China Merchants Bank Co., Ltd. (600036) Earnings Call Transcript & Summary

Welcome to the 2026 Interim Results Presentation. Today, I will cover three areas. Firstly, an overall introduction and secondly, a detailed information. And thirdly, our business strategy for the next phase. In the best a of the year, The group implemented a strategy of building a value creation bank and adhered to the coordinated development of quality, profitability and scale. Various operation indicators registered steady progress with positive momentum. This was primarily reflected in the 4 aspects. First, steady progress in operating performance with distinctive strength in our property. Net operating income, CNY 178.135 billion, up by 4.83% year-on-year. Net profit attributable to shareholders of the bank, TD 76.45 billion by 2.02% year year-on-year. ROAA and ROAE were 1.14% and 13.43% respectively remaining and industry-leading levels. Net interest income, CNY 112.02 billion, up by 5.6% and affected by LPR repricing and effective credit demand and declining market interest rates. The net interest margin was 1.83%, down 5 bps year-on-year. representing a natural decline. Net noninterest income reached CNY 66.4 billion, up by 3.56% year-on-year. The percentage of Net noninterest income was 37.1%, maintaining the leading position in the industry. Net pay and admission income reached 39.8 billion, up by 5.99% year-on-year, of which income from extended growth management reached to CNY 24.7 billion, rising by 18.44% year-on-year, representing the best level in the past 5 years. The cost-to-income ratio was 29.7%, and down 0.1 percentage points year-on-year. Second, we delivered balanced asset growth in both scale and quality with continued increase loans in funding costs. amid an effective provider we carry out a range of measures to strengthen asset origination and optimize asset allocation. Our total SF amounted to CNY 13.79 trillion, up by 5.7%. Total loans and advances to customer 7.45 billion, up by 3.9%. -- accounting for 64.07% of total assets remaining stable. Among them, general loans amounted to CNY 7.19 billion, up by CNY 300 million -- we accelerated the turnover of build assets with discounted is amounting to CNY 6.8 billion, down 17.6% Investment securities and financial assets amounted to CNY 4.4 trillion, up by 6.07% accounting for 31.5% of total assets, a level that the group considers appropriate. We pursued steady liability growth while continuing to optimize deposit structure with the consolidating advantage in opening cost, total liabilities, CNY 2.43 trillion, up by 5.5%, of which total deposits from customers exceeded CNY 10 trillion, up by 3.2%. Core daily core deposit balance was CNY 7.9 trillion, up by 92% compared with the previous year. It accounted for 82.6% of the average daily balance of total deposits. up by 1.7 percentage points as compared with last year. The average daily balance of demand deposits accounted for 49.6%, a up by 0.2 percentage points compared with the previous year, remaining at an elevated level. MujoBank deposits grew rapidly, serving as an expected supplement to the funding sources of which demand deposits accounting for 94 4.54%. The annualized average cost of interest-bearing liabilities was 1.05%, down 30 bps year-on-year. of which the average cost rate of deposits from customers was 0.97%, down 29 bps year-on-year. Thirdly, we maintained stable asset quality and strong risk compensation capacity -- the NPL balance was CNY 7.3 billion, up by $21 million and the NPL ratio was 0.94% remaining at the same level. The annualized NPL formation ratio was 1.06%, up by 0.08 percentage points. The allowance coverage ratio was 38.1%. And -- and the allowance to loan ratio was 3.63%, reflecting a high level of rate compensation capacity. The annualized credit cost was 0.9% in representing a slight year-on-year increase of 0.02 percentage points. Fourthly, we strengthened capital management with industry-leading capital adequacy level. Risk places asset under the advanced approach and weighted approach increased by 5.6% and 5.23%, respectively, which is generally in line with asset growth. with the AT1 CAR, the Tier 1 CAR and the CAR last approach were 14.07, 16.59% and 18.33% respectively, down 0.09 of 0.8 up 0.9 percentage points, respectively. . As for weighted approach, the numbers were 11.84%, 13.96% and 15.06%, respectively, down . A percentage point, up by 0.6 percentage points and up by 0.6 percentage points, respectively. This is a brief overview of our performance in the first half of 2026. We will now turn to the company's operational information. In the first half, we made new developments and challenges in the banking industry, the company proactively responded and see opportunities, taking extensive growth management to a new level, a transformation through the 4 initiatives to deliver notable progress better strengthening the company's resilience and market competitors, which is mainly reflected in following areas. First, we grew our client base rapidly while saving expensive wealth management business. We remain customer-centric, further deepen segmentation and classification based personnel management and achieve growth in both size and quality of our client base. Retail customers target 231 million, up by 3.13%, along the foliar and above customers reached 6.1 million, up by 10% -- the number of private banking customers reached 216,000, up by 8.6%. Corporate customers reached 3.6 million, up by 6.6% and among which the number of newly acquired corporate customers was 347,900 annual tie customer 78,000. The number of corporate customers for recording transactions reached 153 million, representing a year-on-year increase of 14.9%. AUM from retail customers exceeded 18 trillion, up by 7.96% compared with year-end 2025. The half year increase reached CNY 1.36 trillion within the record line. . The average daily balance of corporate wealth management products was CNY 633.6 billion, up by compared to 2025. Total asset management amounted to net, representing a year-to-date increase of 5.9% and in ease and aside CNY 23.5 trillion, representing a year-to-date increase of 8%, maintaining a leading position in the market. Secondly, we will pursue differentiated development with modest business strengths. First, we continue to consolidate our leading position in retail finance. And we maintain the main goal of retail finance business with this Net operating income accounted for 54.5% of the total. We continue to strengthen our professional service capabilities in wealth management. . And the customers holding on many new products, 66.7 million, up by 4.5%. Customers cover 53 system, which 12.8 billion, up by 6.98%. In response to market trends and evolving customer demand the growth structure of AUM of retail customers become more diversified. Agency distribution of nonmoney market mutual funds and trust products increased by 82% and 40.8% year-on-year, respectively. The balance of retail wealth management products increased by 3.88% compared with prior year-end. -- and the balance of deposits from retail customers increased by 3.7% basing rising risk and weakening demand to be prioritized asset quality in retail loans. -- on a moderate contract ending scale. Retail loans totaled CNY 3.61 trillion, down 1.1% compared with prior year-end. The percentage of retail loans to total loans and advances was 51.4%, down 1.8 percentage points compared with our year-end. Amid the industry's flair adjustment, the group appeared to a stable and nonutility operational strategy for its credit card business. Active codec users totaled CNY 7.4 billion. million, up by 0.6% compared with prior year-end, and the transaction value was CNY 1.91 trillion, down 5.3% year-on-year, while maintaining a leading position in the industry and our market share further increased. We continued to both differentiated competitive advantages in Corporate Finance. Total FCA was CNY 7.27 trillion, up by 8.3% year-to-date. We continue to optimize loan structure to further enhance quality and effectiveness of serving the euro economy. Total corporate loans 32 trillion, up by 9.7% and road of loans in key areas, which is grain loans, manufacturing loans and agriculture-related loans are significantly outpacing the overall loan run. . The overall the average daily balance of deposits from corporate customers, CNY 523 billion or 56.1%. -- of which demand deposits accounted for 15 50.4%, down by 0.8% point. We continue to enhance professional service capabilities of retirement finance, the number of individual pension accounts opened exceeded 18 million. . With the pension funds under custody amounted to CNY 1.7 trillion, up by 9.68% compared with prior year-end. We've provided diversified financing services to technology enterprises. -- serving 378,300 fitech enterprise customers, including more than 20,000 enterprises listed on Vitec rankings. We continue to upgrade the distinctive brand of enterprise digital intelligence finance. Compared with year-end 2025, the number of customers using treasury management car services increased by 14.26%. Those using co-based post-dose collection increased by 13.4% we continue to enhance professional capability investment banking or financial market businesses. A Intrebuted by investment banking business increased by 8.4% year-to-date. And that under ret point launched CNY 84.6 billion. And the M&A financing business value amounted to CNY 165.92 billion, up by 19.8% year-on-year. And we have completed multiple deals with significant market expense. Regarding financial markets business, the number of wholesale customers involved in if trading was up by 18.8% year-on-year, and the rat transaction value amounted to RMB 21.7 billion, up by 33.4% year-on-year. ours customers totaled 11,400, up by 11.49% Direct to discounting level was RMB 1.93 billion, up raised in the market Fourthly, we accelerated the development of branches in key regions to strengthen their market competitors. Multiple key indicators, including growth rates of retail customer base, retail AUM for deposits, corporate loans, net operating income and EA of launches in key regions were all higher than the average level of all domestic branches. The contribution was increasing. The proportion of 2 million branches in the total of all domestic branches increased regarding retail AUM balance of 0.26 percentage points Corporate loan balance up 0.56% and average reported positive balance of 0.3 percentage points. Thirdly, we steadily advance compared with an international development with value contribution significantly Total assets of major subsidiaries, RMB 1.05 billion, up by 10.6% compared with prior year-end. Net operating income accounted for 12.93% of the group's total, up by 0.9 percentage points. Net profit for MBand reached HKD 4.73 billion, up by 55.88%. Total assets 7.8 billion, up by 11.63%. Net profit of CMB International capital, HKD 8.7 billion. up by 124.4%. -- total overseas asset management business reached HKD 94.7 billion, up by 25.7% Net profit of Me financial reasoning was RMB 1.63 billion, down 42.4% year-on-year. This is mainly because a is fee income last year. And the leading business was RMB 49 billion, maintaining the leading position. And net profit of CMB We1.5 billion, up 10.9%. Total wealth management products rose 2.7 up by 3.79% compared with prior year-end in bidding position. Net profit of channel margins fund was CNY 802 million. And then non-entry mutual funds under management was RMB 63.1 billion, up by 5.8%. Net profit of Pantene was 52 million, down year. Interested management of insurance bonds totaled RMB 279.4 billion, up by 19.8%. I -- the total assets of overseas institutions increased by 7.1% compared with prior year end and the net operating income those 53.5% year-on-year. In institutions and on cases, opportunities and expanded operations, achieving cost to growth, net operating income grew by 32.7 near total assets under factory of Global Custody Hong Kong Center exceeded CNY 1 trillion International Capital completed 3 Hong Kong sponsorship project and an ag Hainan project. Cross-border business grew rapidly. The number of corporate customers in expect of international balance of payments reached [ 93,700. ] and the international balance of payment of corporate customers increased amounted to USD [ 3.6 billion. ] Accounting comprehensively slot engine in sale development and continuously strengthened technology advantages. First, we promote AI development and application. We continue to refine our self-developed launch model infrastructure. Average daily talents would increase by over 78% with 256 domestic goal domain-specific models were deployed up by 40%. A total of 1,386 intelligent scenarios were deployed up 62% compared with prior year at part models applications have delivered tangible quality and provision to be gained, AI contributes 13.8 million in total people in working balance in terms of decision to gains. We also built a bank-wide knowledge management framework that enables smart language models to a mono value of across business lines. We have increased our 5-rig service capacities and increase our capacity of complex business service. We have launched AI Solan and AI agent serving wealth management partners with newly launched Private banking -- is now deliver one-stop realized service pain work or be asset allocation and protection and succession intention. We have operated our client service system -- the AI-powered intelligent customer service digital human system for institutional scenarios has served customers of RMB 37.6 million in. Internal management surgeons upgrades continue to accelerate. AI is reshaping credit process. We accelerated deployment across the pre-lending and post-landing stages. In terms of business management, intelligent tools now span the front, middle and back offices. Quickly, we obtained the bottom line of this [indiscernible] and reinforce advantages in asset quality. In the case of various rising challenges with setup efforts to prevent and mitigate risk in key sectors and continuously refine risk management strategies. Overall asset qualities remain set -- we appeared to the strategy of stabilizing growth, preventing risk and utilizing structure, strengthened risk management and control in sectors and just property and manufacturing. With corporate loan asset quality continuing to improve NPL ratio of corporate loans 0.78%, down 0.11 percentage points. Among them, the NPL ratio of property industry was 4.47% down 0.3 percentage points. The NPL ratio for manufacturing it was 0.39%, down 0.4 percentage points. Confronted with rising retail loan risks across the industry, we comprehensively for 3 pallet and optimize the FS structure retail asset quality remained stable and consolable maintaining a relatively strong position within the duty. The NPL ratio of retail loans was 1.16%, up by 0.1 percentage points among them, residential show mortgage loans was 0.8% -- 0.48%, down 0.03 percentage points. [indiscernible], 1.9% up by 0.6 percentage points, retail micro finance loans and consumer loans were 1.3% and 1.9%, respectively, up by 0.1 points and up 0.7 percentage points, respectively. In the end, I would like to give a brief introduction with the potent strategy for the next phase. Noah -- we will fully implement China version's Bank 5 5-year strategic plan, contain strategic focus of for fundamental principles and reverence capacity biting transformation through the initiatives. -- the canoe existing strength while building our new advantages, achieving the buses with a colo model. Firstly, we stay committed to long-term to stronger for competitiveness. We will remain customer-centric. We import the set of retail finance through wealth management. upbuild excess quality as the foundation and sustain strong technology support, while maintaining strategic focus will paper to the principle of professionalism and market orientation, continue to see of innovating in products, services, technologies and business models by deepening and refining on 4 businesses the [indiscernible] business and revenue structure will take on FX earnings plus future, which is resilient in down cycles and flexible in up cycles. Secondly, capture structural opportunities to continuously cultivate new drivers for medium and long-term growth. In Retail Finance, we will capitalize on the historic strategic opportunities in wealth management. centering on asset allocation to enhance professional wealth management capabilities and improve customer sense of fulfillment and experience. Secondly, in corporate banking, we will further strengthen professional operation in different industries. Even investigation of possible water range of sectors we find 1 branch on or, 1 industry on policy strategy in key gene branches to enhance differentiation. But, we will also see opportunities arising from new quality product sources, averaging synergies between CMB and the subsidiaries will strive to build technology, finance as a distinctive feature of CMB. Hopefully, we will leverage our local and global presence and establish a development framework comprising the head office plus institutions in Hong Kong plus Paeahu to build distinctive feature in cross-border finance. Thirdly, we will see near-term decisive moves to sustain steady progress in operation. We are focused on stabilizing the new, maintaining our advantage in low-cost deposits and strengthen risk ban pricing on the asset side and increase our repetition capacity. We leveraged our strength of subsidiaries to better expand NII and optimize revenue structure, keeping revenue for stable. We receive capital market opportunities further expand extensive wealth management and financial markets businesses to impose value contribution. Capital management will be strengthened to improve capital returns and reinforce capital resilience. Fourth, we will exit intelligent transformation to further extend tech leadership to sustain technology input and intensified technology in comment to further promote business growth with technology. facing the opportunity presented by AI with order and deepen AI applications to drive improvement in customer experience, internal efficiency and risk management will accelerate the building of toward organization, recite the capabilities of workhorse and deepen people plus digital intelligence model, establishing CMB as a benchmark for intelligent transformation in Main area. Simply, we stay anchored to risk rate approach and reinforce our patient for sustainable development will uphold prudent and stable risk culture, operating within the boundaries of our capabilities. which stay highly vigilant to early science regarding asset qualities, strengthened risk prevention and resolution in key areas, including retail credit and quality sector and intensify collection resolution efforts and internal control will be strengthened with rigorous safe cost of grains credit market risk, operational risk and liquidity risk. -- providing a solid foundation for high-quality development.

We will now open the floor for questions. You are welcome to Raise question. Please follow the instruction of the operators. .

[Operator Instructions] for mobile users, please tap floor at the bottom of the interface and select race hand for PC users basic participants, and this rate hands, please ask 1 question or a turn. When I did, please turn on your microphone and camera and stay joined an institution you represent. We will now take your first question. We will have the first question from postage Yes, we can hear you. .

Senior management for giving me this opportunity to raise the first question. My question is for Mr. Manati. You just assume to be the President of I have a very simple question for you. For this time, as you assume the new role, what is your actual interval? We all know that you'll have a similar new role for around have a year. You have done a lot of work. So I would like to learn from you what about your mindset? -- your idea about the future development of CMB business. We see CMB in second quarter, your revenue, your profit accelerate. Will that trend continue to the second half of the year?

Thank you for your questions. By the end of April, I assume my new role to be the President of CMB. And after that, first of all, I feel strong responsibility, which was reflected in the following aspects. Well, first of all, CMB has managed has been managing $13 trillion asset size. It showed a very strong responsibility and mission. And second, the bank-wide development is highly relevant to 120,000 stocks, live and how could we inherit the good experience and the results from etigeneration of CMB staff's hard work and stick to high-quality development. And third, the capital market -- our investors have attached great importance and recognition to CMB. How do we live up to their expectations? -- how do we live up to what they expect from us. It's also a very important issue for us. I can recall an individual investor from our shareholders' meeting that their phones are coming from their everyday lives, so making good investments is what they want. We should guarantee them with good results and deliver to our investors so as to guarantee their return. And of course, from all these 3 aspects, these are the most important aspects. We also have other dimensions. Then we are faced with important development opportunities. And of course, -- there are challenges ahead. I have been discussing with many investors in different scenario challenges on 1 hand, are coming from the banking industry. These are the common channel space are all bank refine the low interest rate environment, they have been post challenging to the bank and also the challenges they go to the opening development. And another part I mentioned is that as the economic growth rate actually moderate and also to both city finding and structure are experiencing changes the demand for the private demand also shrinks. This is also the PBOC had mentioned in the forum in Shanghai that the total loan growth demand for loan demand is also in a slowdown trend. For the second perfect Basin. We have also been quite special in our own loan structure. As you all know, we are a bank that retail business stays on major line and a wealth management is a very important strength of ops . In such a phase where retail credit assets, retail business facing challenges, I believe this challenge on 1 hand, is coming from the household balance sheet reevaluation and deleveraging this is update, a special base we have. And for the second perspective, some of our households, they are having challenges in their wellness to repay and also their capability to repay. And thirdly, the stocks joint debt risk also demonstrates in such an environment. So for CMB, for both retail business are under pressure, much more pressure compared with our peers. So combined with the low interest rate environment, combined with our over 50% of retail loans among our all loans and also the rather smaller room of liability cost control compared with our peers, I think all of these factors combining together are casing stronger challenge to CMB compared with other banks. But for us, I think on 1 hand, we need to follow the principal -- the pattern of the banking business development for us, I think that we should always stick to the philosophy with customer-centric philosophy to be back to our origin and take customer at our center. And secondly, we should balance risk, return and maintain a good management over the 2 factors and stick to good asset quality and reserve from a commercial bank perspective, we need to combine with our own strengths, our resources, what we are good at. I want to specially mention the 2 points. One is that, even though we are faced with challenges, how do we leverage our strengths in extensive wealth management business, we can consolidate our characteristics at a retail bank, we cannot give up our own strengths and characteristics just because of the change of the external environment. On the contrary, as the market changes, during the process, we should even more, we should even learn better about the environment and seize the opportunities and continue to foster our capability and RASK the development opportunities among the environment? And second, perspective is that we have 3.8 million corporate clients and over 230 million retail clients and we are having rather strong space to further dig deeper in these client groups. We need to take a customer-centric perspective to understand better about their demand, where is their demand, where is their pain point and for CMB we can understand better about them and provide corresponding service to these clients to match their needs were whether their retail clients or corporate clients and to carry out our mission to serve the real economy, and to serve the sense of fulfillment and their investment gain of our customers. And of course, as a commercial bank, we should see the cost of this time to see the trend of development and to see what we should seem to see from current situation, the senior management has discussed the following aspects, directions of development. These are also what we think that we should grasp and cease to be the characteristic of CMB's future developments. The first thing is extensive wealth management business under the low interest rate environment. How do we understand better about customer demand, their demand of preserve and increase their at that value. And we also see the change of asset structure of every household of the Chinese residents for the first half, retail AUM increased by 8% to CNY 18 trillion. We can see that in deposit insurance trust games and mutual fund products, these are all demands coming from our clients ever CMB, we have already accumulated capability recognized by the market and for the next phase we will further strengthen our capability to take customer as the center to increase the sense fulfillment of our clients and to increase also the experience of our clients. We take these aspects, our target to enhance our capabilities of providing asset allocation to our clients and also provide companion service to our clients as well. This is what I would like to discuss about the first capability from besides retail extensive wealth management also improved wealth management to corporate clients. Even though the scale of wealth management service provided to corporate clients is not as big as those who provide to reach our clients, but it's also growing at a very fast pace. For the second perspective, I think we need to see the opportunities arising from the new time and new environment That is Cytec finance. We think that under the backdrop where the government encourage us to develop technology and also the capital markets are providing stronger support in this process. And of course, the financial institutions like us should not miss this great opportunity. it's not just missing an opportunity. It may be a time that you need -- and of course, probably every financial institutions are also practicing and trying to seize this opportunity and how do we further consolidate our capability that is more systematic based on our has cumulative experience. I think on the 1 hand, we need to deepen our understanding towards industries. For every area in technology it actually requires us to have strong knowledge, deep understanding in different areas, segments in the technology business. How to further cultivate our capability. It is what we need to set the big deep and cultivate no matter in the head office or branch level or subsidiary it is also building based on our professional operation that is industry-based, only by understanding better about the future of the company. But we deepen the development of technology finance. And for the second perspective of how do we better promote the development of technology finance, we should give into full play of our license -- our full license capability. I understand that for commercial banking business, the high growth and also high volatile characteristics within technology finance, it cannot be satisfied by the traditional credit business model. because the return coming from loan business is rather certain. So I think that the 2 aspects within the business are actually mismatch -- so how do we better satisfy the demand of technology finance, we need to further leverage our whole license capability, our multi-license capability that is what we need to think further for the next phase -- we have 1 plus 1 plus license, 1 is commercial banking, and the other 1 is our overseas commercial banking and the other our investment banking, investment management, AIC, resin and et cetera. So for CMB within these 8 licenses areas, . Good market share and also market influence compared with CMB's commercial banking business within its own area. So I think we should only leverage what we have been cultivating what we have been accumulating and to better serve our nation's big strategy of developing technology and within this trend, we see the opportunity and further development along with this trend. And for the third perspective, I would like to mention is that about our international development. While logically speaking, our overseas branches are not having as many outlets as the big state-owned banks -- so how do we reflect our own characteristics in international development, especially how do we better leverage our Hong Kong institutions. I think that these 2 ideas are what we need to think further. And the fourth aspect is that in the intelligent era also bring us new opportunities for banks. Do you might not be obviously or quickly reflected in our balance sheet or even at recent basis, they will be reflected as expenses or costs. But for us, -- we think it's the right thing to do. How do we use a more scientific way to grasp the intelligent technology meant a lot for a commercial bank. -- it could help us to enhance customer superiors, enhance our internal efficiency and to conduct even more accurate risk management and also to further accumulate our knowledge. So this is for the development of technology has always been a very important input. Within -- long ago, we have been written that no less than 3.5% of our operating income will become the IT input. And for the next phase, this is retaining our articles of association. So we will -- we are having plans for developing our intelligent bank. And later on, our Chief Information Officer, Mr. Joe will give further introduction. And last but not least, we believe it is also an opportunities given by this area. . And also another long-term momentum is that during the development of Chinese economy, we should better give the full play of our branches in key areas. According to the senior management's analysis for the first half, recently, I just reported the figure of development in our branches in key areas, they are having a better growth rate in the average level of the banks -- all branches, all branches. So we need to stay close to the local industrial policy they close to Industries that are fitting to our understanding of risk and our preference and stay close to our clients, including corporate and retail clients. This is what we need to do to further develop the key branch-branches in key areas. So that they can contribute more to the bank's operating income and also profit. This is we need to -- for the next phase, we need to further foster our capital in strength so as to establish CMB's own driver of future development. . Your last question is about the growth of the first half. Will that trend be continued you see from the senior management level we will strive -- we will make are efforts, and this is also what we want to deliver to the market. We aim to strive to maintain a stable and steady progress to deliver such results to our market and make are efforts to maintain our good asset quality to deliver such good growth momentum to consolidate what we have achieved to reflect better results to the capital market. Thank you.

Next question, please.

We will invite Mark from China Securities.

I'm [indiscernible] from China Securities. Reenter the introduction, we are clear about the strategic outlook I want to further ask my question on retail banking business. DNB has the best wealthy retail customer base in China banking industry. So in areas such as consumption scenarios, basic account services, wealth management, how will you continue to enhance the exclusivity lines and premium experience of products and services to these clients, thereby avoiding simple price wars and marketing roles. -- so that we can then improve customer loyalties and returns. Is there any indicators or metrics we can track to monitor the progress and effectiveness of these efforts.

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

Thank you for the question. I think this is a very good question. You not only mention pay attention to wealth management, but also pay attention to customer consulting scenarios, including bank account services, which are integrated financial services. This is a direction that CNB is paying efforts to serve the clients basically in deposit loans and remittance. Regarding the comprehensive financial services, we do not target only wealthy customers, but the whole customer base of China Merchants Bank deposits Has been elaborated to the extensive wealth management. We will start from the client sensorial to select good products and construct a long-term, stable as such allocation system. Regarding loans, which means we would satisfy client demand in different financing to provide in household business, et cetera for remitters . We pay high attention and continuously enhance our basic account system construction and dedicated to a same convenient and a payment system to cover all scenarios such as early carrying social insurance, et cetera, so that talent can use 1 account to manage all kinds of businesses. make CMB card more -- is very good to use this concept to be more widely promoted Well, the customers have more diversified requirements in the -- most of the clients are entering a phase of material wealth accumulation. So they have diversified from different dimensions that requirement has been well succession and wealth protection and where the bond needs . Under such kind of complexity, we have to take consideration more factors and provide more customized services and more differentiated services to these quality clients. We provide 1 comprehensive and scenario-based service solution, which is a one-on-one relationship managers and plus an expert team for long-term companion to hope you respond to the client's expectations on integrated services. Home product offerings . We would opt for around a category product offerings that are that serves across multiple accounts and whatever currencies, et cetera. Codan and flower and above customers growth in the past 3 years has accumulated to 55% and the CAGR has been 13.26%. Another point I would like to discuss with you is that we have always paid high attention to the upgrade of retail client service model because retail customers is a is a 100 million volume-based customer -- there are a lot categories of retail banking businesses, and there are multidimensional services involved in retail banking client services. So how to match client requirements. And I'll talk about offerings. This is a very important question. In the past, we used 3 years to basically complete the human plus digital intelligence new model in retail finance and completed our digital rematching for clients and channels and product offerings. We have 3 dimensions to support us. First, our customer-centric sale and our strong delivery capacity from the head office to branches and to sub branches as well as our strong support of fintech -- and this is the main support. In the next phase, our retail banking service model will deeply involve artificial intelligence from and transport for people -- people close digital intelligence to people select agents. Regarding metrics, I think there are many indicators to pay attention to. For example, the number of customers holding wealth management products the allocation customers and may you act users, et cetera. And our -- the customers covered by our tree system has increased by 55% for the past 3 years and the compound annual rate has has reached 13%. Our active users has been increased by 31% in the past 3 years and the 9.36%. And the 5.14% of the CAGR of the last 5 years. So as for the indicators, AUM and client base are the most fundamental indicators to look for. Structure volume of these indicators are also something that we're paying attention to. Our AUM increased by 52.2% over the past 3 years. And retail clients increased by 24.5% for the past 3 years and the CD was 6.2%. Overall speaking, we use integrated service capacity to serve our clients as long as we have our retail customer base or even though their demand and present changes across periods. However, for CMB, their trust for CMB and their choice for CMB will not change. .

Next question, please.

Next, we will invite Sean from Morgan Stanley

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

Thank you for the question. Indeed, as you mentioned, and also mentioned in the presentation previously, the bank's total loans and advances reached CNY 7.45 trillion. -- up by 4.73% year-on-year. In this process, we see that the difference between corporate loans and retail loans. The corporate loans increased by 13% while retail loans increased by 0.05%, excluding corporate costs. So we are seeing corporate loan growth is outpacing retail loans. This is broadly in line with the market trend. You just mentioned the number of 7%. This is mentioned in our previous investors discussion regarding our expectation, which is 7%. From actual operation, we think that currently is around 5%. So in the next half of the year, we think that the growth rate would be relatively the same. There are 2 reasons. Firstly, the external environment. The speed of loan growth is is slowing down, which is -- and the asset quality is improving. This is the choice of -- it's our own decisions. With insufficient credit demand in the market, especially the retail loans is facing periodically high risk. We do not only pursue scale expansion. We emphasize that there'll also be a balanced development of quality, profitability and scale . In recent period, what we discussed with the retail banking business sector is that we should -- regarding the retail banking structure. And asset a quality, we have increased our requirements and we do not pay very high emphasis on scale expansion so that our team of retail banking have sufficient attention on the asset quality of retail loans, even though I believe that our -- from many analysis, the Q2 growth is lower than the previous numbers. From the perspective of commercial bank operation, we think that -- we hope we hope to pay higher attention to the challenges and adopt long-term perspective and proactive management. Secondly, I would like to mention about the loan yield sale financing and LC negotiating business, we are -- the volume is shrinking. And we are implementing proactive management -- the overall trend of demand is not changing very fundamentally -- and we if we are not seeing very good signs of improving trend, the overall trend of CMB loan growth will still maintain. Retail loans. In terms of retail loans, we would continue to consolidate our quality customer base, effective control on risk and then we can have our good market share. And in terms of corporate loans, we focus on key areas, key industries and key industries featured by segment. so that we can achieve growth in both volume and quality and increase our quality and effectiveness of serving the real economy. Thank you. .

Next question please.

Next question is from Yang so from Goldman Sachs.

Make this opportunity I have a question for deposits. So recently, we see that some major banks they are resuming the issuance of large denomination personal CD. I would like to learn that whether it has cash any influence to our liability costs, and I would like to understand the repricing of deposits and also the trend of NIM of CMB. The question will be taken by Mr. Peng.

Thank you for your question. I think for the issuance of large nomination CD, we'll have 3 purposes. One is based on the maturity management to the duration to match the duration and liability to absorb the long duration liability to maintain balance sheet management; and second, liquidity management, I think it's also the shopping purpose. And the third purpose is relevant to provide product and service for client demand of having such kind of long-term deposit product requirement. But based on our understanding, 5-year large domination CDs issuance the total size is limited and the cost is rather low. So based on our understanding, it will have limited influence on the bank's NIM. But for CMB -- our duration liability duration is appropriate and balanced. So in market risk, we don't have quite strong requirements on the largely nomination CD, and we have good liquidity. So for temporarily, we won't need the issuance of large nomination CV to supplement our liquidity. If in the future, we need to take such action. It will be out of the purpose of providing relevant products required by our clients. But of course, we will conduct further analysis and understanding that whether or not we have actual demand from our clients and whether the demand should be satisfied by our product supply. So we are also doing such kind of analysis and research. And also, for those products that was further released, we need to conduct some rollover products. We will also start from the perspective of NIM management and also from the perspective of liability management, I think the influence is rather limited.

The next question is from Martin from Waha Haitong Securities. .

Thank you, management. I am Martin Kim from -- both I have a question about the overall CMB's asset quality. What's your point of view and what is the major risk that you see -- and what kind of coking tactics measures that you have been taken to these risk areas.

The question will be taken by Mr. Xi. He is in charge of risk management. .

Thank you for your question. For the first half of this year, we have stick to our prudent and stable risk management culture and prevent the risk in key areas and increase our level of risk management. Our asset quality remains to be stable, and having 3 characteristics, 1 is asset quality maintained stable towards a good momentum. By the end of June, our NPL ratio were 0.94% remained flat from the end of 2025. This is quite a good level. The second is that we stick to a prudent and culture risk classification, as asset calcification, loans overdue for 60 days and 90 days to NPL was 1.23, which was a good level among our peers. And third, we have abundant provision. By the end of June, under the group's category, our adequate coverage ratio was 385% having a strong compensation level you have been paying attraction to our understanding of risk areas, I would like to make some classification according to different segments. First, I would like to talk about corporate loans. For the first half, our NPL -- corporate NPL ratio was CNY 27.4 billion. Corporate NPL ratio was 0.78%, down by 0.1 percentage points. Corporate . Asset quality actually improved for the first half, -- the NPL formation ratio of corporate loans was just 0.16%, stretching to see from a longer cycle CMB's corporate loan asset quality continued to improve, remain stable towards a good trend. For the risk areas that we pay attention to. In terms of corporate loans, the future risk will be lying in real estate credit perspective. By the end of 2025, we have 14.5 billion of NPL loan in the real estate area, which represents a 4.47% of NPL ratio -- so even though these 2 figures remain at a high level, relatively high level, we are paying a very cautious attitude towards these 2 figures. And for for the real estate market, we still see some divergence within the market for some clients with rather not that good performance and qualification, they are having quite core asset quality -- so for this area is what we pay special attention to. That is the corporate real estate. We are taking measures as follows: -- we continue to lower the proportion of corporate loans, corporate real estate loans within total loans, its proportions with now 9.3%, which was lower than the end of 2025, lower by 0.45 percentage points. We will further optimize the structure of property loans corporate property loan. We focus on loan disbursement in Tier 1 and Tier 2 cities, and 85% of them are allocated to Tier 1 and Tier 2 cities. And to see from client structure, -- over 80% of our corporate property loans are granted to local and central state-owned enterprises and also very qualified private enterprises who are having stronger capabilities to paying their debt. And the third perspective is to maintain straight management was management was the projects. We have conducted close-look fund management towards different projects. And in the board perspective, we continue to dissolve the risk within the area and speed up the disposal and enhanced collateral enhance guarantees and enhance the other disposal methods taken by ourselves and also, last but not least, to enhance our provision level to make sure that the risk compensation level within the corporate real estate sector is sufficient. The provision level is over 3 than the average level of the provision for the corporate loan. Looking into the year 2026 with many policies introduced by different regulators, we are seeing that the market, the real estate markets are seeing the trend of further concentrating in the risk. -- and the risks tend to be showing a momentum to contain -- to be contained. But we think that even though there will be some individual events of risk outbreak, but generally, -- the market is now in a stabilizing process. The second perspective I would like to mention is about retail loan. For the first half, the retail -- the retail NPL loans amounted to CNY 42.8 billion. The NPL ratio was 1.16%, up by 0.1 percentage points. Special mention loan ratio and balance of retail loans increased I noticed that some of the investors are paying special attention to the asset quality of our retail loan. And from my perspective, the retail loan asset quality is the major driver, the major reason that influenced our overall asset quality, even though the indicators, the credit asset quality indicators of the retail loans are maintained at a relatively good level, but they are still under pressure. And the second, retail loan accounts for a high proportion in our loan book. So it's natural for us having stronger pressure. Of course, some of the pressure is coming from the market trend. And the other side, I think the pressure is also coming from the expectations from our investors and also is pursued to be the best retail bank. So currently, under such spectra of the economic structure transformation and also the downward trend of the real estate market clients under influence in terms of their capability of prepay and also their willingness to prepay and also we are having joint debt risk in the consumer loan area, -- so we are still having the idea that the retail loan risk is in an upward trend. Of course, we have been taken measures to maintain the risk level of retail assets to what we have been doing is that we have adjusted our budget and target of retail loan business and in our evaluation and also internal encouragement, we even pay special attention to the quality of retail loan and also control the formation of a retail NPL loans. And of course, we also see some positive signals within retail loan asset quality for the first half. Excluding credit card, our retail, our -- the MP -- we are having information of CNY 247 million information of personal loan that is retail loan excluding credit cards. . Real credit assets, the momentum of its NPL new formation, momentum has been -- on the segment segment, we see our balance loan, that is our long loan for the first half of this year, the NPL balance was down by CNY 549 million and down by 0.03 percentage points and realized the full decrease in the amp balance ratio of monsoon for the first half of the year. And of course, good signals are also showing in credit card business. due to some special reasons for adjustment of the asset classification within the credit card business, we have been taking stricter measures to put out asset classification so that we see some uptick in the formation of code overdue loan ratio was down by 0.1 percentage point in credit card business for First half. And overdue loan ratio on billings both recent terms of credit card loans. Of course, we have to note about the qualified assets are still under pressure in terms of the seat quality. But I believe it's still be a very important long granting direction wells to pursue. So in following days, we will follow the market trend. We will emphasize both on quality and size, and we will give the full play of our success of our customer base to increase the threshold of customer onboarding. And third, we will dig deeper into our existing customers. and to prevent the risk comes from joint efforts we will conduct early identification, burning and also proposal and et cetera. We will enhance our systematic risk management capability to strengthen the leverage of AI or data and also to strengthen the consolation of our tag team. we will further strengthen the management over asset quality of real assets. We wish it would be developing in a favorable momentum. .

Next question, please. .

Next, we will invite Mimi from JPMorgan for the questions.

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

Thank you for the question. We will invite Mr. Leite, who is in charge of our Corporate Banking business to answer this question.