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

[indiscernible] banking department and personal banking department and financial market equipment and fintech departments and other related departments to attend today's meeting. We are very happy to talk and communicate with our investors and analysts. First off, I'd like to invite the Deputy Manager from the Personal Banking department on to brief on the Max Wealth Management and relevant progress. Mr. Cheng, please.

Thank you, investors, and analysts for your interest in and support for CCB 2022 as the transformation year for the work year for the transformation of Max Wealth Management of CCB. We have carried out 2 projects. First, we did a macro overlay or a layout in the deep learning, we stressed the top design and have promotion in the detailed work. And also, we focus on the wealth management and the wealth management to explore the wealth management high-quality development. And so with the joint efforts of the Home Group, we have gained recognition from the community and it's the first time for CCB to the best bank -- retailing bank in the Asian Banking Awards and another 2 awards and also, the Banker's Magazines 10 financing or financial institutions. For the indicators of our banking business, we have consolidated the personal banking customers with the increase in scale will hit the 730 million threshold that laid a foundation for our customer base. And for the assets, we have promoted steady in our assets, increasing existing asset structure we have had deposit and investment growth at the same time. And this is also latest foundation for the development of the massive wealth management business. And our fee-based business products income from the comparable centers for the 4 major banks in China, we are ranking in the top second, top 2. And that means we have achieved in results that also give us solid foundation for the massive wealth management business. So that is the wealth management setup. And the update. Next, I'd like to brief you on the massive wealth management measures taken as well as the next steps and the key priorities. First, on the customer centered and create the value for the customer. Massive wealth management is a very complicated professional strategic business wanting to focus on the needs, satisfy the needs and the focus on the interest of our customers. In this progress, CCB Corporation focused on serving the majority instead of the minority to further proof to integrate wealth management with a digital technology focused on the existing customers. And also, we promoted digital wealth management and also diversified the needs of customers to increase the assets as well as the quarterly development on deposit and wealth management. We are also working on the problems on the fee-based businesses, products and as well focusing on the short-term return and other relevant problems. We also give play into the synergy between the internal and external factors to upgrade our macroeconomic outlook and selectively optimized products and integrate it as well as individual and personal customized products to move from a single customer to combined and customized products. So that is the development of our wealth management development. Second, the professional team or manpower development, which is the cornerstone of our business or a massive wealth management business. We created the team of wealth consultants as well as the experts with the layout of the senior management. Head office of CCB has designed a systematic management mechanism. First, we focus on the wealth management team, benchmarking to the balanced peers and standardized the management workflow as well as they optimized the management models and forms and focused on the seeking breakthroughs in the key areas, also promoted the delivery of relevant services. We established a professional analysis and investor -- investment consultants and wealth management consultant. And we have the account manager match as well as in the other relevant managers team building. And we also have set clear the roles and responsibilities of the relevant managers and also the online main list management and also integrated the relevant marketing. Third, as the selectively optimized products, we further did research on the market and make plans and we also worked with the leading market entities to do the research and select the optimize the products to our customers, and it will also strengthen our professional analysis or in research capacity to improve the core competitiveness of their products. And now we have completed the research system of new products. We give full play to our advantages of our research and also create synergy of providing service to the customers while also create benefits to their bank. And also strengthen the support or empower the platform. Our wealth management platform development has such positioning that is to meet the immediate needs of the customers and focus on the -- also as well as the return the bank. And we focus on the change workflows in the wealth management. We focus on key areas and a focus on the stock customer -- stock products with selling, and also focus on the establishment of the core capacities and improve the effectiveness of the platform and the intelligence of the platform and apply new technology to the platform. First, on the protection -- right protection of investors and customers. CCB always attaches importance to the interest protection of customers and investors. With the volatility in the market, we also always adhere to the philosophy of customer centered and also adhere to the red line principle and have investor system always the professionalism and high quality to improve the risk version or prevention awareness of the customer and also did customer education so as to improve their relevant awareness in the investment. That's all for the briefing. Thank you.

Thank you, Mr. Cheng. Now I'd like to give the floor to Mr. -- Madame Yang from Fintech Department on the fintech topics. Thank you.

Thank you. Thank you, analyst and investors for your interest in and support for CCB on the fintech empowered, the high-quality development of the bank. We have followed the strength of the technologies to promote the fintech development in empowering relevant businesses. 4 aspects. First, from the Personal Banking business. In 2022, we have completed our marketing as well as the interest protection area, we empower our marketing or prices marketing with fintech and also have a full chain of marketing would support diversified marketing activities. And internally, we have customer working on desk with virtual technologies and we have relevant technology empower tools. And externally, we have the value transformation in different scenarios to rate again and rate 10 customers and also benchmarking to the enterprise level of the customer [indiscernible] channels like and the routers or other customer attracting channels and also compliant with the post-pandemic consumer consumption needs, as well as in the features of the customers we talked with and the franchise to have a high-quality business circle and improve the effectiveness of the marketing to the customers in 2022. And the personal banking, personal loan has reached around 70, and the customer number reached around 87 million, and the newly contract value is around RMB 1.97 trillion. And among the corporate banking business, in the inclusive financing part, we continue to create quite only 3.0 version and also thinking to the customer level and online general meeting and improve the full cycle service, and also have the intelligent wealth management and other nonfinancial scenarios to further explore and expand our customer service. And we have [indiscernible] and also the -- use a third-party dispute center to introduce the legal management and the logistics and other external services. At the end of October, our -- the download of ADP reached around 25 million and around 170 million registered companies -- users. For the corporate banking business, we also established in the company or the management ecosystem. We have internal external channel improve the financial products, one-stop financial service and it provides online management or intelligent part management platform to or such kind of service to our corporate customers. Now we have around 1.25 million certified customers. And we established the produce -- production integrated waste and the finance product our platform. And we have also established a supply chain ecosystem development and also benchmarking to the core enterprises and the supply chain scenario. We have the full cycle financial service. And also based on the business, we explored the customers on the enterprise level to authenticize the transaction so that to improve the risk control and management capabilities. Now there is RMB 490 million of the financing along the supply chain. And also in terms of the asset management, we build the ecology among our peers. And we build the bank finance and the smart empowerment as well as the sharing services so that our peers can process the commission selling. And also, there are over 420,000 visits of the website and also who received over 11.87 million customers. And also, we used our own system to replace the 5 overseas system to achieve integrated control of the risks. And on the Internet-based platform, we provide the customers with the foreign exchange bonds and all other products and the transaction and trade services. We processed transactions that totaled CNY 2,116 trillion with over 27,000 customers. We also collected funds -- conducted research on investment, risk control and management and investment operations. This system has supported the CCB Wealth Management CCB Trust and CCB pension and different CCB subsidiaries, which were 9 of them. In terms of the custody service, we expanded the value-added services providing the customers with services of the asset custody, investment support and the performance of the risk. We developed the accounting and the information disclosure and the outsourcing of the custody. 95% of the services are optimized. The personal banking services accounted for 29.7%. Another area is the risk management. We conducted this based on technology to protect our bottom line. Also, we built a digital compliance system, covering the businesses, behaviors of the employees, anti-money laundering, and all other services related to the compliance. We conducted the business of the digital technology-based supervising to internalize the regulations on supervising and conduct the internal assessment and check on our appliance. In terms of compliance behaviors, we built the employee behavior management system, combining online and offline services. So that we can nip the bud when there is a behavior of incompliance. We developed the anti-money laundering core engine to prevent the risks, control the risks during the whole process and manage it after the incident happens. Also in terms of the information and data security, they are also covered in the risk control and confine system. Last but not least, the day before tomorrow, we saw the press conference or the release of the double services of the CCB lifestyle and CCB mobile banking. We strengthened the building of these 2 services. We are transforming the functions of the mobile banking towards an independent platform to build a new version of the mobile banking service. This is the end of the current progress of fintechs. Thank you.

Thank you, Ms. Yang. Now let's enter the Q&A session. We would like to hear your questions or comments regarding CCB. All persons in charge of relevant departments are happy to answer your questions online. Now the floor is open.

[Operator Instructions] The first question is from the guest with telephone number of 3412.

Thank you for giving me the opportunity to ask a question. You just gave a detailed introduction of wealth management. I would like to ask, what are the strategies for wealth management next year? This year, we saw the products with high growth was deposits and insurance. So are there any changes next year? And what are our strategies?

Mr. Cheng, please.

Mr. Cheng from the personal financing department. Can you hear me?

Yes. Yes, we can.

I'm glad to answer your question. The wealth management strategies. In terms of product, we based on work on the demand of customers and the changes of the market, just as you said, judging from 2022, the whole banking sector was occupied by the growth of the deposit and insurance business. Looking forward, we believe that from the broader scale, the deposits and the insurance agency businesses still have large room for growth. There are relatively strong demands from customers in these 2 regards. The customers still feel that there are some uncertainties in the economy. Also, there are some fluctuations in the bond market. So in my opinion, the customers still have a strong demand for the relatively safe deposits and insurance businesses. So next year, we will still push forward these 2 fields to satisfy the customers' needs. Also from our judgment in 2023, the capital markets will achieve some growth and development, we have confidence in this. From the macro side, the economic recovery will be in place. Also, there will be relaxed policies regarding the fiscal and monetary policy. We are also see the return on the stock and bonds and the fund. We think we need to provide more assets of the deposits. In terms of the wealth management product and precious metals will also be strengthened, this is my answer. Thank you.

Thank you, Mr. Cheng. Next question, please.

It's very clear. I would like to ask a follow-up question about loans. Is there some recoveries in the demand for credit loans in the fourth quarter? Can you give us the outlook for next year's loan development?

I would like to give the floor to Mr. [indiscernible] from the credit department.

The year 2022 was quite extraordinary. Looking forward to the next year, we are facing both opportunities and challenges because the year 2023 is the first year after the 20th CPC National Congress. It is also the first year of the new government administration. So this means that the banks will achieve high-quality development. There are both opportunities and challenges. Internationally, the economy, finance and geopolitic factors. And domestically, there are some improvement on margins. And from the perspective of CCB in 2023, in general, we plan to set a relatively high target on all our businesses to improve both the quality and the quantity of our businesses, and this is also mentioned in the economic work meeting of the State Council. This is also the general operation target of CCB for 2023. For the RMB loans, we will stabilize the total amount, adjust the structure and address the weak links. I cannot give you a specific number for the total amount of loans, but we can say for sure that we will continue to support the real economy. Compared to this year, the standard will be set relatively higher compared to this year especially. The planned targets for next year, our waiver were more bold than this year. But there -- yes, the need to keep the corporate loan steady, we also need to strengthen our support for the infrastructure loans, including the old and new ones. We'll also continue to grab more loans in the inclusive finance for rural revitalization, green credit and the advanced manufacturing. We'll grab more loans in these fields. In terms of personal lending, the overall target is to get more loans in these regards as well. In 2023, in terms of the house finance and consumer finance. As with the easing of the COVID-19 encounter measures, all these fields will see a recovery. In terms of personal housing credit loans, we will give full play to our advantage. Especially, we need to support the needs of customers for the improved housing. And in the past 2 years, the economy suffers the blow, and that also had an impact on consumption. So next year, the consumption will receive recovery with the policy emphasizing on the consumption. So we believe that next year, the consumer credit loans will also increase for deposits. This will increase the loan, then we also stress the balance for steady growth in -- or development in deposits, and we control the high cost deposits. And its increase in the high cost deposits, and we'll try our vestment have a systematic arrangement to lay out. For example, in terms of our e-governance or the balance for rural revitalization for example, loans to increase in the on-demand deposits and to shore up or slow down the reduced speed of the demand deposits. That applies to different banks. So we are thinking about how to reduce the on-demand or the demand deposit because this is -- such kind of deposit has a very low cost. So that is our overall arrangement trend layout. Thank you.

Thank you. Let's invite the next investor to raise questions.

The next question is from 1637, which is the phone number or the last 4 digits of the number of this investor.

I'd like to ask a question about wealth management because we see the recovery of the redemption or recovery of the wealth management. How about the steady or stableness of the wealth management has grant the redemption of the wealth management products, what will be the influence for such a massive redemption of wealth management products?

Okay. I'll take that question. Thank you very much for your question. I am from the asset management department, [indiscernible]. I'm going to take these questions. Yes, it's true recently, there is a large amount of redemption or the rate or the drop of the net value of WMP. And there were some redemptions of some WMPs. The reason behind this. First, the drop of the net value an important reason is the restructuring or adjustments of the pandemic measures as well as the relative market. There, the interest rate is at a stable level. However, there are some expectations against the backdrop of the adjustment in the rail market and the pandemic control. So there might be a hike in the interest rate. And because of that, as we know, with the uptick in the interest rate, it's a negative correlation with the price. If the interest rate goes up, then the price will go down. Then in this case, the securities with as well, which is the key of the wealth management products. Then with the expectations of the price going down, then the -- that value well is expected to go down. That is the major reason behind that with the adjustment of the product policies. And then the expectation of the price will go down and then the net value of the WMPs will go down. And there are some redemptions in the WMPs. And another aspect is that, actually, this is a normal phenomenon. So from the beginning of this year, WMPs in [indiscernible], overall the new asset management regulation with the net value method to do the measurement of the WMPs. That value with the assets allocated will be volatile, then it's a normal phenomenon. Now previously, we see that therefore the WMPs they are -- it's kind of -- it has [indiscernible] return and the net value of well not to go to negative. That is before the new asset management regulations rolled out. But with the new asset management regulation, it's normal for the net value to be volatile in the WMPs. And it's very natural for funds and other -- for some securities because now most of the WMPs are not principal guaranteed. And third, our wealth management subsidiary of CCB, for the volatility, we also pay high attention to in the overall management, Bank of China also stress there are some adjustments of the policies caused the price to drop down and to the securities or WMPs. There are some guidelines from the bank of PBOC to stabilize the market. So now the market has been stabilized, and the value of the WMPs has been stabilized. So that is the macro for [indiscernible] for CCB itself or in the changes in the market, we adjusted our -- the long-term products or duration of the products as well as maturity period of our products to control the dramatic volatility in the value of our WMPs and to provide stable or relatively stable returns to our customers. In future, well, based on this principle, we will continue to do our work and actually this volatility to provides us with an opportunity to further improve our WMP allocation as well as our adjustment to meet the demands or needs of our customers. Thank you.

Investor, do you have other questions?

Okay. I'd like to have a follow-up question on the housing rental, and which is 1 of the 3 major strategies and 1 of the future products of our strategies or business overcome of CCB. And recently, CCB rolled out RMB 30 billion of housing rental. Could I know the relevant progress of this? How the rental fund and to the future plan?

Would you like to take this question?

Media friends and investors, I'm from the housing rental department [indiscernible]. For your questions, I'd like to make a brief answer. First, on the relevant apartments from the support -- under the support from the relevant department of state console [indiscernible] support for relevant departments and big players, we had smooth progress of the housing rental fund establishment, and we have completed the relevant approval and the review process in September. And in November, we have completed our relevant -- established with a fund as well as the fund management company. As of now, the best fund has moved into the normal operation period. From the feedback from market, there is a high expectation for this fund, including the housing our real estate companies with the assets to be fresh for it to be used. And in the process of setting these funds, we also talked with the relevant market entities and all kinds of local governments. And now in the area with the high inflow of population in Guangzhou, [indiscernible], Shanghai [indiscernible] we have talked with a relevant -- for the relevant investment projects. By the end of November, this fund has then -- the projects have been promoted, and we have promoted around 30 projects, many in the key cities as mentioned. And the asset volume investment is approaching to RMB 1.15 billion. And also for the areas I mentioned for the -- we talked with our marketing to establish a sub fund. And we are in the process of negotiation. And in the 3 -- 2 to 3 areas, the sub funds will be is established within last year. So overall, the progress is quite a lot and the results will be play out. That's all for my answer. Do you have any other questions?

Next question is from investor whose last 4 digits is 1023.

My question is about the real estate market. And there are some supportive measures for the risk market. And what's your plan and strategy for the credit branding for rent market? And most -- how much of the credit granted is delivered? They are rebalanced in the real estate market as well as your real estate companies.

Okay. I'm going to take this question. Thank you for your interest in the real estate market, for the real estate business of CCB has always been stable. By the end of Q3, we have 5% of increase in the credit granted to real estate market, and we adopted relative measures and in line with the requirements and regulations and for the central government as well as and the regulators to support the reasonable asset demand or fund demand for the guarantee of the delivery of the newly established houses as well as the M&A financial service for some real estate companies as well as some financial securities, financial support to support the overall refunds of no recovery of the real estate market. But as of now, central government is strengthen the support strengthening the support for the real estate market and the risk market for the transaction in the market, there is no clear sign of the full recovery, but we can feel that there is some marginal improvement, for example, for their mortgages recovery. Next year, our judgment is that the risk market will continue to bounce back. For the corporate customer support will continue to have a steady credit granting to meet the newly added demand and also promote the M&A to mitigate the risks for the M&A on loans and a consultant and M&A securities will provide relevant financial services; and third, we'll work on the risk control. In the future, in the real estate business in the way the market recovery, there will be some steps for in the or differentiated development in the market some companies will have risk enter into risk. So we will continue to present risk. And we'll also explore the corporate, the housing rental or leasing for the support to meet the funds of the housing rental company. That's all for my answer.

Okay. Next question.

Follow-up question on the SME. What is the impact in part from this pandemic to the bank's longitude SMEs? Is there any sign of positive development?

From inclusive financing department. [indiscernible] I'm going to take this question. For CCB include financing business, we have enjoyed rapid growth. And because we have a digital transformation, we have provided quick loans to small and medium-sized businesses and our asset quality is also kept up to a good level. By the end of November, the NPL -- before the audit, the NPL ratio was less than 1%. But because we have a higher base number, the NPL ratio was a little bit lower than the beginning of this year. Among all the assets, I think you are interested in the loans overdue. So mainly NPLs are in this category. And for the loans overdue we mainly focus on those who were impacted by the COVID-19. However, there's no problem with their operations. So we had CNY 250 million of the deferral of the loans. And also that included 400,000 customers. However, as their operation became normal again, many of the loans were repaid. And also here, we have the 100,000 customers with RMB 55 billion of the loans deferred. And also with the support of the supply side and also the digital innovation and the supply side and also a greater demand, we will have targeted control of the NPL. I believe that all these measures, the asset quality will remain stable. Thank you.

Thank you. Any more questions from this investor?

I don't have any other questions.

Okay. So next question, please.

Next question is from the investor with the last 4 digit of the telephone number being 4309. Please, the floor is yours.

I have a question about the corporate business projects. And how long will it support the supply of the credit. And I would also like to know the distribution of the period and the areas of this kind of loan.

So I will still invite Mr. Cheng to answer this question.

From the corporate business project, in 2022, the corporate loan increased. According to the requirements of the government, the corporate loans reached record high. And just as Mr. [indiscernible] said, there is a requirement of the economic work meeting of the central government. And as the economy continues to recover, the CCB will continue to play a role as a major state of bank. So we have a positive outlook for next year's economic growth in terms of the adjustment of the cycle. And the launch of the new project. I think that all requires a large amount of loans granted. And from our own perspective, we started the marketing with our corporate customers quite early. And the peak season for next year -- for the first quarter of next year will be around very soon. And we have a great number of projects in place. We plan that in the beginning of next year, we will deliver a series of key projects. In general, we will keep pace with the central government arrangement and policies and transform all these projects. And to the factors, loans granted, of course, we will also imagine and control the risk. Thank you.

Thank you. Any other questions from you?

I have a follow-up question. About the trend of the NIM next year, what is your expectation? So when do you expect there will be a tipping point for the NIM to rebound?

In the first 3 quarters, the NIM was 2.03, ranking first among the 4 major banks. So the rate of -- the decrease of the interest was a little bit lower than other banks. And for the outlook for the NIM next year, our initial judgment, is that the trend of going downward will likely to continue in the first quarter of next year because the economic recovery will just start next year with improved margin, and that will still require some support and credit loans. So the price will also be lower. The cost for liabilities is hard to be reversed. So with all these factors, we predict that in the first quarter, the NIM will still decrease. But hopefully, through the reasonable adjustment of the credit structure and by increasing the proportion of the high-yield loan, and through some systemic measures to achieve stability and all other different measures and tools. We will try our best -- we continue to be the bad among the 4 major banks in terms of NIM. So we announced that we wanted to be among the top 2 But since we are the first already, so we are kind of reluctant to give that place to other people or other banks. So that is my answer for this question. Thank you.

Thank you. Any other questions?

I don't have any other questions.

So next question, please.

So the telephone number 3448, the floor is yours.

I have 2 actually. The First is just as our -- as mentioned, there is some improvement for the asset quality. So I would like to know the quality or the level of the provision coverage and other asset quality next year. And the next question is about the financial market. There is some fluctuations of the bond market. So that has an impact on the fourth quarter profit. And what is that impact? And how do you expect next year's trend for the bond market?

So first, I would like to [indiscernible] from the credit management department. Thank you.

Thank you for your attention for the asset quality of the CCB. For a long time, the CCB has maintained a steady asset quality with very little fluctuation. So we expect the trend to continue next year. We have always recognized the risk in advance and managed it proactively, and we continue to optimize the credit structure. That further stabilized the asset quality. So we have a stronger capabilities to control the risk and the asset quality. Since the outbreak of COVID-19-19, we conducted the management and control of risk under this period. And for small and micro businesses, through big data technologies, we recognized the risk. And also, we released the burden of the NPLs because we had the deposits for the reserves. And the projected [indiscernible] for the NPLs and the loans overdue was negative. So we also believe that with the continued macro policies and the support for real estate as well as the easing of the COVID-19 countermeasures, the economy will recover further. Next year, our asset quality will still be stable and we'll have [indiscernible] to work out the risks. In terms of the ROE, I would like to ask my colleagues from the asset and liability department to answer this question. Mr. [indiscernible], can you add some point to this about the ROE.

Yes, ROE. In terms of ROE, we are still the first among the 4 major banks in China. Although the ROE is going down, in the first 11 months, it was 12.33. It was down a little bit. However, in terms of ROE, ROA, or NIM, we all ran the top among the 4 banks. Our target is that we would like those to remain #1 in these regards. However, the downward trend may be inevitable. And first of all, because we are facing the similar operation environment. So if we compare ourselves with the 3 other banks, we would like to be #1 next year in terms of ROE and ROA. So that is my answer.

Mr. [indiscernible], Ms. [indiscernible] from the financial market department, please answer this question.

Thank you for your question. I'm [indiscernible]. About the changes of the bond market, what is the impact on CCB and what is our projection for next year. Yes, it's true that since November, there are some fluctuations of the bond market. And Ms. [indiscernible] also analyzed that with the easing of COVID-19 countermeasures and the changing expectations for the market, the transaction rate will be increased and also, the redemption of the [indiscernible] and bonds further exacerbated the fluctuations. However, our impact is quite low because first, just as investors that the evaluation of the bonds, what are the impact on CCB. Over 90% of the funds in CCB were mainly on the AC and OCI accounts, and ICPL accounts accounted for less than 10%. So the valuation change on the bond market. The AC and OCI accounts will not be impacted. So we won't suffer much impact in terms of our bond products and portfolio. So it was just several hundred million yen. And also after reduction of the reserve ratio in August. And the first -- in the third quarter, we adjusted the structure and dealt with some bonds and the funds were transferred to the fourth quarter. And also, we grasp opportunities of the changes of the market interest rate. We adjusted the bond structures during this period when the interest rate was quite low. So it gives us the opportunity to give a reasonable adjustment to the middle to long-term bonds. So this -- in this case, we -- the contribution to the increase of the interest or profit is increasing for the outlook for next year, the volatility in the bond market to efficient from the regulators. We saw in December, PBOC continued to support the market liquidity into the long to market return has been moving down from the high point to a stable level. For next year, first for the asset in front we know from the economic work Forum. The [indiscernible] market will be precise and strong and over-positioned strengthen or emphasize on the reasonable of liquidity instead of quantitative or excess of easing and focus on the restructure and structural releasing. And the first policy will the business ratio will be increased and the precise of the fiscal policy will be improved. And in this case, the asset change combined with the demand policy as well as the policy from the risk market, from the supply side, the cash flow of real estate companies has been improved. And next year, the negative impact on the economy from real estate market and will be reduced for the changes of the economy with the ease of COVID restrictions. There will be interim period of -- to the recovery for next year for the bond markets interest rate. It will be no fluctuate within the range. While this range will be improved compared with this year, but it's not clear for us to be sure on the inflection point weighs in the [indiscernible] to the end and the overall recovery of the economy as well as the improved consumption and improvement of the consumption covenants. By the first half of this year, and there will trend as well as the inflection point of the economy will be defined and in value of the funds will be clear in the Q3 and Q4. So our fund investment strategy will be made important to the policies, assets as well as the macro economy to be adjusted accordingly with the low interest rate, we'll do the restructuring in the high interest rates we will improve the allocation. That's all. Thank you.

We are about to move to the end. So let's have 1 last question.

Last question from this investor 3142, please.

My question is also on the NPL from for SMEs. What is the NPL in the Q4? And what's the outlook for next year? They are -- we have some policy for extension of the repayment of our risk market. And after the end of the year, if there is no positive signs what is our standard for defining the NPL, will that be changed or will the energy be kept unchanged?

The risk market and CCB development credit is kept at a good level compared to what the 4 major banks in China. And this time, according to the requirements of regulators, in particular, in extension of the repayment period according to the relevant requirements of regulators, we released the policies -- for the policies to our subsidiaries to ease in the repayment burden of our real estate customers. We have a steady management of the loan to real estate market alone. That is why our NPL is performing very well among the 4 major banks in China. In terms of the selection of the areas and the selection of the projects as well as the list management, we have relevant measures to select high-quality customers. And after some risk occurs, we'll have some assets quality management for control measures, for example. For our second level subsidiaries of our branches will help the management of the real estate market on our branches in the city with loan reduced were dropped in the risk market, then we will have the limitation in this area and then set attention to the internal control as well as customer selection as well as the asset quality control. And actual relevant management ability improves then the limitation will be reduced to expand or slower to more -- to search more potential customers. By doing so, we kept the asset quality in real estate market. Looking to the future, CCB for the control of asset quality always be kept was the reality. And we will judge whether in this loan is bad, according to the real or reality of our customers. Next year, was in the gradual recovery of risk market, the asset quality in this field will be kept at a reasonable level. And based on that, the relevant loan in this area will be kept steady.

Thank you. For the sake of time, that's the end of the Q&A session. Thank you very much for your participation. We have received very good questions, and those are hot topics and also the topics that is concerned by the market and the relevant department of CCB has responded to this question totally and comprehensively. If you have any further questions, please contact our Investor Relations team of the Board office, we'll have in time and enough communications with our investors. With that, I'd like to draw today's conference to an end. Thank you very much for your participation. And thank you, our CCB colleagues for your contribution. Hopefully, with -- the pandemic will end one day so we can have in-person communications. And hopefully, we can invite you to our branches of CCB, so you will have more detailed and firsthand experience and what you will have a full understanding for the practices of CCB to provide a service into the economy and other economies. As we are moving to a new year with the new hub, Happy New Year. I wish you all healthy and best wishes. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]