Industrial and Commercial Bank of China Limited

analysts, and friends, good evening. Welcome to the ICBC 2021 Interim Results Announcement. I'm from the Corporate Strategy and Investors Relations Department, Deputy General Manager Qian Zhonghua. Thank you for attending this meeting. ICBC has been highly focused on the management of investors' relations and has maintained frequent, frank, and professional communication. Affected by this pandemic, this meeting will be presented via both video link and call conference. Prior to this, we have also collected investors' relations via email. We are honored to have ICBC Vice Chairman President Liao Ling, Vice President Zhang Wenwu, Vice President Xu Shouben, Board Secretary Guan Xueqing, Chief Business Officer Song Jianhua with us, and other major responsible persons of relevant departments of the headquarters. They will be having frank communications and interactions with you. Meanwhile, non-executive directors Lu Yongzhen, Zheng Fuqing, Feng Weidong, Cao Liqun, Chen Yifang, Anthony Neal, Yang Shaoxing, Wei Link will be attending this meeting online. Then we will give the floor to the board secretary, Mr. Guan Xueqing, to present the ICBC 2021 interim results and highlights. I'd like to introduce the first half of 2021 interim results adhered to the theme of quality development. We, based on the strategic guideline and solidified foundation with risk control talent-oriented development, as well as our development directions, We have attained good direction, beating expectation and better than prior period development results. We have made breakthroughs. Big is the future. Our total assets has exceeded 35 trillion. Have maintained the first, the top one ranking of the globe. Big is also our big strength. ICBC has achieved major advantages in multiple areas to provide financial services to our clients in terms of all levels all around the globe and all other services. Stability is one of the features of our operation. We have gained secure development of our risk and sustainable development as well as new momentum. We have boosted our management innovation and technological innovation. We have boosted the digital transformation and the quality and development skill of our bank is outperforming other peers and has gained trust from our clients. We have devoted to build a world-class financial enterprises with global competitiveness. The second, the quality and efficiency of our operation has been improved. The income of our bank has been exceeding 426 billion yuan, net profit of 164.5 billion yuan, ROE 11.9%, up by the NPL ratio is 1.54%. The overdue ratio, 1.33%. Caesar difference, negative 41.1 billion yuan, breaking a record low. The provision coverage, 191.3%. 97%, up by 11.29 percentage points. We have well contained the interest spread of our bank. Neem stayed at 2.12%, down by 3 BP on the prior period. The change magnitude has been outperforming our peers. Capital adequacy ratio was 17.1%, leading the peers up by 13 BP. Over the last half year, the global pandemic is still evolving. External environment is increasingly severe and complicated. ICBC has adhered to the theme of high-quality development, maintained good quality of development, and we have made New advantages in promoting key strategies. Advantageous business has remained relative edge. For institutional and interbank deposits has remained number one among peers. For corporate finance, clients have reached over 9,602,000 more. Loans of corporate balance reached 12.1 trillion, up by 9%. Corporate deposits, $13.31 trillion, up by 4.4%. For transaction banking, it's $8.85 trillion. Underwriting, agency and investment has been outperforming the peers. Settlement finance, we have gained over $21.95 billion income, up by 8.6%. For the number one personal bank strategy, personal financial AUM has reached 16.6 trillion, excluding security assets, has broken a record high and leading the market. Personal deposits, 12.5 trillion, up by 7.1%. Personal finance, profit before taxation occupies 46.8%, up by 5.5 percentage points for the preferred bank strategy for foreign exchange business. We have been maintaining the first position in a lot of foreign exchange businesses. For the strategy for shopping in competitive edge in key areas, Beijing, Tianjin, Hebei area, Yangtze River Delta, Greater Bay Area, In those five key areas, the sum of our loan balance has been up by 6.2%, reaching $13 trillion. The urban-rural collaborative development strategy, the offline county-level coverage has been up to 85%. Over 150 agriculture-supported financing products was launched. And ICBC adheres to strategic legacy and innovation, bringing our strength to make up for our weaknesses and lay in a solid foundation. We have promote the implementation of our new three-year action plan and has formed a brand new strategic system whose value is just emerging. The third, our market competitiveness has welcomed new progress. ICBC's adaptiveness, competitiveness, and inclusiveness has been up and improved. At the end of June, the RMB loans balance has added 1.3 trillion yuan, breaking a record high. The technology, green development, manufacturing, strategic emerging industry has gained leading peers loan scale. Real estate loans was down from the beginning of the year. Deposits has attained collaborative development. Deposits of clients 27 trillion yuan up by 1.5 trillion yuan up by 5.8%. The personal deposits has been up by 7.1%. ICBC has well managed the intensive costs of deposits. The deposit interest rate declined by 2 BP to 1.61%. Client base has been consolidated. Our customer netting project has been implemented so as to improve the contribution and loyalty of our clients. The total amount of individual clients has reached 690 million. Private banking customers has reached 0.19 million, and the digital ICBC has been constructed to improve the number of client individual mobile banking clients in terms of institutional clients in financial, social security, and interbanking sector has remained its edge. The fourth is GBC collaboration. By creating a closed chain of customers, funds, and info, our bank has turned data flow into holdings. We have established a lot of business scenarios over 5,000. With the additional 6,000 government clients and additional 100,000 business clients and additional 18 million consumption clients, we have gained much more deposits. The fifth scenario high quality development of inclusive finance. We have optimized our structures. The first time borrower has increased by 40%. And unsecured quick lending for operation has up by 70%. We have soundly controlled the risk. and ERM has opened up new horizons. Over the last half year, ICBC has promoted the people, money, defense line, bottom line management system, abiding by the rules of active penetration, intellectual control, and overall management path. All kinds of risks are under control. Strategic risk. credit risk, market risk, counter risk, operational risk, liquidity risk, bank book risk, as well as other risks, has been controlled well. We also strengthened new kinds of risk control. The sixth, green finance and ESG image has hit a new level. ICBC has adhered to the concept of environment is invaluable assets. We have actively developed implemented the low-carbon development philosophy, integrating economic and social responsibility as one. ICBC has launched green financial products and services innovation and has effectively allocated resources into ESG resources. And to improve ESG information disclosure, at the end of June, ICBC's green industry loan balance has reached 2.15 trillion yuan, leading the peers. Total amount of offshore green bond issuance has reached 9.83 billion yuan and has underwriting 21.7 billion yuan. And we have underwritten the carbon neutral bond, the first one, as well as the first National Green Development Fund. We have communicated with a lot of global important investors with ESG topics. The sixth, reform and innovation has nurtured new momentum. ICBC always adheres to exploring new development and innovation. We focus on digital finance, green and site tech finance. and to deepen innovation and mechanism reform. We also further reform the rewards and disciplinary mechanisms for the bank, as well as to reform the resource allocation mechanism and to realize a light capital development strategy. We focus on clients' balance sheets and to coordinate and innovate the whole value chain The monthly active users and whole fund scale has been improved. We'd like to innovate to take FPA as one of our management handles of clients. We'd like to channel our operation reform. and the online transaction amount has reached 363 trillion yuan, occupying 98.8%. We also deepened the research system reform so as to contribute more ICBC wisdom. The seventh, new look for talent-oriented development. We use the better allocation of human resources and compensation mechanism to elevate education and training programs for our talent team building. We adhere to fully implementation of rigorous corporate governance to innovate the cultivation, selection, evaluation, and reward system for our talents We have laid a solid foundation for the future development of our bank, and we will, based on the new development phase, implement new development concepts, serve new development paradigm, so as to realize and fulfill high-quality development for ICBC, and to create a better stage for the global investors to make long-term investment, safe investment, green investment.

We now come to the Q&A session to give more opportunities to more analysts and I ask each analyst to ask only one question and state your institution. First question from telephone line. Xu Ran from Morgan Stanley. Thank you for this opportunity for first question. We pay a lot of attention to wealth management. Is which has become an arena for competition for commercial banks. With the continued opening up for the financial market in China, we see more foreign capitals entering China's market. So ICBC, what kinds of measures will it take to maintain a competitive edge in this new round of fierce competition? From Mr. Liao Lin, Thank you for this forward-looking question. I'll ask Mr. Song Jianhua to answer this question. Thank you for your question. I expected that someone will ask about wealth management, but I didn't expect this to be the first question. It means that we all pay a lot of attention to this area for commercial banks, and thank you again for your question. Dear residents, I have increased their wealth. And the government also proposed that in the high-quality growth, we will enhance the common prosperity. And in such a background, wealth management has become a question that all commercial banks must answer. And this business is just not about retail business. It also has something to do with the corporate banking business and wealth management business and investment banking business. But of course, it poses a lot of influences on the wealth management for the bank. For ICBC, we have a strong competitive edge, at least from two aspects. First, at the customer side, ICBC is a largest wealth management bank in China. We are managing 1.66 trillion RMB personal financial asset. It is something entrusted by our customers to the bank. The figure is 16.6 trillion RMB. That's the scale we manage for our customers. From another perspective, we rely on wealth management, custodian, pension, and investment banking, all these kinds of sectors. We also coordinate with funds, insurance, wealth management. We have a strong ability to invest and to do research to better allocate in whole market and to provide this whole system across the whole business chain to provide diversified and unified professional services to our customers. You asked about the special features of ICBC and our measures. We have the following. First, full customer service. ICBC emphasized that wealth management should be facing all the population, to all our customers. Tomorrow, we'll have the ICBC wealth management season. It's the fourth ICBC wealth management season. This wealth management festival from ICBC. And many of our peers try to emulate this practice of ICBC. And this is also our practice to make the wealth management face all our customers. Second, we have a series of products such as fund insurance and precious metal. We have strength in these regards, especially that we have this ICBC Wealth Management Fund Index. This is an index to help customers screen and choose a fund. And our... Our FOF, we follow the ICBC Equity Mix Fund, and it accumulated a revenue rate of more than 100%. It shows our ability to help customers manage their wealth. And we also provide for corporate customers to provide family trust funds and such high-end products. This is the scope of products we could provide. And as for the allocation, ICBC has built a smart brain to provide our customers tens of millions of plans for all our customers. For each customer, we have our own service plan We also have our channels. Besides the offline banking offices, we also have cloud offices and smart phone calls to provide a pertinent service to customers. These are the four aspects of ICBC's advantages. In the next phase, ICBC's wealth management business we will follow the trend. First, that is the need and direction for everyone to manage their wealth, not just for the hair and customers, but also for all our customers. We need to fit into such a trend. We have a slogan that with our smart ability, we will help the wealth generation outreach to all customers. We also take into consideration of all risk appetite of all our customers. We provide it to our high end customers with high risk and high return products. And we also meet the need for customers to have secure products. And that is to say we will recommend proper products to proper customers. We can say that when we talk about wealth management, we only refer to the high risk and high return products, but we also provide more secure wealth management choices. Third, we will build a wealth management product providing all kinds of products And based on the regulatory compliance, we will explore new channels for wealth management to meet need. Four, we will build smart wealth management and to have a really deep insight into the customer needs and provide more pertinent and customized wealth allocation plan. These are the aspects of my answer. Thank you for your question. Thank you for the response from Mr. Song. Next question, please. Thank you for this opportunity. I'm from Leon Securities. I want to ask a question about strategy. This year marks the first year for the three-year plan for ICBC. Would you please introduce how we began this plan? In the next two years, what's your main areas to development and targets? We are paying a lot of attention to the number one personal bank strategy, and what's your progress and your result? Thank you for your question. This is Mr. Liao Lin speaking. I would like to take your question. This year is the first year for our three-year strategic plan, and we propose the idea that is to build ICBC into a modern financial institution with global competitiveness. We have four layouts, that is to give full play to our advantage and make up for shortfalls and strengthen our foundation. In our advantages, we have long-term experiences such as settlement finance and institutional finance, et cetera. Meanwhile, our shortfalls, and in terms of shortfalls and coordination, we have four directions. First, personal banking. Second, forex business. Third, key regional development. Fourth, the coordinated development of urban and rural areas. This is the part we would like to make up of short balls and make more coordination. And to consolidate our foundation, such as we have risk management, risk governance, and to solidify our foundation. We have this linked operation of the government side, bank side, and customer side. This is our strategic target and strategic pathways. This is an important year. To have a good start is quite critical. After achieving the goals for the three-year plan, Our total asset might exceed 40 trillion RMB from the first half of this year. The four long balls, we are doing pretty well. Institutional finance, deposit is good, and we are the first among peers. And corporate banking, deposit and loans, the growth of deposit and loans are both good. And transactional finance, we have about 9 trillion RMB investment and we are the number one in the sales of bonds. And we also have agency businesses and we show the advantage in all these aspects. As for settlement finance, we have a lot of customers. In the first half, settlement and clearing and cash management, the transaction reached 219 trillion RMB. This shows ICBC's competitive advantage. You also asked about number one personal banking strategy. This is our short board. We will want to make progress. Mr. Song just introduced our wealth management sector. And I would like to say that for this strategy, in the first half, we have achieved good results, better than expectation. By the end of June, the personal banking asset reached 16.6 trillion RMB. This is a historical new high. And deposit divided by AUM we are doing better than peers. This is a very good interaction between deposit and AUM. This is quite important. And this indicator, we maintained the leading position in the banking sector. And the personal mobile banking application, we have a lot of active customers. We have mobile bank users by 44 million and monthly active customers is 0.1 billion RMB. And the proportion of the contribution through personal banking business increased by 5.5 percentage points. We noticed that our deposit is quite stable and we made new breakthrough in terms of credit business for personal customers. We need to thank our technology for that. Mrs. Song just introduced that our wealth management have benefited from FinTech. And in the next phase, personal banking business will play a major role in our strategic layout and will give full play to our strengths online and offline. Online, we have more than 0.4 billion customers. Among them, a quarter of them are monthly active. And offline, we have 16,000 banking offices, which we also need to transform. combine the online and offline channels and with... Thank you very much for this opportunity.

I'm very sorry, the signal was pretty bad just now. Thank you for the question again. Congratulations that you have achieved such good results. According to the market prediction, we are facing with some downward pressure. Moreover, the policies has reaching an edging point of QE. What is the future credit demands of ICBC as the largest commercial bank? Moreover, to the next half year? What is our plan to give out our loans? Will it be bigger? Your question is very accurate. Vice President Xu Xiaobin will answer your question. Thank you for your question. from the perspective of ICBC, the credit demand for ICBC is going into a better direction because the economic recovery is pretty good in the first half. And all the banks have securitization, we have enlarged the credit given out. We can see that on several sides, including customer side and corporate side, we are strengthening our loan given out. The major direction of our loan credit goes to the major strategic important areas according to the 14th Five-Year Plan of the nation. There is rapid growth in our loans of all respects. In key areas, the sum of our loan has reached 76.8%, which is higher than expectation. The result of total loans given out is pretty good for the first half. In the next half, the reserve of our bank is adequate, and we can guarantee a robust growth in the next half. Our development strategy will be combining the market change and economic recovery and it will match the risk appetite of our bank. And the growth rate will remain quite the same as the first half year. Inclusive green tech supply chain will be the major areas of our loan given out. As for allocations, we will combine loans, bonds, and equity to inject capital into the real economy and to satisfy multiple financial services demands of our clients.