China Construction Bank Corporation (939) Earnings Call Transcript & Summary

Respective investors, analyst friends and friends on the media, ladies and gentlemen, good afternoon. You are very welcome to the China Construction Bank Corporation 2020 Annual Results Announcement, and we are truly thankful for your support and help with the bank. Now because we -- of the COVID-19, we are using the phone and Internet to have our meeting. We have our President, Wang Jiang; Mr. Lyu Jiajin; Mr. Wang Hao; Ms. Zhang Min; our CRO, Ms. Jin Yanmin, and I am Hu Changmiao, the Board Secretary. The 2020 results announcement -- results had been disclosed last Friday evening. And the PowerPoint has been disclosed online ahead of time for your references. Now prior to entering into question and answer, I'd like to invite Mr. Wang to walk us through about our performance last year. Mr. Wang, please.

Fellow investors, analysts, friends from media, good afternoon. You are -- very welcome to the 2020 China Construction Bank results announcement conference call. We thank you for the support and the care for us all along. 2020 is a very stringent and difficult time for us, especially after the COVID-19 pandemic effect, how we followed strictly the instructions of the central government and to play the role of a major bank to support and to assist with the COVID-19 pandemic efforts and to assist the economy in development and also to assist in our risks. And our market competitiveness has been enhanced. Our asset and liabilities achieved rapid growth. And our -- in 2020, we have a CNY 28 trillion of total assets. That's a 10.6% increase. And we have a net profit, a 1.6% increase over last year at CNY 273.6 billion, and ROA is 1.02%, ROE at 12.12%. And facing the COVID-19 in such challenging times, we hold ourselves together as a team to assist with the pandemic prevention while guaranteeing the safety of our employees. We have built several pandemic-prevention and control measures. And we have assisted more than 1,000 organizations in this effort. And we have, in Hubei province, several platforms in this function. And also smart platform and also donations that would be the first of its kind. And we have a -- located 160 million pieces of pandemic support items. And we have also reduced our fees and shared our profits and to release loans to help with the prevention of the pandemic. And we have 17.7%, and 19.6%, and 27.6% in our various loan performance. And our -- we have 11.4% and 39.6% in our loans. And we are also reducing fees, and -- to help our clients to -- during such difficult times. And we also took efforts to release our capabilities. We have close to form very excellent sales and leasing models. We have over 29% credit and presence with our real estate presence at various locations. We have 1.2 million flats on lease. And we have 230 different estates. And also with reinstatement of cities and revitalization of facilities, we work with Hangzhou and various cities. We signed strategic agreements with them. With the inclusive economy, we have a new loan portfolio of CNY 43 billion and to serve the SMEs. And the corporate organizations that we work with increased 4 million, with very large usage of our online platform. With inclusive finance, we continue to build our penetration to the villages. And our services already exceeds -- the networks already exceeds 540,000. We are accumulating training over 3 million times and to deliver financial information and knowledge to various corners of the country. And our investment in technology has been increasing significantly. We have over 3 million of such high-caliber technical people. And we are building a new retail network, a new corporate strategy to build new strategies. And given the stress of the COVID-19, we are building smart platforms with various governments in the country. Registered users exceeded 100 million. And for technical experts, we are working with 318 banks working on risk management measures. Our digital reformation has been proceeding also with an open, inclusive and sharing mechanism so that we use a platform, ecology and rely on technology to serve people as well as economy and social development. We insist on market-driven and with a new finance support of new finance and key support of it. And we also build our capabilities with digital capabilities. We also have a cloud working environment, remote working in order to ensure our services and products continues to fit the needs of our customers. And also, we have risk management capabilities to enhance that we move forward in a prudent manner. And we analyze the risk challenges that we face with COVID-19 and strengthen our risk management and to categorize in more detail our different categorizations of loans in 2022. We have 1.56 of NPL ratio. The -- our provision corporate is 23%. And our risk capabilities continue to be strong. And we step on enhancing a fully comprehensive risk management mechanism to optimize our capability to foresee and to tackle various types of risk challenges, including joint partnerships with different partners -- departments and partners in systemic risk management. And also to incorporate this into our comprehensive risk management scheme, and also to optimize our various business processes in this area. And we strictly adhere to the anti-money laundering restrictions. And we also play our role as a big bank and to support healthy and over 1,700 poor villages and also work with Hong Kong as well as the property support team to work towards this goal. And we also enrich our green finances and push for our green and low-carbon transition. We have CNY 1.34 trillion of such loans. And especially during the pandemic, we balance the privacy as well as the -- we have -- nationwide, we have 14,000 points in order to achieve this goal. At the moment, we are the leading bank among all the systematically important banks in the major banks. And if we look back on 2020, this is a very unusual and special year. We have achieved very good results, which is very hard to achieve, and we would like to thank all our staff at CCB and thank you for your hard work. We would also like to thank our customers for their trust and understanding, and we would also like to thank all our shareholders, friends from the media, regulators and people from all aspects of the community, and thank you for your love and support to our company. For 2021, this is only the beginning of the 14th 5-year plan. This is also the beginning year of how we are going to build a new society. And the dual circulation and with the pandemic has pushed forward the transformation of -- technology transformation and with the climate change, the ecological system changes has pushed forward the prosperous growth of new business. In the meantime with the negative interest rate, geopoliticals and the continuous as [indiscernible] has also brought a lot of uncertainties to the market. We have opportunities and challenges at the same time. Next step, we are going to be working in our stable fashion. And we will also combine this with the guidance of the party, and to continue to realize the driving of our development with data and technology and to solidify our new development goals. And to push forward our strategies to realize faster transformation -- technology transformation. And we will be working hard towards the improvement of people's livelihood in the meantime to improve the transformation of finance and to further focus on risk control to care for our staff to create an incentive mechanism, which is to encourage everyone to play and discover all their personal best and potential. And we will be working hard to welcome and using this as a great gift for the 100 years anniversary for the communist party. Great. And thank you. We'll now go into the QA session. [Operator Instructions] And we welcome the first question, please.

Ladies and gentlemen, we move into the Q&A session. [Operator Instructions] The first question comes from Morgan Stanley, Mr. [ Xian ].

I am from Morgan Stanley. My name is [ Xian ]. I'd like to ask about in 2020, all of the loan portfolio has been growing very quickly, and the scope is also very wide. Now where mainly would these be in these loans? And the 2021 prospect, what do you see being the prospect and the distribution of these loans?

Thank you for your question. In the last couple of years, the social financing and loan portfolio of China has been growing very quickly. This has to do with the progress and development of the society. And CCB loan portfolio has also been growing greatly. And 2020 is a special year. This is the final year of the 13th 5-year plan, and it is also a critical year for our society to move in the middle class, and it is also a year of the pandemic. Now with the pandemic impact, we strictly adhered to the state council about comprehensively fighting the pandemic and also the social and economic development. We committed in serving -- in helping with the property and the actual industry. Therefore, our loan portfolio has increased. Just now we have Mr. Wang has said, that we have CNY 1.76 trillion of new loans, and the balance is CNY 16.79 trillion. Now whether it's new or balancing -- both of these numbers are historically high. Now this mainly is because of domestic corporate loans have -- had been growing. The new loans were CNY 1.4 trillion, and private loans, CNY 756 billion. Now on the one hand, this is one of our efforts to support the post-pandemic recovery. We are helping with 10,000 organizations in this area. And also, with financing online, we are helping the upper and lower stream suppliers and corporators of several thousands of companies of the industries to help them to return or restate their business. This is -- the pandemic fighting is one of the key areas of our deployment this year. And we are also serving traditional industries to strengthen infrastructure advantage. This is where we focus on, too. So that our leadership in this area can continue to be strong. And we are also extending our loans especially the new loans that we extend are mostly in the infrastructure area. And third area is to support the upgrading of the economy, especially in the manufacturing sectors. Now CNY 220 billion -- trillion is -- has been invested in this area. Now this is to support the upgrading of the economy. And fourthly, with our strategic zones and industries, we are stepping up on our investment and deployment in here. Our -- the weakness -- the weak part in the real industries, especially the SMEs and the inclusive loans, we continue to keep a quickly growing phenomenon. And we have CNY 624 billion in this area and CNY 700-odd billion in the inclusive finance. And the increased rate is above 50%. Then we also serve the citizens so that they can seek a better living. This is where we are traditionally strong, and we have a CNY 520 billion of increase in property and CNY 70 billion in new consumption as well as some of the increases in credit card loans. And apart from these areas, we -- also in local government bond -- debts, the underwriting and selling of it, we also play an important role as well as sovereign bonds. And we also work with insurance and other companies to serve these purposes. 2020, I would say, the loan portfolio grew so quickly is given -- driven by both internal and external factors. On the one hand, it is the successful epidemic fighting in China. And also, we have a stable currency and policy, and our overall economy is going to the right, good direction. And market demand is good. This has a very good potential for our loan portfolio. Another area, it also is -- I have to thank our very good customer base of our 3 strategies this year. We -- through the many years of experience and the first mover benefits have already formed, we have a very strong customer base. And also with digital operation, we already are enjoying a lot from a lot of synergies from our overall team. In 2020, the loan portfolio, despite that it is at historic highs, we have not let loose our risk management. We remain very confident that with our quality of our customers and our loans continue to be good. And we can ensure that our loans are profitable and effective. In 2021, we would very diligently meet the demands of the 5-year plan and policy requirements. We continue to keep a reasonable development in our loan portfolio, especially optimizing the structure of it. We have to support the upgrading and the opening of our economy so that the country would continue to grow in a high-quality way. And also with green finance, low-carbon development, these are the new areas that we will focus in. And we continue to enhance or build on our strength in traditional infrastructure lens. And thirdly, we continue to support inclusive financing with SMEs and the private enterprise. And also, we also would work on enhancing our property leasing business. So that the property industry can develop in a very healthy way. And we also have to capture opportunities in credit card and personal finance and consumption economy. We -- because we are a full-service bank, we continue to leverage on these characteristics of CCB so that we can contribute to the modernization development of the country and to meet the goals of the next 5-year plan. So this would be my answer. Thank you.

Next question, Mr. [ Manuel Ran ] from China News Agency.

My name is [ Manuel Ran ]. I'm coming from the new Chinese News Agency. We know that this year, we have heard the targets of the inclusive loans and for CCB as the largest inclusive loan provider, what is your target? And the second, in terms of SMEs and the current plan and the loan scheme is extended to end of the year. And what is the size of your SME loans at the moment? And what is your management going forward?

We'll have Mr. Wang answer this question.

Thank you for your question. In the 2 meetings that have just concluded, and we have heard from PREMIER Lear that the major banks inclusive finance will be growing by 30%. And this is a great support and guidance of our business, and we will continue to provide quality service to SMEs. In recent years, we have been pushing forward for the inclusive finance and using AI technologies to help us to find the right way to serve the SMEs and to fast develop our business in the inclusive financing area, and we have also established standards for the industry. So last year, we have a service model, which is 5 plus 3. And for the 5, it would refer to batch customer acquisition, precise profiting, automatic approval, intelligent risk control and comprehensive services. And we also have various loans, for example, quick loan for SMEs [Foreign Language], quick loan for transaction and quick loan for personal operations. At the moment, we already have 440 customers or enterprises. And going forward, we already have a loan size of CNY 4.5 trillion, and the new customers exceed 70,000. And going forward, we have also introduced data coming from external aspects such customer office, et cetera. And this will help us with our studying of the background of the customers and help us with the NPL. And for SMEs, NPL is below 1%, especially during the pandemic. CCB has also supported the SME business, and we have established dedicated channels with dedicated services, et cetera. And we have 8 dedicated type of services. And to help with the customer base, we have been affected by the pandemic and to remind them with the cloud is easy to borrow loans and to help with the SMEs of recovering that business and to continue to provide benefits to them. And for the customers coming from Hubei province, the interest rate is decreased by 1%. And for the same year, the commission fees, et cetera, if we are able to reduce them, we will try our best to reduce and to really help with SME businesses. In the meantime, with the diverse demand of the inclusive financing customers, we have also established loans for our customers who are coming from remote areas, and they are generally the farmers. And so we provide services for them to collect their salary, and we provide services to connect with different industries and help them with an efficient management of their finance. And overall speaking, we have small enterprises, but they are doing big businesses. So we're helping them. In the meantime, for the SME business, we will continue to focus on the help that we can provide to them to exert our advantages and influence and to enrich our products for SMEs. And to have more products available to them in our channels and to really push forward the growth of inclusive finance and to include high-quality development speed. And with respect to your second question, we have Mr. Zhang to answer this.

Well, thank you. Please allow me to add during the pandemic, we have fully implemented the national policy for those who meet the standard, especially the small, medium-sized enterprises. If they meet the benchmark or the requirement and we would extend the loan maturity date. Another moment for last year for such arrangements, we have about CNY 375 million and -- CNY 375 billion and most of them are over 10,000, and most of them are micro and small businesses with the extension of the loan's deadline. The business was able to continue. Again, you can see that the policy is taking its effect. And during the process, of course, we are managing the risks, and we are following up and to make a judgment on the risk especially considering about the pandemic impact and the capability of the management team, et cetera. And we have carried out our provisions in the scientific fashion. And at the moment, in terms of the risk, it is well under control and with the economy's recovery. These enterprises, we can see that the production is also recovering well. And at the moment, even if the government has given us the policy of continuing to extend to end of the year. However, through our monitoring, looking at our customers, and we have fewer and fewer customers who are applying for extension of deadlines. Most people are able to repay their loans on time. So that means that the overall situation is actually quite good. And in terms of the policy at the moment, the state council has already made it very clear about the expansion of the loans. And we will, of course, follow the policy closely. And we will continue to provide support to our SMEs and to extend their loans, and this is what I have to add to ensure the healthy development.

Next question is from [ Juan Shen ].

I'm from [ Chung Sin. ] My name is [ Juan Shen. ] We see that the policy to nurture the long lease market. And 3 years ago, CCB has already launched this part of the business. So I'd like to ask the management what are the progress right now. And also, can you walk us through the specific rental business model -- leasing business model. And what are the updates and the revisions as far as the policy is concerned. And this is -- CCB being the largest mortgage provider in China. And what is the requirement of the regulator of you.

Thank you for your question. Please, Mr. Lee. Can you take this question, please?

As you all know, CCB was built and thrived because of a need. Now regarding this property leasing. This is something that the media and the analysts and investors, they all took to heart. So I think this opportunity to report to you the entire development in the property leasing business of CCB, and also some of our strategies. As of end of 2020, our bank -- our balance in this area is CNY 441 billion, and NPL ratio is 0.7%. And for mortgage, house mortgage, CNY 5.8 trillion, and the NPL is quite low. So our balance is actually small, and the ratio is also low. Now as far as NPL is concerned -- NPL ratio is concerned, our asset quality overall, regardless whether it is corporate loans, or personal mortgage loans, the NPL ratios are very low. And asset quality is very good. Now this year, the regulators have been paying much attention to the risk in property market. And have launched various policies, including the 3 red lines. And also end of last year, the real estate-focused integrated management scheme had been promulgated. Now for Chinese property industry, the market as well as financial services, this would become a big influencing factor. CCB, in order to live up to this policy, for open real estate loans, we focused on the good quality customers in the first and second tier cities. And we would also develop a vetting mechanism to strictly monitor the use of such loans and the vetting process of those loans. And we prioritize to serve the stable demand for residents and for upgrading of the citizens in their living conditions. And -- so that we can assist with the healthy development of the industry. Especially one point that I'd like to mention, CCB, under the big umbrella of being compliant, we also put in various measures to assist with the stable and healthy development of this industry and to healthily enhance the loan portfolio. And -- especially those that are within our own business. And the -- these new regulations has a relatively small impact on our business. For those that are exceeding -- exceeded the limitations, we will tackle and dispose of them. And with the CCB, property leasing in this aspect, while we continue to build the traditional business, we continue to follow the different policy requirements and to follow the target that had been set by the end of 2017 and take property leasing as a very important strategic development of the bank. Now after 3 years of efforts, we have formed a preliminary market-based property leasing mechanism has some success in 8 areas. One is we have a service management mechanism that serves the various local governments, corporations and individuals to provide a transparent platform or transparent access of information. And today -- as of today, we have already set a presence in over 300 cities in the country to promote this. And we have an accumulative 25 million sets of apartments that are made available here. And also, we have set up a service company, which under the CCB umbrella, this property service company now take on property business, property leasing platform business as well. And also to manage the community environment. And thirdly, we are renovating or being creative. In this manner, we make use of idle spaces and apartments and properties, resources on personal or corporate hands and make them available to the market and to tackle the supply and demand conflicts. We already have over 1.2 million slots that were sourced in this way. And fourthly, we have formed a federation of property leasing companies so that we can coordinate the various affiliating supply chain and service providers such as innovators and renovators and supply -- material suppliers, et cetera, onto the platform. This would -- and on this platform, they would offer their services or products, such as furniture and household appliances, et cetera, at 10% to 15% discount versus market rate. Number fifth is we had built certain communities. On a national basis, we have built about 230 property leasing communities that would support the blue collar, the white collar, and youth creative centers, et cetera. These are the communities that we serve with differentiated leasing services. Number six is that we had launched a basket pool of new products and services. We face the market provide long-term residential leasing options so that the demand for having new upgrading and buying and swapping of properties and the financing needs they're from. Number seven is the pilot program of property leasing so that we can better handle some of the risks engaged. And we also target some REIT, R-E-I-T, REIT products so that we can expand the financing channels. Number eight is to pronounce the data regarding this market. We select from 100 cities, a series of data from the property market in order to form a price index. And this is a full coverage of the 70 important cities under country's policy. And to provide the market with a price reference. So these are the 8 areas that China Construction Bank have been working on in the property and property leasing aspect. These are systemic work that we have done based on the commercial modeling. Especially with the 19th CCB meeting, the property leasing has been named as an important policy and strategic policy. So currently, our business here is going well. And the data system had been launched appropriately. And our brand has been well received, and our network has been growing. And we are also focusing on upgrading, remodeling old ones into new living spaces. So we are providing a comprehensive property leasing resources, and that includes residential as well as industrial and corporate resources. And overall, the CCB strategy in this business, after we have launched it, we are helping the citizens to pursue the home dream -- the dream for a perfect home, and we are also making businesses and opportunities more feasible in this industry. And in the retail and this is also helpful with our retail banking. And we hope that this particular strength of ours can help us long-term driver. Because people always say to buy a home, we need to go to CCB. So I hope that going forward, this would expand to -- when you wanted to lease an apartment, you go to CCB. When you wanted to have a new living area, you go to CCB. Thank you.

Next question comes from Ms. [ Zhou Zhao Yang from Chinese Insurance Newspaper ].

I come from the Chinese Bank and Insurance Newspaper, and we have heard that at the moment, there's a lot of banks who are focusing on the development of retail banking. And what is your advantage in this regard.

We will have Mr. Lyu Jiajin to answer this question.

Okay. Great. Thank you. So first of all, in terms of retail business, this is a definite trend of the commercial banks going forward. And with the accumulation of social wealth, individual clients, especially those who have mid-level income or above in terms of wealth management and in terms of their financial needs and continue to grow. And therefore, for retail business, and its role as a core pillar among commercial banks, and we can see that it is becoming more and more obvious. For CCB in terms of our corporate business, whilst solidifying our corporate business, in the meantime, we're also developing our retail business with a great speed. And especially since listing, we have always paid attention to the transformation of retail business. Especially in recent years, in our headquarters and under the guidance of our headquarter and leaders and with the new finance principle in mind, we have always adhered to the principle of new retail business priority and we focus on business such as rental leasing business as well as other retail businesses and wealth management, et cetera. And with the online and off-line development, we can see that retail business has actually developed prosperously. And the main indicators among our peers, we are ahead in our industry. And recently in some of the rating agencies in their ratings. And for retail business, the rating agencies have given us a lot of awards and honors. Specifically speaking, the situation of last year in terms of provision. And for the contribution coming from retail business has created a new high. And in 2020 and has realized a business of CNY 600 billion and a growth of 38.6% and personal business has increased by 61.2%. In addition, we continue to solidify our foundation of the bank and domestic loans, the balance is CNY 7.23 trillion compared with the previous year has -- up by CNY 760 billion. In the meantime, for personal savings, it has also seen good growth. And for personal loans, it has exceeded CNY 10 trillion. And the new supplemental is newly incremental part of the savings is CNY 1.8 trillion. In terms of the domestic savings, it also accounts for 51.2%. And number four, in terms of our foundation of the retail business, it continues to be solidified. And our total number of customers exceeded 700 million. For last year in terms of AUM, we have also seeing a growth of CNY 1.57 trillion. In terms of debit cards, it has exceeded 1.2 billion credit -- debit cards. And for credit card customers, it has also exceeded to 100 million and 2 -- 102 million at the moment. And for the past year, for CCB we have grasped the opportunity in the market of retail business. And we have actively built the new principle and new ideas of retail businesses and focusing on 3 priorities throughout the bank. We focus on digitalization, and we have realized that the high-quality growth of retail business. And for what you have asked with respect to the development strategy or our competitive advantage. And I believe that it can be summarized as the following 3 points. The first one is to focus on the new finance guidance and to realize digitalization through the empowerment of technology and building of scenarios and for the existing customers, for the customers and the newly added customers. And for them in different scenarios and in different areas, and we will have the new operations. And second, we focus on the customers at the core and to improve the customer experience through the rebuilding of the process and the creation of our innovative products. And to improve the synergy between the channels and to deeply root in terms of our online and offline business. So we have been able to provide very convenient services to our customers. Again, we try our best to maintain at the forefront of the market. And number three, in terms of the work, we try our best to work hard to perfect from the Board and all the way to our branches. And we pay great attention to the 8 rights of the protection -- 8 rights -- 8 protection of rights of the customers and the protection of our customers is now at a principal level of our business. And we provide a high-efficient, convenient and safer financial services to our customers. Thank you.

Next question is from Meizhi [indiscernible] from UBS.

I am Yan Meizhi, analyst from UBS. I 'd like to ask a question regarding NIM. We -- NIM spread. We see that in 2020 versus 2019, the NIM spread has come down. And in the fourth quarter, it is slightly better than on an equal basis as the third quarter. So we ask -- we like to ask what is the prospect for the coming year for the NIM spread. From liabilities and assets perspective with assets grow and the liability is stable. So the NIM spread would be better this year. Would that be the case?

Now very thankful for your care about the management and operation of CCB. Now this remains a very important area of our management. And on the one hand, the global economy at this point, we see in low -- in 3 areas, low investment, low growth, and low interest rate. So from this perspective, the narrowing of spread -- of the NIM spread would be a general phenomenon for commercial banks. And 2020, also exposed us to the sudden COVID and the deep shrinking of the economy. We follow strictly with the instructions from the central government to support the SMEs to reduce fees and share profits and different measures to help them. And also the lowering trend of the interest rate in the capital market as well as the -- a series of adjustments and qualitative easing. And all this would cause the lowering of the NIM spread. This, I think, would be a general phenomenon of the industry. We were at 2.19 that is 3 basis points lower than same period last year for our bank. This is in line with the overall banking phenomenon. Mainly 3 areas. One is the yield of our asset. This has caused a decline of 15 basis points. Now in this area, first of all, loans based on this decline as well as our share profits and reduce fees, we need -- we saw that last year, our overall loan pricing. And also, the overall non-discounted loans, we were at 4.38 and it was 7.1 for corporate loans. This is a lot lower than last year and several basis point impact to our overall NIM spread revenue. And we -- the interbank rate also came down. This caused a 5-basis point decline in our NIM spread. So overall, we have a 15-basis point of decline. Now this is due to the cost of our capital. And overall, it had helped improve the NIM for 4 basis points. Now because of competition and the regular basis of the deposit, now this had caused a 2-basis point of decline in our NIM spread. And however, we discover that the loans were able to help us with 6 basis points. And overall, keeping the net balance, this is a 4 basis point of increase. And also, we have enhanced our loan basis. We had stepped up on our attraction to savings and also through alternative markets and interbank business. This has caused the NIM spread to lower by 2 basis points. So overall, it's a 13 basis point decline. Of course, the MOF last year had changed the system for reviewing our credit card revenue, and that also caused an enhancement of our NIM spread, because last year, the change would impact the business of the previous year. So the installment for credit cards impact had caused an overall 13% decline of NIM spread. And as to the other policy, I believe that we remain in the stable and nimble area. And the overall financial market remains stable. So just like the investors saying yesterday, in the fourth quarter, our NIM spread will -- had already started to appear stable. So 2021, our -- we remain nimble and stable and watching closely as to some of the policy changes, because policy changes continue to happen and some policies would return to where it was before, meaning the marketization of interest rate scheme would continue to grow, to be built. So we anticipate that loan interest rates would keep stable or may come down slightly. As far as saving interest rate is concerned, impacted by the regularity as well as the solid demand, we begin to see some signs of improving in this area. Now with the redundant market or the supplemental market, 2021, we believe that management of NIM spread is difficult, and we do face pressure. But all in all, I think we can keep it stable, and you won't see big drops and big rises. So as a next step, we will -- based on the changes in the interest rate environment, we will enhance our dynamic observation and anticipation and also to be prudent in order to maintain our spread. And with the asset side, we have to grab the opportunity, continue to enhance our risk management and differentiated risk pricing in order to enhance our overall capabilities. With the liabilities, we have to maintain an appropriate cost and price and continue to enhance our interest rate risk management capability and to keep our NIM spread at reasonable industrial level. So we believe that with the continuing betterment of Chinese economy and the stable development of fed, the CCB NIM spread will continue to remain at a -- within a reasonable spread in order to ensure that -- ensure the sustainability, sustainable development of the liabilities and asset of the company. Thank you.

Next question is from [ Ms. Li Shao Ying ] from Hong Kong Commercial newspaper.

From 2019, this is our third year that we're having the cloud meeting, and we hope that the pandemic could be finished very soon so that we can have a face-to-face meeting. So my question is also related to the pandemic. I'd like to ask, with the impact of the pandemic and with the policy from the national government, which is to reducing the interest and to give away some benefits to your customers. And so of course, this had some impact on your business, but we can also, again, see your commission fee is still growing. And so can you please let us know more about this impact on the commercial -- on the new policy and on the commission fee, et cetera?

Thank you for your attention and with the transformation of commercial banks of CCB, and at the moment, this is a very key period and this year is also a year whereby our headquarter and our management team pay great attention to this. So first of all, in terms of the government policy of reducing the fee and giving away some profits, and this is for the banks, especially national state-owned banks and to realize its responsibility towards the society and to regulate our business, this has a great meaning, especially faced with the pandemic, which is unexpected. As a commercial bank with our customers, our hands and hearts are connected, and we will cross over the difficulties together. And as Mr. -- as PREMIER has assessed that, we are saving the mountain for the great future. And during this process, CCB adheres and implements a fully of the policies from the Central Communist Party, and we continue to expand the degree of our commission reduction and profitability, giving away activities. And in 2020, based on our rough estimate for our total amount that we have been sharing with others amount for RMB 110 billion. And again, this reflects our responsibility as a major state-owned banks, and we also want to help with the easier and faster resumption of work in construction, et cetera. And in the meantime, for our fee business and commissions, we faced some pressure. The analysts have said for last year, for our fee -- net fee income is CNY 116 billion, and it's grown by 3.3%, even if we have realized some growth. But you can see that the growth speed has slowed down very obviously. And during this process, to realize a positive growth and with this fee reduction and profitability sharing policy in place. And this is, again, thanks to that, we have met some of the new policies and especially in terms of some digitalization explorations that we have done and some new implementations of measures and to speed up and enhance the development of online business development. And to give you some examples, last year, we have about 2 -- CNY 29 billion, and it's grown by 13%. And this is mainly coming from fast payment and from nontouching payment. Basically, we work hard to expand the scenarios. And in the meantime, we also work with some leading payment companies and to bring more of the online payment businesses and to drive that forward. Therefore, for CCB, for our business in terms of ensuring the continuity of our business, we have seen some very obvious results. And second, for our business and our Trust business, it's CNY 15 billion, grown by 9.9%, for our management wealth management products have grown by 3.9%. And therefore, for some of our traditional fees, because of the -- some of the policies in place as well as some of the cutting of the fees, it has been affected. However, for some of the new models, especially, for example, for fee collection from online, and we have seen some very good results. And this is why for 2020, we are seeing a positive growth. And actually, for our new business and for our digital operation, and this is great results that we are seeing. And in the meantime, we are very deeply realizing that for the 2020, the pandemic, and we are speeding up the transformation of digitalization, and whilst building a new business scenario and for the real economy demand, and it's also changing in the meantime. And in terms of the financial supply side and in terms of the credit financing, and it is changing into a new form of financing and for commercial banks and in terms of managing the bank's asset and managing -- from managing the bank's asset into managing the customer's asset. And these changes and for the healthy development of the bank, especially for our intermediary business and for the fee growth, and it has brought immense opportunities going forward. So our next step is that we will be looking for these opportunities in the market and continue to create value in the market and to create and to solidify the foundation that we have with our customers and to promote the intermediary businesses. And this year, we will be focusing on 3 areas of priority of work. And the first one is digitization transformation and to speed up the building of our wealth management bank. This is our target. And we all know that with the growth of citizens' wealth, how do we speed up and promote our business to meet the tailored demand of the individual customers. And this is one of the keys of our commercial bank's business and this is also in our traditional business in terms of savings and loans. And we want to build a third pillar of wealth management, and this is a necessary requirement. So next step, we will be looking at our -- speeding up our business development in this regard. In addition, we will also be looking at nonfinancial products and start enhancing our collaboration with Internet companies and to actively build scenarios and to realize the acquisition of customers as well as creating value and creating wealth for our customers. And we will want to improve our capabilities. And the second, we are going to be deeply rooted in traditional businesses and to further exert our advantages and to work for the national policies and to look for the areas such as green finance, et cetera, to find the diverse opportunities and to grasp these opportunities to continue to improve our operation efficiency and operation services that we are here to provide. We will surround our business around traditional business and to improve traditional business. And number three, we will meet the differentiated demand of our customers of their financial needs. And with the empowerment of technology and to exert the influence and the capabilities of our bank and to try our best to provide tailored services and to help enterprises to resolve their issues. And through our innovation, we would be able to build new growth points for the intermediary businesses. And I believe that with our digital operations continued improvement with the implementation of 3 strategies during this process with our technology empowerment and innovation of products and the intermediary business and the fee income, I believe that we will see better development going forward. Thank you.

Next question, please. Thank you, Mr. Wang. Next question is from [indiscernible]. You can ask your question now.

Yes. I'm from Guangfa Securities. My name is [ Ni Chin ]. My question has to do with deposits. All right. We noticed that the 2020 deposit is at 12.24%. This has to do with overall economy circumstances. And CCB is also very strong amongst its peers. So please walk us through the -- what is the deposit strength for CCB? And can you also give us an outlook regarding this year's deposit? And you have also launched the deposit quality management scheme. So -- and the asset and liability management scheme. So what kind of impact would that have on you?

Thank you, Mr. [ Lee ], please.

With deposit, this is the basis of development for commercial banks. It is a better ground for everyone. So CCB pays a lot of attention to this, especially the development of general deposits. Now by year-end this year, we reached CNY 20.6 trillion of deposits, and the growth rate is 12.24%. Now with loans, liabilities, it also has increased by 0.9% versus last year. It is higher than general average. So it is a further addition based on a high basis. Now the personal deposit had breakthrough the CNY 10 trillion breakpoint. Last year, we were talking about CNY 9 trillion, and by quarter 4, the breakthrough of CNY 10 trillion was reached. Corporate deposits also grew very quickly. Last year, by year-end, the corporate loans -- corporate savings increased by -- it reached CNY 9.7 trillion. Just now, you were talking about -- you were asking about the reason for our growth and what kind of strength do we have. Actually, last year, overall, with the monetary policy as well as the market circumstances were actually quite good for development. One is the overall supply of money in the market had grew very quickly. The -- and two, supply over the year was at 10.1% for the year. It is 1.4% lower than same period last year. And this had actually brought forth a lot more capital for the deposit business. And secondly, CCB every time talked about this, we insist on a new concept, take initiatives in digital management. We work around this -- we built scenarios according to this ecosystem and to insist in connecting the enterprises with the governments and empowering both ends. So this is GBC government business and consumers connection to build this ecosystem and to build the society, the high-flow circumstances scenarios in order to enhance corporate and personal deposits -- our strength in the -- in such deposit classes. And thirdly, it has to do with our traditional strength, because our basic work has always been done quite well. From client base perspective, the group has about 6 million corporate customers. And personal customers, we have about 600 million of them. Now as far as the product is concerned, we were highly innovative regarding our products, especially as it relates to product scenario. We keep enriching our financial products in -- and to effectively enhance the value creation process of our customer. Now as far as channel is concerned, our emphasis has been put on the integration of online and offline. Previously, we talked about O2O. Now we talk about OMO. So this -- we leverage off -- we want to leverage our 14 [indiscernible] of offline network points together with our online business. Especially our mobile banking, the number of users is close to 400 million. And the mobile banking has become a main channel for enhancing customer quantity and customer value for the company. And this year, we saw the development in this product and this market, especially when we are talking about us helping SMEs and property -- and help raising property, this has become very useful. Now in some of the -- we have already built 540,000 channel points in the corporate -- in the area of property. So this is quite a good coverage. Now that would be the third area. The fourth area, I feel that this is only a characteristics of ours, and that is our persistence in stable and prudent management. Our core risk performance always takes the lead of our peers. And we've attached a lot of importance in the protection of consumer rates, especially when customers open up their account. They would chose CC Bank as their first option as the -- as an option of choice. So this is our deposit business. And you asked about the outlook. We will continue to rely on this concept and strategy of ours to better implement our 3 important strategies, meaning to build ecosystems, eco scenarios -- and we will -- in order to enhance our deposit business. We also face, in this new year, some changes in policy and in scenarios. Our preliminary judgment is that in 2021, our deposit will continue to enjoy quite a good growth, but the rate of the growth might slow down a little bit. So with deposit rates, we consider that competition is building up with the deepening of marketization of interest rate and deposit becoming more regular. So deposit interest rate would continue to experience upward or increased pressure. As to your second question about the commercial bank asset, liabilities management policy, now this is the latest management or administration policy of the CBRS, which is beneficial to the pricing -- rational pricing behavior in the market. And it is also beneficial to the healthy development of this market. And we think very highly of it. For large banks, deposit business development and control, we believe that it would actually build a nice or better market environment. Now for us, 80% of deposits -- of our liabilities goes to customers' deposits. And because of our scale, our interbank liabilities are quite low. And therefore, the quality of our assets is high. Our standard is way higher than that minimum required by regulation. And we feel that this is highly benefit for us. Now -- so the asset and liability management of commercial banks, these measures would be helpful to us, because CCB, we strictly adhere to the PBC late regulations regarding interest rates all along. And we have not used a third-party or Internet to absorb deposit business. Therefore, looking at it from this perspective, the liabilities and asset new administration as well as the requirement for stability, we are actually quite aligned with them. So as the next step, we will continue to observe and study and implement the policy's requirements and to enhance the management of asset and liability and to contribute what we tend to the stability of the finance market. We -- can we extend it a little bit, our time.

Next question from [indiscernible] from UBS.

I would also like to say that also thank you that for your good return to the investors since the recovery of the business since last June. And my question is that we know that the operation and management of the company has always been very stable. And with the pandemic and the recovery of the economy, there are some uncertainties. So we would like to ask, what are the measures in place? And last year, we have also heard that the regulators have also talked about that the disposal of nonperforming loans need to be enhanced. And I'd like to ask, how have you -- what progress have you made in this regard?

Okay. Thank you. We'll have Mr. Jin to answer this question.

Okay. Thank you. Thank you for your question, especially for the recognition of the operation style of CCB. And for 2020, yes, indeed, for me personally, in my professional life, it has been a very special year, very challenging. And for 2020, with the unprecedented complicated situation, and we have enhanced our basic foundational management and to have been able to really -- been able to control on the risks and to help us to realize our stable growth and to keep the direction. We have been able to see the result of the stable assets. And in terms of our key indicators, there are 5 features. The first one is that our NPL is relatively stable. And compared with earlier in the year, it is slightly increased. And last year, we have speed up -- sped up our disposal process and NPL is stable. And second, in terms of our expectation and it is -- and it is at about 0 point -- 1.09%, and it is reducing steadily. And thirdly, in terms of cost ratio, it is very stable. And number four, in terms of our provision is above 200. And for our coverage ratio, it's stable and improving. In the meantime, we continue to maintain the scissor difference between our expectation and our actual result. And we believe that with such results, it is thanks our stable growth and our stable culture, and we have always been very prudent, because we have adhered to our development and to control our risks and this is our principle. And we continue to perfect our technologies and our management, especially that we continue to improve our internal risk control. And we have always worked hard on this regard, especially in terms of credit risk and the market risk, et cetera. So in these risk areas that we have taken a lot of measures and we have seen very good results, and it's been very effective in terms of credit risk. And for our credit risk business, it is already accounting for 59%. And for credit cost, again, it is our biggest cost still. So in this regard, whether it is the Board or the management team, we pay great attention to it. On one hand, we have made judgment on the situation, and we are very prudent, and we have taken measures in advance to ensure the quality of our assets. For example, for the Board, we have always been very targeted in terms of risk management. Here, it would include, for example, the reverse stress test and extreme situation test. And we have also improved our quantity of the risks, and we have also communicated with our peers in terms of the risk and stress test. And in terms of the stress test that we are carrying out at -- we believe that we're the one to do the most, and we have the most diverse scenarios. And I believe that this, for us, to have an outlook on the situation and it has helped us with our outlook on the situation. And for the management team, we have also been looking at the situation closely and to have given very targeted measures. And we have put in a lot of efforts into this. And secondly, we continue to improve our quality of the credit, whilst we are working hard and we are also improving the momentum of our business. And we continue to deepen our industry structures and to enhance our management of mortgages. And in addition, we also strengthened on the selection of customers and who we would be allowing to let in and to improve our management of the resource allocation. And in addition, we improved our models, especially in terms of the capital taking up, and it continues to decrease. Number five, we have strengthened our -- in terms of our value creation, we have strengthened our value creation. And last year, we have completed the disposal of loans, CNY 190 billion, and it is growing by 20%, and this is something that's unprecedented. And last year, for the Q1, because of the pandemic impact and without any disposal, and in the next 3 quarters, we have been able to realize this. And for this year, we will continue -- we already have plenty of financial resources and will again use these financial resources to continue to dispose such loans and continue to keep it at this level. And number six, we continue to focus on our off-balance sheet risks and the risk management thereof. And in terms of credit risk management, in terms of the measures that we are basically taking these measures upfront in advance, and we have seen very good results. And in terms of market risk, we also know that last year for the markets, there are a lot of volatilities and we have been faced with a lot of challenges. We have established and response -- urgent emergency response system across different departments. Every week or every day, we will be looking at those and making very strict judgments. And in terms of guiding the operation of the business, it has played a role. And in addition, for our investment platform and the smart platforms, a lot of our platforms have realized replacement and changing of generations and upgrading of generations. And number three, we continue to push forward our wealth management product and with the wealth management product system being upgraded. In the meantime, we also have a penetrating style of management and to separate those products into different categories. And in terms of our assets and bringing them back on to the balance sheet, we have done plenty of preparation. And in the meantime, we also have a whole process of pre-event, in-event and after-event management. And for our group, we have already realized a unified management, including the subbranches. In addition, we focus on the research of the market. And in these regards, we are actively responding to the changes in the market, and we have seen good progress being made in terms of operational risks. And last year, I believe that the biggest gains that we have made is that we have taken the opportunity of the pandemic. In terms of our continuous management system, we have done an overhaul changes and from both domestic to overseas, and everything has been systemized. And in terms of the efficiency, it has also been tested in real practice. In the meantime, in terms of the staff behavioral management, we have done a lot of work. We have established offline network management and online smart management system. In the meantime, in terms of anti-money laundering and we continue to implement the requirement from the regulator. And we have received good results, and we can see that our credit rating continues to improve. And in terms of anti-fraud system management, we have done a lot of work, including financial asset management, et cetera. And we have seen very good results. And for CCB, in terms of our internal risk management, overall speaking, and we adhere to the marking out of our blueprint and, especially for our system, especially for our refined management, it is very well reflected. And in terms of 2021, in terms of the quality, again, this is still a very special year for the pandemic's impact on our business. There is still quite a lot of impact. And overall, for the macro business at the moment, the business is recovering and especially with the dual circulation growth, and it is being built. And for technology innovation and in terms of our industrial chain, et cetera, and with these major policies and they are already coming out, and we are also implementing them. And all of these have provided very good opportunities and space for growth for our business. So therefore, we will continue and adhere to and optimize the structures of our business and to ensure the stability of our asset quality. And of course, in this, there are still challenges. For example, looking at last year, from retail business, it is very stable, including credit card business. And for inclusive finance, the quality is very stable. And in terms of our infrastructure, this is also one of our major part of business, and the NPL has increased slightly. And for our overseas business and for our total asset squeezing and because of this, and we can see that the NPL is going up. And for infrastructure, there are mainly 2 areas of factors. And the first one is for the nonstandard assets, there is some impact. And for this mainly comes from government platforms and for these customers, and we have made plenty of provision, that is not a problem. And the second is for the loans and debt from the local government for certain areas, the debt level is quite high, relatively high. So in terms of their continued financing capability will be affected. And then this might create some of the disclosure of risks. So there are some pressures in this regard. But overall speaking, it is all under control. And we expect that for 2021, our asset quality would still be well maintained. And for various indicators, that could be balanced out. Thank you, so please rest assured.

Thank you next question please. Next question is from Mr. Yang Shuo from Goldman Sachs.

I'd like to ask about the top Internet companies is moving into the finance market. We also see that various banks are moving toward this area too. My question is how does the CCB build the advantage in this area?

Mr. [indiscernible], please take the question.

Thank you for your question. Actually, this year, overall commercial bank in fintech, including digital transformation, had made big moves and enhanced the efficiency and inclusiveness of our business. And since 2020, the overall COVID-19 had caused the social working and all aspects of daily life moving to online. And commercial banks, as far as enhancing our technology, that has also been a big driver. Now our technology capabilities enhancement also dictates the speed at which we develop our development. Since 2018, we have been pushing our capability in this area. And to build our technology measures, we use our data and our technology to enhance our services. You were asking about how CCB leverage on our own strength, mainly 3 areas. One is to optimize our technology investment and technology edge. We have formed a small working group and as well as subsidiaries to build fintech companies in the 3 places. We have invested CNY 22 billion, which is 3% our digital revenue. And we have 1 -- we have 13,000 people working on this and we -- continue to growing. And we continue to build our digital mechanisms. We have built a new retail scheme that is focused on comprehensive demand from the end user and the customer. We also were building new ecosystem to incorporate corporate customers' demands and to build the fintech platform. We already have 5G plus innovative scenarios, and we focus on scenario service types. Our active users are already leading the industry. And we have a smart risk management system and -- which is applicable to over 90% of the -- of our business. And our AI functionalities are already being used to conduct risk management. There's a lot of scenario application that is applicable to supply chain and cross-border training, et cetera. And we also would be building our smart ecosystem to serve the economy and the society. 2020, the entire bank had -- in the modernization of the society, we have helped local government to build Internet and smart platform, serving over 100 million people. It had already reached B and C end. And in 2020, we have been enabling SMEs and other customers. We exported our risk management tools to drive a new risk-controlled ecosystem. In 2020, we supported the recovery. After the COVID-19, we have assisted the government in the use of the medical platform in Hubei province and also to serve the society as well as the economic development using our comprehensive online services. Now with this new concept and using the open and sharing Internet concept, we are continuing to learn and develop, including those top Internet companies. We work with them to innovate and to test our products and services in labs. And through this flow, we would like to enhance our capturing and getting of customers and also to define our technology development path and to expand our capacity in order to satisfy the demand and needs of our customers. So I -- this is my answer. Now based on the regulatory requirement, there had been a collection of those questions that investors pay attention to. And most of that is similar to those questions that have been raised by investor friends in here. But there are some that have not been touched on. There's one that is about the capital management. It says, including CCB and various banks, the asset capital rate has been on the rise. And what do you see being the outlook of this?

Okay. I'll answer this question. I would like to thank the investors for your attention. And in terms of CAR ratio, CAR ratio is a very important indicator in terms of assessing the stability and the health of a commercial bank. It is an indicator that is well being paid attention to. And as what you have seen from your attention and a lot of focus for this indicator because of the pandemic for various banks in terms of the CAR ratio, we have all seen some phenomenon of it decreasing. And there are 2 reasons behind this. And the first one is that in terms of the support of the real economy and the need of fighting against the pandemic for commercial banks, generally speaking, they have improved its degree of loans that it gives out. And just now, we have heard, for last year, our loan growth has grown by about CNY 1.8 trillion, CNY 1.7 trillion. And we also have new loans about CNY 800 billion. And so these 2 combined together, and of course, this will improve and speed up the fast growth of risky asset, and this will dilute the asset. The second factor is that last year, because of the impact of the pandemic, our clients, especially the SMEs, they faced a lot of difficulties in their operations. Whilst enhancing our support and for our existing asset in order to solidify the foundation, we have improved the provisions made to them. And in terms of the NPL and its disposal, as we have heard for last year, NPL disposal last year has reached a record high, about CNY 190 billion. And in the meantime, last year, for NPL, the negative scissor difference is CNY 7.8 billion beyond our expectations. And so we have had a larger exposure to NPL and disposal. This is for building a foundation toward the future. And this will affect the current period's interest rate. And on one hand, it is diluting our assets with more investment being put in; and on the second hand, on the other hand, increasing the disposal of NPLs for our current period profit. And this will help us to further accumulate capital for the future to a certain extent, and that capability will be weakened. And for last year, our CAR ratio, roughly speaking, among our peers, we were ahead of our peers. However, we have also seen certain slight decline. And last year, our CAR ratio is 17.6%. It is down by 0.46%. And you can say that we have still obtained at the leading position among our peers. And we have also met the regulator's requirement well above. And -- however, this is something that can be reflected. And this year, we can see that with the continued support for the real economy going forward and including CCB as well as other domestic systematic important banks in terms of the CAR ratios, and they will all face some pressure, especially for [ CBSRC ] and in their soliciting opinions and they have said that going forward, in terms of the TLAC and the capital -- on the capital side, and there will be some pressure and the gap of capital. And this is a reality that we need to face. And therefore for the CCB Board, and we pay great attention to this issue. And for the next 3 years, we have talked about that we will focus on the supplement of capital. And this is one of our key priorities. And on one hand, we need to focus on the accumulation internally. We need to improve our profitability to ensure our capital supplement mechanism internally. And on the other hand, we will also enhance the supplement of capital from the external source. And from March 2021, we will issue second-tier capital tools of not less than CNY 30 billion. And number three, very important, is strengthen the capital management. We need to gradually change the high capital usage model. And as I said that we need to have a very targeted asset management and very detailed and very refined. And last year, in this regard, we can see that we have made great progress, on one hand, internally through adjusting and optimizing our risk models and tools. And through the optimization of our existing assets, we were able to save about CNY 430 billion in terms of the asset that is being used. And next step, we are going to continue to go on the route of refined management. And through technology, the help of technology, we will be better meeting for the capabilities that is required for a systematically important bank and to realize a long-term and balanced and sustainable development. And this is what I have. Thank you.

And we have online access for this conference, and there are a lot of questions from online. Because of time concern, we would just share one more, which is on dividend payout. The question is, the bigger banks have pressure in here in dividend payment and what is the policy for CCB? Now last year, we have received quite a bit of inquiries about the dividend payout from investors to see whether CCB -- could CCB continue to keep an appropriate ratio and also some questions whether the amount could be kept stable. Now for CCB, this is a question that we attach a lot of importance, and we would try very hard to balance the need for medium- and long-run development as well as returning properly to our investors. In 2020, we capped a dividend payout ratio at 30%. So we have been pushing for the development of our business. And there had been a lot of good results on various businesses. We were able to develop cohesively. Therefore, in the last couple of years, our dividend payout had been stable, rising, and Last year, facing difficulties. However, through our efforts, as described, we continue to have a positive growth. The Director -- the Board of Director, after vetting the demand of our investors and our needs, we decided to keep at -- to maintain a 30% dividend payout ratio. So that comes to about per share RMB 0.326 of -- now this will have to be passed in the June shareholders' meeting. So this is stable or maybe even slightly better than last time. So going forward, we will continue to pay attention to your needs and to capture new capital and new management and business opportunities so that we can grow in a quality way and also to continue to create a larger return and value to our investors. Now today, because of time constraints, we will have to stop our result announcement conference call here. So we have some very excellent exchange with our management about some of the important matters so that you will understand us better and be able to grasp our outlook and continue to be confident with CCB. So very thankful for your participation. There may be some questions that we have not been able to answer. You're more than welcome to contact our Investor Relations department as well as our Board of Directors Secretary regarding your questions. So we will end here, and very thankful to all of you. I wish you well. I wish you health and happiness. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]