Industrial and Commercial Bank of China Limited ($1398)

[Audio Gap] Q1 Earnings Call. I'm [indiscernible]. Today, we're honored to have with us Mr. Ken Fong Lin, Board Secretary of ICBC, along with heads from key departments and subsidiaries, including corporate banking, personal banking, institutional banking, inclusive finance, credit management, finance and accounting, assets and liability management, International Banking, Technology, Data Management Research Institute, Financial Markets, Asset Management, investment banking, personal loans, credit card and ICBC Wealth Management. Now I will briefly outline our key performance indicators. ICBC Q1 results have been officially released. Overall, the bank achieved its strongest start in recent years, exceeding expectations. First, key profitability indicators showed positive growth with higher Y-o-Y increases. In Q1, group revenue reached RMB 222 billion, up 8.4% Y-o-Y. Net profit was RMB 88 billion, up 3.9%. Net interest income as a core revenue driver rose 7.5% Y-o-Y, its first growth since 2023. Net interest margin was 1.29%, up 1 bp, its first increase since 2009 -- 2019. Net interest income grew 11.6% with net fee and commission income up 5.2% and other noninterest income surging 38.9%. Second, assets and liabilities grew steadily. Proactively supporting national priorities and policy packages, ICBC strengthened its role in serving the real economy. By quarter end, total group assets rose 4.3% from year-end to RMB 55.77 trillion, making ICBC the world's first commercial bank to exceed RMB 55 trillion in total assets. Total loans reached RMB 31.7 trillion, up 3.8%. Financial investments was RMB 17.87 trillion, up 5.7%. Deposit competitiveness improved with customer deposits at RMB 38.59 trillion, up 3.4% from year-end and average daily balances up 4.19%. Personal and corporate deposits grew in a balanced manner. Thirdly, risk management remained robust. Intelligent risk control capabilities and comprehensive risk governance was enhanced. NPL ratio was stable at 1.31%. Provision coverage ratio rose to 214.38% and PL disposals totaled RMB 70.5 billion in Q1, up RMB 15.1 billion Y-o-Y. The write-off efficiency ratio reached 2.2. Risk resilience and NPL resolution capabilities strengthened further. That concludes the overview of our Q1 performance. We now begin the Q&A session.

[Operator Instructions]

I'm Meizhi Yan from UBS. My question concerns loan growth. I have seen the disclosed results, I should congratulate all of you for the robust results, better than expectations from the market. My question is, according to the monthly social financing data from the Central Bank, Q1 saw slower Y-o-Y growth in corporate loans, continued contraction in bill financing and an ongoing downward trend in credit expansion. We have also heard that in April, the Central Bank will hope that the bank can grow more credit. I don't know whether it's true. For ICBC, how did you perform on loan deployment was your full year outlook?

Thank you. For this question, I will invite asset and liability departments to answer with supplement with corporate banking department.

On the corporate loan growth, I have 2 observations for your reference. First, for total financing, we have seen that overall corporate financing growth remains stable. According to PBOC Q1 data, total financing to corporate sector loans, bonds and equity combined grew by 8.3%, up 0.4 percentage points from the same period last year. This growth rate has been broadly stable at around 8% since H2 of 2024 for our bank. As of end March, corporate financing under the same definition grew by 11.5%, in line with the overall trend. Second, from loan growth, corporate loan growth has indeed moderated by the end of Q1. Outstanding corporate loans nationwide grew by 8.6%, down 0.7 percentage points from last year. We see a similar pattern on our bank, Domestic RMB corporate loans grew by 10.7%, down 1.8 percentage points Y-o-Y. We believe there are 2 main reasons behind this. First, the base effect, during the 14th 5-year plan, countercyclical policies were strengthened and large state-owned banks took on greater responsibility and credit supply. As a base has risen rapidly, loan growth is naturally normalizing. Second, there has been a positive shift in the financing structure. In the current low interest rate environment, corporates are more willing to issue bonds, which has partly substituted for traditional bank lending and helping reducing finance costs, housing pressure for bank, which is conducive to reducing financing costs for corporates. According to PBLC data, in Q1, corporate loans increased by RMB 60 billion less Y-o-Y, while bond financing increased by over RMB 500 billion more. In response, we have also stepped up our bond investments. At the end of March, our corporate bond investments grew by 37.9% Y-o-Y significantly faster than corporate loans. Therefore, our credit extension in Q1 reflects steady overall growth with a more optimized structure by end March. Our domestic RMB loans grew by 6.9% Y-o-Y, higher than the national level at 1.2 percentage points. Corporate loans grew by 10.7%, 2.1 percentage points above the market. Lending to key areas manufacturing, inclusive finance, green finance, strategic emerging industries, agriculture-related sectors and private enterprises, all grew faster than the average. Looking ahead, we will place greater emphasis on balance and targeted credit allocation, total volume. We aim to maintain steady growth in pacing, will avoid from loading and ensure more even deployment in allocation. We'll focus on major national strategies, key sectors and weak links while strengthening financial support for consumer spending. Meanwhile, we'll actively adapt to changes in the overall financing structure and maintain solid growth in bond investments. Our supplement from the corporate banking. For ICBC, our credit to the credit -- to the corporate we grasp the window for the corporates after the spring festival. First, the volume increased with high growth of loans. In Q1, the corporate loans has increased by has increased by RMB 300 billion. The balance was over RMB 18 trillion, the first of its kind, providing solid foundation for the real economy. Second, the structure is optimized, meeting the requirements for the industries. Our supply of credit to the industrial -- to the technology finance was over RMB 4 trillion. We are increased to 2 majors have increased by RMB 70 billion. Thirdly, our reserve has been strengthened. We continue to solidify the medium- to long-term credit extension, which is balanced our supply for the projects has accounted for 90%, which laid the foundation for the total. So looking ahead, ICBC will fully implement the spirit of the April 28 Intrapolitical Bureau meeting, and we will continue to enhance both intensity and precision for our support for the economy. We'll further increase corporate lending to ensure the loan growth remains aligned with the economic growth and effective credit demand. In terms of allocation, we'll focus on the need during the 15th 5-year plan period, we will optimize our corporate lending structure, strengthen our core responsibilities and increased support for consumer services and will support the water networks, net generation power grids, computing networks, new generation communication networks. With our comprehensive financial services, we will focus on major projects under the 15th 5-year plan, including more than 100 key projects with targeted measures, we will continue to optimize our reserve and credit. Thank you.

I'm from CITIC Securities. I'd like to congratulate on ICBC's stellar performance. My question relates to the fee and commission income. We saw the continued growth momentum. There's a continuation in the equities, but there's a continuous fluctuations. So what is your outlook for the growth of fee and commission income? We can recognize there's significant amount of unrealized gains from the sale of AC assets. How should we view it?

The questions will be answered by finance and accounting department.

Thank you for your questions. In the first quarter, we actively responded to the complex changes in the external environment, continuously improved a comprehensive financial service capabilities and achieve a steady growth in net fee and commission income. And we expect to maintain the top position in total income, laying a solid foundation throughout the year. In terms of retail and corporate, we actively seize the favorable opportunities in the capital market, according efforts across different business lines to improve our research capabilities. We achieved double-digit growth in Wealth Management and Pension Services. And also, we had doubled our income from agency precious metals. On the other hand, we implement the policy of expanding domestic demand and supporting consumptions, improved customer experience, and we have coordinated peak season marketing and we further develop our ecosystems to increase investment to promote consumption driving a positive year-on-year growth in domestic third-party payment income. From corporate side, we continue to strengthen the foundation of corporate clients, promote the development of new financial infrastructures for settlements and digital empowerment and continuously optimized asset services such as bond underwriting and investment guarantees and syndicated loans, leading to a slight increase in income from cash management and settlement services and investment banking. There, we actively seized favorable opportunities in the capital market. We achieved double-digit growth in Wealth Management and Pension services, we will support steady growth of fee and commission income from corporate clients. Looking ahead, as positive macroeconomic policies kicked in, capital market expectations remain positive. Expanding domestic demand is expected to support the recovery of consumption. ICBC will leverage our strength in customer base, extensive channels, comprehensive services and financial technology to respond to risks and challenges and create value through service. We will provide over 40 million corporate clients and over 780 million individual clients with a broad range of financial products, high-quality financial services. Overall, we are optimistic about fee and commission income for the entire year, and we expect a positive growth trend, and we will focus on 3 areas to improve quality and efficiency. First, these opportunities and enhanced wealth management. Second is the strength in customer relationship and the quality of core products. Third is to enhance synergy and achieve breakthroughs in comprehensive services, combining financial insight and AI integration, connectivity and funding explore comprehensive financial solutions and around the entire life cycle. For the other noninterest income and the high base, last year, we have diversified growth drivers for noninterest income. Our noninterest income comes from active investment, bond and exchange profit and loss. In the first quarter, our noninterest income continued its high growth trend. Other -- we still face pressure throughout the year. As you mentioned, the geopolitical tensions and capital markets -- and we'll seize the opportunities and to leverages the strength in order to capture the market opportunities to improve our revenues. Regarding bonds, we strictly follow accounting standards, study the market, seize volatility opportunities and optimize trading strategies, investment structure. In terms of equity, we seize structural investment opportunities and tap into the potential of emerging business such as asset management and wealth management. Regarding exchange gains and losses, we'll closely to monitor exchange rate trends and conduct in-depth market monitoring analysis to achieve sustainable development.

I'm Richard Xu from Morgan Stanley. The question concerns asset quality. How did ICBC's NPL formation performed last year? And what is the outlook for this year? Your NPL formation and the trend of NPL, especially now we see the Middle East geopolitical conflict. What specific impact it has on ICBC's asset quality?

For this question I'll invite credit management department to answer with supplements from international banking department.

As you have seen last year, our annual report has been released previously. The our NPL formation ratio was relatively to -- for the past years from the annual report, we have seen that it was relatively strong among peers. For Q1, you have seen from the Q1 report, if we compare with ourselves the depo ratio was relatively stable. According to the pattern, every year's Q1 NPL formation was higher, so from this perspective, we are confident that for the full year, our asset quality will be stable. You can see that ICBC has been in credit risk management. We have been outperforming other banks. In this year, we continue to promote the Three Gateways and 7 Color Pool. In managing onboarding, we do proactive prevention of risks and enhancing the disposal of NPLs with high quality unchanged to address the changes of the market to keep stable of our asset quality. For your second question, about the Middle East situation. After the exposure of the risks, the impacts in the short term have limited impact on our asset quality. First, our direct credit exposure to the Middle East is relatively limited in both size and concentration, the exposure accounts for a small share of the group and are mainly to solving back entities, large SOEs and high-quality multinational corporations. And second, after the exposure, we have formed the special forces. We do analysis on the risks and do inspection of risks on time. And based on the list of customers and case by case, do the analysis of the risks. So up to now, we see limited impact on ICBC's asset quality. I'll introduce to you the situation of Middle East. After the breakout of Middle East conflict in February, we followed the situation and developments of Middle East situation. We performed the necessary work to keep the stability of our work, the safety of our employees and assets. As in short, the Middle East is also a very important region for our internationalization of the group, and we will coordinate the development in security. Thank you.

I'm analyst from CICC. Congratulate on your performance and exceed expectation. I'd like to ask about NIM. Although we did not disclose NIM figures, but we can infer that this figure has stabilized and even rebounded. What are the reasons behind this? If the first quarter figures is very impressive, can this trend continue throughout the second and the third quarters? Can you break it down further on the asset and the liability side?

The questions on NIM will be answered by asset and liability management department.

Thank you for your question. For the first quarter, the NIM is 1.29% and is stabilized with a slight increase of 1 bp and the increase of about 2 bp compared to the previous quarter. The factors behind the change is due to 4 factors. It is because of our joint effort of both timing and our effort. First is monetary policy remained moderately loose and largely stable, creating favorable external environment for stabilization of NIM. In the -- in the first quarter, the Central Bank did not cut reserve requirement ratio or interest rate. The OMO rates remained stable. With the decline in key term shipper within 10 bp, the nominal LPR deposit rates have remained unchanged for 11 months. A relatively stable monetary policy interest rate environment. alleviated the downward pressure on bank asset returns, which was a substantial positive factor for NIM. Second, the comprehensive cost of liabilities continue to decline, supporting the improvement of the NIM. On 1 hand, high-interest products issued earlier matured with the amount of fixed term deposits over 3 years, maturing in the first quarter, accounting for 35% of the annual total which led to a decrease of 13 bp in the interest rate of various deposits. On the other hand, due to the continued availability of liquidity, market interest rates declined moderately, resulting in a 15 bp decrease in the interest rate of interbank liabilities. Third, efficiency of assets and liability allocation has been further improved. On the asset side, we focused on loans and bonds with the average daily proportion on these 2 investments increasing by 0.5 percentage points, and the structure of major assets continued to improve, which enhanced the overall interest-bearing asset returns. On the liability side, we avoided evolution, striving to enhance the stability of funds, strictly implemented the interest rate adjustment safeguard clause and the self-discipline initiative for Interbank deposits for the reducing costs, improving efficiency. Fourth, the postponement of interest rate cuts by major economies is beneficial to the stability of the NIM in overseas operations. Affected by the rising global inflation risk intensified geopolitical conflicts, major developed economies have postponed their interest rate cut schedules, improving the environment for commercial banks, international operations and enhancing the stability of overseas operations. And the first quarter, with the contribution of foreign exchange in overseas segments increased by 0.6 percentage points. In terms of the trend of the NIM throughout the year, we maintain our view from the beginning of the year. The NIM will turn positive year-on-year and the NIM will continue to decline slowly. This is based on the following 2 factors. On 1 hand, NIM, the interest margin between deposit loans and traditional sectors is expected to stabilize or even rebound. There are signs of marginal stabilization in loan yields. Loan yields on a comparable basis are roughly in line with the interest rates on newly issued loans. And with the repricing progress of existing loans reaching 91%, the decline in loan yield is expected to continue narrowing. Second, there's still room for the deposit interest rate to decrease. Interest rate on newly absorbed time deposits remains low and significantly lower than that of existing time deposits. Assuming policy interest rates remain unchanged, the deposit costs expected to exceed that of loan. On the other hand, when the interest margin between deposits and loans stabilized, the price of bonding to bank liabilities will affect the NIM level. Currently, the repricing cycle for bond assets is longer than that of credit assets and the yield on new bond investments still declining. Therefore, bond investment will become the main factor, in fact, the trend of NIM in the next phase. At the same time, under the background of diversified liability structures, commercial banks increasing their efforts to absorb interbank liabilities, although the interest costs of interbank liabilities has decreased at present. If market interest rates experienced significant fluctuations or reverse and rise in the future, it will also affect NIM level. Thank you.

I'm [indiscernible] from China Securities. My question concerns retail AUM, wealth management and deposits. Could you introduce the retail AUM growth in Q1 and the AUM mix evolvement? What is the current product mix in Wealth Management? What are our client preferences and what is the future development plan? Also are we seeing any signs of accelerated deposit outflows into wealth management or other asset management products? Was a maturity and rollover situation of deposits in Q1? And what targeted measures have been taken to stabilize and grow deposits?

This question will be answered by personal banking department with supplements from ICBC Wealth Management.

Thank you for your question. Our retail AUM growth in Q1 -- the growth is strong following the changes of the market in Q1, the average -- daily average AUM reached was up by RMB 1.78 trillion to RMB 25.8 trillion. The AUM balance was over RMB 26 trillion at the end of Q1. Such aggregates make us the leading position as a commercial bank managing the largest amount of personal financial assets. For the mix, we also do analysis. In the personal financial assets, savings deposits accounted for 77.5%. The non-deposit AUM, 22.5% stabilizing from the end of last year, the change of AUM mix is controllable by ICBC. So for the product mix, client preferences and how do we see future plans for the product structure, our products is centered on deposits, WMP, funds, insurance and private banking selected products and also private banking products. For deposits, we have products which have guaranteed principle and interest for funds. We follow a broad access, selective screening approach to build a long-term and high-performing core allocation. Our private banking platform offers contrastive index enhanced strategies with differentiated products. For insurance, we are shifting from investment-oriented products towards protection-oriented solutions. Life insurance, commercial pension products and health and medical insurance are growing remarkably. From such mix, our wealth management products, funds and insurance are the important nondeposit projects -- products are growing strongly. In Q1, we have seen some new changes in WMPs in terms of clients. We have 784 million personal customers. They have different -- they are categorized into different segmentations. They prefer low volatility, stable return products such as wealth management and fixed income funds. Of course, deposits account for more. High-net-worth clients have more diversified needs with. In Q1, the private quantitative strategies cross-border allocation family trust were growing remarkably. Meanwhile, demand for full life cycle wealth management is becoming more evident. For example, we have seen the elderly, children segments have strong needs for retirement planning, health protection and wealth, inheritance. For the future of wealth management business, the personal financial wealth management is the main battlefield of commercial bank. We will continue to put clients into the center of our business. We will promote wealth management into every family. We aim to build a full life cycle scenario-based service model powered by digital capabilities by integrating financial services into clients everyday ecosystems. We are moving towards 1 entry point full service model, so as to build differentiated competitiveness and support the steady growth of client wealth. We are fully confident to achieving. So you also raised questions about changes of deposits, the rollover after maturity. From our observation in Q1, the daily average deposits increased by RMB 1.46 trillion, maintaining stable growth. The savings deposit growth remains within a reasonable range. We have not seen any unexpected acceleration of outflows in line with the market change. For the maturities, as mentioned by Mr. Fu from assets and liability management, we have the maturity ratio of 35% from the perspective of savings deposits. The rollover ratio was over 90%. Therefore, for the matured funds, the rollover to the demand deposits was remarkable without no remarkable outflows or migration of deposits. On measures to stabilize and grow deposits, first, we give in to fully ICBC's group-wide advantage from GBC dimensions to empower personal finance to develop -- to grow and stable our deposits. First, we are strengthening coordination between corporate and retail business to expand funding sources at the origin. We focused on payroll services, individual merchants and social security cards as strategic entry points. We have seen robust growth, and we will continue our efforts in this regard. Second, we are building out scenarios to expand customer fund flows through fund flow management to stabilize and grow our deposits, especially the cash flow can bring fee-based income. Thirdly, we improve customer segmentation capability. We will make good use of AI and getting to full play the online and offline coordination and our strategic capabilities to enlarge the reservoir of our personal finance funds to enhance our capabilities and competitiveness, to solidify the foundation for deposit growth. I'll make some supplement for the deposit migration. According to the data from financial service, the nonbanking deposits increased by RMB 2.3 trillion. People's savings grew by RMB 0.78 trillion, reflecting that some of the savings deposits flow to WMPs. From the WMPs, the aggregates remained stable. By Q1, the industry's WMP, our goods increased by over 9%, increased by seasonal reasons. So compared with the end of last year, the volume was down by 3.8%. For ICBC Wealth Management, the WMP volume was increased by 4% more. Next, we will continue to enlarge our CFS to improve our capabilities to serve the customers. Thank you.

I'm analyst from Guosen Securities. My question is related to retail asset quality. How is the asset quality of various retail products? When can we see improvement in NPLs? What is the current situation regarding mortgage loan defaults?

The question will be answered by personal, finance department.

Since the beginning of this year, China's economy has shown steady profit structure improvements, but there's external instability and certainty. And there are still some challenges in domestic economic operations. So the asset quality of personal loans at ICBC faced certain pressures with a slight increase in nonperforming loan rate. However, after considering factors related to risks disposal, our situation is consistent with the market. In the first quarter, personal loan nonperforming indicator remained stable, and the overall risk was under control. And the personal loan nonperforming rate remained within the Brisa range compared with counterparties. For personal housing loans since 2022, it is mainly due to the combined impact of factors such as slowing growth in resident income, declining asset price and structural pressures in job market. The nonperforming rate of mortgage loans discounting a short-term upward trend and remains -- but it remains within a reasonable range, after -- but it is still important source of our revenue. Our advantages are their genuine transactions and high-quality collateral. Short-term fluctuations do not affect the fundamental attributes and it is remaining a high-quality credit assets for our bank. As macroeconomic policies kicked in, the economy is showing signs of stabilization and recovery. The President's confidence in future income growth is gradually being restored. The Poliburo's conference has mentioned to mitigate risks and to push forward organization. We are seeing signs of housing price stabilizations in the Tier 1 cities, and we are confident that the asset quality of mortgage will be restored and the systemic risk is controllable. For the mortgage loan default, in terms of asset, we see whether there's continue -- whether there's an increase in default rate, but we see they're stabilized. We're not seeing a default rate at a massive scale. And we also like to brief you on the personal consumer loans. We have seen a double decline in both the amount and the rate. In last year, we focused on adjusting the risk control models and onboarding standard. The optimization of strategies and product reinforcements yielded preliminary results. And the deferred default rates for various terms have been gradually reduced to lowest levels in recent years. For the nonperforming rate of personal business loan has also slightly decreased, affected by a combination of factors such as macroeconomic environment, policy support the ongoing adjustment of real estate market. The asset quality of personal business loan has shown periodic fluctuations. The historical disposal of personal business loans has been lower than the other peers in ICBC and with minimal write-offs, we have maintained the current quality level, demonstrating the high quality of our customer base, precise risk control and strong resilience in business development. In the next phase, will continue to strengthen and solidify the 3 gateways in credit risk management, establish a comprehensive risk control system for the entire process. We comprehensive and continuously optimize portal access. And we will further have daily infrastructure capabilities and to be risk control models cover in the entire process. With the continued implementation of macro control policies and effectiveness of structural fiscal support, it's estimated that the rate of loan deterioration will slow down.

I'm Jing from Guangfa Securities. I want to ask about the results mix. We have seen the operating income increase, which is remarkable. For the full year performance, will you see front load a loaded one or relatively smooth? On the profit side, will profit generally stabilize and improve within the year? Among scale NIM fee income, financial markets provisions, which item do you believe has the most certainty in contributing to the full year performance and which item is most likely to become a major source of volatility?

For your question concerning forecasts of profitability, I'll invite finance accounting department to answer.

For Q1, the key indicators achieved the best start in recent years. Our operating income if we do break down the net profit continue to play the bedrock of the revenue. It accounts for 75% to 80% of revenue for Q1. It is the first time to growth turning positivity since 2023. It has come from our work and the maturity of the high interest rate deposits. So the Q1, the interest expense was down by over 10%, driving the increase 7.5% of net interest income. For the noninterest income and continue to play a strong support, up by 11.6%. Fee-based income was increasing the best of its kind in recent years. The other noninterest income increased by almost 39%. It comes from the dividends from the policies, also comes from our actions and the market window, which is temporary bringing our profitability, which is good in Q1. Now the operating environment is still complicated. First, the net interest margin was stabilizing, but it's still in the downward pressure. For noninterest income, it also -- for example, fee-based income also face pressures from policy changes and market changes. We still face pressure brought by the fee concession to the real economy and also the geopolitical tensions and the interest rate, trend of bond market, Forex bond market also faces uncertainties. Now we will make our efforts to tackle the uncertainties of the markets. We will increase our main business. We will take into effect 3 aspects of measures. First to solidify the fundamental base of net interest income. We will balance total growth with structural optimization, increase the volume of substantive loan, optimize the structure and pace of new interest-earning assets. And also we will enhance management of both interest-bearing and liability yields and strictly control high-cost liabilities, so as to ensure the stable growth of interest income. Second, we will increase the contribution of noninterest income. We will seize opportunities in retirement finance, in Capital Markets to create new growth drivers for wealth management, update the payments and settlement cross-border services and customers custody systems and to serve the customers needs with CFS. Third, we will strengthen asset quality management to contain risk costs. We'll continue to enhance a comprehensive risk management system, coordinate risk prevention and controlling key areas persistently, prevent delinquencies and control MPL, strength collection disposal efforts to better contain risk costs. We are confident that building on a strong performance. In Q1, we will continue to deliver results, which is sustainable for the shareholders. Thank you.

I'm analyst from Shan Securities. I'll congratulate ICBC on the impressive performance. ICBC has long been active in Science and Technology Finance. And there's a lot of layouts in this regard aligned with the national strategy, especially the 5 major priorities of finance. The 15th 5-year plan emphasized digital and intelligent transformation. ICBC's business has developed rapidly, how can ICBC articulate the strength to the capital market from the perspective of digital and intelligent transformation?

The strategy will be answered by Urban Finance Research Institute.

Thank you for your question. As we mentioned, ICBC business long been integrated into the national development strategy. We have the first lay out the ICBC business because we recognize that technology innovation requires patient capital and through diversified tools such as equity investment debt to equity swaps, we have provided long-term and stable capital support to many science and technology enterprises. By the end of first quarter, the balance of loans in this regard reached RMB 5 trillion. This figure make us the market leaders in this regard. As you mentioned, the 15th 5-year plan has mentioned in the digital intelligence 5x. We know there's a twofold meanings to improve the supply of finance and to adapt to the changes. And the second is to improve the digital and intelligent transformations of ICBC and to restructure our procedures and our business. And in this regard, we are building a new differentiated competitive advantages. We would like to leverage our comprehensive licensing advantages. We are building multiple scenarios and to providing comprehensive financial services to our clients. We give special attention to the role of IC in providing patient capital. We have onboarded 53 projects. In terms of providing insights and intelligence, we have undertook more over 2,400 investment banking projects, an increase of 14%. And we actively empower the digital transformation of enterprises. We have provided support in terms of ICBC Treasury, global pay and fund supervision cloud, offering account service to fund supervision, technical consulting to technology output. We embrace AI and accelerate the transition from ICBC to AI ICBC. We use our self-developed models to embrace artificial intelligence and to establish the systems of ICBC. So the intelligent and digital transformation is going into more depth. We believe that with the support we will have more economy of scales and to support the quality development of ourself.

I'm Shen, Juan from Huatai Securities. First, congratulations on your strong results for Q1. My question concerns from the investment. We have seen that last year, there was a notable increase in income contribution from bond investment. Given the recent increase in bond market volatility and shifts in the interest rate environment, how do you view the outlook for the bond market? And what will be your investment strategy going forward?

Your question will be answered by financial market department.

Thank you very much for your question. Our financial market business centered around serving the real economy. We centered on quantity, pricing, including RMB and ForEx. We increased our capabilities of business and market competitiveness. The interbank market making share was stable at 20%. The share in the 4 big banks was 31%. This is a recognition from the market for ICBC. Thank you very much for your support for financial market business. In the future, we admit that the external environment is still complex, influenced by geopolitical conflicts. Our economic foundation is strong. Our policy will be sustainable. Our monetary policy will continue to support the real economy. Against such background, our bond investments will continue to have both feeling and floor with contained risks. In such backdrop, faced with complex environment, our financial marketing business will continue to give in to full potential and balance our pricing quantity and risks and optimize our investments and income mix. First, we will continue to fulfill our role as a major bank by actively support bond financing for the real economy. We will continue to support the government bond issuance and support the key national priorities. The 5 key areas to contribute to China's modernization through bond investments. Second, we'll further optimize portfolio structure to build up value reserves. We will allocate across types, tenors, portfolios and currencies to enhance sustainability and resilience of portfolio. Third, we will strengthen our trading capabilities and aim to translate market volatility into earnings. We will continue to promote digitalization and actively capture opportunities from spread across instruments, maturities and credits. We will balance carry income and trading gains while managing both short-term performance and long-term value creation. Finally, we'll balance development and risk control by strengthening risk identification and management, enhance our forward-looking countercyclical risk assessment capabilities, optimize duration, positioning and improve the portfolio's resilience to interest rate fluctuations.

I'm from Changjiang Securities. When it relates to internationalization in the context of escalating geopolitical tension, what are the opportunities and challenges for the international operations as the largest bank in China and globally? How can ICBC leverage this strength to promote internationalization of the RMB?

The question will be answered by International Banking Department.

Thank you for your questions. In terms of opportunities, the trend of economic globalization remains unchanged despite the geopolitical tensions. The interest of countries are doing to and open remains the mainstream. China continues to make new progress. We are the hub of manufacturing centers. And the total foreign trade increased by 15% year-on-year. The RMB has become the top 3 trade financing and payment currencies globally. And the 15th 5-year plan outline proposes to steadily expand institutional opening up, build a new high-level open-ecoeconomic systems, promote the high-quality development of Belt and Road initiative. We have also noticed that when the per capita GDP exceeds $10,000, there will be experienced a big enterprise globalization. The China's figure has about $30,000 for 3 consecutive years. And our direct investment brands remained around USD 150 billion and the total overseas assets exceeded $9 trillion. We can provide comprehensive financial services for business going abroad and business going in. We've seen that geopolitical situations are characterized by long-term complex and certain features. Geopolitical conflicts are frequent and there is a profound changes international balance of power. And there is disruptions in global economies and the major economies have going into the rate cutting cycles, has bring more intense competition for our international -- from international peers. Our bank's overseas operation maintained a stable and progressive development trend. During the 15th 5-year plan period, we will continue to deepen our international operations. And for the second question for the internationalization of RMB, the ICBC Bank after 40 years of development, we have established a solid foundation for global network, clearance systems and technology systems as of the end of 2025. We have built a global financial service network covering 69 countries and regions through self-development, strategic acquisition and equity partnership. We have established business cooperation relationship with over 1,400 foreign banks in more than 140 countries, covering all 6 continents and major financial centers. We offer services to over 40 million corporate clients and 770 million individual customers. We offer -- we are the clearing bank in 12 countries, offering 24/7 RMB clearing services. And through our core banking systems, we achieved seamless integration. We tag the principle of providing global service to global customers. And we have done a lot of work in internationalization of RMB. We use the BRBR. China Euro business console and other multilateral mechanism to expand the RMB's friends circle and solidify the foundation of cooperation. We also work together with SiPs and Enbridge and cross-border QR code payments to enhance the digital intelligence service capabilities of cross-border RMB and improve new financial infrastructure such clearing payment and custody. For 6 years in a row, we used the stringent actions to launch the cross-border RMB comprehensive financial solutions. We have dedicated RMB 1 trillion to domestic and foreign banks for a special financing quote, providing comprehensive support to eligible domestic and foreign enterprise. We will support new quality productive force, digital trade and enterprises, high-quality development.

I'm Shao Xing Chen from Industrial Securities. My question concerns AI. In what specific ways is AI currently empowering ICBC? How do you quantify the benefits or cost savings from AI applications? In the future, what are your plans for AI investments? And looking ahead, how do you see AI reshaping the banking business model?

I'll invite fintech department to answer your question.

Just now Mr. Yang from finance research institution has introduced our arrangement for the digital drivers, which is 1 of our strategies. We have 4 perspectives in empowerment. First, reducing costs and improving efficiency that is to improve the working efficiency of employees. For example, we launched trade dealing supporting employees in interactive dialogues, in trading so as to increase the efficiency and number of tradings. Second risk management. We use the empowerment of big models from the -- in the anti-fraud links. We train the model to automatic -- to automatically identify the risks out of the risks so as to increase our capability of detection. Second, we refine the personal characteristics of AI use in mobile banking, the machine in the outlets through natural language interaction. We achieved 1:1 interaction for the customers with -- company to the customers. Another is the empowerment of the decision making to make it more digital. We have developed tool in investment bond. On a daily basis, it can -- in trading data, it can make a judgment to conclude investment report and to improve the design-making in bond investment, empowering over RMB 100 billion investment of bond. How to quantify the investment of AI or the application of AI? Because AI progress is very fast as a blue seas, its investment has the market consensus, which raised attention from the market. We have made some acceleration in mechanism for the group to have the sufficient computing capacity. And second, we will step up talent development to ensure we have the expert team. Thirdly, we will strengthen the mechanism, insurance. We will integrate the group team so as to ensure the organization in the group and also we use external institutions like colleges, and companies to make our technology advanced. How do we see its future? We believe AI is not just a tool for improving efficiency but it also reshapes the fundamental logic of commercial banking. First is the change of service models with AI. The financial services are more targeted and personalized. The end-to-end services will be a new normal for the services of customers. The coordination of financial and nonfinancial services will be possible. The new shape of the financial services is expected in the future. Second, the organizational effectiveness, we will look to the employees from the standardized and repetitive tasks while supporting complex decision making so as to ensure a personal efficiency to a group-wide efficiency improvement. Thirdly, as automatic this year, making a link of AI agents is progressing, so that we can have more controllable and smarter AI. This is also a focus of our future work. We believe these 3 aspects our highlights of our future work for ICBC. We will follow closely the development of the technology in the market, so as to promote the construction of AI and improve our efficiency work and the competitiveness of the AI agents. Thank you.

Due to time limit, we shall conclude the Q&A session. If there are any questions, please feel free to contact our investment relations teams for further communication. Thank you for your questions. and thank you for the response. Next, we will invite Mr. Tefal, the Board Secretary for the conclusion.

Dear investors and analysts, thank you all for joining our first quarter performance briefing. We've had an open and professional exchange on topics such as operating conditions, business development, risk control, future planning, and AI application, which yielded very positive results. This year, fees in a complex and changing external environment, ICBC adhered to the steady operations and compliant development with all business areas proceeding smoothly and steadily. The overall quality of our assets remain under control, and the support for the real economy and key areas has continued to strengthen, leading to a steady improvement in operational efficiency. These achievements would not have impossible without the long-term trust, understanding and support of our investors. At the same time, we are also keenly aware that our current business development still face many challenges regarding issues that you are concerned about such as performance results, business layout, capital replenishment, risk management, dividend policies, we will further organize and study them 1 by 1 and continuously optimize information disclosure and respond properly to market concerns and continuously improve our management level in order to better repay the trust of our investors with more solid performance. The capital market is a market of confidence and also a market of long-term value. In the next step, we will continue to adhere to the fundamental nature finance focus on our core responsibilities and main business, promote the 5 transformation, consolidate the foundation of compliance and risk control and start to achieve higher quality and more sustainable development. Finally, once again, I would like to thank all of our investors and analysts for your continuous support for ICBC. I look forward to continuing to work hand-in-hand with you, building confidence together, promoting and sharing achievements together.

The meeting today is now concluded. Thank you. the holidays are approaching, we'd like to wish you a happy holiday. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]