Ladies and gentlemen, welcome to China Construction Bank 2020 interim results announcement conference call.
Dear friends from the media, analysts, investors, ladies and gentlemen, good afternoon. Welcome to China Construction Bank 2020 interim results announcement conference call. In accordance with the pandemic prevention control measures, this conference will be conducted in video conference and conference call. On behalf of the management and the board, I would like to express my sincere gratitude to those friends who have supported the bank for a long time. My name is Liu Guiping, the President of the bank. Today, the management that is with us are Lyu Jiajin, Executive Vice President, Ji Zhihong, Executive Vice President, Wang Hao, Party Committee Member , Chief Risk Officer Jin Yanmin , and Hu Changmiao, Secretary of the Board. The conference today will have two parts.
First of all, I will make a presentation on the business performance of the bank, and it will be followed by a Q&A session. The total conference will last for one hour and 15 minutes . The presentations for interim results has been published on our website. First of all, I'd like to walk you through the business performance of our bank in the first half. In the first half, amid the impact from the coronavirus pandemic and the complex and challenging domestic international environment, CCB fulfilled its responsibility as a major state-owned bank by earnestly implementing government policies.
It helped fight the coronavirus and supported economic and social development with targeted and direct financial services, strived to serve the dual circulation and serving the real economy, and innovatively explored digital operation mode. We have sped up in dealing with non-performing loans and strengthening our foundation for long-term development.
We support the real economy with increasing asset size, and the asset is up by 8.7%, liability is up by 9.3%. We have reduced the cost for financing and the earnings were in line with expectations. We have recorded good profit in key indicators. The ROE is 12.6%. Capital adequacy ratio, 12.62%, and we have taken a proactive measure to expose our risks. NPL ratio is at 1.49%, and the negative scissors difference is CNY 58.9 billion.
Provision and provision ratio is at 3.34%. We have adequate capability in risk prevention. Risk prevention, pandemic control, and high quality development of asset are the major works of the first half. We have supported pandemic control measures very well. After the coronavirus break, we have promoted 10 measures in prevention control and 20 measures for care for employees at outlets. We have started a remote working mode.
We have maintained the health of our employees. At the same time, we maintained the smooth operation of all services. According to the measures of the central government, we have timely conducted 30 measures for pandemic prevention and resumption of work, and 14 measures to strengthen the financial services for medium and small micro-enterprises, 26 special measures for supporting Hubei region, and 29 measures to keep the foreign trade and foreign investment stable. Altogether, we have served over 10,000 enterprises with over CNY 100 billion of supporting funds. Second, we have helped the financial services to clients with stabilizing measures. We have targeted the weak links of the sectors related to the national economy. We have helped industrial chain and supply chain in coordinated resumption.
In the first half, we have invested in over CNY 200 billion of supply chain finance, and we have supported customer consumption, with a total increase in personal loans of 13.4%. At the same time, we have strengthened the support to local bonds and stimulus bonds. In the first half, we have increased the investment for local bonds of over CNY 300 billion and stimulus national bonds of over CNY 200 billion. We have met the requirement for reducing the fees and for small and medium enterprises. Through different measures, we have benefited the enterprises and nationals. We have strengthened our support to inclusive finance. In the first half, we have seen an additional inclusive finance of over CNY 278 billion, and the interest has been down by 63%. We have benefited over 150,000 enterprises, and we have increased the quality of inclusive finance.
We have tried different measures to make it online, and through different multimedia measures, we have certified over 3.4 million enterprises. In the first half, in line with the digital economy, we have been exploring different modes of operation, embedding data in the old process of operation. We have established the ecosystem and expand our customer base. Since the first comprehensive economic campaign, we have shown different characteristics, including comprehensiveness and agility and accuracy, laid a very good foundation for the long-term development of the bank. In major business, we have made historical breakthroughs. We have increased the customers in different sectors. In the first half, we have seen a new deposit of CNY 2.01 trillion, and we have over 300,000 corporate loan new customers. As for personal deposit, we have seen very good performance, and that there is bigger contribution from retail customers.
The proportion of profit from this part has been over 50%, and we have been strengthening our position as a big bank in retail banking. We have built a very comprehensive digital banking system. We have strengthened the digitalization system, including three middle offices, including the digital offices and bank offices. We have established a team covering different sectors, focusing on digital financing. Through digital operation, we have been very responsive to the market demand. In the second quarter, we had over 129 digital campaigns, and we have optimized the 201 models. We have over 600 scenarios. Third, we have improved our risk control system. We have been targeting risk control as the margin of our bank. We have been prudent and comprehensive and proactive in risk control.
In NPL credit approval and other sectors, we have strengthened our concentrated risk, and we have been increasing our application of 3R system and the smart risk control system, and improving the contingent system for major risks. This is to fight a victorious battle against major risks. In the first half, we have been very proactive in risk control and laying a good foundation for assets. We have been normalizing our measures and reacting to these risks timely and make sure that we are ahead of the market. At the end of the first half, we have CNY 548 billion of provision, and the provision ratio has been increasing. In the first half, in total, the business performance of a bank can be summarized by "1, 3, 2, 6." These numbers will reflect our business performance.
"1" means that this year we have encountered a huge black swan, which is the coronavirus pandemic. That event, without any doubt, has created major risks to the global financial system, and the risk is ongoing. CCB, as one of the systematically important banks, has been affected as well. This is a huge challenge. It is a huge public health event. It was very uncertain, especially when it broke out. As a commercial bank, CCB has to operate amid these uncertainties, and we need to seek certainty out of uncertainties. "3" means that we have three commitments in our operation philosophy. First of all, we are committed to customers, serving customers, and we are committed to serving the real economy as our mission. Only when the economy grows can we have a very prosperous financial system.
At a macroeconomic level, when commercial banks are required to give up profit, we have been doing that adequately. W e believe that in the short term, these measures will take a toll on our profit. I n the long term, we will, of course, contribute to the resumption and growth of the real economy. In the end, we can realize a benign circle of financial systems and the real economy. Third, we have been always committed to the principles of a commercial bank. First of all, we need to create value and improve our capabilities. Second, we must improve our capability to control risks. Third, we have been committed to altruism and culture, and we have been shouldering social responsibilities.
No matter it is for the pandemic control or flood control, no matter it is for giving up profit or using our operation philosophy to promote green finance business, or when it comes to using different measures to promote the poverty alleviation campaigns, we have always been committed to the principles and social responsibilities that a major commercial bank should be accustomed to. The number "2" in the three numbers is that we have two key indicators. First of all, we have very good growth in the main business because we have been digitalizing our business, and this has started at the beginning of the year, and it was reflected fully in the jumpstart business. Throughout the bank, our employees have been feeling more confident of digital business. This has been reflected in the numbers as well. Second, the key indicator is sustainability.
Sustainability is not only for growth, but also for those indicators which have seen some year-on-year decrease, but still within a reasonable range. More importantly, to the future, when it comes to business operation, we think that there are six things that we need to refer to observe what our future will be like. The future will be very stable and sustainable. As for the "6" aspects, I can elaborate on these points. First of all, the party committee of the CCB rolled out three strategies in 2018: inclusive finance, house leasing, and FinTech. These three major strategies have paid off very obviously in this year to our business and our customers as well. It has played a very important role.
Second, in the main indicators, especially in the liability business, our core deposit has seen its proportion reaching 85%, 1.3% year-over-year increase, and our balances of core deposit is CNY 11 trillion, and 50.6%, and there is a bigger contribution from retail business. Personal deposit is up CNY 12 trillion, and 49.7%, and 0.4% more than last year. We have been strengthening our position as the biggest retail bank, and we have personal loans balances of CNY 6.67 trillion.
What is more encouraging is that in the first half, our retail business is over 55% in its profit contribution, a record high, and it is up 12.5%. We have a better foundation for personal customers. Asset quality in personal finance has been excellent. Personal housing loans has seen an NPL ratio of only 0.5%, and only 0.85% for personal consumption loans. Our intermediary services, despite our measures to give up profit. In the interim results announcement, it is over 6 percentage points down compared with last year. We have seen 4 percentage points increase because we have digital business and better capabilities at the bank. We have third-party settlement, we have international settlement, and we have a very good growth in liquidation business internationally.
Number five, our capital is sufficient, even if we have 16.6% at the moment. Year-on-year, there is a decrease. However, we continue to replenish our capital, and it mainly comes within. This year, we have a reasonable share of profit. Our profit has come down, so we have a supplement from within, and that is a supplemental. This year, by June 30th, we have only issued about $2 billion bond, and this is number five. Number six, in our focus areas, our asset quality is stable, which includes our poor loans. Even if our customers have grown, the numbers of growing is quite big. By end of June, the number of our customers for SME companies, we have 1.9 million. In terms of the loans, the bad loans is down by 0.25%. For private companies, the bad loan percentage is down by 0.49%.
For manufacturing, bad loans is down by 0.56%. For retail, bad loan is down by 1.22%. Apart from what I have told you earlier in terms of our operation figures, using "1, 3, 2, 6." This concept, perhaps for our half year interim result announcement, it can help you look at it in more detail. At the moment, the pandemic is still going, and the world economy's growth is lackluster. The Chinese economy has bounced back with a positive growth first. However, with the uncertainties going on the world, the pandemic trend is again still the biggest uncertainty for the further development of the economy.
Next step, CCB will continue to adhere to creating value and focus on the prevention of the pandemic, to try our best to find opportunities in the crisis, to further promote our strategies and create digital economy, and to maintain our robust growth and to continue to invest in our long-term value. Now we go into the Q&A session. We welcome questions. Please let us know your name and which company you work for.
Due to time constraint, I would like to ask everyone to limit your questions to just one question. We now pass the floor to the audience. Ladies and gentlemen, now we move into the Q&A session. If you have any questions, please press star and followed by one. Please wait for your name to be called. The first question comes from Ms. Ye Mingzhu from UBS. Please go ahead.
Thank you for giving me the first opportunity to ask this question. I'm Ye Mingzhu from UBS. My question is related to our future profit growth and your prediction. First of all, I'd like to congratulate CCB for obtaining such a great operation performance and great profit prior to provision. I'd like to ask, we can see second half of this year, provision is quite a lot, which means that the profit is down quite a bit. Is the provision going to continue? Based on what Mr. Guo Shuqing said, do you want to achieve a target of impaired loans? Do you think that the speed of handling the impaired loans will continue to be very fast? Will we still continue to see negative growth for the second half of this year? Thank you.
We have our Chief Risk Officer, Mr. Jin, to answer this question. Thank you.
Thank you for your question and your attention to the company for our growth. With regards to the information disclosed in our interim result, it is very clear, you can see from the media report our growth has been affected by the asset quality as well as the growth of the provision made for the Chinese financials. This is in line with the whole industry. Again, with the whole world trend in this financial industry, it is also in line. For Q1, the pandemic in China was kept under control effectively. At that time, our provision did not really respond as aggressively as the European and U.S. counterparts. However, with the global pandemic further development, we continue to increase our provision, which is reflected in our Q2.
We have also noticed that it is the same for the European and U.S. counterparts. Some of these banks, they have increased their provisions for Q2 versus Q1. This is the biggest impact for us. At the moment, the global economy is still in a period of adjustment, and there's still a long way to go from becoming stable. Going forward, there's a lot of uncertainties. In terms of releasing of the provision, whether there is still a lot of room, in my personal opinion, I don't think that there will be a lot of aggressive increase. I think that it will be gradually increased because various countries have taken measures to try and put it onto the right track, especially China. We can see that the economy has come back onto the right track relatively quickly.
However, we need to pay attention and notice that when the policy comes to the maturity date, and when it is time to exit, perhaps there will still be some volatility, and this will be reflected next year, early next year. When all these various policies expire, we will be able to see the result. However, overall speaking, we believe that it is all within our ability, and our coverage ratio is still quite strong. Our impaired loans, as well as the volume of the impaired loans, would be kept stable or slightly go up. There will be an impact on our business. However, in terms of the percentage, I think that we can keep an eye on it. I don't think that there will be a lot of changes. Thank you.
Next question, please.
Next question comes from Mr. Zhang from Sina Finance.
I'm Zhang Yong from Sina Finance. My question is regarding the second development curve of CCB. How about the progress in the second curve? What are the traditional business sectors connected with the second curve?
The board secretary would take the question.
Thank you for the question. Our bank proposed the second curve last year, and it's to respond to some current trends, including technology and modern finance. Especially when the Western world is moving towards financial system, away from the real economy, China's banking industry will get away from that and they're shifting towards the real economy, and we should be serving the real economy and the people's better lives. CCB has been promoting the three strategies, and we have been updating the industry of the progress.
We have seen very good progress in the first half in digitalization, real economy, and pandemic control. We have seen very good progress in all these aspects. I'm sure the information is available to the public. Actually, our bank is coordinating the first and the second curve. On the one hand, we have been doing a good job in the first curve, traditional CASA business, loans, advances, etc. The second curve is coordinated with the first curve, and we have seen very good progress in that. The measures have all paid off. In the future, we will apply more FinTechs to different business sectors, including inclusive finance, house leasing, and other sectors related to people's livelihood, so we can play a better role as a major bank of China.
We will not only build a very good foundation with the basic services, including loans and deposits, we will also look into new sectors so our business will be stable and sustainable. The first curve and the second curve will be coordinated for long-term development. As for the question, I'd like to add one more point. You were asking about the relationship between traditional business and the second curve. We would like to use digital services to enable the first curve and the second curve as well. Thank you.
Next question. It comes from Doris Chan from China Pacific Insurance. Please go ahead.
Thank you, management team. Actually, I come from PIMCO Investment, not from Pacific. I would like to ask about your arrangement. We can see that the profit is coming down, and we can also see that your core capital and the Tier 1 capital, you face some downward pressure. We have also heard from the management that you have not issued any capital bonds. I would like to ask, in this new backdrop for your core, Tier 1 capital, do you have any relaxation on this target? If you want to continue to maintain the same target, would you announce new capital plans? If yes, any tools that you can share with us in terms of various different bonds, etc?
Regarding this question, first of all, CCB, for capital adequacy ratio, not only that we are not going to relax, and we will also further enhance it. For our business, we focus on the organic growth from within. In the meantime, in terms of issuing some Tier 2 capital tools instruments, we also have some further plans for bond issuance, and apart from the $20 billion that is already issued. Next year, we will have plan of issuing CNY 660 billion in terms of capital instruments. Next question, please. Thank you.
Next question comes from Xinhua News Agency. Ms. Yu, you have the floor.
Thank you. I have two quick questions. First, in the interim results announcement, press release, non-interest revenue has been very good in the first half with a 10.43% year-on-year increase, 31.51% in operation income. Non-interest income is at 12.04%. How did you achieve that? The second question is, NPL ratio is 1.49%, but default NPL ratio is even lower. Could you please explain the trends of NPL in that regard?
The first question would be taken by the Vice President, and the second question by Mr. Jin, the Chief Risk Officer.
Regarding the first question, you asked about the growth in intermediary business. In the first half, we have been reducing fees and conceding profits. That is why the growth has been slowing down. I believe the figures you cited were because of a few reasons. First of all, revenue from intermediary business, including online business, has seen faster growth. For example, online payment and credit cards. These business sectors have seen very fast growth. Mr. Jin, can you please take the second question?
Our bank, over the last few years, has been committed strict categorization of risks. Our NPL ratio is always higher than the late loan ratio, and the negative scissor difference has been always there. This year, the scissor difference is enlarging, but there are a few different reasons. First of all, as the President said, we have issued an additional loan of CNY 690 billion, and the new loans have kept very good quality, and we've been strengthening our efforts to support the real economy. NPL ratio and late payment have been affected by that. Second, we have taken very strict control of asset quality. Third, there are some policy factors. Companies affected by the pandemic outbreak can negotiate with the bank if they really have difficulty repaying the loan. We can adjust the repayment period.
Fourth, we have sped up our efforts in dealing with the bad loans and late payments, so that also contribute to that factor. Thank you.
What you were talking about was our intermediary business. Trust business and commission income from that regard have also been growing very fast because we have strengthened our innovative measures. That's why there is fast growth. Apart from that, when it comes to technology, we use technology to enable matchmaking services and comprehensive solutions, especially the design of comprehensive financial solutions. We can offer customers some large-scale targeted consultancy services. That's why we have more revenue from that source as well. These are all very innovative sectors. Of course, there are some sectors which haven't seen very significant growth due to the pandemic outbreak. For example, the agent business for insurance companies. These services have seen rather slow growth.
But that is for the first quarter. In the second quarter, we strengthened our efforts to support the resumption of work of foreign trade companies, especially with trade financing and international settlement business, which have been growing fast. In the near future, we will also look at how the market competition landscape goes and the trends of the pandemic. We will probably see some pressure on the intermediary business, and we will respond to these pressures very proactively, and we will be committed to digital products and grasping the opportunity of consumer business. We will also look at the opportunities in corporate customer business, and we will strengthen the foundation of customership in that regard, especially strengthening our efforts to be more innovate, especially supporting fee income and other income of intermediary business in supporting their healthy growth. Next question, please.
Next question comes from Mr. Yang Shuo from Goldman Sachs. Please go ahead.
Thank you, management team, for this opportunity. This is Yang Shuo from Goldman Sachs. I would like to ask about your strategy for digital finance. We can see that recently, a lot of internet companies have gone into this FinTech area, and perhaps they will become your competitors in the future. May I ask about your investment into technology, and what is your plan for commercialization going forward? We have also noticed that you have issued digital currency, and this digital currency or digital wallet, and how is that going to impact your business as a whole?
T hank you. We have Mr. Zhihong to answer this question.
I'll answer from the last question first. Recently, we have been participating in the pilot scheme for digital RMB. Recently, in our mobile phones, we have also carried out testings, and we can make an announcement and say that the testing has already completed. Some of the stuff that you read online is simply some of the issues that we have encountered during the testing. It is not actually the ones about that which will be implemented. With regard to the digital RMB pilot scheme, I think that we need to wait for the official news from the People's Bank of China. With respect to FinTech and in terms of our competition with large internet companies, overall speaking, we believe that there is competition as well as cooperation. In the early stage, perhaps it is reflected more in the way of competition.
Looking at the recent development, I believe that it is a relationship of both competition and collaboration for commercial banks. In terms of our maintenance and operation of our accounts, it's different from internet companies, and we have different foundations. In a lot of areas, we have competitions. For example, the large internet companies, they could provide with FinTech services in terms of payment, insurance, asset management, etc. I t is also an all-round service package. W e believe that CCB should exert the advantage of our long-acquired trust from our customers as well as our comprehensive advantage, as well as our recently acquired advantages in the FinTech sphere, especially that we emphasize on tech security, information security, etc, and we will work hard to further strengthen the above areas.
Looking at the annual result and interim result, CCB in terms of R&D and investment, we invest heavily in those areas. In addition, Mr. Lyu had also mentioned that we will focus on the building of the digital technology, and we emphasize on the technology empowerment of the bank and to help us in the banking world, and so that the FinTech could grow in a more healthy and stable way to respond to the need of our customers and to connect better with our customers, and to build a FinTech that is a new biological environment for a large-scale commercial bank. We also have a new tech company, which helps us to realize a FinTech engine, so to speak, and to help us resolve the pain points that we have, and to better support the FinTech in our livelihoods and in our business.
For these FinTech companies, we believe that they have dedicated expert team, and we believe that this team will be able to support the business need of the headquarter. In this backdrop, we have built our connection with the government side and working with our peers to share and to empower the companies together. In the meantime, we reach the customers directly to improve our capability of digital operation. I believe that compared with these new internet companies, the traditional commercial banks, their digital or our digital business also have our own features. We believe that we are also very deeply invested in these areas. I believe that we will perform well in those new areas, and I won't go into details. Next question, please.
Next question comes from Ms. Sun Lulu of the Securities Daily.
Thank you. I'm a journalist from the Securities Daily. I have a question regarding the net interest margin. It's down 13 basis points this year, but this March, at the 2019 annual results announcement meeting, your CFO said if the decrease will be within 10 basis points, it will be good. Can you please analyze the reasons for the decrease in NIM as you are shifting from the real economy? What are these factors, and how will they impact the NIM in the second half of the year?
Regarding the change of NIM, as you can see, there is a decrease of 13 basis points, but it's not much more than what we expected, because we are talking about a seismic change of what we are going through. China is in the midst of interest rate marketization, and these factors coupled with the pandemic outbreak. To be more specific, there are these factors. First of all, in the first half of the year to respond to the pandemic, the central bank has taken counter-cyclic measures, which leads to much lower return in bond and securities market. This is the reason why NIM has been down by 8 basis points. Second, loan returns have been going down as well. LPR is going downwards, and we took proactive measures to strengthen the real economy, reducing costs for companies to finance.
With all these factors combined, loan return rate is down 9 basis points compared with the last year, which reduced NIM by 5 basis points. Another factor is that we have seen more deposits, and that's better than what we expected, because the newly added deposit is seldom very orderly. The impact on NIM has been always around 3 basis points. In general, although NIM is going downwards, in the long run the pressure will last for some time. We believe the situation is still under control. Through lean management, digitalized operation, we will be able to keep NIM at a reasonable level, and we will keep it at a very competitive level in the industry as well. The reasons are both regarding the macroeconomy and micro reasons as well.
The regulators are resorting to strong regulation, and customers have seen a different mindset in managing their wealth. We are also shifting to the third pillar, wealth management product, guiding our customers in raising their awareness of risk control, especially in the diversification of assets. T hey will not rely on deposit with high return. Apart from that, we can also offer good returns to the customer with good services and product. At the same time, we are keeping close eye on the change of interest rates in the external developed environment, so we can maintain the coordinated growth of both liabilities and assets. I n the future, there will be not too much pressure on NIM. W e have to strike a balance between micro and macro reasons.
Second, we will create more value by seizing the business opportunities in main areas and strengthening our capability in setting prices differently, so we can increase the proportion of the contribution from individual customers. At the same time, we will be more detail-oriented in management and risk control. T hrough different and comprehensive measures, we will be able to ensure that NIM will be kept within a very reasonable range in the industry. The next question, please.
Next question comes from Mr. Wang Yaoping from CICC. Please go ahead.
Thank you, management team, for giving me this opportunity. I'm Wang Yaoping from CICC. My original question was related to NIM. Actually, we have already heard a very detailed answer from the management. I just want to have a follow-up question. If the current market and the interest environment maintain the same, for our duration of our asset in the industry is relatively long. W hen would the NIM touch the bottom, and what level would that be? In addition, I would also like to ask about the dividend. We have heard that in China, in terms of the financing structure going forward, it could go to more on the route of direct financing.
For the banks, the indirect financing proportion decreasing, which means that in terms of the credit assets and our risks are lowering, which means that we no longer need to reserve so much free cash to support the credit asset. F rom this perspective, is it possible that our dividend ratio might go up? Thank you.
Thank you for your question. In terms of the NIM further going down, I think that we need to take into consideration of the overall Chinese system and its complexity. Looking at it from a loss perspective, just now, I emphasized on a few factors. In the meantime, we can also see that with the Chinese economy recovering relatively earlier and the pandemic being under control, in terms of the profitability on the banking side, perhaps it would be able to maintain at a stable level. This is because the market expectation is also changing. This change, perhaps, recently, you will have be able to see that more clearly. Looking at it from personal mortgage rate, we also need to implement the policy that properties are not for speculation. This mortgage rate is also, by and large, can be maintained at a stable level.
Therefore, we say, even if the NIM could face further downward trend pressure, but we don't think that it will go down by much. Overall speaking, NIM would be kept at a reasonable level. This is to answer your first question. Second question, I didn't quite actually hear that clearly. Regarding dividend, in my personal opinion, overall dividend policy, I don't think that there will be a lot of changes. The whole asset structure and the adjustment, there will be a process. In the meantime, the Chinese economy and system has one feature. Banks, in terms of the whole asset management scheme system, takes up a huge percentage. In this perspective, I believe that commercial banks could have more room for us to play a role. For example, if I go into details, there will be a lot of examples.
For example, for trust, and other businesses, commercial banks could all play a role and could all enjoy the potential for growth. I don't know whether I have answered your question. Thank you. The next question please.
Next question comes from Ms. Lee of Hong Kong Economic Daily.
Thank you. Good afternoon, management. [inaudible] from Hong Kong Economic Journal. This is the third time that we have an online conference. Last time we said we would be able to meet at the interim results announcement conference, but it looks like we have to wait until next year. Just now, the Chief Risk Officer looked into some trends in the second half. We just want to learn if the annual results will be able to resume positive growth or will it be very challenging? If it's challenging, will you change your dividend payout measures? Because we haven't seen this situation before, negative growth in banking industry. My second question is regarding your overseas business. Any change in your policy towards overseas markets?
Let me take your first question. I'm very glad to hear your question again. At the annual results announcement conference, I did say that we hope we would be able to meet in person next time, but we didn't expect such a severe level of this public health crisis. Now we have over 800,000 deaths due to the pandemic. I t's so severe, and for that reason, we have to meet you virtually online. Also thank you very much, Ms. Lee, for your support and attention to our bank. Regarding the business performance of the bank, I believe one key word that we should remember is sustainability. Overall, our business structure and growth are within our expectation and under control. W hen it comes to practice, we have to be true to what is going on the ground.
What I can tell you is that we will be committed to the three aspects that I talked about and care about our own business. You asked three questions, actually. Your second question was regarding dividend payout. W hat I can tell you is that at this time, at present, we don't have the intention to change our dividend payout policies. As for your third question regarding overseas business, I would like to defer the question to Mr. Wang.
In the first half of the year, the bank has been granted the license for our branch in Hungary. Up to now, we have over 200 branches in countries and regions around the world. Despite the situation this year, our overseas branches have been rising to challenges and actively supporting pandemic prevention measures. Over 22 overseas branches donated 2 million pieces of protective gears. For ourselves, we will make sure that all the employees are safe and all the channels are smooth. Risk control has been always our objective in overseas branches.
In the first half, apart from traditional overseas business, very quickly, we launched an online business matchmaking platform and a special area for healthcare. In the first half, we have facilitated the export of over 1.3 trillion pieces of healthcare and pandemic control gears. We have been building up our foundation of clientele overseas with a very stable asset quality. We've been committed to the national policies of stabilizing foreign trade. Our key products have seen very good growth. We continue to invest more in manufacturing industry and foreign trade industry, increasing the level of finance. We have over 7.5 billion of overseas and cross-border financing products.
We have been committed to the internationalization of RMB and Belt and Road Initiative. We've been serving Belt and Road companies with financial services, including factoring services, overseas loans, etc. Your question is more about our development strategy, and that is to serve the dual circulation, and that is to stabilize the real economy. We will play our role in supporting the real economy of China.
In the first half, the net profit of overseas branches have totaled CNY 2.5 billion. It's down by 35%, and that's mainly due to the pandemic. Looking into the near future, we will be actively reshaping the industrial chain and supply chain globally with customer at the core. We will reduce commission fees and giving up profits, and we will accelerate the digital finance platform. That is the second curve. We will make progress in the midst of stability. We will look at the changes of global financial market and improve the stable development of overseas financial business. Thank you. The next question, please.
Next question comes from GF Securities. Mr. Li Jing, please go ahead.
Thank you, management team, for giving me this opportunity. I'm Li Jing from GF Securities. I'd like to ask about asset allocation. We can see that for first half of this year, we can see the high interest bearing liability as well as the supply from the government and the conflicts between those. For example, we can see that the mortgage rate is still coming down and the interbank treasury bond rate is going up.
For the second half of this year, in terms of your asset allocation, will there be any changes? For example, will the credit change speeds? Second, for next year, with the current change of the profit for your ROE and the organic growth coming from within is lackluster, will this affect from next year? And with the risks going up in the next year, will you adapt or change your asset allocation direction? Can you please let us know about your strategy for the asset allocation for second half of this year and next year?
We have our Chief Risk Officer to answer this question.
Hello. Regarding asset allocation, it can be said that the whole asset portfolio and CCB's strategy and advantages and the development direction of the economy must be in line with one another. For CCB, in terms of asset allocation, asset structure, for the past two years, we have been very stable. Coming into first half of this year, perhaps you have noticed that in terms of corporate credit business, we have seen a very obvious increase. This is what we said, whilst solidifying our traditional retail business advantage, we have increased our allocation in the corporate business side.
This is to meet our demand of business growth and to meet the demand of prevention of the pandemic. Since the beneficial for all finance policy, we continue to lead in the market. We have innovated some of our development models, and we have created new routes for development. These advantages, we will continue to keep them. For the credit side, to solidify our advantage in the retail business and for the corporate business in terms of green finance, in terms of some of our traditional areas and credit business, as well as real estate.
We will continue to maintain our advantage. In terms of the local government debt area, I believe that, again, we are ahead of our peers in the market, and the quality in this regard is kept very well. We haven't really been affected by any of the issues encountered in the market, such as major bad loans, etc. Going forward, we'll continue on this correct trajectory. Thank you.
The next question comes from 21st Century Business Herald. Ms. Lee, please.
Thank you. Question from 21st Century Business Herald. CCB is the largest retail bank, even bigger than Industrial and Commercial Bank of China. I n the future, will you strengthen your efforts to develop a better corporate business? Your NPL ratio is very low, and some other banks have seen very high credit card NPL ratio. How did you do that?
Vice President, Mr. Lyu, will take the question.
Thank you for your attention to our bank. When it comes to retail business, our bank has formed the largest retail credit finance bank in China, and that cannot be realized without the efforts of the past generations. T his year we've been faced with unprecedented challenges globally. In China, retail business, among all other business lines, has created opportunities out of uncertainties and crisis.
We've been committed to digital blues and the three major strategies. The retail business has seen very good performance, and we are leading the industry with that. We are confident with our corporate business as well because we have good strategies and a good and professional team, and advanced technologies. These will enable us to have very good corporate business. W e need to work hard as well.
Globally, Industrial and Commercial Bank of China is the largest and leading bank in size and business. It's a respectable bank. In our course of development, we need to learn from these banks, peer banks, so we can do a better job in serving the real economy as well as the mass public of China. W e can increase our value contribution to this country. Regarding credit card business. Credit card business is one of our advantages.
It's one of our leading business among all the sectors. At present, there are over 100 million customers in our credit card business. We're leading the industry with that size. According to the public information on credit card quality, our NPL ratio is as low as 1.17%, and we are leading the industry with that. Despite the impact of COVID-19, we have still seen healthy development of credit card business in the first half of the year. That's reflected in the number of credit cards issued, the size of loans, and the size of settlement. We've seen growth in all these aspects, and we're leading the industry in these indicators. You were asking what the reasons are. I'm not sure we can attribute the success of a business to a single factor because it's related to the strategies of the overall bank.
Over the last few years, our credit card business has been committed to the policies of the national government, and we've been doing a very good job in innovative product. We also give the front row seat to digital finance. We can, by doing that, enable ourselves to acquire more customers and keep them in our loop. We are also reducing the commission, the fees, so we can always put our customers at the heart. These factors are all contributing to the success story of credit card business. At the same time, we observe that there are some aspects that some improvement is still needed. For example, young customers, or the percentage of young customers is far from desirable. Of course, there has been some steady growth, but it's far from enough.
Now we are in the era of internet, and our customers are largely from the Generation Z. W e need to expand the product line. In the near future, apart from existing strategies, we will work on customer structures, product design and other aspects. So, that will be my answer to your question.
Thank you. In the interest of time I think time passes very quickly. The conference will be only one hour and 15 minutes , but it's a bit overrunning now. I know you still have many questions that you would like to discuss about with us, but due to the limit time, I'm very sorry to let you know that, the Q&A session, both on site and online, will be concluded here. Of course, if you have any further questions, you're always welcome to contact our PR department. We will release our information available and have a very candid discussion with you. Thank you again for your support and attention to our bank. Thank you.