk control capabilities and a transformation of digitalization. There are all kinds of traditional as well as new types of the risks, in particular in terms of the complications as well as dynamics. We have to leverage big data cloud computing as well as AI to continue to mitigate risks, to have the risk alert system, RMD and RAD system, so as to promote faster iteration of the risk alert system. When at the same time, we also keep optimizing our risk compliance system. The BlueCore mechanism already embedded risk control into our pre-middle as well as post-business structures, so as to form synergy and channels product as well as client end. We have been very comprehensive to prevent and control the risks. The President said that actually economic as well as finance transformation is our future trend. At a national level, we take building the digitalization strengths as one of our priorities during the 14th Five-Year Plan. And it seems we will also continue to insist on digital transformation, while at the same time to make our digital services more professional and more people-oriented, so as to satisfy the customers' whole lifecycle financial needs, continue to improve the quality service level as well as professionalism of our services, so as to offer the optimal services for our individual clients as well as our corporate clients. Thank you. That's all from me. Next question, please. Next question comes from Fan Haishuo. Thank you, Management, for giving me this chance. My question is more about a NIEM. We see that in the first half of this year, you can see that NIEM of different banks all face a lot of pressure because there's adequate liquidity, and the central government also downgraded our PR. So how can we understand a future policy interest rate as well as deposit and lending rate? And how do you forecast your NIEM trend? Can you help us to understand the drivers between the NIEM and what kind of measures can be adopted by CCB to stabilize your NIEM? We'd like to give the floor to President Zhang Jiliang. Thank you for raising this question. You know, the trend of the rate as well as NIEM is of common interest of the analysts. As you said before, since this year, central government has been implementing the measures to stabilize the monetary policy, and there's also the down adjustment of LPR. As a result, the market interest level is lower than it was in the last year. The two biggest assets, loans as well as debt investment, the interest income is lower than that of the same period last year. And from the liability side, you can see that the interest-bearing cost is also increasing. So you can see that our NIEM in the first half of this year is 2.09 percent and down by four percentage points comparing with the same period of last year. In this circumstance, CCB actively take measures to manage our asset liability structure. In particular, we strengthen differentiated pricing mechanism to deeply adopt the digitalized operation mechanism and use some interest management tools to offset this dynamics. And the result has been proven to be very effective. As you can see, since last year, the interest income has been 2.09 percent of the NIEM is still quite good among peers. In the second half of the year, you can see that the interest income, there's still some room for reduction. You can see since last year, there's been a reduction of the LPR. So interest-account impact hasn't been fully released. And we're also very determined to implement the decisions of the central government state council. There's still for the potential for the cut of the interest. So I think that CCB will take active measures to mitigate all of this negative impact so that our NIEM can be stabilized at a reasonable level. I'd like to analyze this issue from the asset as well as liability side. First of all, from the asset side, we will keep optimizing the structure. The total asset of CCB already exceeds 33 trillion. So there's a big potential for us to adjust the structure, in particular, the structure of the products as well as the tenure. So I think that in the future, we will continue to optimize our research capabilities of the market to review our asset allocation strategies. For example, in the first half of this year, our loan and financial investment, as well as some high-yield assets, take a high proportion in the total asset, which played a very positive role in driving up the NIEM. And in the future, we will continue to play the role like this. And second, from the liability side, there are many things we can do from the liability side. In particular, while we reduce fee income to surrender profit to the real economy, I believe that CCB should pay more attention to cost control from the liability side, only by stabilizing the cost from the liability side. Can we better cope with this situation and reduce the financing cost of the real economy? I think that there are following things we can do. First of all, I think that we will continue to operate the liquidity from the liability business. We should further study the capital utilization rules in different industries and for different clients and take key accounts as an example so as to further expand to the SME clients. In particular, we should also improve the undertaking rate of the capital funding payment for the key accounts so as to form a closed loop of the capital utilization. And second, we will also use our digitalized means so as to further expand to medium and smaller clients as well as long-tail clients so as to improve the payment settlement, the salary payment, as well as the fees collection and the other basic financial products coverage so as to have more current deposit. And certainly, like I said before, CCB has been further promoting our grant wealth management strategy. And take individual funding for example, we're going to further improve our cooperation with all different kinds of financial institutions. I believe that with the implementation of the grant wealth management strategy, we're going to have more low-cost current deposit. And fifth, CCB will continue to further cooperate with different types of financial institutions so as to have more low-cost settlement fundings from the different kinds of financial institutions. Besides, we also see that since last year, you can see that the interest rate market-oriented reform began to play its role. LPR reform will gradually transmit from the loan side to the deposit side, and this will help us to stabilize the cost from the liability side. And certainly, we're going to strengthen interest rate risk management, use different kinds of interest rate derivative instruments. I believe that with the above-mentioned measures, CCB is confident to maintain a very good need level among peers. Thank you. Thank you. President Qin, next question. Next question, Zhang Qingshi from Shanghai Securities News. Thank you for giving me this chance. Good afternoon, management. Inclusive finance is one of your three strategies. Management, please give us a brief update about inclusive finance development, including the size, pricing, asset quality of inclusive finance. And with economic downturn, whether the demand of the inclusive finance is also affected, whether you can also satisfy the needs of the regulators, what kind of countermeasures have you adopted? Vice President Cui Yong, please take this question. Thank you for your attention to inclusive finance. As you see that among the peers, CCB is the first to identify inclusive finance as one of our three major strategies. And over the past few years, we've been improving our organizational structure, in particular in terms of platform development, product development, as well as the service penetration, as well as team building. We have been a very solid foundation for inclusive finance development. I think there is something I would like to share with you. By the end of June 2022, inclusive finance balance was 2.14 trillion yuan. And this is also the largest commercial bank with inclusive finance. And there's an increase of 267.1 billion yuan. And you can see that extension of inclusive loans continue to grow. Now we have 2.25 million clients, an increase of 310,000 comparing with the beginning of the year. I believe that you pay attention to commercial banks. You know that 310,000 is actually the total number of the corporate clients for the commercial banks in the early days. It's really not an easy job. You can see that given the complicated dynamics, it's really not an easy job. You can see that the half-year incremental is also the biggest one over the past years. And you can see that the loan rate will continue to be compliant with the regulators' requirements and continue to drop, so as to surrender profit to the real economy and the quality of the loans continue to be stable. Basically no volatility. All of these achievements, like I said, are attributable to platform development, product development, as well as service penetration. While at the same time, I should say that we play the role of the tech. You know that many colleagues, as well as the media, pays a high attention to our platform, Huidongni. CCB Huidongni offers one-stop services, which is very convenient to reach out to a wider client base. And based on this platform, there are also some things I'd like to share with you. Because we're going to release Huidongni 3.0 version. This new version is really a good thing you can expect about. And recently the visit of Huidongni is about 170 million, and the download is about 21 million. For Huidongni platform, you can see that the beneficiary client is about 8 million. And

there are 1.65 million customers, and with a loan extension of 1.3 trillion. So for inclusive finance, it's impossible to reach such a large number of customers without the support of technology. Over 90% of our business are actually delivered to the Huidongni platform. So indeed, this platform has provided very convenient services to the businesses. And in the first half of this year, we have also organized a dedicated campaign to provide services for self-employed businesses and SMEs. We have also offered some digital and online market loans. This has made the products more relevant and made our services more accurate. Also, we have implemented the policy requirement to extend the loans for SMEs so as to ease the difficulties for the market entities. And you also mentioned the lending needs or borrowing needs of the SMEs. We have seen some volatilities there, but overall, the SMEs still needs funds, and we still have a large room for inclusive finance. As for the regulatory requirements, actually this year is a little bit different from the previous years. So in the beginning of the year, the report on the work of the government said that we need to promote market increase in support, inclusive financing support for the SMEs. This is a different wording than the previous years. And in the May meeting, it has been made clear that the large state-owned banks has increased the SME loans by 1.6 trillion yuan. Actually, based on our progress, there is no question that we can meet this target. So as the next steps, we will continue to closely follow the market trends and the customers' needs to provide more financial services for the SMEs, so as to enable the market players to recover their vitalities and to promote the high quality and sustainable development of inclusive finance. Thank you. Next question, please. Next question is from Winnie Wu of Merrill Lynch, Bank of America. Thank you. My question is regarding wealth management strategy. Over the past two to three years, this has been a priority for a lot of banks, but for the first half of this year, the market conditions are quite challenging and complex. So for CCP wealth management, what are the investment strategies for the first half of the year, and what's the plan for the second half of the year? Mr. Ji will take your question. Thank you. So this year is the first year for the end of the transition period of the new rules for asset management. In the first half of the year in particular, in Q1, the wealth management industry has undergone a very severe stress test. We have accumulated a lot of valuable experience and has demonstrated the resilience. There are several features of the development of CCP wealth management. First, our business has become more prudent. The subsidiary has inherited the prudent business style of the commercial bank. And also we have built our advantage compared with other asset management institutions. We have shown our advantage in terms of synergy between the subsidiary and the parent company. And third, the customers have a good experience. We have a larger customer base who has sophisticated investment philosophy. And thanks to the advantage synergy between the parent company and the subsidiary, we can better cater to the risk appetite of the customers and respond to the customer's needs in a timely manner. So CCP wealth management is the first wealth management subsidiary in China. And by the end of the first year of this first half of this year, the total AUM reached 2.05 trillion RMB Yuan. And our operation has been very prudent. And to go further and go farther, we have to focus on three aspects. First, compliance. Compliance constitutes our core competitiveness. So from the very beginning, the wealth management subsidiary has been separated from the bank in terms of personnel system and products. And we have put a lot of emphasis on compliance so as to protect the interests of investors. And we have provided a lot of value to the customers while serving the country's needs. And second, we need to adopt a market-based mechanism to go even further. I think this is a consensus. We need to adopt a market-based incentives and employ a really good professionals to build competitive products so as to win market trust. By the end of the first half, the comparative performance has reached 90% as compared to the benchmark, which was leading among the peers. And number three, we need to be more professional. So CCB wealth management needs to adopt a market-based approach and at the same time to leverage our advantage in having the synergy between the subsidiary and the group. We have to benchmark ourselves to first class institutions in the market and to build our professional asset management capabilities that can be put into the test of the market and the economic cycles. Also, we need to consolidate our advantages in allocation of debentures, non-standard and other equity assets. And also improve our investment capabilities in stocks and non-listed equities. And also increase investment in public reads and passive investment as appropriate. In the future, CCB wealth management will continue to prioritize development quality and to strike balanced development in quality, scale and efficiency so as to become a very prudent institution and become a very reasonable and trustworthy institution. Our product will continue to offer low volatility and stable yield. We'll continue to focus on fixed income products and to follow a diversified allocation strategy. We'll focus on the greater Bay Area and the Yonzi River Delta region and to support the regional development of key areas. And to make our investment mainly in green finance, ESG, advanced manufacturing, strategic emerging industries, rural revitalization, etc. Faced with the complex economic and financial situation, CCB wealth management will continue to prioritize risk control. We will make sure that our asset quality, our delivery rate and our benchmark meeting rate and other key indicators will continue to lead the market. Here I would like to say that apart from CCB wealth management, we have more than a dozen wealth management subsidiaries including CCB Pensions, CCB Trust, CCB Fund and CCB Insurance Asset Management. And the CCB capabilities in equity investment has been acknowledged by the market and the CCB wealth management has won the Golden Bull Award of wealth management companies of banks for two consecutive years. And on Monday, we have also won the excellent return award and the three equity product Golden Bull Award. We continue to target some customers with long-term and sophisticated investment philosophies. And the CCB will continue to consolidate our group resources to make sure that asset management will continue to meet people's needs for wealth management and to provide a long-term funding for the real economy and the capital market. And to grow with the customers and will continue to improve our competitiveness and advantages in wealth management. Thank you. Thank you, Mr. Ji. Well, it's almost time, but there are still a lot of questions unanswered, so we will extend the meeting a little bit. Next question, please. Next question is from Shen Hu, Credit Suisse. Thank you for the opportunity. I'm Shen Hu from Credit Suisse. So my question is about the mega wealth management. This is a priority for all the major banks and the ample savings has provided good opportunities for the development of this business. So I would like to consult the management on the progress and achievement of the system development of this mega wealth management system. And what's the plan and expectation for this business in the future? So President Li Ren will answer this question. Thank you for the question. So CCB attaches great importance to wealth management and it has been incorporated into the 14th Five Year Plan as a key priority. So in the past three years, we have promoted the strategic transition of the mega wealth management from the top level design and actually our actual practice. So despite the market volatilities, our wealth management business has achieved good results. First, the AUM for retail customers exceeded 16 trillion yuan, an increase of 945.2 million yuan. And second, the fee and commission revenue has exceeded 21 billion up by 7.8 year on year. And it contributed to over 30 percent of the fees, fee based services within the bank. And third, the structure of individual customers continue to optimize. In the first half of the year, there are 2.68 million new customers with an AUM of over 50,000 yuan, which is a historic high. And we have four features. First, inclusiveness. CCB has a total personal client of 700 million. So we have such a large customer base. So we, on the one hand, we need to offer good wealth management services for over 190,000 personal banking clients. At the same time, we have to provide services for 700,000 general public clients. So we have constructed a multi-tiered and multi-category customer system. We have accurately identified the risk appetite of the customers so as to offer relevant wealth management products for them, so as to ensure that we provide high quality financial services to meet people's needs. Second, smart wealth management. CCB enjoy a lot of advantage in FinTech and the digital operation. So we have applied digital technology into wealth management and has achieved some good results. On the employee end, we have developed three work benches, namely this consultant, investment consultant, customer relations, relation managers, and client direct sale platform. So as to provide very good toolbox for our employees. And on the client end, we have built an online platform to incentivize the customers. We have leveraged some practices in the internet industry so that the customers can upgrade to high value customers. And also recently, we have improved the wealth management capabilities of the mobile banking service. We have an online wealth planning service for the customers and have provided a comprehensive customer journey from KYC to product portfolio. Actually, 85% of the customers are reached through the online channels. And third, professional wealth management. Professional capabilities come from practice and exploration. From 2020 to 2022, we have conducted wealth management season and wealth season and other themed campaigns for three consecutive years.

In reality, we keep improved professionalism of wealth management. In 2021 wealth season campaign, 37 tier one branches has realized the all around growth of existing capital deposit as well as investment and wealth management. So far we have been promoting 2022 wealth season campaigns. And it also comes from the team building. CcB has been building three teams featuring the buy side research, investment advisory as well as clients manager. So in terms of the buy side research team, we want to make it into a brain of the investment decision making. There's also a 400 people team, investment advisors team in the headquarter and tier one branches. We also have more than 30,000 accounts manager who also been ranking among the top in the nationwide financial wealth management competition. And of course, we're also trying to build a so-called focus and targeted wealth management. We have been forming the capital centered as well as coordinated AUM related operational system. We have been anchoring with the AUM growth and the whole bank will be focusing on the grand wealth management transformation. In the first half of the year, we have been selling 178 billion pounds among the peers we have been taking the lead. Well, at the same time, we also see that the year on year increase of 29%. With the implementation of the grand wealth management, our retail business market competition keep improving and influence also keep expanding. And last week was the Asian Banker 2022 International Excellent Retail Service Provider Awards. CCB has been awarded as Asian Pacific Best Retail Bank, China Best Retail Bank and China Best Large Retail Bank. These are the three major comprehensive retail awards. And also, actually, this is the very first time for a bank to be awarded all of the three awards. And we are also among the first to be awarded as the Asian Pacific Best Retail Bank as a state-owned bank. We, all of this recognition from the professional industry as well as all walks of life, we're quite determined to make a very grand wealth management business even better. First of all, we are going to focus on inclusive, intelligent, focused as well as targeted wealth management. At the same time, we'll also try to prevent risks and create long-lasting wealth for our clients. Thank you. Next question, please. Next question. Ye Xiaoxiao from UBS. Thank you for giving me this chance. I come from UBS. This question is about fee-based income. We see that in the first half of the year, fee-based income slowed down in the entire banking industry. So with fee cut and the surrender profit to the real economy, how do you strike a balance between the SOE bank responsibility and value creation? What kind of measures will be adopted by CCB to increase your fee-based income? And what will be the major driver? President Jiang Jingliang, please take this question. Thank you for raising this question. In the first half of the year, our fee-based income and commission income is 68.8 billion -on-year decrease of 0.89%. The major reasons are as follows. First of all, we insist on implementing the policies of the central government and the state council. Second, we will cut fees to surrender profit to the real economy. And second, with the resurgence of COVID-19, consumption remains to be quite sluggish. And you can see that the income related to consumption increased very slowly. And thirdly, the volatility on the capital market, we see the insurance of the public fund decreasing. As a result, our fund sales business income also declined. Some of the products as well as the services are affected by the mentioned factors. However, you can see that the fee-based income in CCB still ranks the second among the peers. For some of the priority areas, the performance is pretty stable. First of all, our grant wealth management systematic training has been gradually showing effect. Like President Lee mentioned, in the first half of the year, our grant wealth management fee-based income exceeds 21 billion -on-year increase of more than 8%. Showing our service capabilities in agency sales, custodian, as well as asset management. In particular, in terms of the agency insurance as well as asset custodian income, we realized a double-digit growth. And secondly, we have been nurturing our advantages area as well as intelligent business, which shows great vitality. We see that the property capital-related finance business keep increasing. In the first half of the year, the growth was 11%. Matchmaking acquisition as well as the other capital organization business, as well as the other intelligent related new kind of investment banking business, grew pretty good. The total revenue was 7 billion with an increase of 10%. And certainly, our basic financial business also showed a very solid growth. In particular, settlement and clearing related commission income was 20 billion -on-year increase of 0.5%. In the first half of the year, we see that this is really a hard-winning result because of the dynamic H1. RMB settlement and international settlement, as well as the other corporate transaction business, based on our strengths, we have been witnessing a faster growth of the client number as well as the business transaction. In the first half of the year, there's an increase of 2.5%. In the second half, we'll continue to grasp all the opportunities while creating value for our clients. We would also like to guarantee the compliant-based and stable growth of our fee-based income. There are several things I would like to talk about. First of all, we would like to consolidate our strengths in traditional businesses. And now we have been adopting the project to strengthen our fundamentals. We would like to better leverage our strengths on a corporate service network, continue to deliver better services to large and medium-sized clients. At the same time, we'll also see that for the corporate transaction business fee-based income as well as the house reform, financial-related fee-based income will continue to grow steadily. And secondly, we will continue to improve the contribution of the priority area. And by leveraging on the wealth management season campaign, we're going to further nurture wealth management system capabilities and also continue to focus on the differentiated needs of the clients. One of the specific strengths of CCB is about the advisory business pricing. So we're going to continue to increase our income while at the same time the debt and the writing capabilities of CCB is also very strong. And certainly, we expected that some of the business will turn better with the recovery of COVID-19 and the recovery of the consumption. You can see that consumption-related middle income like e-banking and bank card-related business will gradually recover. We're going to gradually improve the consumption scenarios, optimize the customer's experience so that we will have the compliant-based as well as steady growth of our fee-based income. Thank you. Next question, please. Next question from Lu Yuhang, Financial Times. Thank you for giving me this chance. My question is about green finance. We know that with carbon peak and carbon neutrality, there's an urgent need for green transformation of the society. All kinds of different financial institutions formulated their green finance strategies. And recently, we also see that CCB released the first environmental disclosure report. Could you give us more details about the practices on green finance and future plans? Vice President Cui Yong, please take the question. First of all, thank you for raising this question. In the interest of time, I would like to briefly talk about our good practices as well as the achievements on green finance. First of all, in terms of the operation mechanism, we will continue to optimize our top-level design. Within our group, you know, with the support of the Green Finance Committee, we also have the leaders group led by our chairman, and we also have the dual carbon 20 action plans. And there's also the three-year strategy as well as the three-year action plan. We also initiated a -long-term roadmap. We identified that we were going to build CCB into a global leading sustainable development bank. So this is from the top-level design. And secondly, the green finance product development and innovation will continue to be promoted. We see that CCB has been playing our strengths with whole license. We are going to cover green credit, green debt, green fund, green trust, green rental, so as to have the whole coverage of the green finance product. And so far from the commercial bank's perspective, I believe that we have been consecutively launched different kinds of innovative products. And certainly in terms of the policy making, we have been navigating towards the green and low-carbon transition. We clearly initiated ideas that the green credit proportion in a total lending. We also actually clarified policies on the priority area. The indicators of decarbonization has been incorporated into the selection of some clients as well as some projects. And fourth, keep improving our risk control capabilities. On the one hand, we are going to curb the blind development of two high and one low projects. While at the same time, we will also actively serve the purpose of energy security as well as the stability of the supply chain. Through the mentioned four aspects of Endeavor, CCB, I should say that in terms of green finance development, we really see faster growth. There is some data I would like to share with you by the end of June. Our green loans totaled 2.41 trillion RMB, one increase by 22 percent. And green loan and clean energy loans, growth is faster than the other types of loans. And in terms of the non-credit green finance, in terms of the green debt insurance, in May we have issued a total 1.15 billion USD denominated BRI green bonds. And we also issued 10 billion SLB green bonds, which is very popular on the market. And in terms of the green bond enterriding, by the end of June, we enterride 23 green bonds for 17 clients with a total issuance of 25.7 billion. So you can see with all of this data disclosure and with all of the mentioned service system, I should say that we have been keeping exploring on green finance and there are more best practices. Thank you. Thank you Mr. Cui. We would like to give the floor for the final question on the side. We would like to give the floor to Chiu Zhao-Yan from Bank and Insurance News. Thank you, moderator. My question is about rural revitalization. Management, could you give us an introduction about your strategies as well as your management model? Vice President Li Ren, over to you. Okay, thank you for raising this question. Since they take rural revitalization as one of our major strategies, we think that this is very important to dig into the blue ocean in the financial industry. We are actually among the first to establish rural revitalization department among the peers. After many years of development, we play our strengths in FinTech. We also highlight digital operation as well as ecosystem building. We also initially built a 1211 rural revitalization service system.

The

first

one is one platform. That is the Yunongtong rural revitalization comprehensive service platform. So on the offline channel, we provide Yunongtong inclusive finance outlets. We have established some 490,000 outlets so that the villagers can have access to some cash withdraw, social security and health care and other financial and non-financial services. So now we have already 189 million transactions delivered through these outlets. And on the online channel, we have developed the Yunongtong app. We provide online e-commerce and convenient services through this platform. By the end of June this year, there are over 3 million registered users on the Yunongtong app, and it has extended nearly 12 billion yuan of loans. So both the online and offline channel have constituted this comprehensive Yunongtong service platform. The second two refers to two rural related credit product packages. So on the online channel, we have provided the quick loan product package so as to meet the borrowing needs of the farmers. We have leveraged the big data and have catered to the lending or borrowing needs of the farmers. By the end of June, the balance of this quick loan product reached 41 billion yuan, up by 93%. And the offline loan package mainly catered to the corporate client needs and mainly covered the rural infrastructure projects, public service institutions and some key businesses. And the balance of rural related loans of the bank reached 2.77 trillion yuan, significantly higher than the average growth of loans across the bank. And the third one refers to a series of professional ecosystems and scenes. We have built a series of professional and vertical scenes around three aspects. First, the featured agricultural industrial chain. For example, we have a typical industrial chain service system for the dairy industry, the shrimp industry and the vegetable industry. And we also have the government service in rural areas. We have provided the special high quality agricultural produce dedicated zone on the online channel. And over 600,000 visits have been reached on this channel. And also we have established a set of agricultural related financial digital risk management system. We have a management cockpit and other digital tools to identify and real time monitoring of the suspicious points. We have also deployed 85 monitoring model so as to enhance the auto identification and early warning of the fraud and credit risk and other risks. In this process, CCB has this comprehensive service platform. We have the quick loans and we have the premium products platform. And we have the school room for training and we have the circle for social services. And we have a market for circulation. So we have complicated, we have a very complicated and comprehensive service system which covers the product platform scene customer. And this ecosystem has enabled us to achieve comprehensive development of country business. By the end of June, the balance of deposits at town level reached 5.08 trillion yuan, which is 465 billion yuan more than the beginning of the year. And not long ago, the regulators has conducted evaluation for the services provided to the rural areas by the national banks. And the CCB has been rated as excellent. So as the next steps, CCB will continue to implement the concept of new finance and better serve rural industry, rural development, rural governance and rural reform so as to contribute CCB capabilities to comprehensive rural revitalization. Thank you. We have a webcast for the investors and we have issued a notice for the announcement. So through the hotline and the email, we have collected a lot of questions from the investors. We have seen that a lot of investors have left a message for us. I think most of the questions you are interested in have been answered or have been already been asked by the media. And another question you are all very interested in is about profits and dividends. As many investors have said that given the complex situation this year, the profit growth of banks is closely related to the macroeconomic trends. And the net profit of CCB has been declined compared with the previous year, especially the non-interest revenue. And you would like the management to give some expectations for the trend. And is there any plans to adjust the dividend ratio? So I would like to invite President Jin Liang to give you an answer. Thank you for the question. In the first half of this year, CCB has maintained a steady growth in its profits. Our net profits have grown by 4.95%, which is consistent with the keger over the past five years, that is from 2016 to 2021. So the average keger over the past five years was 5.51%. And our ROE was 1.01%, and the ROE was 12.59%, which is relatively good upon the peers. So I think there are several features of our profits. First, in the first half of the year, our net profits or net revenue from the interest income have grown steadily. This constitutes the bulk of our profits. So net interest revenue reached 317.3 billion yuan by .18% year on year. This is mainly because we have increased investment in, we have increased credit supply and debt investment. At the same time, we have adjusted our asset and liability structure for high yielding assets, including loans and financial investments. They have accounted for a larger share of our total assets. And we face less pressure in terms of paying the personal deposits. Through granular management, the NIM for the first half of this year was 2.09%, which is down by four basis points, which is relatively stable. Second, we have cultivated our comprehensive service capabilities. Fee-based income and commission income was relatively stable. I will not elaborate because it has already been covered in previous answers. Third, you're all very interested in the other non-interest income. This has dropped significantly in the first half. There are three reasons to it. First, because of volatilities in the capital market, the equity investment and the bond investment held by the head office and subsidiaries have dropped in terms of their valuation and their losses. And the second reason is that the business of asset securitization have decreased significantly. And third, because of exchange rate volatilities, our foreign exchange business income have decreased. So these are the three reasons for the reduction in our other non-interest income. And number four, on the profit loss statement, our operation expenses have increased steadily and our efficiency of operation has been quite good. Our operation expense was 95 billion yuan, up by .78% year on year. And our income and cost ratio was 23.4%, which is relatively good compared with the peers. In the first half of the year, we have strictly cut down on unnecessary expenses. For example, some travel expenses, some publicity and reception expenses have been cut down. Number five, we have adopted a prudent principle and have enhanced our risk control and competence. So in the first half of the year, we have set aside 103.3 billion yuan for asset write-offs, which is down by 5.1 billion yuan, down by 4.73%. This is because of our good risk control capabilities. And our provision coverage was 244%. And this is one of the best among the industry. So the banking sector is closely related to the real economy. And the real economy is the ultimate driving force for the sustainable growth of banks. So to support the real economy is to support the future of the bank. Despite a lot of uncertainties in the COVID situation and the macro economy, we have every confidence to keep our performance stable. To elaborate on this, I would like to approach it from both the income and the expenditure end. So from the revenue end, we have a relatively high level of capital adequacy ratio. Tier one, core tier one and tier two, CAR have all been very good. So we have the capabilities to support asset growth, in particular the interest-bearing assets. And the growth of the balance of assets can hedge or offset the downward NIM trend to some extent. And second, as I said, total assets of CCP has exceeded 33 trillion yuan. And there is still a large room for further optimizing the asset liability structure. And this can produce even better results. And third, as the COVID situation eases, consumption will continue to improve. And CCP is actively promoting its wealth management strategy. So fee-based service will continue to generate more revenue for us. This is from the revenue end and from the cost end. The two biggest costs are first, the operating expenses. The cost-income ratio was relatively good among the industry. And we will continue to increase our marketing and strategy expenses to improve the effectiveness of our investment. And second, the credit cost is the biggest cost of the banks. We will continue to focus on substantive risk judgment. And we are very strict in asset categorization. And our NPL overdue scissors gap continue to be minus. And our provision coverage is very high. So we have every confidence to keep our profits grow on a steady basis. And about dividends, over the years, cash dividends from CCB has been maintaining at 30% or more. And we have provided long-term and sustained return to the investors and shareholders. So this is the basic logic for our business. And we will strike a balance between current yield and future capital accumulation. So now we don't have any plans to adjust the dividend proportions. So in the future, CCB will continue to improve its granular management capabilities to achieve high quality and effective growth. And we are going to deliver more values for the shareholders. Thank you.

Thank you, President Zhang Jingliang. Just now our management had very candid, professional and in-depth discussions with the investors. I hope that this can help you to better understand the strategic initiative, the business operation, as well as the future development trend of CCB. If you have other questions, you're interested, you can contact the board office or contact our PR department at any time. And from different channels, we will respond to your interests. Thank you for your participation. I wish all of you stay safe and stay well. Thank you. That's the end of this interim results announcement.