China Merchants Bank Co., Ltd.

Analysts, friends from the media, good morning. CNB 2023 Annual Result Announcement will now begin. I am CNB Securities Affairs Representative, Head of the Office of the Board of Directors, Xia Yongfang. Today, our result announcement will be presented both on-site and online live streaming. On behalf of China Merchants Bank, I'd like to extend warm welcome to your participation and thank you for your long support and investment in CNB. Now, I would like to introduce our attendee. They are Chairman, Mr. Miao Jianming, President and CEO, Mr. Wang Liang, Executive Vice President and Chief Risk Officer, Mr. Zhu Jiangtao, Executive Vice President, CFO, Secretary of the Board of Directors, Mr. Peng Jiawen, We also have online and offline participants, Mr. Li Menggang and Mr. Tian Hongqi, independent director, and also relevant department heads from CNB. There are two sessions of today's meeting. The first session will be given by Chairman Miao and President Wang on the 2023 performance overview, taking around 30 minutes. The second session is a Q&A session, takes around one hour and 30 minutes. The meeting will be concluded. in 11.30 a.m. The meeting will be provided with simultaneous interpretation from Chinese to English. Now I will give the floor to Chairman Miao and President Wang on CNB 2023 performance. Dear investors, analysts, friends from the media, good morning. Welcome to China Merchants Bank 2023 Annual Result Announcement. Today's performance presentation will be including three parts. First, I will introduce the company's 2023 performance overview, and then President Wang will introduce the detailed operational information, and then I will briefly introduce our outlook and strategies to 2024. In 2023, the group has taken to build a value creation bank as our strategic goal. make a steady development with progress, strengthen and optimize capital-heavy business, optimize and enlarge capital-light business, enhance wealth management, fintech, and risk management, three capabilities, and achieve the quality, profitability, and scale dynamically balanced development reflected in the following six aspects. Firstly, we actively and effectively respond to challenges in line with our operational performances. Faced with loan rate cuts narrowing fee-cut sluggish capital requirement and insufficient credit demand and complicated risk conditions and other unfavorable factors, we take active measures to maintain a stable operational performance. Net operating income, 339 billion yuan, down by 1.64% year-on-year. Net profit attributable to the bank's shareholder, 146.6 billion yuan, yielding an increase of 6.22%. ROAA was 1.39%. ROAE was 16.22%. Representing year-on-year decrease of 0.03 percentage point, 0.84 percentage point respectively. We make strict control on cost influenced by the decreasing revenue. Our cost-to-income ratio was 32.97%, a slight increase of 0.08 percentage point. Our net interest income was 214.6 billion yuan, year-on-year increase, a decrease of 1.63%. Although we're influenced by the continuous narrowing interest rate spread and also the structural change of our loan and deposit structure, our NIM was 2.15%, year-on-year decrease of 25 bps, but still maintain a good level. Influenced by the fluctuated capital market and the enhanced fee rate cut, our non-interest income decreased slightly. Our non-interest net income was 124.4 billion yuan, down by 1.66% year-on-year. Secondly, our asset scale grew steadily and maintained our liability advantages. Our balance sheet maintained stable growth, and at the same time, we continued to optimize our liability structure to maintain our advantages of low funding costs. Our total asset scale was 11.03 trillion yuan, up by 8.77%. Our total loan and advances to customers was 6.51 trillion yuan, up by 7.56% compared with the end of last year. Total liability was 9.94 trillion yuan, up by 8.25% compared with the end of last year. Interest-bearing liabilities average cost ratio was 1.73%, up by 0.12 percentage points year-on-year, maintaining at a good level. Cool. total customer deposit was 8.16 trillion yuan, up by 8.22% compared with the end of last year. Demand deposit's daily average balance Proportion to total deposit was 57.08%, maintaining at a high level. Thirdly, we maintain good asset quality, stable asset quality with strong risk compensation capability. We continue to enhance credit risk management, enhance asset quality management. Our NPL balance was 60%. 1.5 billion yuan, up by 3.57 billion yuan compared with the end of last year. 0.01 percentage point compared with the end of last year. Credit cost was 0.74%, down by 0.04 percentage point year-on-year. Allowance coverage ratio was 437.7%, down by 13.09 percentage point compared with the end of last year. Lowen's provision ratio 4.14% down by 0.18 percentage point compared with the end of last year. Fourthly, we continue to optimize our business structure and our capital maintains endogenous growth. We continue to solidify our structural advantages. Retail revenue and profit contribution account for over half of the total volume. Retail finance net operating income and pre-tax profit account for 57.31% and 56.57%, respectively, and giving full play of its balanced role. Non-interest net income account for... 36.69% of the total net operating income, maintaining at a good level. We continue to maintain capital indulgence growth. Under the advanced measurement approach, our core Tier 1 CAR, Tier 1 CAR and CAR were 13.73%, 16.01%, and 17.88% respectively. up by 0.05, 0.26, and 0.11% compared with the end of last year, respectively. Under the risk-weighted approach, our core Tier 1 CAR and CAR were 11.86%, 13.82%, and 14.96%, respectively. by 0.34, 0.57, and 0.28 percentage point compared with the end velocity. Fifthly, we continue to increase IT input and speed up to construct the AI plus finance model. We increase our input to increase our FinTech capability and empower digital operation and management, explore the scenario-based application of AI and speed up our transformation to smart CMB. IT input amount to 14.1 billion yuan, accounting for 4.6% of the bank's net operating income. We continue to optimize talent team with R&D personnel reaching 10%. 1,700 people accounting for 9.14% of the group's total employees. Our FinTech Innovation Fund established 3,700 projects and in total launched over 3,000 projects. We continue to promote new capability construction and exploration of new models and strive to build five smart engines and our intelligent application has released our full-time personnel of over 17,000 people. We launched the LLM ecology construction and established the LLM experience platform to enhance our tech capability. We also actively implement ESG to provide support to real economy. We further improve our ESG work efficiency and won the A-level rating in three consecutive years of the MSCI ESG. We continue to improve the corporate governance system and rename our strategic committee of the board into the Strategic and Sustainable Development Committee of the board. We fully promote green finance and green operation with green loan balance increased by 26% and innovatively launched a green deposit product issue the global's first blue floating rate bond, provide convenient digital financial service to hundreds of millions of customers and lower the carbon emission result from the customer's transportation and promote our own green transformation of operation. We actively fulfill social responsibility, provide support to real economy Our manufacturing loan, inclusive SME loan, and the SciTech loan increased by 25%, 18%, and 44.95%, respectively. We continue to promote the improvement of people's livelihood and further allocate resources to key regions in people's livelihood, such as education, pension, and etc., and upgrade pension finance into a strategic business. increase financial accessibility, and provide the elderly, the disabled, the foreign traveling to China to provide convenient services. We strengthen consumer rights protection, enhance our mechanism construction, improve our complaint handling mechanism, attach great importance to privacy protection, and enhance internet safety management. This is briefly my overview to the 2023 performance. Now I'll give the floor to President Wang on the company's operational detail. Thank you, Chairman Miao. Now I will give you a brief introduction over the company's 2023 performance. In 2023, the senior management has acted according to the board's strategic deployment. We adherence to stable development and maintain good asset quality, strong risk compensation capability and good profitability among complicated environment, consolidate our Thank you very much. As a liability management, optimize asset structure and increase the return of asset allocation. Make multiple measures to strengthen quality asset origination and maintain stable growth in our loan scale. Total loan and advances to customers amount to... increased by 7.56%, accounting for 59% of total assets, regards market opportunities to increase the allocation of investment type assets and make flexible adjustment of interbank assets and increase our capital utilization efficiency. Investment in securities and other financial assets, proportion of the total asset was 29%, increased by 1.61 percentage point, We see the opportunities arising from the recovery macroeconomy and the credit demand from retail customers continue to enhance retail loan extension and retail loans proportion increase. to 54.71% of the total, representing an increase of 0.39%. With rather weak growth of the residential mortgage loan, we make active adjustment to promote the steady growth of credit card loan. With the premise of controllable risk, we enhance the loan extension in terms of microfinance and consumer finance. and their proportion in retail loan increased by 1.97% and 2.44% respectively. Secondly, we enhance liability quality management and maintain balance in quality and pricing of the loan growth. we are faced with the challenges brought by more trending more deposit trending towards term deposit we stick to our liability structure a strategy to take core deposit as the as the core to enhance refined management and maintain balance in cost control and customer demand. Core deposits daily average balance was 6.62 trillion yuan, an increase of 12%, and taking 86% of the total customer deposits daily average balance. Customer deposits cost ratio 1.62%, a yearly increase of 10 bps. But the growth... rate narrowed quarter-on-quarter. The company's RMB-denominated customer-deposit cost ratio was 1.56%, yielding a decrease of 4 bps. Thirdly, we continue to enlarge our capital light business and remain resilient in our non-interest income. We deepen the business model transformation and strive to build up our wealth management capability and promote the extensive wealth management business development. Retail AUM surpassed 13 trillion yuan, an increase of 9.88%. Golden Sunflower and above customers AUM achieved a 10.82 trillion yuan, up by 9.66%. Asset management business totaled 4.48 trillion yuan. Against market downturn achieved an increase of 1.59%. Asset custody business totaled 21.12 trillion yuan, increased by 5.28%. Our non-interest income remains resilient, manifesting our capability to sell through the cycle. Non-interest income accounts for 36.69% of the total, remaining high. Net fee and commission income, 84.1 billion yuan, accounting for 67.61% of the total non-interest net income. Under the sluggish capital market, we increase the supply of stable and conservative products and enlarge the scale of asset management and custody, business and mitigate to some extent the pressure brought by lower net fee income our extensive wealth management business income was 45 billion yuan accounting for 53 percent of the total net fee and commission income our payment and settlement business contribution increase and its proportion of the total net fee and commission income was 41 percent 2.97 percentage point higher yeah bothly we continue to enlarge customer base and enhance our comprehensive service capability Firstly, we always take customer as our center and enhance our customer service capability building with good growth on our customer base. Retail customer group, 197 million, up by 7.07%, among which golden sunflower and above customer, 4.64 million, up by 12%. Credit card active users, 69.74 million. With credit card transaction value achieving 4.81 trillion yuan, maintaining top in the market, we promote to expand corporate customer base with 2.82 million corporate customers, up by 11.66%, among which newly acquired corporate customer was 481 million. 900 customers with withholding customers amounting to 1.19 million. We increase product innovation, increase product competency to better serve our clients. Corporate customers FPA. was surpassing 5.5 trillion yuan, up by 8.44%. SciTech Green inclusive manufacturing loan and loans in other key areas' growth rate were both higher than the average level of the company's loan. We forged features of our pension finance with pension custody scale surpassing trillion level, achieving both increase in the market share and scale. Investment banking debt financing lead underwriting business totaled $591 billion. Bill discounting business balance increased by 24%. Transaction banking wealth management cloud service customer increased by 62%, and in cross-border finance, our corporate clients' international BOP under trading goods volume increased by 9.92%, and in financial market, the derivative transaction volume totaled 64 billion yuan. We speed up to construct our advantages in key regions to promote Yangtze River Delta, Pearl River Delta, Chengdu, Chongqing, and West Strait of Taiwan Taiwan Strait region's key branches to tap into the market potential to adapt to the regional development pace to forge new growth point. Branch in key regions core deposit AUM and corporate low-end growth all were recorded higher level than the average of the bank. The key regions' corporate loan balance increased by 16%, whose proportion was increased by 1.95% of the total of the corporate loan balance. our subsidiaries' competencies continue to increase, and their contribution to the bank's profit also increased, with further manifesting of the synergy effect of the group. CNB Wealth Management's product scale was 2.55 trillion yuan, remaining the top in the industry. CNB Leasing enhances asset allocation with a total asset of 290 billion yuan, China Merchants Fund's AUM 1.55 trillion yuan, up by 4.73%, among which non-money market fund scale was 575.5 billion yuan, ranking top in the industry. CNB International actively worked together with the bank to forge the coordination of investment banking and commercial banking business and finished 30 Hong Kong IPO projects, ranking top among the market. And fourthly, we continue to deepen risk management to prevent risks in key regions. We conduct strict asset classification and fully expose risks and remain stable as a quality. Retail NPR ratio 0.89% remain flat with year-end. Corporate low-end NPR ratio 1.19% down by 0.07 percentage point compared with the end of last year. Special measure low-end ratio, overdue low-end ratio, both record decrease compared with the same period of last year, among which special measure loan ratio 1.1% down by 0.11 percentage point, overdue loan ratio 1.26% down by 0.03 percentage point. NPL to loan overdue for 60 days ratio was 1.19. New formation of NPL was 60.9 billion yuan, down by 1.9 billion yuan year-on-year, NPL formation ratio 1.03%, and year-on-year decrease of 0.12%. NPL disposal scale 58.1 billion yuan, among which standard written off 22.6 billion yuan, securitization 22.5 billion yuan, cash collection 11.2 billion yuan. We effectively manage risk in key regions and maintain controllable asset quality. In real estate business, corporate real estate business balance, 290.7 billion yuan accounting for 4.71% of the bank's total loan. Real estate NPR ratio 5.01%. representing an increase of 1.02 percentage point compared with the end of last year, mainly influenced by individual high-debt customers' further release of risk and slower progress of risk disposal. And those that real estate business that we do not assume credit risk was 249.4 billion yuan down by 16.95%. Consumer finance and microfinance loan, we continue to improve. risk management, select quality clients, and strengthen our quantitative risk control capability and closely follow the external risks to conduct active classification of risks and maintain good asset quality. Retail, microfinance, credit card finance, and consumer finance NPR ratio were 0.61%, 1.75%, and 1.09% down by 0.05%. 0.05 and increase 0.01 percentage point respectively. Special measure low-end ratio and overdue low-end ratio maintain stable. Thank you. We leverage AI plus to drive model innovation and strive to build a smart CMB. We embrace the cutting edge technology revolution and surrounding online digital intelligent platform based and ecological development to speed up the construction of digital finance to transform from online CMB to smart CMB. In terms of AI, we enhance core technology research and speed up the capacity building of natural language processing, cognitive computing, and etc. Explore the application of LLM. CMV application fully use the AI technology to further integrate our smart customer service remote advisory capability and promote the wealth smart assistant Xiao Zhao to provide one-stop wealth management service and customize advisory service to our clients. The number of customer we serve increased drastically. Customer service digitalization in terms of retail finance, we speed up to transform to digitalization Smart and intelligent retail finance. CNB app and CNB live app has MAU achieving 111, 117 million. Microfinance online approval has account for 66% of the total approval. In terms of wholesale, we use digital tool to increase relationship managers' service efficiency with 92% of financing business doing online and 75% of FX business doing online. In terms of risk management, we construct the smart risk control engine and use internal and external data to increase our capability and efficiency of digital risk control. Our Libra system has reduced the percentage of fraud and account takeover by non-cardholders to 0.1 in 10 million. In terms of internal operation, we build the smart operational engine to realize the balance among experience, efficiency, risk and cost over 400 operational process has finished smart reshaping and be put in application with a 27 efficiency increase in terms of digital infrastructure we build an industry leading financial cloud infrastructure continue to deepen the construction of tech middle office and data middle office, enhance R&D efficiency and lower data using threshold. Our big data service has already covered 60% of our employees. This is basically our operational information in 2020. Now I'll give the floor to Chairman Mao on our outlook and strategy in 2024. Now I will briefly introduce our outlook and strategies in 2024. Looking into the year 2024, the banking industry is faced with both challenges and opportunities. In terms of opportunities, the national economy remains stable while seeking progress. We transform ourselves, adjust structure, and speed up to construct the financial powerhouse. to build financial high-quality development, which were mainly reflected in coordinated development of the macro policy, which strengthen the counter-cyclical and cross-cyclical adjustment. Many policies, including fiscal, monetary, and etc., coordinate with each other. Along with the further release of the policy effect, the national economy's rebound will gain momentum. And secondly, new quality productivity speed up development. New industry model momentum is enlarging. SciTech, green, inclusive, pension and digital finance are having great market space. Third, technological advancement represented by AI will bring new opportunities to the banks. tech innovation for the deep and generative AI technology further iterate, promote the banking industry into the smart era, bringing new momentum to the bank by using AI plus finance. To see from the challenging side, there are frequent geopolitical tensions and more complicated international environment and more uncertainties. And secondly, the domestic economies are quite weak in terms of its foundation of recovery, insufficient credit demand, overcapacity, and bottleneck in the domestic circulation. These are all challenges. And thirdly, banks are having more difficulties to remain profit growth, narrower NIM, lower fee rates, and lower risk appetite of our customers, insufficient credit demand. These are all challenges. heightened regulatory management, complicated risk environment, these are all new normal, posing higher requirements to the bank's operation. And the bank in 2024 will stick to our strategic goal of value creation bank and build our three capability of wealth management, fintech risk management, build our mallet curve to create more value to our customer, employees, shareholders, partners, and societies. And our strategies are as follows. We will firstly maintain our characteristics and competence to build a new moat. We will stick to our professional and market-oriented mechanism and remain retail finance as the strategic mainstay and construct our core competency, featured by low liability cost. and construct a new mode that takes smart bank as the core. We will be driven by both management and innovation, secondly, to achieve new quality, high quality development. We will adhere to refined management, solidify foundation, prevent risk, enhance operational efficiency to enhance our quality and competency of service. We will uphold fundamental principles and break new ground, explore new models such as AI plus finance, human plus digitalization to make synergetic efforts to promote high-quality development. And thirdly, we will... Further explore new growth point in segmented areas. We will stand on the regional characteristic industry strength where our branches were located and make according policies to speed up the development of branches in key regions. and to increase their contribution to the bank and also their market share in the corresponding market. At the same time, focus on customer demand, focusing on our endowment to give full play our differentiated advantages to develop SciTech green inclusive pension and digital finance, to build up CMB characteristics and explore new growth point. And fourthly, we will strengthen fortress style risk and compliance management system, adhere to prudent and stable risk culture, enhance our forward-looking assessment to potential risks, and manage all types of risks to effectively prevent real estate, local debt, FI in small and medium size, risks in key regions and in weak links, deepen technological security management and strengthen compliance risk management and firmly guard our bottom line of asset quality. Thank you. Thank you, Chairman and President Wang. Now we will enter into the Q&A session. We will now take the questions from investors and analysts and then take the questions from the friends of the media. As we have numerous participants from today's meeting, please raise your hands to raise questions. Please limit your question to one only and please state your name and the agency you represent before you raise the question. We will rotate the questions from first question on-site and then online. We will now have the first question from on-site.

Thank you for giving me this opportunity. Good morning, management. I'm Mei from UBS. I'm very glad to Seeing that CNB achieved such a great result, and very solid results in such a complex environment. We are very pleased to see that you have raised your dividend payout ratio, and now it's the highest one among Chinese banks. And also we see that there's a high rise of your share price yesterday for each share, around 5%. So my question is for the dividend payout ratio. What is your consideration for increasing the dividend payout ratio at this time? Is there any further room for you to further raise the dividend payout ratio, such as for a two percentage point every year? But I know that it relates to your consideration for short-term and long-term growth. You are very strong in terms of profitability. But definitely you are facing pressure in terms of name. And you also need to take into consideration the capital for your long-term growth. And also you also need to take into consideration about the dividend payout to shareholders. So my I know, do you have any expectations or growth expectations for your RWA growth? Or will you slow down your RWA growth in the future? Thank you very much. I will take the question. For China Merchants Bank, we want to build a value bank for our shareholders. which means that there will be a higher dividend payout ratio. And it's an important part of the value creation, the meaning of value creation. Last year, I know that many of you have lost money or breakeven in this capital market. So paying more in cash as a dividend payout will help to increase your return. and now 35%. I think for each share, our dividend yield is around 6%, and each share around 7%. So I think that CMB is kind of a share which has a higher dividend payout ratio, but with a lower PB ratio. Increasing this dividend payout ratio, Once increased, we never thought it will come down again. But whether we will continue to increase that one to two percentage point, as you said, that we need to balance among different factors, such as cash pay, dividend payout ratio, and also the capital for long-term growth. We hope that We don't want to do refinancing in the share market, but also we want to maintain endogenous capital growth capability and at the same time with a higher dividend payout ratio. So we need to want to balance these three factors in the future. Thank you. Next question, please. Thank you for giving me this opportunity. I'm from CICC, Zhang Shuai. My question is for Mr. Wang Liang. Last year, you have said that CNB want to strike a balance among different business sectors. To be very frank, last year, we don't understand that. But this year, we would like you to elaborate the logic behind the thinking of this business model. Thank you very much. Before answering your question I would like to say a few words. On Monday, we published our annual report. And yesterday, our A share and H share, our share price has raised quite a lot in both A share and H share market. And thank you very much for the recognition from you, from investors and analysts. And for these past two days, I have read a lot of articles from investors Investors and analysts, I know there are some suggestions and there are some criticism. We lay high value on that. Thank you very much for your suggestion and also the criticism for us. And we will all take into consideration your suggestions and try to make a better work Last year, actually, we were facing a lot of challenges, both industrial challenges and cyclical challenges and also policy challenges. So that is why last year pressure was quite high and difficulties were mounting last year. But under the leadership of the board, and also supported by all the related parties. We maintain a stable result and try to make progress in different factors, as Mr. Miao said in the report, in our annual report, that we are still who we are, and we have laid a solid foundation for the future growth as a Mr. Miao also highly praised them. The board has highly recognized what we have achieved last year. So last year, I think that it seems to be a normal year, but actually it was quite a difficult way to go. The result seems to be quite simple, but actually it was hard to achieve that. And CNB will try hard to maintain our result in the future. And just now your question was about the balance development. Last year, according to the strategy put forward by the board, we laid out our idea of building a value bank. It means that you provide value, creating value for shareholders, for customers, for related parties, for customers, employees, and also society. And that is why we think among our business factors, we want all four business factors to move forward and also to reinforce each other among retail, corporate, and also investment banking, and also asset management. But it doesn't mean that we have changed the main priority to retail banking. That is a very important thing. This year is the 20th anniversary of our launch of Retail Banking Strategy. The first time we launched the strategy was in 2004. And now it's already over 20 years, about 20 years that we are doing the same thing. And that is why we have achieved very good results in our Retail Banking. 20 years was quite a hard period. That was a long time. And at the very beginning, We have the original computer and we have launched the all-in-one card and the all-in-one net. And that was all innovation from CNB. And in the internet period, we become the all-in-one net and we provide services to customer seven hours every week and 24 hours every day. And then in the mobile time, we have upgraded our strategy to using mobile phones. So currently, we think we will continue to insist on our retail strategy. We will not change that. But only relying on retail alone cannot suffice. If you only do one thing, you might be fast, but you cannot complicate each other, which means that we need to be strong both also in terms of corporate banking and specialized operation of corporate banking and also strengthen our characteristic investment banking to create new growth point for our business. And also for wealth management, also asset management, these are the very major product line for us. Otherwise, without these product lines, we cannot do very well in retail banking. That is why we say that these four business lines should all move forward, and this is in line with the trend of the international banks and also in line with the domestic banks. Last year, we have achieved quite good results, and this will continue to do so. I think that by doing this, CNB can be a bank with our own characteristic. By moving all the business units forward, we'll not dampen our advantage in retail banking, but make it even stronger. Thank you. Next question, please. Thank you for giving me this opportunity. I'm Catherine Lei from JP Morgan. I read from your annual report that your asset quality was quite stable. Even for real estate industry, your NPO ratio has come down a little bit. But in 2024, when we look at the sales volume, it comes down and also both in volume and also pricing. So, may I know what is your expectation or forward-looking idea about the real estate sector? And also, do you think it will spread over to other areas, such as microloans are collateralized by real estate? And if the collateral value comes down, what will be the impact on that? and how we balance between the policies which ask or require the bank to support the real estate companies, and on the other hand, to ensure that the banks as a quality remain stable, how CMB will balance on that. Thank you very much. For real estate risk analysis, By the end of 2023, our NPO ratio is 5.01%, up by 1.02 percentage point by the end of last year. But compared to June last year, sequentially, you can see that the ratio is declining sequentially. This year, I think the trend hasn't changed much. And for special mission loan ratio last year, by the end of them, was 4.7%. It's down by 1.44 percentage point compared to the beginning of the year. And if we look at the NPO formation amount in 2023, it's down by 36.6% compared to last year, compared to the year of 2022. This is our status or our risk condition in 2023. And for our judgment for 2024 from the current situation, we think that probably it's highly probable that our real estate NPO formation amount will continue to come down compared to what we have in 2023. And at the same time, we will try to increase our efforts to dispose the existing MPLs. So I think the asset quality will remain stable. This is firstly for our judgment for the risk management sector. And for the risk, whether it will spread out to other areas, definitely there will be pressure, such as construction and also for the collateral you just mentioned. such as for the upstream construction. We see that in some regions, some enterprises, we have seen also defaults even in our own bank. And also for upstream and downstream of the real estate sector, we have done a special investigation into that, and we think that as a quality is all under control. and for how we implement the national policy and how we need to satisfy the reasonable financing demand of real enterprise and also how to maintain the asset quality of the bank. I think our priority in 2024 will focus on three areas. and to make sure that it's a ring-fenced management on projects. Three areas. First one is that we will focus on our wireless customers for our head office and branches. Secondly, to focus on first and second tier regions and cities. And thirdly, is to focus on business that is supporting the rigid demand and to improve the livelihood of people. The demand supports to focus on demand in this area. And on the project base, we still emphasize on the self-fulfillment or self-repayment of the financing cost by the project itself, which means that it will mainly highly emphasis on the ring-fencing project management procedure. And I would think that there's no much fundamental changes in the overall real estate sector risk currently. And one more online.

Now is the online Q&A session. Please press the more button if you're joining from mobile and participate the participant and press the participant button. Please, we will have the question from Xu Ran from Morgan Stanley. Thank you for giving me the opportunity. I have a question for the low-end growth plan and low-end pricing. We can see that low-end pricing tend to be quite competitive in the market. SME low-end pricing especially We also see from other banks that they may consider the trend to be not that reasonable, so they will tend to be slowed down in the low-end growth. So I would like to learn from CNB about your arrangement in low-end growth and low-end pricing and how to digest the risks in the mid to long run. And what is your plan's influence towards NIM? Thank you. Thank you for your question. I will take it. To see from the year 2023 that CNB's loan growth tend to be stable. Our corporate loan growth, 9%. Retail loan growth, 8%. The overall low growth was around 7% to 8%. So the speed is slowed down a bit compared with the previous years. But considering the external environment and the macroeconomic environment, I think that the investors and analysts mostly recognize that the growth rate is satisfying for CNB. And we could fulfill the requirement to satisfy the need of the real economy and also take active consideration of the supply-demand relationship in the market. And we are also faced with other questions such as the low-end pricing issue. And indeed, low-end pricing also decreased last year. This is a common challenge faced by the whole banking industry and for CNB. Last year, the low-end yield was down by 10 bps for corporate low-end. And of course, the low-end yield decreased more in retail low-end, 42 bps down. So in average, 28 bps down for the general loan. And indeed, we have to recognize that they have cast influence on the bank's revenue. And from the annual reports released one after another by the banks, we can see it's a common challenge faced by the banks. We need to conduct further analysis on the reason behind. First, it's about the LPR cut. as we are faced by the repricing of the existing loan, regardless of our corporate loan or the retail loan. This is the common challenge faced by them. And the second influence is brought by the supply and demand relationship. From the last year, we can see supply in terms of asset side is way more than demand in the market. So therefore, the competition in the market is fierce. the pricing and the cycle tend to be an influential factor. When the supply is higher than the demand, of course, the loan pricing will go down. And the third factor is that Besides the repricing factor, the supply-demand factor, our structure in the loan portfolio also matters. Our credit card and residential mortgage loan remain fast growth in the previous stage, and their loan pricing tends to be high among other types of loan. But for last year, regardless of credit card or residential mortgage loan, they are under multiple influences. influencing factors, and therefore, their slower growth rate lead to lower loan growth and lower loan pricing for us. So to see our outlook in 2024, our strategy will continue to follow our long adhering stable growth objective for many years. This has long been our goal to maintain stable growth. So, therefore, our total low-end growth will be also set on a target of 8% to maintain a stable growth. And under such circumstances, for low-end pricing management, we will maintain a balanced methodology. And firstly, it is highly... align with the external environment, we shall take active consideration of the enterprise's financing cost. So therefore, we can provide reasonable low pricing. And at the same time, we are able to conduct active management of our asset liability structure so that we are able to achieve a more reasonable asset structure and maintain a rather stable return of our asset yield. Even though I have to admit that we have made every effort to achieve our goal, we have to still admit that the loan pricing will continue to decrease in this year because of the reason of the supply-demand relationship. And also, in February 25th, there is a further LPR cut, which leads to a further decrease loan repricing of our residential mortgage loan. So the influence will gradually be manifested this year. And for the existing residential mortgage loan, there will be one of repricing in this year as well. So we will bear in mind the expectation to lower the expectation for the banking industry that the low-end pricing, that the low-end growth might experience slower growth. We will have one more question from online participant. We will have the question from Mr. Ma Kunpeng from CITIC, from China Securities.