Industrial & Com Unsp/Adr

I'm Wang Liancheng, GM of Corporate Strategy and IR Department. Today, Board Secretary Guan Xuejing and other management personnel from the departments and subsidiaries are here to communicate with you. Our directors are also online. They are Feng Lidong, Cao Liquan, Yang Dingbang, and Yang Shaoxing. Our Q3 results have been released online. We can see that the Q3 results continue the robust performance. Core indicators are stable and robust. The net income totaled $269.9 billion, up by 0.8%. ROA was 0.86%. ROE was 10.56%, leading the peers. Net interest margin was 1.67%. The decrease was the same as the Q2 in the trajectory, the same with the main peers. NPR ratio was 1.36%, slightly lower compared with the beginning. And the CSRS difference continued to be negative for 14 consecutive quarters as the quality improved further. capital adequacy ratio was 18% more and provision coverage ratio was over 200%. The deposit and loan increased robustly. The loans increased more than 2.5 trillion. Investments improved by more than 850 billion. And the deposit increased over $4 trillion. Savings, corporate, and institutional loans increase all the peers. In the government, business, and customer GBC Plus customer ecology and DICBC, the digital ecology continues to optimize. Personal customers increased to 736 million. Corporate customers over 1.18 million. All kinds of customer base continue to solidify, and the active customers of mobile banking exceeded 200 million with ever-growing innovation. This is a brief introduction of our three Q3 results. Now we enter the Q&A session. Please identify yourself before raising questions. Thank you. The first question, please.

Richard Xu from Morgan Stanley. Thank you for the opportunity to raise questions.

In the future, for my question is the outlook for the credit growth in the future. This year we have seen the rapid growth of credit growth. What's your plan for the credit growth in the future? And also we heard the PBOC had some meeting. How do you take on that about the futures trajectory? And also we see some progress in diffusing debt for LGFVs from the platforms or the non-standard business. I think we have more momentum. Is there any new demand in this regard? in Q4 or next year? What's the contribution of it to the credit growth? How do you evaluate this issue? Thank you. I'll invite Mr. Zhou from the asset and liability department to answer your question. Thank you very much. For the credit growth, I would like to respond as follows. Since this year, we adhere to the strategy of the central government and we continue our commercial sustainable principle. We grasp the market need in the resumption of the real economy and the aggregate volume increased stably. For the first Q3 quarters, the increment was 2.49 trillion RMB. The increment and the year-on-year growth recorded historical high. Contribution comes from the major projects and also the grain innovation, rural area service, private sectors, and also the consumption promotion areas are the major momentum and in the regional lending especially in the major strategic regions the proportion of the in the growth and the outstanding are both leading other regions in the mix of the loan book the mid and long term loans proportion was 63.6% of the total and increased by over 20% year on year. The loans growth also account for more proportion, increasing by four percentage point. The inclusive finance loans and other loans are the major momentum. The bank notes and the discount increase, decrease For the whole process, the landing would be focused on Q1. Its proportion is 34% of the total increment. And then the Q2 and Q3 will see a slower pace. But that's the increase still totaled 200 billion RMB. For the end of this year, we will continue to maintain a year-on-year growth. Next year, and also after the landing for the consumption of capital, just now Mr. Wang introduced the Q3 results and also the capital adequacy ratio. The adequacy ratio was over 18%. In the MIPS allocation, the upgrading of MIPS, we are taking active measures. The capital adequacy level lead the peers domestically and also internationally. We are in the first class among international peers. Despite the high growth of assets, our capital adequacy is still robust and balanced. Next year, for the credit extension, every year in Q4, ICBC starts to make plans for the market connection and the credit extension. For the next year, we have seen the arrangements from relevant departments and for the reserve of the loans, we are making plans. For next year, we will hold meetings about the specific targets. ICBC will adhere to the requirements of the macroeconomic requirements and also make due allocation. for the market opportunities and resource preparation, we will make our ample support for the credit extension. On the one hand, in the future, we will have an important meeting in the future in the economic operation, according to the we will respond to the requirement. Second, I've issued a five-year development plan. Under such framework, we will properly manage the growth and effects of the loan extension. We have seen some positive growth quarter on quarter, so we are confident about the extension of the credit and the upgrading of the mix. ICBC has been emphasizing the prioritized position of retailing loans and its proportion in a whole loan book. In the future, I think we can foresee some positive effect. Thank you. I'll give the floor to Mr. Jones from Credit and Investment Management Department. I'll make some supplement. After the credit plan, the debt plans, In this region, we see the external liquidation is improved. For our risk prevention, it plays a positive role. Second, for the demand of credit in this area, we will follow the law-based principle in cash flow. We will make our assessment so as to ensure that they are sustainable. The second question. Thank you for the opportunity to raise the question. I wanted to ask about name. The name for the first three quarters or 1.67. the single Q3 NIM was lower than Q2 and was contracted to a large extent. If we exclude the impact of LPR and suppose LPR will remain unchanged in the future, when can we see NIM start to be stable Another question is about asset quality. What's the NPR ratio of developers' loans in Q3? And what's the balance of the impairment for developer loans and the provision level? The first question will be answered by Mr. Zhou, General Manager of Access and Liability Department. When can we expect to see NIM can be stable. As to your question about NIM, for Q3, we have seen ICBC's NIM was 1.67%. Maybe later you can see for the entire banking sector, all of us face pressure of continuous contraction of NIM. It's mainly because of the lowering of LPR and also the adjustment of the existing mortgage loan interest rate. So that's the major pressure for NIM against this backdrop. The banks can also take multiple measures to deal with this pressure. For example, we have... optimized and strengthened more refinery internal management so as to optimize our performance in NIM. So for the result of adjustment for mortgage, retail mortgage, interest rate and LPR lowering, we have done our best. And you can see some marginal changes of some positive signs, for example, for the deposit cost. For the newly deposit cost, it was lowered by one BIP. And for the newly savings, the deposit cost was also lowered by around 13 BIP from our asset, particularly from the loans. have continued to face pressure and it was 30 bps lower than that of the same period last year for the Q3 of last year. However, along with adjustment of the mortgage interest rate level, we have seen some changes of the prepayment of mortgages. For example, recently we have noticed some positive changes after the adjustment of mortgage rate. And even after adjustment of mortgage rate, the current rate is still above 4%. So it's also a good contribution for us to stabilize our name. In the first three quarters, the medium and long-term loans all account for over 60 to 70% of the total loans. The pricing of the medium and the long-term loans is also conducive for us in the future. From our micro perspective, Q3, the deposit rate, deposit cost and loan yield through our internal management improvement, have some positive signs and good momentum to go better. This is not only our way and the direction for us to go first to achieve. After twice of deposit rate lowering from the bank, we have seen the loss of our new deposit cost. And this momentum will continue to be played out in next year. And now the banking sector has formulated a kind of activism of self-disciplinary and to lower our deposit cost. We will also continue to discuss with our main peers and this is a good opportunity to continue to guide down the deposit cost.

So as to stabilize a reasonable level of our name.

On the demand and the term structure, of liability and also the structure of our loans, along with the mechanism of deposit cost adjustment. We expect to see continuous pressure for NEM. At the same time, we have seen some active positive signs for marginal changes for better. So that's why we have confidence for us to stabilize NIM in the future. Now for the question about the asset quality of developer loans and impairment, I would like to give floor to Mr. Zheng from Credit Management Department in Q3. Along with the active effects of local government policies We have seen NPR ratio of our developer loans have been lowered for the impairment of forward developer loans in accordance with requirements of regulators. We have satisfied adequate impairment to developer loans. And we have also stepped up our efforts to resolve the NPR of developer loans. Usually the actual loss will be lower than the impairment we set aside.

Ms. John from CINDA Securities. Thank you for this opportunity to ask a question. And my question is about retail. The government has issued a lot of policies about personal banking. And what's your prediction of the demand for consumption and in terms of retail credit, what's your new policies and strategies? Another question is that this year the mortgage for the banking sector is under a lot of pressure. And what's the status of ICBC? and was the status of mortgages a provision of ICBC? Thank you. I ask Madam Hua from the Personal Banking Department to answer a question. Currently, for consumption credit, our provision of credit from the perspective of the first three quarters, I think is quite proactive. For the first three quarters, the credit consumption loans and consumption loans with collectors, we witnessed a great increase. And we also see that the consumption trend is getting better. So in the next phase, we are confident to expand this area. In the next phase, in terms of provision of consumption credits, Our choice would be, on one hand, in terms of credit loans, we focus on cooperation with the leading enterprises in terms of new energy cars. And we also pay attention to the scenarios of online retailers and help boost the development of consumption financing. Besides, you also mentioned about mortgages. This year, in the first three quarters, mortgages provision is better than the same period last year from the figures on the broker due to the factors such as the early payment of the mortgages as introduced by Mr. Zhou from Asset and Liability Department. We also noticed that very positive changes in Q3 the early repayment is reduced in Q3, especially in September. We did make a comparison between September and June when it was the peak for the early repayment of mortgages. So we could say that in terms of all retail consumption loans, we are quite confident in that phase. Another question is... you answered about your consumption loans. I noticed that there are also focuses that on the cars, electronic products, decoration of apartments and tourism, overseas education. ICBC's consumption loans, we have credit loans, easy loan, we have this product. And we also have credit card overdraft. We have a large amount of credit card overdraft balance and we also have the down payment for the vehicles on decoration and we also focus on the scenario, the building of scenarios of consumption and provide strong support for the recovery of consumption. Thank you for your question. Next question, please.

The next question is from Guotai Junan Securities.

Thank you for the opportunity to raise questions. My question also concerns mortgage.

On 25th of September, banks started the work on the adjustment of the first home loan's interest rate and also the second home to the first home transfer interest rate. What's the impact on this action? Was there a resumption in the mortgage business for banks?

First, the amount is not large for ICBC.

It's influenced on net interest margin and net interest income is limited. The interest rate for new deposits is decreased by more than 10 bps. coupled with the improvement of the mix and also the interest rate decrease in the outstanding loans. These are conducive to the development of ICBC. So our yield led the average level of the sector.

for the outstanding mortgage and its influence.

The outstanding mortgage, your expression about it can be concluded as first the adjustment including the second loan to the first loan. Provisioning is quite favorable to the consumers for banks, there is pressure for all banks. At the same time, you are concerned every time about that if you decrease the interest rate, the consumers will refuse to repay the loans. But in July, if you refuse to repay the 10 billion loans calculated by today's interest rate, there is still offset, in fact, for banks. The decrease of the outstanding mortgage can have shocks to all banks. On the other hand, however, we focus more on the marginal change and the decrease in the prepayment of mortgage. There is an offset, in fact, for ICBC. Next comes from Thank you for the opportunity to raise questions. I have two questions. The first question is about for the PBOC's monetary report in Q2, they also wish the commercial banks to maintain a reasonable profit. So what's your view on this? Are there any more measures to stabilize the name in the future? Second question. We have noticed the political bureau's July meeting proposed to introduce a series of measures to defuse local government treasury bonds. What more measures can we expect to see? Thank you. The monetary policy report, CBOC, stating that commercial banks should maintain a reasonable level of profit has been noticed by the market. We agree with that. Commercial banks should maintain reasonable profits and maintain sustainable development, which can also be a safe development. My view is that the external economic macro environment is beneficial for the venture banks to be able to maintain a reasonable level of profit. Since we are a popular listed company, so we have to guarantee reasonable returns to our shareholders. which can all be only guaranteed by maintaining a reasonable level of profit. Actually, this is a frequently asked question. Recently, in recent years, we have seen the pressure of neem contraction, but we think this is related with the macro environment. We have seen our neem now has been contracted to 1.67% because we think current market rate is relatively on the low level, so that's relevant with commercial banks low NIM currently in China. We think SBC has been quite precise and optimized its management of NIM, even facing with such pressure. You always ask, when will be the lowest level of NIM and when can we see the NIM will change for better. It's hard for us to predict the precise moment, precise time. It will be dependent on the changes of demand and supply and also the market rate and also the capital markets. Maybe when we see more deposit become demand deposit and maybe also if we change our risk appetite, we have been always neutral to our risk appetite. We will not pursue high risky assets just for the sake of high long yield. Either from the liability cost and long yield, we have been paying a lot of attention to optimize our management. In the future, as PBOC's monetary policy report mentioned, we will also maintain a reasonable level of profit and a reasonable name. As to your second question of our GFV bond diffusion, we have seen quite good progress in this aspect. As our exposure to LGFV is mainly loans and at a higher tier level like provincial level and mainly in the developed regions, as my colleague Mr. Gentelstam mentioned, we will participate in the debt diffusion in the principle of market-oriented. And currently, the asset quality of relevant loans are quite sound. And we also expect to see the measures to diffuse local government bonds will also be good for us to maintain the soundness of our asset quality in this regard. We will also expect to see we can maintain a reasonable level of profit in our assets in this regard. I would like to see whether my colleague from credit department would like to add up. Okay, that's all.

Next question from Zhou Yu of CLSA. My question is about asset quality and in which areas we are facing a lot of pressure, including credit and non-credit. Some overseas banks also disclosed their figures and the exposure to the real estate sector. What's your opinion about the asset quality in the real estate sector? I'll ask Mr. Zheng to answer your question. In terms of asset quality and the different sectors, asset quality, we think that we need to pay constant attention to real estate sector and relevant industry chains. Your question also addressed the question about that in Q3 we see signs of improvement and we expect that the trend is that things will get better and the positive signs will remain and local governments all have their relevant policies in terms of market and we see very positive responses and increasing real estate sector, the the relevant risks are being cleared out. In the next phase, I think the new policies will be supportive to new insurances, and we have a very good foundation for growth. So from this perspective, in the real estate sector, despite the current pressure, we expect that in the future, the marginal changes will be getting to the better. Thank you. Next question, please.

The next question comes from of China Securities. My question concerns diffusing debt.

you have emphasized the principle which is market-based and rule-based. In the last round of the swap of debts in 2015 and 2016, when the swap happens to the high-rate debt, we have seen the fiscal deposits in 2017 and 2018 have played a greater role in the process in the future for the new round of the debt swap under the market-based principles from local government's perspective. Is there any makeup for banks as exchange for the help and especially for the loan with the loan interest rate loans? First, we say it's based on market-based rules and rule-based rules is transactions. When the players can develop sustainably, we can reorganize the loans or extend the loans term or change the financial conditions. No commercial banks around the world is an exception. This is according to the judgment of the banks. I think the financiers are the companies. They do infrastructure like high-speed railway and other infrastructure construction. Many of them are the productive projects covered by ample cash flows. I think the strategies are case by case. There is no such a thing like a makeup or remedy between banks and the companies. It's according to the risks and the risk premiums from the pricing cost of the fund, the lowest capital returns and other factors. These can form our pricing whether to extend or other arrangement. It is according to our judgment based on risks. This is what we call rule-based and market-based. It is not what some people say the change with the low interest rate loans. ICBC always follows a market-based and rule-based principles. And also our subsidiaries and branches The large banks all have branches. The local governments and platforms are negotiating with the local branches. In the head office level, some teams will have case-by-case judgment for the projects and support defusing the debts. It is good for debtors and creditors We do not hope to see a large amount of non-performing loans. This is also good for the shareholders, so when they are willing and also capable to pay back their loans with the adjustment measures like extension or reorganization, this is the common practice for all commercial banks. I hope you can agree with me. Mr. Ma said it's quite clear. Thank you. Thank you for giving me the opportunity to raise a question. I would like to ask about a question of fee income. We have seen the pressure continued on your fee income. Can you give us the breakdown of fee income, and what's the future trajectory? And currently, we have seen tightened regulatory requirements on fee reduction. Can you give us more information? I would like to give the floor to my colleague, Mr. Todd General Manager from the Financial Accounting Department. It's a very good question because the fee income is the very important part of our revenue. For the first three quarters, our fee income, net fee income, continued a stable level. The total, the size of our fee income continued to remain the largest among our peers. Of course, as you mentioned, certain fee income growth rate have been subjected to some changes. I would like to give you some information as to the breakdown and analysis. For the bright side, we have continued to drive the innovation and improve our service level. For the fee income in some key areas, we have witnessed a fasted growth. For example, the bank card fees have increased rapidly as a result of the large increase of our transaction and business owners, customers, and also as a result of the implementation of our strategy of becoming the number one personal banks. And fee as to the investment banking has also increased a lot. Another area is that the income from the agency sales of insurance have witnessed a fast growth, which includes also the products of our subsidiary, ISBIS-AXA Insurance. Another example is the traditional advantage of our large customer base, including the wholesale customers. So our cash settlement fee income in the first three quarters have also achieved fast growth. So all the four above mentioned areas have contributed to the incremental volume of fee income. Some other fee incomes have seen contraction. For example, we have continued to implement the fee cut for some of the commissions. But the general impact is completely controllable. The growth rate of our fee income is negative for the first three quarters. judgment for the negative growth rate. First, it's in line with our peers. Secondly, it's also a result of the volatility of our capital markets. And also uneven distribution, which is structural in different quarters. But generally speaking, the fee income in the first three quarters have some bright areas. and also positive signs. As to our outlook for the entire year's fee income, we have our advantage in the customer size and products and service. And also, we expect to see the capital market is quite likely to perform better which can also bring some positive changes for our fee income in the future. So in the future, we will continue to promote our fee income in the four areas. First is wealth management products fee income. We'll continue to improve our services to key clients and also comprehensive services And also the performance and value contribution from our subsidiaries like ISBC Credit Suisse and ISBC AXA Assurers. And also to increase our income from our investment banking business. And other areas we have already achieved the first growth like bank card fees so as to maintain the leading position of our total volume of our fee income. or from me for your question about the fee income. You also asked about the regulatory requirements to lower the fee for the bank assurance consistent. I would like to ask my colleague from the Banking Department to add up to that. The policy, the requirement from our regulators in this regard will cause some negative impact for a certain period. Now we are implementing, we are trying to negotiate with our, with the insurance companies to implement the new requirement. The adjustment phase we hope to be minimized within the remaining months of this year and also the beginning of next year, which will be the jumpstart for the sales of insurer products. We will try to minimize the impact and try to maintain the stable contribution from this area. I would also like to add up to that. Firstly, we will definitely implement the requirements from regulators. Secondly, we will also try to implement increase our fee income from the sales of insurance. First is to increase the size of the volume of the insurance products we sell. Secondly, we try to optimize the structure to step up the sales of regular premium products to offset the negative impact of the fee income decrease. Next question.

Thank you for this opportunity to read the question. I have two questions. First one is that the Fed has ended its cycle of interest rate increase, and I see some improvement of interest rate. And what's the influence on our overseas business, including asset liability, yield, and investment? Another question is about the forex rate increase. change influence on our foreign exchange businesses. I also noticed that there might be some government policies having influences on our foreign currency deposit and loan businesses. These are no small questions but two very important and major issues and I ask Mr. Zhou to answer your question. First about assets and liability. and the fast increase of interest rates. Indeed, it has a global impact in terms of the trend that it did take up a lot of RMB. But what's the trend for the future? We cannot say, but we are doing continuous research. In terms of the interest rate system, we have quite advanced measures, such as the FinTech measures to support our analysis. and we are predicting the future trend for interest rates so as to deploy our asset and liability deployment overseas and the foreign exchange businesses. From the current status, the 10-year U.S. bond is picking up. This is a very important reference of pricing And such influences still exist, but as a commercial bank, especially ICBC, we are renowned for our stability, so we are not likely to bet on certain kinds of businesses. And from certain indicators, you may have noticed that the deployment of our overseas assets were quite prudent, including the duration exposure of the asset liability and the structure of loans and bonds, the duration of customer deposits and pricing were quite prudent. And we also faced with the regulations of different governments, especially that the U.S. regulators put a lot of pressure regulation on us, and our indicators are compliant. We do not want to show you our ability in terms of compliance, but I want to stress that the indicators themselves already indicate our prudence in terms of asset and liability deployment. For example, the bond, the duration for bond is quite short. At about 1.6 years, we are quite prudent. quite careful, even if there is a rapid increase of interest rate. And when we carry out stress test, we could say that in terms of regulators' indicators, we have lots of buffer space. So our priority is prudence. And currently speaking, ICBC's overseas effect we still have a positive growth in terms of maintain and grow their value, including bond. The categorization of bond and deployment, we all have a very good positioning and very sound strategies, and there's no great impact on our business performance. Another issue is about the domestic foreign exchange business. Since Q1 of this year, with the overseas government's increase of interest rates, it also has impact on the deposit rate, deposit rate also increase. However, at certain point, some mechanisms will give, will play its role, and we think that we can also allow it to to increase and through the peer disciplinary measures we have a cap of the interest rate for the deposit of foreign currencies so after such discipline measures we could see that in q2 and q3 the interest rate payout ratio dropped and the internal pricing and excellent pricing both helping the interest rate for foreign currency deposit to go down to a reasonable level. You also mentioned foreign exchange, the settlement, the sales and the purchase of foreign currencies. We mainly do it on behalf of our customers in the global market department. However, throughout the year, we also, according to our reasonable positioning to carry out regulatory orientation and requirement and will properly manage our foreign exchange business. Generally speaking, you may have noticed that after the interest rate for deposit is dropped, generally speaking, it is conducive to maintain a very good foreign exchange status. if the interest rate is higher, more people would like to have their RMB exchanged into US dollar and have their deposit in US dollars. And after the interest rate in foreign currencies dropped, the stress is released and the deposit is more balanced. But however, indeed, the Fed has already had such a kind of... strong stress, it is commendable, recommendable that we have such a sound level of interest rate. Our scale is not large, but we are quite prudent and we make rational pricing and to properly manage our asset liability business. Let me supplement saying, Ms. Guan, Under such a cycle, ICBC's overseas institutions maintained a very stable business operation and properly centered against the interest rate risk and the credit risk. Credit risk is at a sound level. So, generally speaking, the overseas institutions are quite sound and within our expectation. With the end of the interest rate increase of dollars, we are also adjusting our structures. You also pay attention to the sales and purchase of forex domestically. Our increase in the sector is around 12%. So that's a sound level. And ICBC's overseas structure is sound, and we also have advantage in overseas. in domestic market. And we have measures to manage all these resources. And the loan and deposit business in foreign currency is having structural changes during this interest rate changes. And we have also disclosed that. You can notice that in our interim report and Q3 report. Next, please.

The next question comes from Wang Yifeng of Everbright. First, about the real estate loans.

From January to September, the extension of the loans increased by over 100%. percent year on year. What about this number in ICBC? And for the extended loans, do you have more like punishment for the interest?

What about the situation second? For the fund interest rate, what's your take on that and measures about this?

And also, what's the impact of Basel III through the financial market business of ICBC?

I'll invite Mr. Jones from the credit department and also the assets and liability management department to answer your questions.

The first question, for ICBC, the change is not that large. The reason is that the real estate market is sluggish previously. The sales today are entering into a slowdown period. We are positive, however. Through negotiations, we do extension under the framework of the regulators, and we do arrangements. For the punishment of the interest, according to the contracts we made, if there is any default actions to the contraction, according to provisions of the contract, we will charge and calculate the more interest according to the calculation in the contract. And second, for the strategies for the debt transaction and also the impact on the financial market from Basel III, you said that the fund interest rate is increased. We are looking at the market every day. The lending rate increased largely previously, but in these two days, it has decreased.

I think there are multiple reasons for the increase. First, the bond issuance changed

the fundamentals of the funds in the market, and also with the ending of the term for some tax payment. So the seven-day fund interest rate increased.

In the recent two days, it's decreased. After the bonds are going to the market,

It is an objective phenomenon in the market, but for PBOC, MLF, and the repurchase of funds, they are using them quite flexibly.

When we see the statements of PBOC, we can see that they are the

situation of the market fund after they monitor continuously they will have to arrangement from the perspective of ICBC we do not adjust our strategies only according to some days of change we will Decide our strategies based on comprehensive situations. We have $700 billion more debt in the recent terms. In the future, we will have new investments in bond.

In bond investment, the part

from the returns. We also have some favorable tax returns. So it seems like ICBC is positive for the strategies we will continue to orderly arrange the investment of debt for the whole year. Last year, the increment totaled 1 trillion RMB. You also mentioned the new Basel's impact on financial market business, the change of Basel III, we are looking to the change closely. We are drawing to the window period. From today's situation, we can make a conclusion that the impact on ICBC is tend to be quite positive, but it's hard to have specific data. Financial market business have a part called the modeling risks. We also mentioned internally related to the positioning of risks. After seeing that, we can draw a conclusion to the measurement of its influence on ICBC's business. So, I think it's relatively positive to ICBC for the lending and also financial market business.

We believe the impacts are both positive.

In the last two rounds of the adjustment of capital regulations, we are prudential, so we believe it will not form a shock to our business. This is my judgment at the moment. Next question from JP Morgan. Thank you for the opportunity to ask a question. I have two questions which might be relevant with the questions others have already mentioned. First is about the LGFV debt resource division. According to the Xinhua News Agency, the banks are required to extend for some local government LGFV bonds. So what's the size for the internal extension? Secondly, about the developer loans or other LGFV, the banks can give the extension to their loans. So what... How will you categorize them as to NPLs or special mention loans? And what are the size of those kind of loans? As to your first question, what's the size for IGF-B debt qualified for extension? And I would like to explain that for extension, the debtors should... make an application for extension, so as long as they are qualified for extension, then we can sign the agreement. Currently, we do not have, we haven't seen a statistical level of a large size of those pipelines which have already applied for extension, not yet. And we also don't have large amount of available data. In the future, if we see qualified chapters, we will negotiate with them one-on-one case individually to see whether we will give them extension or restructuring, reorganization, or we are not restricted to only extension of LGSV loans. And as to the provisioning, Mr. Guan, the board secretary already introduced that for our exposure to LGFVs, we mainly focused on the provincial high tier level and so the provision is set aside in line with normal loans but for some specific exposure to lower tier local government with not so good asset quality, we will also get accordingly and set aside adequate provision for potential risks. Next question, please.

Guangxin Shen of Guangfa Securities. Thank you for this opportunity to ask questions. I want to ask about the growth of scale. We are quite fast in terms of growing our asset at 13% this year. And I think this is a common phenomenon for all the state-owned banks in China. And my question is that we have such a rapid growth speed. phenomenon for this phase, or do you think this trend will last? If this trend will last, it means that we'll have a larger proportion. And in which sectors we will have such rapid growth? And if it's just a phenomenon for this phase, what's your prediction for the next year I think that you mentioned Bank of Agriculture. Yeah, yeah. I mean that the four banks also have a very rapid growth. I mean that, yeah, and Bank of Agriculture also have very rapid growth. Whether such high-speed growth could be sustainable. Also, Mr. Zhou, if we all continue this trend of growth at a a double-digit growth if on the longer term you won't see that any bank would have such a rapid growth. We know that in the past three to four years we have a particular scenario and we are also focusing on monetary policy and the monetary policy is still focusing on stabilizing growth and stabilizing economy. And for next year, whether we'll reverse this trend or whether there will be a great change. For the first question, I want to address the question of Mr. Xu from Morgan Stanley. I mentioned that there will be a very important meeting and we have our own planning to have a very sound deployment of our business structure in terms of serving the real economy and serving the economy. I think I've been in the banking sector for many years. The double-digit growth, about 13% growth, is not a constant phenomenon. For me, personally, I think the double-digit growth for a long time won't be a constant trend. The speed of growth is only manifested in the past three to four years. And in the past several years, and if you look at it in the longer term, we don't think this trend will be very protruding. So the asset growth of banks and credit growth, if we put it in a longer cycle, in a longer term, look back in the history and couple it with the common rules of international peers, And I think we can have a more objective opinion. Sometimes the monetary policy, when it's very tight, we will have only single-digit growth at the lower figure because there will be restraints, restraining us from expanding. But currently, major banks will play a role of the real economy and a civilized economy. And so it's only in this phase that we have such rapid growth. And I don't think that growth will be very abrupt. And in the next year, I think the changes will be quite smooth. This is my preliminary judgment. I don't know whether my personal judgment could address your concern. Next, please.

Next question is from of CICC.

My question is a comprehensive one. In Q3, we can see that

for the NPR formation with the mix and looking forward.

And also, we can talk about from the sectors, the reasons for the NPR reformation and also the change trajectory in the future. For the deterioration mix of loans, the real estate and real estate related sectors like building materials, we can see the NPR ratio are decreasing, but the increase is not that remarkable. From the traditional categories like manufacturing, business, circulation, from the volume, it may be the largest ones, but for the deterioration rate, the level is slightly lowering down compared with before. For the industrial chain related to property in the future, as the measures are taking effect and the demands are picking up, we think there are positive effects in the future for the building materials, decoration, and the areas influenced by the property industry, I think there will be positive changes. You also mentioned the measures of defusing debts, and the improvement will be conducive to the capability of cash flows and the debt repayment of related companies. Next question, please.

Thank you. I have a question about inclusive loans.

Over the years, as advocated by the regulators and policymakers, we have seen large banks like SEC develop quite rapidly in inclusive finance. Against the backdrop of weak economy, what is the latest risk of your inclusive loan and the future trajectory? The second question about the wealth management business. We have seen some volatility in the capital market in September, and due to the lack of good assets in the market, What's your expectation for the four years performance of your wealth management business and what changes can we expect to see in next year? And the government is encouraging more capital to be injected in the capital market. Can we expect to see good performance in the capital markets in the future? Your first question is about the NPLs of inclusive finance. This question will be answered by Mr. Tian, the General Manager of our Inclusive Finance Department. The second question will be answered by my colleague from ICBC Wealth Management Sub-Serie. Actually, this is a combo package of questions about the wealth management business.

So please adjust to .

First, thanks to Madam Shen from Huatai Securities. As you mentioned, SBC, same as our other large peers, have developed quite well in our inclusive finance. We have seen faster growth of our inclusive loans for SBC. we put priority of prevention of relevant risk. The asset quality of our inclusive finance by the end of September, the NPR ratio of our inclusive finance is 0.83%. The demand from micro-sized enterprises After many years of fast growth, of them now have entered a relatively slower phase and period, but the momentum will continue. In this kind of situation, we pay a lot of attention to the asset quality of the inclusive loans, and we are well positioned and prepared for the potential optic of the MPLs of our inclusive loans. Through strengthening and enabling from our digital technology, we enhanced the criteria for customer entry, loan extension, and post-loan risk management. So we can combine better with the digital technology and loan management by our experts. So we have introduced the digital technologies into different scenarios of our inclusive finance and tried to pick more prime customers for our inclusive loans and also to recognize the potential risks through digital means and to give pre-warning active recognition of any potential risk of our inclusive loans. We have also strengthened the cross-validation of online and offline information by people and also by digital platforms so as to better recognize and diffuse risks. Based on our practices, the entire asset quality of inclusiveness has been managed quite well. And in the future, we expect to see it will be also completely controllable, and we will continue to explore and strengthen more ways by better taking advantage of our expertise to support the fast growth of our inclusive finance. We expect to see large room for us to further develop inclusive finance in the future, so we will try to achieve a better quality development of our inclusive finance. As to your second part for question of wealth management business, I would like to give the floor to Mr. Li, the Vice President of ISBC Wealth Management Sub-Serie. As to your question, You asked us about the arrangement of our products. ICBC wealth management subsidiary has already established for four years. We have introduced a series of new products which can be better accommodated to our customer needs. In accordance with different risk appetite of our customers, we have fully enriched our products, including mutual fund products, fixed income products, monetary fund products for PR 1 to 3. Proportion has increased to 1 to 2 to 5. as to a second question about the research and the investment, particularly at the equity market. For our company, we have always put a lot of attention to the research and the investment so as to diversify our investment capabilities and asset allocation. So we have investment committee which will guarantee the sound decision making of our investment at the company level. About the equity market investment, we are also trying to improve our capacity to meet the goal of better serve the real economy. I will have to add up to his answer. For the volatility of the NAV of WMP, we think it's quite normal because it's relevant with the market, capital market performance. For ourselves, theory, they will strengthen the ability of research, investment, and also product sales capability so as to enrich their supply. From the asset's end, some high-year assets are not so easy to be developed. But for the performance of the fixed income products or fixed income plus products of our subsidiary, they have achieved quite good performance for next year's products arrangement. They are now starting quite closely about the capital markets and with a large balance of a wealth member AUM. They will make the product investment arrangement in accordance with their research and the study of the entire capital market. About the equity market, ECM, we already have some exposure to the investment of equity capital market and in the future they will also continue to be a long-term investor and increase their investment in the equity capital market within the framework of our regulatory requirement. We will also try to make more contributions to the ECM. Thank you.

Next, please.

I'm from UBS. Thank you for this opportunity to ask a question. I have two questions. The first is about the real estate development until recently or September. Could you please share with us your NPL status in terms of real estate development and mortgages? And for the real estate development, what's the proportion of those with collateral? And as for the existing on the repricing, and I think there's no, do you have a new contract or do you continue with the old contract and change the interest rate? Okay. that is, say, do you sign a new contract or change the term of an older contract? My other question is about a general question. The economy is not on the rise, and I think the banking sector is also under impact. The profit growth for ICBC indeed is, I think it's lower than Pierce, and I think your peers released some provision to support the profit growth. And in Q3, for the shareholders, I think the dividend, they have zero profit. And when you consider the profit growth and you reduce some provision, how do you make such a decision? And do you have similar considerations when you have the positive profit growth? That's my question. Thank you. Thank you, Phil. Very professional questions. The detailed number will be given by the credit and investment management department. I think we have disclosed such figures that the NPL ratio the NPR ratio with collateral or pledges. That is to say, the interest rates for the mortgages. Do you change the contract? Yeah. I think my colleagues will make a detailed response. So first, about the real estate development loans. the NPR ratio will be disclosing the interim report and annual report. And I think the figure is on the trend of decreasing. And those with collateral, the Q3, have we disclosed that for Q3? It's at about 6.2%. That is better than the interim report. And 6% have claterals. And as for mortgages, the NPR ratio is 0.45%. Okay, let's continue. The existing mortgages, how do we adjust the interest rate? For the existing mortgages, we adjust the interest rate mainly by the way of changing the interest rate, but we also support the measure to change the contract itself. The second question, I would like to say that we do not make our profit by releasing our profit. It's not our practice. Why? You pay attention that in the first half and the Q3 report that our disruptive income dropped. This is due to the interest rate decrease. However, we have indeed have a lot of growth in terms of scale. we have a growth of trillions of assets. And it's in some way made up of the drop of the influence of the drop of interest rate. Our net profit growth is due to the following factors. First, you already noticed the negative factors. First, the name contractions. Second, the drop of interest rate. And the positive factor for our interest rate profit growth is that we grow in scale. Second factor, our tax dropped. Third, provision. Actually, the provision is not reduced. The provision of our credit asset is actually on the rise. So we do not release the provision to make up for profit. That is not our practice. Last year, we have put aside a provision for the non-credit sector that is due to the asset, wealth management asset. And we do not put aside a provision for that sector this year. This is a normal practice. Third, several banks, I think the profit growth are showing different signs. This is a result of actual and accurate accounting. So there's no such thing that banks have different figures. I think all banks follow their own accounting rules and reach their own conclusion. And the provision is an object factor. and we just put aside the provision according to accounting rules. And if the profit will be negative, we'll let it be negative. So we do not have the practice of making the profit positive due to our measures about provision. I think it's common practice, and it's... It's common for major banks in the world to lose money for one year and make money for the next year, so it's all natural. And we have a very strict EPL model, and we have followed very strict accounting practices, and the profit is concrete, not manipulated. And I suggest that you focus on new momentums for us. First, under competitiveness, we have changes. Second, customer structure, we have changes. Third, we also have changes in terms of asset and liability structure. And fourth, we also have changes in terms of risk management as well as our structure for income. I think you put a lot of focus on name. However, we have other growth factors. And we also have the recovery of bad loans that are already written off, but we have reclaimed and recovered some of our assets. And that is also one resource for our income. This is also a huge amount of our income, of our growth of value. So I encourage analysts to open up your vision and have a more thorough analysis of our balance sheet. And any supplement from Mr. Tao of Finance and Accounting Department? Let me supplement briefly. First, ICBC in terms of accounting. follow strictly the regulatory requirement and the accounting rules. As mentioned by Mr. Guan, that in terms of the division categorization of a credit asset, we follow strictly the rules of the regulators. In terms of provision, we have the ECL model. The utilization of this model will be followed by very strict mathematics model support And according to the regulatory requirements, we have effective categorization of assets, and we use ECL model, and the provision we put aside could amply reflect our expected loss, and we have ample ability to find other risks in the future. From the second, from the management level, we don't have the intention, nor the necessity to balance profit and provision. which is against the regulatory requirements. So our profit growth, as Mr. Guan mentioned, this is a result of our endeavor to fight against all the negative factors, for example, to enhance our management on asset quality to better effectively support our profit growth. So we made a lot of measures, and we reached this profit goal. Third, the growth of profit by ICBC is relatively lower than our peers. Different banks have differentiated business operations. Another factor is that you should not ignore the scale of ICBC. ICBC is huge and the profit scale is also different from our peers. The percentage growth for ICBC indicates a a large differentiation in terms of the absolute measure, the absolute number of profit. The percentage might be smaller, but our profit is huge. Thank you for your question. And thank you for a very professional question. Due to time limit, let us have one or two questions. Since the meeting has been lasting for one and a half hours. So next one, please.

The next question comes from of HSBC. Some of the investors

with questions about bank insurance issues. What's the proportion of bank insurance fees for your operating income? According to your perspective, is there any recovery from the demotion of wealth management products from investors? in Q3.

In the future, will we see a better sales of insurance products? You also mentioned the provisioning. In the first half of this year, the provision increased. The non-credit assets, is there any recovery of the asset quality?

And the impairment also decreased, but there is no classification. The reason from the non-credit assets And what's your outlook for the asset quality in this regard? I'll invite the personal banking department to answer your questions about the bank assurance fees. The finance and accounting department will respond. RCBC is a large company. The fee and commission income exceeded $100 billion, while the operating income exceeded $600 billion. So in the bank assurance portion, in the whole book, it's not high. The fee-based income thing that's on operating income is low. and it can offset by the growth in other parts of the income. Questions about wealth management products. We have also seen that for the time deposit allocation, customers are increasing this part The trajectory is that the time deposits are growing this year. From our point of view as personal banking department, behind the growth of time deposits, it is the choice of the households for their money. In Q4, in bank assurance products, especially the high yield products. Our judgment is the same with you. Some of the funds will go to the deposits again, and some investment funds will also go to the wealth management products. So for Q4, our view is quite positive. The NAV changes can satisfy personal customers demand for the yield and stability in the relevant products, then we think the volume of WMP will resume. For the non-credit assets, the provisioning and its outlook in this part, last year, We use ECL model and make calculations and we provisioned more for the non-credit assets and also the increase of $220 billion. I think it's fully provisioned last year, so this year we do not have any need for provisioning more. So, The proportion decreased this year. For the credit assets, we will provision more according to the risks. But it's not high according to the performance of the first three quarters. And also we manage properly the asset quality and the risks. And also our positive view about the development of real economy in the future. the provisioning for both kinds of assets, non-credit or credit. We will follow the accounting principles. We will make sure full provisioning and keep it over 200%. It's high in the banking sector. Thank you for your questions.

For the interest of time, we will have the last question. Last question from City Securities.

Thank you for giving me the opportunity to raise the last question. I have a question. I would like to ask about the active liabilities. We have seen the similar trend for the banking sector in the assets allocation. So what about the active liabilities? Secondly, about the credit card loans. Now the pandemic has already ended, so what's the future direction for the credit card loan growth? For your first question, you mentioned about the similar trend of the asset growth, asset allocation, and Mr. Joe, general manager from the asset liability department, will answer your first question.

Thank you.

The first three quarters of this year actually quite similar with several years in the past. The one thing quite obvious is that we have become quite less dependent on the active liabilities. the entire ICBC bank. We have introduced this strategy of encouraging GPC plus customer ecological project to formulate a better ecology of our customers. So, on one hand, we can continue to play out the heritage advantages of our customer base, and we have also improved our Prime services to customers. This year, compared with the last several years, we have seen an injection of the size of active liabilities. We have seen positive changes, marginal changes of the deposit cost, liability cost, If we have the same size of active liabilities as we had in the past, it's hard for us to reduce the liability cost. Since the beginning of this year, we have attached great importance to the management of deposit cost and liability cost, including the less dependence on the active liabilities. That has contributed to the better management of our liability cost. And about your question about the credit card, as you mentioned, the pandemic has caused some impact of our credit card loan extension, and we have also adjusted our business structure to stabilize our growth and maintain. We have successfully maintained the advantage in the size of our credit card loans. Meanwhile, we have also tried to optimize our customer base, customer structure to stimulate the vitality and more demand of our customers. After the pandemic, we have seen the increase of consumption demand. For Q3, we have seen the consumption loans increased particularly from some other new emerging areas like installment card, installment products from the car sales and decoration. So since the Q3 have realized the fastest growth of credit card loan growth since 2020. So that has also driven the growth of our profit from our credit card business. Thank you. Due to the limited time, so that's the end of our Q&A session. Now let's give the floor to Mr. Guan for his conclusion. Thank you to all our investors and analysts for your participation and your questions. Secondly, I would also like to advise our investors and analysts to pay attention both to the short-term performance and indicators, as well as our medium-term and long-term changes, particularly about the changes of the entire banking sector and also positive changes of the macro of China. In the future, if you need any one-on-one meeting or group meetings, please contact our IR team. Thank you for your time and participation. Thank you. Also thanks to Dr. Guan and the heads of relevant departments from our head office. Welcome to contact IR for any further questions. So that's all for today's meeting. Wish you all the best. Thank you. Bye.