China Merchants Bank Aktie

Welcome to the 2026 Interim Results Presentation. Today, I will cover the 3 areas. Firstly, an overall introduction and secondly, a detailed information. And thirdly, our business strategy for the next phase.

In the first half of the year, the group implemented a strategy of building a value creation bank and adhered to the coordinated development of quality, profitability and scale. Various operation indicators registered steady progress with positive momentum. This was primarily reflected in the 4 aspects.

First, steady progress in operating performance with distinct strength and profitability. Net operating income CNY 178.135 billion, up by 4.83% year-on-year. Net profit attributable to shareholders of the bank, CNY 76.445 billion, up by 2.02% year-on-year. ROAA and ROAE were 1.14% and 13.42%, respectively, remaining at industry-leading levels. Net interest income, CNY 112.02 billion, up by 5.6%, affected by LPR repricing in effective credit demand and declining market interest rates. The net interest margin was 1.83%, down 5 bps year-on-year, representing a narrow decline. Net noninterest income reached CNY 66.11 billion, up by 3.56% year-on-year. The percentage of net noninterest income was 37.11%, maintaining the leading position in the industry.

Net fee and commission income reached CNY 39.86 billion, up by 5.99% year-on-year, of which income from extensive wealth management reached CNY 24.7 billion, rising by 18.44% year-on-year, representing the best level in the past 5 years. The cost-to-income ratio was 29.7%, down 0.41 percentage points year-on-year.

Second, we delivered balanced asset growth in both scale and quality with continued improvement in funding costs. Amid an effective credit demand, we carry out a range of measures to strengthen asset origination and optimize asset allocation. Our total assets amounted to CNY 13.79 trillion, up by 5.47%. Total loans and advances to customers CNY 7.45 trillion, up by 2.69%, accounting for 54.07% of total assets, remaining stable. Among them, general loans amounted to CNY 7.19 trillion, up by [ 3% ]. We accelerated the turnover of bill assets with discounted bills amounting to CNY 265.38 billion, down 17.62%. Investment securities and other financial assets amounted to CNY 4.4 trillion, up by 6.07%, accounting for 31.95% of total assets, a level that the group considers appropriate.

We pursued steady liability growth while continuing to optimize deposit structure, further consolidating advantage in low funding cost. Total liabilities, CNY 12.43 trillion, up by 5.45%, of which total deposits from customers exceeded CNY 10 trillion, up by 3.32%. Daily core deposit balance was CNY 7.79 trillion, up by 9.02% compared with the previous year. It accounted for 82.06% of the average daily balance of total deposits, up by 1.37 percentage points as compared with last year. The average daily balance of demand deposits accounted for 49.6%, up by 0.2 percentage points compared with the previous year, remaining at an elevated level. Interbank deposits grew rapidly, serving as an effective supplement to the funding sources, of which demand deposits accounted for 94.54% in banks. The annualized average cost of interest-bearing liabilities was 1.05%, down 30 bps year-on-year, of which the average cost rate of deposits from customers was 0.97%, down 29 bps year-on-year.

Thirdly, we maintained stable asset quality and strong risk compensation capacity. The NPL balance was CNY 70.25 billion, up by CNY 2.05 billion and the NPL ratio was 0.94%, remaining at the same level. The annualized NPL formation ratio was 1.06%, up by 0.08 percentage points. The allowance coverage ratio was 385.1% and the allowance to loan ratio was 3.63%, reflecting a high level of risk compensation capacity. The annualized credit cost was 0.69%, representing a slight year-on-year increase of 0.02 percentage points.

Fourthly, we strengthened capital management with industry-leading capital adequacy level. Risk-weighted assets under the advanced approach and weighted approach increased by 5.16% and 5.23%, respectively, which is generally in line with asset growth. The CET1 CAR, the Tier 1 CAR and the CAR under the advanced approach were 14.07%, 16.59% and 18.33%, respectively, down 0.09 percentage, up 0.08 percentage and up 0.9 percentage points, respectively. As for weighted approach, the numbers were 11.84%, 13.96% and 15.06%, respectively, down 0.08 percentage points, up by 0.6 percentage points and up by 0.6 percentage points, respectively.

This is a brief overview of our performance in the first half of 2026. We will now turn to the company's operational information. In the first half, amid new developments and challenges in the banking industry, the company proactively responded and seized opportunities, taking extensive wealth management to a new level. The transformation through the 4 initiatives delivers notable progress, further strengthening the company's resilience and market competitiveness. This is mainly reflected in the following areas.

First, we grew our client base rapidly while scaling up extensive wealth management business. We remain customer-centric, further deepened its segmentation and classification-based customer management and achieved growth in both size and quality of our client base. Retail customers totaled 231 million, up by 3.13%. Among them, Golden Sunflower and above customers reached 6.41 million, up by 8.2%. The number of private banking customers reached 216,000, up by 8.36%. Corporate customers reached 3.86 million, up by 6.56%, among which the number of newly acquired corporate customers was 347.9 and institutional customers 78.5, up by 3.7%. The number of corporate customers for withholding transactions reached 1.53 million, representing a year-on-year increase of 14.97%.

AUM from retail customers exceeded CNY 18 trillion, up by 7.96% compared with year-end 2025. The half year increase reached CNY 1.36 trillion, hitting a record high. The average daily balance of corporate wealth management products was CNY 632.61 billion, up by 20.51% compared to 2025. Total asset management amounted to nearly CNY 5 trillion, representing a year-to-date increase of 5.29%. The balance of assets under custody CNY 23.58 trillion, representing a year-to-date increase of 8%, maintaining a leading position in the market.

Secondly, we pursue differentiated development with more distinctive business strengths. First, we continue to consolidate our leading position in retail finance, and we maintain the main goal of retail finance business with this net operating income accounting for 54.35% of the total. We continue to strengthen our professional service capabilities in wealth management and customers holding wealth management products, 66.7 million, up by 4.05%. Customers covered by TREE system reached 12.58 million, up by 6.98%. In response to market trends and evolving customer demand, the growth structure of AUM of retail customers become more diversified.

Agency distribution of non-money market mutual funds and trust products increased by 82% and 40.48% year-on-year, respectively. The balance of retail wealth management products increased by 3.88% compared with prior year-end and the balance of deposits from retail customers increased by 3.7%. Facing rising risk and weakening demand, we prioritized asset quality in retail loans, resulting in a moderate contract scale. Retail loans totaled CNY 3.61 trillion, down 1.11% compared with prior year-end. The percentage of retail loans to total loans and advances was 51.04%, down 1.88 percentage points compared with prior year-end.

Amid the industry's cyclical adjustment, the group appeared to a stable and low volatility operational strategy for its credit card business. Active credit card users totaled 70.4 million, up by 0.46% compared with prior year-end, and the transaction value was CNY 1.91 trillion, down 5.43% year-on-year, while maintaining a leading position in the industry and our market share further increased. We continued to differentiated competitive advantages in corporate finance. Total FPA was CNY 7.27 trillion, up by 8.13% year-to-date. We continue to optimize loan structure, further enhance quality and effectiveness of serving the real economy. Total corporate loans CNY 3.5 trillion, up by 9.08%. Growth of loans in key areas such as green loans, manufacturing loans and agriculture-related loans are significantly outpacing the overall loan growth.

The overall -- the average daily balance of deposits from corporate customers, CNY 5,230 billion, up by 6.1%, of which demand deposits accounted for 50.14%, down by 0.48%. We continue to enhance professional service capabilities of retirement finance. The number of individual pension accounts opened exceeded 17 million with the pension funds under custody amounted to CNY 1.7 trillion, up by 9.68% compared with prior year-end. We provided diversified financing services to technology enterprises, serving 378,300 sci-tech enterprise customers, including more than 200,000 enterprises listed on sci-tech rankings. We continue to upgrade the distinctive brand of enterprise digital intelligence finance. Compared with year-end 2025, the number of customers using treasury management cloud services increased by 14.26%. Those using cloud-based postal connection increased by 13.44%.

We continue to enhance professional capabilities in investment banking and financial market businesses. FPA contributed by investment banking business increased by 8.64% year-to-date and the debt underwriting amounted CNY 284.16 billion. And M&A financing business value amounted to CNY 165.92 billion, up by 19.84% year-on-year and we have completed multiple deals with significant market influence. Regarding financial markets business, the number of wholesale customers involved in client flow trading was 78,000, up by 18.38% year-on-year and the transaction value amounted to USD 212.72 billion, up by 33.64% year-on-year.

The bill business customers totaled 191.40 thousands, up by 11.49% year-on-year. Direct bill discounting value was CNY 1.73 trillion, up by 26.61%, ranking second in the market. Fourthly, we accelerated the development of branches in key regions to strengthen their market competitiveness. Multiple key indicators, including growth rates of retail customer base, retail AUM, core deposits, corporate loans, net operating income and EVA of branches in key regions were all higher than the average level of all domestic branches. The contribution was increasing. The proportion of key region branches in the total of all domestic branches increased regarding retail AUM balance of 0.26 percentage points. Corporate loan balance of 0.56% and average core deposit balance of 0.22 percentage points.

Third, we steadily advanced comprehensive and international development with value contribution significantly increased. Total assets of major subsidiaries, CNY 1.05 trillion, up by 10.6% compared with prior year-end. Net operating income accounted for 12.3% of the group's total, up by 0.39 percentage points. Net profit for CMB Wing Lung Bank reached HKD 4.73 billion, up by 55.88%. Total assets HKD 587.8 billion, up by 11.63%. Net profit of CMB International Capital, HKD 3.07 billion, up by 124.14%. Total overseas asset management business reached HKD 94.37 billion, up by 25.27%. Net profit of CMB Financial Leasing was CNY 1.63 billion, down 42.44% year-on-year. This is mainly because fee income last year. And the leasing business was CNY 70.49 billion, maintaining a leading position.

And net profit of CMB wealth management CNY 1.51 billion, up 10.92%. Total wealth management products reached CNY 2.7 trillion, up by 3.79% compared with prior year-end position. Net profit of China Merchants Fund was CNY 802 million. Nonmonetary mutual funds under management was CNY 623.15 billion, up by 5.78%. Net profit of CIGNA & CMAM was CNY 62 million, down 12.68% year-on-year. Entrusted management of insurance funds totaled CNY 279.45 billion, up by 19.78%. The total assets of overseas institutions increased by 7.01% compared with prior year-end and net operating income rose by 30.5% year-on-year. Institutions in Hong Kong seized opportunities and expand their operations, achieving fast growth. Net operating income grew by 32.71% year-on-year.

Total assets under custody of Global Custody Hong Kong Center exceeded CNY 1 trillion. CMB International Capital completed 3 Hong Kong IPO sponsorship projects and 24 Hong Kong IPO underwriting projects. Cross-border business grew rapidly. The number of corporate customers in respect of international balance of payments reached 93.7 thousands and the international balance of payments of corporate customers increased amounted to USD 263.26 billions. All comprehensively promoted entity and [indiscernible] development and continuously strengthened technology advantages.

Third, to promote AI development and application. We continue to refine our self-developed large model infrastructure. Average daily token throughput increased by over 78% compared with 2025. 256 domestic domain-specific models were deployed up by 40%. A total of 1,386 intelligent scenarios were deployed, up by 62% compared with prior year end. Large models applications have delivered tangible quality and efficiency gains. AI contributes 13.8 million equivalent working hours in terms of efficiency gains. We also built a bank-wide knowledge management framework that enables large language models to unlock knowledge value across business lines.

We have increased our client-facing service capacities using AI and increased our capacity of complex business service. We have launched AI Xiao Ban and AI agent serving wealth management partners with newly launched Private banking AI tools now deliver one-stop real service framework for spanning asset allocation and protection and succession plan. We have upgraded our client service system. The AI-powered intelligent customer service digital human system for institutional scenarios has served customers of 37.66 million clients. Internal management intelligence upgrade continue to accelerate. AI is reshaping credit process with accelerated deployment across the prelending, lending and post-lending stages.

In terms of business management, intelligent tools now span the front, middle and back offices. Fifthly, we upheld bottom line of risk control and reinforce advantages in asset quality. In the face of various risk and challenges, we step up efforts to prevent and mitigate risk in key sectors and continuously refine risk management strategies. Overall asset quality remained sound. We adhere to the strategy of stabilizing growth, preventing risk and optimizing structure, strengthen risk management and control in sectors such as property and manufacturing. With corporate loan asset quality continuing to improve. NPL ratio of corporate loans 0.78%, down 0.11 percentage points. Among them, the NPL ratio of property industry was 4.47%, down 0.31 percentage points. The NPL ratio for manufacturing industry was 0.39%, down 0.44 percentage points.

Compounded with rising retail loan risks across the industry, we comprehensively reinforced retail loan risk management and optimized the asset structure. Retail asset quality remained stable and controllable, maintain a relatively strong position within the industry. The NPL ratio of retail loans was 1.16%, up by 0.1 percentage points. Among them, residential mortgage loans was 0.48%, down 0.03 percentage points. Credit card loans 1.9%, up by 0.16 percentage points. Retail microfinance loans and consumer loans were 1.34% and 1.39%, respectively, up by 0.12 percentage points and up 0.7 percentage points, respectively.

In the end, I would like to give a brief introduction to the business strategy for the next phase. Looking ahead, we will fully implement China Merchants Bank 5-year strategic plan, maintain strategic focus on fundamental principles and breaking ground, accelerate capacity building and advance transformation through initiatives to consolidate existing strength while building our new advantages, achieving distinct with common business model.

Firstly, we stay committed to long-term to build stronger core competitiveness. We will remain customer-centric. We enforce the central role of retail finance through wealth management. Uphold asset quality as the foundation and sustain strong technology support. While maintaining strategic focus, we will adhere to the principle of professionalism and market orientation, continue innovating in products, services, technologies and business models by deepening and refining our core businesses, CMB's business and revenue structure will take on a fixed earnings cost feature, which is resilient in down cycles and flexible in up cycles.

Secondly, capture structural opportunities to continuously cultivate new drivers for medium and long-term growth. In retail finance, we will capitalize on the historic strategic opportunities in wealth management, centering on asset allocation to enhance professional wealth management capabilities and improve customer sense of fulfillment and experience. Secondly, in corporate banking, we will further strengthen professional operation in different industries. Given investigation across a broader range of sectors to find one branch one policy, one industry, one policy strategy in key region branches to enhance differentiation.

Thirdly, we will also seize opportunities arising from new quality productive forces, leveraging synergies between CMB and its subsidiaries, we will strive to build technology finance as a distinctive feature of CMB. Fourthly, we will leverage our local and global presence and establish a development framework comprising the head office plus institutions in Hong Kong plus regional hubs to build distinctive feature in cross-border finance.

Thirdly, we will seize near-term decisive moves to sustain steady progress in operation. We will focus on stabilizing NIM, maintaining our advantage in low-cost deposits and strengthen risk-based pricing on the asset side and increase our risk compensation capacity. We will leverage our strength of subsidiaries to better expand NII and optimize revenue structure, keeping revenue broadly stable. We will seize capital market opportunities, further expand extensive wealth management and financial markets businesses to enhance value contribution. Capital management will be strengthened to improve capital returns and reinforce capital resilience.

Fourthly, we will accelerate intelligent transformation to further extend tech leadership with sustained technology input and intensify technology empowerment to further promote business growth with technology. Seizing the opportunity presented by AI. We will broaden and deepen AI applications to drive improvement in customers' experience, internal efficiency and risk management. We will accelerate the building of AI-powered organization, reshape the capabilities of workforce and deepen people plus digital intelligence model, establishing CMB as a benchmark for intelligent transformation in the AI era.

Fifthly, we stay anchored to risk-based approach and reinforce foundation for sustainable development. We uphold prudent and stable risk culture, operating within the boundaries of our capabilities. We stay highly vigilant to early signs regarding asset qualities, strengthen risk prevention and resolution in key areas, including retail risk credit and property sector and intensify collection and resolution efforts and internal control will be strengthened with rigorous safeguards against credit risk, market risk, operational risk and liquidity risk, providing a solid foundation for high-quality development.

We will now open the floor for questions. You are welcome to raise questions.

[Operator Instructions] We will now take the first question. We will have the first question from [indiscernible] Asset Manage.

My question is for Mr. Xiaoqing Wang. You just assumed to be the President of CMB. I have a very simple question for you. For this time, as you assume your new role, what is your actual inner thought? We all know that you have assumed your new role for around half a year, you have done a lot of work. So I would like to learn from you what about your mindset, your idea about the future development of CMB's business. We see CMB in second quarter, your revenue, your profit all accelerate. Will that trend continue to the second half of the year?

Thank you for your question. By the end of April, I assume my new role to be the President of CMB. And after that, first of all, I feel strong responsibility, which was reflected in the following aspects. Well, first of all, CMB has been managing CNY 13 trillion asset size. It shoulders a very strong responsibility and mission. And second, the bank-wide development is highly relevant to 120,000 CMB staff live and how could we inherit the good experience and the results from generations of CMB staff's hard work and stick to high-quality development.

And third, the capital market, our investors have attached great importance and recognition to CMB. How do we live up to their expectations? how do we live up to what they expect from us. It's also a very important issue for us. I can recall an individual investor from our shareholders' meeting that their funds are coming from their everyday life. So making good investments is what they want. We should guarantee them with good results and deliver to our investors so as to guarantee their return. And of course, from all these 3 aspects, these are the most important aspects. We also have other dimensions. CMB faced with important development opportunities. And of course, there are challenges ahead.

I have been discussing with many investors in different scenarios challenges on one hand are coming from the banking industry. These are the common challenges faced by all banks, for instance, the low interest rate environment, they have been posed challenges to the banks and also the challenges they got to the NIM development. And another fact I mentioned is that as the economic growth rate actually moderated and also the society's financing structure are experiencing changes, the demand for -- the credit demand also shrink. This is also PBOC had mentioned in the forum in Shanghai that the total loan growth demand for loan demand is also in a slowdown trend.

For the second perspective for CMB, we have also been quite special in our own loan structure. As you all know, we are a bank that retail business stays in our major line and standard wealth management is a very important strength of ours. In such a phase where retail credit assets, retail business facing challenges, I believe this challenge on one hand, is coming from the household balance sheet reevaluation and deleveraging. This is a phase -- a special phase we have. And for the second perspective, some of our households, they are having challenges in their willingness to repay and also their capability to repay.

And thirdly, the joint stock risks also -- joint debt risk also demonstrate in such an environment. So for CMB, for both retail business are under pressure, much more pressure compared with our peers. So combined with the low interest rate environment, combined with our over 50% of retail loan among our all loans and also the rather smaller room of liability cost control compared with our peers, I think all these factors combining together are posing stronger challenge to CMB compared with other banks. But for us, I think on the one hand, we need to follow the principle, the pattern of the banking business development. For us, I think that we should always stick to the philosophy -- the customer-centric philosophy to be back to our origin and take customer at our center.

And secondly, we should balance risk, return and maintain a good management over the 2 factors and stick to good asset quality. And third, from a commercial bank perspective, we need to combine with our own strengths, our resources, what we are good at and I want to special mention 2 points. One is that even though we are faced with challenges, how do we leverage our strengths in extensive wealth management business, we can consolidate our characteristics as a retail bank. We cannot give up our own strengths and characteristics just because of the change of external environment. On the contrary, as the market changes during the process, we should even more -- we should even learn better about the environment and seize the opportunities and continue to foster our capability and grasp the development opportunities among the environment.

And second perspective is that we have 3.8 million corporate clients and over 230 million retail clients, and we are having rather strong space to further dig deeper in these client groups. We need to take a customer-centric perspective to understand better about their demand, where is their demand, where is their pain point. And for CMB, we can understand better about them and provide corresponding service to these clients to match their needs no matter they are retail clients or corporate clients and to carry out our mission to serve the real economy and to serve the sense of a fulfillment and their investment gains of our customers. And of course, as a commercial bank, we should see the cost of this time to see the trend of development and to see what we should see -- to see from current situation, the senior management has discussed the following aspects, directions of development.

These are also what we think that we should grasp and seize to be the characteristic of CMB's future development. The first thing is extensive wealth management business under the low interest rate environment, how do we understand better about customers' demand, their demand of preserve and increase their asset value. And we also see the change of asset structure of every household of the Chinese residents. For the first half, retail AUM increased by 8% to CNY 18 trillion. We can see that in deposits, insurance, trust schemes and mutual fund products, these are all demand coming from our clients. But for CMB, we have already accumulated capability recognized by the market.

And for the next phase, we will further strengthen our capability to take customer at the center to increase the sense of fulfillment of our clients and to increase also the experience of our clients. We take these aspects our target to enhance our capability of providing asset allocation to our clients and also provide companion service to our clients as well. This is what I would like to discuss about the first capability. Besides retail, extensive wealth management also includes wealth management to corporate clients. Even though the scale of wealth management service provided to corporate clients is not as big as those we provide to retail clients, but it's also growing at a very fast pace.

For the second perspective, I think we need to seize the opportunities arising from the new time and the new environment that is sci-tech finance. We think that under the backdrop where the government encourage us to develop technology and also the capital market are providing stronger support in this process. And of course, financial institutions like us should not miss this great opportunity. It's not just missing an opportunity. It may be a time that you miss. And of course, probably every financial institutions are also practicing and trying to seize this opportunity and how do we further consolidate our capability that is more systematic based on our past cumulative experience.

I think on the one hand, we need to deepen our understanding towards industries. For every area in technology, it actually requires us to have a strong knowledge, deep understanding in different areas, segments in the technology business. How to further cultivate our capability. It is what we need to further dig deeper and cultivate no matter in the head office or branch level or subsidiary. It is also building based on our professional operation that is industry based only by understanding better about the future of a company, could we deepen the development of technology finance.

And for the second perspective, how do we better promote the development of technology finance, we should give into full play of our license -- our full license capability. I understand that for commercial banking business, the high growth and also high volatile characteristics within technology finance, it cannot be satisfied by the traditional credit business model, because the return coming from loan business is rather certain. So I think that the 2 aspects within the business are actually mismatch. So how do we better satisfy the demand of technology finance? We need to further leverage our full licensed capability -- our multi-license capability. That is what we need to think further for the next phase.

We have 1 plus 1 plus 8 license. One is commercial banking and the other one is our overseas commercial banking and the other 8 are investment banking, investment management, AIC, leasing and et cetera. So for CMB, within these 8 licenses areas, they are having a rather good market share and also market influence compared with CMB's commercial banking business within its own area. So I think we should fully leverage what we have been cultivating, what we have been accumulating and to better serve our nation's big strategy of developing technology. And within this trend, we should seize the opportunity and further development along with this trend.

And for the third perspective, I would like to mention is that about our international development. Well, logically speaking, our overseas branches are not having as many outlets as the big state-owned banks. So how do we reflect our own characteristic in international development, especially how do we better leverage our Hong Kong institutions. I think that these 2 ideas are what we need to think further.

And the fourth aspect is that in the intelligent era also bring us new opportunities for banks. It might not be obviously or quickly reflected in our balance sheet or even at recent phases, they will be reflected as expenses or costs. But for us, we think it's the right thing to do. How do we use a more scientific way to grasp the intelligent technology meant a lot for a commercial bank. It could help us to enhance customer experience, enhance our internal efficiency and to conduct even more accurate risk management and also to further accumulate our knowledge.

So this is for the development of technology has always been a very important input. Long ago, we have been written that no less than 3.5% of our operating income will become the IT input. And for the next phase, this is written in our Articles of Association. So we will -- we are having plan for developing our intelligent bank. And later on, our Chief Information Officer, Mr. Zhou, will give further introduction.

And last but not least, we believe it is also an opportunity given by this era. And also another mid- to long-term momentum is that during the development of Chinese economy, we should better give the full play of our branches in key areas. According to the senior management's analysis for the first half, recently, I've just reported the figure of development of branches in key areas, they are having a better growth rate in the average level of the banks, all branches. So we need to stay close to the local industrial policies, stay close to industries that are fit into our understanding of risk and our preference and stay close to our clients, including corporate and retail clients.

This is what we need to do to further develop the key branches -- branches in key areas so that they can contribute more to the bank's operating income and also profit. And this is we need to -- for the next phase, we need to further foster our characteristics and strength so as to establish CMB's own driver of future development.

Your last question is about the growth of the first half. Will that trend be continued? Well, you see from the senior management level, we will strive. We will make every effort, and this is also what we want to deliver to the market. We aim to strive to maintain a stable and steady progress to deliver such results to our market and make every effort to maintain our good asset quality to deliver such good growth momentum to consolidate what we have achieved to reflect better results to the capital market. Thank you.

Next question, please. Next, we will invite Kunpeng from China Securities.

I'm Kunpeng from China Securities. Thank you for President Wang for the introduction. We are clear about the strategic outlook. I want to further ask my question on retail banking business. CMB has the best wealthy retail customer base in China banking industry. So in areas such as consumption scenarios, basic account services, wealth management, how will you continue to enhance the exclusivity, uniqueness and premium experience of products and services to these clients, thereby avoiding simple price wars and marketing walls. So that we can further improve customer loyalties and returns. Is there any indicators or metrics we can track to monitor the progress and effectiveness of these efforts?

We would like to invite Ms. Wang to answer this question.

Thank you for the question. I think this is a very good question. You not only mentioned pay attention to wealth management, but also pay attention to customer consumption scenarios, including bank account services, which are integrated financial services. This is a direction that CMB is paying efforts to serve the clients' need in deposit loans and remittance. Regarding the comprehensive financial services, we do not target only wealthy customers, but the whole customer base of China Merchants Bank. Deposits has been elaborated to the extensive wealth management. We will start from the client sense of we select good products and construct a long-term stable asset allocation system.

Regarding loans, which means we will satisfy client demand in different financing to provide the needs in households, business, et cetera. For remittance, we pay high attention and continuously enhance our basic account system construction and dedicated to a safe, a convenient and rapid payment system to cover all scenarios such as elderly caring, social insurance, et cetera. So that clients can use one account to manage all kinds of businesses, make CMB card more -- it is a very good to use this concept to be more widely promoted.

While the customers have more diversified requirements in most of the clients are entering a phase of wealth -- material wealth accumulation. So they have diversified from different dimensions. The requirement has been wealth succession and wealth protection and more advanced needs. Under such kind of complexity, we have to take into consideration more factors and provide more customized services and more differentiated services to these wealthy clients. We provide one plus and comprehensive and scenario-based service solution, which is a one-on-one relationship managers and plus an expert teams for long-term companion to fully respond to the clients' expectations on integrated services.

In product offerings, we would opt for all ground all category product offerings that serves across multiple accounts and multiple currencies, et cetera. Golden Sunflower and above customers growth in the past 3 years has accumulated to 55% and the CAGR has been 13.26%. Another point I would like to discuss with you is that we have always pay high attention to the upgrade of retail client service model, because retail customers is a 100 million volume-based customers. And there are a lot of categories of retail banking businesses, and there are multidimensional services involved in retail banking client services.

So how to match client requirements and our product offerings, this is a very important question. In the past, we used 3 years to basically complete the human plus digital intelligence new model in retail finance and completed our digital rematching for clients and channels and product offerings. We have 3 dimensions to the focus. First, our customer-centric value and our strong delivery capacity from the head office to branches and to subbranches as well as our strong support of fintech. And this is a main support.

In the next phase, our retail banking service model will deeply involve artificial intelligence from and transfer people plus digital intelligence to people plus AI agents. Regarding metrics, I think there are many indicators to pay attention to. For example, the number of customers holding wealth management products, the allocation customers MAU active users, et cetera. And the customers covered by trade system has increased by 55% for the past 3 years and the compound annual rate has reached 13%. Our monthly active users has increased by 31% in the past 3 years and 9.36% and 5.14% of the CAGR of the past 5 years.

So as for the indicators, AUM and client base are the most fundamental indicators to look for. Structure volume of these indicators are also something that we're paying attention to. Our AUM increased by 52.12% over the past 3 years and retail clients increased by 24.54% for the past 3 years and the CAGR was 6.72%. Overly speaking, we use integrated service capacity to serve our clients as well as we have our retail customer base or even though their demand and preference changes across periods. However, for CMB, their trust for CMB and their choice for CMB will not change.

Next question, please. Next, we will invite Xu Ran from Morgan Stanley.

I'm Xu Ran from Morgan Stanley. My question goes to Mr. Wang Xiaoqing regarding loan growth. We see that loan growth has slowed to below 5% year-on-year. And at the shareholders' meeting, you mentioned that the loan growth rate around 7% would be appropriate. What is the management's long-term consideration on loan growth? And previously, we think that CMB is a retail-oriented bank. And in retail sector, we see that risks are accumulating. So what are your considerations regarding future portfolio allocation?

Indeed, as you mentioned and also mentioned in the presentation previously, the bank's total loans and advances reached CNY 7.45 trillion, up by 4.73% year-on-year. In this process, we see that the difference between corporate loans and retail loans. The corporate loans increased by 13%, while retail loans increased by 0.05%, excluding corporate card. So we are seeing corporate loans growth is outpacing retail loans. This is broadly in line with the market trend. You just mentioned the number, 7%. This is mentioned in our previous investor discussion regarding our expectation, which is 7%. From actual operations, we think that currently is around 5%. So in the next half of the year, we think that the growth rate would be relatively the same.

There are 2 reasons. Firstly, the external environment. The speed of loan growth is slowing down, which is -- and the asset quality is improving. This is the choice of our own decisions. With insufficient credit demand in the market, especially the retail loans is facing periodically high risk, we do not blindly pursue scale expansion. We emphasize the philosophy of a balanced development of quality, profitability and scale. In recent period, what we discussed with the retail banking business sector is that we should -- regarding the retail banking structure and asset quality, we have increased our requirements, and we do not pay very high emphasis on scale expansion so that our team of retail banking have sufficient attention on the asset quality of retail loans.

Even though I believe that from your -- from many analysis, the Q2 growth is lower than the previous numbers. From the perspective of commercial bank operation, we think that we hope to pay higher attention to the challenges and adopt long-term perspective and conduct proactive management. Secondly, I would like to mention that about the low yield financing and LC negotiating business, we are -- the volume is shrinking, and we are implementing proactive management.

The overall trend of demand is not changing very fundamentally. And if we are not seeing very good signs of improving trend, the overall trend of CMB loan growth will still maintain. Retail loans -- in terms of retail loans, we would continue to consolidate our quality customer base, effective control our risk, and then we can have a good market share. And in terms of corporate loans, we focus on key areas, key industries and key industries featured by segments, so that we can achieve growth in both volume and quality and increase our quality and effectiveness of serving the real economy. Thank you.

Next question is from Yang Shuo from Goldman Sachs.

I have a question for deposit. So recently, we see that some major banks, they are resuming the issuance of large denomination personal CD. I would like to learn that whether it has any influence to our liability cost, and I would like to understand the repricing of deposit and also the trend of NIM of CMB.

The question will be taken by Mr. Peng.

Thank you for your question. I think for the issuance of large denomination CD, we will have 3 purposes. One is based on the maturity management to the duration to match the duration and liability to absorb the long duration liability to maintain balance sheet management. And second, liquidity management, I think it's also the second purpose. And the third purpose is relevant to provide the product and service for clients' demand of having such kind of long-term deposit product requirement. But based on our understanding, 5-year large denomination CDs issuance, the total size is limited and the cost is rather low. So based on our understanding, it will have limited influence on the bank's NIM. But for CMB, our duration -- liability duration is appropriate and balanced.

So in market risk, we don't have quite strong requirements on the large denomination CD, and we have good liquidity. So for temporarily, we won't need the issuance of large denomination CD to supplement our liquidity. If in the future, we need to take such action, it will be out of the purpose of providing relevant deposit products required by our clients. But of course, we will conduct further analysis and understanding that whether or not we have actual demand from our clients and whether the demand should be satisfied by our product supply. So we are also doing such kind of analysis and research. And also, for those products that was further relief, we need to conduct some rollover products. We will also start from the perspective of NIM management and also from the perspective of liability management, I think the influence is rather limited.

The next question is from [indiscernible] from Haitong Securities.

I am [indiscernible] from Haitong. I have a question about the overall CMB's asset quality. What's your point of view? And what is the major risk that you see? And what kind of coping tactics measures that you have been taken to these risk areas?

The question will be taken by Mr. Desheng is in charge of risk management. Thank you for your question. For the first half of this year, we have stick to our prudent and stable risk management culture and prevent the risk in key areas and increase our level of risk management. Our asset quality remains to be stable and having 3 characteristics. One is asset quality maintained stable towards a good momentum. By the end of June, our NPL ratio was 0.94%, remained flat from the end of 2025. This is quite a good level.

The second is that we stick to a prudent and culture risk classification -- asset classification. Loans overdue for 60 days and 90 days to NPL was 1.23, which was a good level among our peers. And third, we have a provision. By the end of June, under the group's category, our coverage ratio was 385%, having a strong compensation level. You have been paying attention to our understanding of risk areas. I would like to make some classification according to different segments. First, I would like to talk about corporate loan. For the first half, our NPL -- corporate NPL ratio was CNY 27.4 billion. Corporate NPL ratio was 0.78%, down by 0.1 percentage points.

Corporate asset quality actually improved. For the first half, the NPL formation ratio of corporate loan was just 0.16%, stretching to see from a longer cycle, CMB's corporate loan asset quality continue to improve, remain stable towards a good trend. For the risk areas that we pay attention to, in terms of corporate loan, the future risk will be lying in real estate credit perspective. By the end of 2025, we have CNY 14.5 billion of NPL loan in the real estate area, which represents a 4.47% of NPL ratio. So even though these 2 figures remain at a high level -- relatively high level, we are paying a very cautious attitude towards these 2 figures.

And for the real estate market, we still see some divergence within the market. For some clients with rather not that good performance and qualification, they are having quite poor asset quality. So for this area is what we pay special attention to, that is the corporate real estate. We are taking measures as follows: we continue to lower the proportion of retail -- of corporate loan, corporate real estate loans within total loan. Its proportion was now 9.3%, which was lower than the end of 2025, lower by 0.45 percentage points. We will further optimize the structure of property loan -- corporate property loan. We focus on loan disbursement in Tier 1 and Tier 2 cities and 85% of them are allocated to Tier 1 and Tier 2 cities.

And to see from client structure, over 80% of our corporate property loans are granted to local and central state-owned enterprises and also very qualified private enterprises who are having stronger capability to paying their debt. And the third perspective is to maintain strict management towards the projects. We have conducted close stronger management towards different projects. And in the fourth perspective, we continue to dissolve the risk within the area and speed up the disposal and enhance collateral, enhance guarantee and enhance the other disposal methods taken by our staff. And also, last but not least, to enhance our provision level to make sure that the risk compensation level within the corporate real estate sector is sufficient. The provision level is over 3x than the average level of the provision for the corporate loan.

Looking into the year 2026, with many policies introduced by different regulators, we are seeing that the market -- the real estate markets are seeing the trend of further concentrating in the risk. And the risk tend to be showing a momentum to contain -- to be contained. But we think that even though there will be some individual event of risk outbreak, but generally, the market is now in a stabilizing process. The second perspective I would like to mention is about retail loan. For the first half, the retail NPL loan amounted to CNY 42.8 billion. The NPL ratio was 1.16%, up by 0.1 percentage points. Special mention loan ratio and balance of retail loan increased. I noticed that some of the investors are paying special attention to the asset quality of our retail loan. And from my perspective, the retail loan asset quality is the major driver, the major reason that influenced our overall asset quality, even though the indicators, the credit asset quality indicators of the retail loans are maintaining at a relatively good level, but they are still under pressure.

And the second, retail loan accounts for a high proportion in our loan book. So it's natural for us to have stronger pressure. Of course, some of the pressure is coming from the market trend. And the other side, I think the pressure is also coming from the expectation from our investors and also CMB's pursuit to be the best retail bank. So currently, under such backdrop of the economic structure transformation and also the downward trend of the real estate market, clients are under influence in terms of their capability of repay and also their willingness to repay. And also, we are having joint debt risk in the consumer loan area. So we are still having the idea that the retail loan risk is in an upward trend. Of course, we have taken measures to contain -- to maintain the risk level of retail assets to -- what we have been doing is that we have adjusted our budget and target of retail loan business.

And in our evaluation and also internal encouragement, we even pay special attention to the quality of retail loan and also control the formation of retail loan -- retail NPL loans. And of course, we also see some positive signals within retail loan asset quality for the first half. Excluding credit card, our retail loan, our -- we are having new formation of CNY 247 million new formation of personal loan, that is retail loan, excluding credit card. Retail credit assets, the momentum of its NPL new formation momentum has been [ curbed ]. And the segment signal we see our balance loan, that is our mortgage loan for the first half of this year, the NPL balance was down by CNY 509 million and down by 0.03 percentage points and realized the full decrease in the NPL balance and ratio of our mortgage loan for the first half of the year. Of course, good signals are also showing in credit card business. Due to some special reasons, the adjustment of the asset classification within the credit card business, we have been taking stricter measures to conduct asset classification so that we see some uptick in the formation of credit card NPL.

Overdue loan ratio was down by 0.1 percentage point in credit card business for the first half. Overdue loan ratio and balance also both decreased in terms of credit card loan. Of course, we have to admit that the credit card assets are still under pressure in terms of asset quality, but I believe it still be a very important loan granting direction for us to pursue. In the following phase, we will follow the market trend. We will emphasize both on quality and size, and we will give the full play of the strength of our customer base to increase the threshold of customer onboarding and third, we will dig deeper into our existing customer base and to prevent the risk coming from joint debt risk, and fourth, we will conduct early identification, warning, and also disposal and etc.

Fifth, we will enhance our systematic risk management capability to strengthen the leverage of AI or data, and also to strengthen the cultivation of our talent team. We will further strengthen the management over the asset quality of retail assets. We wish it would be developing in a stable momentum.

Next question, please. Next, we will invite Min Lee from JPMorgan for the questions.

Thank you for giving me the opportunity. My question is regarding corporate banking business. We noticed that corporate banking revenue and profit are outperforming those of retail banking. What are the growth drivers and what is the outlook going forward? Under today's macroeconomic situation, how can we maintain good corporate loan asset quality? Thank you.

Thank you for the question. We will invite Mr. Lei Caihua, who is in charge of corporate banking business to answer this question.

Thank you for the question. You mentioned about the growth of corporate banking in the first half of the year. Overall speaking, our growth is stable. Due to -- in the backdrop of the market environment, we have four growth pillars, we have achieved good operating results. In the past decades, corporate banking operation has formed a differentiated advantages as compared with our peers. The key lies in the number and quality of our customer base, as well as our client experience and clients coverage regarding our digital products. The aforementioned two points generate three points.

Our cost of liabilities is outperforming our peers and our investment banking and cross-border finance business is featured and satisfied our clients' needs and thus generating non-interest incomes. Fifthly, the fourth pillar growth drivers of CMB corporate banking, especially wealth management, asset management, interbank coordination, has jointly formed a growth. Sixthly, our good asset quality.

Next, China Merchants Bank will continue to -- in terms of corporate banking, we will focus on the six aspects to forge our differentiated advantages. Firstly, leveraging digital empowerment, we will further strengthen our client service system. Currently, the classification and segmentation-based client operational model will be continued, and this is a core for our customer base operation. We will enlarge our clients' loyalty and increase our income and low-cost liability.

Compared to peers, we have a better advantage in the volume and quality of our client base. For technology evolving growing clients, we should address their needs in operations and become a principal bank for the clients. Next, in terms of operation, we need to continue to optimize our services. Secondly, to improve our professional operation capacity and increase our asset originations. In terms of, we are focused on the new emerging quality clients and 6 new clients, et cetera. We will have specific industrial investigations and improve our risk investigation and forward-looking judgment on their demands and impose differentiated credit policies so that we can obtain asset allocation, which is with controllable risks. We also strengthen to build industrial ecosystems. We have already covered 36 industries of professional investigation.

Thirdly, we will improve our investment banking and commercial banking integrated service systems. First, we would improve our digital products, including cross-border finance, investment banking, transaction banking, et cetera, so that we can enhance customer experience. In terms of customer experience, we are leading the industry, and we should maintain our advantage so that we can deepen our client loyalty, know better our clients, and forge stronger ties.

Leveraging high efficiency synergy, we will forge a capital ecosystem to provide our clients with more diversified products and increase our M&A financing and direct financing, increase our FPA to improve our income. Next, we will improve cross-border finance business management serving Chinese enterprises going global. In terms of customers of BOP value, cross-border financing, as compared with our comparable peers, we are leading in our position.

Next, we will improve our synergy capacity in cross-border institutions so that we can help the Chinese enterprises going global, help their products going global, and investment and financing going global so that we can provide better services for these clients. Fifthly, we would increase the coordination between the four major business segments. The coordination of these four segments are the feature of CMB, especially the development of wealth management business, as well as the other segments. This coordination -- by leveraging this coordination, we can achieve deep cooperation of these different client categories.

Next, we will continue to forge differentiated processes and mechanisms. Firstly, we will use AI to empower our business. Firstly, we want to increase our response speed to our clients and increase our risk management capacity and internal management -- internal operation efficiency, as well as integration and synergy capacity. That is my answer. Thank you.

Next, we would invite Wang Xianshuang from Guolian Minsheng Securities.

Can you hear me?

Yes.

Thank you. I am Wang Xianshuang from Guolian Minsheng Securities. First of all, thank you CMB for delivering stable performance. Under such kind of circumstances, you have good performance in operation results and see an increase in market price in H share and A share. My question is regarding asset and liability. I want to ask the management, what is your outlook on the NIM trend?

The second is about FinTech. We noticed in the interim report you elaborated a lot on AI, and we believe CMB is leading the industry in AI deployment. The market, it is not having very direct feeling of the AI application. Is there any tangible impacts on the business? Can you give a few examples so that we can have more concrete feelings?

Thank you for the question. First, we will invite Mr. Peng to answer the question. For the second question, we will invite Mr. Zhou for the answer.

Thank you for the question. Regarding NIM changes, this is a heated topic of the market. Since this year, in the banking industry, the NIM is becoming stable. However, there are some divergence in this regard. In some banks, we are seeing a rebound, but the others, we are still seeing decline. As for CMB's perspective, currently, we are still declining. However, the decline is rapidly narrowing. In the first half, the NIM was 1.83%, down 5 basis points year-on-year. As Q2 compared to Q1, 1 basis point lower. We are declining, but the decline is narrower, and it is being stable.

As for CMB, we think that the main factor lies in asset side. First, the repricing factors have far from being fully displayed. This is a common factor impacting all the banks and also we are facing insufficient credit demand, which drive to the downturn of asset pricing. Secondly, for China Merchants Bank retail banking, especially credit card banking asset, has a high proportion. Under current circumstances, its asset has been slower in growth, so posing pressure on our NIM decline.

I think for CMB, there are common factors as well as factors that is applicable for CMB. Overall speaking, no matter how different each bank changes in their NIM trends, we can come to a conclusion that the NIM is facing less pressure of decline and gradually rebounding. For the banking industry in the future, we are still facing pressure of further decline in NIM. The main factors also include, there hasn't been a very clear turning point of insufficient credit demand.

In terms of deposit repricing, it is basically finished. Therefore, this downturn of cost of liability has been slowed down as the impact on NIM. In terms of asset quality, in terms of property assets, it hasn't been fully recovered so we are not seeing very rapid rebounds in this area. In terms of NIM, we are still facing pressure. From my personal point of view, the most difficult time for NIM decline has already passed. We are also faced with many preferential factors. Under -- for example, under the current macro economy, especially our good monetary policy, scientific monetary policies, as well as the application for reasonable competition, our competition will be more reasonable, which is a good factor for our NIM.

Secondly, loan repricing is expected to finish within the year. If there isn't large amount of rate cuts, we think that lower pricing is also turning gradually stable. So my point of view is that although we are facing a certain extent of pressure in NIM, we will gradually enter a phase which is more stable. CMB will continue our management of asset liability and make good arrangements in asset structure. For example, on the premise of good asset quality, we will promote the reasonable growth of retail credit loan, and promote a growth of retail loans which is considered appropriate.

We will strengthen cost management for liabilities. In terms of deposit, we think that quality is more important than volume, so that we can contribute more to the stabilization of NIM. In the beginning of the year, we raised 3 targets. First, to narrow the decline of NIM, which I believe can be done. Secondly, maintaining market-leading position, and we are confident about that and thirdly, we strive to achieve stability in NIM. Thank you.

I will answer the second question. Intelligence transformation is the trend of the time and also an opportunity for CMB since 2024. We have leveraged AI to help CMB transformation. We have intensifying our efforts in that regard. In our employees' daily workflow, AI has been implemented and playing effect. The working items we identified with AI empowerment has been over 1,000. We have achieved 13.88 million equivalent employee working hours contributed by AI. AI has been playing its impact spanning front, middle, and back offices. You mentioned that you hope to learn about what are the specific influence to our businesses. I want to give you two examples.

One, our Golden Sunflower client operation. Currently, RM Assistant is playing good effect of AI for Golden Sunflower RMs. We are also seeing that for -- all of the bank-wide relationship managers for Golden Sunflower clients are using AIs and achieving possible impacts. In the first half of the year, the average effective outreach customers per RM increased by 14.65%, with average transaction value per client increased by 35.82%, generating good effects. In terms of corporate credit, currently 90% of the content in the due diligence reports for small business can be generated assisted by AI.

In the in-lending stage, AI can help with extraction of key information and assisted its decision. So the average service time reduced from 36 hours to 2.17 -- 2.72 hours and the tender guarantee can be issued within minutes. And AI -- the adoption rate of AI monitoring results for loans has been 68%, and the RMs can resolve risks in advance, and the alert triggering time has reduced by 45 days as compared with traditional mode. Currently, on the basis of China Merchants Bank 15th 5-Year Strategic Plan, CMB has more specific and detailed arrangements regarding AI empowerment and impose a high target. We are having full range deployments regarding this area. Thank you.

Next question is from May from UBS.

Thank you, senior management, for giving me this opportunity. I am May from UBS. I have a question about the dividend payout ratio, the dividend policy. We can see that the state-owned banks, they increased their interim dividend payout ratio by 1 percentage point from 30% to 31%. While for CMB, you maintain that a 35% level. However, under such environments, will CMB consider to further increase your dividend payout ratio and for your corporate loan business, you have seen quite good increment. Will that consume a lot of capital and in the future, how do you plan your capital position and the RWA development?

Thank you for your question. For China Merchants Bank, our dividend payout event, we have been authorized by the shareholder meeting and also the board of directors. We have a rather corresponding arrangement. We understand that the capital markets has been paying special attention to this matter. We have also communicate with our investors to understand better about the capital adequacy ratio and also the RWA growth rate and capital position. At the end of June, we have held a shareholder meeting. In answering a question about our market value arrangement, we have provide relevant answers.

We will, based on our capital adequacy ratio, to coordinate the asset growth, the asset return, and the financing of capital, and also dividend payout management, and also the market recognition, and to finally realize 2 targets. One target is the risk remain under control for the bank's operation, and for the second perspective, to value investors and shareholders' requirements, their demand, and provide return, and provide value creation for our shareholders.

Our mindset and the efforts we made are also based on what we have listened to our investors and shareholders. Based on these consideration, we have making plans in our RWA growth. In our capital adequacy ratio and dividend payout ratio, we have always followed one principal, that is to balance the development of both light and heavy assets, and also arrangements. Under such guidance, I think we can understand this matter from 4 perspectives. One is to guarantee the enhance of our return, to optimize the allocation of our resources, enhance the utilization rate of our capital.

Second, scientifically manage RWA growth rate. It means that we need to be more efficient in using our capital and reduce the idle occupation of capital.

Third is what we have always been adhering to, that is the internal generation of our capital, endogenous generation of our capital and fourth is the recognition given by the market of the value of a valuation of CMB. To maintain our good market image, to make sure that we had -- can have a better market valuation and deeper recognition from the market, we have multidimensional consideration and thoughts. We will take full consideration of the opinions from every perspective, from investors, from analysts. They are also serving as very important channel of comments and also we should also be aligned with our own operation. Thank you for your question.

Next question is Gary Lam from HSBC.

Hi, senior management. I am Gary from HSBC. I have a question about fee income and AUM. We see that your fee income increase accelerates in the second quarter. Will that trend continue for the next half? Your retail AUM reported quite fast growth rate, which was annualized to 15%, faster than the deposit growth rate. I would like to understand what is the underlying reason behind, what is the underlying driver of these phenomena and at the same time, we see that in the wealth management income, the driver has been changing possibly they are driven by the agency distribution of mutual fund and wealth management products less from bank insurance products.

In terms of future developments, could you leverage the growth from mutual fund and wealth management product to offset the decline from bank insurance?

Thank you very for your question. It will be taken by Ms. Wang Ying.

For the first half, CMB's AUM has grown at a good pace, hitting a record high of CNY 1.63 trillion, 7.96%. The wealth management products are giving a full play, and we have also seen new growth drivers in the structure. Non-deposit AUM accounts for a higher proportion, excluding the third-party market value. So 85% of the growth are coming from non-deposit assets. I think that is highly relevant to the high growth rates of our equity-related products, for instance, mutual fund, third-party depository payments, trustee, and et cetera. They have all realized quite good growth and also bring us the change in the structure of growth.

Of course, in customer base, we also see good performance in the both Golden Sunflower and Above customers are having higher AUM growth rates compared with the same period of last year, and also that the average level of all customers. In wealth management scenarios, for instance, pension, cross-border business scenarios, we also see faster AUM growth. In income contribution, wealth management relevant AUM yield has created better return compared with other type of products.

You just asked us what is the underlying logic behind our AUM growth. I would like to conclude in the following aspects. I think it is relevant with CMB's capability that we have long accumulated in terms of wealth management capability. It contains three tiers. That is to provide both product and policy products. The second is customer relationship managers and also our wealth management consultant and investment consultants. They are forming a team to provide combined allocation service to our clients, and third, our long-time convenient service we provide for clients.

For us, we understand that AUM growth is not just relevant to wealth management business. It is more relevant to all retail banking business. It is also closely relevant to settlement and payment. Our debit card, our credit card, whether it is of good use, whether it is safe, whether it is convenient, whether it is the first choice for our users. For our clients, they might not be using CMB for purchasing wealth management products only, they also would like to make transactions within CMB. They would like to use the CMB account to be the principal settlement and payment account.

They are willing to buy wealth management products within CMB. They would like to use credit cards with CMB. They would like to use debit card with CMB. I think behind the AUM growth, indicators could not be seen or analyzed isolatedly. They are working with each other as a whole. As I answered the last question, the most important thing is we have a strong support of such a large customer base, such a large talent team, and such a diversified channels.

How do we leverage a strong technology infrastructure to break the silo among different database? This is very important for us to provide a very smooth service to our clients. So AUM growth, income growth, could we maintain such high speed? Well, for us, CMB's AUM structure is quite light. It is very capital oriented -- capital market oriented. Wealth management business are accounting for a high proportion of this business. So it is quite hard for us to say that we can maintain a very high-speed growth because it is relevant -- highly relevant to the capital markets, the development, and transaction itself. But for a long period of time, we will continue to maintain our growth speed.

Next, we invite Zhang Shuaishuai from CICC.

Thank you for giving me the opportunity. I am Zhang Shuaishuai from CICC. My question is regarding management. Previously, when senior management is doing roadshows, you mention synergy a lot. This is a very important concept because currently the market is limited and many banks or institutions are seeking profitability from management. By various metrics, CMB is a leader in synergy. So I want to ask the management, how does management achieve effective synergies across business lines, among branches or subsidiaries, not just in words, but in practice, how to maximize cost and resource efficiency? That is my question regarding management and synergy.

Thank you for your attention on synergy. This is a question that I would like to address on. As you mentioned, on every level of CMB, including our subsidiaries, between branches, between head office and branches, across business lines, we have achieved good results in synergy. There are a few supporting factors. There are 5 perspectives. Firstly, we have set up a mechanism for synergy. For example, regarding cross-institutional synergies, we have designed the dual attribution and shared rewards mechanisms. This design is helpful to the effect of synergy.

Secondly, the design of performance-driven incentives. In our assessments, we have put in the assessment and give a great attribute to synergy. For different institutions and head office departments, we have given assessment indicators for synergy.

Thirdly, model innovation. An institution needs a mature model for synergy. We have a mechanism incorporating investment banking, private banking, commercial banking, scientific research, et cetera. So based on this very effective model, different institutions can have good collaborations.

Fourthly, a corporate culture. Synergy is not a task that is promoted with administrative forces, but a corporate culture that is internalized into the bank. Many different business lines and institutions will proactively embrace the concept of synergy in CMB. This is my feeling.

The fifth point is about organizational enablers. Our organization structure is beneficial to the operation of synergy mechanism. Many departments, many structure designing is based on a consideration of synergy. For example, we have set up a synergy committee bank-wide, and President Wang Xiaoqing is the head of the committee, so that we can promote synergy via organizational structure.

I think the above mentioned five perspectives are a very good and very important factor to promote successful synergy within CMB. Apart from the five mentioned perspectives, there are also two extra factors. Firstly, we adhere to and pay high value to the synergy concept, including the board of directors as well as our senior management. Each CMB employee would have such kind of concepts in mind.

Secondly, our data system and system design is a good support to the measurement of synergy effects, and which contributes to the performance incentives. This is very important for a synergy mechanism building. So we have top-tier awareness and fundamental technical system support. This is my answer to your question. Thank you.

Due to time constraints, we will now take the final question. To ensure the rights of individual investors, we have collected questions from individuals as most of them overlap with the questions we just mentioned. Now, I would like to choose one of the -- one representative one for answer. Now please read out the question.

The question is: "The country is encouraging companies and enterprises going global. CMB began its internationalization efforts 20 years ago." My question goes to Mr. Wang. What is the future direction of CMB's international development strategy? Are there any adjustments compared to the past? Are there any specific targets for international development?

Thank you for the question. International development is an important component of CMB's 15th 5-Year Strategic Plan, and also one of the transformation initiatives of our core initiatives. Regarding the background of internationalization, one of them is the Chinese enterprises going global, and also the international development of the renminbi. Another factor is the periodical interest rate gap between domestic and international interest rates and some enterprises can benefit from the pricing gap. China Merchants Bank pay high attention to international development.

In terms of global presence and development presence, we have one subsidiary bank in Hong Kong and CMB International, and we have 6 overseas branches. This is our overseas presence. When I mentioned about the growth drivers for the medium and long term, I also mentioned international development. In terms of global presence, we do not have as much business presence, business outlets as compared to the large state-owned banks so we have to adopt practical measures.

What we hope is that we can better serve Chinese enterprises' global operation. Especially, we hope to do well in cross-border financial services to these clients. We also serve the foreign enterprises who are having their presence in China, leveraging our cross-border finance service system. Even though we do not have as many business outlets globally, cross-border finance of China Merchants Bank has formed advantage for China Merchants Bank.

Many clients have given us feedback that our cross-border finance team is very professional and have delivered very responsive services. We hope to consolidate these advantages.

We will fully leverage the current institutions we have. In the working conference for the first half, our development pattern will be the one plus one plus five development. The first one is head office, which is the strategic guidance, and the other one is our institutions in Hong Kong, which is a very important business hub for us in Hong Kong. The number five represents New York branch, Sydney branch, Luxembourg branch, and Singapore branch and the others, which forms the 5 major overseas business institutions. They are serving as the regional hubs of our overseas business.

Institutions in Hong Kong is the China Merchants Bank Global Custody Center, Communications Center, and other business centers. CMB will continue to increase resource input in that regard. In the past, we have served a lot of companies with global presence and accumulated experience. In the process of serving these clients, we have also increased our capacity, our tech capabilities, and experience.

So we will further serve these industries -- serve these companies who are the lighthouse companies to improve our product offerings and accumulate capacity and experience from the lighthouse enterprise and leveraging this experience to serve more clients. Thirdly, bank-wide, CMB will cultivate more and more international talent team. Fourthly, we will make full use of our channels like -- partner channels, like agent banks, so that we can build an express highway that connects the major financial institutions globally. More importantly, I think we need to improve our capacity in risk recognition capability.

As for CMB, we continue with conducting our operation within the boundary of our capacities. We will continue to build up our capacity, but we will not do businesses outside the range of our capacity. That is my answer. Thank you.

In the interest of time, we will conclude the meeting here. This is the end of the meeting. If you hope to learn more about the details, you can go to CMB official website for the interim report of CMB. If you hope to get further explanation of detailed questions, you are welcome to contact CMB IR team for further communication. Thank you again. Goodbye.

Dear investors, analysts, friends from the media, good morning. CMB 2025 Annual Result announcement will now begin. I am Head of the Office of the Board of Directors of China Merchants Bank, Xia Yangfang.

We have released the 2025 annual results last Friday. And this conference will be carried out both offline and online webcasting.

Now please allow me to introduce the attendee of today's on-site meeting. Sitting on the podium, they are Mr. Miao Jianmin, Chairman; Mr. Wang Liang, President; Mr. Peng Jiawen, Executive Vice President, CFO and Secretary of the Board of Directors; Mr. Xu Mingjie, Executive Vice President and Chief Risk Officer; Mr. Zhou Tianhong, Chief Information Officer.

Joining on-site and online, we also have Non-Executive Director, Mr. Zhu Liwei; Independent Director, Mr. Tian Hongqi, Mr. Li Chaoxian, Ms. Li Jian, Mr. Wong Yuk Shan, and Mr. Lu Liping, and also relevant Heads of Department of CMB.

On behalf of CMB, I would like to extend a warm welcome to your participation, and thank you for your long attention, support and investment in CMB.

Today's meeting will have 2 sessions. One, we will invite Mr. Miao, Mr. Wang to introduce the bank's 2025 result, which takes around 30 minutes. And the second part is the Q&A session, which takes around 1 hour and 30 minutes. The meeting will be provided with Chinese to English simultaneous interpretation.

Now we will have the floor to Chairman, Miao; and President Wang on CMB's 2025 performance.

Dear investors, analysts, friends from the media, good morning. Welcome to CMB's 2025 Annual Results Announcement. Today's results announcement will be introducing contents of 3 parts. First, I will introduce group's 2025 annual results. And then I'll give the floor to President Wang to introduce the operational information and then I will briefly introduce our outlook and strategy for the year 2026.

In 2025, we seek to quality, efficiency and scale, coordinated development and strive to build a world-class value creation bank and speed up our transformation towards the full initiative development and promote high-quality development, maintain good operations amid stability and strong resilience and innovation vitality, which was reflected in 5 parts.

First, we remain steady in terms of our operation, and we cope with the downward trend of the interest rate in sufficient demand and growth pressure. Our revenue and profit realized both dual growth ROAA and ROAE maintain a leading in the industry.

Net operating income RMB 337.2 billion, up by 0.05%. Net profit attributable to the bank's shareholder RMB 150.2 billion, up by 1.21%. ROAA, 1.19%; ROAE, 13.44%, down by 0.09 ppt and 1.05 ppt year-on-year.

Net interest income, RMB 215.6 billion, up by 2.04%. NIM was 1.87%, down by 11 bps year-on-year, with a narrower reduction and maintain a leading level in the industry, influenced by the fluctuation in the bond market. Non-interest net income, RMB 121.7 billion, down by 3.31% year-on-year, among which net fee and commission income increased by 4.39% year-on-year, which is recording the first positive growth since the year 2022. We seek to refine management and continue to promote reduction in cost and maintain a cost-to-income ratio of 32.01%.

Secondly, we maintained growth in asset and liability and maintain our advantages in low funding cost. Assets exceeding RMB 13 trillion; total loans and advances, RMB 7.26 trillion, up by 5.37%. General loan RMB 6.94 trillion, up by 6.57%. Total liability, RMB 11.79 trillion, up by 7.98%. Total customer deposit RMB 9.84 trillion, up by 8.13%. Demand deposits daily average balance account for 49.4% remain at a high level. Interest-bearing liabilities average cost ratio 1.26%, down by 38 bps year-on-year, and we maintain our advantages in low funding costs.

Thirdly, we consolidate our structural advantages and have strong capital strength. Non-interest income accounts for 36.08%, maintained leading in the industry. Net fee and commission income accounts for 61.85% of the total non-interest income. Retail finance makes over half of the contribution. Its net operating income and pretax profit account for 56% and 50% of the total.

And we also maintained quite good level of CAR under the advanced measurement approach. Core Tier 1 CAR, Tier 1 CAR and CAR were 14.16%, 16.51% and 18.27%, down by 0.7, 0.97 and 0.81 percentage points compared with the end of last year. Under the weighted approach, the core Tier 1 CAR, Tier 1 CAR and CAR were 11.92%, 13.9% and 15% down by 0.51, 0.73 and 0.73 percentage points compared with the end of last year. All levels of CAR's decrease was mainly influenced by the interim dividend payout and the reduction of OCI.

Fourth, asset quality remained stable and risk compensation capability remained to be robust. NPL balance, RMB 68.2 billion, up by RMB 2.6 billion. NPL ratio, 0.94%, down by 0.01 percentage point. Credit cost 0.6%, down by 0.05 percentage points. Allowance coverage ratio 391.79%, down by 20.19 percentage points. Loan loss reserve 3.68%, down by 0.24 percentage points, maintaining a high level of risk compensation capability.

Fifthly, we strive to build a digital and intelligent CMB and actively practice ESG philosophy. We focus on AI, increased IT input and talent reserve. In 2025, our IT input was RMB 12.9 billion, accounting for 4.31% of the bank's net operating income. R&D personnel exceeded 11,000 people accounting for over 9% of our total employees.

We have an open mindset and embrace cutting-edge technology rollout and implement application and strive to build up our AI systematic advantage. We construct a leading, intelligent, computing infrastructure, model performance and computation efficiency continue to increase. Our core computing rate, our token cost has reached an industry-leading level. Our average token throughput has increased by 10.1x compared with that of 2024. Our bank-wise large model developers exceed 10,000 people, and we continue to introduce the cutting-edge model and implement domain-specific model as many as 183. Our average iteration cycle significantly shortened as well. We deeply implement this technology into our business ecosystem and implement over 800 applications and realize both tech and business value.

We build our intelligent era, organizations and teams and construct talent pipeline that are cross functional. We promote deep integration of technology and business and build such intelligent organizational ecosystem. We incorporate ESG philosophy into the bank's development strategy and decision-making and promote sustainable development. We promote the development of green finance and enhance our green operation capability.

Green loan, green leasing balance grew by 21% and 23.89%. We assist enterprises to issue nearly 100 ESG bonds and raise their firms to support energy conservation, clean production, clean transportation and other industries. We attach great importance to green investment. Our companies and subsidiaries are holding more and more balance of green loans, green bonds and ESG products.

We continue to strengthen our green operation and deepen the carbon emission reduction and enhance our own carbon management refined level. We continue to enhance the quality and efficiency of serving real economy, tech, green, inclusive and manufacturing loan balance have taken up more and more proportion. And mentioned, MSCI ESG rating has received the highest level of AAA rating for 2 consecutive years. This is my brief overview of the 2025 result.

Now I'll give the floor to President Wang on the bank's operational information.

Thank you, Chairman Miao. Now I'll introduce the bank's 2025 operational information. The year 2025 is an extraordinary year facing multiple challenges under the leadership of the Board Directors, we have with good pressure, maintain determination and promote the international comprehensive, differentiated and intelligent transformation and maintain a good trend of operational results and our business are moving towards new and better direction and building up our own strength and competitiveness, which were mainly reflected in the following 5 parts.

We continue to consolidate our customer base and our business development are both directing towards good volume and quality. We remain customer-centric and strengthen high-quality customer acquisition and strive to build our -- build ourselves into clients' principal bank and first bank to approach.

Retail customers totaled 224 million, up by 6.7%, among which Golden Sunflower and above clients, 5.93 million, up by 13.29%. Customers holding wealth products amount to 64 million, up by 10.15%. For corporate customers, it was totaled 3.62 million, which was up by 14.4%, among which corporate customers newly acquired reached 657,000 serving tech clients as many as 350,000. And for corporate withholding customers, their amount was 1.53 million.

We also optimized category asset allocation. Total loans and advances account for 55% of the total asset. Retail loan accounts for 51% of the total loans and advances and investment assets accounts for 31.77% of the total assets. Interbank assets account for around 7.36%, down by 0.02 percentage points. Bill discounting account for 4.43%, down by 1.09 percentage points.

We continue to strengthen liability management and enhance the proportion of high-quality liability. Total deposits account for 83.43% of the liability, up by 0.12 percentage points. Core deposits daily average balance account for 87% of the total customer deposits daily average balance, up by 1.17 percentage points. Interbank deposits grew rapidly. Its demand deposit account for 93.77%. Customer deposit cost ratio 1.17%, down by 37 bps. Interbank deposit cost ratio, 1.02%, down by 29 bps.

Secondly, our 4 major segments are developing in a balanced and coordinated manner, and we are showing stronger development resilience. First, we secured a dominant position of retail finance and our leading advantage were further consolidated. Retail AUM balance exceeded RMB 17 trillion, up by 14.44%. Year-round increment reached RMB 2.16 trillion, hitting a record high. Retail customer deposits totaled RMB 4.5 trillion, up by 11%. Retail demand deposits, daily average balance accounts for 47% of the total. Retail loan, RMB 3.72 trillion, up by 2.07% market share growing steadily.

We strive to overcome adverse factors such as weak demand and consumption, our credit card business continued to grow in their market share. Active credit card users surpassed 70 million, developed against the trend. The transaction value was RMB 4.08 trillion, down by 7.62%. Credit card loan amounted to RMB 939.1 billion, down by 0.92%. The credit card transaction value and loan balance remain leading in the industry. And secondly, we speed up to build our characteristic in corporate finance and build up our strength in specialized segments. The FPA balance was RMB 6.73 trillion, up by 11.08%.

Corporate loan balance, RMB 3.22 trillion, up by 12.29%. We focus on modern industrial system. We prioritize our loan granting in tech, green, inclusive manufacturing and other industries and increase our competitiveness.

Corporate deposit balance RMB 5.34 trillion, up by 5.46%. Corporate deposits are accounting for 50% of the total. And retirement finance improve in both quality and efficiency. Annuity and trust surpassed RMB 300 billion pension fund under custody RMB 1.55 trillion. Private pension accounts exceeded RMB 15 million and contribution was among the top in the industry. Transaction banking focused on the trade finance and treasury management needs of the corporate customers. The number of customers using treasury management cloud further specialized.

Third, Investment Banking and Global Market business further specialize and innovate. FPA contributed by IB business grew by 10.38%. The bank, as lead underwriter that instrument was RMB 579.16 billion. Number of clients in GM business of client flow trading and transaction volume both grew. RMB bond investment transaction value grew by 1.96x. Bill discounting business grew by 12.89% ranking second in the market. Fourth, wealth management and asset management continue to expand.

We enhanced asset allocation capability grasp opportunities arising from the capital market and the wealth management business experienced robust growth. Three asset allocation clients was amounted to RMB 11.76 million, up by 13.31%. Retail wealth management product balance grew by 12%. Agency distribution of non-money market fund, trust scheme and premium -- insurance premium grew by 18.13%, 150.65% (sic) [ 155.65% ] and 25.93%. (sic) [ 25.96%. ]

Corporate wealth management product balance reached RMB 524.9 billion, up by 31.28%. Asset Management business totaled RMB 4.71 trillion, up by 5.13% as a custody scale, it ranks among the top in the industry, reaching RMB 26.09 trillion. Extensive wealth management income grew by 16.91%, top for the past 3 years and accounting for 52% of the total fee and commission income and increased by 5.78 percentage point.

Fifth, we speed up the business development in key regions and enhanced the contribution brought by the branches in these areas. We have 16 branches in key areas and their customer base, AUM, core deposits and other key indicators are having higher level of growth than the average level of other branches.

And retail AUMs proportion increased by 0.79 percentage points, and the corporate loan balance account as proportion was up by 0.12 percentage points. Third, for international and comprehensive development, we actively build up our new strength. We actively serve Chinese enterprises going global and resident needs of making global allocation of their assets enhance our service capability.

The overseas contributions are making more and more contribution. Their total asset grew by 12.88%, and the net operating income grew by 33.78%. Institutions in Hong Kong grasp opportunities and make good performance. Their total assets grew by 13.84%. Net operating income grew by 36%. Net income grew by -- net profit grew by 63% and CMB Wing Lung Bank's retail AUM grew by 22.14% for CMBI. The number of Hong Kong IPO underwritten and sponsored actually ranked #2 and #4 respectively.

For cross-border business, it shows strong momentum. Number of corporate customers in respect of international BOP exceeded 100,000 and the volume of international BOP grew by 12%. We deepened our comprehensive development and subsidiaries delivered various performing highlights. Their total asset was RMB 952.8 billion, up by 11%. Their operating income accounted for 12.26% of the group's total, up by 1.96 percentage points. Net profit, RMB 16.38 billion, up by 41%.

CMB leasing focused on new energy, new infrastructure, new tech, new mobility, and new intelligent manufacturing and new material, aka to 6 new industries to build their service mechanism. Their total asset was RMB 325.3 billion, up by 5%. CMB Wealth Management's product scale, RMB 2.64 trillion, up by 6.88%, maintained the top in the industry and equity-related products actually increased in their market share.

CMB Fund has managed a total scale of RMB 961.5 billion, up by 9.29%. CIGNA & CMAM insurance found under Fiduciary Management RMB 223.3 billion, up by 23%. CMB Investment commence operations, and we make new breakthrough in the layout of our comprehensive development.

Fourth, we upheld bottom line of risk and compliance, enhance risk management capability and have an even stronger solid foundation for development. We strictly classify assets and fully expose risks, actively resolve risk assets and maintain a good management of credit, market, operational liquidity and compliant risks and other type of risks. Our asset quality remains stable.

Special mention loan ratio 1.43%, up by 0.14 percentage points. Overdue loan ratio, 1.25% down by 0.08 percentage points. NPL to loans overdue for 60 days ratio was 1.18%. NPL formation ratio, 1.03%, down by 0.02 percentage point. As we are facing with the profound adjustment of the real estate market and rising individual risk, some mismatch in supply and demand in some industries, we seek to risk-oriented approach and dynamically adjust risk strategy and resolve risk in key indicators.

Corporate NPL ratio, 0.89%, down by 0.17 percentage points. Property NPL ratio 4.78%, down by 0.16 percentage points. Manufacturing NPL ratio, 0.43%, down by 0.06 percentage points. Retail NPL ratio 1.06%, up by 0.1 percentage point. Residential NPL ratio was -- residential mortgage NPL ratio 0.51%. Retail SME NPL ratio 1.22% and credit card loan NPL ratio, 1.74% and consumption loan NPL ratio, 1.02% all remain at a relatively low level in the industry. Fifth, we strengthen the management and innovation to promote a high-quality development and we have strong core momentum for future growth.

First, on one hand, we consolidate our foundation and conduct refined management. We consolidate our management to strengthen asset liability, forecast, operations, service and team management so as to guarantee our high-quality development. On the other hand, we continue to promote our innovation capability and maintain a leading technological capability.

We consolidate our technological foundation. The overall accessibility or availability of the cloud has surpassed 99.99%. We use hybrid deployment, elastic scaling and other technologies to increase the input/output ratio of cloud. Big data service has covered over 76% of the business personnel. We have been implemented large model in 4 business scenarios and saving 15.56 million men working hours and effectively enhance our efficiency.

We upgrade retail Xiao Zhao, intelligent service and construct AI Xiao Zhao service for the corporate clients. We speed up to build our AI organization. Over 98% of the personnel has already passed the preliminary level of competency certificates and adapt to the change of the technological risk condition in the AI era.

The above mentioned is the major operational information of the year 2025.

Now I'll give the floor to Chairman, Miao, on the 2026 outlook and operational strategy.

Now I will briefly introduce the company's outlook and strategy of 2026. Looking into 2026, for the banking industry, challenges and opportunities coexist. On the one hand, the external environment are exerting greater impact. And we see a pricing risk and in geopolitical condition, the world economy are sluggish, multilateralism, free trade are under severe threat. The new and growth driver continue to switch, and there are strong imbalance between supply and demand.

The market expectations tend to be weak, and the bank are continuing to face with the 3 lows: low interest rate, low interest spread and low fee rate, and they are taking pressures in their profitability. On the other hand, for Chinese economy, the supporting condition and the future condition has not changed, that the economy will continue to be developing in a good momentum, along with more proactive fiscal policies and monetary policies, we seek to make domestic demand in the dominant position, build up strong domestic market, and we believe that there will be more favorable factors for the operation of commercial bank.

In the year 2026, we will stick to our value creation bank strategy and continue to promote our 3 capabilities of wealth management, digital and intelligent technology and risk, expand our moat and explore a new layout of high-quality development.

Firstly, we will maintain our strategic determination and follow the developing principle of the banking industry focusing on high-quality tech self-reliance, strengthening the domestic market and high level of opening up and other key areas to seize opportunities and seize the customer need, strengthen the capability of innovation and promote professional differentiated, comprehensive financial service to clients and maximize our value that we can bring to customers, employees, shareholders, partners and the society.

Secondly, we will focus and sell through the cycle and maintain our competitive edge. In the low interest rate cycle, we will make sure that we will pay more attention to stabilizing the NIM and maintain industry-leading level. Secondly, we will build up our strength and make up for what we are not good at and strengthen our asset allocation capability, maintain our strength in wealth management business. Third, we pay special attention to the pricing and risk management of credit assets and maintain good asset quality. Fourth, we will promote the reasonable growth of RWA, optimize the capital allocation and maintain high level of CAR.

Thirdly, we will seize opportunity to speed up the transformation of the 4 initiatives and build up the new strength, speed up international development and promote overseas institutions to achieve high-quality development, build up our cross-border business and help enterprises going global, promote the comprehensive development of our subsidiaries and increase their contribution to the bank. So to build up our differentiated competitive edge, consolidate our systematic advantages in retail finance and speed up to form a new growth pool in key areas. And we will also speed up our digital and intelligent transformation, stick to AI-first philosophy and build up an intelligent bank, realize the model upgrade and construct our new mode in the new era of AI.

Fourth, we will build up our resilience to promote the balanced and coordinated development of the 4 business segments. We'll consolidate the dominant position of retail finance, build up our strengths in corporate finance and promote a stronger and better IB and Global Markets business and speed up the development of Wealth Management and Asset Management business and promote these 4 segments to promote each other and support each other in a higher level and construct a more resilient and competitive business development layout.

Fifthly, we will guard our bottom line to consolidate a fortress-style risk and compliance management system. We will stick to prudent and steady risk culture, enhance our capability to judge -- to understand the market, prevent credit risk, market risk, operational risk, liquidity risk and other risks and strengthen AML and internal control management to make sure that CMB could remain steady and resilient in the path of high-quality development.

Thank you.

Thank you, Chairman and President. Now we will enter into the Q&A session. We will have the questions from the investors and analysts first and then from the media. As we have many participants today, please follow the instruction given by the operator to raise your question, and please limit your question to 1 only. Please raise your name and the agency you represent before having the question.

Now we'll have the first question. [Operator Instructions] The first question, please, from this gentleman.

I'm Richard Xu from Morgan Stanley. And congratulations first for the brilliant results that you have achieved in 2025. And also you have achieved very good results in retail even within this very turbulent external environment. So my question is for the Chairman first. So this year is the start year of the 15th 5-year plan. And what is the plan or strategic vision or expectation from the Board to China Merchants Bank. And nowadays, we have seen very same very fierce competition among the banking sector. So against this backdrop, how can Board ensure the market-oriented mechanism of China Merchants Bank so as to expand its advantage -- competitive advantage?

Currently, I think the banking sector is still in a downward cycle. So banks are facing very down mounting challenge. And during the 15th 5-year plan, our requirement from the Board to China Merchants Bank is to stick to the high-quality development and accelerate innovation. It means the high-quality development and stay to the true course. It means to be professional to be market-oriented road. And this is a key to the high-quality development. And also, at the same time, need to have innovation so as to consolidate our strength and also to be differentiated from the peers, and also to accelerate the transformation so as to responding to the challenges, which has been brought out by the downward cycle of the market. And also, what we have seen is to be internationalized and to be more comprehensive operation and also digitalization intelligent banking and also to be differentiated from the peers. These are very 4 key elements of the banks.

In terms of internalization, we have achieved quite obvious results in the past 2 years. In terms of the comprehensive operating management, the subsidiaries of the banks are contributing more to the bank's operating income. So this is a very good advantage of CMB as well. And differentiated positioning is also CMB's advantage. From the Board, the business model for CMB will be, that we have advanced business model and also innovation driven and also to have the distinctive feature and also to be the first-class bank, which can create value for -- create value. So this is very important also the moat for CMB.

Finally, there will be the digitalization and an intelligent bank. In the past, we have been advanced and also better than peers in terms of technology. Now our -- we want to build up the first digitalization bank among the industry. And later on, we will have our Chief Information Officer, who can supply more. So, market-oriented mechanism is the backbone of CMB. And I think that the reforms of the remuneration system will not affect CMB's market-oriented system. So for CMB, the gene or internet is the corporate culture of CMB. So this is the moat of CMB.

And in the past, some of our analysts and also customers are expecting or thinking that different -- have CMB has different moats such as the low cost income -- low-cost funding source, some say that is the retail. But I think the very basic one of our moat is the customer-centric culture, and this has been our corporate culture and is the key our foundation of our business, because we are customer-centered and customers have good experience with the bank. That is why they want to bank with CMB, also deposit with CMB. And the deposit with CMB doesn't mean that they only want to put some money in CMB, but they want to do the financial trading and financial asset management with the CMB. That is why we have the lowest funding cost among the banks. We have the highest demand deposit ratio among the banking peers.

So the Board's requirement is to deepen reformation and accelerate internalization and also differentiation. And these are to be intelligent and to be comprehensive operation. So this is very important for CMB.

And then I would like to invite Mr. Zhou to supply more for the intelligent banking.

So for the past years, we -- one of the very key issue strategy for CMB is to have technology leading bank. And from last year, we also have made a plan for the next 5 years technology development. So -- and we have fully arrangement plan for the next 5 years.

And I think in the next 5 years, the key is to be technology-leading is one of our key strategy. And we all know that AI has been a very important trend. And from -- at the end of 2022, the Chairman has a requirement for CMB is to build ourselves into one of the first intelligent bank among the industry. So we have made quite a lot of efforts on that front.

Now in terms of large model, we have made quite good achievement in 2024. We have more explorations and have experience -- has gathered experiences. And Mr. Wang Liang put out the idea of the AI-first strategy, saying that among the whole bank to expand the application and also the mindset of the AI-first strategy.

So firstly, we have upgraded our organization and team, which are more applicable to the AI era. And especially large model is a very big breakthrough in the technology history. But it cannot substitute fully the human intelligent. And to some extent, it can be replaced. So we have a kind of analyze about what people are more good at and what AI models are better at and how AI can assist or to be separately work together with our human staff.

We have analyzed around 1,580 projects and to analyze how AI can assist on how AI can help with the work. And we have quantitative data on that and some are, say, high-value projects and some are mid-value and some are low value. So, for those high-value projects, which AI can assist more, then we will have more resources to put on. So 69% of them have been already implemented.

Altogether, there will be 856 projects that have been implemented or we can call it a scenario that have already been applied among the whole bank. And just now we have in the results announcement brief, the Chairman said we have already implemented this AI application in 856 scenarios. And now we are accelerating the place, so as to analyze and improve the important business procedures.

And secondly, I think that AI development is very -- have a very big difference to the traditional software engineer software. So it means that there will be high uncertainties where we are upgrading AI model.

So for CMB's experience that we think that 6x of upgrading before we can really put the large model into practice into real work or into real practice. So last year, we have made quite good results in the application of the large model. The upgrading period has been shortened to around 8 days of this model. So -- which means that it's faster for us to apply this large model.

And for 2025, so we have achieved quite results in 2024, which shows that for the large model application in CMB, the depth and the width of the application of AI has been expanded in a very fast manner. And I also would like to share with you why important data in this regard. In 2024, the daily throughput of the token is around 10.1x of what we have in 2024. So it's a very fast speed.

And daily average token throughput is RMB 25.6 billion. And in important areas, the AI large -- the application of the large model has already exerting -- have taken effect is serving around 10,000 Sunflower customers. And we have over 10,000 assistants for our Sunflower relationship manager and also for how our corporate manager help them to improve the customer recharge ratio by around 14%.

And and also for corporate credit loan business and also the AI model is also helping them before loan granting and during the loan lending and also after that, especially for micro loans, around 82% of the micro loan, loan submission and also credit approval is done by AI and large model. So -- and they also -- and also accelerated the approval process of the micro loans, which is 44% faster than what we have last year. And also in the past, for the -- how we can implement the credit approval, approval conclusion in the past that has been done by human beings by the human staff, but now it's assisted by the AI at large model and the system will kind of follow how the credit approval conclusion has been really implemented. And also, it has speed up of our early warning system that is also better than our human staff.

And I think the early warning is 42 days faster than what we have in the past. So which you can see that it's both helping us in all fronts, improving business development quality and also improving efficiency. In terms of improving efficiency that for the whole year, it has saved around 15.56 million human -- working hour, has saved that. So this is efficiency improvement of the efficiency.

But we all know that AI is improving or is kind of upgrading in a very fast manner, but there is illusion. There's forge that the models are doing. So banks are the area that is highly regulated and need very prudent risk management. So we are fully kind of alert to the illusion of the AI. So and controlling risk is a very important aspect of AI. So, very importantly, we need to be very prudent in developing AI models, which can be reliable and also we have achieved quite good results in 2025.

In 2026, I think we will move on and doing more efforts in this regard, better to implement our digitalization and intelligent banking strategy.

Thank you. The second question, please.

Yan Meizhi from UBS. First of all, congratulations on the very good results in 2025, especially against this very complex environment. And last year, our operating income and profit are both have recorded positive growth is very good. My question is, if we look into 2026 or even forward, how we can expect the growth rate of the operating income and the profit growth such as to be accelerated to around 3% to 5%? And also another question is about our ROE. I know, CMB's ROE has been higher than other banks. Last year, it's around 13.44%. The average banking level is around 9% to 10%. So in the past years, for the ROE side, we are seeing the ROE has been declining for CMB as well. So if we look ahead for the next 2 or 3 years, how will you expect the ROEs bottom? So will be the bottom be around 10% to 11%? So my question is for Mr. Wang -- Mr. Wang Liang. Thank you.

Thank you for your confirmation in our -- of our 2024 results. Before going into your question, I think this year is the 20th year when we first IPO-ed in H-share. We have financed around RMB 31.3 billion in our H-share market raised fast fund. And our total dividend payout is around 2.6x of the fund financing that we have got in the H-share market. And the total CAR ratio of the share pricing is around 15.07%.

So I think that even though there is volatilities of our share price, especially during the financial crisis, I think for long-term investors, I think you can make quite a good return from CMB and also we continue to be very firm in creating value for our customer and also to have the return for the investors. And thank you for the long-term trust and long-term investment for our -- for the shareholders in CMB.

And that is why we can see our H-share's PB is higher than our A-share's PB. Thank you very much for the overseas investors, especially for our H-share investors.

And just now your question was about how we expect the operating and profit growth of our -- in 2026. I think that for the past years for operating income, we have been facing very big pressure over the past years. And this year is 0.01% growth rate. It's kind of the first time that we have recorded a positive income from 2023 and 2024.

Finally, it's a positive growth, even though it's a very small growth, but it's a very hard earned one. The small growth can also illustrate or demonstrate that we have been very resilient in our business growth.

And this year, why we are facing such a big challenge or pressure? I think, one of that is that, while our traditional advantage lies in retail, but retail business has been affected -- highly affected by the policy side and also highly affected by the external environment. So we try to make up the shortfall from the retail sector by moving up or have more growth on the other business sectors. And this year, we have a slight positive growth this year.

But whether we can continue to have the 3% or 5% growth in the next years, I think from the business indicators, we will be very proactive and to make efforts to achieve growth and also such as for the customer base growth and also asset and liability growth as well as especially AUM growth. So these are the preconditions for how we can make growth on the financial data. And in terms of the financial data for this year, our expectation is that -- we think that stable -- we will have stable growth. And also, we want to make improvement. We will try to make improvement in the stable growth, whether we can achieve that goal. It's hard to tell, but we will make efforts to own that, such as in the NIM sector, last year, we stood at 1.87%, 11 bps year-on-year decline. And this year, I think that the year-on-year decline of the NIM will be stably -- will be stably declined, but the magnitude of the decline will be smaller than last year.

Last year was a year-on-year decline of 11 bps. This will -- the decline will be smaller than that. The main reason is that from the policy side, I think that we are expecting more rate cuts and also the RRR cut this year. If there will be more rate cut, it means that it will affect our asset yield as well.

And the second reason is that when we are looking on the credit side, we are seeing that quite weak credit demand. There is very fierce challenge or competition for the credit. So people are trying to grow more volume. Banks are trying to grow more volume to make up the shortfall from the decline in interest rate. That is why we cannot see the end to a rebound of the interest rates. So this will also pose a challenge to our NIM to our interest income.

And the other sector is on the -- factor is on the liability side. On the liability side, last year, the funding cost has been down by 38 bps. Last year funding cost is already one of the lowest among banks. But among the peers, the room for us to further decline will be smaller, and that is why we are still facing pressure on the NIM side.

And in terms of the non-interest income, last year, we have seen fast growth on the wealth management fee income so as to make up the shortfall from other non-interest income. But this year, we'll continue to see other fee rate cut policies on such as a mutual fund. So this will also affect our fee income from the agency sales of mutual funds and challenge, that is also a challenge on the fee-based income.

And also the third uncertainty comes from risk sector. For the corporate sector is under control and also stably declining. But still, we are facing mounting pressure on the retail side, especially for micro loan consumption loan. So we try to control the risk so as to reduce the credit cost and to maintain a stable profit growth. These are the negative factors that we are facing. And why I say that growth on the operating income and also profit side, we are still under pressure. But last year, we are trending into a better direction. It's more kind of contributed by our active -- where we have active believe we tackled the challenges, how we have responded to that. So we have quite good results last year, which is -- you are seeing it stably turning to a better trend.

And as for the question about -- you also asked about the ROE, like this year, we have slower profit growth, but the growth rate for our equity and after the dividend payout, we still have quite a big volume of the equity, which is supplemented to the existing one. That is why equity is -- growth rate is faster than the profit growth rate, which lead to a decline on our ROE side. And ROE this year is 13.44%. And from the Board and also from the senior management, we highly emphasize the level of the ROE. As long as we have high ROE, we can have a relatively stable return to our shareholder. We are strengthening the management on our ROE to improve the return on our capital.

But my judgment is that, still we are facing the pressure on ROE decline or the trend will continue. Whether it will bottom out at around 10% or 11%, I think we will control the speed of ROE. I think 10% will be depending on the future external circumstances and also interest rate, I think the 10% will be a bottom for us to have a better control of our ROE because I think a bank if can maintain ROE of 10%, it means a good return for the shareholder. But we also compare that our bank's ROE and also the advanced banks in the world, we think that CMB is still in a leading position. So I think that we will try hard to maintain a sustainable ROE.

And for 2026 and for the next few years, I would like to conclude what we have Mr. Wang has just said. The first one is that the cycle is the same, namely the CMB's business cycle is the same, in line with the sector cycle, but we are -- the marginal performance of CMB is better than peers. No matter it's in a downward cycle or upward cycle, I think we are trending toward a more a better trend.

And thirdly, we still have our existing advantage during this cycle, even though our business cycle is in the same trend with the sector trend. But marginally, we can see we are improving and also, we have a very obvious advantage. This is a conclusion of our performance. This is my conclusion for CMB's performance in 2026 and continue forward.

We'll have another question from the on-site participant.

I am Gary from HSBC. I have a question about NIM outlook. We noticed that in the fourth quarter, your NIM was experiencing quarter-on-quarter growth, which is for the first time for the past 3 years, I would like to learn from the senior management. Do you expect the trend to be continuing in 2026? And when do you expect the turning point of NIM to be up here? How do we understand that?

Thank you for your question. So just now President Wang has mentioned a bit about the judgment about NIM. I fully commit that the direction is correct. In 2025, our NIM was 1.87%, down by 11 bps.

To see from quarter-on-quarter change, quarter 1 -- 1.91%, 1.86% and 1.83% and 1.83% in quarter 1, 2, 3, 4. There are some characteristics of our NIM. The declining trend continue, but the magnitude actually shortened. In 2025 the reduction was 70 bps. In the annual operation of our NIM, we see some rebounds in the fourth quarter. But there are 3 bps up on quarter-on-quarter change. And for the group-wise, that was 2 bps.

You can also see from our external change of the interest rate environment, there are some contribution given by these factors about our NIM. So there are quarter-on-quarter increase for the bank wise in terms of the NIM in the fourth quarter, in asset and liability management of the bank, we have made great achievement. In pricing, we have been quite following the self managing mechanism, and we have strictly followed the principle to give the loan pricing. So generally, we have improving the loan pricing condition.

The second perspective is that we have made achievement in improving our structure. We have increased the proportion of assets that are earning higher asset yields. Even though in the demand side, we are experiencing some pressure, but we strive our best to promote the growth in assets, and it has also contributed to the final results. In the fourth quarter, for instance, for some low earning assets, for instance, like bills, we have been reducing its proportion. So all-in-all, that factors contribute to the rebounds of our NIM in the fourth quarter.

You just asked about us whether this trend will be continued in the year 2026. So generally, I think my -- our judgment of the development of 2026, we believe that NIM will still decline, but we are having this wish. And we are having this judgment that the magnitude of decline will be smaller. I think this is a trend for the past several years as well.

You may expect to see the first quarter data that also was the beginning of the year. But when it comes to our judgment, generally speaking, the NIM will be somewhat lower than that of the quarter 4 indicator. The mainly influencing factors are still those external factors such as weak demand in assets, and it further leads to the declining in the loan pricing. And there are also some technical reasons behind. Last May, there are some LBR cut, and we have some floating pricing loans that will be repriced in the first quarter. That accounts for around 78%. There are around 78% of the loans that are to be repriced in the first quarter. So in the first quarter, it will be a concentrated period of time when we see the most amount of loans to experience repricing.

The other part is that deposits. The deposit repricing has not yet complete for the past year. But just now, President Wang also mentioned that deposit repricing for CMB, we should not neglect that CMB has quite a high proportion of demand deposit. We have not that much room to further decline in our deposit cost. So that in the liability side, the cost reduction will attribute less comparatively speaking. In 2026, NIM will continue to reduce, decline, but the magnitude of decline will be better than that of the past year.

We will take further measures of liability and asset management. We have made a very accurate and very comprehensive management. We have been asked by our Board to maintain a leading level in NIM and we aim to achieve these goals in the year 2026. The first is to realize the magnitude of decline of NIM to be smaller than that of the past year. And the second is to achieve the stability of NIM as soon as possible. We wish that we could achieve this goal in the second half of the year. And third, we can maintain a leading level in the industry about our NIM. Thank you.

Thank you. President, Peng. Let's just wait a second, and we have also got some questions from online. And I think the next question will be given to an online participant from Guotai Haitong Security, Zhu Chenxi.

Can you hear me? I have a question for President Wang. You have just mentioned that CMB has been listed for over 20 years. And you have taken us go through the history, for the past 20 years, such a long period of time, CMB is actually begin to develop -- think about its development model ever since the financial crisis in 2006. I think by that time, you actually penetratedly choose Retail and Wealth management as your development priority. And as we take a look back, this choice has made CMB a leading position ahead of our peers around 1 decade.

We have deeply plotted our choice to deeply develop retail finance. And we have experienced a glory brought by the retail strategy in the year 2017 to '21, which was also shown in the evaluation in the capital market. We have also experienced some pressure due to the change in the external environment. Standing in this time point and looking into the future, we are now in a new phase of economic development. How do you consider -- how does CMB consider a new competitive edge for yours in the future?

Thank you for your question. As you say, CMB has been listed -- has been adopting the retail strategy since the year 2004. We have forge our systematic strengths. And this strategy has bring us a lot of contribution in our overall development and retail finance has made over half of the contribution for us in terms of net operating income, in terms of profit and et cetera.

And of course, we have overcome some difficulties and experienced some pressure. The retail credit and the credit card business, they are all under external environment pressure and Wealth Management business, the agency distribution of fund management and about insurance policies, we are also experiencing challenges brought by the fee reduction. So this year for CMB, how to adjust ourselves, how to adapt to this new environment and maintain sustainable development, we need to have some new mindset. So on one hand, we have been developing a coordinated and balanced development of the 4 major segments.

The 4 major segments are Retail, Corporate, Investment Banking and Global Markets and also Wealth Management and Asset Management. So by consolidating the systematic advantages brought by retail finance, we will consolidate its contribution to CMB and speed up to build up our strength in corporate finance and corporate finance, especially for cross-border finance, manufacturing finance, tech finance and et cetera. They have all made good achievements. For IB and Global Markets business, they are becoming our new growth pole. Asset Management and Wealth Management business, they are all showing good growth momentum.

So these 4 major segments, they are coordinated and balanced and supporting each other. And for the second aspect, we will speed up our four initiative development, especially for the international development. For CMB, we propose to develop cross-border business overseas business, FX business. These 3 businesses will be the pillar of our cross-border finance development, our international development.

In comprehensive development, we will give full play of our full licensed characteristic and enlarged our subsidiaries development and to make sure that these subsidiaries are the top players in their areas. We have also made good results in these fields. Fourth, we will -- we are also sticking to our differentiated regional development philosophy.

Beijing, Shanghai and Shenzhen used to be the 3 core cities that makes the most contribution to us. We will be driven by these 3 core cities and to and transform into the 3 major regions: Yangtze River Delta, Greater Bay, and the Bohai Rim, the 3 key regions will serve to be the new 3 core regions of our business development so as to make us more sustainable in development.

We can make sure that by developing these 3 regions, the business in these 3 regions, we can maintain a good momentum in the future development. I think by leveraging on these several aspects, we can transform from the previous retail-driven strategy to a multi-segment balanced and coordinated development of our new development model so that they can support each other, promote each other. For the past 2 years, all our domestic and overseas branches, our subsidiary branches have both -- have all realized product making and our business tend to be more balanced, more sustainable, and we are walking towards an era with multiple contribution given by different sources of revenue.

And to answer your question, I think -- these are the measures that we have been taken and what are the positive results that we have achieved.

We have a question from on-site participants.

I am Yang Shuo from Goldman Sachs. I noticed that you have been experiencing fast in retail finance. I noticed some risk in the retail finance -- retail loan business. For the second half of 2024, you have quite a fast growth rate of the non-mortgage loan. And I would like to understand the risk about this part of loans? And could you further elaborate? And could you also provide more details about the provision in these part of loans?

Thank you for your question. So just now President Wang have mentioned that the retail credit asset quality. Since 2019 after the pandemic happened, credit card risk begin to arise. And then until the year 2022, we observed that the corporate property loan risk begin to expose and then it continues to rise in terms of its risk. Excluding the credit card loan, the rest of the retail loan, for instance, the mortgage, the consumption, the micro loan, ever since the year 2024, we also see their risk begin to rise.

Until now, the rising pace of their risk tend to be slower. So for some specific number, I think I will leave it behind. But for special mention, NPL and overdue loan, their balance and the ratio both increased in terms of micro loan. For consumption loan, its NPL ratio, it decreased a bit compared with the end of last year. Special mention loan ratio rise a little bit. Well, in terms of the future outlook, in the short run, property market is still under a deep adjustment so that the residents income, whether or not it could be improved for consumption, for micro finance loan, they are still under pressure. Well, along with the path that the government are playing a bigger role in terms of their proactive fiscal policy and monetary policy and with the external environment tend to be trending towards a good direction ever since this year, micro finance loan and consumption loans, this NPL balance increment are now tend to be slower marginally.

In the low interest rate environment, some profit-making products, they're actually experiencing some slowdown in the profit-making level in their risk variance level. So in the following pace, we will further optimize our structure and stick to a collateral-based business, especially for consumption loan. And consumption loan, we will strictly got our bottom line of onboarding these clients and further optimize our customer structure, which will have early warning, early risk exposure and take proactive measure to lower the risk of arising from retail credit and to guarantee that the retail assets tend to be good -- maintain good in its asset quality.

For allowance -- for allowance and provision for the past year, the allowance coverage ratio was down by 20 ppts compared with that of last year. The main reason is the NPL balance increased. The NPL balance increased by RMB 2.5 billion, a growth rate of 4%. The provision balance tend to be lower. So the numerator decreased and the denominator increase so that the allowance coverage ratio decreased for personal credit, but for personal loan, in classification, we tend to follow our strict manner.

In the overdue days, entering into the doubtful level into the subdue level, we still keep our very strict classification management. In provision, we are making the provision one case by one case. The main reason is that the overall balance of the personal loan continue to increase, and the allowance, the provision tend to decrease. That is the major reason. So looking into the future, the major reason is that the NPL balance need to decrease, so that our allowance coverage ratio could be better.

So actually, this indicator is quite sensitive to its numerator. If CMB under this external environment, if we can control our balance of retail NPL, we could maintain a good condition of this allowance coverage ratio. We are still under challenges in the year 2026. Retail credit risks are a market problem or an industry challenge that every banking peers are facing. The retail assets are under pressure so that it's not just CMB are facing this question.

By responding to this challenges, we will maintain and take proactive measures to guarantee the retail asset quality to be stable. We will conduct very strict asset classification and make very adequate and accurate provision. Our allowance coverage ratio is now 391%, which is 20 percentage points lower than that of the previous year, but the absolute level of this indicator is still higher than that of our peers. We will maintain a very steady and prudent provision strategy and make sure that we have abundant coverage of our NPL to guarantee that we are having a good provision level compared with our peers.

Next question, please.

I'm from CICC, Zhang Shuaishuai. My question is about the intelligent -- follow-up question. Just now I think Chairman and also President and also Mr. Zhou has already have very specific answers on that. And I see that we have more disclosures on the intelligent part. So my question is, from the financial data, how we can evaluate the effect from the application of the investment into AI because you have put a lot of resources in AI?

And another question is that you want to build up into the first intelligent bank. So how we can evaluate that, how we can compare you with other Chinese banks? Now CMB want to do more, AI want to be best among the banking industry. How we can -- we evaluate the advantage of CMB in this spectrum?

As for the large model from its birth to now it's 3 years. So it's not a long period. The application of this technology and every day, we are -- we can see news from the media that is improving. And I think the real impact of the technology on the society is still in the process. Currently, the very -- the industry, which have been deepened reform by the AI technology don't have much. We don't have much industries on that. But overall, we can say there's not many industry that have been deeply reformed by the AI technology and banking sector is quite a different sector and the regulator's attitude towards the application of AI in banks, not only the Chinese regulator, but the overseas regulators such as Singapore regulators, they are quite prudent on that front. And as well as -- such as the Singapore authority, they have also made very strict regulations on the application of AI.

So for the Chinese regulator, the requirement is that the apply of the AI technology should be taken account from the human staff. So it means that the application of the AI among the banks should be human staff plus AI application is a requirement from the regulator as well. And from CMBs, we think that in the width and depth of the application of AI, we are faster than peers. But currently, for 45 kind of the areas, we have analyzed what human staffs are doing. For the projects that human staffs are doing is around 3,400 done by human staff, but amounted around 1,500 could be assisted by AI. So it's a dynamic process that we are kind of analyzing and also improving. And from a very macro perspective, we see that AI is taking effect in many areas. But I know that the question you have raised is also something that I'm thinking about.

And what changes or big changes that the AI application has been done to CMB. I think there are some changes but still in the process. There's changes in the macro side, such as for the Sunflower customer, the customer reaching out ratio has been improved by 14% for our relationship manager. So it's taking effect. And for customer transaction volume has been increased by 20%. So it's also quite a good number. So overly, I think it's taking effect. But from this kind of up -- so we think that the technology is still improving and moving forward, there's great potential on that. And we are firm in this AI-first strategy. This is to your first question.

Second question is, well, how can we say that -- how can we evaluate intelligent back? This is something we are done. And I think that we are starting what are the indicators that can evaluate -- how we can evaluate digital intelligent bank?

The first intelligent bank in terms of -- I think that from these aspects such as for the application of the large model like the research technology and research capability in terms of the application, we can -- we are ahead of the peers. And also, we need to improve the efficiency of the usage of chips.

And in China, we are more use the domestic chips and how we can better improve the efficiency and how we can improve the computing efficiency. We're still improving, but it's not very mature yet. And it relies on the entity that is using the chips. We are very strong in terms of cloud, and we have around a team of 300 people, who are engaging in the cloud technology. And also, we have a reasoning platform as well.

And for the computing around 35% are done by ourself is quite the level of the top Internet companies is like 19% of us to make use of a cluster of chips and responding very fast and do not have much delay. There are many difficulties in technology, but we have done quite well. And the width of the application, we have already applied large model to 859 scenarios and more of them are contributed -- concentrated in the high-value scenarios. So we have a very big width on that.

And for CMB, we have a special area even compared with advanced banks in the world, we have a very good fusion of technology and business. And technology could be better applied to business. So CMB has done quite well in the fusion integration of business and technology. And there are some concerns that maybe AI can substitute human being. So I think the people who will be phased out in the future are the ones who cannot use AI. So, we are encouraging our staff to use AI. So that is why we can see a very fast speed of the usage of token. And people are -- staff in our bank have very -- have been very open-minded, and they're trying to use the new technology. So we are ahead of the peers in this regard.

But what can we say about the, what is -- what is intelligent bank. I think we are still studying how we can evaluate that. And just now, I mentioned about the illusion elution and these are also challenges where kind of input more -- to put more investment on that. And what we are trying to do is to reduce the illusion and to build a more reliable agent.

And for CMB, we think there are some top companies like the AI, OpenAI and Anthropic. They are not open sourcing and they do not say anything about that. So how we can limit the illusion of AI application, and there's -- let's talk on that. It means that we need to input by ourselves, and we have made quite good progress on that, especially in the past 6 months. And also, we have made quite a good target on that. Thank you.

From the investment and output perspective, because if you want to build an intelligent bank, there will be much impact for CMB. Our investment into the -- investment is to optimize the resources allocation. It's not the same as other companies. Other banks may have not invested in this regard and need to increase a lot of CapEx in this regard. But for CMB, we have been continuously increased resources into that. So we are optimizing resources. It doesn't mean to increase much capital investment into that. So it doesn't have much impact on the cost side.

So banks, IT -- I can see that we are -- in terms of business perspective, we have already built up our advantage. So next phase, we are building our advantage and our moat in the technology area, so that CMB can have a long-term and sustainable competitive edge.

And I have one more -- one more point, point to that. I think a good question is better than a good answer. This is the same question that I asked Mr. Zhou. So today, I think that he has answered my question before, but it's not a very, very good point and doesn't satisfy me. Today, I think he made quite a good point today.

Just now, for the retail -- my question is about the retail business for this year, both for asset size and also for asset quality. And CMB is regarded as the best retail bank among the industry. How you can continue to grow your retail business and also consider the change of the environment to upgrade your retail business. Could you please explain from the perspective of retail credit and also for the retail credit business, how you can -- what is your short-term and mid- and long-term change and also how you can arrange that?

Thank you for your question. And as you mentioned, that just now I mentioned that CMB's retail business is facing quite big challenge, and we have made -- we have tried to be more comprehensive operating as to make up the shortfall. But even though we are growing our other business, we didn't forget the retail. Retail continue to be our strength and can be our advantage. So everyone in the CMB talks about retail and knows about retail and trusts retail business. So this is a culture has been embedded into CMB -- embedded in the mind of everyone of CMB. So we will continue to expand our advantage on the retail front.

So for this year, the retail contribution to our income has been quite stable. It's not growing very fast, like in the past. But the business actually have changed. In terms of structure, such as you can see the customer base, like that we have a very big retail base to 224 million, especially the high-end customer growing faster. Secondly, our AUM is growing very fast last year, reaching around RMB 17 trillion and up by RMB 2.6 trillion.

So the growth rate is a high ratio. In the past years, annually increment is around over RMB 1 trillion, but last year, it's over RMB 2 trillion. And thirdly, even though we have seen a quite a big decline in the growth rate of our retail credit growth. But last year, we are continuing to see more market share in the market share in terms of the retail credit. So this shows that the strength of our CMB's retail business is actually expanding.

In order to consolidate our strength of our retail business, we continue to expand the customer base; secondly, to improve the product system; thirdly, to upgrade the service system like we are combining online and offline service channels, so as to improve the customers' experience with us; and also fourthly, distribute our ecosystem, such as we work with the mutual funds and also trust companies as well as asset management companies to build up our friendship with the ecosystem. So we have more better products that we can provide to our customer and create value for the customer. And fourthly, very important, is to prevent risk to improve our system kind of strength in the retail side so that we can see the contribution from the retail side is still around 50% to our operating income and also profit.

Just you also mentioned about the retail credit and also the Wealth Management business. For retail credit, we have the credit card, we have a mortgage. We have consumption loan and micro loan, the 4 major projects -- products. So last year, we have negative growth on credit card. But our strategy is that we maintain a stable and low volatility trend to prevent the risk. So we think that some of the decline in our revenue or the business growth in order to maintain a stable asset quality last year, the credit card's NPL ratio is around 1.74%. It has been stable over the past years and be better than the peers.

In terms of mortgage, we continue to grow the secondary housing facing the decline in the demand side. And so that is why we have slight growth on the mortgage side. The growth rate cannot be compared with a fast growth rate in the past.

So for micro loan, we are doing inclusive financing. And -- so inclusive financings and also micro loan, 80% of them have collateral with the property as a collateral. So the risk -- overall risk is under control. And consumption loan, we think that we are centered on the retail customer that we have already salary payout and also AUM. And this kind of short-term demand for us. So it's -- the asset quality is also stable.

So for our total retail credit, quality totaling around RMB 3.6 trillion and around 50% of our total asset. So it's continued to be an important area that we allocate our credit resources for. We will continue to namely to kindly to take advantage of the -- advantage of retail credit and its small ticket size and also the risk is more diversified. These are the advantage of the retail credit card -- retail credit business.

In terms of Wealth Management business, I think that we will seize the opportunity brought by the capital market, especially people's demand for -- to allocate more of their assets to the financial products. And so for product side, we need to be more advanced, and we have mutual private fund and also for precious metal and also overseas investment, and as said and also Wealth Management products, we have different product lines. And also, we need to upgrade our product system to better satisfy our customers' needs.

And secondly, very important is how we can improve the service -- so how we service our customer. Online together with the offline is combining them together, very important. This year, we are more allocating our offline relationship manager service the high-end customer, and this is a better resources allocation of the relationship manager.

So in terms of Wealth Management, we will continue to maintain our fast growth strength. So the total income of the Wealth Management can also continue to grow. And I have a goal for CMB, namely for a restart of the retail business and also faster growth of the corporate business. So for Retail, it means that Wealth Management should be strong and also continue to build, maintain the -- one is to improve the asset quality and secondly is to maintain the solid advantage of the funding source and also to strengthen our advantage in Wealth Management.

We'll have next question from an on-site participant.

I am Yu Lihan from JPMorgan. I have a question regarding the capital. We have noticed that in 2025, CMB's RWA growth rate was 10%, which was faster than the 8% asset growth rate. I would like to understand the underlying reason behind. Is that a one-off reason? Or is a normalized influencing factor that will continue? Looking ahead, how do we look at the RWA growth rates as a loan growth rate for the future 1 to 2 years? And what is the trend of the CAR? Will we continue to face downward pressure? What's the influence to return of the shareholder and also the cash dividend payout?

Thank you for your question. I will answer first on RWA. So every year, when we are discussing about RWA, we have been emphasizing that we aim to lower the volatility and maintain stability. So for many years, our RWA, the level of it was around 9% to 8%. And it's overall stable, but we will adjust it a little bit according to the external environment. It's more or less around 9%.

So just now you mentioned that in the year 2025, the RWA growth rate, 8.8% under the weighted approach, 9.5% under the advanced approach. Generally, it's following our philosophy. Compared -- but compared with our asset growth, you might think that it would be a little bit higher. So I would like to explain more a little bit.

So I think the influencing factors are, in the year 2024, the swift from the new capital regulation is actually conserving some capital for us. So that, that will be having a low base effect comparing the year '24 and '25. And the second reason is that when the credit loans are under pressure, the corporate loans are taking higher proportion and these type of loans are having higher risk weights. So to some extent, it will enhance the RWA. And then the 3 influencing factor is that as we have quite strong capital strength, we could use it to support some off-sheet business, for instance, the bill discounting business and et cetera.

And the fourth reason is that, in bond investment, we have enhanced our bond investment and enhanced the market risk assets. So these 4 reasons above mentioned, generally contribute to our higher growth rate of RWA. But I once again want to emphasize our philosophy. We would like to lower the volatility of our asset allocation. And I think it's also a capability to help us to sell through the cycle.

We will maintain our mid-level of RWA growth to 9% to 10%. And there will be some slight changes according to the external environment. We have also noticed that our CAR experienced some slight decrease, but the reason is mostly about some one-off reasons. For instance, we have had 1 interim dividend payout in the year 2025. And last year, due to the market volatility, we have experienced some volatile influence in our OCI account. This is also another factor influencing our capital strength. But excluding this factor, our CAR continued to be stable. But when our CAR tend to be more and more abundant and when we are facing more and more pressure from the capital, it's quite difficult for us to see a continuous increase in the CAR.

But even though I still wish that we can leverage our own efforts to achieve a balance in business development, capital growth and et cetera. So I think that for the dividend payout question, I have also just answered that we tend to be stable. I think it's a triangle balance that we aim to achieve that is business development, dividend payout and capital strength.

We will have another question.

I am Qi Leon from CLSA. I have an asset quality question. We noticed that in the fourth quarter, CMB's NPL formation has been increased. I would like to understand the reason behind. Is it because of the micro or consumption loan you mentioned before? Is it about some quarterly reasons? And we also noticed that President Xu, you have mentioned about the decrease of the allowance coverage ratio and our principal to manage this indicator. I would like to understand that how do we balance the product growth and allowance coverage ratio? How to achieve the balance between them two?

So for the fourth quarter, our NPL formation was RMB 21.1 billion. There are some slight increase compared with the third quarter, an increment of RMB 5.9 billion, mostly from corporate loan, that is RMB 4.6 billion. So corporate loan NPL formation saw an increment of RMB 4.3 billion compared with that of the third quarter. And for retail loans, the NPL formation was around RMB 6.3 billion. And for credit card, the new formation is RMB 10 billion. So generally, the fourth quarter, the increase in the fourth quarter in terms of NPL formation are mostly from corporate loan.

So the corporate loan -- so these NPL formation loans are mostly from corporate property industry. Some existing risk identified risks. And there are some exposure of individual cases and individual clients. And some individual event cases or clients risk exposure, they will cast influence on the NPL formation for a single quarter.

So there will be some fluctuation during quarter-on-quarter indicator. But overall speaking, if you take a look at our corporate NPL loan, we are experiencing some improvement. So for us, since the year 2022, we begin to expose risk in the real estate sector.

Ever since the year 2022, the real estate NPL, NPL formation tend to decrease. And in the year 2025, our real estate NPL formation continue to decrease. And it's also at the lowest point for the past 5 years. To see from the first quarter of 2026, the corporate loan and asset quality remains stable and they are in order.

For those risks that have already been exposed, especially for those real estate groups, we have made quite adequate and abundant provision. So the average level of LRR was 3x higher than the average level of those of the general corporate loan. You have mentioned about the allowance coverage ratio. In the year 2025, the figure is 391%, which is 20 percentage points lower than that of the previous year. The fourth quarter NPL, we have made some provision, 14.14% higher than that of the previous quarter. But you can still see that the absolute level of our allowance coverage ratio is still quite leading in the industry.

So making provision is being influenced by many factors. We would make provision case by case, and we should take several factors into consideration. First, scale, the product structure, the corporate loan and the retail loan were different in terms of their weighted risk and customer quality and customers' internal ratings are still factors that will influence the provision we made, including how do we take a look at the external macro environment. If we consider the external environment tend to be stable or do we expect there are more uncertainties in the future, we will also consider this factor into consider -- make this consideration and then to make a relevant provision.

One very important factor is that during the phase of the post-pandemic era and the deep adjustment of real estate property, these 2 periods of time are the major reason why we have been making abundant provision. So generally speaking, these 2 adverse factors, they are fading out. The real estate market are hitting the bottom -- are in the process of hitting the bottom. So we don't see the necessity to make even more provision for this industry. You can also take a look at our absolute level of the provision. It's quite abundant.

In the year 2021, the figure was RMB 37 billion. And for the last year, the level was RMB 42.6 billion. But compared with our loan scale, the ratio experienced a slight decrease. The allowance coverage ratio is not a figure that we used to balance profit. It is calculated based on our expected credit loss, based on our loan scale, based on our internal credit rating. So we will still make very abundant provision. But if the NPL balance increase, it will cash influence on our provision.

If one day, our NPL balance stop to increase, I think we will see some uptick in our provision and in our allowance coverage ratio.

In order to ensure the rights of the individual participant, we have collected beforehand through e-mail about their questions. And as most of the questions actually overlap with what we have also discussed previously, so we will have 1 representative questions read out by our staff.

The question is CMB last year have received approval to establish AIC. I would like to understand what is the major business of this company. And except for debt-to-equity transfer business, do you consider to make equity investment? What is the function of this company's role in CMB's comprehensive development?

Thank you for the question. Last year, approved by the regulator, now we have set up our investment company, namely the AIC. And last year, we have opened the AIC successfully. And this is a very important milestone of our comprehensive operation in order to have a better integration of investment banking, and also commercial banking to better service those start-up companies. And now we have a more -- we can provide more comprehensive service and have coordinated business in terms of investment banking and also commercial banking.

According to the regulator that want this to -- in 2018, there is a policy that -- in 2018, there was a batch of the AIC company that have been set up to do the business, namely to convert the debt into equity. And nowadays, business are also changing. So more are doing toward the equity investment directly.

So CMB's AIC will be both for the debt conversion to equity business and also at the same time, equity investment services. So for Commercial Banking doing equity investment is kind of a very big transition of the business model. So we need to have the right person and right business model in place and right purpose in place.

So from the regulators' perspective, they are For newly opened AIC, the regulator need to have new approval for the business qualification on that. And we are also have a conversation with the regulator and communicating with the regulator because we have very good foundation in terms of equity investments, like we have the CMB International and also CMB International Capital. We have done equity investment in the past. We have around a team of 200 people. We have many successful investments in the past. And many of the enterprises have been successfully IPOed. So -- and have done quite good results. So for equity investment, if we can get the approval from the regulator, then means that AIC together with CMB Leasing can have a better integration of the business and to -- based on the business foundation that we have and the team that we have to better have a development of our AIC.

And now for second section for a question from the media. Yes, please.

I'm from the Security Times. My question is for the Chairman. Just now you mentioned about the moat. You have mentioned that for many times. And also in your speech, in our annual report, you also said we need to have a differentiated moat. So a follow-up question about the moat is that, in the past, people are talking about retail service and brand name. These are the moat also funding source of CMB. So entering into the new era, what will be the difference of the new moat for CMB. Will that be technology, talent or ecosystem? If you have some key words to conclude CMB's next 5 years core competitiveness, what would you quote, which keywords will you use?

So the so-called moat is the core competitiveness. What we are -- in which area that we are stronger than other people and which we are far ahead of other people. So just now I mentioned in the past, the moat for CMB, many people are saying, is retail is the moat and fintech was the moat. But I think the real moat is that our philosophy, namely customer-centric, which has been integrated already internalized into our corporate culture and has become a routine of our staff. This is the biggest difference between CMB and other enterprises. If you go to the other branches of CMB, after the working hour, if you -- after working hours, you go to the branches there. You see -- you can see the difference between CMB and other people. Our staff never off work on time.

Just now before the results, I asked the office of the -- office of the Board. So after the results announcement, they have passed the information to me about the information they get for the communication between them and the investors. So I think this is the culture, and this is the biggest moat that we have.

And no matter is the concept, no matter is the philosophy of all technology. So by -- it's all done by human beings even without this culture, without this dedication spirit to work, other moat is nothing that will be fall down. This is a keystone that support our moat that CMB is customer-centric is the most that we have built up. No matter it's talent, no matter it's technology or other co-committees.

I think the keystone is the culture. As long as culture is there, then we have moat. So one day, we changed our culture, customer-centric culture, then I think the other moat will also be diminished. So in the past, in the downward cycle of the banking industry, why we also have seen some downturn, but still, we are better -- continue to have a better performance than the peers. This relies on the culture of CMB.

The next question.

I'm from the 21st Century. My question is about -- for the deposit movement. Many -- there are many institutions saying that in 2029, there will be around RMB 5 billion to RMB 7 billion deposits mature in 2026. Some may go to Wealth Management, fixed income and other products. So from the liability perspective, whether you are facing some pressure. So when this kind of term deposits mature, what is your observation? Whether they will be go to other aspects? Just now you mentioned about your subsidiaries and how you can get the deposits which are mature in 2026?

Thank you for your question. Recently, there's a lot of talks and discussions on that. My understanding on that is currently for the matured term deposit, the outflow of the matured term deposits, there will be 2 key elements, how much will mature and second, whether there will be an outflow. For the media have calculated an amount. And for CMB, for the amount that will be mature, the term deposits this year will be a little bit higher than what we have in the last year, but it's not an extraordinary number. I think it's still in a normal range.

And I think more people are more caring about in this low interest rate environment, if the deposit rate cannot satisfy customers' demand on the asset yield, so how -- where the deposit will go. And some say, it may go to the capital markets, some say it may go to Wealth Management and also mutual fund products. There are many discussions on that.

So for the outflow of deposits, I think from a different angle is that, from the customers' perspective, if the deposit outflow, where it will go. If it goes to the wealth management or mutual fund products, then we think that we can provide service to maintain the AUM with CMB. Maybe it may not be shown as a liability, but it's still the customer funds is with us. So we can see an outflow of deposits based not an outflow of customer. And that is why we emphasize the definition of AUM. So that is why you see last year, our AUM is up to RMB 17 trillion and a growth rate of 14%. So this is also a way of retention of the deposit and we are not worried about that.

And the second angle that can provide is from the funding perspective. Some funding are going from the deposits go to capital market as the stock, which in return can be deposit as a third-party deposit with us. So these are recorded as interbank deposit for us.

So from a funding perspective, if we can provide a service and then can continue to have an inflow from the interbank market, it means that outflow of deposits, but funding is not outflowing. So from this perspective, we think from these 2 perspectives, outflow or maturing of the term deposit is not a terrible thing. The first one what we are trying to do is not to prevent an outflow of deposits, namely to have abundant products in place and also to prevent the deposit outflow. Secondly if deposit really outflows, then we have product in place to retain the customers' AUM with us.

Just now you mentioned about the subsidiary of CMB, we have Wealth Management subsidiary. This is also a test of the professionalism of our subsidiary and it means that taking the funding to continue to be within the bank. And secondly we will service our financial institution customer, namely the fund can return inflow into CMB from the capital market.

And fourthly, very important. And I think the outflow of the deposit is also a reshuffle of the banking sector for -- if we can use our advantage and service and product to retain or regain the market share with us to have more funding from our -- from the market. This is something that we are working for.

Next question?

I'm from [ Xinda ] report. My -- the first one is for cross-border business in 2025 for CMB has actually has the funding between the CMB and also the overseas margin can have a connection on that. So what is the plan for CMB's plan for the Bay Area? In 2026, how you can use the platform in Hong Kong to have a better cooperation with the institution in Hong Kong?

Secondly, is for Wealth Management. My question is for Mr. Peng. Wealth Management is regarded as an area of the growth of CMB. So how do you expect the fee income from Wealth Management and also that overall fee income for 2026.

I will answer your first question. Just now I mentioned that CMB is highly emphasized on the cross-border business and highly emphasized in the Bay Area busines -- economic integration of the Bay Area, and we want to have a bigger play in the Bay Area. So CMB's headquarter is in Shenzhen. And for the mid- and large-sized enterprises, we are the very few banks that have headquartered in Shenzhen.

And secondly, in Hong Kong, we have Wing Lung Bank. We have CMB International. We have CMB branch. And also in Macau, we also have our branch. So we have covered major cities in the Bay Area. This is our geographical advantage.

And thirdly, we -- from the national policy also support the growth of the Bay Area and to improve the influence of the Bay Area and to have a better connection between the 3 cities in the Bay Area, especially the funding connection between the cities. And it means that we can have more business in this area, such as for the Wealth Connect and our market share of the Wealth Connect of CMB is leading. And also, we are promoting the capital market and to strengthen such as Hong Kong is improving, stance and positioning as a financial center. So we are strengthening our cooperation with the financial institutions in Hong Kong. So there are many Hong Kong -- many China domestic enterprises are going IPO in H-share. So our CMB International is playing a bigger role on that, such as for IPO and IPO underwriting, and IPO sponsor, they are leading the market.

And also for commercial banks, we have Wing Lung bank. And also Wing Lung Bank can also be a collection bank for the IPO. So this -- the comprehensive service that we can provide to the enterprises that go into the overseas market. And also domestic residents are having more investments, investment in Hong Kong because Hong Kong, the overseas products have a better yield for customers. Some of the customers would like to allocate, have some overseas allocation, and we are strengthening our capability in this regard.

And I think that these are also paying off and taking quite good results. So -- these are the advantage that we have taken from the external environment and also from what we have our own institution, I do think that in the future, there will be a very big opportunity, especially in our major Bay areas in the world that will be tough in financial institutions, which will merge. In Bay Area, there are already some very leading financial institutions among the Bay areas.

CMB even though have only a history of 39 years old, but I think we have the advantage in terms of geographical advantage and we have a coordination between the domestic and also overseas platforms. So we will have a better play in this regard to support the integration of the Bay Area to support the prosperity of Hong Kong.

A brief answer to your second question. Last year, fee income was up by 4 -- or over 4%. This is mainly driven by wealth management products. which is up by 21%. The contribution is from the agency sales of the wealth management, up by 19% and 40% for mutual funds. And also, we have seen growth on other agency sales of the trust products. There's a small decline on the agency sales fee of the insurance products is mainly because of the change of our product structure.

If you look at the premium, it's up by 27% up. But due to the structural change, the realization of the fee income that we get from -- of insurance products is changing namely from -- we are -- that is what have led to a decline on that front. So I think the external environment has been quite beneficial to the fee income of wealth management.

So in 2026, we are more optimistic on that, especially the -- from the national policy also regarded regarding consumption is very important, have played a key role in the future. So these are the positive factors for fee income, but there are also challenges as well as you can see geographical conflicts having quite a posting risk to the economy.

And also secondly, there's a policy side for fee rate card for mutual fund as well. And also thirdly, from the consumption side, even though there are major policies, but still depending on the real effect, whether you can drive -- whether you can drive our credit card fee income or not.

So we think that the fee income from the -- we hope that it will be better than last year, but there are also structural problems like the credit card is so facing great pressure on that. We hope that the decline of our credit card magnitude will be better than last year. And also for fee-based income, we hope that it can continue to have a good growth. Thank you.

Due to the time constraint, I think the last question from the media.

Dear senior management, I am Shanghai Securities. [indiscernible] I have a question for Mr. Wang. In such a backdrop of narrowing NIM, you proposed a value creation bank strategy and deepened 4 initiative transformation, I would like to understand these strategies, what changes have it brought for CMB in specific business development?

Thank you for your question. So in the interest rate declining environment, fee reduction and narrower NIM, these challenges have brought pressure for our development. We proposed a value creation bank strategy and that is our philosophy to create value for customer, shareholder, partners and the society and to realize common prosperity of all. This is a philosophy. It's also a guiding principle for us, to serve as an underlying principle to create value instead of expanding scale separately. It requires us to provide better service to our clients to increase volume, increase value to make a good judgment of what business is good business and how to cash our business development into return to the society. So this will contribute to the bank's sustainable development. So value creation bank strategy is bringing changes for us in our methodology, in our philosophy of operation. We are more reasonable, and we tend to respect the principle of banking operation.

In international development, in comprehensive development, we all see contribution brought by these initiatives. In financial indicators, the full initiatives have also contributed to our capability of making sustainable development. I think digital and intelligent development and comprehensive development, these will help us to find our strength and to make up for what we are not good at. So the full initiative bring us business returns, but also enhance our capability.

Thank you, President Wang. Due to time limit, we have now conclude today's meeting. For more information and details, you may refer to the annual report we released online. If you have more questions or comment, you are more than welcome to contact the CMB IR team. Thank you again. Goodbye.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Dear investors, analysts, good morning. China Merchants Bank 2025 3rd quarter result announcement will now begin. I am Xia Yangfang, General Manager of the Office of the Board of Directors of CMB. We have announced our third quarter result in this Wednesday, and this conference will be conducted via audio webcast.

And now allow me to introduce the attendee first. And they are Mr. Peng Jiawen, EVP, CFO and Secretary of the Board of Directors; and General Managers from the Asset and Liability Management department, Financial Accounting department, Corporate Finance HQ, Retail Finance HQ and relevant departments. And at the same time, we have also invited independent directors Li Menggang, Liu Qiao, Tian Hongqi, Li Chaoxian and Ms. Li Jian to attend the meeting online. On behalf of China Merchants Bank, I would like to extend a warm welcome to your participation, and thank you for your warm support and investment in CMB.

There are 2 sessions in today's meeting. First, we will -- introduction given by Mr. Peng Jiawen on the performance of our third quarter results, takes around 15 minutes. And the second session is the Q&A session, takes around 1 hour and 15 minutes. There will be simultaneously interpretation from Chinese to English for this conference.

Now I would like to give the floor to Mr. Peng.

Dear investors, analysts, good morning. This Wednesday, we announced our third quarter results, and I am happy that together with the general managers of relevant departments in the head office, I can communicate with you. First of all, I would like to thank you for your attention and support. And I would like to briefly introduce our operational performance for the first 3 quarters. According to standard practice, the below mentioned statistics are under the IFRS calibre also the H-share announcement calibre. Since this year faced with complicated environment, we stick to our strategic target of building a value creation bank and stick to a dynamically balanced development philosophy of quality, profitability and scale.

And our general development has extended to be development in a good momentum, and there are 5 features of our operation. Firstly, our core profit indicators remain stable and trending towards good trajectory, ROAA and ROAE and CAR maintained at a high level. The group's net operating income was RMB 251.28 billion, a year-on-year decrease of 0.52%, with the decrease narrowed by 1.21 percentage point compared with the first half. Net profit attributable to the bank's shareholder was RMB 113.7 billion, year-on-year increase of 0.52%, up by 0.27 percentage points compared with the first half, ROAA and ROAE were 1.22% and 13.96%, up by 0.01 and 0.11 percentage points compared with this half.

We continue to strengthen cost management. Our cost-to-income ratio was 29.86%, maintained at an appropriate level. We maintained sufficient and high capital level and under the advanced approach, our CET1 CAR was 13.93%, Tier 1 CAR, 16.25%. Capital ratio -- total capital ratio 17.59%, down by 0.93, 1.23 and 1.46 percentage points compared with last year-end. We also strengthened asset liability management and secured both increase in loan and deposit scale.

We cope with multiple challenges and promote the growth of our low-cost core deposit. We maintained optimized liability structure. As of the end of September, our total asset was RMB 12.64 trillion, up by RMB 4.05 trillion compared with last year-end. Total loan RMB 7.14 trillion, up by 3.6% compared with last year-end. Retail loan RMB 3.7 trillion, up by 1.43% and accounted for 51.8% of the total.

Corporate loan, RMB 3.15 trillion, up by 10.01% compared with last year-end. Financial investment balance totaled RMB 4.03 trillion, up by 10.52%. Our total liability was RMB 11.37 trillion, up by 4.12% compared with last year-end. Total customer deposits RMB 9.52 trillion, up by 4.64%, accounting for 83.73% of the total liability. The average daily balance of demand deposit accounted for 49.45% maintained at a high level.

Thirdly, our NII maintained steady growth and our NIMs decrease narrowed. We continue to strengthen our low-cost funding advantages, influenced by LPR cut and other influence along with insufficient effective credit demand, especially in the retail loan, we have pressure in our loan yield of the interest-earning assets. For that, we continue to optimize our structure and strengthen liability cost control to drive the improvement of our liability cost and offset the pressure brought by the narrower spread.

For the first 3 quarters, our interest-bearing liability cost ratio was 1.31%, down by 38 bps, among which customer deposits average cost ratio, 1.22%, down by 36 bps year-on-year, driven by the above-mentioned factors. Our NII was RMB 160.04 billion, up by 1.74%. For the first 3 quarters, our NIM was 1.87%, down by 12 bps year-on-year. The decrease was narrowed. The decrease was narrowed year-on-year.

Fourth, our Wealth Management business has shown good growth momentum, and our net fee and commission income recorded positive year-on-year growth for the first time in 3 years. Since this year, we see recovery in the capital market and the bank sees opportunity to achieve good growth in the wealth management business. Our retail clients totaled 220 million, up by 4.76% for the Sunflower and above client, 5.78 million, up by 10.42%.

Our retail AUM was RMB 16.6 trillion, up by RMB 1.67 trillion compared with the end of last year, a growth rate of 11%. For the first 3 quarters, our wealth management fee and commission income was RMB 20.67 billion, up by 18%, a faster growth than the first half. Agency sales of wealth management products, mutual fund trust scheme grew by 18%, 38% and 46% year-on-year. Our agency sales of insurance policy was decreased by 7.05%, and driving by the above factors.

The group's noninterest income has decreased, narrowed. And for the first 3 quarters, the net noninterest income was 91.24% and accounting for 36% of the total net operating income, among which net fee and commission income was RMB 56.2 billion, year-on-year increase of 0.9%. First positive growth since the year 2022.

Fifth, we maintained stable asset quality. Our NPL has maintained an increase in its balance and decrease in its ratio and the NPL balance was RMB 67.4 billion and the NPL ratio was 0.94%, down by 0.01 percentage points. Our new formation of NPL was RMB 48 billion. Annualized NPL formation ratio was 0.96%, down by 0.06 percentage points. The company closely monitored the change of the external environment and enhanced our risk management capability to prevent risk in key areas.

Under the bank's calibre, the NPL in our property and manufacturing sector were 4.24% and 0.45%, down by 0.5 and 0.05 percentage points. NPL in retail loan ratio was 1.05%. The risk was under control. The group continued to stick to its prudent and stable provision policy. Our annualized credit cost was 0.67%, up by 0.02 percentage points.

Our allowance coverage ratio was 405.93%, down by 6.05 percentage point. Loan loss provision ratio, 3.84%, down by 0.08 percentage point and maintained at a leading position in the industry.

The above are our characteristics of our operation for the first 3 quarters. Since this year, China's economy maintained stable and our high-quality development has made good results, but there are still risk ahead, and many uncertainties were still lying in the external environment.

This month, we see the fourth plan recession of the 20th CPCCC approved the 15th 5-year plan, mapping out the new blueprint of the next 5 years China's development, also providing good opportunities for the Chinese banks. We will continue to promote our transformation into international comprehensive and differentiated and intelligent development and provide better value for our customers, employees, shareholders, partners and the society.

For the next part, we will enter into the Q&A session. Please follow the instructions given by the operator. Please state your name and the agency you represent before you raise the question.

[Operator Instructions] Now we'll have the first question. The first question is from CICC , Zhang Shuaishuai.

I have a question for Mr. Peng about your short-term demand and long-term development strategy and the current environment is not favorable for CMB. We don't see sufficient demand from the retail loan, and we see some challenges ahead which will influence CMB's business. We see some of your banking peers. They're trying to make up the lowering pricing by increasing quantity or lower their risk appetite to realize a short-term financial target? And what is your view towards this phenomenon? And how do you strike a balance? I know that the external environment and the capital environment has posed a high requirement on CMB. And what do you think that CMB can use in terms of your new model, your business strategies to balance -- strike a balance between short-term demand and long-term strategy development to realize an offset?

Thank you for your question. Well, according to current situation, we need to hold an attitude that is objective enough. The macro economy is stable in a steady progress, high-quality development momentum is still there. For the first 3 quarters from the macro statistics, the environment withstand the pressure and make steady progress. But objectively, we still see some challenges ahead. The bank's operation, of course. It requires our attention. For instance, you have mentioned that the demand from the retail loan and the fee card, these are all challenges posed to CMB in terms of our operation. But generally speaking, CMB have withstand those pressure.

For the first 3 quarters, our performance has shown that we have met our expectation. And we have realized good growth momentum. I would like to briefly introduce my view. Beyond the 5 characteristics I mentioned above, there are some other highlights within our performance. I think to some extent, that could answer your question as well. Through our hard work in this field, we have realized a good development, and maintain good momentum. And these are the aspects I would like to mention. Besides on the revenue and our profit, even though they are under pressure. I won't mention too much about it, but I would like to emphasize that behind our financial indicators, there are some situation that I would like to seize your attention.

One is that our customers grow, our customer base growth should show good momentum, no matter our corporate client or our retail clients, we see the client growth as our base of development. And if you take a look at our detailed figure of customer growth, our mid- to high-level clients has secured a growth of over 11% in terms of customer number. Within it, some high value client number, value client number, these growth type are showing good momentum. The CMB's wealth management business have also picked up and realized a double-digit growth in terms of its income.

The wealth management income has realized a year-on-year growth of over 18%. If you take a look at excessive wealth management business, our income has secured a growth rate of over 11%. Our AUM when surpassing RMB 16 trillion level. By the end of September, we have already secured a retail AUM of over RMB 16.6 trillion, an increment for the first 9 months of RMB 1.67 trillion, which is quite impressive. Influenced by the external environment, we see the recovery of the capital market, and this has also bring us opportunity. We see these opportunities relying on our good customer base, relying on our capability, and this is what we will continue to nurture. And I also see some other highlights.

I want to especially mention that our subsidiary are also showing good growth momentum this year. By the end of September, the total assets of our subsidiary companies were RMB 900 billion, surpassing RMB 900 billion, a growth rate of 8%, representing compared with the end of last year. And the net profit growth has surpassed 16%. We see the current opportunity and they have emerged into CMB's overall development. Besides the highlights in our subsidiary, I think we are also developing in our international business. The total asset of our overseas institutions has surpassed 10% in terms of its total assets. We seize the opportunities arising from the Hong Kong market. And our Hong Kong subsidiaries grew 10% in terms of its total assets and 27% in terms of its profit and income. And our cross-border business, the international BOP has surpassed 90,000 customers.

In terms of FX business, we maintained good momentum of growth, a growth rate of 15% for business on behalf of customers. So to -- from the 2 highlights, our subsidiary and our cross-border business, this is 2 of our 4 major developments. We have also captured some highlights from it. And of course, we maintain a good foundation of our asset quality. This is the base of our development. Without a good asset quality, we cannot secure what is building above the asset quality, that is our performance, our customer base and et cetera.

So through this year's effort, I think that can reflect what we have withstand. And to coping these pressures, I think we still have some measures that are going to take in response to the insufficient effective credit demand of retail loan, we still regard the retail loan as the cornerstone of our business. And I think we cannot -- we will not change in maintaining relevant market share and our market position in the retail loan business. So in this year, we have also made some efforts in developing corporate loan under insufficient credit demand from retail side and our asset growth in the corporate loan grew by 10%. And these loan growth are in line with the government's guidance. And later on, I will ask our relevant colleagues to introduce the detailed situation.

We will also maintain a good management of asset allocation and maintain a stable momentum of our NIM targeted at current risk situation, we will maintain good risk management capability. You have also mentioned some long-term strategy. No matter on the beginning of the year or the interim report or our daily communication with our investors and analysts, we have also mentioned about what we are considering about the future development. We have got our layout for the future development, combined with the recently announced 15th 5-year plan, CMB has also mapping out our own 15th 5-year plan.

So generally, we will stick to our plan of value creation bank, building a value creation bank. And for some certain direction, we will continue to focus on the modern industries to enlarge our efforts in the opening up and et cetera. These opportunities arising from some window opportunities, we will seize these opportunities. We will combine the strategic focus of our own 15th 5-year plan with the national's 15th 5-year plan.

Of course, I would like to mention again that developing retail business will still be our focus. And the third is that the transformation of the 4 development will continue to be our focus, the international development, the comprehensive development, the distinguished development and the intelligent development. We will speed up this transformation. This will be implemented thoroughly into our own 15th 5-year plan. Besides our efforts in the business development, we are still paying special attention to our daily management, including NIM management, asset quality management, financial management, expense management, all cost management. These all we will continue to pay attention to and also including risk management, we will guard our bottom line to secure our bottom line of risk management. So generally, for current pressure, we are calm, and we have made early preparation. This will be all reflected in CMB's own 15th 5-year plan.

The second question, please.

The second question is from Mr. [indiscernible].

Congratulations for your results for the third quarter. I'm from PICC. And I think that you have a positive profit growth in the third quarter. And also you have maintained sound asset quality. My question is for Mr. Peng for NIM. Just now, you mentioned about the weak demand in the retail side. So my question will be, what kind of impact will the weak demand be on for your asset structure? What will be the impact on your NIM? So how long do you think that the NIM will continue to decline and whether the declining period for CMB will be longer than that for the state-owned banks?

Thank you for your question. I think NIM is a concern for all the investors. And during the interim results conference, I shared with you my judgment on NIM, namely, we will continue to maintain a leading NIM level, absolute NIM. But for the marginal change, we are under pressure. But I think the decline will be under control. These 3 judgments are made during the interim results. And NIM is -- will be -- is still affected by structure of our asset and liability and also our active management, which is why we have maintained a sound NIM in the past.

Nowadays, we are seeing that our retail loans are still under pressure, which is 51% of our total loan portfolio in the past is kind of the backbone of our loan book. And it's also the main reason why we can maintain a leading NIM. So as for -- currently, retail loan are facing pressure in loan growth, but still it has made quite a big contribution to the NIM. And at the same time, we need to see that if there is a slowdown for retail loan growth, definitely, that will have some marginal negative impact on the NIM. That is why I say the NIM marginal change will be under pressure.

I think there are main 2 reasons behind the pressure. But of course, we will continue to maintain a leading absolute NIM level, but for the marginal change will be under pressure which is affected by the following factors. The first one is a slowdown of retail loan growth, especially for credit card loan growth and also for consumption loan growth, micro loan growth, all growth rates are slowing down. This has made some challenge to the asset structure. And as for -- compared to the peers, we have a higher proportion of retail loan. So that is why we are facing higher pressure than peers.

Second factor is that from the liability cost, just I mentioned, our liability cost is around 1.02%, down by 36 bps, which means that since we have maintained the lowest level of liability cost among peers, and at the same time, we continue to reduce that by quite a big amount, which means that in the future, the further room for us to further lower down the deposit cost will be smaller because if you look at the demand deposit ratio is around 0.05%. So there's a little room to go. And more room coming from the term deposit but we have an even higher demand deposit ratio, which is why we can benefit less compared to peers in the future from the lower down of the deposit cost.

And third judgment is that we think that the future trend will be under control, which means that we have our judgment on how deep that the NIM will go down. We have our own analysis and also we have done strategy considerations about how we can counter with the NIM decline. So firstly, I think we'll continue to focus on retail loans. This year, even though retail loans growth is slowing down, it is around 1.34%. But this number is a strong number, but compared to the overall banking industry, we are still higher than the average level, which means we are increasing our market share.

And the thing I would like to -- the point I would like to point is that the slowdown of the retail loan is mainly affected by the macro situation. At the same time, we don't want to lower down our risk criteria. That is why we have a slower growth rate, but our market share has continued to increase, which means that retail loan is still a focus of our business. And we are stepping up our efforts and also putting more resources into our retail business, we have made adjustment to our retail business unit and also credit card unit. We are confident that we can continue to improve our market share.

And just now Mr. Zhang Shuaishuai from CICC also mentioned about whether we will choose to lower down the risk criteria. I think lower down the risk criteria will not be our choice. The other words to say that is that to make up the shortfall of the loan growth by compromising risk. This is something we will not choose to do. Some say that we need to -- if the price comes down, we need to grow more loans. This means that to grow more amount to make up the shortfall coming from the pricing coming down. But we will not choose to lower down the risk appetite or sacrifice risk to -- in order to gain amount growth.

And I think in the future, that the risk from retail side will be stabilized. And as long as the government is trying to lay out many procedures to stimulate demand. And I think at the end of the day, the retail loan will grow again. And also, we will have active measures such as for corporate loans, we have our own strategy for how we grow our corporate loan, and we have reconsidered great debt, including for big midsized and small sized enterprises and the major areas that we would like to focus on. So we think there's a big room to go.

And also from liability side, we will continue to maintain a sound liability structures such as the demand deposit proportion you mentioned. And this year, we are seeing that the demand deposit ratio is changing or is trending good towards a better direction. This will be also beneficial to our cost control. And thirdly, is the asset and liability portfolio management that will also help with the NIM side to improve the structure so as to improve the NIM level. So overall speaking, I think for the future trend of the NIM, we are confident that hopefully, that the NIM can reach the bottom and begin to stabilize.

Just now for your question, I would like to share 1 of my 2 personal views. I think very important for banking industry today. The first one is that we need to take a perspective from customer. Just as I said, the customer is the foundation of our business as long as we have the customer in place, no matter how product changes because product changes according to the external environment, such as if there's less demand for assets, such as you will face the slower growth of retail, but at the same time, your AUM in your wealth management products can continue to grow. So this also will help with the income for the bank. So taking the perspective from the customer to -- will be very important for banking operation rather than purely focusing on 1 or 2 products.

Secondly, I think very important is balanced and diversified operations. A bank's operation and development cannot focus on one aspect. It should be very balanced and also diversified structure such as if there's a slowdown of retail loan, then if we can do better in corporate loan or if we can do better for the asset allocation for retail customers, if they didn't choose to place the demand deposit or if when the market is not performing well, you can provide more deposit with the customer, or when the customer doesn't have demand for loan, but they still have demand for wealth management, which means that customers demand will be very multifacet.

So if you can provide a balanced products, multi-level products for the customer, you will have a very balanced and also diversified business structure, no matter how customers' demand changes or how the products they choose changes. Then this balanced and also more diversified structure will help you to maintain a more stable income.

Second question, please.

Next question is coming from May from UBS.

Can you hear me?

Yes.

I'm May from UBS. And congratulations for your results in the third quarter. It's a very stable results and also trending towards the better direction. My question is still about NIM. Just now you mentioned for liability cost is declining. This will be beneficial for your NIM. Q-on-Q it is around 10 bps down. So the level of the decline is smaller than the peers. I think that CMB has always maintained advantage in liability cost, but now China has ensued a low interest rate environment. So the advantage for you and the liability cost, is that still strong -- as strong as before? How do you view that? Or do you think the advantage is also contracting?

The second question is that the capital market is performing better. There are some discussions on deposits moving around to other parts outside the banking industry. So whether there will be any marginal improvement on demand deposit ratio. But in the third quarter, you can see that your demand deposit ratio is still declining. But why? Why the trend is still declining? And also for liability costs, we are seeing that the rental cost, rental linked cost and also the debt costs are also rising. What are the reasons behind that?

As for liability cost I think just now Mr. Peng has made his judgment on NIM, I think, it's also applicable to liability cost. Firstly, I think we still have a leading liability cost advantage. For the first 3 quarters, the liability cost is 1.31%, down by 38 bps. And our customer cost is 1.22% and down by 56 bps. And for interbank cost is 1.06, down by 54 bps. So in absolute amount, you can see that we'll have a very low absolute liability cost and a very low absolute level, you can see we still have reached quite a big level of decline.

And secondly, Mr. Peng just mentioned that for the marginal improvement, we are under pressure. So you might concern about if compared to peers, whether the decline level might not be as big as our peers. I think the main reason is that it's mainly decided by the features of our deposit costs. In liability costs, we have a higher proportion of customer deposit, namely around 85% and amounted around 50% are coming from the demand deposit. These are very high. This structure feature or characteristic means that we cannot benefit more from the rate card of deposits because rate card is more on term deposit side rather than on demand deposit side.

And just now I mentioned demand -- customer deposits make up around 85% of the total. That is why when interbank or market rate is coming down, which means we also cannot benefit from that because some of the peers, if they cannot have so high proportion of customer deposits, well, they will have a more higher proportion of the interbank liability, which means they can benefit more. And especially this year, it's very obvious. The interbank costs are coming down quite rapidly, but we have a lower proportion, lower -- that is why when you see the marginal improvement, we might not be big as our peers.

But if you look at the absolute amount, we're still having the very absolute leading position. And thirdly, I think that the trend for the cost deposits to decline is continuous. For September, our RMB demand deposit is only around 1%, and this trend actually continues into October. And for demand deposits for RMB level, we have a daily average growth of over RMB 200 billion. The demand deposit cost is around 1% and it's mainly coming from the demand deposit. So currently, we can see we still have a leading position in the liability cost. And we are continuing to see the trend that the deposit cost is coming down. The only thing is that if you -- from the marginal improvement, since we have a very low absolute amount, that is why the marginal improvement might not be as big as the peers. So I would like to confirm that we are very confident to have a leading liability cost advantage in the future.

Second, to your question about the demand deposit ratio. So for this year's trends, we are seeing for the whole banking industry, it's quite obvious that we have a term deposit trend. And this year, I think this term deposit trend is continuing, but from third quarter with the warming up of the capital market, and also M2 and M1 gap are narrowing, we think that there are more and more deposits becoming demand deposit. In September, for the single month, our demand deposit ratio have increased again. So demand deposit ratio is still our advantage. We will take active liability and asset management measures to promote those settlement-related business so as to gain the source of the lower-cost demand deposit. And when the market -- in the market, people tend to have more demand deposit. If this environment continues, we definitely are confident that the demand deposit ratio will continue to ratio will continue to improve.

And also for thirdly, for the cost for bonds. Just now I mentioned that since we have a very high proportion of customer deposit, 85% of the total deposit. So for RMB side, we do not have any demand to raise RMB from RMB bond market. So this year, we have done some funding raise from the bond market in the overseas market. And this year, since our overseas branches, they have demand for overseas assets. That is why they have underwritten some overseas bonds, so as to raise the funding side, that is why have led to an increase on the RMB side on the cost on the payable bonds. So marginally, you are seeing for the cost has risen, this is mainly because foreign currency-denominated fundraising. And for the rental cost, this is more related to the rental agreement. Rental agreement is set on a certain date. And that is why we are seeing that the agreement was signed previously, so that cannot change for the time being.

Next question, please.

Next question is from Zhu Chenxi from Guotai Haitong Asset Management.

I am Zhu Chenxi from Guotai Haitong. I have a question regarding the income from agency distribution of mutual funds. I noticed that this income realized in the single third quarter, there is a growth rate of 98%, around double. It is relevant with the recovery of the capital market. I would like to understand your outlook towards this income. The growth rate is quite high. Is it sustainable? And the industry itself, the mutual fund industry, we see the third phase fee cut in the mutual fund industry. And what is your understanding of the future influence of this policy, the introduction of this policy.

Thank you for your question. Regarding your first question, my answer is as follows. For the third quarter, the agency distribution of mutual fund is growing fast. It is mainly because of the following reasons. One is that thanks to the recovery of the capital market and the rising risk appetite of our investors. And on the other hand, we have also optimized our structure of mutual fund product, and we enhanced our supply and optimization of the equity-related products. And looking into the future development, the above mentioned 2 factors will continue to give great contribution. But considering the same period of last year, there are some high base effect that we need to take into consideration. I think these 2 factors will marginally become milder in their contribution.

And for your second question about the third phase fee reduction in the mutual phone industry, what kind of influence will it bring to the income of this sector? I think there will be influential reasons align behind. And of course, we will be put under the pressure of the influence itself. But we understand that we are still in the phase of advice consultation, and there will be a transitional period for further implementation. So I think that for the income of 2025, the influence is limited. In the year 2026, the influence will be rather negative, and there will be some pressure on our income in mutual fund business. And generally speaking, regardless of the redemption fee and subscription fee and also the self-service fee, the 3 dimensions will be put under pressure internally speaking.

But to see from the industry level, it is not the first time that we have overcome this kind of fee cut policy arrangement. We will act aligned with the market trend and the customer demand and to make efforts in the following 2 aspects. Firstly, we will continue to follow our high win rate and diversified allocation strategy and take active measures to enlarge our sustained and retained AUM foundation. And for the second aspect, we will continue to follow the market change and understand more and adjust to customers -- adapt to the customer demand to optimize our structure, enhance our resilience and increase the fee rate and increase the return of our product and realize a high-quality development. These are my answers.

Next question, please.

The next question is from China Securities, Mr. Ma Kunpeng to raise his question.

I am Ma Kunpeng from China Securities. I have a question regarding the micro -- small and micro finance business. So in recent years, we see fierce competition in this kind of business, but the demand is quite weak. Especially for the recent period, the asset quality, we see some deterioration and the pricing is also declining. I would like to understand from you about the loan pricing of small and micro size loan. Well, considering the cost, the credit cost, the funding cost, operational cost, when you cover all these costs, will there be further room for making profit? And have you made sufficient provision -- and from a RAROC perspective, will small and micro finance business still become your priority in your retail credit business? These are my questions.

Thank you for your questions. I would like to briefly answer in the following aspects. So small and micro finance, these are a sector under the retail finance business. And just now Mr. Peng has mentioned that in the whole market, the retail loan is under a thorough -- a very tough growth trajectory. So from the market perspective, I think the market is still growing in retail finance business, but the trend is slowing down and the social financing, resident loan and the corporate loan, the structure -- the loan structure itself have all reflect the pressure in the industry itself in growing retail loans.

But CMB, our market share is undoubtedly increasing. And of course, for small and micro finance, we are still faced with challenges such as insufficient credit demand and et cetera. Banks are quite -- are having very difficult situation and trying to find a way out. For some banks, they're trying to expand their volume by using lower loan pricing. But for CMB, ourselves under this difficult situation, we choose a more balanced strategy to cope with current situation.

In response to current situation, we will put risk management in priority. And based on good risk management, we will strike a balance between the growth in quantity and pricing. And of course, the first I'd like to especially mention is that we manage a good control in our risk. We maintain a leading position in the industry in terms of our risk control. The second is that we have secured our pricing in retail loan. We have not used a low-price strategy to enlarge our risk loan volume. It's a reasonable growth, as you can see.

In safeguarding our pricing, we have realized a reasonable growth, a year-on-year growth of around 4%. The growth rate itself is quite leading in terms of our commercial banking peers. I would like to talk a bit more about the risk that you have mentioned. We have increased a quarter-on-quarter increase -- a mild quarter-quarter increase in our risk itself, the NPL ratio. Well, based on the industry trend of increasing risk, we cannot be alone. We cannot stand alone to be having an opposite trajectory. We have been doing a lot of assets in studying industry, in the industry chain and to try to seize more qualified clients.

And the second strategy, we pay special focus on regions with higher quality developments such as Yangtze River Delta, Pearl River Delta. And for the third strategy, we have maintained good control in having good collaterals and nearly 90% of the collaterals are secured by ourselves in terms of our small and micro finance loans. And our asset pricing has continued to evolve and to reevaluate in terms of its collaterals. So we have quite good buffer for our asset quality of retail of small and micro finance loans. And for the provision itself, we are quite confident that we can maintain quite a good leading position in the industry.

About quantity and pricing balance that you mentioned, we have always followed a balanced philosophy in quantity and pricing. We will continue to stick to this principle. And for the second aspect, I believe that under the guidance of anti-involution and self-disciplined mechanism in the industry. I think, to some extent, given some time, the industry will be back to its reasonable competition. I believe that it is quite a good trend that is beneficial to the industry itself.

So I believe that the retail finance, the retail loan, the small, micro finance loan will still be the milestone of our business. And of course, I believe that for the external environment, we could be positive that the trend is still there. The Chinese economy is stable and developing in a good progress. So there will be future room for the growth of retail loans. So in conclusion for CMB, small and micro finance loan is under our guidance, our principles of balanced development, and we will continue to maintain a quite certain proportion of small and micro finance loan in retail loan and also balanced proportion of retail loans in total loan. We will also making efforts to ensure that we have certain market share in the industry.

Next question, please.

Next question is coming from Shen Hu from North Rock.

My question is for asset quality. After I read our third quarter results, in the bank's asset quality are moving in the same direction. For CMB, we can see that NPL has rose by 1 bps. It's -- can I understand it is a normal volatility among quarters? Or does it mean there will be continuous pressure on your asset quality? If you look at other figures like you are seeing the overdue ratio are declining but a slight increase on NPL and also stable special mention loan ration. Does that mean that asset quality is still under pressure, but at the same time, still under controllable or we might not be seeing very obvious improvement in next phase. So can you share with us about the NPL formation trend per month? And how do you look forward to the future trend such as in the fourth quarter and in next year, what other factors? What major factors will you have?

Thank you for the question. Firstly, I think for the volatility, I think it's a normal volatility. It's all under control and under controllable range. Secondly, about the future trend of asset quality or what the challenges ahead. I think for asset quality, I think overall, it's under control. But in different phases for different time point, we might face challenges, such as currently for corporate banking. And I think the major impact will be coming from the real estate sector, even though we are stepping up our efforts in controlling asset quality in this area. But periodically, we might see some volatilities and also see some periodic challenges.

And secondly, for retail, like consumption loan and micro loan, NPL formation, we are seeing it's still increasing. So these are the major challenges we are facing, and this is also the cause for the volatility of our asset quality indicators. So overall, I think everything is still under the controllable range and maintaining a stable trend.

Next question, please.

Next question is from Gary Lam from HSBC.

I'm Gary from HSBC. My question is about your CET1 ratio and also your RWA. In the second and third quarter, we have seen that the CET1 ratio has declined quite rapidly and also RWA growth rates are also faster than what we have expected. So what are the reasons behind? And also what will the -- will this trend continue in fourth quarter in 2026? And whether it will affect your capability of endogenous capital growth and also the continuity of the sustainability of your dividend payout?

Thank you for your question. Indeed, in the second also in the third quarter, as we can see that the RWA growth rate has been quite fast. And as for risk-weighted approach and also for the internal rating approach, we see the RWA growth are speeding up. There are several reasons behind. Firstly, last year in order to -- in line with the new regulatory capital rule, so that is why there was a low base for RWA growth rate last year. And secondly, this is mainly because of the structural change of business this year. And since retail loan is growing lower for the whole banking industry, so all the banks, almost you can see are having a faster growth on corporate side, retail loans slowing down. This is the same with CMB. As we can see its growth rate for corporate loan till now is 10% and also retail only 1.4%.

We all know that the risk weight for corporate loan and retail are different. So this structural change has led to RWA growth. And thirdly is that for bill discounting, discounting rate is coming down. So we hold less bill discounting this year. And we invested -- shifted the investment into interbank lending and the risk weight for bill discounting is also smaller, but risk weight for interbank lending are higher. So this also lead to a higher RWA growth.

And fourthly, in order to improve our profitability, we also have increased our investment for trading purpose, just even though we have lowered down the holding of bill discounting, but we have done more bill discounting for trading purpose on behalf of our customer. So we have slowed down some of the bills after we bought in according to the regulation before we sell down, it still occupies even for the trading purpose, we still occupies the periodic RWA. This also lead to RWA growth.

And fifthly, in order to gain some trading profitability, so we have increased our holding in the PO account and also have done more trading. That is why -- which has led to a higher market risk and also which lead to a higher RWA growth. So all these together, we can see that some are in part due to the business structural change. Some are short period, or volatility lead to a higher growth RWA, especially for the trading parts are lead to RWA growth.

And sixthly, definitely -- and also just you mentioned about the CAR ratio, one is due to the RWA growth and the second one is that another factor, except from the RWA growth rate is because from the OCI account. Last year, we have seen a quite a big decline on the bond holding in OCI account, which were quite beneficial for the CAR ratio last year. But this year, we have seen more volatilities in the bond market, which also affected the overall other income in the OCI account, which definitely has affected the net amount of our capital.

So these are the main reasons why the RWA growth are faster, but CAR ratio are coming down. And I would like to say that the capital management is very important for our internal management. So in the future, I think from 1 perspective, since we have relevant strong capital base, and that is why we will definitely support the business since the all banking industry's profitability are under pressure. And I think we need to expand our trading parts so as to make profit from the trading gains. So we need to support the trading business.

And also secondly, we need to make more precise management of capital. As for different products have a different return on capital, we will analyze that and also to put more resources of capital into the products and business units which have a higher return and also control the resources, which have a lower return. And looking forward in fourth quarter, I think with all measures taken and with more precise management and also we have more -- we need to manage the trend of the CAR ratio.

So in the mid and short -- in the mid and long run, no matter the CAR ratio or the Tier 1 ratio, I think we will continue to maintain our leading advantage, but also at the same time, we also need to utilize the capital to support the business, which are effectively will bring us more profitability. So even though there are some marginal volatility. But in the future, in the long run, I think we will still continue to have a sound CAR ratio and also have a leading position and also stable CAR ratio.

Next question, please.

Next question is coming from Katherine Lei from JPMorgan.

My question is for fee income. I thought your fee income has been positive in the third quarter, whether it's a trend that is sustainable. And in the fourth quarter, whether -- since you have a high base, whether it will slow down or become negative. And looking into the detail of fee income, you see that the asset management fee for the third quarter has -- from turning from negative to positive. What's the reason behind that? And also for the banking fee decline, whether the decline level will contracting or slowing down?

Thank you for your question. So firstly, for fee income, I think it's moving in line with our expectation and is moving towards a better direction. In the third quarter, we have seen positive growth for income. And also, this is a positive growth first time since 2022. And in the third quarter for a single quarter, an increased by 17%. So it's quite a strong growth. And just now my colleagues also mentioned about the reason behind the fee income. So one is coming from the wealth management business. We have seen strong growth on that front, especially from the retail side, including distribution fee coming from agency from the -- and also trust products and also brokerage securities.

And just now you mentioned about the asset fee growth. Even though for the first 3 quarters, I think it's down by 1.9%, but the decline level is narrowing down. The reason behind, firstly, I think it's related to the capital market performance. Secondly, I think, it's related to the growth of the asset management, total assets under management. In the third quarter, it has increased by 2.9% compared to the beginning of the year.

And thirdly, I think we have seen growth on the custodian part. So among the fee income, we have seen quite good performance on wealth management and asset management and also custodian business. So if we look at the trend, I think the capital market is still moving in a good direction. So capital market-related fee income, we are quite confident on that. And the confidence actually is coming from the strong base, strong customer base, especially for quality customers, we are seeing more and more customer growth and also secondly coming from the growth of our AUM.

And also -- but we also noticed that in the fee income among for payment related, fees are quite weak and also still under pressure. And year-on-year, we are still declining. This is mainly because of the credit card business. For credit card business, there are 2 reasons behind the decline or I think it's also a way that we observe the future trend. Firstly, is the recovery of the consumption market. In the first half and also in third quarter, we are seeing that since we haven't seen the data in the third quarter of the consumption data.

But in the first half, we are seeing that the consumption has been down by 11% for the whole market. So the whole market is still under pressure. Our transaction value only declined by 8%. In third quarter, it is down by 7.7% for our credit card transaction value. I think the decline level of our credit part is better than the overall trend, but still is under pressure. So that is why payment-related income, especially from credit card is still under pressure. And another thing to look at that is even though payment from credit card is under pressure, but our market share is still increasing, and now we still have the largest market share. In the first half, the market share -- our transaction value market share is around 14.32%. I think it's still the highest in the market.

But look in the future, with governments continue to stimulate consumption, we think that the consumption market will continue to improve, which will lead to an improvement on our credit card-related business. So we think that we are thing that the trend will be in line with the whole market. And fourthly, just now you mentioned about the investment related other noninterest income. If we look at the other noninterest income, even though there is still a decline in the third quarter, but still the decline level is also contracting.

Amounted income from investment are moving in a better direction. Firstly, the long-term equity investment is improving, including our subsidiary like the CMB Cigna according to the new accounting policy, this is -- we have some increase on the income coming from CMB Cigna. And also secondly, coming from the dividend of our funds we have invested in. And thirdly is from the bond trading account. And fourthly, from the FX exchange, we also have turning from negative growth to positive growth. So even though we are seeing negative growth on the other noninterest income, mainly affected by the bond market performance, but other factors are also turning into the better direction.

Next question, please.

Next question is from Xiao Feifei from Citic Securities.

I have a question regarding wealth management business. Along with the recovery of the capital market, I would like to understand that about CMB's wealth management business, what are the new transitional direction for you? And how do you evaluate the new gesture or new plan for future development? And what is your assessment of your future performance and income in this business?

Thank you for your question. You have just mentioned about a question that we have been considered to think -- the social wealth total volume and the future room to grow, I believe, there are a large room. Well, for us, I think that we would like to seize this opportunity in the overall strategy. We will stick to our principle to develop customer base, especially high-quality customer base. This will be the foundation of our business development. This is the first dimension.

And the second dimension is that for CMB, we are unremittedly pushing forward customer service, a new service mechanism of human plus digitalization. We hope that we can implement this new mechanism to realize a further upgrade and further outreach and deepen our service model that we can deliver to our clients. And the third is that we have -- we see there are a larger room to provide professional wealth management consultation service, and we hope that we can provide a stronger service in this area to provide a better customer experience.

And for the fourth dimension in the product itself, we think that we need to satisfy our clients' clients and satisfy our clients and center on their demand to realize a high win rate plus diversified allocation strategy to realize our balance in our product metrics to cope with potential changes happening in market itself. So generally, we hope we can enlarge our -- we can deepen our study over the market change and to seize opportunities to maintain a balanced structure and to also be resilient to the market. As you can also see that in the third quarter, our work management fee income actually reflects that what we have been doing is to seize the market opportunity.

And finally, in the future. In the financial indicator of Wealth Management business, we think that even though the market has opportunity, we are still faced with many challenges, and these challenges are mainly from these aspects, for instance, the fluctuation, the potential fluctuation of the market, the potential changes in the regulatory requirements, but we are still confident that with the market becoming larger and larger and the increasing of our professional capability that we can maintain a good proportion of the market share and continue to increase our market position, reflecting the financial indicator itself, we will strive our best to overcome the difficulties posed by the third phase fee cut, a fee reduction in the mutual fund industry. And finally, we can realize a stable development, an increase of the fee income and to seize opportunities arising from different types of assets.

We will have the next question.

The next question is from Mr. Wai Sing Chang from CIMB Securities.

I have a question regarding the property sector. We noticed that the real estate NPL is actually decreasing. What is your idea on the progress of exposure in the risk in this sector? And of course, for the next year, we see the maturity of the 16th measure of the property finance. What is the idea on it? And along with the decreasing housing price what is your idea on the influence on your loans LTV? And apart from the property sector, what do you think that the risk that you should pay more attention to?

Thank you for your question. For the property sector's risk exposure progress, I would like to talk about my idea from the following 2 aspects. The first is how do we view the current situation? And the second is how do we cope with it. The first one is that I think from the policy side and from the market side, we are both having some views. From the policy side is that the policy will continue, and our target is to stop the decrease and to maintain a stable development manner.

And I think from my perspective, the market is also showing a divergent trend. So in the year -- trillion, for the RMB 1 trillion level and trillion meters -- square meters level, I think these are 2 aspects that reflects the decrease in the property market, which is quite sharp. I would like to use these 2 idea to conclude my view on the industry. And from the bank's perspective, CMB in terms of our property sector's risk, I have 3 ideas. The scale maintained stable and the structure is optimized and then the quality is trending towards a stable position.

One figure is that from 2019 to 2020, the real estate sector's proportion in our corporate loan is decreasing from 19% to less than 10%, is the decrease in our scale and our structure is further optimized. First is that in Tier 1 and Tier 2 cities, our projects are mostly centered in these cities accounting for over 82%. And the top 10 corporate clients in the real estate sector accounts for over 40% of our total corporate loan and total corporate real estate loans.

So by the end of September, our NPL ratio of real estate loan was 4.24%, down by 0.5%, and we make sufficient provision in this sector, which is 2.5x of the average level of our corporate loans provision, which is very abundant and sufficient. We will continue our policy to back to origin to select qualified region, qualified customer, qualified project and make strict management over our real estate business.

The second question is about the 16th measures. And I would like to talk about some of my idea. In fact, I think the 16th measures have casting good impact on the market to ensure the smooth development of the market -- of the real estate market, especially the guaranteed delivery of the housing project. So in terms of the maturity of the project itself, it actually extends and help the project to secure a soft landing. So generally speaking, why do I say so? The policy will be continued to the end of the year 2026. And for some projects, if the project cannot meet the expectation of its expected sales volume, so probably the policy will continue to be extended in terms of its maturity.

So from the transitioning of the old project to the white list management, I think these management measures are doing beneficiary influence to resident itself, to companies, to government, to local governments. So generally, I think it is a useful measure that is targeted specifically to its audience. So I believe that if the management -- if the project itself could be put under strict implementation. And for the market, I believe that the land price accounts for 60% of the total project volume, I think -- so based on this current situation, our loan is quite secure in terms of the phenomenon.

So the 16th measure itself, probably it will be extended in accordance with the current market situation. I think it is -- it could be considered that the safety itself is under control. And your -- another question about other risk areas that we pay attention to is that besides real estate itself, we are still focusing on other areas such as the debt resolution of the local government and also some industries, for instance, the infrastructure and construction, evolution, relevant industries and et cetera, and also small and micro finance and consumption finance sector.

I would like to invite Mr. Lu from the Retail Finance headquarter to introduce more about the risk in the retail finance sector and also the mortgage sector.

Well, for mortgage itself, the mortgage risk is based on our good structure. I could introduce that most of our mortgage are centered, 90% of our mortgages are located in Tier 1 and Tier 2 cities. The collateral rate is maintained at a relatively low level. The LTV level was less than 40%. The collateral is also under repeat and frequent reassessment. Even though we are faced with pressure of decreasing housing price, we have a good reserve in the asset allocation behind to ensure that the overall risk is under control. Of course, undoubtedly, the trend is showing some upward trajectory. It is aligned with the whole market, not just CMB itself. So the mortgage risk, there will be experiencing some uptick. This is about our judgment on the mortgage risk.

Next question, please.

Next question is from [ Claire ] from GS.

My question is still for asset quality, we can see that the NPL formation has risen a little bit. And just now you have mentioned about the reason already. And at the same time, we have noticed the provisioning level has been down by 7%. But in between the provision for loans are increasing. So how do you see the future provisioning level and also for future provisioning trend?

And another question is about interest rate, your view on interest rate after the Central Bank decided to go into market and buy bonds again. So how do you view the interest rate trend?

So the first question, in terms of asset quality, we continue to maintain our stance as a stable -- maintain a stable asset quality. And for retail and also corporate loan, we take a prudential view in provisioning. Provisioning level, I think, is more related to the business structure change, such as for corporate provisioning is mainly because more special mention loan for real estate. That is why we have increased the provisioning on that. But at the same time, we definitely see -- have some underwritten for the disposal of the assets as well. So overall, I think the provisioning level is stable. So even though there are some periodic volatility, but overall, it will be -- so firstly, really reflect the asset quality level.

And thirdly, I think the volatility will be under control. I have some -- for the provisioning level structure, we can see that we have the provisioning for loan has increased. But for the other non-loan asset provisioning has been declining, and this is mainly related to the total size of the non-loan assets.

And for your second question, do you mean that the PBOC has decided to buy or sell bonds in the market? I think after Mr. Peng has made a statement, there is a volatility in the market and the rate has been down by 4 to 5 bps. So the market estimation is that after PBOC resumes the operation since there will be more alliance on monetary policy and fiscal policy that will help the rate to go down again. So in the third quarter, they will be affected by many reasons. There's a rebound of interest rates. So last year, for the 10-year bond was stood at 1.86%. And in the third quarter, I think it's around 1.8%. There are many reasons behind that. Some are because of the capital markets and some of the anti-involution expectation, and they are also for new tax rules on the new issued bonds, which will be not affected by that.

But after we have resumed the operation of PBOC in the market, I think that will -- our judgment is that, that will be beneficial for the overall investment income. Just now another analyst have asked about the trend of the fee of the noninterest income. So among the noninterest income, other non interest income are affected by the bond market. Last year, we have a -- since the rate was low and that is why we have a high base of other noninterest income. So in the fourth quarter, we are under pressure in this aspect since -- due to the high base.

But after PBOC resumed the operation or if they really have done the operation, I think that the market rate will go down for the bond yield will come down, which will be beneficial for our investment gains.

In order to guarantee the interest of the individual investors, we have collected individual investors' questions and some are more similar to the questions which you have just raised. And now there is a particular one that has not been asked before, which is -- in the first 3 quarters, CMB's corporate banking loan growth rate exceeded 10%. So what are the major areas that the loans has gone to? And whether you have enough reserve -- project reserve in place for the next year. Thank you.

And I think by the end of the third quarter, our loan is 2. corporate loan is RMB 2.8 trillion, up by around $26 million compared to the beginning of the year and the growth rate is 10.27%. If we look at the growth structure in terms of industry, the first largest incremental part are coming from manufacturing. The second coming from the power and also -- and third one is coming from the rental and service industry. The incremental power coming from the 3 major sectors compromise around 49.9% of the total income and which is the first 1 coming from manufacturing and for power and also water litigation is around 11.14% of the total corporate loan.

And increased level amounted is around -- and also for leasing and also for that is also quite big and also increased by around 23%. So these are the 3 major sectors that we have seen increased for that. And when we look at other regions, we are seeing the Pearl River Delta and also High Sea area and also the -- and also the Bohai Rim region. These are the major areas coming from that. So these are the major areas that our corporate loan goes to.

And currently, I think, affected by the overall economy since real estate is not coming up yet, and we are seeing demographically, we are still seeing negative pro income. That is why demand deposit -- for the demand for corporate loans is still under pressure, and there's also a very fierce competition on that. So in the future, I think we still need to look at the right direction to go. And from the reserve and also strategy for next year, from industry and also region strategy, I think that will be similar to the -- this year from industry, we step our efforts also in transportation. And for customer base, except for large focusing on large corporates and large projects, we are also focusing on the midsized corporates to hope that we have more balanced customer structure.

And also from a product perspective, we have increased fixed income projects and also M&A projects, which have a longer duration and hope that we can have a more diversified product structure. So we hope that we can keep our balance among scale and also pricing and also asset quality. And can have a dynamic balance according to the changes in the external environment.

Now I think due to the constraint of the time now we have, the last question please.

And the last question goes to Richard Xu from Morgan Stanley.

My question is still on loan yields and also loan growth strategy. Just now Mr. Peng has mentioned that there are many policies like the anti-involution and also guidance on banks to have a reasonable loan yield. So when you look at the newly disbursed loans, whether you are seeing the yield is coming stabilizing? And also, secondly, you mentioned about for corporate loan, you want to compete for more quality loans. Everyone want to compete in that area. So what will be your major strategy. And thirdly, from the loan growth rate and also the shareholder return, if the loan yield is not good, whether you will consider to slow down your loan growth rate and also to improve the shareholder return, whether that will be a consideration?

Thank you for your question. I think it's the last question, that will be the conclude of our today's dialogue. So firstly, for the loan strategy, this year's the loan yield is coming down. One is affected by the LPR rate coming down and also affected by the weak demand in the market, which lead to a lower yield. And I think when we analyze whether the loan yield has reached the bottom, I think mainly we need to analyze whether the demand is picking up or not.

And secondly, whether the LPR will temporarily stop to going down. So when we look at the LPR cut, our analysis is that with the macro economy, maintain a stable growth momentum. The LPR cut expectation is smaller. But overall, when we look at the GDP Q-o-Q growth rate, the decline of the growth rate is narrowing down like the third quarter is 4.8%. So we expect that for quarterly GDP growth will be lower than that. If there is pressure on GDP growth rate, we cannot rule out the possibility that the PBOC will continue to have the cumulative monetary policy and continue to cut the LPR rate. So this is from the LPR rate and policy rate.

And secondly, if we look at the demand side, if the bank's demand is closely related to the vitality in the marketplace and also vitality in our investment market. But according to the data, we have seen that the investment data relating to investment is not still stabilizing yet. So even though the profit growth of industrials have rebounded a little bit, but demand for loans, still, we haven't seen very obvious rebound. And for demand, definitely, we need to seize opportunities to seek for new opportunities.

Just now, my colleague from Corporate Banking has shared with you some of the areas that we would like to work on. I think mainly for strategies, these -- some of the industries that we need to be even stronger for and for some industries, we currently might have some shortfall, but we want to make up for that. So we need to continue to optimize our customer structure, such as in the past, for corporate banking, we have a higher proportion of large-scale customer, and we might have the highest proportion of large-scale customer, it's around 50% of the total higher than peers.

So it means that for -- there will be further room for optimization of customer structure. And if we can also expand our midsized customers, especially for those quality customer size, I think that will also help with the loan yield. And at the same time, when we think that there might be further room for LPR to further cut down, but the anti-involution, we need to also take into consideration about the anti-involution policy, namely banks are having a more reasonable or on pricing. So that will also help with the stabilization of loan yield.

So taking into consideration of all the factors I mentioned above, I think that the loan yield will be trending to stabilized at a level. There will be less room for the rate to continue to go down. But for the newly disbursed loans there and for the existing loan, there's still a gap between the new one and the existing one. So that will drag down the loan yield overall. But if you look at the newly disbursed loan yield quarter-on-quarter basis, I think it's more and more returning to a reasonable level for all the banks. So this is my judgment on that.

And just now, I also mentioned that when I analyze the NIM level, that is why I think that the NIM is kind of stabilizing at the bottom range. And under this pricing environment, how can we see the return on shareholders? As I always mentioned that for return on one customer, we cannot only focus on the loan that they have, but we are -- actually, we are providing comprehensive solution service for the customer. Loan is only one part of the complete measure. So we hope that loan is kind of something that we give to the customer and then to simulate the customer can work us with us in all fronts, including investment, including other retail-related business, including wealth management-related business. So the contribution from the customer cannot purely be measured by the loan side, rather, it should be a very complete measure of the contribution from our customer.

And also I mentioned for loan growth rate, I mentioned when the macro economy is stable, our loan growth rate will be stable. But when the macro economy is under pressure. Our loan growth will also be stable. I don't want to see much volatility in the loan growth rate. Volatility means risk. So it should be in line with the total macro economy. In line with that and try to be stable and then to increase the overall contribution from the customer. And I think it's almost -- we're almost done for today's conversation. I think our friends, analysts, your questions are really, really very good questions and also invoked our thoughts on that. And also you focus -- you also care about the future trends.

So I would like to share with you some of our views on the future trends of our bank's operation. So when we look at the future, I think some are certain and some are not certain. For certainties, I think, firstly, the overall economy will continue to have a stable growth, and make steady progress like the GDP growth rate per year, 5% and also other macro datas are moving towards a better position. This is something that is certain -- under this certainty of the external environment, we are sure that our customer base, our AUM, these are the foundation of our business will make steady progress. This is also certain. So this is the first certainty I would like to say.

Second is that for asset quality, this is to control the asset quality is our pursuit, and it's something that we will always emphasize on. We will continue to make sound asset quality and maintain a prudential risk appetite. This is also the certainty of us. Just how you focus on the RWA growth rate. And many investors asked a question about that. I think you don't need to worry too much about that because RWA growth, there are many reasons, some are periodic and some are calibre reason and some are base reason. What I want to say is our risk appetite doesn't change. And also our pursuit to make a contribution to our shareholder return doesn't change. So our philosophy, our banking operation doesn't change. So you don't need to worry too much about RWA.

And also, we have maintained a relatively high CAR ratio. So for asset quality and also for capital management, this is also certain. And thirdly, the core financial indicator of CMB to maintain a leading position doesn't change. We -- namely like ROE, like the CAR ratio, like the NIM, like the fee income proportion and also like the retail business proportion in our total business portfolio, these are certain. We will continue to maintain our leading position in all these aspects.

And fourthly, I think another certainty is under this low interest rate, low fee rate environment, for banking industries for quite a long term, the banks may maintain a low net profit growth rate for quite a long period. So this is also certain. I think you cannot have unreasonable expectation, too high expectations for our bank's low profit growth rate. So I think for maintaining a relatively low profit growth rate will be stable for a bank. It's like a marathon our bank is running. It's not a short run as you need to have a stable -- as long as you have a stable growth for the -- in the long perspective, that will be a high return. So this is something that is return.

And when we look at the uncertainties we have, I think there definitely are some uncertainties we are facing with. So that is why we cannot give you a very precise prediction on some financial data. The first one is side under the certain direction of the macro situation, but the market still are facing volatilities. Like the capital market, like the foreign exchange market, there are many volatilities. And also for the bond market, the 3 markets are facing volatilities and changes like the foreign exchange market is affected by the tariff issue. There are some judgments on that, but we cannot make sure that it will be applicable for all the times.

And also capital market, definitely, people think that there will be a bullish market, but definitely, there will be volatility, and we are not sure that is establishing of a bond market. And also for the bond market, we have analyzed on that. There are many factors affecting it, and it's a normal thing for the volatility in the market. So whether -- how it will go, the market will evolve is something that is uncertain and also which definitely will bring some volatility to the profit and income of the banks. So this is uncertainty lying ahead.

And the second one is that when the overall risk is under control for some certain area of risk in certain areas or for a particular individual cases, there will be some kind of volatility. Just now you mentioned about property, some of the retail risk, we cannot say that it's time that we can stabilize or we can rebound the asset quality. But what we can say is the overall asset quality is under control, but we cannot rule out the possibility that due to some uncertain events, there may be some volatilities ahead. So these are the uncertainties we also need to face with.

And thirdly, volatilities that the monetary policy and also fiscal, we will also are changing. Definitely, these are monetary and proactive policies, but how they implement that, what instruments they will use, these are uncertain like whether they will cut the rate or whether they will cut the interest rate or whether how much fiscal investment that we'll have. So this will definitely affect the bank's NIM, bank's fee income and also bring some short-term uncertainties.

So even though with all the uncertainties, I think more are coming from the certain sides with all the factors I mentioned above, I think the most certain thing is that we will continue to focus on quality and also lay priority on profitability and to have a proper growth on scale. We are confident we are making steady progress and moving towards a better direction. So I would like to take the chance to share with you some of our views on the future trend. Thank you.

Thank you. Now it's the end of our third results conference call. If you have further questions, you can go online to see our third quarter results or if you want further explanation, you're welcome to contact us. Our IR team are always there for you. Thank you. Bye.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]