Industrial and Commercial Bank of China Limited

I'm Dong Jianjun. Today, we're honored to have with us Mr. Tian Fenglin, Board Secretary of ICBC, along with heads from key departments and subsidiaries, including corporate banking, personal banking, institutional banking, inclusive finance, Credit Management, Finance and Accounting, Assets and Liability Management, International Banking Technology Data Management Research Institute, Financial Markets, Asset Management, Investment Banking, Personal Loans, Credit Card, and ICBC Wealth Management. Now I will briefly outline our key performance indicators. ICBC Q1 results have been officially released. Overall, the bank achieved its strongest start in recent years, exceeding Expectations First key profitability indicators showed positive growth with higher YOY increases. In Q1, group revenue reached $222 billion, up 8.4% YOY. Net profit was $88 billion, up 3.9%. Net interest income as a core revenue driver rose 7.5% YOY. It's and other non-interest income surging 38.9%. Second, assets and liabilities grew steadily. Proactively supporting national priorities and policy packages, ICBC strengthened its role in serving the real economy. By quarter end, total group assets rose 4.3% from year end to RMB 55.77 trillion, making ICBC the world's first commercial bank to exceed 55 trillion total assets. Total loans reached RMB 31.71 trillion, up 3.8%. Financial investments was 17.87 trillion, up 5.7%. Deposit competitiveness improved with customer deposits at 38.59 trillion, up 3.4% from year-end. And average daily balances up 4.19%. Personal and corporate deposits grew in a balanced manner. Thirdly, risk management remained robust. Intelligent risk control capabilities and comprehensive risk governance was enhanced. NPL ratio was stable at 1.31%. Provision coverage ratio rose to 214.38%. NPL disposals totaled 70.5 billion in Q1, 15.1 billion YOY, the write-off efficiency ratio reached 2.2. Risk resilience and NPL resolution capabilities strengthened further. That concludes the overview of our Q1 performance. We now begin the Q&A session. Please identify yourself with name and institution. Thank you very much. Let's take the first question. Please identify yourself with name and institution. Thank you. Thank you very much for giving me the opportunity to raise the first question. I'm Mei Yan from UBS. My question concerns loan growth. I have seen the disclosed results. I should congratulate all of you for the robust results better than expectations from the market. My question is, according to the monthly social financing data from the central bank, Q1 saw slower worldwide growth in corporate loans, continued contraction in bill financing, and an ongoing downward trend in credit expansion. We have also heard that in April, the central bank will hope that the bank can grow more I don't know whether it's true. For ICBC, how did you perform on loan deployment? What's your full year outlook? Thank you. For this question, I'll invite asset and liability departments to answer with supplements with corporate banking departments. On the corporate loan growth, I have two observations for your reference. First, for total financing, we have seen that overall corporate financing growth remains stable. According to PBOC Q1 data, total financing to corporate sector loans, funds, and equity combined grew by 8.3% of 0.4 percentage points from the same period last year. This growth rate has been broadly stable at around 8% since H2 of 2024 for our bank. As of end March, corporate financing under the same definition grew by 11.5% in line with the overall trend. Second, from loan growth, corporate loan growth has indeed moderated by the end of Q1. Outstanding corporate loans nationwide grew by 8.6%, down 0.7 percentage points from last year. We see a similar pattern on our bank. Domestic RMB corporate loans grew by 10.7%, down 1.8 percentage points YOY. We believe there are two main reasons behind this. First is the base effect. During the 14th five-year plan, counter-cyclical policies were strengthened. and large state-owned banks took on greater responsibility in credit supply. As the base has risen rapidly, loan growth is naturally normalizing. Second, there has been a positive shift in the financing structure. In the current low interest rate environment, corporates are more willing to issue bonds which has partly substituted for traditional bank lending in helping reducing finance costs, posing pressure for bank, which is conducive to reducing financing costs for corporates. According to PBOC data, NQ1 corporate loans increased by $60 billion less, while bond financing increased by over $500 billion more. In response, we have also stepped up our bond investments. At the end of March, our corporate bond investments grew by 37.9% YOY, significantly faster than corporate loans. Therefore, our credit extension in Q1 reflects steady overall growth with a more optimized structure by end March. Our domestic RMB loans grew by 6.9% YOY, higher than the national level at 1.2 percentage points. Corporate loans grew by 10.7%, 2.1 percentage points above the market. Lending to key areas, manufacturing, inclusive finance, green finance, strategic emerging industries, agriculture-related sectors, and private enterprises all grew faster than the average. Looking ahead, we will place greater Emphasis on balance and targeted credit allocation in total volume. We aim to maintain steady growth. In pacing, we'll avoid front-loading and ensure more even deployment. In allocation, we'll focus on major national strategies, key sectors, and weak links while strengthening financial support for consumer spending. Meanwhile, we'll actively adapt to changes in the overall financing structure and maintain solid growth in bond investments. Supplements from the corporate banking. For ICBC, our credit to the credit to the corporates. We grasp the window for the corporates after the Spring Festival. First, the volume increased with high growth of loans. In Q1, the corporate loans have increased by have increased by 300 billion. The balance was over 18 trillion, the first of its kind, providing solid foundation for the real economy. Second, the structure is optimized, meeting the requirements for the industries. Our supply of credit to the industrial, to the technology finance was over 4 trillion. Our increase to two majors have increased by $70 billion. Thirdly, our reserve has been strengthened. We continue to solidify the medium to long-term credit extension, which is balanced. Our supply for the projects has accounted for 90%, which paid the foundation for the total. So looking ahead, ICBC will fully implement the spirit of the April 28th Central Political Bureau meeting, and we will continue to enhance both intensity and precision for our support for the economy. We'll further increase corporate lending to ensure the loan growth remains aligned with the economic growth and effective credits. In terms of allocation, we'll focus on the need during the 15-5 year plan period. We'll optimize our corporate lending structure, strengthen our core responsibilities, and increase support for consumer services. And we'll support the water networks, net generation power grids, computing networks, new generation communication networks, with our comprehensive financial services We will focus on major projects under the 15 five-year plan, including more than 100 key projects. With targeted measures, we will continue to optimize our reserve and credit. Thank you.

Please identify yourself with name and institution. Thank you for the opportunities and from CITIC Securities. I'd like to congratulate ICBC's stellar performance. A question relates to the fee and commission income. We saw the continued growth momentums. There's a continuation in the equities, but there's continuous fluctuations. So what is your outlook for the growth of fee and commission income? We can recognize there is a significant amount of unrealized gains from the sale of AC assets. How should we view it? The questions will be answered by Finance and Accounting Department. Thank you for your questions. In the first quarter, we actively responded to the complex changes in the concerned environment, continuously improved the comprehensive financial service capabilities, and achieved a steady growth in net fee and commission income. and we expect to maintain a top position total income laying a solid foundation throughout the year. In terms of retail and corporate, we actively see the favorable opportunities in the capital markets. We have coordinated efforts across different business lines to improve our research capabilities. We achieved double-digit growth in wealth management and pension services. And also, we have doubled our income from agency precious metals. On the other hand, we have implemented a policy of expanding domestic demand and supporting consumption, improved customer experience, and we have coordinated peak season marketing. and we further develop our ecosystems to increase investment to promote consumption driving a positive year-on-year growth into massive third-party payment income. And from corporate side, we continue to strengthen the foundation of corporate clients, promote the development of new financial infrastructures for settlements and digital empowerment. and continuously optimized asset services such as wealth underwriting and investment guarantees and syndicated loans, leading to slight increase in income from cash management and settlement services and investment banking. Thirdly, we actively seized favorable opportunities in the capital market. We achieved double-digit growth in wealth management and passion services with support of steady growth of fee and commission income from corporate clients. Looking ahead, as positive macro-economic policies kicked in, capital market expectations remained positive. Expanding domestic demand is expected to support the recovery of consumption. SMBC will leverage Our strength in customer base, extensive channels, comprehensive services, and financial technology to respond to risks and challenges and create value through service. We will provide over 140 million corporate clients and over 780 million individual clients with a broad range of financial products and high quality financial services. Overall, we are optimistic about fee and commission income for the entire year and we expect a positive growth trend We will focus on three areas to improve quality and efficiency. First, seize opportunities and enhance wealth management efficiency. Second, is to strengthen customer relationship and improve quality of core products. Third, is to enhance synergy and achieve breakthroughs in comprehensive services, combining financial insight, technology integration, connectivity and funding, explore comprehensive financial solutions centered around the entire life cycle. for the other non-interest income and the high base. Last year, we have diversified growth drivers for non-interest income. Our non-interest income comes from equity investment, bond, and exchange profit and loss. In the first quarter, our non-interest income continues high growth trend. We still face pressure throughout the year. As you mentioned, the geopolitical tensions and capital markets. We will seize the opportunities. and to leverage their strength in order to capture the market opportunities to improve our revenues. Regarding bonds, we strictly follow accounting standards, study the market's volatility opportunities and optimize trading strategies and investment structure. In terms of equity, we'll seize structural investment opportunities and tap into the potentials of emerging business such as asset management and wealth management. regarding exchange gains and losses for closing the monetary exchange rate trends and conduct in-depth market and monetary analysis to achieve sustainable development.

The third question, please.

Thank you very much.

I'm Richard Xu from Morgan Stanley. My question concerns asset quality. How did ICBC's MPL formation perform last year? And what is the outlook for this year? Your MPL formation and the trend of MPL, especially now we see the Middle East geopolitical conflict, what specific impact it has on ICBC's asset qualities? For this question, I'll invite Credit Management Department to answer with supplements from International Banking Department. Thank you. As you have seen last year, our annual report has been released previously. Our NPL formation ratio was relatively For the past years, from the annual reports, we have seen that it was relatively strong among peers. For Q1, you have seen from the Q1 report, if we compare with ourselves, the peer ratio was relatively stable. According to the pattern, every year's Q1 NPL formation was higher. So from this perspective, we are confident that for the full year, our asset quality will be stable. You can see that ICBC has been in credit risk management. We have been outperforming other banks in this year. We continue to promote the three gateways and seven color pool in managing onboarding, We do proactive prevention of risks and enhancing the disposal of MPLs with high quality on change to address the changes of the markets to keep stable of our asset quality. For your second question about the Middle East situation, after the exposure of the risks, the impacts in a short term, have limited impact on our asset quality. First, our direct credit exposure to the Middle East is relatively limited in both size and concentration. The exposure accounts for a small share of the group and are mainly to sovereign backed entities, large SOEs and high quality multinational corporations. and second after the exposure, we have formed the special forces. We do analysis on the risks and do inspection of risks on time and based on the list of customers and case by case, do the analysis of the risks. So up to now, we see limited impacts on ICBC's asset quality. I'll introduce to you the situation of Middle East. After the breakout of Middle East conflict in February, we followed the situation and developments of Middle East situation. We performed the necessary work to keep the stability of our work, the safety of our employees and assets. In short, the Middle East is also a very important region for our internationalization of the group, and we will coordinate the development and security. Thank you.

The fourth question, please. Please identify yourself with your name and institution. Thank you for the opportunity. I'm analyst from CICC. Congratulate SBC on your performance. It exceeds expectation. I'd like to ask about NIM. Although we did not disclose NIM figures, but we can infer that this figure has stabilized and even rebounded. What are the reasons behind this? If the first quarter figures is very impressive, can this trend continue throughout the second and the third quarters? Can you break it down further on the asset and the liability side? The questions on them will be answered by asset and liability management department. Thank you for your question. For the first quarter, the NEM is 1.29%. It stabilized with a slight increase of 1 BP. And the increase of about 2 BP compared to the previous quarter. The factors behind the change is due to four factors. It's because of a joint effort of both timing and our... First, as monetary policy remained moderately loose and largely stable, creating a favorable external environment for stabilization of NEM. In the first quarter, the central bank did not cut reserve requirement ratio or interest rate. The OMO rates remained stable. With the declining key-term shiber within 10 BP, the nominal LPR deposit rates have remained unchanged for 11 months. A relatively stable monetary policy and interest rate environment alleviated the downward pressure on bank asset returns, which was a substantial positive factor for a NIM. Second, the comprehensive cost of liabilities continued to decline, supporting the improvement of the NIM. On one hand, high-interest products issued earlier matured, with the amount of fixed-term deposits over three years maturing in the first quarter, accounting for 35% of the annual total, which led to a decrease of 13bp in the interest rate of various deposits. On the other hand, due to the continued availability of liquidity, market interest rates declined moderately, resulting in a 15bp decrease in the interest rate of interbank liabilities. Efficiency of asset and liability allocation has been further improved. On the asset side, we focused on loans and bonds, with the average daily proportion on these two investments increasing by 0.5 percentage points. And the structure of major assets continued to improve, which enhanced the overall interest-bearing asset returns. On the liability side, we avoided involution, striving to enhance the stability of funds. strictly implemented the interest rate adjustment safeguard clause and the self-discipline initiative for interbank deposits, further reducing costs and improving efficiency. Fourth, the postponement of interest rate cuts by major economies is beneficial to the stability of the NIM in overseas operations. Affected by the rising global inflation risk and intensified geopolitical conflicts, major developed economies have postponed their interest rate cut schedules, improving the environment for commercial banks' international operations, and enhancing the stability of overseas operations and the first quarter contribution of foreign exchange and overseas segments increased by 0.6 percentage points. In terms of the trend of the NIM throughout the year, we maintain our view from the beginning of the year that NIM will turn positive year on year and the NIM will continue to decline slowly. This is based on the following two factors. On one hand, the NIM, the interest margin between deposit and loans in traditional are expected to stabilize or even rebound. There are signs of marginal stabilization in loan yields. Loan yields on a comparable basis are roughly in line with the interest rates on newly issued loans, and with the repricing progress of existing loans reaching 91%, the decline in loan yields is expected to continue narrowing. Second, there is still room for the deposit interest rate to decrease. The interest rate on newly absorbed time deposits remains low and significantly lower than that of existing time deposits, assuming policy interest rates remain unchanged, declining deposit costs expected to exceed that of loan. On the other hand, when the interest margin between deposits and loans stabilize, the price of bond and interbank liabilities will affect the NIM level. Currently, the repricing cycle for bond assets is longer than that of credit assets, and the yield on new bond investments is declining. Therefore, bond investment will become the main factor affecting the trend of NIM in the next phase. At the same time, under the background of diversified liability structures, commercial banks are increasing their efforts to absorb interbank liabilities. Although the interest cost of interbank liabilities has decreased at present, if market The fifth question, please. Please identify your name and institution before raising questions. I'm Ma Kunpeng from China Securities.

My question concerns retail AUM wealth management and deposits. Could you introduce the retail AUM growth in Q1 and the AUM mix evolvement? What is the current product mix in wealth management? What are client preferences and what is the future development plan? Are we seeing any signs of accelerated deposit outflows into wealth management or other asset management products? What was the maturity and rollover situation of deposits in Q1? And what targeted measures have been taken to stabilize and grow deposits? This question will be answered by personal banking departments with supplements from ICBC Wealth Management. Thank you for your question. Retail AUM growth in Q1. The growth is strong following the changes of the markets in Q1. The average, daily average AUM reached was up by 1.78 trillion to 25.8 trillion. The AUM balance was over 26 trillion at the end of Q1. Such aggregate make us the leading position as a commercial bank managing the largest amount of personal financial assets. For the next, we also do analysis In the personal financial assets, savings deposits accounted for 77.5%. The non-deposit AUM, 22.5%. Stabilizing from the end of last year, the change of AUM mix is controllable by ICDC. So for the product mix, client preferences, and how do we see future plans for the product structure? Our products is centered on deposits, WMPs, funds, insurance, and private banking selected products, and also private banking products for deposits. We have products which have guaranteed principal and interest for funds. We follow a broad access selective screening approach to build a long-term and high-performing core allocation. Our private banking platform offers quantitative index enhanced strategies with differentiated products for insurance, We are shifting from investment-oriented products toward protection-oriented solutions. Life insurance, commercial pension products, and health and medical insurance are growing remarkably from such mix. Our wealth management products, funds, and insurance are the important non-deposit products are growing strongly. In Q1, we have seen some new changes in WMPs in terms of clients. We have 784 million personal customers. they have different, they are categorized into different segmentations. They prefer low volatility, stable return projects, such as wealth management and fixed income funds. Of course, deposits account for more. High net worth clients have more diversified needs. For example, in Q1, The private quantitative strategies, cross-border allocation, and family trusts were growing remarkably. Meanwhile, demand for full life cycle wealth management is becoming more evident. For example, we have seen that the elderly and children segments have strong need for retirement planning, health protection, and wealth inheritance for the future of wealth management business. the personal financial wealth management is the main battlefield of commercial bank. We will continue to put clients into the center of our business. We will promote wealth management into every family. We aim to build a full life cycle scenario based service model powered by digital capabilities By integrating financial services into clients' everyday ecosystems, we are moving toward an entry-point full-service model so as to build differentiated competitiveness and support the steady growth of client wealth. We are fully confident to achieving so. You also raised questions about changes of deposits, the rollover after maturity. From our observation in Q1, the daily average deposits increased by 1.46 trillion, maintaining stable growth. The savings deposit growth remains within a reasonable range. We have not seen any unexpected acceleration of outflows in line with the market change. For the maturities, as mentioned by Mr. Fu from Assets and Viability Management, we have the maturity ratio of 35% from the perspective of savings deposits. The rollover ratio was over 90%. Therefore, for the matured funds, the rollover to the demand deposits was remarkable without no remarkable outflows or migration of deposits. Measures to stabilize and grow deposits First, we give into Fukui ICBC's group-wide advantage from GBC dimensions to empower personal finance to develop, to grow and stable our deposits. First, we are strengthening coordination between corporate and retail business to expand funding sources at the origin. focused on payroll services, individual merchants, and social security cards as strategic entry points. We have seen robust growth and we will continue our efforts in this regard. Second, we are building out scenarios to expand customer fund flows through fund flow management to will stabilize and grow our deposits, especially the cash flow can bring fee-based income. Thirdly, we improve customer segmentation capability. We will make good use of AI and give into full play the online and offline coordination in our strategic capabilities to enlarge the reservoir of our personal finance funds to enhance our capabilities and competitiveness to solidify the foundation for deposit growth. I'll make some supplements for the deposit migration. According to the data from financial service, the non-banking deposits increased by 2.3%. and Zhang Shouchuan. In the last three years, China has grown by 3.3 trillion. People's savings grew by 0.78 trillion, reflecting that some of the savings deposits flowed to WMPs. From WMPs, the aggregate remained stable. By Q1, the industry's WMP aggregate increased by over 9%, increased by For seasonal reasons, compared with the end of last year, the volume was down by 3.8%. For ICBC Wealth Management, the WMP volume was increased by 4% more. Next, we will continue to enlarge our CFS to improve our capabilities to serve the customers. Thank you.

The sixth question, please. Please identify yourself with name and institution. I'm analyst from Guoxin Securities. My question is related. How is the asset quality of various retail products? When can we see improvement in NPLs? What is the current situation regarding mortgage loan defaults? The question will be answered by a personal finance department. Since the beginning of this year, China's economy has shown steady progress with structural improvements, but there is external instability and uncertainty. And there are still some challenges in domestic economic operations. So to add a quality of personal loans, and SBC faced certain pressures with slight increase in non-performing loan rate. However, after considering factors related to risk disposal, our situation is consistent with the market. In the first quarter, personal loan non-performing indicator remained stable and overall risk was under control. And the personal loan non-performing rate remained within the reasonable range compared with counterparties. For personal housing loans, since 2022, It's mainly due to the combined impact of factors such as slowing growth in resident income, declining asset prices, and structural pressures in the job market. The non-performing rate of mortgage loans is currently showing a short-term upward trend, but it remains within a reasonable range. But it is still an important source of our revenue. Our advantages are that they are genuine transactions and high-quality collateral. Short-term fluctuations do not affect the fundamental attributes, and it is remaining a high-quality credit asset for our bank. As macroeconomic policies kick in, the economy is showing signs of stabilization and recovery. The residents' confidence in future income growth is gradually being restored. The Politburo Conference has mentioned to mitigate risks and to push forward urbanization. We are seeing signs of housing price stabilizations in the Tier 1 cities. We are confident that asset quality of mortgage will be restored and the systemic risk is controllable. For the mortgage loan default, in terms of asset, we see whether there is an increase in default rate, but we see that they are stabilized. And we're not seeing a default rate at the massive scale. And we also like to brief you on the personal consumer loans. We have seen a double decline in both the amount and the rate. In last year, we focused on adjusting the risk control models and onboarding standards, the optimization of strategies and product reinforcements due to the preliminary results. And the deferred fault rates for various terms have been gradually reduced to the lowest levels in recent years. For the non-performing rate, the personal business loan has also slightly decreased. Affected by a combination of factors such as economic environment, policy support, and ongoing adjustment of real estate market, the asset quality of personal business loans has shown periodic fluctuations. The stock disposal of personal business loans has been lower than that of peers in ICBC, and with minimal write-offs, we have maintained the current quality level, demonstrating the high quality of our customer base, precise risk control, and strong resilience in business development. In the next phase, We will continue to strengthen and solidify the three gateways in credit risk management and establish a comprehensive risk control system for the entire process. We will comprehensive, dynamically, and continuously optimize product access. And we will further enhance data infrastructure capabilities and to build risk control models covering the entire process. with continued implementation of macro control policies and effectiveness of structural fiscal support. It's estimated that the breadth of loan deterioration will slow down.

Next question, please. Thank you. I'm Yijun from Guangfan Securities. I want to ask about the results mix. We have seen the operating income increase, which is remarkable for the full year performance. Will you see front load, a loaded one or relatively smooth? On the profit side, will profit generally stabilize and improve within the year among scale, name, Fee Income Financial Markets Provisions Which item do you believe has the most certainty in contributing to the full-year performance? And which item is most likely to become a major source of volatility? For questions concerning forecasts of profitability, I will invite Finance Accounting Department to answer. For Q1, the key indicators achieved the best start in recent years. Our operating income, if we do break down the net profit, continue to play the bedrock of the revenue. It accounts for 75% to 80% of revenue for Q1. It's the first time to growth turning positivity since 2023. This comes from our work and the maturity of the high interest rate So the Q1, the interest expense was down by over 10%, driving the increase of 7.5% of net interest income. For the non-interest income, it continued to play a strong support up by 11.6%. Fee-based income was increasing the best of its kind in recent years. The other, non-interest income increased by almost 39%. It comes from the dividend from the policies. Also comes from our actions and the market window, which is temporary. We're in our profitability, which is good in Q1. Now the operating environment is still complicated. First, and many more. In the past, the net interest margin was stabilizing, but it's still in the downward pressure for non-interest income. It also, for example, fee-based income also face pressures from policy changes and market changes. We still face pressures brought by the fee concession to the real economy and also the geopolitical tensions and many more. We will take into effect three aspects of measures first to solidify the fundamental base of net interest income. We will balance total growth with structural optimization, increase the volume of substantive loan, optimize the structure and pace of new interest earning assets. And also we will enhance management of both interest bearing and liability yields and strictly control high cost liabilities. So as to ensure the stable growth of Interest Income Second, we will increase the contribution of non-interest income. We will seize opportunities in retirement finance and capital markets to create new growth drivers for wealth management, update the payments and settlement cross-border services and custody systems, and to serve the customers' needs with CFS. Third, we will strengthen asset quality management to contain risk costs. will continue to enhance the comprehensive risk management system, coordinate risk prevention and control in key areas, persistently prevent delinquencies and control NPL, strengthen collection and disposal efforts to better contain the risk of costs. We are confident that building on the strong performance in Q1, we will continue to deliver results which is sustainable for the shareholders. Thank you.

Next question, please. Please identify yourself with name and institution. Thank you for the opportunity. I'm analyst from Zhejiang Security. I'd like to congratulate ICBC on the impressive performance. ICBC has long been active in science and technology finance. and there's a lot of layouts in this regard aligned with the national strategy, especially the five major priorities of finance. The 15th Five-Year Plan emphasized digital and intelligent transformation. ICBC's business has developed rapidly. How can ICBC articulate its strength to the capital market from the perspective of digital and intelligent transformation? The strategy will be answered by Urban Finance Research Institute. Thank you for your question. As I mentioned, ICBC has long been deeply integrated into the National Development Strategy. We are the first layer of the AIC business because we recognize that innovation requires patient capital and through diversified tools such as equity investment, debt to equity swaps. We have provided long-term stable capital support to many science and technology enterprises. By the end of the first quarter, the balance of loans in these cards reached 5 trillion RMB. This figures Amiga's market leaders in this regard. As we mentioned, the 55-year plan has been mentioned in Digital Intelligence five times. We know there are two-fold meanings. To improve the supply of finance and to adapt to the changes. And the second is to improve the digital and intelligent transformations of ICBC and to restructure our procedures and our business. And in this regard, we are building a new differentiated competitive advantages. We would like to leverage our comprehensive licensing advantages. We are building multiple scenarios and to providing comprehensive financial services to our clients. We give special attention to the role of the IC in providing patient capitals. We have onboarded 53 projects in terms of providing insights and intelligence. We have undertook more over 2,400 investment banking projects, an increase of 40%. and we actively empower the digital transformation of enterprises. We provided support in terms of AdVisa Treasury, Global Pay and Fund Supervision Cloud offering account service to fund supervision, technical consulting to technology output. We embraced AI. and accelerate the transition from DICPC to AICPC. We use our self-developed models to embrace artificial intelligence and to establish the systems of AICPC. So the intelligent and digital transformation is going into more depth. I believe that with the support, we will have more economy of scales and to support the quality development of ourselves.

The next question, please. Please identify yourself with name and institution. Thank you. I am Shen Jun from Huai Tai Securities. First, congratulations on your strong results for Q1. My question concerns bond investment. We have seen that last year there was a notable increase in income contribution. from Bond Investment. Given the recent increase in bond market volatility and shifts in the interest rate environment, how do you view the outlook for the bond market and what will be your investment strategy going forward? Your question will be answered by Financial Markets Department. Thank you very much for your question. Our financial market business centered around serving the real economy. We centered on quantity, pricing, including RMB and Forex. We increased our capabilities of business and market competitiveness. The interbank market making share was stable at 20%. The share in the four big banks was 31%. This is a recommendation from the market for ICBC. Thank you very much for your support for financial market business. In the future, we admit that the external environment is still complex, influenced by geopolitical conflicts. Our economic foundation is strong. Our policy will be sustainable. Our monetary policy will continue to support the real economy. Against such background, our bond investment will continue to have both feeding and floor with contained risks. In such backdrop faced with complex environment, our financial market business will continue to give me to fully the potential and balance our pricing quantity and risks and optimize our investments and income mix First, we will continue to fulfill our role as a major bank by actively support bond financing for the real economy. We will continue to support the government bond issuance and support the key national priorities, the five key areas to contribute to China's modernization through bond investments. Second, we will further optimize portfolio structure to build up value reserves. We will allocate across both types, tenors, portfolios, and currencies. to enhance sustainability and resilience of portfolio. Third, we will strengthen our trading capabilities and aim to translate market volatility into earnings. We will continue to promote digitalization and actively capture opportunities from spread across instruments, maturities, and credits. We will balance carry income and trading gains while managing both short-term performance and long-term value creation. Finally, we'll balance development and risk control by strengthening risk identification and management, enhance our forward-looking and counter-cyclical risk assessment capabilities, optimize duration, positioning, and improve the portfolio's resilience to interest rate fluctuations. Thank you.

The next question please. Please identify yourself with name any institution. I'm from Changjiang Securities. My name relates to internationalization in the context of escalating geopolitical tension. What are the opportunities and challenges for the international operations As the largest bank in China and globally, how can SBC leverage this trend to promote internationalization of the RMB? The question will be answered by International Banking Department. Thank you for your questions. In terms of opportunities, the trend of economic globalization remains unchanged despite the geopolitical tensions. The interests of countries are deeply intertwined, and open cooperation remains the mainstream. China continues to make new progress. We are the hub of manufacturing centers, and the total foreign trade increased by 15% year-on-year. The RMB has become one of the top-grade trade financing and payment currencies globally. and the 15th Five-Year Plan outline proposes to steadily expand institutional opening up and build a new high-level open economic systems for both the high-quality development of the Belt and Road Initiative. We have also noticed that when the per capita GDP exceeds $10,000, they will be experiencing peak enterprise globalization The Chinese figure has about $30,000 for three consecutive years. And our direct investment abroad has remained around $150 billion, and the total overseas assets exceeding $9 trillion. We can provide comprehensive financial services for business going abroad and business going in. We've seen that Geopolitical situations are characterized by long-term conflicts and certain features. Geopolitical conflicts are frequent. And there's profound changes in international balance of power. And there is disruptions in global economies. And the major economies has gone into the great cutting cycles, has bring more intense competition for our international, from international peers. Our Bank's overseas operations maintain a stable and progressive development trend. During the 15th Five-Year Plan period, we will continue to deepen our international operations. And for the second questions for the internationalization of RMB, and Jisib Bank after 40 years of development. We established solid foundation of a global network, clearance systems and technology systems as of the end of 2025. We have built a global financial service network covering 69 countries and regions through self-development, strategic acquisition and equity partnership. We have established business cooperation relationship with over 1,400 foreign banks in more than 1,140 countries. cover all six continents and major international financial centers. We offer services to over 40 million corporate clients and 770 million individual customers. We arm-built clearing and banking 12 countries, offering 24-7 arm-built clearing services. And through our core banking systems, we achieve seamless integration We adhered to the principle of providing global service to global customers, and we have done a lot of work in internationalization of RMB. We used the BRBR, China-Europe Business Council, and other multilateral mechanisms to expand the RMB's friend circle and solidify the foundation of cooperation. We also worked together with CIPS and Enbridge and cross-border QR code payments. to enhance the digital intelligence service capabilities of cross-border RMB and improve new financial infrastructure such as clearing, payment, and custody. And for six years in a row, we used the twin-sheet actions to launch the cross-border RMB comprehensive financial solutions. We have dedicated 1 trillion yuan to connect domestic and foreign banks for a special financing quota providing comprehensive support to eligible domestic and foreign enterprise. We will support new quality productive force, digital trade and Chinese enterprises going global, providing high quality developments.

The next question please. Please identify yourself with name and institution. I'm Chen Shaoxing from Industrial Securities. My question concerns AI. In what specific ways is AI currently empowering ICDC? How do you quantify the benefits or cost saving from AI applications? In the future, What are your plans for AI investments and looking ahead, how do you see AI reshaping the banking business model? Thank you.

I would invite FinTech Department to answer your question.

Just now Mr. Yang from Finance Research Institution has introduced our arrangements for the digital drivers, which is one of our strategies. We have four perspectives in empowerment. First, reducing costs and improving efficiency. That is to improve the working efficiency of employees. For example, we launched trade dealing supporting in interactive dialogues in trading so as to increase the efficiency and number of tradings. Second, risk management. We use the empowerment of big models in the anti-fraud link We train the model to automatically identify the risks out of the risks so as to increase our capability of detection. Second, we refine the personal characteristics of AI use in mobile banking Thank you very much. Thank you. developed tool in investment bond. On a daily basis, it can, in trading data, it can make judgments to conclude a investment report and to improve the decision-making in bond investment, empowering over 100 billion investment of bond. How to quantify the investment of AI or the application of AI? Because AI progress is very fast as a blue sea, its investment has the market consensus, which raise attention from the market. We have made some exploration in mechanism Group have the sufficient computing capacity. Second, we will step up talent development to ensure we have the expert team. Thirdly, we will strengthen the mechanism insurance. We will integrate the group team so as to ensure the organization and also we use external institutions like college and companies to make our technology advanced. How do we see its future? We believe AI is not just a tool for improving efficiency, but it also reshapes the fundamental logic of commercial banking.

First, it's the change of service models with AI.

The financial services are more targeted and personalized. The end-to-end services will be a new normal. For the services of customers, the coordination of financial and non-financial services will be possible. The new shape of the financial services is expected in the future. Second, the organizational effectiveness. We will lift the employees from the standardized and repetitive tasks while supporting complex decision-making so as to ensure a personal efficiency to a group-wide efficiency improvement. Thirdly, as automatic decision-making and the link of AI agents Thank you very much. Thank you for your questions and thank you for the response.

Next, we will invite Mr. Fenglin, the board secretary, for the conclusion. Dear investors and analysts, thank you all for joining our first quarter performance briefing. We've had an open and professional exchange on topics such as operating conditions, business development, risk control, future planning, and AI application, which yielded very positive results this year. Facing a complex and changing concern environment, ICBC adhered to the steady operations and compliant development, with all business areas proceeding smoothly and steadily. The overall quality of our assets remains under control, and the support for the real economy and key areas has continued to strengthen, leading to a steady improvement in operational efficiency. These achievements would not have been impossible without the long-term trust, understanding, and support of all are investors. At the same time, we are also keenly aware that our current business developments still face many challenges. Regarding issues that you are concerned about, such as performance results, business layout, capital replenishment, risk management, dividend policies, we will further organize and study them one by one, continuously optimize information disclosure, and respond properly to market concerns, and continuously improve our management level in order to better repay the trust of our investors with more solid performance. The capital market is a market of confidence and also a market of long-term value. In the next step, we will continue to adhere to the fundamental nature of finance, focus on our core responsibilities and main business, promote the five transformation, consolidate the foundation of compliance and risk control, and strive to achieve higher quality and more sustainable development. Finally, once again, I would like to thank all of your investors and analysts for your continuous support for ICBC. I look forward to continue to work hand in hand with you, building confidence together, promoting development, and sharing achievements together. The meeting today is now concluded. Thank you. The holiday is approaching. We'd like to wish you a happy holiday. Thank you.