Bank of China Limited (3988) Earnings Call Transcript & Summary

Distinguished investors, analysts, friends from the press, good afternoon. Welcome to BOC 2024 Interim Results Release. I'm Zhuo Chengwen, the BOC Board Secretary. Today, I and Madam Yu Ke, BOC spokesperson will co-chair the session. And this release will also be live streamed on the Internet. So greetings to friends joining us online. First of all, I would like to introduce the BOC leaders present today. They are Chairman Ge Haijiao; Executive Director and Vice President, Lin Jingzhen; Vice President Liu Jinn; Vice President, Zhang Xiaodong; Vice President, Cai Zhao; Chief Risk Officer, Liu Jiandong. Also a representative of our Independent Director, Madam Liu Xiaolei joins us online. The 2024 interim results have been released on August 29. The slides can be downloaded at the official website of the BOC or can be viewed down the live streaming page. So all the financial statistics are compiled based on the IFRS otherwise -- unless otherwise specified. So we have 2 sections today, the results announcement and the Q&A. So first of all, I would like to invite Chairman Ge Haijiao to introduce to you the interim results of the bank.

Dear investors, analysts, friends from the press. Good afternoon. Welcome to the interim results release of BOC for 2024. Over the years, you have paid a lot of attention, support and assistance to the operation and development of the BOC. Here on behalf of the bank, I would like to express my sincere gratitude to you. So now I would like to first introduce to you the [Audio Gap] encouraging performance in the first half of 2024 and the outlook for the future. Also, after that, together with the other management, I would like to [Audio Gap] the after-tax profit, RMB 126.35 billion. NIM stood at 1.44%, which is the same as the first quarter of this year. The noninterest income increased by 6.36% year-on-year and the cost-to-income ratio is down by 0.32 percentage points year-on-year. Second, the asset and liabilities continue to grow steadily. Asset scale reached RMB 33.91 trillion and liabilities RMB 31.13 trillion, up by 4.55% and 4.9%, respectively, over last year's end. Third, customer base continued to be consolidated. All corporate customers increased by 6.8% compared with the last year's end and the all personal customers increased by 1.19%. And the group's private banking customers increased by 6.65%. Fourth, risk resilience capabilities increased. NPL ratio stood at 1.24%, 0.03 percentage points down compared with the end of last year and the provision coverage ratio, 201.96% or 10.03 percentage points compared with the last year's end. The capital adequacy ratio stood at 18.91%. 1.17 percentage points higher than last year's end. Also, in the first half of the year, the stock prices in A&H markets also performed well, which has delivered tangible results for the shareholders. In order to implement the new requirement of the government and to answer the shareholders' need for cash dividends, we will increase the interim dividend for the year considering the operational results, financial conditions and future development and approved by the Board of Directors, we suggest that we will pay out the interim common stock dividend for 2024 at RMB 1.208 per share, and it will be submitted for shareholders' approval. So in first half of the year, BOC focused on our main businesses and taking our responsibilities. We focus on 5 main areas to serve the overall strategy of national development and have boosted the economic recovery. And our main business have improved a lot. First will it be a [ practitionery ] implementing the CPC central committee's decisions and give more support for the 5 main areas. The BOC consistently understood the essence of high-quality development, improved the financial supply and also the quality and efficiency of services. Fintech have continued to improve, and we have established fintech center in the head office and branches to quickly respond to the customers and market needs. We provided 100 -- we provided RMB 1.71 trillion of credit support for 38,000 high-tech companies and providing RMB 650 billion of comprehensive services. And for Green Finance, the domestic green credit balance stood at RMB 3.67 trillion, up by 18%. And the green financial product system continued to be enriched and the scale of underwriting the green bonds remained the #1 in the market. And the operation of the head office and many other offices have remained carbon-neutral and credit financial services become even better. Our credit -- our loan balance exceeded RMB 2 trillion, up by 18.94%, and the number of customers exceeded 1.3 million, up by 21.67%. And in terms of the customer numbers and coverage ratio for special enterprises, we are market leader. We also continue to improve the pension finance. We continue to improve the service level, both online and in the outlet to the elderly people and the amount of fiduciary pension funds exceeded RMB 232.3 billion, up by 10.71%. And the number of personal account of enterprise annuities exceeded 4.37 million, up by 6%. And our digital finance continued to empower transformed development, the OASIS project have been going live, and the data platform have covered over 80% of the institutions in the group. We have improved the number of monthly active users of mobile banking for 9.98% and the corporate online clients increased by 9.96% year-on-year. Second, to be a mainstay for serving the real economy and boosted the recovery of economy. In the first half of the year, domestic RMB loans increased by RMB 1.21 trillion with better growth and structure. We have supported the growth of effective investment and the interim to long-term loans of the manufacturing sector increased by 13.82%. And the balance loans for strategic emerging industries increased by 15.37%, and the agricultural-related loans, RMB 2.28 trillion. We have boosted domestic consumption. And the personal housing consumption loans balance increased by 24.9%. We have supported the trading of consumer products. We have also supported the private economy and developed the work plans for supporting business -- private businesses to go global and the balance of loans for private companies increased by RMB 348 billion, up by 9.35%. We've also helped to build a new pattern for the real estate sector. We have supported the coordinated mechanism for urban real estate financing to meet the reasonable financing need of the real estate developers and our market share of corporate mortgage business have increased. Service should be a pioneer of the dual circulation development pattern and leverage our globalized and integrated operation advantages. The pretax profits of the overseas commercial banks exceeded RMB 5 billion for the first half of the year, up by 11%, and the contribution to the group reached -- increased to 23.95%. And we consolidated advantage in overseas settlement. And the international settlement exceeded USD 1.8 trillion and the number of customers increased by 13.6%. We've seized the opportunities of international trade growth and the overall trade volume of overseas e-commerce increased by 59% year-on-year. We further expanded our advantage in cross-border RMB business. And the Serbia RMB clearing bank has officially started operation, and we have implemented the first RMB loans to Middle Eastern companies and the carrying amount of cross-border RMB increased by 93.97% and the amount of Panda debts underwriting exceeded RMB 28.5 billion. We've supported the companies to go in and go out. We have provided credit for over 1,100 projects along the Belt and Road, involving USD 341 billion and the number of merchants receiving overseas cards increased by 127%. We've also increased the coordination mechanism and the core business indicators of several comprehensive operation companies have improved and the daily sale of asset management products exceeded RMB 1.3 trillion. Fourth, we will be balanced loan for maintaining financial stability and effectively prevent financial risks. We will build a comprehensive risk management system, improve the risk inspection and judgment system and also the closed-loop management of the emergency case management. I would take a case-by-case approach in improving the risk management of overseas institutions and comprehensive operation companies to strengthen the see-through management of the group and to prevent the cross-regional, cross-market and cross-border spread of the risks and to respond to the volatility of global financial markets, will also increase risk -- the prevention of conventional and nonconventional risk and be more proactive in preventing the risks in real estate and local debt. We will also -- we have also effectively improved our risk offset capabilities. Number five, we'll be a practitioner in building strong and large state-owned financial institutions to improve the efficiency of the group. We have implemented the central government's requirement and have further improved our performance evaluation mechanism to better serve the national strategy and achieve high-quality development. We have consistently improved the corporate governance mechanism and reviewed the Articles of Association, the authorization mechanism, the rules of procedures for the special committees of the Board and the strategic planning of the group and have developed 12 point action plan for implementing the spirit of the Central Government's Financial Work meeting. We've also improved the high-level design for globalized management and promoted the one point contact global response mechanism to improve our global layout mechanism and international competitiveness. Looking into the future, the Third Plenum have set out the new blueprint for reform and opening up as China's economy picks up, and the new momentum and the advantages continue to be cultivated and the high-quality development takes root and the bank faces the rare opportunity of accelerated transformation and development will go all out in promoting the high quality development of social and economic development and focus on 5 key areas: to promote and improve the financial supply, structure and to promote the profound transformation of development philosophies and business patterns; two, build new momentums and new advantages. We will better boost domestic demand and coordinated regional development and boost the development of the private economy. We will also contribute to high-level opening up and to build a high-level opening up economic new system and support the international trade and BRI initiative to promote the internationalization of RMB to meet the diversified needs of the customers for comprehensive financial services, improve our global competitiveness. We will also prevent systematic risks and be more forward-looking to have systematic implementation of risk measures. We should be more proactive in preventing and foreseeing the risks more targeted in risk control and have see-through integrated management so as to build an effective risk prevention net and to prevent and mitigate risks in key areas. We will overtake -- overcome difficulties and promote innovation and reform. We will focus on customer centric product service system, improve our products to be more diversified, accessible and inclusive. We will also accelerate the digital transformation, strengthen high-tech empowerment to build a governance structure that is suited to our global and comprehensive management and this year is the 75th anniversary of the establishment of the PRC and also a critical year for achieving the 14th 5-year plan. BOC will continue to work hard, to deepen reform and take responsibilities to accomplish all the tasks, so as to make greater contribution in serving Chinese-style modernization to build strong financial power and to boost high-quality development and make greater contribution to the society, the shareholder and the country. Thank you.

Thank you, Chairman. Now let's turn to the QA session. [Operator Instructions]

I am from the China Securities. I'm [indiscernible] I'd like to have a question -- a board's question. We're saying that over the past 1 year, the environment is very complex for banking industries. There are many uncertainties, and we've seen that BOC in the past 1 year have mobilized your motivation and the results have been achieved to pull through the difficulties and the ability to go through the cycles. And that is reflected on the results. I have a question for Chairman Ge. Starting from now, looking to the future, how do we see the future business environment as well as the business strategies and layouts, deployments, do you have specific considerations?

Thank you very much for the question. This is a very good question actually. The economic environment in China is recovering for a large financial institution as BOC and [indiscernible] my personal understanding is that we are having more opportunities than challenges. For any challenges or risks for us, there are new challenges. There are aspects. First, in terms of the national policy of China since -- and the Third Plenum of the 20th CPC, Central Committee of China, there are systemic layouts and the policy dividends will be unleashed. And that will bring impetus to the high-quality development of the economy and society. In terms of the industrial development, BOC is faced with positive factors and externalities in particular, with the high-level opening up of China as well as a new round of technology and scientific innovation and development that will bring opportunities to BOC build for overseas wise and domestic China, for example, the vast development of high-quality new productive forces that will be good for our comprehensive business operation, and we can -- to seize the opportunities in the changes. In terms of the financial regulations since the central financial work, the regulation are more fledged and the efficiency has been improved. That has provided strong support and regulation environment for stable development. For the banking industry itself, now it is restructuring and for us to do our own job well and improve our quality. And the challenges of the market brought us the impetus for us to improve the efficiency and quality of ourselves and optimize our business strategies to seize the opportunities brought by the changes in the market to achieve the stable and sound development of our businesses as well as our restructuring. Looking forward, BOC will learn for the financial chapter of [indiscernible] on economic development, in particular, the bilateral philosophy and people oriented over the finance. In particular, combining with the policy strategies of our country as well as in the development of the financial sector to seek our own high-quality development road. To be more specific, while cultivating the new quality productive forces. And -- for BOC, we have a lot explorations on this part. In particular, the 5 key aspects of financial sector, in particular, fintech, be it our management team, we pay full attention to this part, will provide the high-quality development of the fintech and combined with the life cycle of the industries and to provide financial service to the technology sector. While at the same time, actively participate in the international rule making or standard making to provide its service to the different kinds of business entities and we'll also combine the 5 key priorities of the financial development and play our role in those 5 key priorities. And second, and promote the comprehensive reform, how can we provide more diversified financial products and increase its diversity and accessibility of financial products, and in particular, providing service to the new productive forces as well as the optimizing our group governance framework, and it provides more quality products and to meet the changing demands of our customers, we need to be ready for that and make some preparations and to create more values and a sustainable development and also upgrade some of our governance work. And third, we need to improve our competitive -- competitiveness to ensure the financial revenues indicators, sustainability, you can see the results in the first half of this year. We controlled the risks. Based on that, we maintained a stable financial performance. We'll optimize our business structures. For example, leverage our advantages and improve our revenues for financial performance, while at the same time, we'll control the cost, control the increase of the fees and expenses. And fourth, we'll invest more resources to consolidate our international operations as well as our advantages in our global businesses. And CPC, Central Committee promote to build a strong financial country. We have the advantages and the capacity in the future to play a bigger part in this process, in particular, support the BRI cooperation as well high-quality branding and high-quality going out, so we will provide financial support to those very pragmatic projects in overseas cooperation. While at the same time, we expand our cross-border business servicing ability and to provide immediate and fast response to customers' demands. And fifth, we will shore up our defense line of the risks. We will continue to improve our risk management mechanism, in particular, increase our risk screening and the management of the conventional and nonconventional risks to break down the risk management to the different layers and the levels of the institutions within group, be it domestically and overseas operations and businesses and we'll maintain close interactions with the regulators to promote the risk mitigation in key areas, improve our coordination in the risk mitigation, provide service into the 3 major projects particularly ensuring delivery of presold housing units. We will also build analysis and research at the industry and increase our risk mitigation, prevention of risk, counter risk as well as ensure AML compliance to ensure the stable and a safe and secure operation of BOC, build BOC as a strong and resilient state-owned bank.

Thank you very much, Chairman Ge. Next question, please.

I am Shen Juan from Huatai Securities. Congratulations management. Against the difficult market environment, BOC achieved good performance in terms of the financial indicators. I have a question about credit. We've seen that in the first half of the year, the credit extension was good. But I'd like to ask a question about the geographical features, structures of the credit granting as well as in the forecast for the next half of this year against the backdrop of the market environment as well as in policies. So what our forecast or outlook or plan for -- in terms of credit extension in the second half of this year?

I'd like to give the floor to Vice President, Lin Jingzhen to take this question.

Thank you for the question. Since the beginning of last year, BOC implemented the policies and strategies of the government of China and implemented a series of the guidelines in the conferences and also meet the regulators' requirements, pay attention to a stable growth of credit granting as well as optimizing of the structures of credit products to provide service to the real economy. As at the end of June this year, BOC's domestic RMB loans increased by RMB 1.2 trillion compared of the beginning of this year, an increase of 7.3%. Corporate credit achieved a stable growth. Domestic corporate loan increased by RMB 1.06 trillion or 9.98%. Private credit contribution has been increased. Domestic RMB personal loan increased by RMB 143.9 billion or 2.47%. So the volume and speed are better than the same period of the last year. Inclusive finance, credit -- green finance, finance for the strategic emerging industries as well as the key areas has been higher than the average growth rate of the loans. So the structure of the credit products has been increased. In terms of private credit, we have implemented the policies of expand domestic demand, nonhousing consumption loan has been increased by more than 70% year-on-year, and we also support the consumption goods trade in as we work with relevant local governments to provide support to the new energy vehicles, smart housing appliances as well as growing home appliances to improve the quality of the consumption. In terms of corporate credit granting, in terms of the industries, we provide credit supplies to the manufacturing, transportation, warehousing as well as a post and energy, thermal power, gas and water. So those are the top 5 industries we provide credit granting to and also provide support to the wholesale and retail sector. And in terms of the geographical distribution, the key areas show faster growth, including the Hebei, Tianjin and Beijing area and Hong Kong, Macau and Guangdong area, Yangtze River, Delta area. And the contribution has been increased compared with the year beginning. And looking forward, BOC will continue to provide strong support to the real economy. To ensure the scale as well as they combine our supply to the demand of the customers, we'll focus more on the structural optimization, increase efficiency and quality. In terms of private credit granting, we will continue to enhance the credit granting in the real estate sector to support the demand for an elastic amount and [ replace the amount ] of housing sector. We also provide service to the consumer goods trade in and increase the consumption loan installment of automobile purchasing as well as other products. We'll also continue to expand our customers and acquire more customers and also we'll provide the key line scenarios of our customers as well nonhousing consumption loans will be increased and the coverage will be expanded. And also optimize our credit structure and to promote the key areas of loan granting or credit granting. We will provide more service to the 5 key priorities, including inclusive and green finance, digital finance and pension finance, and we improve our group's commercial banking, comprehensive service to provide deposit, loan, equity, bond, foreign exchange as well as other series of comprehensive and packaged service and improve the quality of our financial supply. In terms of regions or areas, Yangtze River Delta, Big Bay Area, Beijing-Tianjin-Hebei area, the 3 strategic areas, credit bound is strong, and they are the key areas of contributing to our credit increasing. And we will seriously promote the Western area development to build a new landscape of our development as well as the innovation of -- or revitalization of the Northeast China. We will optimize the resources allocation in key areas and provide our contribution to the credit granting to key areas.

Thank you President Lin. Next question.

I'm Yan Meizhi from UBS. My question is about operating income. We can see that BOC outperforms the peers in terms of operating income and has achieved a positive growth in Q2. My question is, could you help us analyze BOC's performance in terms of interest income and noninterest income? And what's your outlook for the future?

President Liu Jinn will give you an answer.

Thank you for your question. Just as you said, in the first half of 2024, our bank has achieved an operating income of RMB 317.9 billion which is relatively stable compared with the same period of the last year. In terms of net interest income, in the first half of the year, it was RMB 226.7 billion which has fallen year-on-year. Apart from the impact of asset liability scale, there was also an impact from the prices. Since beginning of this year to better serve the real economy, the banking sector have taken the initiative to deliver more benefits to the real economy. And the different industries are very different credit demands and the impact of the repricing of assets and liabilities continue to be felt. Also, the ECB and the Switzerland have started to cut the rates and the Federal Reserve is expected to cut rates since starting from September. And we need to do a better job in the proactive management of foreign currency denominated assets and liabilities. So for us, we need to actively respond to market changes, strengthen the coordinated management of quantity and rate of deposits and loans. In the first half of the year, the group's NIM stood at 1.44% which is leveled off compared with the Q1 last year and the downward trend has slowed. As for the future, BOC will continue to leverage our advantage in our business structure and institutionally out so as to respond to the downward pressure of the NIM and to be more proactive in NIM management. In terms of the RMB business, we will continue to optimize the asset structure. To give more support for new quality productivity, the 5 main areas and other key areas, we will provide more credit support for the personal mortgage loans and so that personal loans will make more contribution to the loan increment. And second, we'll continue to consolidate our fundamental businesses and to stabilize and increase deposits through agency, salary payment and cash management and to have more sources of low-cost funds. Also, we will have more refined management of liabilities. Also, we will improve the quality of services, better learn our customers' needs to improve the quality and services. And in terms of the foreign currency business, we will seize the strategic market opportunities offered by the internationalization of RMB and to help companies go out and introducing advanced companies. We will also accelerate the transition of light asset businesses overseas and to approach this through overseas custodian services and cross-border agency salary payment. And fourth, we will closely follow the dynamics of the monetary policies of key economies to be more forward looking and to have more reasonable layout arrangement of the term and pacing of the market financing. In terms of the noninterest income, in the first half of the year, we have proactively seized market opportunities and overcome negative impacts, achieved RMB 91.1 billion of noninterest income, up by 6.36%. So this is our advantage that noninterest income accounts for a large proportion of our operating income and it accounted for 28.68%, improving by 1.87%. Specifically first, our bank has actively responded to the initiative of the industry associations and have proactively cut some of the fees to deliver benefits to the real economy. And second, we have been committed to a customer-centric philosophy to focus on customers' financial needs, improve our comprehensive service capabilities and expand the customer base so that the payment and settlement fees have still increased. The Internet payment fees increased by 4.7% year-on-year and the domestic corporate settlement fees increased by 5.87%. And International settlement fees grew by 9.62% year-on-year. Third, we have leveraged our global advantage and integrated operation features to seize market opportunities and to earn more through the financial investment into the rare earths and insurance services. Looking into the future, we will seize the opportunity of economic -- domestic economic pickup and actively support the real economy, effectively meet customers' needs, leverage our own advantages to promote the noninterest income business. First, we will expand new businesses and tap into potential of old businesses so as to increase the number of customers and the amount of income. Second, we will provide more comprehensive and better comprehensive financial services to create more customers and to create more values for the customers. Third, we will follow the policy guide of boosting domestic demand and consumption to be more targeted in reaching customers. Fourth, we will closely follow the global economic and financial market development to strengthen our trend analysis and to dynamically optimize the investment strategy and portfolio to seize opportunities in market volatilities. Thank you.

A lot of friends, including each investors and analysts cannot join us offline and are joining us online. So we would like to give an opportunity to the analysts online. So please identify yourself first before raising your questions.

I'm Xu Ran from Morgan Stanley. My question is about asset quality. Now the market pays close attention to the asset quality of real estate and retail-related loans. So what's the asset quality [Audio Gap]

[Technical Difficulty] an increase of RMB 8 billion. The NPL ratio was 1.24%, 0.03% down. And the special mention loans account for 1.23% of the total loans, down by 0.03 percentage points. And [ size ] difference between overdue loans and NPL have remained negative for 19 consecutive quarters. So the risk offset capability continue to increase and the provision coverage ratio was 201.69%, up by 10 percentage points. So in the first half of this year, the national economy on the whole is picking up and this has created sound external environment for our bank to control the asset quality. At the same time, we have further improved the granular control measures to improve the efficiency of collection and disposal and be more proactive in managing the credit risks and have achieved good results in asset quality management. You have mentioned the real estate and the retail loans. So in the first half of this year, so as the policy to support the real estate sector takes effect, the external financing environment for developers have improved. Also, the BOC have strengthened risk management and improved the efficiency of collection and mitigation. So by the end of June, the NPL balance was RMB 47 billion, down by RMB 1 billion and the NPL ratio was 4.94%, down by 0.57 percentage points. So overall, the risk in the real estate sector for our bank is under control. As the next step, we will continue to implement the work related to the guarantee of house delivery and to support the coordination mechanism. And based on market oriented and law-based principles, we will give out loans whenever it is necessary, and we will also encourage local SOEs to acquire existing commodity housing and to use it for subsidized housing. We will also implement the 3 big projects and the house leasing projects. Also, we will strengthen the monetary and disposal of the developers and to prevent and mitigate the real estate-related risks through various means. Another thing you have mentioned is the retail loans. In the first half of the year, BOC continued to be more forward-looking and proactive in risk management. And we have strengthened the access and approval management of the clients and be more granular in the post-loan management. So we have focused on the prevention of potential risks for overdue loans. And by the end of June, the personal mortgage loans NPL was 0.55%, which is 0.07 percentage points higher than the end of last year, which is consistent with the overall real estate market. And for the domestic commercial bank and non-housing consumer loans, NPL ratio is 1.04%, 0.19 percentage points compared with the end of last year. And the credit card NPL ratio was down by 0.17 percentage points. As the next steps, we'll continue to strengthen the management of personal business-related risks and to mitigate the NPLs. So looking into the future, the real estate sector, personal and micro loans and overseas real estate will be the focus areas. We'll continue to balance development and security, better -- do a better job in risk management and be a balance loan in maintaining financial stability. First, we'll address problems in development and integrate into the national development strategy, focus on the 5 main financial areas, optimize the financial supply structure to achieve high-quality development and high-level security to achieve benign interaction between the two. We will adopt a systematic approach and observe the bottom line of security. We will implement a national strategy of preventing financial risks in key areas and take a comprehensive approach in preventing and mitigating risks in real estate sector and local debt. And third, we will be comprehensive, proactive, granular and prudent in risk management and comprehensively -- deepen comprehensive risk management system and improve risk governance systems. We will establish a cutoff mechanism for all types of risk transfers. Also, we should have 4 early principles to be more forward-looking in the risk judgment and more timely and proactive in identifying and mitigating the potential risks. Number five, to actively and to accurately reflect the quality of the assets to have enough and prudent provisions. Also, we will have granular management and to keep the credit cost at a reasonable range. So overall, we are confident that we can maintain the stability of the asset quality for the whole bank for 2024. Thank you.

For the interest of time, that's all for the Q&A for the analysts and investors. If you have further questions and inquiries, you can contact our team after the meeting. Next, I will hand over to Madam Yu Ke, Spokesperson of the BOC to chair the media Q&A session.

Thank you. Hello, everyone. It's a great pleasure for me to meet all of you again. And I hope that through today's communication, you can better understand the BOC and you can help us convey our management philosophies and to spread our positive energy. Next, we'll have the media Q&A session. Please raise your hand if you have any questions. First question.

Hello. I'm from [ CCTV. ] First, congratulations to the bank for the good results. I noticed that the BOC have provided strong support to the 5 priorities of financial development. What are the effective approaches in this regard?

For this question, I'd like to give the floor to Vice President, Zhang to take.

Thank you very much for the question. In the QA session as well as in the presentation, Chairman Ge has given some answers. We implement the national strategy while we make the work plan to the 5 key priority areas and focus on the upgrading of the traditional areas as well as and cultivating the new areas to provide service to the cultivation of the new productive forces. Our quality of service have been improved on 5 aspects. In terms of fintech, CCB based on the head office as well as 24 fintech centers, we enhanced our service capability into the strategic technology as well as the technology companies and talent to provide a full life cycle as well as a diversified financial service to provide a specific credit approval process as well as credit assessment models, specifically for the fintech companies or technology companies, and we would like to invest early invest in the small companies and long-term investment, and we optimize our fintech insurance companies, insurance products supply. And also we incorporate ways in the fin innovation partners, build ecosystem with the research and investment companies and to build a benign circulation for technology products in finance. In terms of green finance, we diversified our green finance, green equity financing, green financial leasing as well as green asset management to improve our comprehensive and growing service scale and to deepen our global cooperation participating in the UN on Climate Conference as well the UN Biodiversity Conference and participating in the Green Financing Standards making. In terms of inclusive financing, we deepened our outreach to build inclusive finance service system built on -- focused on the small and micro companies in the technologies and to improve our service to the enterprises with specialized innovation and improve our coverages and also provide credit support for companies to staying afloat as well as ensuring their employment and provide service to the agricultural revitalization and rural revitalization and then build some featured industries, for example, the tourism in rural areas and also build global matchmaking, we have BOC e-platform to build on the investment tracking as well as optimized our comprehensive online platform to build a future plan to the key customer groups to improve our quality of inclusive financing to provide a service to those need the most. In terms of pension finance, we built pension finance center as well as coordinated our pension finance work. We enhanced our top design. We implemented [ 3-3-3 one ] development strategy. The first 3 is to deploy the pension finance, pension personal finance, personal industry finance in these 3 key areas. The third -- second 3 is to provide service to government, businesses and [indiscernible]; and third, build a global comprehensive and scenario-based 3 advantages. And one is to build BOC featured pension finance services system. We have built -- deepened our third pillar service, and we have a pension app at our mobile banking to build the pension insurance system as well as provide the personal pension finance service system, diversified our product supply as well as agree here specific area at our mobile banking and build 1,000 demonstration areas and also provide -- deepen our cooperation with the government agencies and provide policies proposals and actively communicate with the PBOC's trial pilot projects and also build the green area matchmaking at the Expo in Shanghai and also promote the equity products, service and technology cooperation with domestic and foreign pension companies. In terms of digital financing, we built an action plan, including 30 specific action measures. To be more specific, first, we enhanced our basic features and built our transformation of our technology architecture and enhanced our application of the R&D, built in the large models in the automated credit reporting; and second, to build in the digital assets quality or add value to support precise marketing, risk management, optimizing of operation and empower the high-quality development. We upgraded the 9.0 version of mobile banking to help the -- to improve our user experience as well as combining the digital currency with the traditional industries. And we have the first digital currency wireless payment. Our digital financing consumption is among -- top among the peers.

Next question, please.

I am from China Securities. I'd like to ask about the -- in the digital transformation, what are the achievements? And what are the next plan?

Thank you very much for the question. Vice President, Cai Zhao would like to take this question.

Thank you very much for the question. BOC actually participating in the digital financing trend and to integrate our businesses with digital technologies and to build the synergy to accelerate the finance to transfer or shifting to new finance, we have yielded some results. First, we have consolidated our digital transformations and foundation and promoted the digital architecture transformation, the computing power had 49,000 servers and provide the businesses, provide support to the business development of the Group. In H1 this year, we have 4 batches of production and we built -- improved our support to the business development of the group. We have consolidated our business consolidation as well as the BOC one e-platform. Now the storage has been reached 29 PB. And the data platform we have covered 80% of the institutions and the users reached 240,000 and we built a data center for the process marketing as well risk management to do the data analysis. And the multiplier in fact, has been achieved. And second, we have used the new driving forces of digital financing based on the algorithm and the computing power as well as data. We built while using and using the application to promote our computing power development. We have deepened the RPA, OCR as well as other applications. We have accumulated the channel and corporate banking as well as other areas, including 2,900 scenarios and building the data security sharing. We are using the 2 computing technology to build our brand new risk spectrum and we formulated a 30 million scenarios with our customers or companies to improve our smart risk control mechanism. And we -- third, we've built a global service scenario. The BOC Group customers, we have a full life cycle service as well as one point to connect in and global response platform. We iterated a cross-border e-platform as well as expanded our e-commerce cross-border settlement and improved our technical investment to support our cross-border unified payment and we promote the local clearing settlement. We are #2 among the global peers as well as this [indiscernible] direct and indirect participating -- we are #1. And fourth, we improved our technical management mechanism. By echoing to the digital development trend, we optimized or restructured our financial -- digital finance committee, we set a digital finance commission and optimized our IT governance system and improved R&D, coordinated and see-through management and improved our development team. We enhanced the group-wide R&D integrated operation and maintenance. So as to improve the efficiency and quality of our technology as well as the security of the operation and business. And also we refined our development process and optimized our management mechanism for the financial resources to improve our response. We remain agile to the market changes. Looking forward, BOC will remain innovative and promote digital transformation, improve the convenience and competitiveness of providing financial service to be more specific. First, we will do well in the digital finance and we'll focus on fintech, green finance, inclusive finance, pension finance. In those 4 areas, we'll focus on the application scenarios and improve the functions of our products and improve our online business intelligence as well as our full process control, and we use the new generation of open banking as well as scenario building promote the digitalization as well as the digital public service ability and to promote the real economy, digital economy integration. And second, we will build a strong engine of the technological application. We'll continue to enhance our computing power infrastructure development and build up multi-centers and multi-cloud development as well as the migrating the applications to the cloud and then further tap into the digital multiplying fact as well as in the leveraging on the big data as well as AI to improve the quality of our service. And third, we will further consolidate our global advantages as well as our feature as providing comprehensive service, we're deploying a global fintech business. We deploy the branch and a company-specific plans to improve our power of providing service to China's diplomacy and foreign trade.

Next question, please.

I am from [ Phoenix TV. ] I'd like to have a question about the global development. We know that BOC is a Chinese bank with the global presence and we -- in the Third Plenary it is pointed out to promote the global development. How can we further consolidate your advantage and promote and the high quality, high level of finance development that is the feature of BOC?

And CRO Mr. Liu would like to take this question.

Thank you very much for the question. BOC is actively learning and implementing the Third Plenary guidance as well as in the central financial work and conference and build globalization as the core of our strategic development and take it as the top priority of BOC's development using reform to improve our governance and further diversify our products and service and to build capital saving development, risk control management and deepen the one click and global response to provide a better service to our customers. In first half of this year, our overseas commercial banking deposits has been increased by 4.75%, before tax profit increased by 11.04%, contributing to 23.95% to the profit. And we have been more capable of providing the service to the dual cycle development. So we will focus on these 3 aspects in leveraging our advantages. First, to help support the International Economic and Trade Investment Cooperation and the construction of Shanghai and Hong Kong International Financial Center. We will take new and effective measures in supporting International Economic and Trade Investment Corporation and to achieve more tangible results in bringing and going out. We will also seize the opportunity of foreign capital introduction and to support the investment for Fortune 500 companies. We will enrich the cross-border financial services and product supply and to improve our service capabilities for domestic and over -- domestic and foreign trade integration, digital trade and new types of offshore international trade and seize the export opportunities and focus on the intermediary product exports and overseas warehouse development. We will focus on the FTZ development and deeply engage in the institutional opening up of the financial sector. We will also serve the development of the Shanghai International Asset Management Center, the Shanghai International Reinsurance Center, the Shanghai Exchange International Financial Assets Exchange platform and to enable higher level opening up of the Shanghai Futures Exchange. We are also -- Hong Kong -- building an offshore RMB business hub and the overseas asset management center and international and the Asian International Bond Center. Second, we will actively serve the BRI initiative and promote the internationalization of RMB. We will continue to follow up our efforts in the BRI cooperation in building a multifaceted interconnectivity work and multilateral cooperation platform. We'll focus on green development, digital economy and AI and to support the building of financial guarantee system that is a long-term, stable, sustainable and risk controllable. And we will promote the internationalization of RMB and seize the opportunity of using RMB in cross-border trade settlement and investment and strengthen our support of services for the cross-border fund pool, the overseas loans. The bond connect CIBM, QFI and cross-border wealth management connect. We'll also consolidate our leading position in cross-border RMB clearing and fulfill our role as an RMB clearing bank and improve our customer base and service capabilities, and consolidate our market maker position in Shanghai Free Trade Zone and the Hong Kong offshore RMB market. Also, we will promote high-quality globalized development and the high-quality and high-level security. We will balance financial opening up and security and observe the bottom line of financial security. We will improve our judgment capabilities and closely follow the international situation and the global economic and political situation. We will continue to implement regulatory requirement and to proactively carry out compliance and AML management so as to build a comprehensive management system and strengthen the overseas asset quality control.

Thank you. Now we will have the last question.

Hello. I'm [ Fonana ] from China Banking and Insurance News. So my question is related to foreign trade. In the first half of this year, China has done a good job in foreign trade, but we all know that the international situation faced a lot of uncertainties. So as the main -- one of the main banks to support the high-quality development foreign trade, so what has the BOC done in this respect? And what achievements have been made? And how do you further leverage your advantages and unique characteristics to help build a dual circulation development pattern?

Okay. Mr. Jiandong Liu will take this question.

Thank you for the question. Foreign trade is an important driver for domestic economic growth. It is an important lever for building a dual circulation pattern. So as one of the main banks to support the credit quality development of China's foreign trade in the first half of this year, we have taken a lot of targeted measures and have achieved some good results. I'll talk about 3 aspects. First, we continued to consolidate our position as the main channel for financial services for foreign trade. In the first half of the year, the settlement amount of international trade and the settlement amount of cross-border RMB settlement increased by 12% and 24% respectively, staying #1 in the market. We have launched the Export E-Loan, online financing product providing [indiscernible] other products in the first half of this year, BOC's cross-border e-commerce settlement scale exceeded RMB 370 billion, up by 95% year-on-year. We also provided differentiated financial services for overseas development, leasing and operations. We have served all together 270 overseas warehouse businesses by the end of June and we have continued to provide stronger support for intermediary product trade and the 3 new export items and other key areas. So we have continued to consolidate our role as a financial bridge for foreign trade. We have successfully served the Guangzhou Expo and the Consumption Expo. We've also leveraged our globalized operation advantages to help local customers attract more foreign investment. We've also leveraged our advantages in overseas layout to help the local government attract foreign customers and investments. We've also built connectivity platforms for global SMEs by the end of June 2024. We have all together organized 124 overseas matchmaking activities. Looking into the future as the global trade recovers and coupled with favorable foreign trade policies, China's foreign trade will continue to pick up and BOC will continue to leverage our traditional advantages and make greater contribution in improving the quality and quantity of China's foreign trade and facilitating the domestic and international circulation. First, we will further enrich the cross-border financial product and services supply and improve our financial service capabilities for cross-border e-commerce overseas warehouse, so trade and a new type of offshore international trade will also contribute to the establishment of international logistics hub and the commodities resource allocation hub. Second, promote internationalization of RMB. We will promote the use of RMB in BRI countries and help build the offshore RMB market. Third, we will continue to help the foreign businesses of foreign trade-related businesses expand diversified market. We will help serve the major national exhibition events and to respond to the needs of the businesses through one contact point global response mechanism and to make our voices heard and make China's voices heard and improve the global impact of China's foreign trade.

Thank you. For the interest of time, we cannot take all your questions. So if you have any further questions, please contact us at any time. So we'll soon embrace the best season in Beijing, and we hope that we can together witness the most beautiful season and the best harvests. Just as the Chairman Ge has said, BOC will take more effective measures in fostering new quality productivity and promote comprehensive and deep reform through our deep lying plans. We will leverage our advantages in our globalization and comprehensive services and observe the bottom line of security and make a greater contribution in Chinese-style modernization and make greater contribution to the shareholder, society and the country. [Statements in English on this transcript were spoken by an interpreter present on the live call.]