Industrial & Com Unsp/Adr

Thanks for your participation. The meeting is ready to start.

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.

The third question comes from Li Chen of China Securities. Thank you, management. I'm Li Chen from China Securities. My question is about loan growth. Heading into Q4 at present, will the loan growth for four-year decrease And how is the result for the good start of loan growth for next year? And after the introduction of the package of policies, will the loan growth for next year improve? For the loan growth, I'll invite Mr. Fu from SM Laboratory Management Department to answer. And the result, General Manager from Corporate Banking Department will answer. Thank you very much for your question. For the full year's loan growth, we expect that R&D loan growth will record around 10%. A little bit lower than the same period last year, but higher than 2 percentage points than the average for the society and higher than 5 percentage points than GDP growth. There are multiple factors. First, macro perspective. At the end of September, the loan balance was over $250 trillion. The double-digit high growth created a good environment for economic development. But as the economy transforms, the demand change of real estate markets and the risk control strengthened in LGSE, we believe based on such growth, high base, the loan growth will be lowered. Our loan balance was over 28 trillion. I think in the future, RMB loan growth will gradually decline. the trend will be similar to that of the whole society. To maintain our support for the real economy, our loan growth will continue to be higher than the average of the whole society. Also, I hope that you can observe this issue from two sides. We adapt to the change of the social Although the growth declined, but the bond investment increased by 2.7 trillion, up by almost 15%. So the growth in general maintained stable. Also, I'd like to share that we have three characteristics in loan growth in the first three quarters. This is very important to the stable growth for the full year. First, the RMB loans increased by $2.12 trillion, up by 10.2%. Second, we prioritize our main business. We prioritize support for major projects. The domestic RMB corporate loans increased by $1.43 trillion, up by 6% to 8%. Loan growth in manufacturing, emerging new industries, inclusive finance, and green finance were all over 15%. And the loans for personal consumption, personal business, and credit card overdraft increased by more than $390 billion, up by 13.3% than the beginning of the year. For the reserve of next year, I'm Jonathan from Corporate Banking Department.

I'd like to add that for next year, we have three points to make.

I think from macroeconomics perspective, the economy will continue to recover. The long-term better performance has not changed. So we believe the new drivers will continue to be cultivated that will pave the way for the demand of loans. Second, from the national strategies, a lot of policies are being introduced, especially in recent months. We believe these can create new effective loan needs. From ICBC's perspective, we see that corporate loans reserve is quite stable. In the future, we will follow the windows of the new policies and increase our loan growth, and especially the NDRC's multiple projects, such as the nuclear power projects. We will continue to refine the management and help at the end of next year or Q4 the growth of the loans for ICBC. Thank you.

The first question. And let's invite Shilin from Bank of American Securities. Thank you so much for this great opportunity. I'm an analyst from Bank of American Securities, Shui-Lin Yu-Jue. And what is the overall trend of your bank's asset quality? What is the change in asset quality of real estate-related loans? And has there been any optimization of credit policy for housing-related loans? Were the recent interaction of more real estate policies led to the masking and underestimation of real estate credit risk? Thank you so much for your question. And now we will invite... Mr. Leader from the Credit Management Department. Thank you so much, analyst, for your question. And for the first three quarters, the bank's credit asset quality was stable and improving with an MPL ratio of 1.35% at the end of September, down by 1 BP from the beginning of this year and unchanged from the middle of this year. The average MPL ratio of corporate loans in deposit branches was 1.42%. So for the next step, we will continue present operational principles. In particular, we need to be aware of the whole package of policies issued by the central government which will definitely facilitate our economic growth and the stimulation of the real estate market. I believe that with a better market environment for commercial banks, especially for ICBC and other big banks, we have a very favorable environment. as for the real estate market actually in recent years um this sector for the commercial banks has been the center of the attention and we have to take a very active attitude to deal with um the new changes in the real estate sector for the first nine months and we have stress and the disposal of the bad asset. And also, we have a very adequate GDL provision. That's why by the end of September, the NPL ratio is about 5.26%, down by 11 BP. Besides, we have followed closely the new policies regarding the real estate market, and we have witnessed the recovery of the market for the first three weeks of November for Beijing, Shanghai, and Guangdong. And we found that the transaction and deals has reached historical high over the past 18 months. The confidence expectations of the consumers have enhanced and also the situation for the real estate developers have also relaxed. We believe that when commercial banks take the initial active to manage the real estate risks, will create a more variable environment, you may know, we have maintained a prudent operation principle. For instance, we will have the Trinity principle of the cities and projects and also the houses, and also maintain the reasonable ratio of the real estate loans, of the total loans. So recently, will continue to reasonably manage our real estate asset layout and actively promote the disposal of the MPOL related to the real estate sector. Besides, you may have noticed that the regulator has issued some very favorable policies, for instance, the full cancellation for decline and the full additional approaches and we will promote the sound development of the real estate market by following relevant regulations. Thank you. The fifth question, please.

Next question comes from Chen Junyao of Guo Xin Securities. The question is, after the introduction of the new policies, how is your mortgage loan growth? Is there a positive growth? And will the repricing of the outstanding mortgage mitigate early repayments? And what about the asset quality in the future trend? We see the increasing trend of consumption loans, operating loans, and credit card MTR ratio. What measures will you put in place to control such risks? Thank you very much. I'll invite Mr. Chen Zhaoxu, the general manager of personal banking department, to answer your question. Thank you very much for your concern for the personal banking business. For the multiple new policies, they are related to releasing purchase limits, down payment, proportion decrease, and also the decrease of interest rate This can help the recovery of the real estate market from the short-term results. We have seen that the willingness of people buying houses has been recovered in some new houses, second-hand houses. We have seen more deals after the first month, for the first month after the introduction of the new policies, our Personal mortgage application and loan growth have seen increase compared with last quarter, but as the policy was only introduced for a short time, the results appear to be observed for a longer term. In the future, as the policies continue to be implemented, as the economy continues to recover and the real estate market continues to pick up, we are confident about the positive growth of mortgage loans. In adjusting the outstanding mortgage interest rates, we have completed the adjustment of the interest rates of the outstanding mortgage loans. that is LPR deduct 30 BIP. For most outstanding loans, this can lower down the burden of the interest rates payment of people, and it can also reduce the willingness for early repayment. Recently, we have seen that the amount of early repayment has decreased. We expect that as the interest rates of the outstanding mortgage Compose to that of the new loans and the economic continue to improve. We believe the early repayment will be back to a reasonable level in asset quality. Since this year, ICBC's personal mortgage NPR ratio has seen some slight increase. This is in line and this is the same for the sectoral trend. But the absolute number is still very low, and the general asset quality is quite good. The transmission of credit risk will require a process. In short term, the NPR ratio may increase slightly, but from mid and long term, as economic development continues to be stable and people's income continue to improve, the asset quality will be stable and will be good. And for other retail loans, their asset quality shows the same trend as that of the whole sector. We have seen growing trend in MPL ratio since this year. As a package of new policies continue to be implemented and the positive factors for economic growth continue to pick up, we believe that the asset quality for personal loans will continue to be manageable. Second, in the future, from three aspects, we will coordinate the development of personal loans and the management of the First, we will continue to strengthen and increase the loans, personal loans. We think at present there are still potentials for personal loan growth. When we implement the new policies, promote people's consumption, We believe this can be conducive to establishing a good environment for management of risks in personal loans. Second, we will accelerate digital drivers transformation. This year, we have introduced five transformations. In personal loans field, we will try to increase digital drivers. Our focus is to increase digital risk management capabilities improve standardized line of credit and risk management. We will center on ECL management, optimize onboarding model and line credit model and post loan management model. Third, we will improve intensified intelligence and digitalized post loan management. to horizontal and vertical management will increase the pre-earning warning system for personal loan risks and to improve the risk management effectiveness. Thank you.

The sixth question, please. Let's invite Liangfeng Jie from Zhoushan Securities. Thank you so much for this great opportunity. I have a question which is about inclusive finance. What were the investment structure and the pricing of inclusive nodes in the first three quarters of this year? Jason, the NFRA indicated that it would further optimize our policy of non-repairable long-renewable, including expanding renewable targets and adjusting the risk classification standard. What is the implementation status of non-repairable, long-renewable, and corresponding risk of ICBC? What is the outlook for the asset quality of inclusive nodes in the future? Now let's invite from the Inclusive Finance Department. Thank you so much for your question. Focusing on the high quality development of inclusive finance, ICPC has integrated the requirements of the national strategy. And by the end of Q3, The balance of the bank's inclusive notes amounted to about 2.81 trillion RMB, with an incremental of 585.9 billion RMB, an increase of 26.3%. And the share of inclusive notes in the balance and increment of all notes was further increased. The number of inclusive finance customers exceeded 2 million, an increase of nearly 40% during the year. So based on the fastest growth, we mainly targeted at the science and technology innovative business and manufacturing industries and the micro and small-sized enterprises and to help them with expanding domestic need and industrial upgrading. For instance, we upgraded the new generation operation express loans to further enrich the supply of the credit-related products and expand the coverage of our customers. customer base and we have also explored the scenarios of the industrial chain and explored the financing solutions that is related to digital supply chain and we also encourage innovative products tailored to the different areas. By the end of Q3, our individual loans from the small and the medium-sized enterprises, the growth rate is much higher than other kinds of loans. And so in this context of the overall interest rate adjustment, we have maintained the online development, intensive and intelligent development, focusing on solving the problems of information asymmetry and promoting the enhancement of risk prevention and control, as well as efficiency operation and management. We hope that by further lower cost and enhanced efficiency, we can increase the feasibility of inclusive finance for the first three quarters. And the average interest rate of interest loans is about 3.37%, which is very reasonable. In terms of loan renewal, We do believe that to meet the operational needs, especially the financial needs, and stimulate their dynamism and support the real economy is very critical. and also for the banking and other relevant financial institutions to provide high-quality services will enhance the customer competitiveness and optimize the structure and effectively prevent risks and also to create long-term benefits. So recently, based on the policies of the CBRC, we have continuously provided very high quality development and on September the 24th, the financial regulator, the NFAR, issued the circular, which is based on the previous policy and made some improvement and we implemented the policy. And we will stick to risk orientation and to provide the credit and the services to the businesses that have good reputation and have no bad record. Besides, we will also, based on implementing the policies and combining the procedures of loan renewal and continuously monitor risks and management of loans and stress the review and supervision of the whereabouts of the loans and analyze the risks and also enhance our early warning capabilities and to enhance high quality development. In terms of asset quality, I think BC has stick to online and offline integrated development and digital governance and expertise and enhance the full process. risk control mechanism for inclusive finance. And we also stress the joint prevention and control from the front, the middle, and the back office. And also by the end of September, our MPF ratio has maintained at a reasonable level. And mainly in the business access, we have integrated multidimensional data from both inside and outside of Bank ETH and optimized the functions of business access monitored and had used our early warning models as well as identify risks in a forward-looking manner in the no duration stage will continue to do a good job of risk mapping and enhance the efficiency of risk prevention and also in the deposition and the treatment, we have expanded the channel so as to enhance the efficiency and broaden the channel of disposal. Recently, the whole package of financial policy has conveyed a very great signal to the market. and we believe that it sets a very great foundation for stabilized asset quality and based on that we will continue to promote high quality development of inclusive finance and continuously enhance the intelligent management level of risk prevention and control and consolidate the sustainable foundation of inclusive finance so that it will be more practical and more long-term and of high quality. Thank you again for your question. Thank you so much, Mr. Tian. The seventh question, please.

The next question comes from Xiaofeifei of CITIC Securities. Thank you very much. My question is attracting attention recently. Recently, share buyback and holding increased. Loan facilities have been gradually implemented. We've already seen several companies disclose loan credit lines granted by CDC. Could you provide an update on the number of companies that have reached a cooperation agreement so far in the estimated loan amounts? What types and attributes of clients are the primary focus? Are there specific qualifications or scale requirements for companies seeking repurchase and holding increased loan facilities? I'll invite Ms. Zhang Zhang from Investment Banking Department to answer your question. The listed companies have been a focus of our financial service. Our comprehensive service has been quite fully covered. PBOC, National Regulatory Administration, have set the related notice. We have followed the requirements We have followed the principle of prioritizing internal controls and establishing systems. ICBC launched a new specialized credit product, becoming the first to establish a comprehensive framework of products, systems, and processes for repurchase and increased loan facilities. You've asked about client selection. In 2023, we followed National Financial Regulatory Administration requirements. ICBC treated listed companies across different ownership structures equally. We have approved several business. They can apply for their loans according to their needs. You have seen some release. and we have already granted loans for the first batch of clients and several customers have signed agreements with ICBC. And the listed companies are promoting the information disclosure according to requirements. For the business types, the loans is related to share buybacks or holding increase. We cover main boards, new China Next, and we support the transformation and upgrading of traditional industries and also support the development of emerging industries. In the future, we will continue to implement the loans and we will leverage our advantage in financial services when we strengthen the confidence of the market sentiment And also, we will strengthen our financial services for the shareholders and continue to play the role for serving the real economy. Thank you.

The eighth question, please. Let's invite from UBS Securities. Thank you so much for this great opportunity. I also have a question which is related to everyone's attention. Recently, the state announced a capital injection to larger state-owned banks. What is the outlook for the scale, pace, and the pricing of capital replenishment? Will there be a further increase in credit expansion after the completion of capital replenishment? Will the capital injection have a marginal impact on subsequent capital replenishment, including the lack of insurance? Will the dilution of VPS and dividend after the capital increase be absorbed by earnings growth in the medium and to the long term? Thank you so much. Thank you so much. And this is related to our credit management, so we will invite Fu Jie to address your question. First of all, thank you so much for your question. Let me first briefly introduce the overall situation of ICBC's capital management. In the first three quarters, we actively promoted the capital management measures for commercial banks in accordance with general ideas of endogenous and exogenous and balanced development, optimized capital management, enhanced efficiency of capital use. At the end of Q3, CBC's capital adequacy ratio stood at 19.25% with quarter one, and the tier one capital adequacy ratio at 13.95% and 15.23% respectively, which continues to meet a relatively good level compared with our counterparts. This is an overall picture Regarding the scale, pace, and pricing of capital replenishment, recently regulators indicated that it will increase the core tier one capital of six large commercial banks and implement it in an orderly manner in accordance with the idea of advancing in an integrated manner facing by batches and individualized plan for each bank. And now the specifics are not clear yet. And we are still working on the relevant proposals and also had talked with the regulators. I believe that when they are more identified and the finalized content, we will timely communicate with the investors. Secondly, regarding the credit expansion after the completion of capital replenishment, we believe that capital injection is definitely conducive to strengthening the bank's capital strength and enhancing our credit investment capability and ability to serve the real economy. So for the next step, we will take full consideration of the policy orientation, economic growth rate, market supply and demand, and business strategies to coordinate the credit expansion efforts prioritized to meet the financing needs of major strategies, key areas, and links and further enhance the financial service capabilities. And regarding the impact of the capital injection on subsequent capital replenishment, including the marginal impact of TILAC insurance, we believe that definitely it will have some marginal impact on TILAC. However, as the amount and timing of the capital injection have not yet been determined, it's very hard to tell the extent of the impact. However, we will So after the plan is determined, we will reasonably arrange the pace of the insurance of capital instruments and the TILAC bond in accordance with the actual capital injection and the operation situation of the capital indicators in the future. The bank will successfully achieve the first phase of the DOTI-LAC target by the end of this year and will steadily push forward the second phase of initiatives and the subsequent DOTI-LAC bond insurance under the guidance of regulators and shareholders to ensure that regulatory requirements are met on schedule. Regarding EPS and dilution after the capital injection, we believe that it will have the phase dilution of EPS in the short term. However, for the medium and the long term, it will conducive to the sound development of large banks, including ICBC, and the creation of a sustainable value for shareholders. We hope that with our efforts, in all aspects with a short-term period of time, we can absorb such impact with our better performance. Thank you so much, Mr. Fu. The next question, please.

The next question comes from Shen Jun of Huatai Securities. Thank you for the opportunity to raise questions. My question concerns FinTech. My question is, what are the progress and key achievements in the ICBC development during the first three quarters of this year? Will the technology investment start impacting profitability and will this be reflected in cost, interest margin, or lower credit costs? How does ICBC view cybersecurity management and development? Thank you very much. For FinTech, I'll invite the General Manager of FinTech Department, Mr. Yang Longyu, to answer your question. Thank you very much for your concern for FinTech. For DICBC establishment, there have been several years since the introduction of DICBC. We have been improving steadily. First, the clients reaching availability, competitiveness, and the stickiness of clients. We try to improve all these aspects. And for externally, we show it in our three platforms. For example, mobile banking, ICBC eLife. and the open banking platform we are trying to improving and polishing our systems for example in mobile banking we are doing version 10 in the future we will introduce the new version and also you may observe the development of Harmony OS version. We will also introduce such a version in the future. And also we are improving the ecological rights protection for the industry internet and the specific industry's need. We are improving our plans. Internally, we center around the need of our employees we have two groups one is client managers and second is the outlets working employees in on the counters we improve our effectiveness and service of the financial products and second we are improving the office environment for example in outlets services We synergize online and offline services. Our clients, our employees exceeded the number of tens of millions. So the results have been quite fruitful. And the second result is that the improvement of products and services. all kinds of demand and clients for example in corporate banking we focus on the corporate banking especially this year we have made improvements in several aspects Also, the Inclusive Finance Department also mentioned the intensification and the intelligence of inclusive finance. The DICBC development also helps the improvement of inclusive finance. Also, we have a traditional advantage, for example, the custody settlement. We enlarge our investment and expand the ICBC worldwide payment system and the cross-border clearing system. And thirdly, for the risk management, we're giving to full play the advantage in risk management of ICBC. And we have corporate level and group level smart risk management system this year we will see milestones so gradually we will fully implement our risk management system and also when we adapt to the technology change we transform from traditional model to the new model of more open so as to improve the flexibility of the system. A new technology system, especially that with AI, we have seen fruitful results in improvement, the industrial level and a hundred billion level scenarios we have supported a lot and improve our products and services These are several aspects I can give you as examples. We also put people at the center of our work. We explore the integration of people and technology. For example, we have IDBG plan in which how technology employees can be better incorporated into business need. so as to integrate and give into full play the effectiveness of data. This is cooperation between our department and the HR department, so as to make the digital chain be incorporated in all kinds of branches. The center around clients reaching and ecosystem support and the operation for the clients We are improving such supporting system. This is my brief introduction for the ICBC. For technology, for fintech investment, this has aroused great attention from the market. Last year, I think this is fintech investment, totaled $27.2 billion, including all kinds of fees, HR, the cost of salaries. But for the direction, we think the level is quite reasonable. I think the proportion of the FinTech investment accounts for 3% of the total operating income in the large banks. This is quite an amount. The investment is used in the operating of of equipment, second to the development of financial services. The five major tasks requires the upgrading of models and products. So this year, based on last year's investment, our daily average transaction almost reached $1 billion, increasing by 10% compared with last year. These all require the upgrading of equipment. And third, some new technologies and strategic layouts, in particular, AI development. You know that the cost of labor is still high, but all levels of the employees believe that AI will be conducive to the upgrading of the banking system and the driver for the development in the future. So we have made some proactive arrangements in this regard. But compared with the international banks, we can still improve ourselves. You also mentioned the results we can see I think the results can always be seen. ICBC's assets, for example, in recent years increased by several trillion, but the number of the employees actually decreased. From my understanding, the development of FinTech is a core driver This can show the value of the ICDC for some direct contribution. For example, last year, the digital employees, robots, the automatic process, we can calculate the workload was over 300,000 30,000 employees. We are doing some constitutive transaction, which cannot be done by humans, but can be done by the technologies. These are the value contribution of the development of DICBC. In the arrangement and system of the investment in FinTech, we have a full process from the investments and the post evaluation, we have mechanism to assess, to guarantee the effectiveness and results. For cyber security, in general, the challenge is a little bit high for cyber security. we see the attack may be industrialized. There are also factors like geopolitical contradictions, but from the perspective of technologies, we think IT development is quite important. First, the business operation security We need to keep the 1 billion transactions that can be operated stably. We can serve over hundreds of millions of customers personally and tens of millions of corporate customers. For the past years, in general, in the continuity of business operations, In the support of the security, we have made some achievements. And second, for cybersecurity, we are facing several million of potential attacks. For the firmware, the number may be 400 million. The increase was over 20 times of the past So the pressure is quite high, of which the most pressure comes from the global operation of ICBC. We're 100% confident about domestic operation in China, but there's also such protection should also be extended to other institutions in other countries. We are doing this job to... put the system of early warning system and the security system to be expanded globally, and third, data security.

How can we implement

the national level data security laws and regulations to increase our data security in its effectiveness. We are actively promoting such work. The classification, we have completed the required work. We will continue to strengthen our job. From present situation, we are confident about ICBC's security system to improve it to a higher level. Thank you.

Okay, so we will proceed to the 10th question. We will invite Shen Hu from CLCA SA. Thank you so much for this opportunity for raising the last question from CLSA. How about the bond investment situation and the revenue contribution in the first three quarters of this year? At the end of September, the equity market will strongly enter the seesaw between stocks and the bond has increased. How do you look forward to the performance of the bond? business in the fourth quarter and next year. Thank you so much for your patience and for your attention. Now we will invite Wang Hailu to address your question. Thank you so much. Indeed, just as you mentioned that overall the bond market from the beginning of this year to September and the momentum is quite good. um therefore the q3 there's some changes and because for the last week there's some rebounds and because of some major events for instance in early august the superbank of japan increased the interest rate that lead to market fluctuation and also in the mid september and the fat decreased um the interest rate by 50 BP. And also in September, the, uh, package of, the financial policies were thrown out by China. So we have, uh, timely, um, adjusted our policies and for the first three quarters and we have increased the income from the bond market by about 10 billion and also the total incremental value of the investment is over 20 billion so looking forward to Q4 and the next year in a bond business and now The name is narrowed while the monetary and the fiscal policy stabilized and gradually implemented as well as the impact of the election of the U.S. to the overseas market. We think that the fluctuation in the bond market will increase. We believe that liquidity is pretty well, and also the short-term interest rate is decreasing. The shortage of good assets is fundamental of the bond market. So we think that the overall risk of the bond business is still under control, even if the fluctuation will be strengthened. For the next step, we will continue to implement the policies of the central government and strengthen our forward-looking measures and the judgment and to adjust our policies according to the changes of market and maintain the control and the pace of our policies. measures and also to optimize our investment strategies and to balance the income from the lean and also from the prices and to make our bond businesses more sustainable and sound and also with the current the package of financial policies. We will play our role as a leader in this area and to serve the real economy and to strengthen our investment in green development, innovative development, and also the investment in the key sectors and the weak sectors. And in terms of transaction, we will fulfill our role as the market maker and to enhance the flow and also the transaction and to facilitate high-quality development of interbank businesses and also to increase the contribution of bank businesses to our overall revenue. Thank you. In the interest of time, the Q3 performance. briefing is to an end. Thank you so much for your question and also want to thank our Governor Yang. If you have any questions, feel free to contact our IR team and that will be the end of our meeting and I wish you all happy and healthy and all the best. Thank you so much. The meeting has ended. Thank you.