China Merchants Bank Co., Ltd.

Good morning. CNB 2022 third quarter result announcement will now begin. I am CNB representative of Securities Affairs, the head of BOD office, Xia Yongfeng. Considering the pandemic situation, we will continue to broadcast our communication online. First of all, I'd like to introduce the attendees on site today. They are Mr. Wang Yang, President and CEO. Mr. Wang Jianzhong, Executive Vice President. Mr. Li Deling, Executive Vice President. Mr. Zhu Jiangtao, Executive Vice President. Mr. Zhong Desheng, Executive Assistant President. On behalf of CNB, I'd like to extend warm welcome to your participation in today's meeting and thank you for your long support and interest and investment in CNB. Today's meeting includes two sessions. First of all, we'd like to give the floor to Mr. Wang to briefly introduce CNB's Q3 results in 2022, takes around 15 minutes. The second is the Q&A session, takes around one hour. The meeting is provided with simultaneous interpretation from Chinese to English. Now let's give the floor to President Wang to the introduction of CNB 2022 Q3 results. Dear investors, analysts, good morning. Last Friday, CNB released the 2022 third quarterly report, and today, along with our senior management, to meet with all our investors and analysts. I'd like to take this opportunity to thank you for your long support and interest in CNB. I'd like to, along with my colleague, to conduct in-depth and open communication with all of you today. several minutes to introduce our CMB Q3 results and then take your questions. What's worth mentioning is that the below-mentioned statistics are based on the IFRS Calibri, also the Age Share Announcement Calibri. Since this year, under the complicated domestic and external operating environment, CMB continues to uphold a quality, efficiency, and scale dynamic balance development philosophy along our set target of direction and goals to continue to build a 3.0 model and strive our capability in wealth management, risk management and fintech to promote our operating and management level to realize the steady growth in our operating performance and consolidate our advantage in our fortress type balance sheet For the first three quarters, we are featured by the following six characteristics in our operation. First of all, we remain stable in our profitability and a high level of ROAA and ROAE. Till Q3, we have realized operating net revenue 264.8 billion yuan, up by 5.31% year-on-year. Net income attributable to the bank's shareholder, 106.9 billion yuan, up by 14.21% year-on-year. Realizing net income from the interest income, 162.13 billion yuan, up by 7.63%. Net non-interest income, 102.7 billion yuan, 1.85% up year-on-year. ROE AA and ROAE analyzed attributable to the bank's shareholder were recorded 1.5% and 18.2% respectively and up by 0.06 and 0.11 percentage point respectively. Under the advanced and weighted approach, our CET1 ratio continued to increase, reaching 12%. and 11.18% respectively. Secondly, we secure our growth in wealth management business. Non-interest and net income has increased steadily even on a high base. By the end of September, retail AUM 11.96 trillion yuan up by 1.2 trillion yuan by the end of last year with a growth rate of 11.16%. Asset management business totaled 4.72 trillion yuan up by 9.26% compared with the beginning of the last year. Asset custody business totaled 20.77 trillion yuan up by 6.72% compared with the end of last year. Under the drastic decrease of the capital market, wealth management business still maintain good growing momentum showing strong resilience. For the first three quarter, the group has realized non-interest net income 102.7 billion yuan up by 1.85% yearly. It is a growth secured based on the last year's growth rate of 21.87%. and accounted for 38.78% in our net operating revenue. To see from key items, our fee and commissioning come from wealth management, 25.5 billion yuan, a negative growth of 13.1% year-on-year. Fee income from asset management business, 9.4 billion yuan, up by 22.32% year-on-year. Custody business realizing revenue, 4.4 billion yuan, up by 6.59% year-on-year. Bank card commission fee income, 15.9 billion yuan, up by 6.54% year-on-year. Settlement and clearing fee income, 11.5 billion yuan, up by 8.87% year-on-year. Thirdly, our loan scale grows steadily. Consumption in credit card loan has demonstrated fast recovery momentum. With insufficient credit demand and a shortage of asset origination for the banking industry, we have made active proposal of the loan extension Total low-end and advances 5.99 trillion yuan, up by 424 billion yuan, a 7.62% growth. And the total low-end advances has accounted for 61% of the total assets, 1.53 percentage point higher than the end of last year. Under the bank's calibrate, our corporate low-end increased by 125 billion yuan, with a growth rate of 6.64%. among which green loan has increased by 56.6 billion yuan compared with the end of last year with a growth rate of 21.45%. Manufacturing loan up by 67.6 billion yuan compared with the end of last year with a growth rate of 21.12%. Retail loan 3.16 trillion yuan up by 175.8 billion yen compared with the end of last year with a growth rate of 5.89%. Among the retail loan, as we see less increment in the residential mortgage loan and more increment in the SME loan, it actually reflects our strongest approach to the real economy. And we have made very proactive graphs of the recovery of the consumption loan after the pandemic. And therefore, our third quarter newly granted loan are mainly invested in the retail business. And we see consumption loan and credit card loan experiencing fast recovery. They represent an increment of around $50 billion and accounts for 80% of our total increment for the third quarter low-end. To some extent, offset pressure brought from a fast decrease in the low-end yield. Fourthly, we see steady growth in our customer base and the customer deposits increase in its quantity while remaining good quality. By the end of September, we have 2.47 million corporate customers which is 153,000 more than the end of last year. Retail client amounted to 182 million, up by 5.2% compared with the end of last year. The growth in our customer base has promoted actively and strongly in the high-quality growth of our deposit. Total customer deposit is 7.09 trillion yuan, surpassing the 7 trillion threshold, up by 11.71% compared with the end of last year, among which corporate customer has contributed to around 4.39 trillion yuan, and the deposit from our retail customer has amounted to 2.7 trillion yuan up by 18.08% from the end of last year. We will continue to adhere to take the core deposit as our center and strengthen to attract and accumulate more settlement funds of our customers and at the same time conduct both quantity and pricing management over high-cost deposits. Demand deposit has accounted for 61% of our total deposit remaining at a high level. For the first three quarters, customer deposit cost ratio 1.51% up by 11 bps year-on-year, among which for the third quarter, customer deposit cost ratio 1.54%, which is 2 bps higher quarter-on-quarter. The degree of increase has narrowed from that of the previous quarter. Fifthly, we continue to dynamically adjust our balance sheet and to narrow our degree of decrease for the NIM. For the first three quarters, our NIM was 2.41%, down by 7 bps a year, mainly influenced by the multiple cuts of LPR, the weak financing need from the real economy, and people's intention to make more money fixed-term deposit rather than capital market investments. In order to maintain a stable NIM in the third quarter, we further enhance our strategy in portfolio management over our balance sheet. In the asset side, we extend our customer base, increase our loan extension, maintain the price, and guarantee our quality to make sustainable arrangement of loan extension and enhance our efforts in allocating more bonds and exit those interbank assets with low yield. Our net interest income has upped by 7.63% year-on-year. On the liability side, we promote the growth of low-cost core deposits and manage more on high-cost liabilities. To see from the third quarter, our interest earning asset yield 3.86%, interest-bearing liability cost ratio 1.61%, remaining the same, with that of Q2. Third quarter NEM was 2.36% down by one bit compared with that of Q2, but the degree of decrease has greatly narrowed compared with that of Q2. Sixthly, we have categorized strict asset categorization and strengthened the risk prevention and solving to control our risk, influenced by the risk brought by our real estate clients and brought by the retail loan influenced by the pandemic. The company's NPL, special mention, and overdue loan balance and ratio all increased compared with that of last year. By the end of September, our NPL loan... NPL balance totaled $57 billion, up by $6.2 billion compared with that of last year. NPL low-end ratio, 0.95%, up by 0.04 percentage point compared with that of last year. Special mentioned low-end ratio, 1.14%, up by 0.3 percentage point compared with that of last year. Overdue low-end ratio, 1.21%, up by... 0.19 percentage point compared with the end of last year. The company's NPL2 low-end overdue for 60 days ratio was 1.21%, the annualized NPL formation ratio 1.13% up by 0.18%, mainly influenced by the new formation of non-performing real estate loan and the recognizing time point adjustment of our credit card loan and the migration of recognizing loans overdue for 60 days and above as NPL. Targeted at current operating environment, the company will continue to adhere to our prudent and stable provision policy. Our provision coverage ratio, 455.6%, down by 28.2% compared with the end of last year. Loan provision ratio, 4.34%, down by 0.08% compared with the end of last year. high capability of risk compensation. The company's annualized credit costs 0.81% up by 0.32 percentage points year-on-year mainly because that we have made forward-looking and prudent provision increase for low and then advances looking into the fourth quarter on the the very challenging external environment in economy financial and geopolitical environments repetitive outbreak of the pandemic the adjustment in the real estate market the decreasing interest and interest rate and the fluctuation in a capital market, we are still faced with great pressure. CNB will remain our strategic positioning unremittingly, remain the free unchange, namely the president assumed full responsibility under the leadership of the board, our marketized system, and our stability of the talent team to continue to take customer as our center and create value for our clients. and continue to strengthen our capability construction in work management, FinTech, and risk management surrounding the value creation chain of increasing quantity revenue efficiency and value to comprehensively strengthen our management to prevent and to solve risk to build our new competitive edge and form a new mallet curve and continue to increase our long-term investment value of cnb thank you that's all for my introduction thank you president wang now we will enter into the q a session please Follow the instruction given by the operator and please introduce your name and the agency you represent before you raise the question. Now we'll have the first question.

Please raise your hand. to raise your question. And please open your microphone and also your camera and state your name and the institution that you represent. The first question is coming from Guotai China Asset Management. Mr. Zhu.

Great.