CIHKY (CIHKY) Q2 2026 Earnings Report, Transcript and Summary

Welcome to the 2026 Interim Results Presentation. Today, I will cover the 3 areas. Firstly, an overall introduction and secondly, a detailed information. And thirdly, our 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. Various operation indicators registered steady progress with positive momentum. This was primarily reflected in the 4 aspects. First, steady progress in operating performance with distinct strength and profitability. Net operating income CNY 178.135 billion, up by 4.83% year-on-year. Net profit attributable to shareholders of the bank, CNY 76.445 billion, up by 2.02% year-on-year. ROAA and ROAE were 1.14% and 13.42%, respectively, remaining at industry-leading levels. Net interest income, CNY 112.02 billion, up by 5.6%, affected by LPR repricing in effective credit demand and declining market interest rates. The net interest margin was 1.83%, down 5 bps year-on-year, representing a narrow decline. Net noninterest income reached CNY 66.11 billion, up by 3.56% year-on-year. The percentage of net noninterest income was 37.11%, maintaining the leading position in the industry. Net fee and commission income reached CNY 39.86 billion, up by 5.99% year-on-year, of which income from extensive wealth management reached CNY 24.7 billion, rising by 18.44% year-on-year, representing the best level in the past 5 years. The cost-to-income ratio was 29.7%, down 0.41 percentage points year-on-year. Second, we delivered balanced asset growth in both scale and quality with continued improvement in funding costs. Amid an effective credit demand, we carry out a range of measures to strengthen asset origination and optimize asset allocation. Our total assets amounted to CNY 13.79 trillion, up by 5.47%. Total loans and advances to customers CNY 7.45 trillion, up by 2.69%, accounting for 54.07% of total assets, remaining stable. Among them, general loans amounted to CNY 7.19 trillion, up by [ 3% ]. We accelerated the turnover of bill assets with discounted bills amounting to CNY 265.38 billion, down 17.62%. Investment securities and other financial assets amounted to CNY 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, further consolidating advantage in low funding cost. Total liabilities, CNY 12.43 trillion, up by 5.45%, of which total deposits from customers exceeded CNY 10 trillion, up by 3.32%. Daily core deposit balance was CNY 7.79 trillion, 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% in banks. The annualized average cost of interest-bearing liabilities was 1.05%, down 30 bps year-on-year, of which the average cost rate of deposits from customers was 0.97%, down 29 bps year-on-year. Thirdly, we maintained stable asset quality and strong risk compensation capacity. The NPL balance was CNY 70.25 billion, up by CNY 2.05 billion and the NPL ratio was 0.94%, remaining at the same level. The annualized NPL formation ratio was 1.06%, up by 0.08 percentage points. The allowance coverage ratio was 385.1% and the allowance to loan ratio was 3.63%, reflecting a high level of risk compensation capacity. The annualized credit cost was 0.69%, representing a slight year-on-year increase of 0.02 percentage points. Fourthly, we strengthened capital management with industry-leading capital adequacy level. Risk-weighted assets under the advanced approach and 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 percentage, up 0.08 percentage and up 0.9 percentage points, respectively. 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 will 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 wealth management to a new level. The transformation through the 4 initiatives delivers notable progress, further strengthening the company's resilience and market competitiveness. This is mainly reflected in the following areas. First, we grew our client base rapidly while scaling up extensive wealth 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 8.2%. 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 and institutional customers 78.5, 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%. AUM from retail customers exceeded CNY 18 trillion, up by 7.96% compared with year-end 2025. The half year increase reached CNY 1.36 trillion, hitting a record high. The average daily balance of corporate wealth management products was CNY 632.61 billion, up by 20.51% compared to 2025. Total asset management amounted to nearly CNY 5 trillion, representing a year-to-date increase of 5.29%. The balance of assets under custody CNY 23.58 trillion, representing a year-to-date increase of 8%, maintaining a leading position in the market. Secondly, we pursue differentiated development with more distinctive business strengths. First, we continue to consolidate our leading position in retail finance, and we maintain the main goal of retail finance business with this net operating income accounting for 54.35% of the total. We continue to strengthen our professional service capabilities in wealth management and customers holding wealth management products, 66.7 million, up by 4.05%. Customers covered by TREE system reached 12.58 million, up by 6.98%. In response to market trends and evolving customer demand, the growth structure of AUM of retail customers become more diversified. Agency distribution of 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 deposits from retail customers increased by 3.7%. Facing rising risk and weakening demand, we prioritized asset quality in retail loans, resulting in a moderate contract scale. Retail loans totaled CNY 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. Amid the industry's cyclical adjustment, the group appeared to a stable and low volatility operational strategy for its credit card business. Active credit card users totaled 70.4 million, up by 0.46% compared with prior year-end, and the transaction value was CNY 1.91 trillion, down 5.43% year-on-year, while maintaining a leading position in the industry and our market share further increased. We continued to differentiated competitive advantages in corporate finance. Total FPA was CNY 7.27 trillion, up by 8.13% year-to-date. We continue to optimize loan structure, further enhance quality and effectiveness of serving the real economy. Total corporate loans CNY 3.5 trillion, up by 9.08%. Growth of loans in key areas such as green loans, manufacturing loans and agriculture-related loans are significantly outpacing the overall loan growth. The overall -- the average daily balance of deposits from corporate customers, CNY 5,230 billion, up by 6.1%, of which demand deposits accounted for 50.14%, down by 0.48%. We continue to enhance professional service capabilities of retirement finance. The number of individual pension accounts opened exceeded 17 million with the pension funds under custody amounted to CNY 1.7 trillion, up by 9.68% compared with prior year-end. We provided diversified financing services to technology enterprises, serving 378,300 sci-tech enterprise customers, including more than 200,000 enterprises listed on sci-tech rankings. We continue to upgrade the distinctive brand of enterprise digital intelligence finance. Compared with year-end 2025, the number of customers using treasury management cloud services increased by 14.26%. Those using cloud-based postal connection increased by 13.44%. We continue to enhance professional capabilities in investment banking and financial market businesses. FPA contributed by investment banking business increased by 8.64% year-to-date and the debt underwriting amounted CNY 284.16 billion. And M&A financing business value amounted to CNY 165.92 billion, up by 19.84% year-on-year and we have completed multiple deals with significant market influence. Regarding financial markets business, the number of wholesale customers involved in client flow trading was 78,000, up by 18.38% year-on-year and the transaction value amounted to USD 212.72 billion, up by 33.64% year-on-year. The bill business customers totaled 191.40 thousands, up by 11.49% year-on-year. Direct bill discounting value was CNY 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. 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 key region branches in the total of all domestic branches increased regarding retail AUM balance of 0.26 percentage points. Corporate loan balance of 0.56% and average core deposit balance of 0.22 percentage points. Third, we steadily advanced comprehensive and international development with value contribution significantly increased. Total assets of major subsidiaries, CNY 1.05 trillion, up by 10.6% compared with prior year-end. Net operating income accounted for 12.3% of the group's total, up by 0.39 percentage points. Net profit for CMB Wing Lung Bank reached HKD 4.73 billion, up by 55.88%. Total assets HKD 587.8 billion, up by 11.63%. Net profit of CMB International Capital, HKD 3.07 billion, up by 124.14%. Total overseas asset management business reached HKD 94.37 billion, up by 25.27%. Net profit of CMB Financial Leasing was CNY 1.63 billion, down 42.44% year-on-year. This is mainly because fee income last year. And the leasing business was CNY 70.49 billion, maintaining a leading position. And net profit of CMB wealth management CNY 1.51 billion, up 10.92%. Total wealth management products reached CNY 2.7 trillion, up by 3.79% compared with prior year-end position. Net profit of China Merchants Fund was CNY 802 million. Nonmonetary mutual funds under management was CNY 623.15 billion, up by 5.78%. Net profit of CIGNA & CMAM was CNY 62 million, down 12.68% year-on-year. Entrusted management of insurance funds totaled CNY 279.45 billion, up by 19.78%. 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 seized opportunities and expand their operations, achieving fast growth. Net operating income grew by 32.71% year-on-year. Total assets under custody of Global Custody Hong Kong Center exceeded CNY 1 trillion. CMB International Capital completed 3 Hong Kong IPO sponsorship projects and 24 Hong Kong IPO underwriting projects. Cross-border business grew rapidly. The number of corporate customers in respect of international balance of payments reached 93.7 thousands and the international balance of payments of corporate customers increased amounted to USD 263.26 billions. All comprehensively promoted entity and [indiscernible] development and continuously strengthened technology advantages. Third, to 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. Large models applications have delivered tangible quality and efficiency gains. AI contributes 13.8 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 client-facing service capacities using AI and increased our capacity of complex business service. We have launched AI Xiao Ban and AI agent serving wealth management partners with newly launched Private banking AI tools now deliver one-stop real service framework for spanning asset allocation and protection and succession plan. 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 clients. Internal management intelligence upgrade continue to accelerate. AI is reshaping credit process with accelerated deployment across the prelending, lending and post-lending stages. In terms of business management, intelligent tools now span the front, middle and back offices. Fifthly, we upheld bottom line of risk control and reinforce advantages in asset quality. In the face of various risk and challenges, we step up efforts to prevent and mitigate risk in key sectors and continuously refine risk management strategies. Overall asset quality remained sound. We adhere to the strategy of stabilizing growth, preventing risk and optimizing structure, strengthen risk management and control in sectors such as property and manufacturing. With corporate loan asset quality continuing to improve. NPL ratio of corporate loans 0.78%, down 0.11 percentage points. Among them, the NPL ratio of property industry was 4.47%, down 0.31 percentage points. The NPL ratio for manufacturing industry was 0.39%, down 0.44 percentage points. Compounded with rising retail loan risks across the industry, we comprehensively reinforced retail loan risk management and optimized the asset structure. Retail asset quality remained 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 points. Among them, residential mortgage loans was 0.48%, down 0.03 percentage points. Credit card loans 1.9%, up by 0.16 percentage points. Retail microfinance loans and consumer loans were 1.34% and 1.39%, respectively, up by 0.12 percentage points and up 0.7 percentage points, respectively. 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 5-year strategic plan, maintain strategic focus on fundamental principles and breaking ground, accelerate capacity building and advance transformation through initiatives to consolidate existing strength while building our new advantages, achieving distinct with common business model. Firstly, we stay committed to long-term 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. While maintaining strategic focus, we will adhere to the principle of professionalism and market orientation, continue innovating in products, services, technologies and business models by deepening and refining our core businesses, CMB's business and revenue structure will take on a fixed earnings cost 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 customer sense of fulfillment and experience. Secondly, in corporate banking, we will further strengthen professional operation in different industries. Given investigation across a broader range of sectors to find 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, leveraging synergies between CMB and its subsidiaries, we 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 regional hubs to build distinctive feature in cross-border finance. 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, further expand extensive wealth management and financial markets businesses to enhance value contribution. Capital management will be strengthened to improve capital returns and reinforce capital resilience. Fourthly, we will accelerate intelligent transformation to further extend tech leadership with sustained technology input and intensify technology empowerment to further promote business growth with technology. Seizing the opportunity presented by AI. We will broaden and deepen AI applications to drive improvement in customers' experience, internal efficiency and risk management. We will accelerate the building of AI-powered organization, reshape the capabilities of workforce and deepen people plus digital intelligence model, establishing CMB as a benchmark for intelligent transformation in the AI era. Fifthly, we stay anchored to risk-based approach and reinforce foundation for sustainable development. 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 property sector and intensify collection and 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 are welcome to raise questions.

[Operator Instructions] We will now take the first question. We will have the first question from [indiscernible] Asset Manage.

My question is for Mr. Xiaoqing Wang. You just assumed to be the President of CMB. 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 CMB's business. We see CMB in second quarter, your revenue, your profit all accelerate. 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 CMB. And after that, first of all, I feel strong responsibility, which was reflected in the following aspects. Well, first of all, CMB has been managing CNY 13 trillion asset size. It shoulders a very strong responsibility and mission. And second, the bank-wide development is highly relevant to 120,000 CMB staff live and how could we inherit the good experience and the results from generations of CMB staff's hard work and stick to high-quality development. And third, the capital market, our investors have attached great importance and recognition to CMB. How do we live up to their expectations? how do we live up to what they expect from us. It's also a very important issue for us. I can recall an individual investor from our shareholders' meeting that their funds are coming from their everyday life. So making good investments is what they want. We should guarantee them with good results and deliver to our investors so as to guarantee their return. And of course, from all these 3 aspects, these are the most important aspects. We also have other dimensions. CMB faced with important development opportunities. And of course, there are challenges ahead. I have been discussing with many investors in different scenarios challenges on one hand are coming from the banking industry. These are the common challenges faced by all banks, for instance, the low interest rate environment, they have been posed challenges to the banks and also the challenges they got to the NIM development. And another fact I mentioned is that as the economic growth rate actually moderated and also the society's financing structure are experiencing changes, the demand for -- the credit demand also shrink. This is also PBOC had mentioned in the forum in Shanghai that the total loan growth demand for loan demand is also in a slowdown trend. For the second perspective for CMB, we have also been quite special in our own loan structure. As you all know, we are a bank that retail business stays in our major line and standard 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 reevaluation and deleveraging. This is a phase -- a special phase we have. And for the second perspective, some of our households, they are 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 both retail business are under pressure, much more pressure compared with our peers. So combined with the low interest rate environment, combined with our over 50% of retail loan among our all loans and also the rather smaller room of liability cost control compared with our peers, I think all these factors combining together are posing stronger challenge to CMB compared with other banks. But for us, I think on the 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 at our center. And secondly, we should balance risk, return and maintain a good management over the 2 factors and stick to good asset quality. And third, from a commercial bank perspective, we need to combine with our own strengths, our resources, what we are good at and I want to special mention 2 points. One is that even though we are faced with challenges, how do we leverage our strengths in extensive wealth management business, we can consolidate our characteristics 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. 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 they are retail clients or corporate clients and to carry out our mission to serve the real economy and to serve the sense of a fulfillment and their investment gains of our customers. And of course, as a commercial bank, we should see the cost of this time to see the trend of development and to see what we should see -- 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 seize to be the characteristic of CMB's future development. The first thing is extensive wealth management business under the low interest rate environment, how do we understand better about customers' demand, their demand of preserve and increase their asset value. And we also see the change of asset structure of every household of the Chinese residents. For the first half, retail AUM increased by 8% to CNY 18 trillion. We can see that in deposits, insurance, trust schemes and mutual fund products, these are all demand coming from our clients. But for CMB, we have already accumulated capability recognized by the market. And for the next phase, we will further strengthen our capability to take customer at the center to increase the sense of fulfillment of our clients and to increase also the experience of our clients. 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 includes 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 that is sci-tech finance. We think that under the backdrop where the government encourage 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 an 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. For every area in technology, it actually requires us to have a 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 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. And for the second perspective, how do we better promote the development of technology finance, we should give into full play of our license -- our full license capability. I understand that for commercial banking business, the high growth and also high volatile characteristics within technology finance, it cannot be satisfied by the traditional credit business model, because the return coming from loan business is rather certain. So I think that the 2 aspects within the business are actually mismatch. So how do we better satisfy the demand of technology finance? We need to further leverage our full licensed capability -- our multi-license capability. That is what we need to think further for the next phase. We have 1 plus 1 plus 8 license. One is commercial banking and the other one is our overseas commercial banking and the other 8 are investment banking, investment management, AIC, leasing and et cetera. So for CMB, within these 8 licenses areas, they are having a rather good market share and also market influence compared with CMB'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. 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 2 ideas are what we need to think further. And the fourth aspect is that in the intelligent era also bring us new opportunities for banks. It might not be obviously or quickly reflected in our balance sheet or even at recent phases, they will be reflected as expenses or costs. But for us, we think it's the right thing to do. How do we use a more scientific way to grasp the intelligent technology meant a lot for a commercial bank. It could help us to enhance customer 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. 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 later on, our Chief Information Officer, Mr. Zhou, will give further introduction. And last but not least, we believe it is also an opportunity 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. 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 are 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 fit into our understanding of risk and our preference and stay close to our clients, including corporate and retail clients. This is what we need to do to further develop the key branches -- branches in key areas so that they can contribute more to the bank's operating income and also profit. And this is we need to -- for the next phase, we need to further foster our characteristics and strength so as to establish CMB's own driver of future development. Your last question is about the growth of the first half. Will that trend be continued? Well, you see from the senior management level, we will strive. We will make every effort, and this is also what we want to deliver to the market. We aim to strive to maintain a stable and steady progress to deliver such results to our market and make 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. Thank you.

Next question, please. Next, we will invite Kunpeng from China Securities.

I'm Kunpeng from China Securities. Thank you for President Wang for the introduction. We are clear about the strategic outlook. I want to further ask my question on retail banking business. CMB 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 products and services to these clients, thereby avoiding simple price wars and marketing walls. So that we can further improve customer loyalties and returns. Is there any indicators or metrics we can track to monitor the progress and effectiveness of these efforts?

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

Thank you for the question. I think this is a very good question. You not only 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 serve the clients' need in deposit loans and remittance. Regarding the comprehensive financial services, we do not target only wealthy customers, but the whole customer base of China Merchants Bank. Deposits has been elaborated to the extensive wealth management. We will start from the client sense of we select good products and construct a long-term stable asset allocation system. Regarding loans, which means we will satisfy client demand in different financing to provide the needs in households, business, et cetera. For remittance, we pay high attention and continuously enhance our basic account system construction and dedicated to a safe, a convenient and rapid payment system to cover all scenarios such as elderly caring, social insurance, et cetera. So that clients can use one account to manage all kinds of businesses, make CMB card more -- it is a very good to use this concept to be more widely promoted. While the customers have more diversified requirements in most of the clients are entering a phase of wealth -- material wealth accumulation. So they have diversified from different dimensions. The requirement has been wealth succession and wealth protection and more advanced needs. 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 clients' expectations on integrated services. In product offerings, we would opt for all ground all category product offerings that serves across multiple accounts and multiple currencies, et cetera. Golden Sunflower and above customers growth in the past 3 years has accumulated to 55% and the CAGR has been 13.26%. Another point I would like to discuss with you is that we have always pay 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 multidimensional services involved in retail banking client services. So how to match client requirements and our product offerings, this is a very important question. In the past, we used 3 years to basically complete the human plus digital intelligence new model in retail finance and completed our digital rematching for clients and channels and product offerings. We have 3 dimensions to the focus. First, our customer-centric value and our strong delivery capacity from the head office to branches and to subbranches as well as our strong support of fintech. And this is a main support. In the next phase, our retail banking service model will deeply involve artificial intelligence from and transfer people plus digital intelligence to people plus AI agents. Regarding metrics, I think there are many indicators to pay attention to. For example, the number of customers holding wealth management products, the allocation customers MAU active users, et cetera. And the customers covered by trade system has increased by 55% for the past 3 years and the compound annual rate has reached 13%. Our monthly active users has increased by 31% in the past 3 years and 9.36% and 5.14% of the CAGR of the past 5 years. So as for the indicators, AUM and client base are the most fundamental indicators to look for. Structure volume of these indicators are also something that we're paying attention to. Our AUM increased by 52.12% over the past 3 years and retail clients increased by 24.54% for the past 3 years and the CAGR was 6.72%. Overly speaking, we use integrated service capacity to serve our clients as well 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.

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. What is the management's long-term consideration on loan growth? And previously, we think that CMB is a retail-oriented bank. And in retail sector, we see that risks are accumulating. So what are your considerations regarding future portfolio allocation?

Indeed, as you mentioned and also mentioned in the presentation previously, the bank's total loans and advances reached CNY 7.45 trillion, up by 4.73% year-on-year. In this process, we see that the difference between corporate loans and retail loans. The corporate loans increased by 13%, while retail loans increased by 0.05%, excluding corporate card. So we are seeing corporate loans growth is outpacing retail loans. This is broadly in line with the market trend. You just mentioned the number, 7%. This is mentioned in our previous investor discussion regarding our expectation, which is 7%. From actual operations, we think that currently is around 5%. So in the next half of the year, we think that the growth rate would be relatively the same. There are 2 reasons. Firstly, the external environment. The speed of loan growth is slowing down, which is -- 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. In recent period, what we discussed with the retail banking business sector is that we should -- regarding the retail banking structure and asset 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 your -- 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. Secondly, I would like to mention that about the low yield financing and LC negotiating business, we are -- the volume is shrinking, and we are implementing proactive management. The overall trend of demand is not changing very fundamentally. And if we are not seeing very good signs of improving trend, the overall trend of CMB loan growth will still maintain. Retail loans -- in terms of retail loans, we would continue to consolidate our quality customer base, effective control our 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 segments, so that we can achieve growth in both volume and quality and increase our quality and effectiveness of serving the real economy. Thank you.

Next question is from Yang Shuo from Goldman Sachs.

I have a question for deposit. So recently, we see that some major banks, they are resuming the issuance of large denomination personal CD. I would like to learn that whether it has any influence to our liability cost, and I would like to understand the repricing of deposit and also the trend of NIM of CMB.

The question will be taken by Mr. Peng.

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

The next question is from [indiscernible] from Haitong Securities.

I am [indiscernible] from Haitong. I have a question about the overall CMB's asset quality. What's your point of view? And what is the major risk that you see? And what kind of coping tactics measures that you have been taken to these risk areas?

The question will be taken by Mr. Desheng is in charge of risk management. Thank you for your question. For the first half of this year, we have stick to our prudent and stable risk management culture and prevent the risk in key areas and increase our level of risk management. Our asset quality remains to be stable and having 3 characteristics. One is asset quality maintained stable towards a good momentum. By the end of June, our NPL ratio was 0.94%, remained flat from the end of 2025. This is quite a good level. The second is that we stick to a prudent and culture risk classification -- asset classification. Loans overdue for 60 days and 90 days to NPL was 1.23, which was a good level among our peers. And third, we have a provision. By the end of June, under the group's category, 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 to different segments. First, I would like to talk about corporate loan. For the first half, our NPL -- corporate NPL ratio was CNY 27.4 billion. Corporate NPL ratio was 0.78%, down by 0.1 percentage points. Corporate asset quality actually improved. For the first half, the NPL formation ratio of corporate 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. By the end of 2025, we have CNY 14.5 billion of NPL loan in the real estate area, which represents a 4.47% of NPL ratio. So even though these 2 figures remain at a high level -- relatively high level, we are paying a very cautious attitude towards these 2 figures. And for the real estate market, we still see some divergence within the market. For some clients with rather not that good performance and qualification, they are having quite poor asset quality. So for this area is what we pay special attention to, that is the corporate real estate. We are taking measures as follows: we continue to lower the proportion of retail -- of corporate loan, corporate real estate loans within total loan. Its proportion 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. And to see from client structure, over 80% of our corporate property loans are granted to local and central state-owned enterprises and also very qualified private enterprises who are having stronger capability to paying their debt. And the third perspective is to maintain strict management towards the projects. We have conducted close stronger management towards 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. The provision level is over 3x than the average level of the provision for the corporate loan. Looking into the year 2026, with many policies introduced by different regulators, we are seeing that the market -- the real estate markets are seeing the trend of further concentrating in the risk. And the risk tend to be showing a momentum to contain -- 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. The second perspective I would like to mention is about retail loan. For the first half, the retail NPL loan amounted to CNY 42.8 billion. The NPL ratio was 1.16%, up by 0.1 percentage points. Special mention loan ratio and balance of retail loan increased. I noticed that some of the investors are paying special attention to the asset quality of our retail loan. And from my perspective, the retail loan asset quality is the major driver, the major reason that influenced our overall asset quality, even though the indicators, the credit asset quality indicators of the retail loans are 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 have stronger pressure. Of course, some of the pressure is coming from the market trend. And the other side, I think the pressure is also coming from the expectation from our investors and also CMB's pursuit 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 in an upward trend. Of course, we have taken measures to contain -- to maintain the risk level of retail assets to -- what we have been doing is that we have adjusted our budget and target of retail loan business. And in our evaluation and also internal encouragement, we even pay special attention to the quality of retail loan and also control the formation of retail loan -- retail NPL loans. And of course, we also see some positive signals within retail loan asset quality for the first half. Excluding credit card, our retail loan, our -- we are having new formation of CNY 247 million new formation of personal loan, that is retail loan, excluding credit card. Retail credit assets, the momentum of its NPL new formation momentum has been [ curbed ]. And the segment signal we see our balance loan, that is our mortgage loan for the first half of this year, the NPL balance was down by CNY 509 million and down by 0.03 percentage points and realized the full decrease in the NPL balance and ratio of our mortgage loan for the first half of the year. Of course, good signals are also showing in credit card business. Due to some special reasons, the 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 uptick in the formation of credit card NPL. Overdue loan ratio was down by 0.1 percentage point in credit card business for the first half. Overdue loan ratio and balance also both decreased in terms of credit card loan. Of course, we have to admit that the credit card assets are still under pressure in terms of asset quality, but I believe it still be a very important loan granting direction for us to pursue. In the following phase, we will follow the market trend. We will emphasize both on quality and size, and we will give the full play of the strength of our customer base to increase the threshold of customer onboarding and third, we will dig deeper into our existing customer base and to prevent the risk coming from joint debt risk, and fourth, we will conduct early identification, warning, and also disposal and etc. Fifth, 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.

Next question, please. Next, we will invite Min Lee from JPMorgan for the questions.

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

Thank you for the question. We will invite Mr. Lei Caihua, who is in charge of corporate banking business to answer this question.

Thank you for the question. You mentioned about the growth of corporate banking in the first half of the year. Overall speaking, our growth is stable. Due to -- in the backdrop of the market environment, 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 key lies in the number and quality of our customer base, as well as our client experience and clients coverage regarding our digital products. 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 and thus generating non-interest incomes. Fifthly, the fourth pillar growth drivers of CMB 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. 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 base operation. We will enlarge our clients' 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. Next, in terms of operation, we need to continue to optimize our services. Secondly, to improve our professional operation capacity and increase our asset originations. In terms of, we are focused on the new emerging quality clients and 6 new 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 asset allocation, which is with controllable risks. 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, et cetera, 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 serving Chinese enterprises going global. In terms of customers of 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 would increase the coordination between the four major business segments. The coordination of these four segments are the feature of CMB, especially the development of wealth management business, as well as the other segments. This coordination -- by leveraging this coordination, we can achieve deep cooperation of these different client categories. Next, we will continue to forge differentiated processes and mechanisms. Firstly, 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 management -- internal operation efficiency, as well as integration and synergy capacity. That is my answer. Thank you.

Next, we would invite Wang Xianshuang from Guolian Minsheng Securities.

Can you hear me?

Yes.

Thank you. I am Wang Xianshuang from Guolian Minsheng Securities. First of all, thank you CMB for delivering stable performance. Under such kind of circumstances, you have good performance in operation results and see an increase in market price in H share and A share. My question is regarding asset and liability. I want to ask the management, what is your outlook on the NIM trend? The second is about FinTech. We noticed in the interim report you elaborated a lot on AI, and we believe CMB is leading the industry in AI deployment. The market, it is not having very direct feeling of the AI application. Is there any tangible impacts on the business? Can you give a few examples so that we can have more concrete feelings?

Thank you for the question. 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 NIM changes, this is a heated topic of the market. Since this year, in the banking industry, the NIM 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 CMB's perspective, currently, we are still declining. However, the decline is rapidly narrowing. In the first half, the NIM was 1.83%, down 5 basis points year-on-year. As Q2 compared to Q1, 1 basis point lower. 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 far from 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. Secondly, for China Merchants Bank retail banking, especially credit card banking asset, has a high proportion. Under current circumstances, its asset has been slower in growth, so posing pressure on our NIM decline. I think for CMB, there are common factors as well as factors that is applicable for CMB. 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 rebounding. For the banking industry in the future, we are still facing pressure of further decline in NIM. 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, this downturn of cost of liability has been slowed down as the impact on NIM. 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. From my personal point of view, the most difficult time for NIM decline has already passed. We are also faced with many preferential factors. Under -- 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 NIM. Secondly, loan 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. So my point of view is that although we are facing a certain extent of pressure in NIM, we will gradually enter a phase which is more stable. CMB will continue our management of asset liability and make good arrangements in asset 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. 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. In the beginning of the year, we raised 3 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 will answer the second question. Intelligence transformation is the trend of the time and also an opportunity for CMB since 2024. We have leveraged AI to help CMB transformation. We have intensifying our efforts in that regard. In our employees' daily workflow, AI has been implemented and playing effect. The working items we identified with AI empowerment has been over 1,000. We have achieved 13.88 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 operation. Currently, RM Assistant is playing good effect of AI for Golden Sunflower RMs. We are also seeing that for -- 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 customers 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. In the in-lending stage, AI can help with extraction of key information and assisted its decision. So the average service time reduced from 36 hours to 2.17 -- 2.72 hours and the tender guarantee can be issued within minutes. And AI -- the adoption rate of AI monitoring results for loans 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. Currently, on the basis of China Merchants Bank 15th 5-Year Strategic Plan, CMB has more specific and detailed arrangements regarding AI empowerment and impose a high target. We are having full range deployments regarding this area. Thank you.

Next question is from May from UBS.

Thank you, senior management, for giving me this opportunity. I am May from UBS. I have a question about the dividend payout ratio, the dividend policy. We can see that the state-owned banks, they increased their interim dividend payout ratio by 1 percentage point from 30% to 31%. While for CMB, you maintain that a 35% level. However, under such environments, will CMB consider to further increase your dividend payout ratio and for your corporate loan business, you have seen quite good increment. Will that consume a lot of capital and in the future, how do you plan your capital position and the RWA development?

Thank you for your question. For China Merchants Bank, our dividend payout event, we have been authorized by the shareholder meeting and also the board of directors. We have a rather corresponding arrangement. We understand that the capital markets has been paying special attention to this matter. We have also communicate with our investors to understand better about the capital adequacy ratio and also the RWA growth rate and capital position. At the end of June, we have held a shareholder meeting. In answering a question about our market value arrangement, we have provide 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 2 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. Our mindset and the efforts we made are also based on what we have listened to our investors and shareholders. Based on these consideration, we have making plans in our RWA growth. In our capital adequacy ratio and dividend payout ratio, we have always followed one principal, 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 4 perspectives. One is to guarantee the enhance of our return, to optimize the allocation of our resources, enhance the utilization rate of our capital. Second, scientifically manage RWA growth rate. It means that we need to be more efficient in using our capital and reduce the idle occupation of capital. Third is what we have always been adhering to, that is the internal generation of our capital, endogenous generation of our capital and fourth is the recognition given by the market of the value of a valuation of CMB. To maintain our good market image, to make sure that we had -- can have a better market valuation and deeper recognition from the market, we have multidimensional consideration and thoughts. We will take full consideration of the opinions from every perspective, from investors, from analysts. They are also serving as very important channel of comments and also we should also be aligned with our own operation. Thank you for your question.

Next question is Gary Lam from HSBC.

Hi, senior management. I am Gary from HSBC. I have a question about fee income and AUM. We see that your fee income increase accelerates 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 possibly they are driven by the agency distribution of mutual fund and wealth management products less from bank insurance products. In terms of future developments, could you leverage the growth from mutual fund and wealth management product to offset the decline from bank insurance?

Thank you very for your question. It will be taken by Ms. Wang Ying.

For the first half, CMB's AUM has grown at a good pace, hitting a record high of CNY 1.63 trillion, 7.96%. The wealth management products are giving a full play, and we have also seen new growth drivers in the structure. Non-deposit AUM accounts for a higher proportion, excluding the third-party market value. So 85% of the growth are coming from non-deposit assets. I think that is highly relevant to the high growth rates of our equity-related products, for instance, mutual fund, third-party depository payments, trustee, and et cetera. They have all realized quite good growth and also bring us the change in the structure of growth. Of course, in customer base, we also see good performance in the both Golden Sunflower 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, cross-border business scenarios, we also see faster AUM growth. In income contribution, wealth management relevant AUM yield has created better return compared with other type of products. You just asked us what is the underlying logic behind our AUM growth. I would like to conclude in the following aspects. I think it is relevant with CMB's capability that we have long accumulated in terms of wealth management capability. It contains three tiers. That is to provide both product and policy products. The second is customer relationship managers and also our wealth management consultant and investment consultants. They are forming a team to provide combined allocation service to our clients, and third, our long-time convenient service we provide for clients. For us, we understand that AUM growth is not just relevant to wealth management business. It is more relevant to all retail 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. 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 card with CMB. I think behind the AUM growth, indicators could not be seen or analyzed isolatedly. 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 of such a large customer base, such a large talent team, and such a diversified channels. How do we leverage a strong technology infrastructure to break the silo among different database? This is very important for us to provide a very smooth service to our clients. So AUM growth, income growth, could we maintain such high speed? Well, for us, CMB's AUM structure is quite light. It is very capital oriented -- capital market oriented. Wealth management business are accounting for a high proportion of this business. So it is quite hard for us to say that we can maintain a very high-speed growth because it is relevant -- highly relevant to the capital markets, the development, and transaction itself. But for a long period of time, we will continue to maintain our growth speed.

Next, we invite Zhang Shuaishuai from CICC.

Thank you for giving me the opportunity. I am Zhang Shuaishuai from CICC. My question is regarding management. Previously, when senior management is doing roadshows, you mention 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, CMB is a leader in synergy. So I want to ask the management, how does management achieve effective synergies across business lines, among branches or subsidiaries, not just in words, but in practice, how to maximize cost and resource efficiency? That is my question regarding management and synergy.

Thank you for your attention on synergy. This is a question that I would like to address on. As you mentioned, on every level of CMB, including our subsidiaries, between branches, between head office and branches, across business lines, we have achieved good results in synergy. There are a few supporting factors. There are 5 perspectives. Firstly, we have set up a mechanism for synergy. For example, regarding cross-institutional synergies, we have designed the dual attribution and shared rewards 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 assessment and give a great attribute to synergy. For different institutions and head office departments, we have given assessment indicators for synergy. Thirdly, model innovation. An institution needs a mature model for synergy. We have a mechanism incorporating investment banking, private banking, commercial banking, scientific research, et cetera. So based on this very effective model, different institutions can have good collaborations. Fourthly, a corporate culture. Synergy is not a task that is promoted with administrative forces, but a corporate culture that is internalized into the bank. Many different 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 a consideration of synergy. For example, we have set up a synergy committee bank-wide, and President Wang Xiaoqing is the head of the committee, so that we can promote synergy via organizational structure. 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. This is very important for a synergy mechanism building. So we have top-tier awareness and fundamental technical system support. This is my answer to your question. Thank you.

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 of the -- one representative one for answer. Now please read out the question.

The question is: "The country is encouraging companies and enterprises going global. CMB began its internationalization efforts 20 years ago." My question goes to Mr. Wang. What is the future direction of CMB's international development strategy? Are there any adjustments compared to the past? Are there any specific targets for international development? Thank you for the question. International development is an important component of CMB's 15th 5-Year Strategic Plan, and also one of the transformation initiatives of our core initiatives. Regarding the background of internationalization, one of them is the Chinese enterprises going global, and also the international development of the renminbi. 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 global presence and development presence, we have one subsidiary bank in Hong Kong and CMB International, and we have 6 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-owned banks so we have to adopt practical measures. What we hope is that we can better serve Chinese enterprises' global operation. Especially, we hope to do well in cross-border financial services to these clients. We also serve 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 Merchants Bank has formed advantage for China Merchants 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. 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. The 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 for us in Hong Kong. The number five represents New York branch, Sydney branch, Luxembourg branch, and Singapore branch and the others, which forms the 5 major overseas business institutions. They are serving as the regional hubs of our overseas business. Institutions in Hong Kong is the China Merchants Bank Global Custody Center, Communications Center, and other business centers. CMB 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 capacity, our tech capabilities, and experience. So we will further serve these industries -- 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. Thirdly, bank-wide, CMB will cultivate more and more international talent team. Fourthly, we will make full use of our channels like -- partner channels, like agent 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 conducting our operation within the boundary of our capacities. We will continue to build up our capacity, but we will not do businesses outside the range of our capacity. 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 CMB official website for the interim report of CMB. If you hope to get further explanation of detailed questions, you are welcome to contact CMB IR team for further communication. Thank you again. Goodbye.