Industrial and Commercial Bank of China Limited (1398) Earnings Call Transcript & Summary

[Interpreted] Dear investors, analysts and friends from the media. Good afternoon, and welcome to ICBC's 2026 Interim Results Announcement. I am Dong Jenn. Our interim results have been released. We'd like to thank Global shareholders for your recognition and support for our investment value. We've attached great importance to IR media relations and market capitalization management we've been maintaining open, candid and efficient communication with global investment research institutions in the media. For 20 years since our listing, we've always worked together with our investors Here, I'd like to express our sincere thanks to all shareholders and friends from the media for your long-term support. Today's announcement is held both on site in Beijing and through a global webcast. We are also pleased to have some investors, analysts and media friends here with us in person. First, let me introduce the members of our senior management and the directors attending today's announcement. President VP, Mr. Wang Change Laminor, Tangshan and Sage, Board Secretary, Mr. Ken Fuling; and our Directors Mr. Don Manta and Lian, Ms. Water Horn and Mr. Cianna. Now I'd like to invite our Board Separator, Mr. Tim Folin, to present our interim results.

Investors, analysts and friends from the media, good afternoon. Welcome to ICBC 2026 Interim Results Announcement. Thank you for the continued interest and support. Let me walk you through the highlights of our operations for half 1. This year, guided by party building and driving our transformation, we had a strong start to the first half of 5-year plan. The trades of being large, stable axon and strong shining through the foundation for high-quality development and high-level security is more solid. Our value creation, market competitiveness marketing influence and risk management capabilities keep improving, resulting in a high-quality midyear inter sheet that shows clear upward momentum. First, steady progress in business with stronger resilience. By the end of June, our total assets were CYN 57 trillion for half 1. Operating revenue was CYN 446 billion, up 9% and Y-o-Y. Fee income had been CYN 69 billion, up 3.3% and net profit reached CNY 176 billion, up 4.54% -- our NIM was at 1.29%, up 1 bp from last year. The NPL ratio was 1.29%, down 2 bps from the end of last year show improvement in asset quality Capital adequacy ratio was 18.57% provision coverage ratio to 217.58% keeping our risk buffering capacity solid. On the balance sheet side, the loans reached nearly CYN 32 trillion. Investments had CNY 18.63 trillion, up CNY 1.73 trillion or 10.2% and deposits were CNY 39 trillion, up CYN 1.86 trillion or 5% to give investors an even better sense of reward impacted by the strong results. We raised our interim cash dividend payout ratio to 31% for 2026 after Corporate governance procedures will pay out CYN 1.51 per 10 share, tax inclusive totaling about CYN 53 billion based on the average share price in half 1, the dividend yield for A&H shares at 4.22% and 5.36%. This sustainable shareholder returns underscores our long-term investment value, second, solid progress in fire transformation. Our intelligent risk control, we are speeding up the shift to smart risk management following the path of comprehensive management, proactive prevention and intelligent control, we are strengthening our plate risk management framework, constantly improving our forward-looking early warning and bottom line controls, building out a comprehensive risk management system, our enterprise level smart risk control platform now fully live views measurements, early warning and decision-making the 4 centers are established. Our NPL ratio was 1.29. The loan provision ratio was 2.8% and Provision coverage ratio was 217.58%, up 3.9 percentage points, keeping our risk defense robust. Among this, we are strengthening core responsibilities to our growth potential we are going deep into 5 major articles in tech finance our loans hitting our loans to the car companies, CYN 3 trillion inclusive finance, the balance reached almost CNY 4 trillion in tension finance, total assets under management hit CNY 6.52 trillion, up 10.29% in digital finance loans to core digital economy industries reached CYN 1.26 trillion, up almost 12 -- 20%. We rolled out our RMB CFS. We were also approved by jointly served as the R&D Clearing Bank in Africa with Standard Bank of South Africa. -- expanding our RMB clearing network to 19 African countries where the Sanand group operates. We have 1 cross-border RMB business volume hit CYN 5.5 trillion. on digital and intelligent momentum, we are fast tracking the building of AI ICBC and creating 1 plus One last system. The first 1 is enhancing ICBC GroTech Foundation, rolling out the pilot AIs initiative. So that ICBC stays in the top tier of domestic fintech development. The second 1 is building out the ICBC data base forming an enterprise-level data application equals system supporting our business. The 3 refers to building 3 smart platforms, forming an ICBCIagent matrix for corporate clients, retail clients and our employees, while giving our 400,000 employees and new tool to boost economy, the AI agent for personal relationship manager delivered over 22 million service interactions in half 1 on comprehensive services, where Centurion client needs to provide CF. The incremental growth in loan and bond investment of $3 trillion, we're deepening the ICBC Tech Finance equity service brand and pushing under AIC equity pilot business, our cost by scale CYN 33.7 trillion, ranking first in industry of securities investment insurance assets, pensions and QD products. We have provided treasury services to 17,000 core enterprises. overseas institutions had total assets of USD 51 billion in pretax profit of CYN 3 billion, up Y-o-Y. Net profit was CYN 12.9 billion, up 55%. On the eco technological system were made alerting fundamental GBCs projects to drive balanced growth, we saw a net increase of 2.9 million retail clients with AUM over 10,000 events -- our average per branch general deposits and free profit are leading the industry. Through our 10,000 miles marketing campaigns and 3 of GBC are driving traffic to each other and mutually empowering 1 another, building a great internal circulation funds, we are organically integrating ESG and sustainable development into our operations. Looking ahead, ICBC will step up as a leading bank as main for serving the real economy of the blast for financial stability, the trailblazer for operational excellence and the benchmark market for strengthening core responsibility will keep our strategic focus, execution, we will make sure we get a 55-year plan off to a great start to ensure a sustainable value return for domestic overseas shareholders. to give you more opportunity to raise questions, please suggest each question for 1 guest and please identify yourself before raising questions.

Now for the first question, the lady on the left in the first row.

Thank you very much. I'm Shinji from Hansa Securities. Congratulations. ICBC achieved impressive results. My question is -- could you highlight the highlights for half 1 and for the full year, what is your outlook for revenue and net profits. We have seen that since this year. the banking has entered into deposit repricing trends. Could you share with us the change? And what is your outlook for NIM trajectory?

For your question. Regarding the half 1 results, the Board and management rate them as proactive and progressive. This is not only because we further consolidated our operational foundation in a contract environment but also because of our strategic transformation is continuously turning potential into momentum. Here, I'd like to expand on Board Secretary cantons overview. First, this progress benefits from the full recovery of our value engine in half 1, the group achieved operating revenue of RMB 446 billion up 9.1% Y-o-Y, approaching double-digit growth on such a high base is not easy. While deposit repricing helped it is fundamentally the result of synchronized revenue boosting measures across into chain. Structurally, NII noninterest income and net fee income all rebounded all 4 segments, domestic overseas subsidiaries in head office and retail corporate, institutional and markets achieved positive revenue growth. Behind the strong restart of this value engine is our consistent principal shared responsibility of business lines and regional blocks. We anchor the business orientation of both lines and blocks on value creation. We built a strong link between process and results. We earn the trust of the market shareholders and employees. Second, our proactive approach demonstrates confidence and disciplined risk management from the data in half 1, we embarked RMB 1.9 billion of resources for NPL write-offs, representing the strongest efforts in recent years as a result, NPL ratio was reduced to 1.29%. Provision coverage ratio increased by nearly 4 percentage points. Our attitude is that we do not seek short-term gains. We focus on addressing existing risks. We do not pursue absolute targets alone, we aim for sound and stable fundamentals. We do not see 0 risk. We pursue a rational balance between returns and risk cost finance, automator reflects the real economic changes in the real economy will inevitably be reflected in bank's financial statements with an asset base of CNY 57 trillion our approach to balancing development and security is fundamentally not about speculative bets is about comprehensive allocation. The Ultimate reference framework for our asset allocation a national balance sheet -- this means ICBC has embedded the stabilizing foundation of the Chinese economy into the core of our asset allocation framework, allowing us to capture the long-term growth opportunities arriving from China's development. Third, this progress is rooted in the conversion of growth drivers through reform and transformation at grows rely more on scale. Future developments rely on depenreform to reshape the growth equation through the rising contribution of noninterest income overseas and subsidiary revenue in recent years a year trajectory have emerged. ICBC is accelerating its shift away from the single growth curve of traditional credit seeking new drivers in the vast blue oceans of comprehensive international and digital intelligence operations. Diversified operation converts licensing advantages into capabilities to serve the real economy. We have made the -- for example, we support charging stations, energy storage and computing power procurement of our financing plus leasing. We convert network advantages into financial infrastructure that serves R&D rationalization and facility the circulation. We broke the deadlock with direct RMB conversion through a syndicated loan, cutting the clients comprehensive financing costs from over 20% to 5.7%, relying on the group self-built clearing system, we achieved second-level instant cross-border and clearing. We have seen the changes in 1980s or '90s, if internationalization means the flow of other currencies. Now the internationalization means the efforts around RMB and the going global of RMB. ICBC is providing financial score for enterprise going go digital intelligent operation converts technological variables into core constant, the reshape productive productivity, the fully self-controlled ICV feature large model platform has not only take routing over 600 scenarios, but also spills over to industry partners. Helping SMEs harness AI at a lower threshold from the point of sale impairment to plan of eco impoirment. This is the underlying hold for our digital intelligence drive to convert old and new growth drivers. These assets are not just visual to ICB transformations, but also mark true growth metrics on our financial statements. New tracks are continuing converting into revenue inflows hedging against the headwinds of narrow interest rate margin and building new pillars for ICBC's future development. Regarding margin, the data shows a trend of marginal stabilization with deposits repricing being the most crucial supporting factor. This is a common value factor for the banking industry and large banks with their fundamentals of scale, channels and customer base can more smoothly achieve synergy among volume, price and risk -- of course, the maturity volume of existing time deposit decreases and the interest rate spread between old and new products narrow. The supporting effect of the repricing dividend on NIM will gradually weaken. Therefore, we will continue to deepen the proactive fuel management of assets and liabilities by optimizing the structure and capital the potential for liability cost reduction, we will strive to consolidate margins to a trend. We are confident for the full year in continuously forging long-term value that present cycles for our shareholders and investors.

I will take the second question. Sir, on the road 2 in the middle than for the opportunity was the Everbright Securities. My question is about asset quality. What is the overall asset quality in the first half of the year? Can you elaborate on the situation of the asset quality, especially on the retail banking and inclusive finance, what risk control measures have you taken regarding that? And can you also elaborate us on your risk control transformation and there is any new measures taken for the enterprise-level intelligent risk control platform.

EVP, Mr. Wang will take your question.

Thank you for your question. In the first half of this year, although the international environment remains complex with many uncertainties. The China economy has demonstrated strong resilience and vitality. Against the macroeconomic backdrop of new driving force and optimizing structure. ICBC has deeply implemented the spirit of the Central Economic Work Conference adhere to the main working line of preventing risk, strengthening compliance and promoting high-quality development. Anchored the goal of becoming first class and persisted in seeking progress while maintaining stability and improving quality and efficiency. We align with the national strategies to lay our total asset, optimize credit structure and advance various tax of asset quality control. The core integrators steadily improved with the NPL ratio at 1.29% at the end of H1 this year, a decrease of 2 bp from the beginning of the year, further consolidating the foundation of high-quality development. And in the corporate sector, the asset quality continues to improve at the end of H1, NPL ratio of corporate loans was 1.2%, dropping another 9 BP on the base of the 21 BP decrease in the previous year. We continue to focus on serving a national modern industrial system. We conduct in-depth research on industrial planning and supporting policies and fully support development of advanced manufacturing. We have an investment in financing policy system for the manufacturing industry covering 7 major sectors and 22 key areas. lay out, technological innovation industrial chains such as AI and connected with many projects of the 15, 5-year plan, such as 6 networks. The credit structure is deeply integrated into the national strategy for coordinated regional development. And we have the structure of large, medium, small macro individual has been further improved. And for the retail and inclusive finance segment, judging from the current situation, there is still pressure on the asset quality control, which is a common problem faced by the banking industry as a whole. From the perspective of internal management we implement the stabilizing growth, expanding the domestic demand and preventing risk philosophy and adopted serious measures such as institutional mechanism optimization, full process risk control. And at the institutional mechanism level, we adopted -- we optimized the organizational structure and the assessment constraints continue to train high-quality talents adapted to the transformation development. comprehensively strengthened promotion from customer acquisition to risk control implemented intensive post lending management and advanced the construction of integrated collection system for retail and inclusive finance. The front, middle and back office head office and branches and various business segments have jointly formed a synergy for control. And the foundation for high quality development. At the third process very functional level, we continue to strengthen these 3 passes and 7-color risk control system. In the access phase, we optimize product risk control design connect innovative services with high-value business scenarios, improve the access management and valuation mechanism for partner institutions to deepen the applications of large models and perfect multidimensional credit strategies. By improving the accuracy of risk identification and response efficiency, we make efforts to screen and block risk at the entrance. In the duration management phase, we strengthen the iterative optimization of risk mogrmodels, investigates, potential risk heading centers through various methods such as negative behavior identification and cross verification of key nicators, improved the quality and efficiency, front-end risk screening and reduce existing reexposure. At the same time, we continue to depend the classification, management of retail and inclusion and credit assets and move the risk resolution gateway forward by setting differentiated risk control strategies. In the risk disposal phase, we accelerate the disposal of nonperforming assets, broadband market oriented disposal channels and use multiple disposal method to speed our risk clearance. At present, China continues to introduce policies to benefit people's livelihoods, expand massive demands and promote consumption. And we build a new model for real estate development and vigorously promoting high cat development of inclusive finance and continue to improve the market environment. The asset quality of retail inclusive finance loans expected to remain within a reasonable range. For the intelligent risk control transformation, we continue to iterate and upgrade our platform and constantly improve integrity, synergy and systemicity of risk management. After platform successfully transitioned from focusing on construction to paying equal attention to construction and application in '25. In the H1 of this year, we continue to improve platform functions. -- deepen application of AI technology strengthened coverage of retail business scenarios and in power asset quality monitoring and risk prevention control. First, we upgrade the risk control toolbox, strengthen the asset quality monitoring of retail businesses, such as inclusive finance, personal loans and costs in homes, cross-selling, crosstalwarnings, improved rig screening efficiency, optimize risk control revenue deployments. And second, depending on the application of AI technology, we put into production, the risk control AI agent, providing Digital and intelligence services such as risk knowledge, Q&A, intelligent customer health checks and risk control data analysis for the first lines of defense, risk officers, risk managers, reducing the workload at the front line; and third, strengthening full scenario coverage. Currently, the enterprise level, intelligent risk control platform has been promoted and applied in all domestic branches, some subsidiaries and overseas institutions covering 323 business scenarios such as found trading, product access, channel touch on intense risk resolution and encompassing various business processes such as product access, credit granting, lending and collections. It has achieved critical risk control results and multiple aspects such as risk prevention and control.

The third question the lady on the right in the first row.

I'm from Phoenix team. How did ICBC's international business before may have 1 recently, PBLChas been stepping up afford liquidity support and expanding offshore asset supply and ICs overseas clearing network has also been expanding. Could what measures has taken to help drive internationalization of RMB and what results you've achieved.

Thank you. ICBC has been aligning our internationalization with the country's opening up strategy. We are balancing growth with security and doing our part to support the domestic international circulation, -- this shows in 3 areas. First, our international business has been grown steadily. By the end of June, our overseas network reached 69 countries and regions with branches and Belgian road countries, covering 6 continents and major global financial hubs. By the end of June, our total overseas assets topped USD 500 billion 11% Y-o-Y and 4% in the year meaning pretax profit made up around 10% of the total group's total contribution to the Group is telecon asset quality remains stable. Second, global service capabilities kee getting better, we are steadily boosting our ability to provide global integrated, coordinated versus we are giving business CFS, we've rolled out signature products like ICBC speed remittance, ICBC transfer. All this helps companies speed up their settlements and fix the financing in points when expanding overseas. Using our clearly settlement, payments and cost the services along with new platforms like prices and third-party payments. We are constantly improving experience of the customers. The total credit balance for foreign trade companies grew by 12%. The international settlement handled by our domestic branches jumped 41% Y-o-Y, the FX hedging ratio for our corporate clients climbed to 36%, ranking first among the Big 5, our global direct overseas service now covers 42 countries. Our cross-border and offshore custody assets broke the CNY 3 trillion mark. Third, we continue to deepen our International Corporation platform. We've actually -- we've performed our role as the Chinese Chair of the Brick Business Council for Sitin corporation. We've also kept expanding and upgrading the China, Europe with union, which covers 136 countries across 20 countries, including 51 Fortune Global 500 firms. Through BRB, we are supporting the high-quality development of the meter initiative, our members and observers have grown to 216 institutions, covering 79 countries and regions. -- like the CIIE, the Canton Fair the China fare, we leverage major international exports. We are helping build the export China brand. About RMB internationalization. This has always been a strategic priority for our international business. Since this year, we've been pushing hard on 3 main fronts. First, we keep broadening the use cases of cross-border RMB, we launched the campaigns, rolled out comprehensive cross-border IMB Financial Solutions, including 10 major services focusing on new quality productive forces, digital trade and Chinese companies going global for key clients, groups like SOEs, commodity traders, multinationals and SOE, we have tailored services plans. We have on our group handled CNY 5.5 trillion in cross-border MB. The cross-border RMB segment jumped by CNY 299 billion, a 34% increase ranking first among for central SOE settlement volume grew by 34% and for bulk commodity fierce by 70%. Second, we keep improving the cross-border RMB payment and clearing network. We're building up our clearing infrastructure, upgrading our service capabilities, strengthening the role our RMB clearing bank play in nurturing offshore MB market. We already had RMB clearing banks in 12 countries. In July were approved to serve as a joint RMB clearing bank for Africa, meaning our clearing network now stretches into 19 African countries where standard bank operates. Our clearing capacity keeps growing year-by-year and have 1 occurring the clearing volume handled by us rose by 16% Y-o-Y. Third, we keep steming up our ability to serve the offshore RMB market. We closed first offshore bond investment deal in Shanghai FTZ involved investors from trade -- free trade accounting units boosting Shanghai's push to become International Financial Center. We rank top in the market for trading volume, number of participating institutions. We have on our group's offshore RMB ForEx market making and client-driven trading volume grew by 36%, client base expanded by 16%. We are actively serving overseas institutional investors across 70 countries and regions. The volume of interest rates of ForEx trades we made with these investors jumped by 23%. Our market share had 15%, up almost 1 percentage point. We've also been actively involved in building Hong Kong International gold trading center as a directing institution for Hong Kong Gold, we executed the very first batch of trade. Looking ahead, we'll keep focusing on serving the real economy and the new development paradigm will strengthen our A&T great operations performance abroad and keep enhancing our ability to provide global allocation through all this, we aim to contribute build even more to the country's high center opening up. Thank you.

Thank you. The first question. We'll take questions online. Can you hear me? Yes, please.

Thank you. This is BA Securities and we need -- congratulations on your first half results. I have a question for the fee-based or the noninterest income. What are the main driving factor of the growth in the fee in the first half of the year? How about other noninterest income? What is the outlook for noninterest income for the whole year? What are the core revenue-generating parts and growth strategy of SBC Wealth Management business.

As CVP, Mr. Ya will take your question.