Industrial and Commercial Bank of China Limited

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Please remain on the line. ICBC SEVP, Mr. Yao-Ming Zhe, lead the general managers of relevant departments and subsidiaries to carry out this communication review. The Q3 results were already released. In general, since this year, we faced with low interest rates environments. We accelerated intelligent risk control, modern layouts, digital drivers, diversify structure, ecological foundation, the so-called five transformation. We cultivated new drivers and create a new balance between common expenses Our operations maintained robust. First, the main indicators performed well. In the first three quarters, net income was over $270 billion by 0.2%. The increase turned positive. Operating income was $599.1 billion. The decrease shrank. NPL ratio 1.35%, down by one bit. Capital adequacy ratio was 19.25%. Provision coverage ratio maintained 200% above. Second balance sheet continued to expand. Total assets was $48.3 trillion by $3.7 trillion. The loans increased by $2 trillion investments, $1.4 trillion. The mix continued to be optimized. Liabilities increased $44.4 trillion up by $3.5 trillion. The deposit deviation recorded the lowest in the same term in the recent five years. So the high-quality development drivers continue to pick up. GBC Plus Strategy and DICBC continue to optimize. Personal customers increased to 755 million customers. Corporate customers, 13.15 million, and banking was over 200 million. Such is the briefing on the Q3 results of ICBC. Now we will start the Q&A session. Please raise questions, and before that, please identify yourself with your institution and name. Thank you. The first question, please. The first question comes from of Morgan Stanley. Thank you for the opportunity. I'm the analyst from Morgan Stanley Shuyuan. First of all, congrats RICBC because your Q3 net income was better than expected, but the operating income and PPOP were negative and the credit cost was already very low. In future, will you increase provision in Q4? Will the non-interest income continue to maintain high growth to contribute to operating income? And when mean and fee-based income face pressure, what is the outlook for the full year and next year's profitability? And will the net income maintain positive growth? Thank you for your support and concern for ICPC for this question. I would like to invite Mr. Tom Nohung, General Manager of Finance and Accounting Department to answer your question. First, for the provision, we follow accounting principles and regulatory requirements. The provisioning is decided by several, the relationships between several factors. First, according to the accounting principles, we consider how much provision we need to maintain. And second, how much provision we need to maintain at the end of the term. Third, how much we have spent for the provision for the term. And fourth, we consider the disposal, how much provision how much provision we have made back to the book. So this is decided by the comparison of the multiple factors for ICBC. First, we strictly follow accounting principles and the ECL and also the regulatory requirements for provisioning. In future, All these are the premise of our future provision strategies. Second, for today's strategy, our operation income will continue to decrease. This is a trend for the whole sector. We hope to establish a good balance between income and expense. And we need to strengthen our loan growth. First, we save the write-off resources. And second, when we estimate the potential in some non-performing loans, by comprehensively considering the two factors, we decide how much provision we do for the term. and when we compare the provision at the beginning and at the end of the term, we think that the provision will continue to decrease the provision than that of the last terms. For Q4, we will continue such strategy, but whether the provision will increase or will be back to the book, I think it is decided by the comparison of the major factors. I think by effectively managing all the resources, we will try our best to save the resources and through disposal so as to save the new provisioning and control the credit cost to support a better performance. For your second question about other non-interest income, especially after September, our non-interest income has shown a robust momentum for Q3. Our operating income decrease was remarkably better than expected you can see that the decrease remarkably shrink than that of half one. So this comes from partially the contribution of non-interest income. There are several reasons. First, the better performance of the capital markets. So we have seen some increase in the equity products and investments. And also when we saw the the better performance of the exchange rate market so we have seen that we have seen some better performance in the exchange foreign exchange income and also in adapting to the new changes the financial market business have applied comprehensive tools to earn more in the trading business so that we have seen increase in non-interest income for Q4. For the performance of the capital markets, we think the attitude was quite positive. So in equity market, we believe Q4 will continue the robust growth and also for debt investments will continue to operate well for the foreign exchange market. Now the RMB to U.S. dollar, I think the momentum is quite robust, but it's hard to say whether we can keep a robust growth in Q4, but we are fully confident to continue such trend. At present, Natif's margins still face downward pressure. The fee-based income is affected by the fee reduction policy and the investment appetite of the investors. It is facing downward pressure before the full year and next year. We have several opinions. First, from a macro perspective, especially after september we have seen multiple new policies whether it's fiscal or financial policies against this background they will provide a positive environment for the operation of the bank the confidence for consumption is recovery the industries are picking up so we believe These will provide more business opportunities for banks and for the real estate market and LGSE. There are also policies which is conducive to saving the credit costs for banks. We believe that for banks, they will be conducive for the operation of the bank. internally we pay our attention to the pressures and challenges if we will continue our high quality development and create a more balanced and stable balance of credits of credit income and expense first adapt to the low interest rate environment and stabilize net interest income We think that net interest margin will still face downward pressure, but the management will continue to strengthen the adjustment of the asset mix and stabilize income and optimize loan mix and mitigate the downward pressure of interest yield and stabilize net interest margin for fee-based income. and non-interest rates, non-interest income. We will continue to let the business lines to grasp new chances, especially grasp the chances amid the good performance of the market so as to cultivate more sources in wealth management and also the potential of subsidiaries and foreign institutions in its contribution to our income. And third, in asset quality management, we hope to strengthen asset quality management and cultivate the potential and advantage of ICBC in comprehensive risk management and also in risk cost control. We will continue such management system and promote an active prevention, smart control, and comprehensive management to keep our asset quality to be stable and increase the non-performing loans disposal so as to promote the risk resilience capabilities and decrease the real credit cost by the comprehensive measures, we hope to increase, we hope to maintain the balance between the income and expenses. Thank you. For the bond investment in non-interest income, I'll invite the General Manager from Financial Markets Department to make some supplements. Well, this year the bond market performs quite well, so the trading income recorded 2.5 times compared with the last term. So in the last three days of the term, there may be some fluctuations, but for the full year, the non-interest income have contributed a lot for the operating income. Thank you. The next question.

Now let's invite Li Yingqi from CICC. The floor is yours, Mr. Li Yingqi. Thank you so much for this opportunity. I'm Li Yingqi from CICC. First of all, congratulations to the management. ICBC's name stabilized in Q3 with a recent monetary policy package. How much impact will the interest rate cards and deposit rate cards have on ICBC's name in Q4 and 2025? Deposit interest rates have been declining in recent years. Is there any room both assets liabilities. What is the outlook for ICPC subsequent lean trend? Thank you. Thank you so much for your question. regarding the topic we will invite the food. Thank you so much for your question. I also want to thank you for your attention to name. I want to answer a question in three aspects. The first one regarding the impact of the package of monetary policy recently, the PBOC in conjunction with relevant departments issued a package of monitoring policies to support stable economic growth, including reduced reserve ratio and interest rate cuts, new estate financial policies, policies to support the stable development of the capital market, to boost confidence in the market, and it will definitely promote the smooth operation of the real economy and play a very important role in favor of the commercial banks to continue sound operation. Specifically, first, the reserve ratio cut directly provides the bank with low-cost long-term funds, which is conducive to reducing the cost of bank funds. and enhance the capability of our financial sector to serve the real economy. Simply, the MLF and deposit interest rate decreases is conducive to reducing the bank's cost of funds. And certainly, the deposit mortgage interest rate decline is conducive to reducing the early prepayment of loans, stabilizing the size of the bank's assets and improving the vitality of the consumption from the residents and investors. However, we are also aware that with the downward adjustment of LPR deposits, mortgage rate cuts and other policies, there is a greater downward pressure on the level of returns on the asset side. From the perspective of the pace of loan repricing, this round of red card will have a very small impact on the interest income in Q4, but it will have a very greater impact on the interest income for the whole year of 2025. The volatility side is affected by the slower pace of deposit repricing, and the cost-saving effect of the interest rate adjustment will be relatively lagging. That's my response to your first question. aspects of your question. And secondly, regarding the trend of the deposit rates, since this year, the deposit listing rate was cut twice in July and October, respectively, with a cumulative 10BP cut in the interest rate for current deposit and the cumulative reduction of around 35 BP to 45 BP for time deposit adjusted by maturity. On the whole, after the reduction of the deposit listing rate in October, if there are no special circumstances, it is less likely to be reduced again during the year. In the future, we will closely monitor the market situation, policy interest rate changes, and other factors to comprehensively study and flexibly adjust the deposit listing rate. And certainly regarding the outlook on the subsequent lean trend, currently the overall lean of the banking industry is at a low level, and it is expected that the trend of a declining lean and a narrowing lean will continue next year. But the magnitude of the narrowing lean will be In the three quarters of 2024, our net net amounted to 1.43%, unchanged from the interim period, down by 18 BP from the beginning of this year, and 7 BP narrower than the same period. While actively playing the role of a large state-owned bank as the main force to serve the real economy, we have also taken initiatives to strengthen the adjustment of asset liability layouts under a low interest rate environment. On the other side, we have done a great job in arranging major asset classes, optimizing credit allocation and accurate pricing. On the liability side, we have strengthened cost of control and the favorable factors for cost reduction have increased. So the foundation of sound operation has been further entrenched and we will maintain that at a reasonable level. Thank you so much. That's all for my response. Thank you. Now let's move to the third question.