Industrial and Industrial Financial institution of China Restricted (OTCPK:IDCBY) Q2 2024 Earnings Convention Name August 30, 2024 6:30 AM ET
Firm Contributors
Wang Liancheng – Company Technique and Investor Relations DepartmentDuan Hongtao – Senior Govt Vice President and Board SecretaryLiao Lin – PresidentZhang Shouchuan – Senior Govt Vice PresidentJingwu Wang – Senior Govt Vice PresidentWeiwu Zhang – Senior Govt Vice President
Convention Name Contributors
Junliang Chen – Guosen SecuritiesRichard Xu – Morgan StanleyJia Wei Lam – HSBC
Wang Liancheng
Pricey buyers and analysts, good afternoon. I am Wang Liancheng from Company Technique and IR Division of ICBC. Welcome to ICBC’s 2024 Interim Outcomes Announcement. This convention is broadcast on-line. We’re additionally joyful to have among the buyers and analysts with us in particular person.
I might wish to introduce to you the senior administration members becoming a member of at the moment. President, Mr. Liao Lin, Senior Govt Vice President, Mr. Jingwu Wang; SEVP, Mr. Weiwu Zhang; SEVP, Mr. Duan Hongtao; SEVP, Mr. Zhang Shouchuan; our administrators, Herbert Walter and Murray Horn participated on this assembly in particular person. Our administrators, Lu Yongzhen, Feng Weidong, Chen Yifang, Dong Yang, and Shen Si take part on-line. We even have basic managers from departments and subsidiaries right here with us.
Subsequent, I will give the ground to SEVP and Board Secretary, Mr. Duan Hongtao to temporary you on ICBC’s interim outcomes and the principle options.
Duan Hongtao
Pricey buyers and analysts, good night. Within the first-half of 2024, with complicated exterior atmosphere, we pursued progress whereas making certain stability superior the 5 transformations of clever threat management, fashionable format, digital driver, diversified construction and ecological basis and promoted its personal high-quality improvement with serving financial restoration.
Our essential efficiency indicators maintained secure and working outcomes grew steadily with improved high quality. It is demonstrated in following three points, first sustaining secure operation and demonstrating working and improvement resilience, core efficiency indicators had been secure. The market-leading place by the tip of half 12 months, complete belongings had been greater than RMB47 trillion persevering with to guide the world.
Loans to prospects recorded practically RMB28 trillion, up by RMB1.8 trillion over the tip of final 12 months because of prospects was greater than RMB34 trillion, up by over RMB580 billion. Sound efficiency. Working earnings was RMB402 billion, and internet revenue, RMB171.3 billion, sustaining the main stage amongst home banks.
ROA and ROE had been 0.75% and 9.53%, respectively, remaining at an affordable stage. NIM was 1.43%. Value-to-income ratio was 24.79% sustaining secure basis for operation. Capital adequacy ratio was 19.16%, sustaining the forefront amongst main banks world wide.
NPL ratio was 1.35%. Allowance to NPLs was 218.43%. In 2023, the dividend totaled RMB109.2 billion, persevering with to have the best money dividend amongst A share listed corporations. Based mostly on the typical share worth of half one 12 months, dividend yields for every share are 5.79% and seven.97%, respectively. This 12 months, we actively promote interim dividend, planning to pay RMB51.1 billion within the subsequent January. In order to supply secure and sustainable returns for shareholders.
Second, belongings and liabilities rising steadily and the standard and effectivity of companies for the true economic system improved. In half one 12 months, belongings grew steadily. The steadiness of loans to prospects elevated by 6.7% over the tip of final 12 months, and the steadiness of bond investments elevated by 9.8%.
Deposits noticed strong progress, of which private deposits elevated by 5.8%. The deposit deviation was improved, was the bottom within the corresponding interval within the final 5 years, constantly optimizing the credit score construction and taking strong steps to spice up 5 priorities.
Company loans elevated by RMB1.37 trillion, which had been extra focused. The financial institution exercise accelerated the transformation of the true retail enterprise by elevating the proportion of retail inclusive loans, private enterprise loans and private consumption loans, maintained excessive progress. We really served the 5 priorities.
Loans to strategic rising industries steadiness was RMB3.1 trillion, up by 15%. Loans to website and enterprises RMB2.1 trillion, up by 19%. Inexperienced credit score was over RMB6 trillion, up by 14%. Inclusive loans, over RMB2.7 trillion, up by 22%. Pensions beneath administration RMB4.5 trillion, up by 8%. Loans to core industries of the digital economic system totaled RMB911.1 billion, up by 16%.
Third, deepening operation transformation and innovation and enhancing drivers of high-quality improvement. For half one 12 months, we accelerated reform and improved the transformation framework deepened the transformation contents and upgraded the transformation measures and work to appreciate the efficient enchancment in high quality, Hebei enterprise has continued to strengthen.
Company banking. Company loans totaled RMB17.5 trillion. Company prospects numbered 12.85 million. Mortgage to manufacturing exceeded RMB4 trillion, all main friends. Private banking. Private AUM totaled RMB21.8 trillion. The variety of personal banking prospects, the full quantity and increment of AUM, the variety of private pension accounts opened and the full quantity of contributions to all led the business. Institutional banking, institutional deposits was RMB8.4 trillion main the business.
We acquired a double excellence ranking the analysis of centralized fee brokers organized by the Ministry of Finance for the sixth consecutive 12 months. Market enterprise, AUM exceeded RMB30 trillion. Home belongings beneath expensive recorded CNY 24.5 trillion. We led the business in bond investments, underwriting, international alternate buying and selling on behalf of shoppers market making, making new progress within the improvement of the ICBC.
ICBC continued to enhance three exterior and three inner platforms, strengthen the 2 supporting programs of enterprise and knowledge, speed up the digitalization and intellectualization by serving prospects and empowering our personal staff. For the exterior platforms, MAUs of cell banking exceeded RMB230 million. MAUs of ICBCE life had been over RMB17.4 million buying and selling quantity of open banking over RMB200 trillion, bettering buyer expertise.
Persevering with to optimize the client ecosystem and implementing GBC previous tasks in depth, we accelerated the mixing of 4 chains: Fund, customer support and worth chains, strengthening the client base. Private prospects totaled virtually 750 million, up by 9 million over the tip of final 12 months. Cellular banking prospects totaled over 460 million, up by 12 million, main the business.
Asset high quality, sustaining secure and the standard and effectivity of enterprise threat administration enhanced, ICBC continued to boost enterprise-wide threat administration system and mega threat coordination and improved threat presents and mechanism, speed up threat management intellectualization, all dangers are controllable, asset high quality secure.
By the tip of June, group-wide NPL ratio was 1.35%, down by 1B over the start of this 12 months. Credit score value was 0.7%, sustaining a sound stage. Dangers in key areas had been successfully addressed. Actual property NPL ratio continued to say no supporting native governments in stopping and resolving debt dangers primarily based on legislation and market guidelines. For small and medium-sized banks, we offer technical {and professional} help. Dynamically integrating the ESG idea into operation improvement. We additional strengthened the ESG governance construction, continued to construct a three-in-one ESG info disclosure system. ICBC’s MSCI ranking was AA, main home friends.
Looking forward to the second-half of 2024, ICBC will stay dedicated to the trail of economic improvement with Chinese language traits, deal with advancing 5 transformations and attempt to realize a dynamic steadiness of worth creation, market place, threat management and capital constraints. The financial institution will embark on the brand new journey for ICBC after its fortieth anniversary with achievements in high-quality improvement and ship secure and sustained returns to shareholders from house and overseas.
Wang Liancheng
Thanks to Mr. Duan. Now could be the Q&A session. Please state your title and group earlier than asking the query. The primary query from this aspect.
Query-and-Reply Session
Q – Unidentified Analyst
Thanks for the chance to lift the primary query. I am from UBS. I want to ask you a query concerning the earnings and internet revenue. Within the first half of the 12 months, we now have seen the complete banking sector nonetheless faces strain of earnings and internet earnings of ICBC has additionally decreased by 2%. So what measures have you ever taken — will you are taking to stabilize working earnings and income within the second-half of the 12 months?
Liao Lin
Thanks on your query. Within the first-half of 2024, ICBC achieved a internet revenue of RMB171.3 billion, a year-on-year lower of two%, as you talked about in your query. That is in step with the provide pattern of the home banking business, as a result of we now have giant sum. However we expect this deviation remains to be inside our expectation. And in addition the interim dividend payout can also be an excellent demonstration of accountable listed firm for ICBC and which can also be our purpose to pay sustainable return to our buyers.
The primary-half of the 12 months, the decline of our internet revenue is extremely related with the macro rate of interest atmosphere and in addition on the present stage. And that is additionally a state of affairs at the moment dealing with the complete sector. So for the entire 12 months, though we nonetheless have strain by way of working earnings and internet curiosity margin, we now have seen some constructive adjustments, and you’ll present sturdy help for stabilizing annual internet revenue.
First, deposit rate of interest declined in contrast with the start of this 12 months, and the soundness in deposit progress important improved, benefiting from audible reductions in deposit benchmark rate of interest. The deposit value now within the first half is 1.84%, down by 5 bps in comparison with final 12 months.
And by the tip of July, we lowered our deposit benchmark to five to twenty bps, so which is able to additional drive our decline by way of our deposit prices within the first half of — within the second-half of this 12 months. So within the first-half, we now have seen very high-quality deposit progress. The deviation of our deposit is 2.2%, the bottom in practically 5 years. On the identical time, we now have additionally optimized the deposit construction and the legal responsibility with decrease value has elevated proportion.
Secondly, our asset construction continues to optimize. Within the low rate of interest atmosphere, we now have constantly strengthened adjustment of the asset construction and centered on top quality improvement of the — to serve the uncommon economic system. Efforts we made to stabilize the 12 months margin. Within the first-half of the 12 months, the loans and bond investments, which have greater yields elevated by 0.7 share factors and 1.1 share factors, respectively.
Within the first half of the 12 months, yield on interest-bearing belongings decreased by 5 bps, a smaller decline than within the first quarter. Furtherly, extra diversified earnings supply is regular enchancment in working earnings contribution. Based mostly on the principle contraction, we now have realized a internet charge earnings of RMB67.4 billion, with the full quantity remaining the best within the business domestically.
So with the typical above talked about, the compression of our internet curiosity margin has been slowed. This could display the resilience of ICBC. And amongst our charge earnings, our earnings from the funding banking syndicate. Sports activities ForEx commerce and the RMB company settlement has witnessed an excellent progress and we now have additionally seized the traits to appreciate different noninterest earnings, which totaled RMB20.6 billion, elevated by 12%.
So we now have made achievement on this regard within the first-half of the 12 months, and we are going to proceed to take action within the second-half. Fourthly, the secure asset high quality steady enhancement of threat resistance functionality. By the tip of June, the NPL ratio of ICBC was 1.35%, 0.01 share factors decrease than Q1 finish final 12 months. And the supply protection ratio is 218.4%, up by 4.5 share factors.
Whole provision steadiness was RMB954.2 billion, elevated by RMB70 billion. And the mortgage impairment provision is RMB819.9 billion, elevated by RMB63.5 billion. In order you’ll be able to see, the mortgage provision ratio is up and all these index can present ICBC has performed our due half by way of the main position to supply help to the true economic system.
Within the second-half of the 12 months, we are going to proceed to deepen construction transformation, successfully forestall the management threat, strengthen asset liabilities, promote working earnings and push ahead reforms by actively adapting to the rate of interest in kind with — strived to serve the high-quality improvement of the true economic system and in addition create long-term secure worth returns for shareholders.
Firstly, implement a number of measures to stabilize the curiosity margin and attempt to slender the decline within the internet curiosity earnings. On the asset aspect, we proceed to take proactive steps to excel within the 5 key monetary areas supporting the event of recent high quality productiveness, strengthen the credit score provide capability to the important thing methods, key areas and weak hyperlinks, whereas sustaining our main benefits in manufacturing, rising business, inexperienced finance and personal enterprises accelerated the rise within the proportion of return, inclusive loans on the legal responsibility aspect and to shut the funding loop continues to advertise the GBC Plus foundational tasks centered on the supply and the movement of funds, attempt to extend the retention of low-cost settlement funds, centered on key eventualities of strengthen the competitors for present funds and that embed length administration into the complete deposit administration course of, promote a wholesome interplay between financial savings and AUM, in the end lowered the proportion of high-cost liabilities and guarantee a secure, but gradual lower within the deposit fee.
Secondly, accelerated transformation monetary companies, improved new infrastructure companies corresponding to clearing, settlement, fee and value, deeply delving into the expansion potential of the 4 new enterprise areas, funding banking, asset administration, wealth administration and monetary buying and selling. Utilizing the worth ecosystem chain of funding banking, asset administration, wealth administration, monetary buying and selling to invigorate the normal steadiness sheet and supply more practical help for income progress.
In company enterprise, the mix of economic and funding banking merchandise to create a complete service ecosystem, promote income progress in funding banking, syndication custody and bond underwriting by means of buyer sharing and enterprise synergy. In fundamental companies continues to enhance the development fee settlement and consumption eventualities and promote income progress in bank cards, third-party funds and RMB settlement merchandise.
In Wealth Administration, enrich the product portfolio primarily based on market rotations to fulfill prospects’ drivers’ wants for monetary asset, participation and appreciation, additional stimulating the expansion potential enterprise like fund distribution, wealth administration distribution and valuable metals.
Thirdly, asset high quality. We’ll proceed to boost our threat management and in addition seized the chance of some constructive alerts we now have seen to higher management the associated fee. On one hand, we are going to proceed to boost our threat management and to make sure the general asset high quality, secure momentum. And on the second, we additionally proceed to boost our deserve remedy and disposal of non-performing loans, in order to create a extra coordinated new steadiness between earnings and expenditure. Thanks.
Wang Liancheng
The subsequent query.
Junliang Chen
Thanks for the chance. I am Junliang from Guosen Securities. My query issues the expansion. Just lately, we now have noticed that banks appear to face mortgage progress decline, lower from scale, combine and pricing temporary us with the half one 12 months state of affairs? And in addition, regulators have modified their wording about scale. So do you propose to cut back your mortgage progress plan for full-year?
Wang Liancheng
I will invite Mr. Zhang Shouchuan to reply the query.
Zhang Shouchuan
For half one 12 months state of affairs, we comply with the macro insurance policies, coordinate tempo power, focus of funding and financing, accelerated rejuvenation of excellent fund and promote the transformation and upgrading of mortgage combine. In serving the true economic system in its restoration, we now have performed the position of main power in Encore.
First, scale an excellent, each the friends, the home RMB loans steadiness was over RMB26 trillion, up by RMB1.74 trillion attaining a steady progress on the excessive base. Second, mortgage progress was extra focused. The home branches company loans was up by RMB1.4 trillion, of which the medium- and long-term proportion was 72%, up by 3 share factors year-on-year.
We elevated our help for five priorities, to majors, to new manufacturing, meals, vitality, assets safety. The rising — strategic rising industries loans steadiness was over RMB3 trillion, manufacturing over RMB4 trillion, inexperienced loans over RMB6 trillion. Specialised in new loans, inclusive finance, agricultural loans had been each grew over — by over 10%. We comply with the insurance policies of our actual property market, high-quality developments and help financing coordination mechanism for city actual property markets, assist the secure and wholesome developments of the property market.
Third, the momentum continued to select up. We actively sensify the folks’s consumption want. The home non-mortgage loans was over by RMB300 billion year-on-year progress. The — we adapt to the financial transformation upgrading, the relending of the loans to rejuvenate the excellent loans was over RMB2 trillion, growing the effectiveness of fund allocation.
Fourth, the tempo of progress was balanced. The day by day common of increments of RMB loans was over RMB2.1 trillion, up by 9%. We crossed the 12 months and quarter and achieved secure progress. For the second half of the 12 months, the Chinese language economic system operates stably and making progress, proceed the restoration. So the strong financial coverage is concentrated on steering business banks to maintain an affordable progress and balanced progress of loans.
So for the way forward for the Chinese language economic system and for our personal high-quality improvement, we’re totally assured. Within the second-half of the 12 months, we are going to proceed to implement macro insurance policies and promote the secure and affordable progress of loans and in accordance with market adjustments, we are going to steer the targets of mortgage progress, preserve our aggressive internet edge, enhance {our capability} of serving the true economic system and proceed the main place.
First, we are going to proceed to deal with serving the main methods and high-quality prospects. We’ll use the group’s complete monetary benefit to help the main methods, fields and weak hyperlinks when enhancing the muse, we are going to create new progress factors. We’ll do good in making certain timing supply and the assured housing to assist the brand new mode of actual property markets. We’ll moderately improve our help for medium- and long-term loans to the main tasks.
Second, we are going to proceed to supply greater high quality and extra diversified retail finance companies. We’ll proceed our help for private consumption, private enterprise loans and bank card and different retail and inclusive loans, and enhance their proportion within the mortgage combine. We’ll modify the mortgage combine about mortgage loans within the second-hand homes.
Third, we are going to proceed to optimize the combination of the credit score assets. For the high-quality belongings, we are going to proceed to strengthen our NPL disposal and coordinate the event amongst areas and enhance the coordination between mortgage progress and financial improvement of the areas. Thanks.
Wang Liancheng
Thanks. At the moment, we are also joined by many analysts and buyers on-line. So subsequent query from on-line.
Richard Xu
Thanks for the chance to lift the query. I am Richard from Morgan Stanley. My query consists concerning the asset high quality. Seen to view of the macroeconomic, the provide belongings high quality of ICBC maintained a secure stage. Wanting ahead, we nonetheless face strain of additional slowdown of the macroeconomic. So what’s your view in your present asset high quality stage? And what key areas do you suppose it wants additional focus and a focus? And all of us pay a whole lot of consideration to the danger in the true property sector. So what’s your view on this regard?
Wang Liancheng
Thanks. I will invite Mr. Wang Jingwu to reply this query.
Jingwu Wang
Thanks on your query concerning the asset high quality. Within the first-half of 2024, ICBC strike a steadiness between top quality improvement and high-level safety. We deal with the principle themes of threat prevention, compliance enhancement and improvement promotion. Now we have tightly managed the credit score threat throughout the complete scope and cycle. Dangers in key areas have been resolved in an orderly method and the standard of credit score belongings has remained secure and controllable.
As of the tip of June 2024, as enterprise NPL ratio stood at 1.35%, a lower of 1 foundation level from the tip of the earlier 12 months. From a enterprise phase perspective, the asset high quality within the company sector has continued to enhance. The general NPL ratio for home department company loans was 1.63%, down by 14 bps in comparison with the tip of final 12 months. The NPL ratio for all main industries have additionally seen very lower of decline for the reason that starting of the 12 months with notable reductions of 40 bps within the manufacturing and wholesale and retail business.
Whereas the NPL ratio within the retail phase has elevated as a result of slowdown of financial progress and earnings family, however the general asset high quality stays at a comparatively good stage. In accordance with early prevention precept, we’re taking a number of measures to boost sensible threat management, restoration mechanism and disposal of NPLs.
By way of the danger in the true property sector, we now have lengthy adhered to a prudent and cautious enterprise philosophy following the 3-in-1 asset choice standards that think about area, buyer and undertaking. We deal with constructing a diversified and balanced actual property funding and financing construction, moderately controlling the proportion of actual property within the complete mortgage portfolio and strictly managing the proportion of loans to particular person actual property firm.
In response to the brand new traits and conditions which have emerged in the true property sector in recent times. ICBC has adopted a complete method specializing in growing, stopping, mitigating and managing dangers by optimizing new funding and serving to to determine new improvement fashions for the business actual property sector successfully managing current belongings growing efforts to order and clear dangers related to high-risk enterprises and tasks.
As of the tip of June, the steadiness of company loans, improvement loans — home improvement loans, the steadiness is RMB852.1 billion solely accounting to three% of the full loans and NPL ratio of the developer loans down — was down by 2 bps over — as stability of our developer loans was fairly secure. Moreover, ample provisions have been made for threat loans to completely cowl potential losses and dangers.
Wanting forward, within the second half of this 12 months, we are going to proceed to stick to the purpose of secure improvement, strengthen the safety improvement line and act as a stabilizing power in sustaining monetary stability and leveraging greater stage threat administration to help high-quality improvement.
We’ll improve administration empowerment, continues to strengthen the bank-wide threat management system, optimize coverage help, precisely handle key space mortgage placements and improved asset allocation capabilities. Moreover over deepened digital and clever empowerment constantly superior building of an enterprise-level clever threat management platform makes use of early warning capabilities for sensible software attaining forward-looking and exact threat administration.
Wang Liancheng
The subsequent query is from on-line.
Jia Wei Lam
Thanks for the chance to lift questions. I am Jia Wei Lam from HSBC. I’ve a query concerning capital and dividend. Now we have seen that ICBC has comparatively excessive capital adequacy ratio. Do you will have any capital plans sooner or later? Now the sector is dealing with the NIM compression strain, how do you steadiness the connection with — between capital adequacy, asset progress and dividend stability and the way do you create sustainable returns for shareholders?
Wang Liancheng
I will invite as SEVP, Mr. Duan Hongtao, to reply the query.
Duan Hongtao
At current, ICBC’s capital is nicely managed. The capital plan is already carried out. Within the first-half of the 12 months, our precept is inner, exterior and balanced we actively promote business banks, capital administration tips, implementation. We use retained earnings as the principle channel to replenish capital. We optimize capital administration and elevated capital effectivity. On the finish of second quarter, ICBC’s energy was 19.16%, CET1 and Tier 1 capital adequacy ratio had been 13.84% and 15.25%, respectively, sustaining an affordable and strong vary. In serving the true economic system, strengthening threat resilience, we lay a strong basis.
First, we improve inner capital accumulation. Our revenue for the primary half of the 12 months was RMB171.3 billion. Deducted dividend and fairness instruments curiosity, we now have retained earnings of RMB56.6 billion. Now we have been sustaining a strong profitability. We offer good returns for shareholders and buyers and in addition obtain self-replenishment of capital.
Second, we already implement exterior capital replenishment. In first half of the 12 months, ICBC’s CNY 370 billion capital instruments issuance plan was accredited by the regulator. We glance into the asset improvement and market rate of interest improvement pattern. We already accomplished RMB50 billion perpetual bond and RMB50 billion Tier 2 capital bond issuance by the tip of August. We implement maturity alternative of the excellent instruments. So the entire curiosity fee value was lowered by 26 bp.
Third, we actively carried out new guidelines necessities. This 12 months, we now have seen the happening of capital tips in capital allocation, capital measurement and threat restraint. There are new guidelines, so we prioritize the capital extension to key areas, the RWA progress was decrease than that of complete belongings, saving capital occupation attaining secure transition between outdated and new guidelines.
Fourth, we actively participated in TLAC instruments innovation. In first half of the 12 months, guided by regulators and shareholders, we carried out the issuance of RMB40 billion TLAC noncapital instruments, the primary in home markets receiving excessive recognition from the market. As G-SIB, we now have been a mannequin for the friends and offered a brand new and high-quality funding targets for the market. You additionally raised questions on internet curiosity margin strain. The NIM change was modified, was influenced by macro economies and industries atmosphere adjustments of NIM for ICBC is just like different friends.
In contrast with the final phrases knowledge, we now have seen some marginal enhancements. We pay excessive consideration to NIM administration in low rate of interest atmosphere. We adjusted asset and liabilities allocation, optimize giant belongings allocation and stabilized internet curiosity margin. First, we optimize mortgage combine and make focused pricing. Within the first-half of the 12 months, the brand new RMB loans rate of interest was elevated by 4 bps in contrast with fourth quarter final 12 months. The rate of interest change was just like the sector.
Second, the deposit curiosity fee ratio was lowered. There are a number of constructive curiosity components on this regard. In first-half of the 12 months, the brand new deposits rate of interest was lowered by 29 bp than final 12 months, an excellent stage among the many friends. Sooner or later, we are going to coordinate belongings and liabilities, promote 4 transformations and promote internet curiosity margin to keep up in a comparatively affordable vary.
Just lately, we’re actively implementing interim dividend, contemplating that our capital was ample, interim dividend wouldn’t carry exceptional strain to our capital adequacy ratio. With the dividend payout ratio unchanged, we moderately elevated the frequency of dividend is nice for smoothening the capital adequacy ratios change.
Sooner or later, we are going to proceed to coordinate the affordable progress of amount, refined administration of pricing, efficient enchancment of high quality and focused management of dangers and to assemble a triangular of effectivity among the many capital belongings and fund in order to create a clear and wholesome steadiness sheet and a balanced and coordinated and sustainable earnings sheet and enhance our sustainable improvement functionality. Thanks.
Wang Liancheng
Now we have printed an inventory of the questions from buyers. And all these questions could also be centered on dividend payout and Mr. Duan answered this query. So final query, please.
Unidentified Analyst
I am from Citi. I want to ask a query concerning the monetary advertising and marketing funding. Within the presentation, in the beginning of this 12 months, we now have seen ICBC’s bond funding has realized a exceptional earnings. So might you present extra particulars of ICBC’s bond funding efficiency? And what are your future plans for increasing the bond enterprise?
Wang Liancheng
I want to invite Mr. Zhang, Weiwu, to reply this query.
Weiwu Zhang
Thanks on your query. On the finish of June 2024, as bond funding steadiness had elevated by 9.8% in comparison with the tip of final 12 months, with the steadiness of RMB bond funding rising by 10.4%, whereas sustaining a robust deal with authorities bond investments and making certain a market-leading scale in key classes corresponding to native authorities bonds, ICBC has optimized the construction of credit score bond funding across the 5 key monetary areas.
From January to June, the expansion fee of recent RMB company bond funding in key areas corresponding to superior manufacturing, technological innovation and inexperienced environmental safety exceeded 60% year-on-year. Moreover, ICBC has actively offered citation and market-making companies to each home and international buyers, striving to boost the exercise and the liquidity of the home interbank bond market.
On the finish of June, the bond buying and selling quantity between us and abroad institutional buyers elevated by 35% year-on-year, per the expansion fee of our financial institution’s bond market-making quantity. Just lately, the Central Financial institution has made some new motion. And in addition, we now have seen some new adjustments within the demand and the provision of bonds. So trying forward, ICBC our bond enterprise primarily based on the rules of ample power, regular tempo, optimized construction and a sustainable pricing, striving to realize a steadiness between performance and profitability to make higher contribution to serve the true economic system and top quality improvement of the financial institution.
So firstly, to supply complete help for the true economic system, we are going to proceed to optimize account and portfolio constructions, strategically allocating funding varieties, maturities and currencies to steadiness liquidity, safety and profitability. Efforts will likely be made to boost the income contribution of bond funding and buying and selling, aiming for high-quality deployment. By way of help for key areas, we are going to deepen our deal with the important thing — 5 key monetary areas by growing investments within the main methods, key sectors, essential areas and weak hyperlinks.
Secondly, we are going to present our market-making duties. We’ll proceed to be dedicated to our position as a market maker, serving to to make sure the environment friendly operation of the home bond market. We’ll comprehensively enhance market-making service ranges, strengthen market analysis evaluation and judgment capables’ and purpose to extend buying and selling enterprise earnings, whereas sustaining market liquidity.
Efforts will likely be made to develop the vary of counterparties and lengthen the service attain. Constructing on present abroad buying and selling counterparties, we are going to proceed to develop relationships with international sovereign and nonbank institutional purchasers. At identical time, the financial institution will work intently with monetary infrastructure regulation, regulatory our bodies to optimize bond market regulation and preserve good buying and selling order.
Firstly, we may even attempt to — we are going to purpose to completely leverage synergies between bond underwriting and funding facilitating interconnected progress in these areas. We’ll proceed to combine our buyer enterprise expertise, expertise and model benefits to constantly optimize the ecosystem of bond issuance and the distributors. On one hand, we are going to appropriately decrease the credit score focus of home issuers, whereas supporting extra high-quality issuers corresponding to international middle banks, worldwide improvement establishments and multinational companies to concern bonds domestically, thus serving to to boost the position of RMB as financing foreign money.
Then again, we are going to proceed to refine our bond distribution community, enhanced distribution efforts and capability and obtain differentiated administration of threat urge for food for bond funding and distribution. This may help the interconnected improvement of the first and the secondary bond market and enhance the market layered bond market system that integers funding financing.
Wang Liancheng
On account of restrict of time, the Q&A session will shut now. Thanks for the questions from our buyers and analysts. In case you have additional questions, be at liberty to contact our IR workforce. Please present help to ICBC, as all the time, and we may even proceed to realize secure operation of ICBC in order to ship secure returns to ICBC. So that is the tip of the interim outcomes announcement. Thanks, once more.
