China Merchants Bank (Shanghai:600036) Q2 2026 Earnings Call

0:00 Welcome to the 2026 Interim Results Presentation. Today, I will cover three areas. Firstly, an overall introduction. And secondly, a detailed information. And thirdly, a business strategy for the next phase. In the first half of the year, the group implemented a strategy of building a value creation bank and adhered to the coordinated development of quality, profitability, and scale.

0:31 Various operation indicators registered steady progress with positive momentum. This was primarily reflected in four aspects. First, steady progress in operating performance with distinctive strength and profitability. Net operating income, 178.135 billion, up by 4.83% year-on-year. Net profit attributable to shareholders of the bank, 76.45 billion, up by 2.02% year-on-year. RAA and RAE were 1.14 and 13.43% respectively, remaining at industry-leading levels. Net interest income. 112.02 billion, up by 5.6%, affected by LPR repricing, ineffective credit demand, and declining market interest rates.

1:22 The net interest margin was 1.83%, down 0.5% year-on-year, representing a narrower decline. Net non-interest income reached 66.11 billion yen, up by 3.56% year-on-year. The percentage of net non-nutrient income was 37.11%, maintaining the leading position in the industry. Net fee and commission income reached 39.86 billion yen, up by 5.99% year-on-year, of which income from extensive growth management reached 24.7 billion yen, rising by 18.44% year-on-year, representing the best level in the past five years.

2:08 The cost-to-income ratio was 29.7%, down 0.41% each point year-on-year. Second, we delivered balanced asset growth in both scale and quality, with continued improvements in funding costs. Amid ineffective credit bonds, we carried out a range of measures to strengthen asset origination and optimize asset allocation. Our total assets amounted to $13.79 trillion, up by 5.47%. Total loans and advances to customers, $7.45 trillion, up by 2.69%, accounting for 54.07% of total assets remaining stable. Among them, general loans amounted to $7.19 trillion, up by 3.65%.

3:05 We accelerated the turnover of bill assets with discounted bills amounting to 265.38 trillion, down 17.62%. Investment securities and financial assets amounted to 4.4 trillion, up by 6.07%, accounting for 31.95% of total assets, a level that the group considers appropriate We pursued steady liability growth while continuing to optimize deposit structure. With a consolidating advantage in low funding cost, total liabilities sold 0.43 trillion yen up by 5.45%, of which total deposits from customers exceeded 10 trillion yen up by 3.32%.

3:58 Core deposit balance was 7.79 trillion yen up by 9.02%. compared with the previous year. It accounted for 82.06% of the average daily balance of total deposits, up by 1.37 percentage points as compared with last year. The average daily balance of demand deposits accounted for 49.6%, up by 0.2 percentage points compared with the previous year, remaining at an elevated level. Interbank deposits grew rapidly, serving as an effective supplement to the funding sources, of which demand deposits accounted for 94.54%.

4:44 The annualized average cost of interest-bearing liabilities was 1.05%, down 30 bps year-on-year, of which the average cost rate of deposits from customers was 0.97%, down 29 bps year-on-year. Thirdly, we maintain stable asset quality and strong risk compensation capacity. The MPL balance was 70.25 billion yuan, up by 2.05 billion, and the MPL ratio was 0.94%, remaining at the same level. The annualized MPL formation ratio was 1.06%, up by 0.08 percentage points. The allowance coverage ratio was 385.1%, and the allowance to low-end ratio was 3.63%, reflecting a high level of risk compensation capacity.

5:41 The annualized credit cost was 0.69%, representing a slight year-on-year increase of 0.02% each point. Fourthly, we strengthened capital management with industry-leading capital adequacy level Risk Places Asset under the Advanced Approach and the Weighted Approach increased by 5.16% and 5.23% respectively, which is generally in line with asset growth. The CET1 CAR, the Tier 1 CAR, and the CAR under the Advanced Approach were 14.07%, 16.59%, and 18.33% respectively, down 0.09% of 0.08 and 0.9 percentage points, respectively.

6:30 As for weighted approach, the numbers were 11.84%, 13.96%, and 15.06%, respectively, down 0.08 percentage points, up by 0.6 percentage points, and up by 0.6 percentage points, respectively. This is a brief overview of our performance in the first half of 2026. We now turn to the company's operational information. In the first half, Amid new developments and challenges in the banking industry, the company proactively responded and seized opportunities. Taking extensive growth management to a new level, the transformation through the full initiative delivers notable progress that is strengthening the company's resilience and market competitiveness. This is mainly reflected in the following areas.

7:25 First, we grew our client base rapidly while scaling up extensive growth management business. We remain customer centric. further deepened its segmentation and classification-based customer management and achieved growth in both size and quality of our client base. Retail customers totaled 231 million, up by 3.13%. Among them, Golden Sunflower and above customers reached 6.41 million, up by 8.02%. The number of private banking customers reached 216,000, up by 8.36%. Corporate customers reached 3.86 million, up by 6.56%, among which the number of newly acquired corporate customers was 347.9 thousand, and the additional customer, 78.5 thousand, up by 3.7%. The number of corporate customers for withholding transactions reached 1.53 million, representing A year-on-year increase of 14.97%.

8:34 AUM from retail customers exceeded 18 trillion yen, up by 7.96% compared with year-end 2025. The half-year increase reached 1.36 trillion, hitting the record high. The average daily balance of corporate wealth management products was 632.61 billion yuan, up by 20.51% compared to 2025. Total asset management amounted to nearly 5 trillion yuan, representing a year-to-date increase of 5.29%. Balance of assets under custody, 23.58 trillion yuan, representing year-to-date increase of 8%, maintaining a leading position in the market. Secondly, we pursue differentiated development with more distinctive business strengths.

9:23 First, we continue to consolidate our leading position in retail finance, and we maintain the main role of retail finance business with this net operating income accounting for 54.35% of the total. We continue to strengthen our professional service capabilities in wealth management, and the customers holding large-managed products, 66.17 million, up by 4.05%. Customers covered by three systems reached 12.58 million, up by 6.98%. In response to market trends and evolving customer demand, the growth structure of AOM of retail customers become more diversified.

10:14 Agency distribution of non-money market mutual funds and trust products increased by 82% and 40.48% year-on-year respectively. The balance of retail wealth management products increased by 3.88% compared with prior year-end, and the balance of deposit from retail customers increased by 3.7%, facing rising risk and weakening demand to prioritize asset quality in retail loans. Resulting in a moderate contract spending scale, retail loans totaled 3.61 trillion, down 1.11% compared with prior year end. The percentage of retail loans to total loans and advances was 51.04%, down 1.88 percentage points compared with prior year end.

11:05 Amid the industry's cyclical adjustment, The group appeared to a stable and no volatility operational strategy for its credit card business. Active credit card users totaled $74.4 billion, up by 0.46% compared with prior year end, and the transaction value was $1.91 trillion, down 5.43% year-on-year, while maintaining a leading position in the industry, and now market share further increased. Merchants Bk Co H Total corporate loans 3.2 trillion yen, up by 9.27%.

12:00 Growth of loans in key areas, such as grain loans, manufacturing loans, and agriculture-related loans, are significantly outpacing the overall loan run.

12:11 The average daily balance of deposits from corporate customers, 5,230 billion yen, up by 6.1%.

12:21 of which demand deposits accounted for 50.14% down by 0.8%. We continue to enhance professional service capabilities of retirement finance. The number of individual pension accounts open exceeded 17 million. With the pension funds under custody amounted to 1.7 trillion, up by 9.68% compared with our year end, we've provided diversified financing services to technology enterprises, serving 378.3 thousand Scitech enterprise customers, including more than 200,000 enterprises listed on Scitech rankings.

13:07 We continue to upgrade the distinctive brand of enterprise digital intelligence finance, Compared with year-end 2025, the number of customers using treasury management cloud services increased by 14.26%. Those using cloud-based host-to-host connections increased by 13.44%. We continue to enhance professional capabilities in investment banking and financial market businesses. FEA contributed by investment banking business increased by 8.64% year-to-date, and the net underwritten The M&A financing business value amounted to 165.92 billion yuan, up by 19.84% year-on-year. We have completed multiple deals with significant market influence.

14:04 Regarding financial markets business, the number of wholesale customers involved in FIFO trading was 78,000, up by 18.38% year-on-year, and their direct transaction value amounted to $212.7 billion, up by 33.64% year-on-year. Two business customers totaled 191.4 thousand, up by 11.49% year-on-year. Direct through discounting value was 1.73 trillion, up by 26.61%, ranking second in the market. Fourthly, we accelerated the development of branches in key regions to strengthen their market competitiveness.

14:50 Multiple key indicators, including growth rates of retail customer base, retail AUM, core deposits, corporate loans, net operating income, and EVA of branches in key regions were all higher than the average level of all domestic branches. The contribution was increasing. The proportion of two region branches in the total of all domestic branches increased regarding retail AUM balance of 0.26 percentage point. Corporate loan balance of 0.56% and average daily total deposit balance of 0.22 percentage points. Thirdly, we steadily advance comprehensive and international development with value contribution stability community tools. Total assets of major subsidiaries, 1.05 trillion yuan, up by 10.16.

15:42 Bk Co H Bk Co H Bk Co H Bk Co H Bk Co H Bk Co H Bk Co H 3.07 billion Hong Kong dollars, up by 124.14%. Total overseas asset management business reached 94.37 billion Hong Kong dollars, up by 25.27%. Net profit of CNB Financial Leasing was 1.63 billion, down 42.44% year-on-year.

16:37 This is mainly because a business beat income last year. And the leading business was $72.49 billion, maintaining the leading position. Net profit of CNB Wealth Management 1.5 billion, up 10.92%. Total wealth management products reached 2.74 trillion yuan, up by 3.79% compared with 5 yuan, keeping leading position. Net profit of China Merchants Fund was 802 million. and the non-monetary neutral funds under management six was 623.15 billion yuan, up by 5.78%. Net profit of CNB Sigma was 52 million yuan, down 12.68% year-on-year. Interested management of insurance monies totaled 279.45 billion yuan, up by 19.78%.

17:38 The total assets of overseas institutions increased by 7.01% compared with prior year end, and net operating income rose by 30.5% year-on-year. Institutions in Hong Kong seize opportunities and expand their operations, achieving positive growth. Net operating income grew by 32.71% BnB International Capital completed 3 Hong Kong IPO Sponsorship Project and 24 Hong Kong IPO and Running Project. Cross-border business grew rapidly. The number of corporate customers in respect of international balance of payment reached 93.7 thousand.

18:23 and the international balance of payments of corporate customers amounted to 263.6 billion US dollars. Accounting for comprehensively promoted intelligent development and continuously strengthened technological advantages. First, we promote AI development and application. We continue to refine our self-developed large model infrastructure. Average daily token throughput increased by over 78% compared with 2025. 256 domestic domain-specific models were deployed, up by 40%. A total of 1,386 intelligent scenarios were deployed, up by 62% compared with prior year end.

19:14 Large model applications have delivered tangible quality and efficiency gains. AI contributes 13.88 million equivalent working hours in terms of efficiency gains. We also built a bank-wide knowledge management framework that enables large language models to unlock knowledge value across business lines. We have increased our five-facing service capacities using AI and increased our capacity of complex business service. We have launched AI South Bank, an AI agent serving wealth management partners. It was newly launched. Private banking AI tools now deliver one-stop legalized service framework for spending, asset allocation, and protection and succession of income.

20:08 We have upgraded our client service system. The AI powered intelligent customer service digital human system for institutional scenarios has served customers of 37.66 million times. Internal management intelligence upgrade continue to accelerate. AI is reshaping credit process with accelerated deployment across the pre-landing, landing, and post-landing stages. In terms of business management, intelligent tools now span the front, middle, and back offices. Merchants Bk Co H With corporate loan asset quality continuing to improve, NPL ratio of corporate loans 0.78% down 0.11% point. Among them, the NPL ratio of property industry was 4.47% down 0.31% point. The NPL ratio for manufacturing industry was 0.39% down 0.04% point.

21:46 Compounded with rising retail loan risks across the industry, we comprehensively enforce retail loan risk management and optimize the asset structure. Retail asset quality remains stable and controllable. maintain a relatively strong position within the industry. The NPL ratio of retail loans was 1.16%, up by 0.1 percentage point. Among them, residential mortgage loans was 0.48%, down 0.03 percentage point. Credit card loans, 1.9%, up by 0.16 percentage point. Retail microfinance loans, and consumer loans were 1.34% and 1.39% respectively, up by 0.12% in points and up 0.37% in points respectively.

22:43 In the end, I would like to give a brief introduction to the business strategy for the next phase. Looking ahead, we will fully implement China Merchants Bank's 15Y3F strategic plan, maintain strategic focus, uphold fundamental principles, and regulate ground, accelerate capacity building, and advance transformation through the four initiatives to consolidate existing strengths while building our new advantages, achieving distinctiveness within a common business model. Firstly, we stay committed to long-termism, to build stronger core competitiveness. We will remain customer-centric. We enforce the central role of retail finance through wealth management, uphold asset quality as the foundation, and sustain strong technology support.

23:39 While maintaining strategic focus, we will adhere to the principle of professionalism and market orientation. Continuously innovating in products, services, technologies, and business models by deepening and refining our core businesses, B&B's business and revenue structure will take on a fixed earnings plus feature, which is resilient in down cycles and flexible in up cycles. Secondly, capture structural opportunities to continuously cultivate new drivers for medium and long-term growth. In retail finance, we will capitalize on the historic strategic opportunities in wealth management, centering on asset allocation to enhance professional wealth management capabilities and improve customers' sense of fulfillment and experience.

24:34 Secondly, in corporate banking, we will further strengthen professional operations in different industries. Investigation across a broader range of sectors to refine the one branch, one policy, one industry, one policy strategy in key region branches to enhance differentiation. Thirdly, we will also seize opportunities arising from new quality productive forces. Averaging synergies between CMB and its subsidiaries will strive to build technology finance as a distinctive feature of CMB. Fourthly, We will leverage our local and global presence and establish a development framework comprising the head office plus institutions in Hong Kong plus the five regional hubs to build distinctive features in cross-border finance.

25:24 Thirdly, we will seize near-term decisive moves to sustain steady progress in operation. We will focus on stabilizing NIM, maintaining our advantage in low-cost deposits, and strengthen risk-based pricing on the asset side, and increase our risk compensation capacity. We will leverage our strength of subsidiaries to better expand NII and optimize revenue structure, keeping revenue broadly stable. We will seize capital market opportunities, better expand Extensive Wealth Management and Financial Markets Businesses to Encourage Value Contribution Capital Management will be strengthened to improve capital returns and reinforce capital resilience.

26:12 Fourthly, we will accelerate intelligent transformation to further extend tech leadership to sustain technology input and intensify technology empowerment to further promote business growth with technology. Facing the opportunity presented by AI, we will broader and deepen AI applications to drive improvements in customers' experience, internal efficiency, and risk management. We will accelerate the building of an AI-powered organization to appreciate the capabilities of workforce and different people, plus digital intelligence model, establishing CMB as a benchmark for intelligent transformation in the AI era. We stay anchored to risk-based approach and reinforce foundation for sustainable development.

26:58 We uphold prudent and stable risk culture, operating within the boundaries of our capabilities. We stay highly vigilant to early signs regarding asset qualities, strengthen risk prevention and resolution in key areas, including retail risk, credit, and the property sector. and intensify collection resolution efforts and internal control will be strengthened with rigorous safeguards against credit risk, market risk, operational risk, and liquidity risk, providing a solid foundation for high quality development. We will now open the floor for questions. You're welcome to raise questions. Please follow the instruction of the operators.

27:51 Your name and the industry and the institution you represent. For mobile users, please tap More at the bottom of the interface and select Raise Hand. For PC users, please click Participants and choose Raise Hand. Please ask one question per turn. When invited, please turn on your microphone and camera and state your main institution you represent. Thank you. We will now take the first question.

28:23 We will have the first question from Huota Haipong Asset Management.

28:33 Can you hear me? Yes, we can hear you. Thank you, senior management, for giving me the opportunity to raise the first question. My question is for Mr. Wang Xiaoqi. You just assumed to be the president of CNB. I have a very simple question for you. For this time, as you assume your new role, what is your actual inner thought? We all know that you have assumed your new role for around half a year, you have done a lot of work. So I would like to learn from you. What about your mindset? your idea about the future development of CNB's business. We see CNB in second quarter, your revenue, your profit all accelerate.

29:23 Will that trend continue to the second half of the year? Thank you for your question. By the end of April, I assume my new role to be the president of CNB and after that, First of all, I feel strong responsibility, which was reflected in the following aspect. Well, first of all, CNB has been managing 13 trillion asset sites. It shoulders a very strong responsibility and mission. And second, the bank-wise development is highly relevant to 120,000 CMB staffs.

30:16 life and how could we inherit the good experience and the results from generations of CNB staff's hard work and stick to high quality development? And third, the capital market. Our investors have attached great importance and recognition to CNB. How do we live up to their expectation? How do we live up to what they expect from us? It's also a very important issue for us. I can recall an individual investor from our shareholders meeting that their funds are coming from their everyday lives. So making good investment is what they want. We should guarantee them with good results and deliver to our investors so as to guarantee their return.

31:19 And of course, from all these three aspects, these are the most important aspects. We also have other dimensions. We are faced with important development opportunities. And of course, there are challenges ahead. I have been discussing with many investors in different scenarios.

31:45 Challenges, on one hand, are coming from the banking industry, which is not a common challenge faced by all banks, for instance, the low interest rate environment. They have been posed challenges to the banks and also the challenges they've got to new developments. And another thing I mentioned is that as the economic growth rate actually moderates and also the whole society's finance and structure are experiencing changes, the demand for the credit demand also shrinks.

32:22 This is also the PBOC had mentioned in the forum in Shanghai that the total loan growth demand, the loan demand is also in a slow downtrend.

32:37 For the second perspective, for CMB, we have also been quite special in our own loan structure.

32:47 As you all know, we are a bank. that retail business stays in our major line and extensive wealth management is a very important strength of ours. In such a phase where retail credit assets, retail business facing challenges, I believe this challenge on one hand is coming from the household balance sheet re-evaluation and elaborating. This is a special phase we have.

33:37 And for the second perspective, some of our households, they're having challenges in their willingness to repay and also their capability to repay. And thirdly, The joint stock risks also, joint debt risk also demonstrate in such an environment. So for CMB, for those retail business are under pressure, much more pressure compared with our peers. So combined with the low interest rate environment, combined with our over 50% of retail loan among our all loans, and also the rather smaller room of liability caused control compared with our peers, I think all of these factors combining together are posing stronger challenge to CMB compared with other banks.

34:47 But for us, I think on one hand, we need to follow the principle, the pattern of the banking business development. For us, I think that we should always stick to the philosophy, the customer-centric philosophy to be back to our origin and take customer as our center. And secondly, we should balance risk, return, and maintain a good management over the two factors and stick to good asset quality and from a commercial bank perspective, we need to combine with our own strengths, our resources, what we are good at. I want to especially mention the two points.

35:45 One is that Even though we are faced with challenges, how do we leverage our strengths in extensive work management business? We can consolidate our characteristics as a retail bank. We cannot give up our own strengths and characteristics just because of the change of external environment. On the contrary, as the market changes during the process, we should even more We should even learn better about the environment and seize the opportunities and continue to foster our capability and grasp the development opportunities among the environment.

36:37 And second perspective is that we have 3.8 million corporate clients and over 230 million retail clients. And we are having rather strong space to further dig deeper in these client groups. We need to take a customer centric perspective to understand better about their demand. Where is their demand? Where is their pain point? And for CMB, we can understand better about them and provide Corresponding service to these clients to match their needs, no matter their retail clients or corporate clients, and to carry out our mission to serve the real economy and to serve the sense of fulfillment and their investment gains of our customers.

37:36 And of course, as a commercial brand, We should seize the pulse of this time to seize the trend of development and to seize what we should seize. To see from current situation, the senior management has discussed the following aspects, directions of development. These are also what we think that we should grasp and cease to be the characteristic of CNB's future development. The first thing is extensive wealth management business under the low interest rate environment.

38:25 How do we understand better about customers' demand, their demand of preserve and increase their and we also see the change of asset structure of every household of the Chinese residents. For the first half, retail AUM increased by 8% to 18 trillion yuan. We can see that in deposits, insurance, trust schemes and mutual fund products, these are all demands coming from our clients. For CNB, we have already accumulated capability recognized by the market and for the next phase, we will further strengthen our capability to take customer as the center to increase the sense of fulfillment of our clients and to increase also the experience of our client.

39:24 We take these aspects, our target to enhance our capability of providing asset allocation to our clients. and also provide companion service to our clients as well. This is what I would like to discuss about the first capability. Besides retail, extensive wealth management also improves wealth management to corporate clients even though The scale of wealth management service provided to corporate clients is not as big as those we provide to retail clients, but it's also growing at a very fast pace. For the second perspective, I think we need to seize the opportunities arising from the new time and the new environment.

40:15 That is SciTech Finance. We think that under the backdrop where the government encourages us to develop technology and also the capital market are providing stronger support in this process. And of course, financial institutions like us should not miss this great opportunity. It's not just missing opportunity, it may be a time that you miss. And of course, Probably every financial institutions are also practicing and trying to seize this opportunity. And how do we further consolidate our capability that is more systematic based on our past cumulative experience? I think on the one hand, we need to deepen our understanding towards industries.

41:20 For every area in technology, It actually requires us to have strong knowledge, deep understanding in different areas, segments in the technology business. How to further cultivate our capability. It is what we need to further dig deeper and cultivate no matter in the head office or branch level or subsidiary. It is also It is also building based on our professional operation that is industry-based. Only by understanding better about the future of a company could we deepen the development of technology finance.

42:13 And for the second perspective of how do we better Promote the development of technology finance, we should give into full play of our license of full license capability. I understand that for commercial banking business, the high growth and also high volatile characteristics within technology finance, it cannot be satisfied by the traditional credit business model. Because the return coming from loan business is rather certain. So I think that the two aspects within the business are actually mismatched. So how do we better satisfy the demand of technology finance?

43:01 We need to further leverage our full license capability, our multi-license capability. That is what we need to think further for the next phase. We have one plus one plus eight license. One is commercial banking, and the other one is our overseas commercial banking. And the other eight are investment banking, investment management, AIC, leasing, and et cetera. So for CNB, within these eight licenses areas, they are having a rather a good market share and also market influence compared with CNB's commercial banking business within its own area. So I think we should fully leverage what we have been cultivating, what we have been accumulating and to better serve our nation's big strategy of developing technology. And within this trend, we should seize the opportunity and further development along with this trend.

44:17 And for the third perspective, I would like to mention is that about our international development. Well, logically speaking, our overseas branches are not having as many outlets as the big state-owned banks. So how do we reflect our own characteristic in international development? Especially how do we better leverage our Hong Kong institutions? I think that these two ideas are what we need to think further. And the fourth aspect is that in the intellectual intelligence era also bring us new opportunities for banks. It might not be Obviously or quickly reflected in our balance sheet or even at recent faces, they will be reflected as expenses or costs.

45:15 But for us, we think it's the right thing to do. How do we use a more scientific way to grasp the intelligent technology meant a lot for a commercial bank? It could help us to enhance customer experience, enhance our internal efficiency, and to conduct even more accurate risk management, and also to further accumulate our knowledge. So this is for the development of technology has always been a very important input. Long ago, we have been written that no less than 3.5% of our operating income will become the IT input.

46:05 And for the next phase, this is written in our articles of association. So we will, we are having plan for developing our intelligent bank. And then later on our chief information officer, Mr. Joe will give further introduction. And last but not least, We believe it is also an opportunities given by this era. And also another mid to long-term momentum is that during the development of Chinese economy, we should better give the full play of our branches in key areas.

46:51 According to the senior management's analysis for the first half, Recently, I've just reported the figure of development of branches in key areas. They're having a better growth rate in the average level of the banks, all branches. So we need to stay close to the local industrial policies. Stay close to... Industries that are built into our understanding of risk and our preference and stay close to our clients including corporate and retail clients.

47:36 This is the this is what we need to do to further develop the key branches branches in key areas so that they can contribute more to the banks operating income and also profit. This is we need to For the next phase, we need to further foster our characteristics and strengths so as to establish CNB's own driver of future development. Your last question is about the growth of the first half. Will that trend be continued to see from the senior management's level? We will strive. We will make every effort.

48:23 This is also what we want to deliver to the market. We aim to strive to maintain a stable and steady progress to deliver such results to our market and make every effort to maintain our good asset quality to deliver such good growth momentum to consolidate what we have achieved to reflect better results to the capital market.

48:53 Thank you.

48:58 Next question, please. Next, we will invite Ma Kunfeng from China Securities.

49:08 Thank you.

49:10 I'm Ma Kunfeng from China Securities. Thank you, President Wang, for the introduction. We are clear about the strategic outlook. I want to further ask my question on retail banking business. CNB has the best wealthy retail customer base in China banking industry. So in areas such as consumption scenarios, basic account services, wealth management, how will you continue to enhance the exclusivity, uniqueness and premium experience of product and services to these clients? thereby avoiding simple price wars and marketing wars so that we can further improve customer loyalties and returns.

50:02 Is there any indicators or metrics we can track to monitor the progress and effectiveness of these efforts? We would like to invite Ms. Wang Ying to answer this question. Thank you for the question. I think this is a very good question. You not only mentioned pay attention to wealth management, but also pay attention to customer consumption scenarios, including bank account services, which are integrated financial services. This is a direction that CMB is paying efforts to. to serve the client's basic needs in deposit, loans, and remittance.

50:48 Regarding these comprehensive financial services, we do not target only wealthy customers, but the whole customer base of China Merchants Bank deposits. has been elaborated to the extensive wealth management. We will start from the client's sense of experience. We select good products and construct a long-term stable asset allocation system. Regarding loans, which means we will satisfy clients' demand in different financing to provide the needs in households, business, et cetera. Bk Co H A convenient and rapid payment system to cover all scenarios such as elderly caring, social insurance, etc. So that client can use one account to manage all kinds of businesses.

52:02 Make CMB card more is a very good to use this concept to be more widely promoted. While the customers have more diversified requirements, in the most of the clients are entering a phase of material wealth accumulation. So they have diversified from different dimensions that requirements has been wealth succession and wealth protection and where the bonds meet. Under such kind of complexity, we have to take into consideration more factors. and provide more customized services and more differentiated services to these wealthy clients. We provide one plus and comprehensive and scenario-based service solution, which is a one-on-one relationship managers and plus an expert teams for long-term companion to fully respond to the client's expectations on integrated services.

53:12 In product offerings, we would opt for all-ground or category product offerings that serves across multiple accounts and multiple currencies, etc. Golden Sunflower and above customers' growth in the past three years has accumulated to 55% and the CAGR has been 13.26%. Another point I would like to discuss with you is that we have always paid high attention to the upgrade of retail client service model because retail customers is a 100 million volume based customers and there are a lot of categories of retail banking businesses, and there are multi-dimensional services involved in retail banking client services. So how to match client's requirements and our product offerings? This is a very important question.

54:24 In the past, we used three years to basically complete the human plus digital intelligence new model in retail finance. and completed our digital rematching for clients and channels and product offerings. We have three dimensions to support us. First, our customer centric value and our strong delivery capacity. from the head office to branches and to sub branches, as well as our strong support of FinTech. And this is a main support.

55:10 In the next phase, our retail banking service model will deeply involve artificial intelligence and transfer for people plus digital intelligence to people plus AI agent. Regarding metrics, I think there are many indicators to pay attention to. For example, the number of customers holding wealth management products, the allocation of customers, active users, etc. and the customers covered by our trade system has increased by 55% for the past three years and the compound annual rate has reached 13%.

56:04 Our monthly active users has increased by 31% in the past three years and 9.36% and the 5.14% of the CAGR of the past five years. So as for the indicators, AUM and client base are the most fundamental indicators to look for. Structure, volume of these indicators are also something that we're paying attention to. Our AUM increased by 52.12% over the past three years and retail clients increased by 24.54% for the past three years and the CAGR was 6.72%.

57:05 Overall speaking, we use integrated service capacity to serve our clients as long as we have our retail customer base or even though their demand and preference changes across periods. However, for CMB, their trust for CMB and their choice for CMB will not change. Next question, please. Next, we will invite Xu Ran from Morgan Stanley. Thank you for giving me the opportunity. I'm Xu Ran from Morgan Stanley. My question goes to Mr. Wang Xiaoqing regarding loan growth. We see that loan growth has slowed to below 5% year on year. And at the shareholders meeting, you mentioned that the loan growth rate around 7% would be appropriate.

58:01 What is the management's long term consideration on loan growth? And previously, we think that CMB is the retail oriented bank and in retail sector, we see that risk are accumulating. So what are your considerations regarding future portfolio allocation? Thank you for the question. Indeed, as you mentioned, and also mentioned in the presentation previously, the bank's total loans and advances reach 7.45 trillion, up by 4.73% year-on-year. In this process, we see that the difference between corporate loans and retail loans, the corporate loans increased by 13% while retail loans increased by 0.05%, excluding corporate card.

59:04 So we are seeing corporate loans growth is outpacing retail loans. This is broadly in line with the market trend. You've just mentioned the number 7%. This is mentioned in a previous investors discussion, regarding our expectation, which is 7%. From actual operation, we think that currently is around 5%. So in the next half of the year, we think that the growth rate would be relatively the same.

59:50 There are two reasons. Firstly, the external environment. The speed of loan growth is slowing down, and the asset quality is improving. This is the choice of our own decisions. With insufficient credit demand in the market, especially the retail loans is facing periodically high risk, we do not blindly pursue scale expansion. We emphasize the philosophy of a balanced development of quality, profitability, and scale.

1:00:39 In recent period, what we discussed with the retail banking business sector is that we should, regarding the retail banking structure and as a quality, we have increased our requirements and we do not pay very high emphasis on scale expansion so that our team of retail banking have sufficient attention on the asset quality of retail loans. Even though I believe that from many analysis, the Q2 growth is lower than the previous numbers, From the perspective of commercial bank operation, we think that we hope to pay higher attention to the challenges and adopt long-term perspective and conduct proactive management.

1:01:51 Secondly, I would like to mention that about low-yield financing and LC negotiating business where the volume is shrinking and we are implementing proactive management. The overall trend of demand is not changing very fundamentally. and if we are not seeing very good signs of improving trend, the overall trend of CMB loan growth will still maintain.

1:02:42 Retail loans, in terms of retail loans, we will continue to consolidate our quality customer base, effective control and risk, and then we can, have a good market share. And in terms of corporate loans, we focus on key areas, key industries, and key industries featured by six nets so that we can achieve growth in both volume and quality and increase our quality and effectiveness of serving the real economy. Thank you.

1:03:22 Next question, please. Next question is from from Goldman Sachs. Thank you for giving me this opportunity. I have a question for deposit. So recently we see that some major banks they're resuming the issuance of a large denomination personal CD. I would like to learn that whether it has cast any influence to our liability cause and I would like to understand the repricing of deposit and also the trend of name of CMB. The question will be taken by Mr. Peng. Thank you for your question. I think for the issuance of large nomination CD will have three purposes.

1:04:08 One is based on the maturity management to the duration to match the duration and liability to absorb the long duration liability to maintain balance sheet management and second liquidity management. I think it's also the second purpose and the third purpose is relevant to provide the product and service for a client's demand of having such kind of long-term deposit product requirement. But based on our understanding, five-year large-domination CDs issuance, the total size is limited and the cost is rather low.

1:04:55 So based on our understanding, it will have limited influence on the bank's NIM. But for CMB, Our duration liability duration is appropriate and balanced. So in market risk, we don't have quite strong requirements on the large denomination CD and we have good liquidity. So for temporarily, we won't need the issuance of large denomination CD to supplement our liquidity. If in the future we need to take such action, it will be out of the purpose of providing relevant parts of products required by our clients.

1:05:42 Of course, we will conduct further analysis and understanding that whether or not we have actual demand from our clients and whether the demand should be satisfied by our product supply. So we are also doing such kind of analysis and research. and also for those products that was that was further relieved we need to conduct some rollover product we will also Start from the perspective of management and also from the perspective of a liability management. I think the influence is rather limited.

1:06:28 The next question is from Martin King from what I had on security. Thank you, senior management. I am Martin King from what I had home. I have a question about the overall CNB asset quality. What's your point of view and what is the major risk that you see and what kind of coping tactics, measures that you have been taken to these risk areas? The question will be taken by Mr. Xu. He is in charge of risk management. Thank you for your question. For the first half of this year, We have stick to our prudent and stable risk management culture and prevent the risk in key areas and increase our level of risk management.

1:07:25 Our asset quality remains to be stable and having three characteristics. One is asset quality maintains stable towards a good momentum. By the end of June, our MPL ratio was 0.94% remain flat from the end of 2025. This is quite a good level. The second is that we stick to a prudent and culture risk classification asset asset asset classification loans overdue for 60 days and 90 days to MPL was 1.23, which was a good level among our peers. Third, we have abundant provision.

1:08:16 By the end of June, under the group's calibrate, our coverage ratio was 385%, having a strong compensation level. You have been paying attention to our understanding of risk areas. I would like to make some classification according different segments. First, I would like to talk about corporate loan. For the first half, our MPL, corporate MPL ratio was 27.4 billion yen. Corporate MPL ratio was 0.78%, down by 0.1 percentage point.

1:09:10 Corporate asset quality actually improved. For the first half, the MTR formation ratio of corporate loan was just 0.16%, stretching to see from a longer cycle CMB's corporate loan asset quality continue to improve, remain stable towards a good trend. For the risk areas that we pay attention to, in terms of corporate loan, the future risk will be lying in real estate credit perspective.

1:09:56 By the end of 2025, We have 14.5 billion of MPL loan in the real estate area, which represents a 4.47% of MPL ratio. So even though these two figures remain at a high level, relatively high level, we are paying a very cautious attitude towards these two figures. For the real estate market, we still see some divergence within the market. For some clients with rather not that good performance and qualification, they're having quite poor asset quality.

1:10:51 So for this area is what we pay special attention to, that is the corporate real estate. We're taking measures as follows. We continue to lower the proportion of corporate loan, corporate real estate loans within total loan. Its proportions was now 9.3%, which was lower than the end of 2025, lower by 0.45 percentage points. We will further optimize the structure of property loan Corporate Property Loan. We focus on loan disbursement in Tier 1 and Tier 2 cities, and 85% of them are allocated to Tier 1 and Tier 2 cities.

1:11:45 And to see from client structure, over 80% of corporate property loans are granted to local and central State owned enterprises and also very qualified private enterprises who are having stronger capability to paying their debt. And the third perspective is to maintain strict management was management was the projects. We have conduct close look fund management was different projects. And in the fourth perspective, we continue to dissolve the risk within the area and speed up the disposal and enhance collateral enhance guarantee and enhance the other disposal methods taken by our staff and also last but not least to enhance our provision level to make sure that The risk compensation level within the corporate real estate sector is sufficient.

1:12:56 The provision level is over three times than the average level of the provision for the corporate loan. Looking into the year 2026 with many policies introduced by different regulators, we are seeing that the market, the real estate markets are seeing the trend of further concentrating in the risks. And the risks tend to be showing a momentum to be contained. But we think that even though there will be some individual event of risk outbreak, but generally, the market is now in a stabilizing process.

1:13:43 The second perspective I would like to mention is about retail loan. For the first half, the retail MPL loan amounted to 42.8 billion. The MPL ratio was 1.16%, up by 0.1 percentage points. Special mention loan. Merchants Bk Co H Merchants Bk Co H Merchants Bk Co H As a quality indicators of the retail loans are maintaining at a relatively good level, but they are still under pressure. And the second, retail loan accounts for a high proportion in our loan book. So it's natural for us to having stronger pressure. Of course, some of the pressure is coming from the market friends.

1:14:58 And the other side, I think the pressure is also coming from the expectation from our investors and also CNBs pursue it to be the best retail bank. So currently, under such backdrop of the economic Structure transformation and also the downward trend of the real estate market clients are under influence in terms of their capability of repay and also their willingness to repay. And also we are having joint debt risk in the consumer loan area. So we are still having the idea that the retail loan risk is an upward trend. Of course, we have been taking measures to maintain the risk level of retail assets to What we have been doing is that we have adjust our budget and target of retail loan business. And in our evaluation and also internal encouragement, we even pay special attention to the quality of retail loan and also control the formation of retail loan, retail MPL loan.

1:16:12 And of course, we also see some positive signals within retail loan asset quality for the first half. Excluding credit card, our retail loan, we are having information of 247 million information of personal loan. That is retail loan excluding credit card. Retail Credit Assets, the momentum of its MPL new formation, momentum has been curbed. And the second signal we see, our balance loan, that is our March loan, for the first half of this year, the MPL balance was down by $5.9 million and down by 0.03 percentage points and realize the full decrease in the balance and ratio of our months long for the first half of the year.

1:17:19 And of course, good signals are also showing in credit card business due to some special reasons for adjustment of the asset classification within the credit card business. We have been taking stricter measures to conduct asset classification so that we see some uptake in the formation of credit card NPL.

1:17:45 Overdue loan ratio was down by 0.1% point in credit card business for the first half. An overdue loan ratio and balance also both decrease in terms of credit card loan.

1:18:02 Of course, we have to note that the credit card assets are still under pressure in terms of its asset quality, but I believe it will still be a very important loan-granting direction for us to pursue. So in the following days, we will follow the market trend, we will emphasize both on quality and size, and we will give the foreplay of the strength of our customer base to increase the threshold of customer onboarding. And third, we will dig deeper into our existing customers and to prevent the risk coming from joint debt risk. And fourth, we will conduct early identification, warning, and also disposal and etc.

1:18:56 We will enhance our systematic risk management capability to strengthen the leverage of AI or data and also to strengthen the cultivation of our talent team. We will further strengthen the management over the asset quality of retail assets. We wish it would be developing in a stable momentum.

1:19:23 Next question, please. Next, we will invite from JP Morgan for the questions. Thank you for giving me the opportunity. My question is regarding corporate banking business. We notice that corporate banking revenue and profit are outperforming those of retail banking. What are the growth drivers and what is the outlook going forward under today's macroeconomic situation? How can we maintain good corporate low-end asset quality? Thank you. Thank you for the question. We'll invite Mr. Lei Caihua who is in charge of corporate banking business to answer this question. Thank you for the question.

1:20:13 You mentioned about the growth of corporate banking in the first half of the year. Overall speaking, our growth is stable due to in a backdrop of the market environment. And we have four growth pillars. We have achieved good operating results. In the past decades corporate banking operation has formed a differentiated advantages as compared with our peers. The keys lies in the number and quality of our customer base as well as our client experience and clients coverage regarding our digital products.

1:21:04 The aforementioned two points generate three points. Our cost of liabilities is outperforming our peers. And our investment banking and cross-border finance business is featured and satisfied our clients' needs as generating non-interest incomes. Fifthly, the fourth pillar growth drivers of CMV corporate banking, especially wealth management, asset management, interbank, Coordination has jointly formed a growth. Sixthly, our good asset quality. Next, China Merchants Bank will continue to, in terms of corporate banking, we will focus on the six aspects to forge our differentiated advantages.

1:21:57 Firstly, leveraging digital empowerment, we will further strengthen our client service system. Currently, the classification and segmentation-based client operational model will be continued. And this is a core for our customer-based operation. We will enlarge our client's loyalty and increase our income and low cost liability. Compared to peers, we have a better advantage in the volume and quality of our client base. For technology, evolving, growing clients, we should address their needs in operations and become a principal bank for the clients.

1:22:54 Next, we are in terms of operation. We need to continue to optimize our services. Secondly, to improve our operational operation, professional operation capacity and increase our asset originations. In terms of, we're focused on the new emerging quality clients and six next clients, et cetera. We will have specific industrial investigations and improve our risk investigation and forward looking judgment on their demands and impose differentiated credit policies so that we can obtain assets allocation, which is with controllable risk.

1:23:42 We also strengthen to build industrial ecosystems. We have already covered 36 industries of professional investigation. Thirdly, we will improve our investment banking and commercial banking integrated service systems. First, we would improve our digital products including cross-border finance investment banking transaction banking etc so that we can enhance customer experience in terms of customer experience we are leading the industry and we should maintain our advantage so that we can deepen our client loyalty know better our clients and forge stronger ties Leveraging high-efficiency synergy, we will forge a capital ecosystem to provide our clients with more diversified products and increase our M&A financing and direct financing, increase our FPA to improve our income. Next, we will improve cross-border finance business management.

1:24:58 serving Chinese enterprises growing global. In terms of customers of BOP, BOP value, cross-border financing, as compared with our comparable peers, we are leading in our position. Next we will... improve our synergy capacity in cross-border institutions so that we can help the Chinese enterprises going global, help their products going global, and investment and financing going global so that we can provide better services for these clients. Fifthly, we will increase the coordination between the four major business segments The coordination of these four segments are the feature of CMB, especially the development of growth management business, as well as the other segments.

1:25:57 By leveraging this coordination, we can achieve deep operation of these different client categories. Next, we will continue to forge differentiated processes and mechanisms Sixly, we will use AI to empower our business. Firstly, we want to increase our response speed to our clients and increase our risk management capacity and internal operation efficiency, as well as integration and synergy capacity. That is my answer. Thank you. Next question, please.

1:26:46 Next, we would invite Wang Sianshuang from Bolian Mingsheng Securities. Can you hear me? Yes. Thank you. I'm Wang Sianshuang from Bolian Mingsheng. First of all, thank you, CNB, for delivering stable performance. And under such kind of circumstances, you have good performance in operation results and see an increase in market price in each share and each share. My question is regarding asset and liability. I want to ask the management, how do you, what is your outlook on the meme trend?

1:27:37 The second is about FinTech. We noticed in the interim report, you elaborated a lot on AI and we believe CMV is leading the industry in AI deployment. The market is not having a very direct feeling of the AI application.

1:27:57 Is there any tangible impact on the business?

1:28:00 Can you give a few examples so that we can have more concrete feelings?

1:28:04 Thank you for the question.

1:28:07 First, we will invite Mr. Peng to answer the question. For the second question, we will invite Mr. Zhou for the answer. Thank you for the question. Regarding need changes, This is a heated topic of the market. Since this year, in the banking industry, the name is becoming stable. However, there are some divergence in this regard. In some banks, we are seeing a rebound, but the others we are still seeing decline. As for CNB's perspective, currently, We are still declining. However, the decline is rapidly narrowing. In the first half, the NIM was 1.83%, down 5 bps year-on-year, as Q2 compared to Q1, 1 bps lower.

1:29:00 We are declining, but the decline is narrower. And it is being stable. As for CMB, we think that the main factor lies in asset side. First, the repricing factors have been being fully displayed. This is a common factor impacting all the banks. And also we are facing insufficient credit demand, which drive to the downturn of asset pricing. And secondly, for China Merchants Bank.

1:29:39 For China Merchants Bank, retail banking, especially credit card banking assets has a high proportion.

1:29:46 Under current circumstances, these assets has been slower in growth, so posing pressure on our name design. I think for CMB, there are common factors as well as factors that is applicable for CMB. So, overall speaking, no matter how different each bank changes in their NIM trends, we can come to a conclusion that the NIM is facing less pressure of decline and gradually rebouncing. For the banking industry, in the future, we are still facing pressure of further decline in NIM.

1:30:34 The main factors also include there hasn't been a very clear turning point of insufficient credit demand. In terms of deposit repricing, it is basically finished. Therefore, the downturn of cost of liability has been slowed down to the impact on NIM. And in terms of asset quality, in terms of property assets, it hasn't been fully recovered. So we are not seeing very rapid rebounds in this area. In terms of NIM, we are still facing pressure.

1:31:24 From my personal point of view, The most difficult time for name decline has already passed. We are also faced with many preferential factors. For example, under the current macro economy, especially our good monetary policy, scientific monetary policies, as well as the application for reasonable competition, our competition will be more reasonable, which is a good factor. for our name as well. And secondly, but when repricing is expected to finish within the year, if there isn't large amount of rate cuts, we think that lower pricing is also turning gradually stable.

1:32:16 So my point of view is that although we are facing a certain extent of pressure in name, we will gradually enter a base, which is more stable CMB will continue management of asset liability and make good arrangements as a structure. For example, on the premise of good asset quality, we will promote the reasonable growth of retail credit loan and promote a growth of retail loans, which is considered appropriate. And we will strengthen cost management for liabilities. In terms of deposit, we think that quality is more important than volume, so that we can contribute more to the stabilization of NIM.

1:33:14 In the beginning of the year, we raised three targets. First, to narrow the decline of NIM, which I believe can be done. Secondly, maintaining market leading position, and we are confident about that. And thirdly, We strive to achieve stability in NIM. Thank you. I'll answer the second question. Intelligence transformation is the trend of the time and also an opportunity for CMB since 2024. We... help leverage AI to help CNB transformation.

1:34:02 We have intensifying our efforts in that regard. In our employees daily workflow, AI has been implemented and playing effect. And the working items we identified with AI empowerment has been over 1000. We have achieved 13.8 million equivalent employee working hours contributed by AI. AI has been playing its impact spanning front, middle and back offices. You mentioned that you hope to learn about what are the specific influence to our businesses. I want to give you two examples. One, our Golden Sunflower client, Currently, RM's assistant is saying good effect of AI for Golden Sunflower RMs.

1:35:08 We are also seeing that all of the bank-wide relationship managers for Golden Sunflower clients are using AIs and achieving possible impacts In the first half of the year, the average effective outreach calls per RM increased by 14.65%, with average transaction value per client increased by 35.82%, generating good effects. In terms of corporate credit, currently 90% of the content in the due diligence reports for small business can be generated, assisted by AI.

1:35:54 And in the in-landing stage, AI can help with extraction of key information and assistive decision. So the average service time is reduced from 36 hours to 2.72 hours. And the tender guarantee can be issued within minutes. And AI, the adoption rate of AI monitoring results for low-end has been 68% and the RMs can resolve risks in advance and the alert triggering time has reduced by 45 days as compared with traditional mode. And we are having full range deployments regarding this area.

1:36:41 Thank you. Next question please. Next question is from

1:37:06 Mei from UBS. Thank you, senior management for giving me this opportunity. I'm Mei from UBS. I have a question about the dividend payout ratio, the dividend policy. We can see that the state-owned banks, they increase their interim dividend payout ratio by one percentage point from 30% to 31%. Well, for CMB, you maintain at a 35% level. However, under such environment, will CMB consider to further increase your dividend payout ratio? And for your corporate loan business, you have seen five good increments.

1:37:51 Will that consume a lot of capital? And in the future, how do you plan your capital position and RWA development? Thank you. Thank you for your question. Welfare China Merchants Bank, our dividend payout event. We have been authorized by the shareholder meeting and also the board of directors. We have rather corresponding arrangement. We understand that the capital market has been paying special attention to this matter. We have also communicated with our investors to understand better about the capital adequacy ratio and also the RWA growth rate and capital position. In the end of June, we have held a shareholder meeting in answering A question about our market value arrangement.

1:39:00 We have provided relevant answers. We will, based on our capital adequacy ratio, to coordinate the asset growth, the asset return, and the financing of capital and also dividend payout management and also the market recognition and to finally realize two targets. One target is The risk remain under control for the bank's operation and for the second perspective to value investors and shareholders requirements, their demand and provide return and provide value creation for our shareholders.

1:39:50 Our mindset and the efforts we made are also based on what we have listened to our investors and shareholders. And based on these considerations, we have making plans in our RWA growth, in our capital adequacy ratio and dividend payout ratio. We have always followed a one principle that is to balance the development of both light and heavy assets and also arrangements. Under such guidance, I think we can understand this matter from four perspectives. One is to guarantee the intent of our return, to optimize the allocation of our resources, enhance the utilization rate of our capital. Second, scientifically manage RWA growth rate.

1:40:54 means that we need to be more efficient in using our capital and reduce the idle occupation of capital. And third is what we have always been adhering to, that is the internal generation of our capital, indigenous generation of our capital. And fourth is the recognition given by the market of the value of a valuation of C and D. to maintain our good market image to make sure that we can have a better market evaluation and deeper recognition from the market. We have multi-dimensional consideration and thoughts. We will take full consideration of the opinions from every perspective, from investors, from analysts, They're also serving as very important channel of comments. And also, we should also be aligned with our own operation. Thank you for your question.

1:42:05 And next question, please. Next question is Gary name from HSBC. Hi, senior management. I am Gary from HSBC. I have a question about the income and AUM. We see that your fee income increase, accelerate in the second quarter. Will that trend continue for the next half? Your retail AUM reported quite fast growth rate. which was annualized to 15% faster than the deposit growth rate. I would like to understand what is the underlying reason behind what is the underlying driver of these phenomena. And at the same time, we see that in the wealth management income, the driver has been changing. Most of the, they are driven by the agency distribution of mutual bond and wealth management products. That's from bank assurance products.

1:43:06 Well, in terms of future development, could you leverage the growth from mutual fund and wealth management product to offset the decline from bank assurance? Thank you. Thank you for your question. It will be taken by Ms. Wang Ying. For the first half, CNB's AUM is growing at a good pace. are hitting a record high of 1.63 trillion yuan, 7.96%. The road management products are giving them full play. And we have also seen new road drivers. In the structure, non-deposit agent accounts for a higher proportion, excluding the third-party market value. So 85% of the growth are coming from non-deposit I think that is highly relevant to the high growth rate of our equity-related products, for instance, mutual bonds, third-party deposit repayment, trustee, etc. They have all realized quite good growth and also bring us the change in the structure of growth.

1:44:25 And of course, in customer base, We also see the performance in the growth of both some dollar and above customers are having higher AUM growth rates compared with the same period of last year and also that the average level of all customers. In wealth management scenarios, for instance, pension, hospital, business scenarios, we also see faster AUM growth. In income contribution, wealth management relevant AUM yield has made better return compared with other type of products. So you just asked us what is the underlying logic behind our A1 road. I would like to conclude in the following aspects.

1:45:14 I think it is relevant with CNB's capability that we have long accumulated in terms of load management capability. It contains three tiers. Co-Founder Co-Founder Co-Founder Co-Founder

1:45:51 But for us, we understand that AUM growth is not just relevant to wealth management business. It is more relevant to all retail

1:46:01 banking business. It is also closely relevant to settlement and payment. Our debit card, our credit card, whether it is of good use, whether it is safe, whether it is convenient, whether it is the first choice for our users, Well, for our clients, they might not be using CMB for purchasing wealth management products only. They also would like to make transactions within CMB. They would like to use the CMB account to be the principal settlement and payment account. They are willing to buy wealth management products within CMB. They would like to use credit cards with CMB. They would like to use debit cards with CMB. I think behind the AUM growth, Indicators cannot be seen or analyzed isolated. They are working with each other as a whole. As I answered the last question, the most important thing is we have a strong support, such a large customer base, such a large talent team, such a diversified channels.

1:47:08 How do we leverage a strong technology infrastructure through Merchants Bk Co H Next, we invite Zhang Shuangshuai from CICC.

1:48:15 Thank you for giving me the opportunity. My question is regarding management. Previously when decision management is doing roadshows, you mentioned synergy a lot. This is a very important concept because currently the market is limited and many banks or institutions are seeking profitability from management. By various metrics, PMB is a leader in synergy. So I want to ask the management, how does management achieve effective synergies across business lines, among branches and subsidiaries, not just in works, but in practice? How to Maximize cost and resource efficiency.

1:49:21 That is my question regarding management and synergy. Thank you for your attention on synergy. This is... I have a question that I would like to address on. As you mentioned, on every level of CMV, including our subsidiaries between branches, between head office and branches, across business lines, we have achieved results in synergy. There are a few supporting factors.

1:50:08 There are five perspectives. Firstly, we have set up a mechanism for synergy. For example, regarding cross-institutional synergies, we have designed the dual attribution and share remote mechanisms. This design is helpful to the effect of synergy. Secondly, the design of performance driven incentives. In our assessments, we have put in the assessments and given great attributes to Synergy. For different institutions and head office departments, we have given assessment indicators for Synergy. Thirdly, model innovation.

1:51:04 is an institution needs a mature model for synergy. We have a mechanism incorporated investment banking, private banking, venture banking, scientific research, et cetera. So based on this very effective model, different institutions can have good collaborations. Fourthly, the corporate culture. Synergy is not a task that is promoted with administrative forces, but a corporate culture that is internalized into the bank.

1:51:52 So many digital business lines and institutions will proactively embrace the concept of synergy in CMB. This is my feeling. The fifth point is about organizational enablers. Our organization structure is beneficial to the operation of synergy mechanism. Many departments, many structure designing is based on the consideration of synergy. For example, we have set up a synergy committee Bankwide and President Wang Shaoqing is the head of the committee so that we can promote synergy via organizational structure.

1:52:45 I think the above mentioned five perspectives are a very good and very important factor to promote successful synergy within CMB. Apart from the five mentioned perspectives, there are also two extra factors. Firstly, we adhere to and pay high value to the synergy concept, including the board of directors as well as our senior management. Each CMB employee would have such kind of concepts in mind. Secondly, our data system and system design is a good support to the measurement of synergy effects and which contributes to the performance incentives.

1:53:37 This is very important for a synergy mechanism building. So we need top tier, we have top tier awareness and fundamental technical support, system support. This is my question, this is my answer to your question, thank you. Thank you, Mr. Peng. Due to time constraints, we will now take the final question. To ensure the rights of individual investors, we have collected questions from individuals, as most of them overlap with the questions we just mentioned. Now, I would like to choose one representative one for answer.

1:54:26 Now please read out the question. The question is, the country is encouraging commodities and enterprises going global. CMV began its internationalization efforts 20 years ago. My question goes to Mr. Wang. What is the future direction of CMV's international development strategy? Are there any adjustments compared to the past? Are there any specific targets for international development?

1:54:55 Thank you for the question.

1:54:58 International development is an important component of CNB's 15 five-year strategic plan, and also one of the transformation initiatives of our four initiatives. Regarding the background of internationalization, one of them is the Chinese enterprises going global. and also the international development of Deming B. Another factor is the periodical interest rate gap between domestic and international interest rates. And some enterprises can benefit from the pricing gap. China Merchants Bank pay high attention to international development in terms of In terms of global presence and development presence, we have one subsidiary bank in Hong Kong and GMB International.

1:56:09 And we have six overseas branches. This is our overseas presence. When I mentioned about the growth drivers for the medium and long term, I also mentioned international development. In terms of global presence, we do not have as much business presence, business outlets as compared to the large state of banks. So we have to adopt practical measures. What we hope is that we can better serve Chinese enterprises' global operations. Especially, we hope to do well in cross-border finance services to these clients.

1:57:02 And also, we also serve are the foreign enterprises who are having their presence in China, leveraging our cross-border finance service system. Even though we do not have as many business outlets globally, cross-border finance of China Registry Bank has formed advantage for China Registry Bank. Many clients have given us feedback that our cross-border finance team is very professional and have delivered very responsive services. We hope to consolidate these advantages.

1:57:48 We will fully leverage the current institutions we have. In the working conference for the first half, our development pattern will be the one plus one plus five Development. First one is head office, which is the strategic guidance. And the other one is our institutions in Hong Kong, which is a very important business hub. Bk Co H

1:58:44 is the China Merchants Bank global custody center, syndication center, and other business centers.

1:58:56 GMB will continue to increase resource input in that regard. In the past, we have served A lot of companies with global presence and accumulated experience. In the process of serving these clients, we have also increased our tech capabilities and experience. So we will further serve these companies who are the lighthouse companies to improve our product offerings and accumulate capacity and experience from the lighthouse enterprise and leveraging this experience to serve more clients.

1:59:57 Thirdly, bank-wide, CMB will cultivate more and more international talent teams. Fourthly, we will make full use of our content channels like Asian banks so that we can build an express highway that connects the major financial institutions globally. More importantly, I think we need to improve our capacity in risk recognition capability. As for CMB, we continue with the network operation within the boundary of our capacities.

2:00:50 We will continue to build up our capacity, but we will not do businesses outside

2:00:58 The range of our capacity.

2:01:02 That is my answer. Thank you. In the interest of time, we will conclude the meeting here. This is the end of the meeting. If you hope to learn more about the details, you can go to CNB official website for the interim reports of CNB. If you hope to get further explanation of detailed questions, you are welcome to contact CNB IR team for further communication. Thank you again. Goodbye.