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Ladies and gentlemen, good afternoon. My name is Liu Qin, Secretary of the Board of Directors of ABC. Welcome all shareholders, investors, and analysts and friends to attend 2024 Q3 results announcement. Thank you for your long-term care and support. Today's announcement is mainly held through telephone access. Also, I have invited some of the friends to the scene. First, I would like to introduce the team attending this announcement.
They are Mr. Deng Zheng, Director of the Office of the Board of Directors, Liu Yongquan, General Manager of Financial Accounting Department, Xiao Ning, Senior Expert of Financial Markets Department, Wen Xiaolei, General Manager of Corporate Business Department, Wang Xiaohan, General Manager of Credit Management Department, Wang Yang, Deputy General Manager of Asset and Liability Management Department, Zhou Bin, Deputy General Manager of Personal Credit Department, and Sun Yigang, Deputy General Manager of Rural Revitalization Finance Department.
Today's announcement will be divided into two parts. In the first part, I will introduce the business performance in Q3. The second part is Q&A. We'll respond to the questions you care about. Now, when we proceed to the part one, we'll just release the Q3 results, and we'll continue to financial operations with steady and sound. The net profit and operating income continued to grow with net profit CNY 215.3 billion, up 3.6%. Operating income CNY 540.7 billion, up 1.3% YoY. Net interest income CNY 437.8 billion, up 1% YoY. The net interest margin 1.45%, remaining the same in the H1. The all-caliber balance and the domestic loan balance up CNY 2.21 trillion, up 8.2% YoY. The margin and the speed ranked the first among peers. Among them, for the personal loan balance, CNY 8.75 trillion.
Corporate finance, CNY 14.3 trillion, up CNY 1.54 trillion. County level, CNY 9.73 trillion, accounting for more than 40% domestic loans. Corporate loans increased by CNY 956.3 billion, up 10.9%, 1.73 percentage points higher than the whole bank. And NPL, 1.32%, dropped by 0.01 percentage points. The Special Mention loan, 1.45%. The overall risk indicators are stable, and the provision coverage ratio was about 3%.
Now, let's come to the Q&A session. In this session, we will adopt three ways: answer questions, telephone questions, respond to publicly solicited questions. If you want to ask questions, please press the asterisk key on the phone, and then press number one. Please ask one question only, and please identify your name and organization before asking. Now, we may come to the first question.
Okay, thank you. Thank you. My name is Zhang Zheng from CITIC Securities. First, congratulations.
You have mentioned that the operating profit is down. I would like to ask the trend of the profit. How about Q4 and the whole year? From the previous year, we have seen that ABC has shown quite strong competitiveness. Can you please, could you please elaborate on this?
Thank you for your question. Mr. Liu from the Financial Accounting Department will answer the question.
Thank you for your question. For the first three quarters, ABC continued to improve its ability to serve the real economy and the overall performance was sound, and we have maintained the general stability of the asset quality. The main financial indicators have improved generally, and net profit has increased by 3.6%, and the growth speed still leads the peers. Net interest spread, 1.45%. Provision coverage ratio was still above 300%. So we have a strong cushion to defuse risk.
This has laid a solid foundation for this year's performance and Q4. Next year, as looking forward into Q4 and 2025, with the macro-control increment policy has shown its effects, the economic recovery will be consolidated. The market demand will continue to increase. This will create a sound environment for the operation of the banks through, given the LPR's continued decline and the existent mortgage rate adjustments, and also ABC actively yield profits to the real economy. These policies may increase the market volatility. The operating profits continue to increase, but still face a certain degree of pressure. We still focus on the key businesses and continue to increase the revenue and increase the quality of the assets and maintain the stability of the assets. We have strived and worked hard to realize that in the whole year, we will achieve the stability of the operating performance.
We'll constantly optimize the structure of the assets and maintain stability of the asset increase in the first three quarters. The share of the real economy financing still increased. In the next step, we'll continue to focus on the main businesses and responsibilities, improve the key areas such as Sannong area and the tech financing. We'll constantly serve the real economy. At the same time, we will strengthen the foundation set up of the customers and control the costs and have better pricing, so as to reduce the net interest spread volatility to promote the interest income. Second, we have increased the non-interest income. We have narrowed the decline margin of the fees. Q3, compared with H1, the drop margin is narrowing with the effects of the policy. We will seize the opportunity of market recovery.
We will continue to grasp the potential of the market and also keep the other non-interest income stable. We'll also follow the domestic and international macro-environment changes and seize the sound opportunities and optimize the portfolios, also increase other non-interest income to keep the asset quality stable and reduce the credit cost. In the three quarters, the provision coverage ratio is still high, and we still have the strong ability to diffuse risks, and we will continue to strengthen the risk control and keep the asset quality stable. This represents my answer. Thank you.
Thank you, Mr. Liu. Please welcome the friends from the telephone to ask questions, and also, the question will be ordered by the time of your application. Let's connect to the first questioner. Greetings. Please ask question.
Okay. Thank you. I'd like to ask you, when it comes to the interest spread trend we have seen recently, there are lots of interest rate adjustments in September, the mortgage rate repricing. Of course, the PBOC's press conference has mentioned that the liability of the banks can maintain the corresponding adjustment. I'd like to ask you, when it comes to the interest rate spread in the new policies, what is the expectation of the interest spread? What's your prediction in the net interest spread has narrowed when reaching the bottom?
And please ask Mr. Wang from the Asset and Liability Department to answer the question.
I would like to thank you. And you have raised a quite good question, just as the Secretary of the Board mentioned in the first three quarters, the net interest spread for 1.45%, the same with the last H1.
We have implemented the deployment of the CPC Central Committee, especially recently. The Central Political Bureau has issued the relevant documents to launch the counter-cyclical interest rate adjustment. We have reduced the existing mortgage interest rates and compounded by LPR decline. Our net interest spread will be maintained steadily. In the asset side, we will strengthen the support to the real economy and reduce the general financing cost of the society. Considering the October existing mortgage rate adjustment, the interest income will still face pressure. It is expected the asset ratio interest rate will be under pressure in terms of liability with July and October. RMB deposit rate has been reduced, and the efficacy of the policy has been released. The Fed has reduced by 90 basis points. The liability cost pressure will be released.
And from the October's package of policies, deposit loan interest rate effects will be offset each other. So it will have a limited impact on the net interest spread next year when the financial sector will yield profit to the real economy. Our income will, under pressure, mainly consider the following factors. One, on liability side, this year's three times of the LPR reduction will promote the existent mortgage repricing. So the interest rate will be manifested next year. The interest spread will also go down. The deposit cost pressure will be eased, and deposit interest rates will continue to go down. If we consider the deposit interest rate, it may offset the deposit interest decline.
Thank you, Ms. Wang. Now, next, please welcome the speaker and the questioner from the scene. From CITIC, Zhang Zheng.
My name is Wang. I'd like to ask you a question related to the asset quality. Could you please look forward to the asset quality in the future? Also, from the corporate and retail, so what are the areas the most prone for the NPLs?
Thank you for your question. The Credit Management Department, Mr. Wang, will answer this question.
Thank you for your question. I'd like to release the information on ABC's asset quality because ABC has always prioritized the prevention of the risks and keeps to the bottom line of the credit risk. The asset quality has been steadily recovered. The NPL is 1.32% and down 0.01 percentage point compared with H1. The forward-looking default ratio has been maintained low among peers. Our expected scissors margin has reflected the foundation of the assets.
So among the major state-owned banks, this ratio, we have been the only bank that has maintained the positive ratio. From these indicators, ABC's asset quality is kept steadily. So in looking forward, we expect that the asset quality will be stable from external factors. China's policy stabilizing expectation growth. And this has been showing its effects. And our economy has been recovered with the introduction of the package of policies. It will provide a more favorable environment for us, especially the real estate market has stopped the decline and recovered. And also, for the government debt, a package of fiscal policy support has also eased the debt pressure of the government. So externally, we have a sound policy environment. Internally, we always serve the real economy and constantly optimize the credit structure, accelerate the economic transformation.
We have consolidated the asset quality in terms of credit risk management. We have strengthened the real estate and local government risk diffusion. In terms of the credit management, we have improved digital management capacity. Our digital centers have established lots of models. We have also collected lots of clues. We can have the caution and early warning of the risks. Therefore, the credit risk management has been forward-looking. From the forward-looking indicators such as the scissors margin, we have maintained a sound level among peers. Our asset quality reflected in the NPL has been maintained a sound level.
Thank you, Mr. Wang. Please connect to the next questioner from the telephone side.
Okay. Thank you, management, for giving me such an opportunity. My name is Peng Suyang from Shenwan Hongyuan. I'd like to ask you the risks currently for the general policies.
There are some supports on the real estate asset quality. I'd like to ask you the corporate real estate asset. What is the trend for the loan disbursement for real estate? The Central Political Bureau has mentioned that we should promote the recovery of the real estate market. Are there any policies for the collection and storage? So I'd like to ask Mr. Duan to answer this question.
Thank you for the question. For long-term, ABC conscientiously implement the deployment and decision-making of the CPC Central Committee and State Council according to the requirements of the regulators. Also, we have secured the policy compliance. We have adjusted our real estate and mortgage policies to follow the rule of law and regulations meet various diversified demands of the different financing entities.
In terms of asset quality facing the downward pressure of the market, ABC has taken active steps and multiple steps to adopt one policy for one player. As of September, the NPL ratio compared with H1 at the beginning of the year has been stable. Asset quality has been kept steadily, so we have the sufficient provisioning to ensure that real estate risks are controllable generally. In the next step, we will earnestly implement Central Policy Bureau's work ethics and highlight the people-orientedness and the political-orientedness of the real estate policy, secure the delivery of the houses, and purchase the existent commercial houses for the purchasing and leasing. Actually, we actively support the real estate sound development to facilitate the stop of the declining of the real estate market, and according to the commercial sustainability, for optimizing the additional real estate, we will play a more active role.
Thank you.
Thank you, Mr. Duan, for your answer. Next, the question from the line.
Thank you, the management. My name is Ni Jing with Guangfa Securities. I'd like to ask a question related to county area because in recent years, the county area contribution has been high. What is the priorities and deployment for the county areas? And the county area loan has been increasing fast. And how do you control the risks? Thank you.
The Rural Revitalization Finance Department's Mr. Sun will answer this question.
Thank you. For Sannong and county area businesses, the main businesses of ABC, and this is where our traditional advantages lie. Just now, our speaker has introduced the county area loan situation. We have seen the contribution has been increasing. Next, we will conscientiously implement the Third Plenary Session essence an d match a package of incremental policy.
We use the experience of thousands of engineers and will mainly do the following work. First, we will grasp the major opportunities of integrated urban-rural development and increase the supply of incentive area, focusing on the key area and weak links, and implement the industrial financing and the farmers and new citizen financing, constantly increase the disbursement. Second, we will build on the Sannong customers' diversified needs and deepen the service model innovation and cater to the new demands of the business types and categories and expand the bond and fund and leasing and other financing needs, explore the diversified and diversified Sannong financial service systems. Third, we focus on the digital technology development.
According to the smart bank development, we have strengthened AI, IoT, and big data and other technologies application in the farmer-related businesses, constantly serve the digital scenarios, and introduce more online farmer-related products, optimize the products, use the quality products to promote the rural area's economic development. Fourth, we optimize Sannong professional service system relying on the Sannong business units architecture and strengthen the resource giving, optimize the business authorization channel establishment so as to provide stronger guarantee and support for the Sannong financial services. As for the Sannong area loan, which are our next focus, we'll continue to do well the loan disbursement. At the same time, we'll control the risk. We'll constantly optimize the credit policy supply, identify the priority of the disbursements, optimize the county area business, strengthen the risk control. Second, we will strengthen the farmer-related business.
We will strengthen the dairy products manufacturing and research, identify the big customers' risk control. Third, we'll deepen digital risk control methods, diversify the digital risk control methods, and iterate the risk monitoring models, constantly improve the accuracy of the risk identification. Fourth, we will improve the long-term working mechanism using the recovery and write-off. This is my answer. Thank you.
Thank you, Mr. Sun, for your answer. Now, please connect to the next questione r from the telephone.
Thank you for the opportunity. My name is Yu Lin. I'm from J.P. Morgan. When it comes to my question related with the disbursement, the growth rate has reached 9.2%, and it is stronger than the industry. So with the economic growth under pressure, how do you view the current credit disbursement situation? So what are the major priority areas for the credit disbursement?
Thank you for your question. Mr. Wang from the Credit Management Department will answer this question.
When it comes to the credit disbursement for ABC, it is mainly focused on three areas. First, Sannong business and county area business have maintained growth. By September, the balance reached CNY 9.72 trillion, accounting for 40% of the domestic loans, for the increment of CNY 956.3 billion up 10.3%. In the rural revitalization development, it has maintained fast growth. The accuracy and coverage of the county financial services have been increased and will serve the five priorities. Support for the key areas has been increased. In tech and strategic emerging industries, loan growth rate has exceeded 20%. The growth rate has reached 12.6%. Green credit has exceeded CNY 4.9 trillion, up CNY 895.7 billion or 22.2%. In inclusive finance, the balance reached CNY 4.95 trillion. The third area is the personal loan area. It is leading the peer. It has newly added CNY 691.8 billion.
The increase speed was higher YoY, and the emerging as well as the growth speed are among the first in peers, so the macro policy's effect has been showing. Our economy has continued to be recovered. Economic transformation and transition has given us impetus, and the credit need has been recovered steadily, so we will seize the opportunity to store the projects to increase the disbursement efforts so as to mainly serve the provider of the finance to the real economy, and as for the, we'll continue to focus on the whole supply chain of the financing and tap the potential and needs of the county area, maintain the fast growth of the loans in county area.
We'll serve the Five Priorities, serve the upgrading and transition, accelerate the green and low carbon transition, and match two areas' credit needs so as to increase the financing for the key projects and engineering. Second, we will increase our efforts of the coordinated whitelist for the financing. We'll use the refinancing and securing the delivery of houses tools. Fourth, we'll facilitate the well-being improvement and matching using the old to replace the new objects to keep the leading advantage of the retail business. Fifth, we'll implement the policies to support the real economy and continue to support the SMEs and constantly strengthen the inclusive finance services. These are our efforts. The credit demand will continue to be recovered steadily. Thank you.
Thank you for your answer. Next speaker from the scene. Next questioner, please. Thank you.
I care about the investment issue because so my question, could you please introduce the strategies for the investment? And can you please look forward to the investment return? So financial market, Mr. Xiao will answer this question.
Thank you for your question. Since the start of this year, the bond market investment has been in decline, and 10-year bond market has dropped by 40 basis points compared with the start of the year. As for the bond investment, we conscientiously implement the central financial work conference and central economic work conference and the Third Plenary Session essence. And we maintain pursuing steady growth. So we'll constantly give a play of these SOEs. In the bond investment, it has three features. We have mastered the market trend according to the asset allocation strategies.
We have also considered the needs of the investment, and we have also seized the opportunity of the high interest rate of bond. Second, we coordinated the categories and duration and account structure of the bond and coordinated the comprehensive yield requirements. We have increased our investment in the tax-free bond to serve the real and local economic growth. The third feature goes like this. We still actively serve the economic development strategies and serve Five Priorities. We actively support modernized system, strategic emerging industry financing, support the rural revitalization, inclusive finance development. ABC has comprehensively considered the asset liability structure and the need to serve the real economy. We have also adjusted our duration generally, which is higher than market average. In the downward pressure, investment return has been sound. From the whole year, the return has been sound, which is higher than market average. Thank you.
Thank you, Mr. Xiao, for your answer. Please connect to the questioner on the telephone.
Greetings. Regarding consumer credit, I'd like to ask you the consumption loans. Our country has introduced lots of policies. I'd like to ask you for the personal loan and consumption loan. What are the trends of these loans? Are there any increase of the NPL ratio? And how do you control and manage the relevant risks? Thank you.
The personal credit, Mr. Zhou will answer this question.
Thank you for your questioning. ABC attached great importance to the development of the personal credit business. Especially this year, we have implemented policy deployment of our country to boost the consumption. By the end of September, personal loan balance CNY 8.75 trillion up 8.5% for the five years in a row. The growth margin and speed have been leading among peers in the consumption loan.
We actively respond to our country's strategies and support the cars, utilities to using the old objects to replace the new objects by the end of September. The personal consumption loan registered CNY 1.62 trillion up CNY 666.8 billion, maintaining the first in terms of the margin. We have disbursed CNY 4.48 trillion. We have nearly disbursed the interest rate that is 18 basis points lower than the H1. We face lots of commercial and industrial users. We constantly optimize Shanghu e-Loan and Huinong e-Loan, increase our financing to the catering and wholesale and retail industry. As of September, personal operation loan balance up CNY 68.6 billion. Accumulatively, we have disbursed CNY 258 million. Newly disbursed weighted ratio of 2.55%. Just now, Mr. Wang has mentioned the asset quality situation. I'd like to add some of the personal loan situation. As of September, the NPL ratio, personal ratio, 0.88%.
Asset quality is leading the peers. The personal consumption debt was 1.32%. From the perspective of the future development trend, our business department's judgment was the same with the credit department. The asset quality is generally controllable, and we will do the prevention control of the personal loan. First, we uphold the business development and the risk control integration, so the risk prevention control has been incorporated into the adjustment. Strengthen the risk control at the source. We will also pay great attention to the risk control of before loan, before lending, and also will prevent the illegal agents. We have established the personal credit model monitoring committee. We have also iterated the models so as to identify and dispose of the risks at an early time, and also, if the risk cannot be diffused, we'll stop the such business.
And also, we have improved the before lending tools to ensure the real mortgage and the field investigation. We also refuse to cooperate with the illegal agents. Third, we uphold the service driving and the tech fund driving. We have created and innovated the management model before lending, in the lending, and after lending. And in the personal mortgage loan, we have introduced the external data. Also, in the consumption, we have introduced the insurance data. So currently, the effects have been sound. Fourth, we established the normalized risk management. We have utilized asset securitization methods and so on. And we have adopted multiple channels to diffuse the existing risks. This is my answer. Thank you.
Thank you, Mr. Zhou. The next question from the scene.
Thank you, Management. My name is Shen Juan from Huatai Securities.
I'd like to ask you a question related to the deposit we have seen in the past one year or two years. The deposit has met serious conditions, but in the Q3, market has undergone great changes. I'd like to ask you for the loan trend, so what is your judgment and analysis in the future? Also, so for the citizens' deposit, also, I'd like to ask you because in the past two years, there has been adjustment of the listed interest rates, so what is the effect on the repricing of the liability side? What is the rhythm of the repricing, and what is the effect on the liability side on ABC?
So, Asset and Liability Management Department, Mr. Wang. Ms. Wang, we'll answer the question.
Thank you for your question. I'd like to answer this question.
In recent years, the financial environment has been complex, both from the broad and the residents and the companies who favor the stable deposit, especially the time deposit. The time deposit has been rising in recent years. This has increased the pressure of the net interest rate, but at the same time, with the share of the time deposit increasing, it has increased the liability, made the liability stable. So ABC's trend is in line with the whole industry. The time deposit has currently, as our economy continues to be consolidated and recover, facilitating consumption. Domestic demand policies have been strengthened, especially in recent years. A package of incremental policy has been introduced. The market expectation has been changed gradually, which will facilitate the willingness of consumption.
The deposit will continue to consolidate the base of the savers and will enhance our capacity of the customer segmentation, facilitate the demand deposit to turn to the time deposit, constantly optimize the deposit structure when it comes to the interest rate reduction. According to the deposit adjustment mechanism, you can refer to 10-year yield bond, bond yield, and considering your own conditions, adjust the deposit interest situation. Our banks have for two times reduced the deposit rate. Next, given the market condition, as well as the strategies of our peers, optimize the deposit pricing strategies, consolidate the service of the real economy. Thank you.
Thank you, Ms. Wang, for your answer. Because tim e is limited, we will answer the last question.
In October 23rd, we announced the notice soliciting the questions from the investors. They focus on the capital and credit dividend payout.
The country planned to increase the Tier 1 core capital for the six banks. What is the latest trend of ABC? Also, it will dilute the dividend per share. Will it increase the dividend payout ratio in the future?
Mr. Zhou, I'll answer this question.
Thank you for your caring and support of the ABC. Also, thank you for your question. When it comes to the capital remuneration, according to the arrangement of the shareholders, we facilitate the capital supplements, and we actively communicate on this issue and discuss the core capital supplementation. ABC has considered the requirements of the shareholders. We have maintained a relatively high dividend payout ratio, which has been maintained at 30% or over 30%. We have cumulatively paid dividend of CNY 815.2 billion from the share interest rate. According to 2023, A share and H share dividend payout ratio is about 4.8% and 6.9%.
In management, in H1 announcement, it said we attach great importance to the dividend payout. Before the Spring Festival, we'll complete the distribution of the dividend so that the shareholders may get the dividend. When it comes to the refinance influence on the dividend payout, indeed, in the short term, it will dilute the dividend per share. We'll adopt a package of measures to meet the gap of the dilution. With the policy's effects being released, we will provide more long-term and also abundant dividend payout. We wish you can continue to care and support ABC.
Ladies and gentlemen, Agricultural Bank of China 2024 Q3 results announcement comes to an end. I'd like to thank the investors, shareholders, and analysts for your long-term and continued support and care. Also, I'd like to thank the colleagues of our team for your interpretation and sharing.
If you have any questions in the future, welcome you to contact with our team. This announced the end of this results announcement. Thank you. See you.