Industrial and Commercial Bank of China Limited

Welcome to the 24th Annual Earnings Call of ICBC. I'm Qianlong Hua from ICBC's Strategic Management Investor Relations Department. The 24th Annual Announcement has already been released. Thank you for the 880,000 investors for recognition. ICBC has been highly valued the IR and the market value management. we have maintained a frequent and effective contact with investors and media. Today's earnings call will be broadcasted globally. And now let me introduce you to the senior management of ICBC. In Hong Kong, we have Mr. Liu Jun, President. ICVP, Mr. Duan Hongtao. ICVP, Mr. Yao Mingde. In Beijing, we have ICVP, Mr. Wang Jingwu. ICVP, Mr. Zhang Weiwu. ICVP, Mr. Zhang Shouchuan. Senior Business Director, Mr. Song Jianhua. Directors, Mr. Feng Weidong, Mr. Lu Yongzhen, Madam Cao Lichun, Madam Chen Yifang, Madam Zhong Nantao, Director Dongyang, and Director Herbert Walter. And also we have department heads and heads of the branches and subsidiaries here today. And now I'll give the floor to SEVP Board Secretary for his introduction.

Friends from the media, investors, and analysts, good afternoon. Welcome to ICBC's 2024 Annual Results Announcement. Thank you for your participation and support. Next, I will briefly report on ICBC's performance in 2024. In 2024, ICBC celebrated its 40th anniversary Forty years is the right time for a new start. Our goal is to build a world-class, modern financial institution with Chinese characteristics. We are committed to leading, serving the real economy, maintaining financial stability, building a strong financial institution, and focusing on our main responsibility and the business. we are steadily promoting intelligence risk control, modern business layout, digital growth momentum, diversified business structure, and ecological foundation. In short, five transformations. We focus on enhancing the value creation, market competitiveness, market influence, and risk control capacities in various business fields, and have delivered a good result in maintaining stable operations while making progress. Several key points. First, we maintained stable operating performance while making progress and further enhanced our resilience. As of the end of 2024, ICBC's total assets were nearly 49 trillion yuan RMB. Customer loans exceeded 28 trillion yuan. an increase of 2.3 trillion yuan from the end of last year. Customer deposits were nearly 35 trillion yuan, an increase of over 1.3 trillion yuan from the end of the previous years, both maintaining a global lead. The annual operating revenue was 786.1 billion yuan, and the net profit was 366.9 billion yuan. Those remaining at the forefront of the domestic industry. Net interest margin, 1.42%. Cost to income ratio, 29.43%. Maintaining a good cost and income efficiency. The capital adequacy ratio is 19.39%. An increase of 29 basis points from the beginning of this year, of the year, ranking among the top global banks. NPL ratio was 1.34%, with provision coverage at 214.91%, laying a more solid foundation for our steady operation. Based on the good operational results, ICBC plan to increase In 2024, we increased the frequency and time of dividend payout. And for the first time, we paid interim dividends, so two dividends per year. The interim dividends amount to 51.1 billion yuan. After fulfilling the corporate governance procedures, we will arrange for one more year-end dividend of 58.7 billion yuan. Second, we steadily grew assets and liabilities and further improved our service quality and efficiency. As of the end of 2024, the outstanding customer loans of ICBC increased by 8.8% year-on-year. The bound investment balance increased by 20.1%. maintaining a steady and balanced pace. The scale of customer deposits increased by 3.9% year-on-year, with stability further enhanced. We focus on the five main areas to provide better financial services to give multifaceted but connected and coordinated management systems. We enhanced the policy implementation so as to enhance the service quality. In terms of the technology finance, by the end of the 2024, the technology finance loans balance was more than 3 trillion yuan. We maintain the market lead in this regard. For site tech companies, The equity financing exceeded more than 70 billion yuan. The green loan balance also maintains the domestic lead. The underwriting scale of the green balance maintains the market leader domestically. In terms of the inclusive finance, the balance was 2.9 trillion yuan. Customer in growth exceeded 40%. And the pension finance, the AUM was nearly 5 trillion yuan. Customer above the age of 55 years old exceeded 200 million. And the pension account and the deposit amount maintained the market lead. In terms of digital finance, The core industry loans maintain the market-leading position, and the results are significant. Third, we made steady progress in the FIVE transformation and further released the reform momentum. The VIVE transformation is the pivot for ICPC to transform its growth driver efficiency and quality in a new macro background, as well as a basic path for better coordinating high quality development and high level security. After a year of practice, we witnessed good results in transformation. In terms of intelligent risk control, we adopt proactive prevention, intelligent control, and comprehensive management, strengthen the overall coordination, improve the CRO mechanism, and enhance the empowerment of technologies such as artificial intelligence and risk control, thereby improving the overall risk management efficiency. By 2024, our asset quality remains stable with NPL down by two basis points for the whole year, and the provision coverage up by 0.94 percentage points for the whole year, further enhancing our risk defense capacities. Also, effective progress has also been made in risk management of key areas, with the real estate NPL down by 38 basis points for the whole year. In terms of the modern business layout, we adapt to the requirements of Chinese modernization with its own characteristics, enhance support for key areas of economic and social development, and the cultivation of quality productive force. In areas such as manufacturing, strategic emerging industry, and grain industry, we provide special support for them and comprehensive service consisting of equities, loans, bonds, guarantees for Saitai companies. We participated in the pilot program, widening the access for commercial banks, financial investment subsidiaries and equity investment. Also, the loans for specialized, refined, differentiated and innovative companies up over 54% for the whole year. In terms of equity investment, ICBC has reached agreement of cooperation with enterprises in all 18 pilot cities across the country with the intended found scale exceeding 100 billion yuan. We have comprehensively paced up our business lines to enhance our service for private companies. for their high-quality development and perfected the cross-border financial services. Participated in financial governance across the globe, served the higher-quality opening up. In terms of the digital growth momentum, we comprehensively implemented the DICBC strategy, upgraded the digital service platform Further consolidated the two supporting systems, business and data technology. Accelerated the digital and intelligent upgrade of financial services. As of the end of 2024, the MAU of our mobile banking application exceeded 200 million. Also, the MAU of ICBC eLive application reached 19.3 million. The annual transaction volume of the open banking exceeded 375 trillion yuan. Several bank-wide systems were upgraded, better empowering our employees in marketing and office efficiency. At the same time, ICBC put into use the industry's first billion-level large model, Gongying Zhiyong, into more than 20 business lines and 200 use cases, taking up the annual risk for more than 40,000 people. In terms of the diversified structure, We respond to the situation of falling interest rates and narrowing net interest margins by accelerating the adjustments of customer, business, and segment structure, opening up new growth spaces. On the customer side, we improve the structure of large, medium, small, micro, and individual customer franchise, with the proportion of micro customers up the business, product, and asset liability structure have been further optimized, witnessing a decline in name narrowing from the previous years. The share of retail inclusive loan increment has increased, and the value contribution of financial market business has improved. At the same time, headquarters, domestic branches, overseas institutions, and comprehensive subsidiaries and other institutions have been more coordinated so as to enhance the synergy. In terms of the ecological foundation, we persist in integrating our own business ecology into the overall society and economy. We continued the GBC Plus program, focusing on the changes in customer demand. We follow the capital chain and strengthen the customer chain, service chain, and the By 2024, we have expanded G-end and B-end customers by over 3.7 million, reached 170 million C-end customers. The total number of individual customers is nearly 770 million. The total number of corporate customers is 13.35 million. And the scale of mobile banking customers is nearly 590 million. At the same time, we We are organically integrating ESG and sustainability into the business development, further consolidating the ESG governance and continuously improving the ESG information disclosure, looking ahead to 2025. The advantage and conditions for China's high-quality economic development continue to expand, and the prospects of Chinese modernization became even more promising. ICBC will unswervingly follow the path of financial development with Chinese characteristics, actively play the leading role of banks, make progress while making stability and promote the five transformation more deeply. By focusing on creating a clean and healthy balance sheet, a balanced and sustainable P&L statement, we will promote the coordination of assets, capital and funds, deposit and low income, strength, quality, and scale. We will better balance value creation, market position, risk control, and capital constraints so as to ensure that the key operating indicators remain robust. With higher quality development, we will create stable and sustainable value returns for shareholders. both at home and abroad. Thank you, Mr. Duan. Next, we'll enter into Q&A session. To ensure we have more questions, we suggest that every one of you only raise one question at a time, and please state your name and organizations before asking the question. First, give the floor to Hong Kong.

Please, this lady from the first row. Thank you very much for giving me this opportunity. I'm from the UB Securities. I would like to congratulate ICBC as the largest bank to achieve such a good result against such a complicated internal and external situation in 2004. Can you please introduce us about the business highlights last year? And what is the outlook for the operating income and profit in 2005? Can we still sustain a positive growth? Thank you. I will take this question. Thank you for your question. This is my first time to attend Earnings Call as the president. Last time when I was at the Earnings Call, I was representing a different bank, but I'm very happy today that I can represent the largest bank in this world. Mr. Zhuang just summarized the highlights before. So it makes it much easier for me to give you an introduction on the business highlights, but it is difficult to get an outlook into the 25. So first I will give you the business highlights to see if our highlights is consistent with that of analysts. To see the 24 is the new year of The new journey for SBC is its 40th anniversary, and the situation is that we have to go through a low-name situation, and it gives us very heavy pressure. It's a short path for us to be a leading bank in China. We have to blaze a new trail of our own. So for the last year, we have... been committed to the five transformations and some of them have already had fruit and manifest in our earnings which was introduced by Mr. Duan. Some of them are just taking its form and will have results later on. And we will continue to have the manifestation in the future so I will summarize in three aspects first from the value creation ICBC have already had a high ambition we always aim high last year our net profit has achieved a 0.5 percent our operating income has down by 0.5 percent and this decrease is also the smallest among peers. So the NIM is only down by one BP. Considering the internal and external environments, our value creation is still robust. We also share our dividends to our shareholders and investors. The A share and H share price has been up by 44% and 36% respectively. The yield on dividend is 5.32 and 7.49 for A and for H share. And that is very remarkable for a listed company. We have sustained very positive returns to the investors. And our dividend distribution is also leading and second from the business development our total asset has sustained 48.8 trillion and our total net capital was 4.99 trillion we also have made remarkable progress in IT and innovation And facing a lacking credit, we are also playing a role to help ease that situation. We are also clearing out our high-cost loans. This is an issue that a large bank has to deal with. If you cannot manage your liability cost, then you will have to undertake many risks. you don't want that kind of business on your balance sheet. And it will also lower your quality and efficiency of the business. The RMB deposit interest rate was 1.3%. And another aspect is that we have continued to consolidate our balance sheet, our NPL, is down going by 1 BP and as I just mentioned before our net profit is growing so actually we didn't change any accounting subjects we have sustained a real positive growth to give returns to the investors It showcased that we have a very resilient indicators. And I want to talk about changes now. Talking about SABC, we got this impression of being resilient. In this macro environment, resilience is a word that's being brought up very frequently. That is a very important characteristic for a competitive bank. I think this comes from our skill. and our business because we have a very large and strong balance sheet and we have a very strong customer base. And our balance sheet is matchable to our country's balance sheet. We have good resources to those important industries. We also are faced with cyclical pressure and we will continue to improve our whole product line and we will bring more momentum to the old and new business and I talk a lot about whole product line and I understand that there may be doubts about whether we can do it but ICBC is the largest bank in China in the world we are so committed to do what we have made promise to And we have covered 49 countries and regions. We are the number one shareholder of the South Africa Standard Bank. So we have reached deep into the Africa zone. We also have 11 overseas RMB clearing banks, which can help business and insurance custodian business and etc. According to our estimations, those two businesses take about 11% of the business. It can help us to take more growth points. If we can have two more points in our international business, if we can have two more points in our subsidiary business, then we can have 5% to 7% of income In this regard, we can have a more diverse balance sheet to create income and values. It can also support our growth. Last year, we also have a balance sheet for each overseas bank to help improve the synergy between the branches, subsidiaries, and the mother bank. And now the pre-tax profitability is a double-digit figure, about 11%. Another thing is that we will continue to serve the real economy. If our balance sheet is only a balance sheet of liabilities and assets, it's a heavy balance sheet. It's less flexible. That's why ICBC has made efforts to build its financial services. To build our second growth curve, we have a one-stop service for infrastructures, and we will recreate values. Taking an example of serving the infrastructure, ICBC is the largest agency for the capital markets. We have helped to link the invest, banking, securities, and many other financial services. We will try to make our balance sheet more flexible and try to expand to more overseas businesses. Another thing is to use well of AI and FinTech. FinTech is one of our strongest advantage. I'm not a brag at the earnings call, but we have a very powerful model and a very powerful ICBC AM model that can empower our bank ITBC embraced the new round of IT revolution. I'll give you several figures. Last year we had this multi-billion level AI model which covers dozens of scenarios which can have this digital estimation of launch extension. We will try to cut our manual work by using machines, but I'm not going to disclose you the numbers. We will continue to improve our quotation to the clients. With the help of AI and the FinTech, we will create more values on our applications. And so back to the beginning, can we sustain a positive growth in 2025? I cannot make a very forward-looking estimation because the markets will create a lot of uncertainties. But I want to make a promise here that we will be at least above the average. We will go with the market and achieve values as much as possible. So for this year, we'll continue to sustain, adhere to the five transformations, continue to manage risk, and to get the better results to return our investors. Thank you.