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

Distinguished investors, analysts, media friends, ladies and gentlemen, good afternoon. Welcome all of you to China Construction Bank 2026 Interim Results Announcement. I'd like to thank you sincerely for your continued trust, interest and support to CCB. Today's results announcement. Has two venues in Beijing for shareholders and the public. Joining us in Hong Kong today include Mr. Zhang Yi, President of CCB. Mr. Tang Shuo, Deputy President of CCB, joining us in Beijing included Deputy President, Mr. [indiscernible] , Deputy President, Ms. Han Jing, the Deputy President, Mr. Lei Ming. We are also joined by our nonexecutive directors, representatives from independent directors as well as the senior colleagues from the head office and also Hong Kong entities. My name is Li Jianjiang, Deputy President of CCB. The interim results of 2026 of CCB were officially released to the public earlier today. We will begin this afternoon with opening remarks from Mr. Tong followed by an open Q&A session. Now we will invite President Zhang.

Distinguished investors, analysts and media friends, good afternoon. Welcome all of you to CCB 2026 Interim Results Announcement. First, I would like to thank you sincerely for your trust, interest and support to the CCB over the time. Since this year, CCB sticks to Chairman's [indiscernible] spirit of developing China and also executed the principles of the Party Congress and also the Central Government's conferences. And we also uphold the operation philosophies and risk management philosophies. So we emphasize on three abilities, pursue steady growth, improve efficiency and also stick to the high-quality development. For the first half of 2026, the operation performance reached our expectation with a steady growth and also scale economy and coordinated with the capital also has a very steady growth. The asset AUM also is at RMB 30 trillion. And also the liability side also increased the [indiscernible] Points. [indiscernible] me ratio 22.17% continue to be industry-leading. The structure optimization accelerates transformation momentum. The asset allocation is precise and efficient. The gross loans to customers is RMB 29.34 trillion. Financial investments, RMB 13.9 trillion, increasing by [ 5.65% ] and it's [indiscernible] respectively, the green and technology-related loans continue to increase, and the loans are also very healthy. We have effective control of liability costs through expansion of low-cost settlement, deposits, integration and optimization of Wealth Management products and deposits and various other management measures. Net interest income also stands at RMB 115 billion, up 16.3%, increased by 1.63 percentage points Y-o-Y. The efficiency and quality of operations has also increased and strengthened. We maintain very clean control of general expenses, enhanced financial support in customer marketing and technology [indiscernible] Provision coverage ratio is 8.69%. We have a various efficiency ability against risk. We also continue to enhance the balanced short- and long-term capital objectives. by providing capital replenishment, these performance results also laid a solid foundation for sharing our results with shareholders. We also emphasize our dividend. And we have accumulated cash dividend at RMB 52 billion for the first half. And we also suggest the cash dividend -- interim cash dividend of RMB 2.01 per 10 shares, including tax. The total dividend of is RMB 52.582 billion, dividend payout ratio increased from 30% to 31%. These will be reviewed by the shareholders' meeting. Now I would like to report the development plan. And for the second half, first, we will strengthen support for the real economy, while enhancing quality and efficiency and financial service. We emphasize on the technology precision and we have realized a double-digit growth in technology lending. We also rely on various measures. We have also issued 87 tranches of technology loans, satisfying various demands for these technology industries at various stages. We also respond to the policy regulated and provide orderly equity financing services for emerging and future industries. In terms of Green Finance, we also have optimized the Green Financing channel. We have also a Green loan balance of RMB 6.53 trillion, up 8.95%, we underwrote 34 tranches of Green Nonfinancial bonds totaling RMB 15 billion. We also issued green bonds overseas of USD 1 billion, an offshore renminbi bonds of RMB 3 billion. We maintained MSCI AAA ESG rating. In terms of inclusive finance, we also try to continue to optimize the support to small and micro enterprises. We serve 3.82 million customers of micro and small enterprises. In terms of pension finance, the corporate pension accounts increased by 33%. We also launched the Wellness Living platform covering various scenarios. We also enhance the AUM, especially the Pillar 2 AUM of CCB, it increased by 10.7%, standing at [ RMB 800 billion ]. In terms of Digital Finance, we deployed AI across various scenarios covering marketing, customer service, investment advisory, operation, risk control and corporate management, covering over 600 scenarios. We also enhanced the online platform development. We have personal customers, 592 million and the CNY cost consumption value is also around [ 8 billion ], and it also increased by 13% and at 14.68%. We also emphasized on some key priorities optimizing the smart economy, the new infrastructure related financial services. We also refined the Shenzen Intelligent Manufacturing and Shenzen strong foundation initiatives by the end of June. We also increased the manufacturing sector loan at RMB 4 trillion up 17.5%. In terms of private enterprises, the loan reached RMB 7.36 trillion, up 9.42%. We also actively supported major national regional development covering Beijing, Tianjin-Hebei region, Yangtze River and GBA, et cetera. The showroom socially related finance services also increased. We continue to enhance our support to the urban renewal initiatives. We also support the domestic demand expansion and consumption growth, actively implement the interest subsidy policies for the first half. We have issued [indiscernible] residential mortgage is over RMB 300 billion, keeping industry-leading position. We also deepened the integration of financial services for consumer spending scenarios surrounding on the home life and auto life, we continue to enrich our supply chain. The personal consumer loan balance reached RMB 806 billion, up by 14.96%. Credit card loans is at RMB 934 billion, and the likehood related consumption sectors also exceeded loans also exceeded RMB 1 trillion, covering elderly care, cultural tourism, sports, health care and education facility disperse of more than RMB 1 billion in Government consumption subsidies. We also have a stronger support for high-level opening up, serving the free trade zone and the free trade port. We also facilitate the cross-border quick loan and RMB scenarios. The International business loan balance reached RMB 2 trillion, up 24.57%. We also provided cross-border quick loans to the small and medium foreign trade enterprises of RMB 53 billion. The loan balance to [indiscernible] Countries and regions reached RMB 73 billion. We also support development of Hainan free trade port and Shanghai International Financial Center, support Hong Kong in consolidating its position as International Financial Center and actively promoted development of offshore renminbi market. Second, we also maintained a customer-centric approach with continued enhancement of comprehensive service capability. We have further streamlined the 4 integration mechanism, continue to advance the financial banking. The underwriting volume of nonfinancial enterprise debt, financing instrument reached RMB 268 billion, the M&A loan balance reached RMB 287 billion. Equity Investment business also advanced in an orderly manner. The Corporate and Retail Banking business is also enhancing their synergy. The social city cards and the disbursement customers and acquired the merchant transaction volume also continued to increase. The AUM payroll disbursement customers increased by RMB 663.7 billion, net increase of social security card exceeded [indiscernible] million. We have met the need of domestic and foreign currency and domestic foreign currency indicated accounts increased by 144,200 customers and we have achieved a double-digit growth in international settlement customers and international settlement volume. Cross-border RMB settlement volume reached RMB 4.25 trillion. Improved group-wide integration efficiency, overseas commercial banking institutions recorded net profit of RMB 9.5 billion, up 21.87% year-on-year. In the first half, overseas branches have recorded net revenue of RMB 9.5 billion and subsidiaries recorded a net profit of RMB 18.2 billion, up 21.87% and 85%. We have focused on 3 customer groups, government, enterprises and personal customers. We have developed model projects for 12 key ecosystem clusters, including universities, hospitals, social security cards, et cetera. We have seen an additional 792,900 corporate customers, an increase of over 5 million personal customers. Our products are better in meeting customer demand. We have seized the opportunity of diversified wealth management. We focused on customers asset allocated needs. We offer investment advisory services so we can help them manage their wealth long term. Wealth Management scale exceeded RMB 5.3 trillion. Wealth Management customers added 5.57 million. Private Banking customers and AUM achieved double-digit growth. Security customers for the third-party security custody services of trading settlement funds exceeded 100 million. Asset and custody reached [ 25.45 trillion ]. Thirdly, we strengthened risk and compliance management and further consolidated the foundation for sound development. We improved risk and internal control management system. We focus on the overall risk system problem. So we can establish a smart risk management system. We strengthened our policies so we can respond to the key businesses. We strengthened the penetrative risk management across overseas institutions and subsidiaries. We have strengthened the review of differentiated risks, and we have conducted evaluation management for corporate customers. And we have seen higher quality in new loans, we optimized the asset quality management and NPL disposal mechanism and broaden market-based disposal channels. NPL is 1.29%, down by 0.02 percentage points with key areas seeing controllable risks. We have adopted us ourself to the rapid change of technology and risk profile so we can establish a risk management platform. And we have developed fundamentals of Chinese economy. But we are very aware of the pressure and challenges in our operation. We will try our best to do a good job in the following areas. We will closely follow national strategic priorities and foster new drivers of transformation and development, advanced the 5 priorities and sees the 2 key tasks and 2 renewals, support major projects under the [indiscernible] Plan and development of the 6 networks, we will fully support the expansion of domestic demand, industrial upgrading and the growth of private micro businesses. We will strengthen our capability in cross-border capability, and we will enhance our promotion initiatives and reach the bank-wide home living and auto living ecosystems and brand-specific consumption scenarios. We will deepen inclusive livelihood financed to better meet resident's financial needs in housing, education, health care and childcare. And we will work with governance and corporations in meeting we will align loan growth with monetary policy and optimize funding duration and bond investment returns. Liability business, we will maintain alignment among scale, pricing and quality, further strengthen funding stability initiatives. Intermediary business, we will maintain category-specific policies across the integration of [indiscernible] We will safeguard the bottom line thinking of the worst scenario and strengthened risk and compliance management. we will strengthen our capability in mitigate financial risks and we will focus on key areas and effectively identify and mitigate [indiscernible] Segments can operate in a stable and regulated way. Ladies and gentlemen. CCB [indiscernible] Of China. So we will return to customers with high-quality financial services and let's work together for a robust and more sustainable future. Thank you.

Thank you, President Zhang. Now we will open the floor for questions. We will alternate questions between Hong Kong and Beijing to allow more analysts.

And Question 1 comes from Hong Kong. -- have recorded very good momentum. What are the drivers behind this robust performance? Looking forward, what's your expectation for the operational revenue profit going forward in this year? President Zhnag will take that question.

Thank you, Mr. Shi CCB seized the opportunity of the 15th 5-year plan, and we seized the opportunity in high-quality integration of business groups. We have seen some achievements in the first half in high-quality development in net profit and net profit attributable to shareholders, up 5.56% and 4.62% year-on-year, respectively, and higher than the first quarter by 1.8 and 1.09 percentage points. Operational revenue is 10.48%. It has been 2 digit growth for 2 consecutive quarters. We have more diversified source of revenue, net interest income and noninterest income have come our 2 drivers. Our core indicators are very balanced. ROE, ROA, NIM, cost cost revenue ratio and capital adequacy ratio have all kept a very good level. There are 5 reasons. First, we optimize the allocation of asset and liability. We have implemented very proactive and flexible asset liability allocation strategy with 8.46% growth in net interest income, [indiscernible] Percentage. percentage in high-yield assets we have optimized asset portfolio, loan and financial investments have seen higher percentage. We focused on new productive horses. And integration of finance and governance, personal consumption, personal operational loss have realized 2-digit growth. We optimized the loop of corporate funds. Our demand deposit has seen a very good level in its percentage. We have been very flexible in adapting asset portfolio. Secondly, we promoted the transformation of revenue structure with high growth in noninterest income, we have expanded the source of revenue. Noninterest net noninterest income is up by 16.31% for two reasons: commission fees are stable. We seized the opportunity of Wealth Management, Asset Management so we can improve on customer loyalty with professional services, fund, custody, CTS, these business lines have realized a 2-digit growth. We seized the opportunity of consumer markets, third-party payment and credit cards have seen stable progress we increased efficiency of settlement services. On the other hand, other noninterest income have maintained good momentum that is attributed to our efforts in asset allocation and improvement in transaction capabilities, equity investment has been performing very well as well. Thirdly, operational management, cost expenses, we have reduced costs and improved efficiency, we give priority to technology and customer marketing. We use the technology and digital tools for corporate operation. And we have strengthened evaluation of expenses, cost/income structure is 22.17%, down by 1.5 percentage points. We also have various control and the quality of assets is very steady. We have applied a very prudent operation philosophy and principles to -- we -- our ability of risk control continue to be improved. The RMB settlement accounts is standing at RMB 18.91 million, increased by RMB 1.02 million, compared with the end of last year. The personal clients AUM also exceeded RMB 24 trillion, up by RMB 1 trillion. And it has also capped the double-digit growth. The Retail Mobile Banking also increased by 15% in terms of the activity ratio. The International business loan also has a realized a growth of over 20%. All these have laid a solid foundation for our operation in the second half. Looking ahead, we will continue to emphasize on the 5 chapters. Optimized technology finance system, improve investment banking, wealth management and financial markets transaction ability, enhance the differentiated service ability also improved our opening up of high-quality service. On the other hand, we should also pursue sustainable growth. we should also upheld the right philosophy and balance our development. We also will improve the net interest income to a better level and also realize a steady growth of non-net interest income. We will continue to improve the linear management and preoperation ability in continue to enhance the risk identification and alarming system.

Thank you, President Zhang. Now I would like to invite questions in Beijing. The lady from the third row on the left.

I'm from China Security Daily, Shuaishuai. We have seen that for the first half of CCB, the loan also you maintained very steady growth. So I want to ask about the loan disbursement aspects. And now the financing structure is changing. So I want to know about the loan strategy for CCB in the future. So I would like to invite Ms. Han Jing, our VP in Beijing to answer.

So about the loan disbursement, President Zhang has also given very detailed introduction in his overall speech in the beginning, and he has also summarized the key parts in the first question. The end of June, the loan scale stands at RMB 29 trillion, up by RMB 1.5 trillion with an increased level of 5.65%. Loan also takes up 60% of our asset. A very solid foundation for the increase of our revenue and income. For the optimization, the overall volume is quite optimal. Our balance of customer, retail banking and also corporate banking is very balanced. The corporate loan is over RMB 20 trillion, up by RMB 1.54 trillion compared with last year, is up by 8.2%. The retail loan also is standing at RMB 9.19 trillion, taking up 31.31%, is over 1/3 corporate, 1/3 private. And so it is quite optimal. And for the second optimization, we also invested in consumption, investment and the premium sectors. What we mean by that? First, we emphasize on the 5-pronged aspects. The loan is also increasing faster than other aspects. For example, tech finance. We are also determined to be the leading bank to invest in tech finance. We also have go-to the manufacturing sector, this exceeded RMB 4 trillion, with a growth rate of 17.95%. The modern service industry and the modern infrastructure loans also have new changes. We also invest in the consumption for the consumption-related loans. We also are keeping the industry leading position. We also stick to high-quality opening up. We have the [indiscernible] Cross-border direct financing structure is also changing. Actually, the results of our economic structure transformation. It is also the result of the deepened reform of supply chain in the finance business. Next, we will also follow the trend, and we will target at the various demands of the sectors like globalization and more smart related services will also emphasize on the integration of investment and also the foreign and the local currency integration of the group. So we will also diversify financing channels at in different manners. We will also construct the modern industry system, and we will also try to coordinate with the changing financial markets. And we emphasize on the characteristics of CCB, we will also orient towards the 15th 5-year plan, including the 6 networks, the key areas and key projects. And we will have also responded to a series of incremental policies continue to guarantee the sustained and robust growth of loan disbursement. In the same time, we will also stick to the operation principle, principle, emphasize on the balanced development of volume and the prices on the basis of prudent risk control so that we can improve the high-quality development.

Now I would like to invite questions from Hong Kong. The lady from the nfourth row on right.

I'm from Phoenix TV. I'm Yang Shuo. We have seen that CCB has a very remarkable results in terms of NIM. So can you further elaborate on that? Apart from the external market factors, what you have done to differentiate yourself and also judge the [indiscernible]

Increased by 1.38%. So on the row, our NIM level is also leading in our industry. We have realized the comprehensive balance of volume price and also structure. That is a result of our economic development momentum and various other external factors. It is a result of our active management internally. We stick to value creation. We dynamically and flexibly enhance the balanced management of assets and liabilities. We also take differentiated measures to improve the -- our NIM level. We also have the two integration and one integration strategy. First, we optimize the allocation of the major asset class. We -- based on the market trends, we dynamically adjust the asset allocation. For the core asset growth, the growth is exceeding the growth of the group assets by 2.8 percentage points. The balance is standing at 91.6%. Just now Mr. Han mentioned that the loan takes up over 60% of our assets. So with these two, it takes up 91.9% combined. Second is to optimize the credit and loan maturity structure. By the end of June, for the domestic loans, the loan and mid long-term loan takes up 71%. It increased by 0.05 percentage points. Third, we improved the comprehensive pricing ability. We try to determine the loan interest rate placed on the comprehensive pricing service and also the transaction. On the liability side, we also implement strategy of control, the high risk, we emphasize our low-cost settlement capital management improve the settlement network optimization and all the new platform development. We also enhanced the physical local bonds capital connection. We'd like to leverage on the major capital to improve the high-quality capital pool. For the first half, the savings deposit balance increased by RMB 54 billion, also have a Y-o-Y increase of RMB 38 billion. Secondly, we also connect the time deposit capital, improve the optimal circulation of this capital, we also provided other sales of the other Wealth Management products. For the first half, the domestic time deposit interest payout rate is to 1.66%, down by 34 percentage points on a Y-o-Y basis. Third, we also actively and effectively control the high-cost liability, the interest rate of the other financial organizations deposits decreased by 19 percentage points. For the whole year, we are confident to optimize our active management of these aspects. First, we will balance the total volume. We'll fully integrate into the modern industry system, adapt to the new changes of the market environment and also client needs. Assets are aligned with market competition. We will take a balanced approach in credit and bond markets. The key is to make sure that cash management and payroll services a settlement fund increased the percentage of high-yield assets. Fourthly, liability we will focus on lowering costs and optimizing structure agile management is key. We will make sure that we flexibly adjust duration, pace and categories of liabilities. So the interest-bearing assets would be at a reasonable level.

We will take another question from Beijing.

From CICC. I have a question regarding Financial Investment. In the first half, we've seen very good growth in bond investment. Can you please talk about bond investment overall? Now the market is in a low interest rate even. So going forward, how will you take an active approach in this regard?

Mr. Ji from [indiscernible] We have aligned ourselves with the change in social financing structure, so we can coordinate investment transaction and customer services and this will lay a good foundation for strengthening profitability. There are a few aspects. Number one, we strengthened [indiscernible] And efficiency of these assets in the first half, we added over RMB 1 trillion of investment in Technology and Innovation. Secondly, we've taken an active approach in portfolio management, so we can take our advantage of transaction operations. And CCB has higher importance to bond portfolio. We focus on coupon rate and strengthen transaction in categories or types of bonds, duration and issuance. We will try our best to take advantage of them. In the first half, there were three features. Number one, we seized good time opportunities. In the first half, when the interest rates were on the raise, we implemented long-term allocation of mid- to long-term duration bonds. Secondly, we seized the opportunity of market volatilities in Q2 when the prices were high through secondary market transactions, we optimized our portfolio structure. Thirdly, we seized the opportunity of refine management, given the yield curve, we flexibly adjust the strategy of investment. So our capability has been enhanced in mitigating risk -- rate risk and profitability. Thirdly, we leverage on our integrated services. So on the one hand we enhanced income. And on the other hand, it becomes an important driver in operational transformation. So bond underwriting, investment, these are deeply integrated. The [indiscernible] Doubling in the first half and a bond issuance and bond underwriting volume has increased by 174%. We offer allocation and risk management services to customers in China and overseas, so customers can face market risks and volatility in a robust way. Going forward, we will focus on three areas in bond market businesses. First of all, as a big bank, we will help the government implement policies supporting the demand of recon. Secondly, as a market maker in foreign currency and bond markets, we will provide liquidity. Secondly, we will offer diversified investment vehicles and cross-border platforms. We will enrich transaction strategies, strengthening return and our investment portfolio, strengthening cross-border investment, especially in underwriting tender bonds, we will help Chinese companies going overseas and also foreign companies operating in China. Thirdly, we will develop a professional team specialized in investment transactions and sales, we will strengthen the use of IT and other technologies strengthening the business capability of our investment and financial business.

Now we will take the question from Hong Kong. The fourth row to my.

[indiscernible] And Personal Finance. How do you look at the asset quality in the second half? How do you enhance risk management? How do you make sure that your stable development momentum can be sustained?

I will take that question. The CCB is committed to coordinated development. We will think of the worst scenario, strengthening the management of credit risks with a better risk management system, we can serve the real economy with high-quality services, asset quality has been stable. We have very good risk mitigation capability. As Mr. Zhang said, as of the end of June 2026. NPL of CCB Bank was 1.29%, down by 0.02 percentage points compared with the end of last year. Provision covered ratio of [indiscernible] up 5.4 percentage points. We have made arrangements in two aspects. Number one, we will serve the economy, we will take targeted measures in credit finance. We will align our services with the five priorities in national financial policy. We will strengthen technology innovation and investment on the structural and cyclical features of risks, we will optimize our strategy. So the business management and Risk management can be coordinated. On the other hand, we focus on key areas and strengthen the all cycle management of credit risks, we will focus on the new trends in credit risks, so we can dynamically optimize long-term mechanisms of risk management. In corporate finance, in key regions, key customer groups, key projects, we can manage in different dimensions with pre checks and prewarning capabilities we can form the synergy across the bank. In retail banking, we enhanced the management of corporate credit risks. We will improve efficiency, both online and off-line. We will strengthen will be committed to stable progress so we can strengthen our risk control system, which is smart and proactive. So we can build a very robust risk management foundation for high-quality growth. Now we will shift back to the Beijing venue. This gentleman in the fifth row on my left.

From People's Daily. Now we have seen the shift of personal deposits. I'd like to ask about the renewal of personal deposits in the first half, what were the new trends and faced with the low interest rate environment, what measures have been taken by CCB?